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Colin Hines still hasn’t grasped the basics here

Summary:
Colin Hines has spent the last decade telling us that if we can print billions, nay trillions, to save the banks then we can print billions, nay trillions, to spend on his Green New Deal. Which means that Colin Hines has spent the last decade not grasping the basics:Central bankers used “bankers’ QE” to help tackle the 2008 financial crisis and are now turning to “coronavirus QE”. While working to bring this latest threat to human health under some degree of control, it is time to also plan for “green QE” to fund a global green new deal to transform the health of the planet. In the UK this would involve the Bank of England e-printing hundreds of billions of pounds. A new national investment bank would issue bonds that would be bought using QE and the money used to fund a green and

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Colin Hines has spent the last decade telling us that if we can print billions, nay trillions, to save the banks then we can print billions, nay trillions, to spend on his Green New Deal.

Which means that Colin Hines has spent the last decade not grasping the basics:

Central bankers used “bankers’ QE” to help tackle the 2008 financial crisis and are now turning to “coronavirus QE”. While working to bring this latest threat to human health under some degree of control, it is time to also plan for “green QE” to fund a global green new deal to transform the health of the planet. In the UK this would involve the Bank of England e-printing hundreds of billions of pounds. A new national investment bank would issue bonds that would be bought using QE and the money used to fund a green and decentralised infrastructure programme. This could include a decades-long, multi-skilled initiative involving energy refits of all 30 million UK buildings, a shift to localised renewable energy and food production, and the building of local transport and flood defence systems. The last war led to the NHS; this one must result in a green new deal.

Colin Hines

Convener, UK Green New Deal Group

The entire point of QE is that you don’t actually spend the new money on anything. It is prestidigitation to lower long term interest rates, that’s all. The moment the money is spent on real and actual services and products out there in the economy it becomes not-QE, it becomes the monetisation of fiscal policy. Just printing money to go spend, rather than the manipulation of the money supply.

This second is what happened in Weimar Germany, is what John Law performed with his Mississippi scheme, a large part of what has brought both Zimbabwe and Venezuela to their knees and so on.

Far from being the “new economics” which will solve problems this is old, tried and discarded economics which creates problems.

As to why, all this printing more money can change the price of money - that interest rate being the price of the use of money over time - and it can change the value of the money itself, through inflation. What printing more money cannot do is create more resources within the economy to devote to this or that or any other problem we might like to solve.

Or as we might put it, sure there’s a magic money tree and it works only with money, not with anything real and important.

We’d rather hoped that Hines and others would have learned something over this past decade as many have indeed been stating this obvious truth. But apparently not.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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