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Time for alternative QE?


786Trader

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When the esteemed leaders of the world contemplate courses of action to remedy the current, apparently unexpected economic malaise, they may consider alternative QE.  QE direct. Instead of purchasing Government bonds and other financial assets why not invest directly in people by giving them money on an inverted scale relative to tax payments, with no other criteria save being taxpayers, based on last years tax returns? This places money directly into the economy through people power. It may sound controversial, it is controversial, but it will work. QE 1 and ultra low interest rates saved the economy at the expense of years of austerity because of profligacy in the financial sector. It was a controversial approach. Consider $4.5 trillion in US and £454 billion in the UK, the approximate amounts in 2009-2010. The public will not wear or vote for more austerity. QE direct, or QE2 will work because of the increase in GDP and demand.  Afterall, without people there would be no economy. Put money directly into people's pockets. I am sure the idea of free money is anathema to many, but times are changing and embrace the change. 

Just putting the idea out there.

 

 

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Not marxism. Good grief man. It's direct economic stimulation.  Also people are the economy. It is only people that value money/ gold/ oil. As I mentioned , it is controversial. However, the present value system is in need of overhaul. Though Marxism is not the answer. Suggesting a fairer distribution of wealth and resources is quickly seized on by many as Socialism/communism, which it is not. It is merely pointing out the reality of the situation. 

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Unbelievably frightening that this type of utter nonsense continually rears its head. Why can't people understand that periodic recessions are actually good for markets and society. An economy where things only ever go up in value is not sustainable. Eventually the bubble is so large that the resulting collapse takes everything with it including the value of the currency.

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They tried this in Australia in 2009. I received a cheque here in blighty!

I am trying to find analysis of if it worked. Guardian - it did work

I'm not a fan of direct economic stimulus because I expect the money flow to go like this.

Govt > Tax Payer > New TV > Large multinational > TV manufactured outside the UK and jobs/ some profit goes there.

So we end up in a situation where large companies benefit anyway, just takes a month to hit their balance sheet.

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3 hours ago, MrBridger said:

Why can't people understand that periodic recessions are actually good for markets and society

If you can overlook the devastation caused to small business owners and peoples' careers (with the knock-on consequences for their families, children and communities).

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Gordon Brown stimulated the UK economy using tax credits and increased benefit payments. Money given to the poorest demographic is spent immediately on the high street so small bossiness benefit. It seemed to work because UK GDP growth was the highest in Europe at the time. This was reversed by the government following. They favoured stimulating the top end with corporation tax cuts, low interest rates, and increased lending to major corporations and risk free businesses only. Note, inflation follows the money so recently we have seen increased corporate borrowing, share buy backs and higher property prices because money is so cheap. Pumping money into the high street would have an inflationary effect there.  

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