Monetary policy – and QE in particular - served an important purpose in the immediate aftermath of the financial crisis, but central bankers have allowed it to become a quasi-permanent feature, and that is a mistake.
Our political leadership should instead turn its attention to fiscal policy. A change in government spending can be affected in many ways, but the only responsible way to spend more public money would be to do it in a way that affects productivity positively, and that means more infrastructure spending.
The UK and the US could certainly do with a better infrastructure, and they are not the only two countries.
Now the trickier one – Are there ways to enhance the spending power of the broad public without turning it into a socialist economy? The answer is yes - think helicopter money, but certainly not Zimbabwe-style helicopter money, which was an absolute disaster.
"Think of it instead as helicopter money achieved through fiscal means and designed to increase the spending power of the poorest 95% of income earners," says economist, Niels Jensen of Absolute Return Partners. "One way to do it would be to lower the tax rate for low income earners or to send them a monthly cheque.
"Before you object to spending public money on non-productivity enhancing initiatives, think about the trillions of dollars that corporates from all over the world have stashed away in offshore tax havens," he adds.
Taxing that money at a reasonable rate could easily finance such an initiative, and increasing demand would benefit the corporate sector anyway.
That’s proper chopper moolah.
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