There's been much debate and, I fear, confusion, about "people's quantitative easing". Personally, I suspect the case for it all depends on the circumstances.

Let's start from a fact - that if it has any effect at all, PQE is inflationary. Whether this is a good thing or not depends upon the conditions in which it is introduced.

If PQE is undertaken when inflation and economic activity are high, then Tony is right - it would be incompatible with the Bank's mandate to keep inflation at 2%. If, however, we face the risk of deflation and/or weak activity then PQE would be entirely consistent with that mandate. In such circumstances, there is nothing radical whatsoever in the Bank buying the bonds of a National Investment Bank: the Fed's QE involved buying the bonds of government agencies such as Fannie Mae and Freddie Mac, so why shouldn't the Bank do the same?

Doing this would not require any breach of Bank independence. Any expansion of QE would require authorization by the Treasury, and as part of this the Treasury could authorize the Bank to buy NIB bonds.

Undertaken in the appropriate conditions, therefore, there is nothing radical or unusual about PQE*.

In fact, it could be that the problem with PQE is that - if undertaken at a time of recession - it would not be radical enough. I say so for three reasons:

1. The QE element might not be very stimulative. Let's say, for concreteness, that the government announces £50bn of investment via the NIB. This would represent an increase in aggregate demand of around 3%. This itself would tend to be inflationary: how much so depends upon how much spare capacity there will be. If this is financed by the Bank buying NIB bonds there might be an additional boost to inflation through the same mechanisms that orthodox QE added to inflation: by raising inflation expectations;by boosting asset prices as investors who get the cash reinvest it; and perhaps by weakening sterling. These mechanisms, though, might be weak. The Bank estimates (pdf) that the first £200bn of conventional QE raised inflation by 0.75-1.5%, so £50bn of QE might have a quarter of that impact. That's 0.2-0.4%, which isn't much.

2. PQE concedes too much to deficit financing. In saying that NIB bonds should be bought by the Bank, PQE fails to address the fact that there is massive demand for safeish assets and so a NIB can be financed at negative real rates through ordinary bond issuance.

3.There are more radical fiscal/monetary alternatives. The Bank could simply write everyone a cheque. It could, as Andrew McNally has argued, print money to allow households to buy shares. Or a mix of QE and conventional bond finance could be used to finance the creation of a sovereign wealth fund whose dividends would eventually form part of a citizens' basic income. Relative to these ideas, PQE - if introduced when monetary/fiscal stimulus is necessary - is a remarkably conservative idea.

Which poses the question: why do its advocates give us the opposite impression? One reason is that some seem to have been confused about when it would be introduced: would it be implemented in normal times or reserved for when inflation has to be raised?

Another reason is that some of them have conflated the case for PQE with attacks upon mainstream economics and, often, arguments for modern monetary theory**. These, though, are separate matters. PQE, under the right circumstances, would be a mainstream conservative policy.

* There is another issue here. One could argue that the 2% inflation target is too restrictive and that it should be lifted to, say, 4%. This would create more room for PQE. But this too is not a radical idea: it was suggested by Andy Haldane yesterday.

** It seems to me that MMT is mostly a wholly reasonable idea, undermined by the dogmatism, obscurantism and longwindedness of its advocates.