People's Quantitative Easing

People's Quantitative Easing is a policy proposed by the socialist Jeremy Corbyn. The idea is that the Bank of England should create money to fund government investment. The idea has been highly criticized, and some called it "economically illiterate". The idea has been used on Bernie Sanders's website[1] and endorsed by Yanis Varoufakis.[2][3]

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What it is exactly

People's Quantitative Easing is a policy under which the Bank of England would create money, so the state can invest. The Bank would purchase bonds for a "National Investment Bank" owned by the state. The aim is to turn the UK into a high-skill, high-tech economy.[4]

Is it really a bad idea?

The policy has been collectively attacked by many opponents of Corbyn, who even coined the term "Corbynomics". However, the idea was endorsed by some economists, such as Richard Murphy and Robert Skidelsky.[5]

Inflation
See the main article on this topic: Inflation

One of the first claims of opponents to PQE is that it would cause inflation. Indeed, PQE involves printing money, however, inflation is not necessarily bad; economist Paul Krugman explains that controlled inflation can help the economy.[6]

Slippery slope

An economist called Tony Yates has criticized the proposal as he believed it would encourage the State to finance other "pet projets" instead of just financing public services and housing.

Conclusion

The idea would allow to fund very important policies, and the inflation caused by would just be killing two birds with one stone.

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References
  1. https://berniesanders.com/in-troubled-times-the-federal-reserve-must-work-for-everyone/
  2. http://positivemoney.org/2015/10/yanis-varoufakis-olivier-blanchard-in-favour-of-pqe/
  3. http://www.taxresearch.org.uk/Blog/2016/03/04/yanis-varoufakis-backing-peoples-quantitative-easing-as-the-basis-of-a-new-prosperity-for-the-uk/
  4. http://www.telegraph.co.uk/finance/economics/11862318/What-are-we-to-think-of-Jeremy-Corbyns-peoples-QE.html
  5. http://krugman.blogs.nytimes.com/2013/05/24/the-four-percent-solution/
  6. http://krugman.blogs.nytimes.com/2013/05/24/the-four-percent-solution/
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