Ed Balls Embraces “Monetary Activism”
“With our economy stagnated since last autumn David Cameron and George Osborne are now betting on a bail out from the Bank of England.
“The Government’s reckless policy of cutting spending and raising taxes too far and too fast is demonstrably not working. But rather than change course the Government has spent the last week urging the Bank of England to step in and essentially print more money. The Bank of England has been left with no choice but to step in and try to offset the contractionary effects of George Osborne’s Budget plans
“This is the Bank of England’s contribution to a Plan B. But while another round of quantitative easing may help, I fear it will do little to create the jobs and growth we desperately need if we are to get the deficit down. When monetary policy is already so loose – with interest rates at record lows – and with confidence depressed this is, as Keynes said, like pushing on a string.”
Very different policies have resulted in different outcomes for the British and American economies. In the US, the combination of monetary activism and President Obama’s fiscal growth plan has helped ward off global threats, strengthened the recovery, and seen a continued fall in the deficit.
“Fiscal growth plan” is an excellent phrase, there’s so much nuance packed in there, and it avoids all the negativity in phrases like “cutting the deficit” or “fiscal austerity”. Just take the word “fiscal” and add “growth plan” – who will notice?
Source: IMF WEO (April 2013)
All we need to do is to cut the deficit and print money – sorry – “a fiscal growth plan and monetary activism” – Ed Balls’ new “One Nation Labour” macro policy?
[Edited: added links]