So, Ambrose says that PQE isn’t entirely mad:
Jeremy Lawson, from Standard Life, gave his blessing to radical action this week, arguing central banks should be willing to fund fiscal stimulus directly, and even inject money “directly into household bank accounts” if need be.
Mr Corbyn’s ideas are a variant of “helicopter money”, the term coined by Milton Friedman, the doyen of monetary orthodoxy, lest we forget.
Friedman did not, of course, mean that banknotes should be dropped from the sky, though they could be in extremis, but rather that central banks have the means to create money to fund tax cuts, or to cover state spending, until the economy comes back to life.
So, let us assume that we do end up in extremis. We need urgent expansion of the money supply, as in the scenario where Friedman suggests helicopter money.
OK, does PQE make sense?
No, even here it doesn’t. Because of that “urgent” bit.
PQE is to be spent upon building things. Great, how long does it take to start building things? How long does planning permission take? Environmental permits? Wading through the morass of challenges by hippies, Nimbys and Bananas?
Two years? For a large project, a decade?
That’s not urgent then, is it? Meaning that if we do have an urgent need then we’ll have to do something else: like, say, helicopter money.
That is, even when we’ve a need to expand M0 in order to prevent falls in M4, it’s still not true that PQE does what we need. There’s therefore no circumstances under which it would be useful.