I’ve made reference before on this blog to Tim Congdon’s ignorance on monetary matters. His latest blunder is to claim in the Financial Times that quantitative easing consists of the state borrowing from private banks and buying back government debt.
QE consists of the central bank creating money ex nihilo and buying back government debt.
His exact words (in a letter to the Financial Times) are thus.
“Circumstances can arise in which the banking system, and therefore the quantity of bank deposits, is shrinking because the private sector is repaying bank loans on a large scale. If so, the state needs to borrow from the banks and create new money. This is indeed the monetisation of public debt, a process naively (and inaccurately) characterised as “the printing of money”, and labelled “quantitative easing”…”.
How Congdon ever came to be made a professor of economics is a mystery.
But then (as the plebs have always known) there are plenty of idiots in high places.