"Quantitative easing is quantitative easing, and that's a pig that looks no better with lipstick."
Not sure what your issue is here with QE. Its an accepted anti-austerity strategy that pumps more money into a stagnant / failing economy through the Central Bank rather than the usual running up of deficits. The "People's" qualifier underlines that in this version the new cash injections will be invested in infrastructure and public services, - not bailing out of the banks as has been done in recent memory.
I have seen three regular criticisms of the PQE approach:
- its not needed at the moment: with interest rates low, the Gov't would do better to just borrow money on teh market than print it;
- its unwise for Gov't to direct the Central Bank to any specific courses of action (arms length, and all that). This is the "Mr Carney would not be pleased" argument.
- People's QE is a socialist boon-doggle to fund gov't expenditures that would not otherwise be possible through conventional fiscal approaches. ( A Tory favourite.)
From afar, I would have had you pegged as a PQE enthusiast, Rev. But maybe you are more concerned about Mr Carney's sensibilities than I.
Here is a nice short video on QE, the authors have there own agenda though.
For the effectives of traditional QE is rather poor but nature is tried 3 times in the US and still the US economy barely hanging out to life. I believe Carney came with term of "escape velocity" in regards of the economy. The economy has not escaped the economic gravity it needs constant monterary infusion.
1.- its not needed at the moment: with interest rates low, the Gov't would do better to just borrow money on teh market than print it;
That more a political question rather than economic question. Depending on your political agenda if there this a need for pqe.
2- its unwise for Gov't to direct the Central Bank to any specific courses of action (arms length, and all that). This is the "Mr Carney would not be pleased" argument.
The idea that central banks are independent of governments of influence is overplayed. The political class gave "independence" to the central bank it can take it away just as easly. Politically independence means that politicans have an excuse to keep populist ideas at bay. I would compare this to how trade agreement as used deflect nationalist and populist ideas. A government will say sorry but we can not regulate certain environmental laws or safety issues becasue gave away those rights. Or this legislation is not consistent with our international trade laws. Its a convientant way to say no to progressive ideas.
The irony(blowback)(not really an issue in Canada but in europe and the US yes. Here people are not quite desperate enough econimcally) the political class wonders why people are turning to protectionism and against globalization. Telling people that can we can not effectively pass laws to address pressing needs because we given that right to corporations to adjudiate these issue is creating blowblack as it should. Is to bad prople have accepted that can no longer rely on the usual political actors. So they seeking other actors to get control of there lives, trump, bernie, le pen, in europe and what the media calls the extreme left and extreme right parties in europe. Brexit was a reaction to the dispowerment they feel in theirs lives. I went off topic but does provide needed context.
3 - People's QE is a socialist boon-doggle to fund gov't expenditures that would not otherwise be possible through conventional fiscal approaches. ( A Tory favourite.)
When torys engage it QE is sound policy if the left wants try QE than is bood-doogle.
4 - The only agruement in general agaisnt QE and and more focused PQE that makes any potential sense to me is that maybe inflationary. The reason that QE is not effective because purchasing power is not reaching the average person. The rich get a benefit do to rising assets in the fininancial realm, the middle class get a much less effect but is there for their primarly asset they hold with is the housing bubble. This is not infaltionary when use the common ways to measure inflation becasue the money is trapped and cannot be spent. The are rich are getting richer but they can only spent so much. As for the middle class they have to sell there houses to actually have free spending power. Although the can refi their mortages to free up some purchasing power and lines of credit transform equity to cash in the homes. As I am dirt poor QE has down nothing for me aside raises my living costs in rent and food prices. I welcome PQE getting check to spend or goverment spending on social and health care is a boon for me. This where I have "limited" respect for the right says agaisnt PQE. Actually making spending power availalbe to the masses means they will spend it and actually raise inflationary pressure. I would ackownlegde inflation my go up for me and other person that is poor and middle class the actual check will pay the rise of inflation and still there will a hansom rise in my purchasing power.
I will close by saying that QE, Negative interest rates, PQE, plus other unheard montary schemes are a reflection of our deseperate economic times. I am 41 I became economically literate in my early 20's. I read capitialism business press and watched the capitlalism news and channels that were focused on the economy. For those that in there 20's you may think that QE, NI, PQE are just a rational reponse to the economic times but let me provide some context. In my 20's the of QE was taboo subject and PQE was a communist plot. For negative interest rates i maybe seen a economic journal that talked about in a abstract way rather than a real policy answer. Today the captialist that support these ideas were dead set agaisnt these ideas 20 years ago. We are on the ship in 1492 and just landed in north america. We not idea what lies in the future but we just reacting to what to we see as our reality. If our leaders came and told the public this truth. Confidence would collaspe and quite frankly confidence in our economic leaders is the only thing stands between us and very ugly times. Persoanly I am try to look at happy side of life and since I live on economic edge of other society things may get marginally worst. For those of the middle class I would say you better not lose confidence in our economic leaders because you big way to fall. Thats my to cents QE.
