Financial Stability News

Flashing news about financial stability and central banking

Helicopter money and government investment

This is what is needed now to avoid another Depression according to Robert Skidelsky, professor emeritus and eminent biographer of Keynes.  In this Project Syndicate post he makes the sensible proposal, earlier advocated by J Stiglitz, that government expenditures for investment makes sense today even though it will add to government’s deficit. He notes that:

If today’s accounting rules are too insensitive to make this distinction, a separate entity could do the investing. A national investment bank would be capitalized by the government, borrow from the private sector, and invest in infrastructure, housing, and “greening” the economy. This would simultaneously plug a hole in demand and improve the economy’s long-term growth prospects. There are signs that officials in the UK and the United States are starting to move in this direction.

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: