QE in various forms is now very much part of the economic conversation, especially in connection with recent market turmoil. Dynamic Quantitative Easing (also called Peoples Quantitative Easing) remains under government, not bank, control and targets specific investment projects without borrowing, interest or repayments. It can reboot the economy, boost manufacturing and exports and enable sustained growth of real national wealth shared by all, rather than just asset inflation which is the downside of ordinary QE. If you want to find out more you can enjoy a lucid explanation of the original idea from the link below.
Archive for July 7th, 2016
Geting Value From The Lower Pound: Dynamic QE
Thursday, July 7th, 2016Falling Pound : An Opportunity Needing Management
Thursday, July 7th, 2016The one ingredient indispensable to re-balancing the economy to achieve sustained growth for the benefit of everybody, a falling pound, is in place. But the things to make it work in our favour are not.
This Blog believes that sustained growth in which imports fall, home industry prospers and exports expand, require a pound sterling trading between a low of $.95 and a high of $1.20. It also believes that central banks now have too big a remit which takes them into the arena of political decisions where they have no place to be, and from which they shrink. Restoring the role of government in both economic and currency management is essential. Government should introduce QE into the real economy to create new wealth through critical investment in social housing, transport, education, health, science, power generation and so on. This will divert investment from banking and debt, which is far too large and which funds asset inflation, into the creation of new wealth, which is far too small.
If managed in the traditional manner by government, business, industry and unions, personal incomes grow as the increased money supply expands the economy, through new activity both in the public and private sectors, which allows for an increase in the prices of imported goods and food to be offset by falling housing costs and less borrowing. It also creates much better opportunities for home manufacture of consumer goods and an expansion of exports through competitive pricing. This is all the more critical to the country’s future following Brexit. The critical bit is careful control and management of a volatile process.
If that is absent at the political level, which it now is, there is a risk that export opportunities will be limited and the weight of increased costs of imports in a country which imports almost everything, will act as a dead weight on the economy and slow it down. We are headed this way now.
We need a Prime Minister and a Chancellor long before September.