Ritchie on PQE again

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.

19 thoughts on “Ritchie on PQE again”

  1. “And borrowing would withdraw funds from the economy that should be sued by the private sector”

    right. because when the government borrows money, it stuffs it under its mattress

  2. oops that comment was supposed to be on the post below.

    I don’t actually think that’s a terribly strong response from the Economist, prefer the argument that under current regime CB simply cannot deliver permanent monetary expansion

    if they’d said PQE as envisioned would necessitate ending inflation targeting mandate of BoE, to force through higher rates of base money growth, then would make clearer that confidence on inflation would be in peril.

  3. to fund infrastructure investment that […] pays a fantastic rate of return

    I’ve tried banging my head on a spike but I still don’t get this.

    I’m not alone in here (apart, possibly, from the spike treatment) because the council still hasn’t fixed the potholes in our road with a view to garnering the fantastic rate of return.

  4. OT but congrats Timmy on being linked by Instapundit for your “minimum wage increases really do have consequences” article at Forbes.

    Good article and great exposure but also isn’t part of Forbes’s structure a ‘pay per click’ thing?

  5. Remember what Ritchie and his GREEN New Deal gang used to call PQE? Remember the ‘GREEN’ in Green QE?

    That’s right, it used to be all insulation and Green energy. And he was abusing owners of expensive vehicles in Norfolk for their false values and their desparate need for “stuff”, which nobody needs.
    Now that same person is screaming barrages and bridges and bemoaning traffic jams at airports and calling for a massive house-building programme.
    And what a little Corbynista he is. Intrastructure Ritchie is the same Ritchie who opposed HS2, obviously, and opposed ANY new airport runway for London because “it isn’t needed” and was only a few months ago defending the decision not to dredge rivers through the Somerset Levels, all in the name of the environment.
    Can’t help thinking it’s “all Tory and private investment bad; all State investment good AND good for the environment.”

  6. Yep, pay per click. So far, looking at the stats, that link has made me €1.50. Instapundit isn’t quite the traffic firehose it used to be…..

  7. TMB,

    Yes. And why haven’t the neoliberal capitalist banksters already funded these projects? They clearly need to seize these fantastic returns to fund their yachts, Porsches and holidays to oppress poor people?

    Because we all know how evil they are and how they couldn’t possibly allow any profit to be in anybody’s hands but their own.

  8. “they think has an enormously positive return”

    The Meissen Bison is correct; the return has not been established at all.

    It is a Petitio Principii fallacy.

  9. The enormous return will be about 1 vote per £40000 spent. You may think that a very poor return, but you’d be wrong. The politician has great value for a vote; they have absolutely no value for Other People’s Money. They would consider 1 vote for £1000000 to be a good deal.

  10. They clearly need to seize these fantastic returns to fund their yachts, Porsches and holidays to oppress poor people?

    I suspect because those fantastic returns will not come in the usual form of financial reward but of white elephants – utterly useless to the general public – which can be shown off by Corbyn and his politburo to foreign dignitaries from Venezuela, Cuba, and North Korea.

  11. OK. How about the first “People’s Pensions” being public sector ones? They will generate a better rate as PP than private pension schemes, we know that coz Richie tells us they will.

    Let’s give the public sector a ten year head start enjoying these benefits, then we’ll take stock.

  12. Ritchie’s PQE blog has attracted supportive comments from the Zimbabwean Finance Minister and the Governor of the Zimbabwean central bank. So everything will be OK then.

  13. So Much For Subtlety

    GlenDorran – “How long before we get “Jeremy Corbyn Looking At Things”?”

    Well we are getting Obama “staring down” a glacier in Alaska. Just daring it to continue melting I assume:

    http://www.progressivestoday.com/not-the-onion-the-associated-press-claims-obama-stared-down-a-glacier-in-alaska/

    It is amazing how the Left just keeps on failing to notice how their politics are simply making up for their lack of a proper childhood or something.

    Although in fairness, I can think of some Ministers I would like to have executed by anti-aircraft gun. So we have that going for us.

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