Policymakers Need New Tools to Spur Economic Growth

Albert Einstein defined insanity as “doing the same thing over and over again and expecting different results.” The world’s policymakers would do well to remember these words in the coming months as they ponder their next moves to battle the global economic malaise.

As economic indicators have worsened, central banks and governments have demonstrated an asymmetric reaction function: They have been more likely to react to — and act upon — deflationary influences than inflationary ones. There has been a growing recognition, even among central bankers, that a little inflation is better than deflation.

在金融危机期间，中央银行人员转向定量宽松，以刺激GDP增长。但这从来没有意图是银行家长期政策工具包的精确乐器或一部分。虽然美国联邦储备和英格兰银行的批量购买政府债券可能会驱动债券收益率，但很难判断行动是否升高了贷款。

The Bank of England’s latest Quarterly Bulletin ascribed a positive GDP effect to quantitative easing, but the analysis smacked a little of starting with the answer and working backward to the question. The bank must now ask itself: Would repeating the exercise of bond buying bring genuine economic benefits, or are yields so low that the power of quantitative easing is diminished?

Now that we have grown accustomed to quantitative easing and had time to reflect on its value, more-precise tools can be made available to boost growth. The dyed-in-the-wool monetarists among us are nervous about any unconventional stimulus. Boost the money supply without growth and inflation will surely follow, the logic goes. Yet this might be a risk that has to be taken. Generating nominal GDP growth on its own might be tricky, but creating a little inflation to accompany it might actually be a desirable outcome.

Such thinking, of course, flies in the face of nearly 30 years of accepted wisdom that lower inflation is always better. The slaying of the inflation dragon that crippled economies in the 1970s and early ’80s was necessary, and nobody suggests or desires a return to the double-digit inflation of that era. Nonetheless, a period of slightly elevated inflation would reduce the real value of debt and could have a positive effect on consumer confidence. Money illusion — the appearance of greater wealth when both incomes and prices have risen — is a powerful force.

So how can we target nominal GDP growth? One method would be direct lending to key growth-generating sectors, such as small and medium-size enterprises (SMEs). SMEs form a significant proportion of GDP in many countries and are hotbeds of innovation and entrepreneurialism. However, they are too small to access bond markets; without willing banks, they struggle to get funding.

Direct lending to SMEs could boost growth by breaking the credit logjam. Whether done directly by a government agency or by the government’s underwriting of loans by commercial banks, it’s a more direct way of encouraging innovation, investment and job growth.

这类贷款的货币效应可能offset by the sale of Treasury bills, or, if the authorities felt the risk of deflation was too great, money could effectively be printed to cover the loans. The program would blur the boundaries of fiscal and monetary policy. Lending is central bank territory; sectoral intervention is the preserve of governments.

对于中小企业的贷款成功，从中央银行商的买入将是至关重要的。但是，政府和央行不太可能承认试图产生通货膨胀 - 甚至有点。因此，它至少适想看哪些政策制定者听到他们所说的话。

The upshot of such policy developments would be the superior performance of real assets and the underperformance of financial ones. The relative performance within real assets would vary according to the type of inflation generated. If prices rose because of an increase in genuine demand in the economy, riskier assets such as equities and property would probably perform well, but this scenario is hard to create. In more-uncertain economic circumstances, the preferred portfolio would be lighter in risky assets like equities than would normally be the case during a recovery.

过去30年的政策思维态度受到激烈的反通货膨胀。这可能需要改变，至少在我们认识到它是危险的，无法过于靠近通货紧缩的黑洞。吸入这个洞可能导致十年的荒北增长。但是，如果当局获得政策处方权，那么可观的经济复苏仍然是可行的。

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Jonathan Gibbs是基于苏格兰的标准寿命投资的爱丁堡的真正回报负责人，该投资在管理层中拥有2330亿美元。