PORTUGAL: Draghi welcomed by “Quantitative Easing for the People” demand while in Lisbon

PORTUGAL: Draghi welcomed by “Quantitative Easing for the People” demand while in Lisbon

As expected, European Central Bank (ECB) president Mario Draghi’s visit to Lisbon on Thursday 7th April was welcomed with protests. First at Palácio de Belém (the official presidential premises), and later that day at Largo de São Domingos.

A few dozen protesters were present, answering a call from the political party Bloco de Esquerda, as well as activists from Basic Income Portugal, who held a banner with “QE for the People” written on it.

“QE” stands for Quantitative Easing, which designates the ECB’s stimulus programme by which it injects 60 billion euros per month into financial markets. As a reaction to this programme, more and more are defending the alternative idea of “QE for the People” which is being promoted by a coalition of organisations across Europe. The idea basically consists in redirecting the ongoing money creation of the ECB towards the real economy, for instance as a citizens’ dividend.

Protests have been spurred around the ECB’s QE policy because it has exclusively benefited the financial system (mainly banks), and not those more in need of it, the general population. Draghi has shown an interest in the policy of “QE for the People”, as if money was being (metaphorically) thrown out of a helicopter. However, no such policy has yet come to be, and it would, in effect, mark a reversal of all past ECB monetary policy.

Draghi was invited to Lisbon by the recently elected President of Portugal, Marcelo Rebelo de Sousa.

 

More information at:

In Portuguese: Sputnik, “Lisboa protesta contra Europa [Lisbon protests against Europe]”, Sputnik Sociedade, April 7th, 2016

Rendimento Básico Portugal Facebook page.

EUROPE: 75 economists endorse Quantitative Easing for People campaign

At the end of November, a coalition of eurozone campaigners, civil society organizations and economists launched the campaign Quantitative Easing for People, calling for the European Central Bank (ECB) to radically change its approach to the current Quantitative Easing (QE) program. At the time of writing, 75 economists have endorsed the campaign.

The initiative brings together groups including Social Justice Ireland, Collectif Roosevelt (France), World Future Council (Germany), FairFin (Belgium), European Alternatives, and Basic Income Europe. The campaign is also supported by organizations from Italy, Greece, Spain, Austria, and the Netherlands; see the full list here.

QE is an unconventional monetary policy used by central banks to stimulate the economy. It usually consists of buying government bonds or other securities in order to lower interest rates and increase the money supply. QE began in the eurozone earlier this year, and the ECB is currently creating 60 billion Euros each month. Matthias Kroll from the World Future Council said: “So far the ECB’s QE program has proven to be ineffective in raising inflation back to its 2% target.”

“Flooding financial markets inflates share and bond prices, which makes the rich richer, but does little to help households and business. In fact, QE is helping fuel a new financial bubble, laying the foundation for another financial crisis. The eurozone needs a more direct and efficient stimulus.”

European stock markets plunged on December 3, when Draghi announced that the current QE program would be extended by six months to March 2017. This is a sign that even large corporations and financial markets do not believe in Draghi’s QE and expect more.

The aim of the QE for People campaign is to push the ECB to spend the money differently, by focusing on public investment, key social services or redistributive mechanisms like a citizens’ dividend – the last idea resonating well with basic income activists.

The proposal was first put forward in a letter signed by 19 economists and published in the Financial Times in March this year:

Rather than being injected into the financial markets, the new money created by eurozone central banks could be used to finance government spending (such as investing in much needed infrastructure projects); alternatively each eurozone citizen could be given €175 per month, for 19 months, which they could use to pay down existing debts or spend as they please.

Cash transfers under QE for People and basic income have common features. Both are directed to all citizens, with no strings attached. The time dimension differs though, as QE measures are by definition temporary, while basic income is a permanent scheme.

The 75 experts who support the campaign include several pioneers of the idea, such as Professor Steve Keen, Professor David Graeber and fund manager Eric Lonergan, as well as other influential economists and financial analysts like Ann Pettifor and Frances Coppola. These experts signed a statement of support that lays out the reasons behind the campaign:

1. Conventional QE does not work

Since it started in March, the eurozone QE program has not helped to rescue the eurozone economies from stagnation.

 

2. Conventional QE is risky and harmful

Flooding financial markets inflates share and bond prices, which makes the rich richer but does little to help ordinary people and businesses. In fact, QE is helping fuel a new financial bubble, laying the foundation for another financial crisis.

 

3. A more direct approach is needed

Countries in the eurozone need to stimulate their economies without increasing public and private debt, without increasing inequality, and without creating bubbles.

 

4. QE for People is possible

Instead of flooding financial markets, money created through QE should be spent into the real economy, on essential public investment such as green infrastructure, affordable housing and/or distributed as a citizens’ dividend to all residents.

 

5. QE for People is urgently needed

Given the challenges facing the eurozone, we urge economists, civil society organizations, and people from across the eurozone to join us in calling on the ECB to implement QE for People as soon as possible.

 

The campaign will focus on raising awareness of the failures of the current QE program, building political momentum around alternative monetary policies and fostering further research. “Having more than 70 economists endorsing the idea is a huge milestone, but this is only the beginning. Our goal is to create a much bigger coalition with citizens, academics and civil society organizations,” said Stan Jourdan, campaign coordinator.

If you want to know more about the campaign, visit the campaign website.

You can join the movement QE for People by signing up here.

