An economist on PQE

Let me emphasise that the concern about PQE is that it would be used excessively, and in doing so would contribute to inflation. The whole issue is whether we can trust that PQE will not be abused. Murphy attempts to downplay this fear by claiming that he wants “modest” PQE, and that it’s a good idea because inflation is under target. But if Murphy’s reasons for advocating PQE circa 2015 are sincere, this implies that he did not think there was a case for PQE in 2011. My recollection is that he has been advocating PQE throughout this time period, even when inflation was above target.

To explain: the answer is always more Murphmonster, it’s the reasons why that change.

14 thoughts on “An economist on PQE”

  1. Murphy has not been advocating PQE for all government expenditure (instead of borrowing) but Milton Friedman has, no matter what the inflation rate.

    Now, perhaps the wise minds of this website would kindly look what would have happened to the UK’s government debt position if we had followed Mr Friedman’s advice from 1951 onwards.

    My suggestion is that things would have pretty much been the same, except the government would only have one third of the debt is has now. And the private sector of course £1,000bn less savings in government bonds.

    Please have a look:

    https://radicaleconomicthought.wordpress.com/2015/09/24/pqe-how-to-cut-the-uks-debt-by-two-thirds/

  2. It was Green QE at least back in 2011. Thats 4 years ago, which in Murphy-world is half a dozen different obsessions at least. The P only got added recently when the sniff of a peerage and some more adulation from the Hard Left suddenly appeared on the horizon. I guess the planet can just go fuck itself, its build baby build now with lots of CO2 emitting concrete and steel.

  3. Can you imagine Murphy and the gang ‘modestly’ applying PQE? That, once started, the flow of pork to friends and vested interests would be tightly controlled and ‘modest’?

    No, me neither.

  4. I do think inflation worries need to be properly addressed by those in favour of some form of helicopter money or debt monetisation.

    This idea from Citigroup is rather good, though:

    http://ftalphaville.ft.com/2015/09/23/2140625/a-wink-and-a-nod-later-and-the-debt-is-monetised/

    Bloomberg’s take on it:

    http://www.bloomberg.com/news/articles/2015-09-23/citigroup-strategist-central-banks-will-try-to-monetize-government-debt-when-the-next-crisis-hits

  5. Is there any attention being paid to the supply side? Ie all the reports comoing through of labour shortages in the construction industries?

  6. @ Frances Coppola
    I note “central bankers in developed economies, who are much more confident in their ability to damp down inflation than generate it,”
    Pride goeth before a fall

  7. Concrete *absorbs* CO2 as it cures. Yes, it does emits CO2 as it’s manufactured, but in carefully designed systems it can result in the CO2 load being cyclical and long-term neutral.

  8. JGH: “… in carefully designed systems…” (above)

    Do I take it that “carefully” in that context carries its usual green meaning, which is to say, “absurdly expensive?”

  9. Yes, all economic commentators keep on the possibility of further QE and of going further, using it to finance much larger fiscal deficits, tax cuts very often being cited. They nearly always set these suggestions, however, in the context of a serious new downturn in domestic or the world economy. All are aware of the inflationary impact monetary incontinence could have.
    Contrast this with an amusing little piece of fluff offered to the Labour conference by the progress group: inflation getting out of control?Simple, just stop the house-building as instantaneously as you started it, “at the end of the street”.
    Or am I libelling a renowned academic?

  10. Diogenes – I think the short answer to your question is ‘No’. Usually accompanied in its longer version by complaints that you are obsessing over ‘details’, and then rounded off with accusations you are a troll or neoliberal for daring to have some knowledge of the sector in question.

  11. The link is one of the best articles I have ever seen and perhaps can be hardwired into the brain of Murphy and his idiotic cheerleaders/advocates of mass murder on these pages and on TRUK. Being an evil, smug, self-satisfied, obnoxious piece of crap is one thing when you are a commentator outside the tent is one thing – refusing to debate with critics when potentially you are going to be in a position of power is manifestly unacceptable.

    Incidentally I have it on very good authority that negotiations are ongoing between the John Mcdonnell camp and the man in question as to a role as one of a triumvirate of special economic advisors to the Shadow Chancellor so assuming he is able to negotiate a salary expect to see an official announcement soon…..

  12. VP

    “the man in question as to a role as one of a triumvirate of special economic advisors to the Shadow Chancellor so assuming he is able to negotiate a salary expect to see an official announcement soon2

    Cripes, I do sometimes wonder if it is I or others who are hallucinating when I read things like this.

    On the positive side, gorging near to the teat of power may just cause a reaction metaphorically like that of Mr Creosote.

    If that does not happen, presumably he will have become forever tainted with the looney left and when Corbyn is forced out Murphy will never again be able to influence or darken frontline politics again

  13. BraveFart

    My source is someone who knows Murphy quite well – so I’m inclined to trust the rumour here!

    The prospect of irrelevance if they fail may be a factor in the delay on the announcement certainly – although there is no indication in any of his writings that he is possessed of that degree of understanding of second order consequences or indeed any awareness of his own limitations so unless his private persona is radically different to his public I don’t see it. The poem by Pastor Niemoller needs adapting to the Murphy age….

    ‘First they came for the Neoliberals’

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