Wednesday, December 10, 2008

And today's solution to economic meltdown is...

One of the bracing features of the current economic problems is there is more discussion of genuinely radical courses of action than usual. In today's Guardian Simon Jenkins reckons that more good would be done giving everybody a thousand pounds and forcing them to spend it than in spending the same amount of money trying to unfreeze credit.
Get people to spend by giving them money, and just stop them saving it. Give them non-cashable vouchers for domestic goods and services that expire in three months. Drive them to the high streets, supermarkets, restaurants, entertainments, garages, anything that is not saving and has an employment multiplier effect. Only firms should be able to bank the vouchers. Demand must feed straight into business revenue, because revenue is collateral for credit. Without revenue, boosting credit is pointless.

I'll buy that.


  1. He could have said this before I did my xmas shopping

  2. The credit crunch is making me pay off debt.

    Just in the process of bunging the bulk of my savings into the mortgage, as there seems to be little point hanging on to cash with current inflations levels vs interest rates.

    Does anyone with an economical bent want to tell me (assuming my behaviour is typical) what this means for the economy?

  3. Japan is about to do this. Everyone gets Yen12,000 which is about GBP800. Those over 65 and, I think, under 18 get another Yen8,000. It will be in cash rather than vouchers. The last time they did something similar (on a smaller scale), it did not make much difference since people used the cash to buy what they were going to buy anyway. I am waiting to see if I get Y12,000 as it is not necessarily for non-Japanese (since we cannot vote - the government is hoping this will keep them in power at the forthcoming election).

  4. 12,000 yen is more like £80... I still wouldn't say no though.

  5. Like getting GBP200 when you pass go in Monopoly, a game invented by an unemployed man in the US in the 1930s. We used to play the variant where all fines and taxes incurred would be placed in the middle, and won by the next person to land on Free Parking. It boosted the economy very nicely.

  6. Joanne - you are right about it being closer to GBP80. I think the excitement of possibly receiving the money made me add an extra zero.