UKH

Fighting the coronavirus is going to have a massive financial impact, potentially putting many firms out of business and impacting on the ability of millions of individuals to earn.

Following the last financial crisis the government (Lab and Con) shuck the magic money tree and carried out £375bn of quantitive easing. The situation is rather different now and relates more to individuals than the system, so would an answer be to just give every adult in the UK a chunk of cash, say £5k, which would be about £250bn.

People who are looking at sudden loss of income could pay their rent / mortgage etc. The luckier ones spend the extra money on goods and services once the problem has passed, giving the economy a post corona boost.

In reply to The New NickB:

Certainly one possibility - although there would have to be guarantees that it's spent in a certain timeframe I would say - rather than it just getting chucked on someone's pile. 

(Although I imagine spending nepotism would be rife with lots people's friends or relative's businesses becoming the beneficiary)

In reply to The New NickB:

I think things like waiving mortgage payments, Rent etc are more likely (some banks have already said they plan this) - of course in some countries governments are mandating it

At some point the economic damage could out weigh the public's guilt/fear/reservations about the deaths to the vulnerable. Is it better to starve (if it comes to it) than try to avoid spreading it?

In reply to The New NickB:

Japan tried this a few decades ago to try to stave off deflation but I think it was ineffective.

In reply to The New NickB:

"people's quantitative easing"? When I saw your thread title, for one hopeful moment I was hoping the it's-the-end-of-the-world-99%-of-the-UK-population-is-going-to-die-in-the-next-2-weeks team were going to be asked to wind it back in a little. At least for a bit. Or at least try for a little balance

No such luck

I do not belittle them or the virus. And I'm [1] in the vulnerable range and [2] now in South Korea

Stay safe, The New NickB and all

In reply to gravy:

I think the Japanese QE starting in 2001, whilst huge was pretty traditional central bank based QE.

In reply to The New NickB:

They kind of did that before.. the PPI compensation payments are considered by some to have helped the economy through the recession as most folk spent the extra cash. 

It's possible that this virus could change people's spending habits longer term..  maybe they'll realise they don't need to go to the nearest out of town mall and buy clothes etc. Every single week. 

In reply to The New NickB:

Hong Kong recently handed all its citizens a cheque for HKD 10,000 (about £1,000) in a move exactly as you describe. The modish term used for this is negative taxation rather than people’s QE.

It seems to me that support is needed at every level, businesses, workers including those on ZHCs, the marginalised. Every level.

In reply to The New NickB: No Japan tried a cash giveaway, but a lot of people simply saved it so it wasn't too effective.  Given that these are very different circumstances it could be very effective 'restart'.

This would be a lot more effective than traditional QE where the money generally didn't enter the 'real' economy

In reply to BnB:

I’m not precious about the name, I just think the concept has some value. Let’s go with reverse taxation as it’s not out of bounds because of association with Corbyn (even if that was a very different proposition).

In reply to The New NickB:

https://en.wikipedia.org/wiki/Negative_income_tax

It’s more nuanced than giving everyone a cheque. I don’t need nor want one and nor do the millions whose incomes are unaffected by the impending lockdown. I think this model works better than spreading the benefit to those without need.

In reply to BnB:

Not yet - it's planned for July this year

In reply to BnB:

That seems a good idea.  I too don't need it for now at least - if anything the next couple of months will help me build up reserves because I'm going to have nothing to spend money on!

In essence a means tested UBI makes some level of sense - i.e. each person will get a minimum of £X total income.

This could be reduced by e.g. suspending mortgage and Council Tax payments.

In reply to BnB:

As you know businesses need help now to avoid bankruptcy, then when things ease in 3, 6, 9.. months time measures to get the public out spending again. Protecting employment so folk have some earnings to spend in the future. 

It's going to devastate many countries debt to GDP ratio but there is little choice. Do or die, literally. 

In reply to The New NickB:

£5k for all. Would this apply to everyone? 

People wholly relent in benefits will see no loss of income as they don't work and at the other end of the scale the wealthy will just chuck it on the pile as it makes no odds to them. 

Maybe if they sold it as a "workers rebate" or something, given to all those in employment less than 50% dependent on benefits or earning less than say £100k a year. Self employed also included. 

Politically I'm against it, but if you're offering me 5k I'd rather have in my pocket than the governments.

In reply to The New NickB:

I think we should really focus on finding ways to get work done and do thing in a way that doesn’t spread corona, instead of giving people money that they won’t be able to spend.

