Left Outside

No, no, no you fucking idiots

Dear Liberal Conspiracy,

We need more demand, of course it would be better if money was given to normal people but that isn’t on the cards. It would be better to target a nominal anchor like NGDP or a specific price level, but we have to work within the realms of reality.

QE is a politically feasible way to boost demand, which is flagging and will begin really suffering next year. Attacking Adam Posen, who cares about unemployment and siding with George Osborne, who doesn’t, is always the wrong position.

Yours sincerely,

LO

Filed under: Economics, , , , , ,

Adam Posen WIN

Bank of England increases QE by £75bn

Britain’s interest rates-setting body voted to expand its purchases of gilts in an effort to bolster a badly flagging economy that is already showing signs of stagnation. At the same time rates were left unchanged.

The Bank said it would increase asset purchases by £75bn, taking the total to £275bn.

Good news. Although, I’d much rather the Bank just gave people money rather than swapped one asset for another.

If people want to hold money, and money is free to produce, then we can just give them money – we stop when expected future inflation gets too high and inflation predictions are not looking too high.

The alternative to giving people free money is that they spend less to increase the amount of money they hold. If everyone does this at the same time, we have a recession until people hold as much cash as they want to.

Avoiding this outcome is what monetary policy is for and I’m glad the BoE are taking their job seriously.

I am sceptical of QE because as far as I’m concerned monetary policy works better through expectations than through what a bank does in the here and now. So the £75bn extra doesn’t concern me too much other than as a good sign that Andrew Mellon Sentance is losing and that Adam Posen is gaining the upper hand.

Filed under: Economics, , , , , , , , ,

David Cameron must, sensibly, occasionally read this blog

David, yesterday.

I once stood before a Conservative conference and said it shouldn’t matter whether commitment was between a man and a woman, a woman and a woman, or a man and another man. You applauded me for that. Five years on, we’re consulting on legalising gay marriage.

And to anyone who has reservations, I say: Yes, it’s about equality, but it’s also about something else: commitment. Conservatives believe in the ties that bind us; that society is stronger when we make vows to each other and support each other. So I don’t support gay marriage despite being a Conservative. I support gay marriage because I’m a Conservative.

Me, last month.

Changing the institution of marriage might have bad effects, but there have been none from the introduction of civil partnerships six years ago, a half-way house towards full gay marriage. This implies that previous scepticism about gay partnerships, and therefore marriage, was undue. If conservatism is about scepticism then its scepticism should now have flipped.

Rather than being sceptical about the damage being done by expanding marriage, conservatives should now be sceptical about the damage being done by treating some citizens as less equal that others. If the costs of introducing gay marriage are low, as has been at least partially proven, then equality before the law should now trump diminished conservative worries about gay marriage.

Filed under: Politics, Society, , , , , ,

When NGDP is Depressed, Employment is Depressed

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Increase NGDP, Put These People Back to Work

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