2 May 2015

Can Quantitative Easing (QE) work for everyone?

Printing money (spending money you haven't got) has always been one of the ways that Governments pay off their debts. Done in normal times it will cause inflation which will hit those on lower incomes disproportionately (because they have to spend all their income to live) but QE used in exceptional times, as events since the collapse of the banking system in 2008 have made necessary, can have economic benefits, but it really does matter how the cash is allocated.

The can see a big difference between Jeremy Corbyn's QE and George Osborne's QE in that Osborne gave the money to the banks to prop up their balance sheets, then let them lend out what they had left, while Jeremy Corbyn is proposing that the money would be better spent by cutting out the middleman and investing directly for the public good, or, put another way, buying things that ALL the people will benefit from and not just the failed banks: a better infrastructure - roads, schools, railways, hospitals and so on...

Osborne's version of QE put banks in charge of who gets the free money and that's like putting a child in charge of a sweet shop. Like the mass of economists I'm backing the people's QE and Jeremy Corbyn too...

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