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MONETARY POLICIES

Jeremy Corbyn’s Controversial Quantitative Easing Proposal

Jeremy Corbyn, People’s QE, Controversial, Quantitative, Easing Proposal, Monetary Policies, fx trader, forex

Jeremy Corbyn has proposed a “People’s QE” that has critics crying hyperinflation  and  supporters  saying  it’s  about  time.

Jeremy Corbyn, recently elected Leader of the UK Labour Party, has included in his program “quantitative easing for people.” He said in a July 22nd presentation:

“The ‘rebalancing’ I have talked about here today means rebalancing away from finance towards the high-growth, sustainable sectors of the future. How do we do this? One option would be for the Bank of England to be given a new mandate to upgrade our economy to invest in new large scale housing, energy, transport and digital projects: Quantitative easing for people instead of banks.”

As his economic advisor Richard Murphy further explains it:

“People’s quantitative easing is . . . a highly directed process where the debt that is . . . repurchased has been deliberately created and issued either by a green investment bank or by local authorities, health trusts and other such agencies for the specific purpose of funding new investment in the economy at the time when big business and financial markets are completely failing to deliver the scale of investment that is needed to get the UK working again and to restore our financial prosperity. “

According to the Positive Money group:

“Ideas in a similar vein have been advocated or at least suggested by notable economists including J M Keynes (1), Milton Friedman (2), Ben Bernanke (3), William Buiter (4) and Martin Wolf (5).  Most recently, Lord Adair Turner (6) has proposed similar ideas, highlighting that ‘there are no technical reasons to reject this option’.”

Perhaps, but critics have found plenty to criticize. Peter Spence wrote in the UK Telegraph:

A victory for Jeremy Corbyn in the next general election would put Britain on a collision course with Brussels and condemn the UK to “Zimbabwe-style ruin”, experts have warned.

“. . . Tony Yates, a former Bank economist and now a professor at the University of Birmingham, said: “Down that road leads monetary policy ruin. . . . That’s what Zimbabwe was doing, where they ended up paying all their bills by printing new money.”

Spence also quoted Bank of England Governor Mark Carney, who said, “The reason why one doesn’t even start on this conversation is the removal of any discipline on fiscal policy that comes from that.”

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