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From 3pm TODAY, our @franboait will be giving evidence to @LordsEconCom on Quantitative Easing.
We will be live tweeting. Stay tuned!
Watch live here: https://parliamentlive.tv/event/index/b886f44b-0e65-47bc-b506-d0e805c01f4b
We will be live tweeting. Stay tuned!
Watch live here: https://parliamentlive.tv/event/index/b886f44b-0e65-47bc-b506-d0e805c01f4b
We're live. @franboait to @LordsEconCom:
Over the past decade, we’ve had fiscal & monetary policy pulling in different directions.
We've had money creation at the same time as reckless austerity - which has been disastrous for stimulating the economy.
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Over the past decade, we’ve had fiscal & monetary policy pulling in different directions.
We've had money creation at the same time as reckless austerity - which has been disastrous for stimulating the economy.
/2
Without fiscal policy, QE relies on a weak 'wealth effect' - trickle down economics has been widely discredited but is still widely used in economic policymaking.
The richest 10% of households benefited 100x more than the poorest 10% from first rounds of QE.
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The richest 10% of households benefited 100x more than the poorest 10% from first rounds of QE.
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We've had a decade for the Bank of England and the Treasury to develop a new settlement for monetary-fiscal coordination.
We need this if monetary policy is to serve the whole of society - and tackle challenges like high private debt & wage stagnation.
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We need this if monetary policy is to serve the whole of society - and tackle challenges like high private debt & wage stagnation.
/4
QE inflates asset prices - we've seen stock markets and housing bubbles booming, at the same time as food bank use and poverty are on the rise.
That points to a highly dysfunctional economy.
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That points to a highly dysfunctional economy.
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However, on consumer prices, we face deflationary pressures.
That's why we need direct monetary financing - to get newly created money directly into the real, productive economy
That's how we can make sure QE benefits ordinary people rather than international finance.
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That's why we need direct monetary financing - to get newly created money directly into the real, productive economy
That's how we can make sure QE benefits ordinary people rather than international finance.
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We also have a banking system that directs 80% lending towards property & financial markets, and just 10% into real economy. 
That means an economy with an oversized, extractive finance sector, fuelled by QE.
To rebalance the economy we need new macroeconomic tools.
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That means an economy with an oversized, extractive finance sector, fuelled by QE.
To rebalance the economy we need new macroeconomic tools.
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It was right to use QE to help finance gov't spending during a protracted crisis - but we need more coordination and transparency around this.
There are significant risks to unwinding QE too quickly - including deflation, unemployment, & financial instability.
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There are significant risks to unwinding QE too quickly - including deflation, unemployment, & financial instability.
/8
On independence, we need to remember that the Bank of England's mandate is set by the Treasury.
The BoE should be accountable to Parliament and the public, and we need greater communication, and a full and accurate picture of what they're doing and why, as well as other options
The BoE should be accountable to Parliament and the public, and we need greater communication, and a full and accurate picture of what they're doing and why, as well as other options
Instead of just talking about the quantity of money, we need to be thinking about where that money is going - whether its going towards financial markets & property, or supporting incomes & employment
We need a new framework to ensure that fiscal & monetary policy works together
We need a new framework to ensure that fiscal & monetary policy works together
