I'm sharing a large chunk of this comment from the FT because it is important:
Andrew Bailey, the incoming governor of the Bank of England, said on Wednesday that it was very likely the central bank and UK government would soon need to provide bridging finance to small companies to help them deal with coronavirus.
Under questioning at the Treasury committee, Mr Bailey insisted he would not just be a “safe pair of hands” at the central bank, but would also act quickly to mitigate crises. He said it was already pretty clear “we are going to have to provide some supply chain financing so that the effects of the [coronavirus] shock are not damaging to small and medium sized firms,” he said.
“We're going to have to move very quickly to do that,” he added, highlighting that the BoE's response should not be limited to traditional monetary policy tools of changing interest rates.
Setting out his attitude of BoE independence, he said, “we must act in a co-ordinated manner [with the government] and can't let out independence get in the way of that”.
This needs unpacking. First, it says that there is an awareness in the Bank, if not in the Treasury, that we're facing a crisis.
Second, it says that extraordinary measures will be required.
Third, they only see that as an SME issue: apparently people are inconsequential and will not need help.
Fourth, since individuals and SMEs do not hold accounts with the Bank of England very clearly this must mean that the interventions will come from support to other banks.
Fifth, if traditional monetary policy is not the limit then the very strongest hint that QE is on the cards has been given.
And sixth, the conventional rules laid down by neoliberal dogma are going to be thrown aside: the charades of that policy will be exposed as the shams they have always been and that the Bank has, and always will, work with and for the Treasury.
This is significant: it is the first sign that there is awareness of the crisis that we face.
The types of policy I have proposed will follow next.
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Good news, the UK is ranked number 1 in the world in being prepared to deal with a biological threat when it comes to rapid response and mitigation.
https://www.ghsindex.org/wp-content/uploads/2019/10/2019-Global-Health-Security-Index.pdf
You believe that?
How amazing that voters will swallow the Tory mantra that governments have no money of their own to invest in public services for the many that can’t make a profit such as education and healthcare but come a pandemic and threat to business profits and suddenly government created money is essential!
I think we’re going to need helicopter money, and rather a lot of it. Alas, we have a government which would rather watch everything burn, than provide economic means to those who desperately need it; crisis be damned, that’s the hill they will choose to die on.
I remain as yet unsure about helicopter money
That may be too untargetted
The time has come for the introduction of Universal Basic Income.
I think pumping money into the economy would be counter-productive. This is not, certainly in the initial phase, a falling demand problem but a falling supply problem as fewer goods and services become available due to falling human resources. Unless resources can be directed towards increasing supply then increasing the money supply will simply risk higher inflation.
simon gray – the supply of property (rented and owned) will remain constant though, so how will targeted resources towards this (as Richard advocates) be inflationary?
I love these kind of responses. When people witter on about “a falling demand problem” as if this is the big issue that we need to worry about. Losing sight, as usual, of the fact that there are people behind all of this jingoistic babble-speak – people who don’t have enough money in the bank to withstand missing a council tax payment, let alone weeks of ill health, meaning no income and no means to pay off creditors who, doubtless, will be as unsympathetic and as jingoistic as Simon is. Forget about helicopter money – we need to get away from helicopter-vision, where the commentators see things from such a lofty perspective that they don’t see the ordinary folk, desperately trying to survive in a world that sees them as an opportunity or a burden, often in equal measure.
Perhaps Bailey’s real concern is that there’ll be a future dearth of SMEs plump and ready for harvesting by his bankster chums (see GRG etc) unless he takes steps to fatten them up. Isn’t this a logical extension of his behaviour at the FCA?