Quantitative easing for the people

Michael Linton, founder of the Open Money Project

I’ve been thinking about money.

Michael Linton, the founder of the Open Money Project, says that money is really an immaterial measure, like an inch, or a gallon, or a pound, or a degree.

It’s a measure of the relative value of things and not a thing in itself.

To speak of a lack of money is absurd. It’s like a builder saying he can’t finish your house as he’s run out of inches, or a brewer saying he can’t brew any more beer as he’s run out of gallons.

That’s what the government is telling us when it talks about austerity: we can’t build for our future, it says, because all of the financial feet and inches have been used up somewhere else.

If you think that money is a limited resource, then tell me: how come the government created £375 billion worth of the stuff as quantitative easing?

That’s the equivalent of £10,000 for every man, woman and child in the UK. Where did all that money go?

It went into the pockets of the very wealthiest.

According to the Bank of England, the top 5% of the population took 40% of that money. This is because most of the money has gone into boosting asset prices rather than creating anything new.

The richest people in the country have seen the value of their holdings grow by around £322,000 per household.

That’s why house prices are going through the roof, particularly in London. It’s an asset bubble generated by quantitative easing.

The rest of us are no better off. In fact we are worse off because, at the same time as it is boosting asset prices, the government is also selling off public assets to its friends in the City.

Steve Keen, one of the few economists to predict the financial crash of 2008, talks of “quantitative easing for the people”. He says that the government should use the capacity to create money, but that they should give it to the people instead of to the banks.

If you are in debt, he says, you should use the money to pay down the debt. If you are in credit, you should spend it.

Give money to a rich person and they will hoard it in an offshore account, thus withholding it from the economy.

Give it to an ordinary person, on the other hand, and they would spend at least some of it. They would buy a new three-piece suite, or a new kitchen. They would go on holiday. New clothes for the kids. A new hairdo. They would decorate their house or build a garden shed. They would spend what they felt they could afford.

Spending money creates jobs which gives more people more money to spend. The money goes round and round and the economy grows.

#Positive Money have estimated that of every pound of that £375 billion created by the Bank of England and given to the banks, only 8p went into the real economy.

If, on the other hand, they had given it to us, the people, every pound would have generated £2.80 worth of economic activity and everyone would have been better off.

Isn’t it time we had some new thinking about money?

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