Stimulus+: Give People, Not Banks, Wads of Cash

Let them eat cash? Mark Blyth elaborates

Once more demonstrating how little understood us IPE scholars are, Yahoo! has an otherwise interesting feature on Scottish "economist" (shouldn't he go by "political economist"?) Mark Blyth talking about his ultimate stimulus plan. The gist of it goes like this: so the US has enacted unprecedented levels of monetary easing and stimulus spending to help the country recover. However, the financial system which intermediates in the process of cash reaching citizens' hands remains most unreliable. So, why not use stimulus more directly by giving it to them and not the unreliable, untrustworthy banks?

In the accompanying video, Mark Blyth, professor of International Political Economy at Brown University, talks about his idea. He says while quantitative easing -- or mass asset purchases -- have cost basically $2.8 trillion dollars so far, if you divide that by the taxpaying population it would come to about $56,000 per household. "Imagine if that had just been given to households," he asks.

"So why not just give them a fraction of that directly, rather than trying to force all of that money through the banking sector altering asset prices, causing asset bubbles and distortions, and hoping that some of it causes real growth," he adds.

What about the consequences, like inflation, as some critics argue would occur? Check out the video to see how he responds.

Unfortunately Yahoo! doesn't have an embed feature so you'll have to visit its site through the link above. (The full article is here.)