Thursday, February 12, 2015

QE For The People In The EZ

Quantitative Easing by the Fed has had a positive effect on the US economy.  This article shows the channels by which QE in the US has been beneficial.  However, since the EZ is much different from the US, it will not work as well as it has in the US.  Moreover, since QE has the effect of increasing the value of assets that are held primarily by the well-off,  it would create negative political repercussions in the EZ.  There are also important differences between the ECB and the US Federal Reserve.  The ECB is legally prohibited from doing some the things that the Fed had done.  Consequently, this article makes the case for a direct distribution of money to citizens by ECB.  This would be consistent with its mandate to prevent deflation, and it would be perfectly legal.  There are, of course, many objections to such a program.  Some of those objections are considered and countered in this article.

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