Barbara’s Blog

ALL THE MONEY THAT’S FIT TO PRINT

17-01-2009

There have been suggestions that the government is considering printing more money to get us out of the current economic crisis. Barbara Panvel wonders what the extra cash would be spent on.

Will the opportunity offered by the current dialogue about ‘quantitative easing’ – ie printing money - be taken by people working on the Green New Deal? (http://www.neweconomics.org/gen/greennewdealneededforuk210708.aspx)

The definition of quantitative easing given by those with a vested interest in opposing such measures is ‘printing money’ and warnings are given citing the example of Zimbabwe.

Philip Stephens, associate editor of the Financial Times, does not agree, describing printing money as ‘the new prudence’ now that the Washington consensus has been fractured.

However, printing and distributing banknotes – once suggested by Milton Friedman and the Fed's chairman, Ben Bernanke - is not on the agenda of most monetary reformers.

MP Austin Mitchell has for years consistently and constructively proposed to spend fiat money, issued electronically, into circulation in a focussed way, meeting unfulfilled public needs such as improving transport, education and health provision – and the range of measures advocated in the Green New Deal.

In November 07, his EDM 265 called for a policy of using publicly-created money to finance carbon neutral measures and conversions which could be adopted to create additional economic growth and recommended the Treasury to use its powers to create non-interest bearing money to fund activities to combat climate change.

The real issue is not one of bank-notes versus virtual money but of the uses to additional ‘liquidity’ could be put: money issued in this way could be used for good or ill.

To date, Alistair Darling has not ruled out quantitative easing, so I hope that readers will press for the funds released to be used in the interests of the ‘real’ economy and the environment - and not to give further subsidies to the arms trade or to build incinerators and nuclear power stations.

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