The European Central Bank is, in response to the emerging world financial crisis, considering extending its current €1.1 trillion (£800 billion) quantitative easing programme.
Under this programme the ECB is buying €60 billion (£44 bn) of assets from the financial markets a month. The aim is, straightforwardly, to boost inflation. It is hoped that the Eurozone will get an economic boost on they way, but that is a secondary objective. That this is the case is clear from the FT's report on the announcement that the programme may extended, which says:
Mr Draghi delivered a clear signal [yesyerday] that his central bank stood ready to bolster its landmark asset-purchasing programme, should the turbulence that has rocked investors over recent weeks threaten the eurozone's economic recovery.
The promise of additional quantitative easing, from a central bank that has already pledged to buy €1.1tn of mostly government bonds, buoyed equities and bonds across the region.
I have argued before, and I will argue again (no doubt) that this type of quantitative easing is aimed solely at providing support to the relatively limited number of people who own financial assets in the EU's financial markets but that it will not, despite the enormous sums involved, provide any effective support to the real economy, or create jobs and so it will not, even, create the desired inflation for reasons I have discussed here.
In that case the real question is why is money being created and wasted in this way?
Why, right across Europe aren't people asking why central banks are not being used to fund real economic activity that creates prosperity and sustainability for the future as well as homes and jobs for the present?
Why, in fact, isn't People's Quantitative Easing being used to build the homes that a million refugees need right now?
Can anyone think of a better use for European Central Bank money at present?
And can anyone think of a better reason to put people to work than that?
The ECB has the money: let's demand it be used to tackle the biggest humanitarian crisis of this century, so far.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Here’s a good reason. What most people want is for refugees to be spread across the EU. This means they will not be concentrated in any few places. Therefore, to try and put a centralised building programme in place which has to reach out to every town and city in every country where a few dozen refugees will end up would be hideously bureaucratic and inefficient. It is exactly the sort of approach that has given EU spending a bad name. It would also stop them moving around. The alternative of building some camp for them would likely end up with a ghetto scenario.
Citizens of europe should take responsibility for refugees by paying higher taxes.
But 300,000 new homes cost money
Why not raise the money for them to pay to communities that will host refugees ?
There are 1,8m empty houses in Germany and 3m+ in Spain…
Source?
here’s a source for the Spain figure: http://www.thelocal.es/20140225/spain-worst-in-europe-for-empty-properties
Spain, of course has huge numbers of homeless and I doubt there is much of a desire to do anything that will affect house prices-assets before people it seems.
Guardian.
http://www.theguardian.com/society/2014/feb/23/europe-11m-empty-properties-enough-house-homeless-continent-twice
Here’s a source for the German figure
http://www.theguardian.com/society/2014/feb/23/europe-11m-empty-properties-enough-house-homeless-continent-twice
Interesting that the UK has relatively few unoccupied dwellings, and a lot of those we do have are in poor condition. Then again we’ve got a very anti-free market restrictive planning system, and other countries don’t have green belts and nimbyism on our level.
“Can anyone think of a better use for European Central Bank money at present?”
Rather than building homes for 1 million refugees, a large proportion of which seem to be men aged between 16-35, why don’t we train those men so that they can go and fight to free their country? Or is the idea that when ISIS come everyone runs away and comes to live in Europe, and ISIS is left occupying huge swathes of abandoned land that nobody will fight for? Is there any long term expectation that any of these refugees will ever return to Syria or are we simply creating a permanent class of refugees who will speak for generations of a lost homeland?
I’m all for giving support and shelter to the sick, the elderly, women and children. But ultimately, the number of ISIS fighters is not huge and it is for the men of that region to fight for their homeland. We should support them, as we supported the Free French and Czech fighter in WWII. But building houses for them and allowing them to stay in the EU is simply letting ISIS win without a fight.
I really do not think it our job to conscript people for foreign wars
Doing so contravenes the Geneva convention, I think
Bad suggestion
Regardless of the moral/legal problems, would we really be helping if we took individuals whose instinct is to flee violence and forced them into military service? Throwing more young men and guns into the situation is unlikely to achieve any good.
As a genuine question if I may please: if PQE works, why not use it for all government spending, not just infrastructure?
Is there any reason it MUST be restricted?
In theory, no
In practice you have to reclaim money from the economy to prevent inflation: that is the role of taxation
Taxation never pays for public services: in effect newly printed money always does that and tax claims it back
Explained in The Joy of Tax
Thanks.
I didn’t realise tax has this ‘hoovering money’ function, but that’s helpful.
So does it follow that Margaret Hodge is totally wrong when she contends that the consequence of Starbucks, Google, Apple not paying their taxes is that the State has less to spend on roads, hospitals etc? If it doesn’t have a role in funding expenditure how can the burden of the expenditure fall on others?
If I understand you, tax is does not fund anything (as new money is printed) but it does have a role in inflation control by protecting the purchasing power of the currency and, presumably, as a means redistribution/redirecting resources. If so, I would agree with you.
Read the Joy of Tax in due course
Nice one. I am REALLY looking forward to this book – Waterstones in Derby has my name on their book reservation list.
Thanks
I am proof reading now
I’d much rather see politicians from everywhere just trying to create peace in their lands – never mind about the money.
The fact that these people have to leave their homelands in fear in such numbers is the real tragedy that no amount of money can make up for.
The fact that they may end up being used as cheap labour and put into the same poverty trap as those already here (the working poor) doesn’t make me happy either.
Although I agree somewhat with your solution, it won’t go down well with the UK population who have been led to view immigration as a threat to themselves.
A more generous benefit system for everyone and less stirring up of jealousies by venal politicians would need to happen too.
Thanks for writing up my suggestion from twitter.
I had thought temporary housing would be the best solution to the current and coming refugee problem, rather than permanent housing. This is because most of the Syrian (and other nationalities) refugees will eventually return home when the reasons for them leaving have abated.
Extending the thought further, using PQE to fund social housing in the UK would have twofold benefits; creating much needed housing for poor people and helping to deflate the housing bubble which is contributing to their suffering.
The principle remains the same in both cases – it is an ethically justified reason to create new money, as opposed to standard QE, which just goes into the pockets of financial speculators.
I’m very much looking forward to reading the Joy of Tax.
But the UK us desperately short of housing anyway….
It is: I was just imagining the political furore whipped up by eg the right-wing media, arising from a project to create permanent housing for refugees, while UK residents are unable to afford a house.
After WW2 there was a rapid solution to the housing crisis, in the form of pre-fabs.
And the truth is we could make great ‘pre-fabs’ now that would look great, be liveable, have sustainability built in, generate their own power (at least in part) and solve a real problem
But tiny sums are being invested in the process
Why?
It’s a task for PQE….
Zero carbon housing please; costs are now “within the normal budget for social housing”.
http://www.bbc.co.uk/news/science-environment-3354483
http://www.lcri.org.uk
Agreed
Definitely. Perhaps someone could suggest this to Jeremy Corbyn.
as Paul Mason recently pointed out, the OECD predict Europe needs to add 50 million more people through migration by 2060 to avoid a “significant downside risk” to growth. and here we have a few million literally dying to come. the only things stopping this ‘crisis’ becoming a godsend are racism and a greedy elite.
http://www.theguardian.com/commentisfree/2015/sep/04/this-refugee-crisis-is-too-big-for-europe-to-handle-its-institutions-are-broken