Government must therefore set a policy framework that forces the close collaboration of monetary, financial and fiscal policy to induce a sustained rise in credit from our very wounded and risk-averse financial system. The British government, along with other western governments, must replace its redundant inflation target with a target for the growth of the value of the goods and services we produce – the growth of GDP in cash terms. It should say that every instrument of policy – quantitative easing, interest rates, government borrowing, guarantees for new bank lending – will be used to sustain the growth of money GDP by 7% a year for the next five years.
Of course, Willy being Willy he doesn\’t understand that this is a direct outgrowth of Friedmanite monetarism.
Nor does he understand that it\’s all about money, the money supply, the monetary stance. None of the rest of his blather about government subsidies and direction of investment is necessary at all.
But then if Willy understood the genesis of his pronouncements, the implications of them, then he wouldn\’t be Willy, would he?