Adaptation is key.

In reply to RomTheBear:

I’m thinking in part about potential spreaders who will say, I can’t afford to self isolate. We are also going to need to put money in to the economy in a bit way, I’d rather see money operating in a delayed circulation than not trickling down.

In reply to The New NickB:

Yes. People are going to struggle to meet basic life requirements like food and housing for a few months. For a lot of people the economic effect will be worse than the health effect, through no fault of their own and in order to protect the most vulnerable. 

In reply to RomTheBear:

how do we eat then?  Of course money has to be spent

In reply to Lord_ash2000:

Far too much admin and far too divisive. 

The whole point of helicopter money is that it is an emergency one off payment to everyone. 

In reply to ClimberEd:

central govt should pay councils and let everyone off paying council tax and business rates

council tax is a big item of our household income

In reply to The New NickB:

The new Imperial paper says we may need to maintain a lock down until there is a vaccine which is 12 to 18 months.  That length of time calls for 'pressing pause' on the normal economy and maintaining the paused state until a month or so after the lock down is withdrawn and business is good to go.

I think it is crazy that people whose business is renting property, lending money or collecting tax should expect to have zero disruption when other sectors are going to be completely stopped dead.  So my proposal would be:

a. No tax collection, no interest collection, no rent or mortgage collection for the period of the lockdown.  Not just missed payments accumulated into loans which burden the business/person later but cancelled.  This means everybody can relax and survive with enough income to pay for basics: utility bills, food and a small amount of entertainment so they don't go crazy.   It also means people living off interest and rent feel some of the pain of the productive economy because they lose their normal income level too.

b. Universal Basic Income set high enough to pay for life in lockdown plus a bit so people can have a reasonably happy existence and businesses that are still operating have customers with some money to spend.   Maybe a higher level of UBI for people who volunteer to contribute in some way or if people enroll in relevant online education.

c. Pay for it by printing money.  Figure out the consequences once it is over.   If necessary have a one off wealth tax and wipe out the billionaires.

In reply to tom_in_edinburgh:

This may all be necessary, but I think we shouldn’t hit the pause button. 

We simply need to adapt.
 

There are still many things people can do, and many things people will want and need. They just won’t be exactly the same as what they are now. This will require a lot of out of the box thinking for sure !

In reply to RomTheBear:

We probably do need to adapt, probably significantly. We also need to soften the transition.

In reply to wercat:

He means extra money.  Disposable income that would be used to go to the cinema or something if they were open, but they're not, so there's no point having the money anyway.

I don't think it's crossed his mind that there are people who don't have enough to cover the basics.

In reply to The New NickB:

Food stamps for everyone. Stop all cash spending on food. Basic Rations only plus a few luxuries. 

In reply to DancingOnRock:

Suspending utility bills sounds a helpful idea (on the surface)

In reply to The New NickB: Yes I think it will be something like that to get economies going again when it's time, with cash going to SMEs too.

The classic danger is inflation, but I don't think that will be an issue as most counties are in the same boat.

In reply to wercat:

Whereas it is only a couple of percent of our household expenditure and for most people of working age it will be a much smaller consideration than rent or a mortgage. It could be a measure, but actually the problem needs much, much more than that.

In reply to ClimberEd:

On cue. Trump has announced he wants payments of a minimum of $1000 made to every American in the next two weeks. Helicopter money 'dropped from the sky'

In reply to ClimberEd:

Its not really a solution. I know plenty of Americans who just do not need $1,000.

Needs to be targeted with higher amounts at those who need it over the medium term.

In reply to neilh:

I didn't say it was a solution, I said it was what the US government would do.

In reply to profitofdoom:

It is, but they have done it before as well 😀

In reply to The New NickB:

Isn't quantitative easing also a way of devaluing a countries currency  leading to demand increasing from outside the country?  I'm not an economist but that's what I observed last time, when hundreds of billions of extra pounds were created the price of imports shot up. I guess that isn't going to turn out the this time as every country is likely to be in the same boat. creating a bucket-full of money in every country won't change anything.

In reply to The New NickB:

I don't think a people's quantitative easing would be needed and I'd oppose any pressures on women to have more children. If more population is required, I can't imagine a single good reason for not relaxing immigration rules to achieve it - there is a large queue of people trying to get into the UK and they are already productive and so on, if we are trying to pop more babies, it will take like 2 decades to make any difference.