Despite AEP, PQE still doesn’t work

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.

12 thoughts on “Despite AEP, PQE still doesn’t work”

  1. Correct. Or as Simon Wren-Lewis said, printing money and building infrastructure are perfectly acceptable policies in themselves, but there’s no reason to join them at the hip.

  2. I guess the ‘urgency’ of PQE could be an excuse for pushing through emergency legislation to override all the paperwork for their pet projects.

  3. Why wait?

    Since it seems everybody gets to indulge their fantasies, issue every white middle aged male under 6 foot tall with grey hair in South London with 500 shares in RBS then:

    Print £1,000,000,000,000,000,000,000 and buy the best bits of New York and rent them out.

    Then pay me £1,000,000 each month in dividends and I’ll provide the economic stimulus.

  4. Ambrose has obviously misunderstood helicopter money.

    His Eminence Cardinal Professor Murphaloon will have him excommunicated:

    >”As for the BoE article, it refers to PQE as helicopter money, which it is emphatically not.”

  5. I see Ritchie offers his gimps, sorry, followers, no direct link to the article – cos it’s the Telegraph and dirty no doubt. His very selective extracts don’t include that tax cuts suggestion. Funny that.

  6. Tim

    You’re ignoring the classic apparently ‘shovel ready projects’ and as Ben S says, they’ll run roughshod over the petty bureaucratic rules that restrict their freedom of action – have no fear on that score. I really need the eloquence of Mr. Ecks to summarise the mindset here but veteran readers of the blog who have not read ‘Mein Kampf’ or ‘the Doctrine of Fascism’ or indeed ‘the Communist manifesto’ or ‘What is to be done?’ will not be surprised by certain similarities with those visions and the one expounded by Murphy…


    He’s too dim to appreciate the argument AEP is putting forward – as we see from the myriad range of supporters ha has had in the past within his comments section, subtlety and nuance are alien concepts in his thought process….

  7. Ritchie is on The Daily Politics today discussing the tax gap.

    Now, will Andrew Neil go easy on him or not? Depends whether he thinks there is any real sport in it.

  8. Only caught the end of this, but you could sense the rage coming out of Ritchie: at one point I thought he was about to start screaming. Andrew Neil saw it as well and pulled back from pushing him quite so hard.

    Neil said a few times “But you are the only person who thinks there is a £120bn tax gap”

    Ritchie said that 10 years ago no-one estimated the tax gap; Neil responsed with the HMRC figures from 2004. Ritchie looked like he was about to have a stroke.

    Oh, and he was badged
    as “City University” and was very very clear that he has no formal appointment from Corbyn. Don’t want to jeopardise that charity funding live on TV.

  9. AEP is also nuts though, isn’t he – seems to predict global financial meltdown for one reason or another every week.

  10. Your forgetting that Ritchie has previously changed direction on PQE when challenged on shovel ready and said it could be used for other things not just infrastructure, such as training. Though how you ‘urgently’ set up a training program I’m not sure.

  11. The ALP government in Australia really did try helicopter money in 2010 as a stimulus measure. Something like $900 per person, direct into bank accounts. I missed out because too high an income that year.

    Most people saved it (on the grounds of if the government is giving away money. shit must be bad) so the projected spending simply didn’t arise. We’re still paying for it.

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