What happens after the coronavirus threat has passed? The government has decided — on our behalf, in theory — to implement a measure that threatens to plunge us back into a period of ‘austerity’ to recoup the losses we’ve incurred during this time.
But, according to Positive Money, there is an alternative. Instead of giving money to bankers (and, incidentally, making them richer while the rest of us get poorer) there is another way.
If the Bank bought bonds directly from the government, then the Treasury would be able to spend without falling further into debt, and wouldn’t have any excuse to claw that spending back with draconian austerity measures once this crisis is over.
The Bank of England is already using its power to create new money to buy government debt from private financial institutions. But the truth is, we don’t have to rely on private money markets to finance our public spending. By adopting direct monetary financing, the Bank would help bust this outdated ideological money myth once and for all.
The problem is, there’s a huge obstacle in the way, in the form of Bank of England governor Andrew Bailey, who recently said that he will not do direct monetary financing. And the only way to convince him otherwise is to have public support in favour of it.
These are esoteric arguments. I don’t for a minute believe that overwhelming support in favour of direct monetary financing can happen overnight. But something has to change….