It’s Not The Deficit, Stupid!


New Economic Perspectives has the article Corbynomics 101—It’s the Deficit, Stupid!

As anyone who’s followed the discussion has seen, the proposal from the newly-elected leader of the British Labor Party, Jeremy Corbyn, to implement “People’s Quantitative Easing” or PQE, has created a lot of controversy (Richard Murphy’s blog is a good place to see the PQE defense against these arguments).  The basics of the proposal are that the government would create a public bank for financing infrastructure (National Investment Bank, or NIB), which the Bank of England (BoE) would then lend to directly in order to fund.  The NIB would then carry out infrastructure projects to jumpstart the economy, create public capital, and create jobs.

Maybe this New Economic Perspectives article would be better titled “It’s Not The Deficit, Stupid!”

Here is an example of what Bernie Sanders could do if he managed to figure out how to get the public to understand this.

Notice the mention in the article of Stephanie Kelton whom Sanders brought in as chief economist for the Democrats on the Senate Budget Committee. “Stephanie Kelton termed it, Overt Monetary Financing of Government (OMFG)”

The details of the article are enough to make a CPA’s eyes glaze over, but the mere knowledge that something like “People’s Quantitative Easing” or PQE has been proposed somewhere is very important.


To put this PQE in context, note that The Wall Street Journal has the article Price Tag of Bernie Sanders’s Proposals: $18 Trillion.

Stephanie Kelton tweeted in Sep 2012

Randy Wray says #Fed intervention approx. $29 Trillion. #Bernanke says Fed created 2 million #jobs. Translation: $14.5 million per job.

Econo Monitor published the L. Randall Wray December 14th, 2011 article The $29 Trillion Bail-Out: A Resolution and Conclusion.

So Corby’s calling his program PQE to emphasize the similarity to the FED’s QE, makes it reasonable to compare The Wall Street Journal ‘s estimate of $19 Trillion for Bernie Sanders program to the $29 Trillion of the FED’s QE. Remember that the estimate on the FED’s spending was made before December 2011. By now the total is probably higher.

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