From 2016: John Cassidy on a radical proposal for stimulating the economy.
After 2008, that’s precisely what happened to Ireland and, to a lesser extent, Spain and Portugal. Even in countries where the stricken banks eventually repaid most or all of their bailouts, such as the United States and the United Kingdom, the debt burden rose sharply as governments adopted stimulus programs to ameliorate the broader consequences of lending busts. In the advanced economies as a whole between 2007 and 2014, Turner reports, public debt as a proportion of G.D.P.
The best alternative, Turner thinks, is his radical proposal—creating money and handing it out to entities that can spend it. He readily concedes that it wouldn’t matter much whether the newly minted money was forwarded to households in the form of bank credits, or used to finance tax cuts, or spent on building new roads and bridges. The key point is that the government would be stimulating the economy without issuing any new debt.
As a way of preventing elected politicians from overusing the electronic printing presses, Turner proposes putting money finance exclusively in the hands of independent central bankers. Skeptics may wonder if this really solves the problem, though. Even independent central bankers aren’t immune to temptation, or to political pressures: many of them are political appointees, after all.
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