Coppola Comment

This is the uncut version of the final chapter of my book, "The Case for People's Quantitative Easing". It was written May/June 2018, so is slightly out of date (though I have updated it in places). But I believe its conclusions are right. So I am publishing it now to coincide with COP 26.  I've also included an updated version of the original postcript of the book, which seems to me to be very relevant now - not least because the first part of the Dune epic has just been released! There is scientific consensus that climate change is radically changing the nature of the planet, with profound implications for the future of humanity and indeed for life on earth as we know it. Already, the effects are becoming apparent: ice caps are melting, sea levels are rising, global temperatures are the highest on record and the incidence of extreme weather events is increasing. According to the former Governor of the Bank of England, Mark Carney, climate change threatens both fina...

Yesterday, someone who had been watching one of my (all too frequent) Twitter arguments about money made this comment:  The "unknown person with few followers" was my protagonist. And the blue tick "classical expert" was me. I am Goliath.  But ten years ago, I was David. Armed only with Blogger and Twitter, and my knowledge of banking and finance, I set out to slay the financial Philistines that rampaged across the internet in the aftermath of the 2008 financial crisis. I published my first Coppola Comment post on 20th February, 2011. It throws slingshots at a media pundit who had written an article about short selling, on which he was far from expert. You can still read it , if you like.  My early posts were rough and ready, and my terminology is at times excruciatingly loose, but I was sure of my subject. I understood British banking and financial markets well, though I had left RBS nearly ten years before. It was evident to me that the 2008 financial crisis in th...

Last night, the Resolution Foundation hosted a debate to launch my book, "The Case for People's Quantitative Easing". A great panel consisting of Jagjit Chadha, Director of NIESR; Fran Boait, Executive Director of Positive Money; and James Smith, Research Director of the Resolution Foundation, debated my ideas with immense verve, ably moderated by Torsten Bell, Chief Executive of the Resolution Foundation. You can watch the debate here . In 2008, QE did a great job of supporting asset prices and preventing the disastrous deflationary spiral of the 1930s. But since then, enormous quantities of asset purchases by central banks around the world have proved unable to raise aggregate demand and kickstart growth. Although central banks didn't do a bad job in the last recession, many of the tools they used won't work in the next one, not least because the legacy of the tools themselves has not yet dissipated. Interest rates are on the floor, central bank balance sh...

No doubt you are all wondering why Coppola Comment has been quiet for the last two months. There are two reasons: the first is personal - my father is seriously ill and needs a lot of my time. But the second will I hope be music to your ears. I am writing a book. My forthcoming book will be called "The Case For People's QE" and will be published by Polity, probably in Spring 2019. Yes, I know, the title makes it sound as if I have gone over to the dark side. But I assure you I have not become a Corbynista. My version of "People's QE" has a long and hallowed pedigree, running all the way from Keynes through Friedman to Willem Buiter, John Muelbauer, Paul McCulley, Zoltan Poszar and numerous other sensible people. It's really the outcome of much of my thinking and writing over the last eight years. Coppola Comment will be back in due course. In the meantime, here is some music. Ice creams may be obtained from the kiosk in the foyer, and drinks are ...

"Best diss of the Quantity Theory of Money comes from Keynes", commented Toby Nangle on Twitter, referring to this paragraph from Keynes's Open Letter to Roosevelt   (Toby's emphasis) : The other set of fallacies, of which I fear the influence, arises out of a crude economic doctrine commonly known as the Quantity Theory of Money. Rising output and rising incomes will suffer a set-back sooner or later if the quantity of money is rigidly fixed. Some people seem to infer from this that output and income can be raised by increasing the quantity of money. But this is like trying to get fat by buying a larger belt. In the United States to-day your belt is plenty big enough for your belly. It is a most misleading thing to stress the quantity of money, which is only a limiting factor, rather than the volume of expenditure, which is the operative factor. But is Keynes really dissing the Quantity Theory of Money (QTM)? Well....no. He is objecting to the way in which it...

I have repeatedly said that  I do not support Jeremy Corbyn's "People's QE". But there seems to be considerable confusion about what exactly I oppose. And that is for one simple reason: the deliberate conflation  of government investment spending and QE by the architect of this scheme. PQE is composed of two separate and distinct strands: 1. Government spending to finance investment in infrastructure, innovation, R&D and housing 2. Bank of England purchases of government bonds.  Despite the insistence of the scheme's creator that one is impossible without the other, these two strands are actually not interdependent. In fact they are unconnected. As the UK is a member of the EU and a signatory of the Lisbon Treaty, it is not possible for Strand 1 to be directly financed with money from the Bank of England. But there is nothing to stop the government issuing "Corbyn bonds" to the UK private sector for Strand 1, either directly it...