Memo to Vince Cable: QE is not enough – we need Green Quantitative Easing

Posted on July 25 2011

I note Vince Cable is calling for a new round of quantitative easing to boost consumption.

He's right that we need demand stimulated.

He's wrong that we need more consumption.

And he's wrong in the sense that a major part of QE goes straight to bank bottom lines and reinforces divisions in society and achieves no desired economic impact.

What we need is Green Quantitative Easing - as recommended here and explained in detail here.

This delivers real investment for a sustainable economy - which is what we really do need, now.

So, Vince - can we have some joined up thinking on this please? Green QE is just that.

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2 Responses

Stevo!! says:

July 26 2011 at 2:33 pm

I despaired at seeing the same tired old neoliberal economic thinking displayed in the Daily Mirror today. It sticks to the line that the coalition is cutting “too hard and too fast”, rather than grasping the fact that cutting back spending in an economy that is flatlining is the main reason for the ecomony getting worse. Cutting back spending puts more limits on demand, therefore more and more businesses go bust due to the fact that the government is taking more and more demand out of the economy.

This article states the apparent need for the deficit to be cut and, at the same time, for the government to magically get our manufacturing base going. The article doesn’t seem to explain how this miracle is going to be achieved, that is providing stimulus and cutting back on spending at the same time!

It also criticised the last Labour government for eunning a deficit when in fact governments for decades have had absolutely no choice BUT to run a deficit. If the government simply relied on tax income to run things (especially now) the economy would grind to a shuddering halt almost overnight. Governments of all shades have absolutely no choice but to run up a national debt.

There needs to be Keynesian thinking. Run a big deficit during times of depression and use the resultant economic boom to pay down that deficit (as far as is practicable, anyway).

Of couse, the method described with green QE suggested by Mr Murphy is an excellent way to stimulate the economy in the right areas without even having to raise the deficit, Public works can be created, demand stimulated and the resulting employment and tax that the government would get as a result of more employment would lift the economy out of recession.

We beed to SPEND to create demand, not cut spending and strangle it. Greece is a perfect advert for what happens when you keep selling off your assets and cutting back on spending. You just create a spiral of more unemployment, more businesses going bust and less consumer spending as more and more demand is lost.

Theres hardly one historical example anywhere that shows cutbacks are good for an economy. The polar opposite to cutbacks is usually the method that works.
Carol Wilcox says:

July 27 2011 at 12:08 am

I’ve said it many times, but…. Good public expenditure always increases land values. If you collect all the land rent then by making the investment you will automatically increase the revenue and thus produce a virtuous circle. Richard, I do wish you would include this in your green programme for growth.