This is the radical change that ensures that there is more money in the system. We have already done this once. We made £375 billion of quantitative easing in the UK to effectively bail out banks and not a single penny was charged to the taxpayer for doing so. Banks make money out of thin air. We can have just as much of it as we like. And creating £375 billion of it – which reduced the national debt forever by that same sum although all politicians refuse to acknowledge it despite the fact that this amount of government debt is now owned by the government itself and so due to no one – did not create inflation. We do, in fact, have almost no inflation at all and no risk of it.
QE was not intended to bail out the banks and did not bail out the banks. Banks were negative holders of gilts before the BoE started to buy gilts. Ritchie’s spouting nonsense. QE has not reduced the national debt forever. BoE is quite clear about it: at some point they will stop replacing maturing bonds and the debt will return to the private sector. Finally, QE stopped deflation. Which is, of course, to say that it caused inflation.
And people are buying monetary policy from this idiot?
Firstly, he will borrow to invest and to show he has done so this borrowing will be through a national investment bank that makes clear the accountability for the funds it pouts to use. The commitment should be to invest as much as is possible to use up the capacity of the UK to build for its future. This is the real way of making sure the next generation do not lose out. Nothing less will do. And he will acknowledge that financial markets are queuing up to let him do this. He will start small with new streets of houses and not HS2s or major rail line electrification. That way things get going quickly. And he will train people along the way so that bigger projects that might follow. Vanity will not come into this. But every constituency – whoever it voted for – will.
There’s a shortage of brickies and other construction workers. So, err, what capacity?
He will run a QE programme – at least £70 billion and maybe more for the next five years if need be……that might at best deliver the inflation we so desperately want of maybe 3% a year.
That’s, err, fascinating. Something roughly akin to the old M0 is notes and coins in circulation. Which is £70 billion or so. Reserves are rather larger, £350 billion or so. Not sure which is the most appropriate one to use to compare with QE being spent directly into the real economy. But the idea that money supply, base money supply, will rise 100% to 500% over 5 years and deliver inflation of only 3% pa does sound a little unlikely really.
There’s a very small and very evil part of me that would like to see this all actually happen. Just so people will have an inkling of what a bad policy suggestion it is.