So, next downturn, we’ll get People’s QE. Huzzah!
Ambrose Evans Pritchard:
The Bank would buy the bonds as needed in any future QE. It would inject the stimulus directly into the veins of the economy through public works. The bonds could be sold again later to drain excess liquidity. This is how quantitative tightening has been working in the US.
The reality is the bonds will never be sold again: the point is inconsequential. What is relevant is that he appreciates that there is a real need to do this
If the bonds are never sold again – or rebought, to be accurate – then it’s not QE. It’s straight monetisation of the deficit. Which, in extremis, might be a good idea. Milton Friedman certainly thought so.
But then if it’s an old idea then it’s not Ritchie’s is it? And if it is some new idea then it’s not QE anyway.