Economists can endorse the campaign here.

See also: Stanislas Jourdan, “Europe: 19 economists call on the ECB to make ‘QE for the people’ in a letter to the Financial Times,” Basic Income News, March 27, 2015.

UBI-Europe calls for Quantitative Easing for the People

UBI-Europe calls for Quantitative Easing for the People

The European Central Bank’s attempt to counter-attack deflationary pressure by giving banks funds raised through QE is doomed to be both ineffective and anti-redistributive. The ECB must consider more unconventional policies if it hopes to get the real economy going again.

Press release by our affiliate Unconditional Basic Income Europe (january 23, 2015)

logo-square-blueUpdate November 2015: 

UBI-Europe is one of the 20 organisations that have joined the campaign “Quantitative Easing for People.” Citizens and organisations can join the campaign here: www.qe4people.eu

 

At the announcement of its quantitative easing program yesterday, the ECB showed that it has learned nothing from recent quantitative easing programs in the UK and the US, where the effects of QE on the real economy has produced no significant results.

“The experience of the US shows that QE is useful to the real economy only when they are combined with expansionary fiscal policies. In Europe, the idea is to combine QE with austerity policies, guaranteed to offset any potential benefits of QE. So, in the absence of a radical change in the eurozone’s fiscal stance, we expect the depression to continue.” said Thomas Fazis, member of UBI-Europe, referring to the conclusion of a recent paper he wrote.

Quantitative Easing is anti-redistributive

At its worst, such a program could increase inequalities. As the Bank of England itself concluded in a recent research paper (pdf): “By pushing up a range of asset prices, asset purchases have boosted the value of households’ financial wealth held outside pension funds, but holdings are heavily skewed with the top 5% of households holding 40% of these assets.”

In short: this QE benefits the rich, not the poor.

There is an alternative: Quantitative Easing for the People

Unconditional Basic Income Europe calls the ECB for an alternative monetary policy such as  distributing QE money directly to the pockets of citizens.

“QE for the people is not just a more efficient approach for directly stimulating the real economy, it is also more fair in the current context of deep social inequalities and the rise of extreme poverty in the eurozone. By doing so, the ECB could target two objectives at once.” Thomas Fazi said.

This might sound radical, yet many economists such as Anatole Kaletsky and Steve Keen have backed the idea.

Several proposals for such a policy have emerged recently, notably from Oxford economist John Muellbauer and the chief European economist for the French investment bank Natixis, Sylvain Broyer. Muellbauer calls distributing 500€ to every citizen in the Eurozone, while Broyer’s proposal amounts to 3,000€.

The amount of QE money unveiled yesterday by the ECB could, alternatively, fund a €2100 annual cheque to all residents of the eurozone.

“Such a policy could be a pragmatic, direct pathway towards an unconditional basic income for all in the eurozone. It would set a precedent.” UBI-Europe’s coordinator Stanislas Jourdan said. “Where citizens can be counted on to spend, banks have not shown with previous QE programmes that they can be counted on to lend.”

Quantitative Easing for the People would not violate EU Treaties

“As opposed to having the ECB financing governments and public entities, handing cash directly to the citizens is not explicitly prohibited by the EU Treaties.” Thomas Fazi explained.

Moreover, such a program would be far more protective of the independence of the ECB. By targeting the quantitative easing money to all citizens without distinction, the institution could not be blamed for interfering with governments.

 

John Muellbauer, "Quantitative easing for the people"

John Muellbauer. From: The New Times.

John Muellbauer

Oxford Economics professor John Muellbauer elaborates a rational justification and a simple application plan for giving each EU citizen a 500 €, no strings attached, monthly payment. The money would be printed in the European Central Bank and simply given to registered citizens in the eurozone.

John Muellbauer, “Quantitative easing for the people“, Project Syndicate, November 7 2014

Three publications agree giving money directly to the people beats quantitative easing

Three recent U.S. editorials have argued that Quantitative Easing would be more effective and more equitable if the money was given directly to the people in the form of a basic income—if only a temporary one. Martin Hutchinson discusses the Feds goal of buying $40 billion dollars worth of debt each month for as many months as it takes. He argues that for only $31 billion dollars per month the Fed could send a $100 check to each of the 310 million US citizens. Anatole Kaletsky argues that $2 trillion (the amount the Fed spent on Quantitative Easing in 2009) could finance a cash dividend of “$6,500 for every man, woman and child, or $26,000 for a family of four.” All three agree this would be a superior anti-recession policy than Quantitative Easing, which directly benefits bankers and has a lesser effect on overall economic activity.

Brown, Ellen, “Why QE3 Won’t Jump-Start the Economy—and What Would,” Web of Debt, September 21, 2012; reprinted by Truth Dig Sep 22, 2012.
https://www.truthdig.com/report/item/why_qe3_wont_jumpstart_the_economyand_what_would_20120922//
https://www.resourceinvestor.com/2012/09/20/for-qe-ben-should-have-tried-the-helicopter

Kaletsky, Anatole, “How about quantitative easing for the people?” Reuters Opinion, August 1, 2012
https://blogs.reuters.com/anatole-kaletsky/2012/08/01/how-about-quantitative-easing-for-the-people/

Hutchinson, Martin, “For QE, Ben Should Have Tried the Helicopter,” Resource Investor, September 20, 2012
https://www.resourceinvestor.com/2012/09/20/for-qe-ben-should-have-tried-the-helicopter