Quantitative Easing (QE) for People not Banks
Following the financial crisis of 2008, Bank of England initiated a £375 billion Quantitative Easing (QE) programme (created new money) to rescue private banks and to stimulate the economy. Although it reduced the depth of the recession we faced, the QE program had some limitations that are explained by ECONOMICS HELP. In addition to these problems it also led to more inequality, an asset price bubble and higher government debt (used by the Conservatives as an excuse for their harsh Austerity program).
The BoE can create new money to
- increase asset prices & lower interest rates (current QE program)
- increase lending & spending (current QE program)
- directly finance spending for productive purposes
- directly finance spending for green initiatives
- directly finance government spending
- fund household spending by increasing disposable income
- fund consumer spending
- fund investment in infrastructure
These alternative programmes are also known as ‘Helicopter Money’, ‘Overt Monetary Finance’ (OMF), ‘Strategic QE’, ‘Green QE’, ‘Green Infrastructure QE’, ‘People’s QE’ and ‘Sovereign Money Creation’ (SMC).
POSITIVE MONEY summarises how these schemes could have been used during the crisis.
Following the BREXIT vote, the UK economy would require stimulation. A new QE programme that benefits People not Banks is what may be is necessary.