We need deficits to create money
Saving takes money out of circulation in our economy: it effectively destroys it. That is because money is only created be lending and since saving is the opposite of lending ( loan repayment having the same net effect as saving in economic terms) than a worldwide glut of savings leaves a shortage of something that we all need, which is money. UK money supply has fallen since the end of the quantitative easing programme in 2012. If this shortfall is to be made good then the only party capable of delivering the money we need to keep the economy going when the private sector insists, overall, on saving is the government and the only way in which it can create this new money is by running a deficit. This is the role of quantitative easing when the economy gets really tight: I would of course prefer People’s Quantitative Easing to any other form because this does, of course, direct the funds to productive investment for all the positive reasons noted in the previous section.
An incredible mish mash of fiscal and monetary policy. He’s saying that the government should spend more than it taxes because we need to create money, that is, expand M4 (which is itself MxV, roughly and around about). Then he says that he’d prefer to do this through PQE, which isn’t the government running a deficit at all, that’s expanding M1 (roughly, M) to thus expand M4 (again, roughly MxV).
That is, his preferred method of expanding the money supply doesn’t even imply, let alone prove, that the government has to run a deficit. And yet this is used as proof that the government must run a deficit in order to expand the money supply.
City University has some fun on its hands, doesn’t it?