A source of confusion lies in the mainstream thinking that if a central bank does something, it is monetary policy, and if a national treasury does something, it is fiscal policy. However, as MMT points out, operationally monetary policy only changes the composition of net aggregate non-government financial assets without altering the amount; whereas fiscal policy alters the amount.
Much Excitement—and Lots of Confusion—about “Helicopter Money” of Late
Jörg Bibow
Great first sentence. The inability of people to understand the difference between monetary policy and central bank policy is a huge drag on public discourse.
ReplyDelete"And who would want unelected central bankers to be in charge of taking such a decision;"
ReplyDeleteMost economists apparently.
It's important to remember that the interest rate channel *is* about the central putting money in the hands of people. Normally those running banks or holders of financial wealth.
We need to get beyond this idea that there is much difference between fiscal and monetary policy. It's all about putting money in somebody's hands so they'll spend it.