So, they say that the infrastructure that they think desperately needed, and which they think has an enormously positive return, could be funded as I have suggested (and I note they have made no suggestion at all as to how they think cash should be found) but they refuse to consider my option because:
[I]t is a risky proposal. At present the bank looks unlikely to embark on a fresh round of QE (instead it is mulling monetary tightening). If Prime Minister Corbyn were to rely on QE to fund public investment, he might be tempted to cajole the bank into prescribing more of it. At the mercy of politicians, the bank would lose its credibility, and confidence would drain from the economy, forcing interest rates up and crimping investment—again, just the opposite of what was intended.
Or to put it another way, they say that a central bank that can’t find a way to create inflation (and so is failing in its core task) should not be used instead to fund infrastructure investment that the government knows is sorely needed and pays a fantastic rate of return.
Amazingly, no, that’s not what they said.
Rather, a central bank which thinks it has already done enough to engineer the required inflation (recall, monetary policy operates with a lag of 18-24 months) isn’t going to print money to build infrastructure.