Printing money is not like in the movie, Money Heist; it needs to go through a process known as QE
pic by BERNAMA
THE debate on Budget 2021 continues and many aggressive young leaders are trying to come up with a solution for the country’s economic predicament — regardless whether it is sincere or for political gain.
Recently, Umno deputy youth chief Shahril Hamdan and Parti Pribumi Bersatu Malaysia’s Armada leader Wan Ahmad Fayhsal Wan Ahmad Kamal proposed for more money to be printed and put in people’s pocket.
I believe both of them might have gotten this idea from the previous US Federal Reserve chairperson Ben Bernanke who is the biggest supporter of helicopter money. We need to realise that printing money is not like in the movie “Money Heist” that we watch. It needs to go through a process known as quantitative easing (QE).
QE is an activity where central banks are buying bonds and assets with the intention of injecting money to the economy. It is a good move especially in the environment of a weak economy or low to negative inflation.
It is beside the point to discuss whether both leaders have failed to see the core issue in hand.
As it is, we are dealing with global pandemic and healthcare problems. As of today, more than 215 countries have been affected with millions of active cases and about 1.3 million deaths. Due to this deadly virus, many countries around the world have imposed a restriction on their people, including Malaysia.
Herein lies a simple layman question without any economic jargons and minus the implication to the capital and foreign-exchange markets: If we print money and put it in people’s pockets, when can they spend their money since their movements are restricted? How can people in rural areas go to shopping malls in the cities to spend if there are inter-district roadblocks?
There are various scenarios of how you may not be able to spend your cash which would result in the money remaining only in bank accounts. This can be considered as a leakage in the economy.
There is also the issue of job banks and training as a part of the solution for unemployment. When can you conduct an interview? When can people go for training since their movements are restricted?
Where can you conduct this training? Is it safe based on the Health Ministry’s guide?
We could discuss many economic theories, but as stated again, what we are facing at the moment is unprecedented. Even Prof Dr Jomo Kwame Sundaram, a prominent economist, said we cannot simply find a solution to the problems we are facing simply from any text book.
But at the same time, we cannot be dismissive of good ideas. The most important thing is to understand that implementation of any policy is crucial. As of today, none of the medical practitioners can forecast on the availability and accessibility of a Covid-19 vaccine.
In my opinion, the only way the government, through fiscal measures, and the central bank, through monetary policies, can take is to micro manage the situations. Those who are in need must be supported because we do not want to have people starving to death due to loss of income.
Being cautious is good, but we should look into saving our people, not only from this pandemic but also from the economic crisis.
Once the vaccine is ready and available in the market, I think only then we can discuss how to revive the economic activity.
The views expressed are of the writer and do not necessarily reflect the stand of the newspaper’s owners and editorial board.