THREAD 1/18

Dear @RishiSunak, @MattHancock & @BorisJohnson, I have figured out how to solve the big problems coming your way in 2021. It might be leftfield, but you'll be so amazed at its simplicity and effectiveness that you'll probably take to calling me Mr. Wolf. Read on...

2/18 The government clearly believes that mass vaccination is the only (or at least the best) way to get the economy back running at full steam. But polls suggest that a significant number will refuse to be vaccinated -- so much so that there's talk of making it compulsory.

3/18 Meanwhile, the damage done to the economy ALREADY raises the possibility of a full-blown depression next year. The IMF forecasts our economy will contract 10% this year and not regain its former (low) growth trend thereafter. This is a huge problem. https://www.imf.org/en/Countries/GBR

4/18 The bankruptcies and job losses when furlough ends are likely to dwarf those from the 2008 financial crisis. People will stop spending, leading to more job losses and so on. Worse, the BofE has no more room to lower interest rates. This would probably lead to DE-flation.

5/18 This is a nightmare for 2 reasons. First, people would stop spending because they'd want to build rainy-day savings and they'd know stuff would be cheaper tomorrow than today (because of deflation), squeezing the demand side yet more and entrenching deflation. Secondly...

6/18...the real value of debt would rise. £100 debt this year would be worth £110 next year if we had 10% deflation. Given the high indebtedness of our businesses and consumers, this world lead to bankruptcies and transfer huge sums from investment/spending to debt servicing.

7/18 Ordinarily, the BofE would lower rates, but they're already at zero, so it would likely rely on more QE. The problem is that this doesn't get much traction in the real economy, and is anyway likely to be bottled up in banks as they repair their battered balance sheets.

8/18 The other problem with QE is that while it doesn't much help the real economy (see: J.M. Keynes "pushing on string"), it lifts the value of bonds and stocks, enriching the holders of capital even as ordinary people get poorer. Do we really need more wealth inequality?

9/18 Added to this, we have Brexit. While I am a believer in the long-term economic benefits of leaving the EU and supported Brexit, there will be economic disruption. Even in a good economy, this would have hurt. In this, it is likely to pile on more misery.

10/18 So, a summary of these problems: (i) The government believes mass vaccination is the only way to open the economy, but many people are suspicious of the vaccines. (ii) The economy, even if we could reopen, is likely to be smashed. Now, here comes the genius solution...

11/18
PAY PEOPLE TO BE VACCINATED.

Better yet, pay them in time-limited scrip. Hand £1,000 to anybody being vaccinated in the form of scrip that has to be spent within 6 months of vaccination. If that sounds mad, read on to learn how it would work and the amazing benefits.

12/18 The govt would issue a special bond for £65 bln (the population times 1,000) and instruct the BofE to buy it with freshly printed money and hold it to maturity. This covers the entire cost of the scheme. When the bond matured, it would repay the BofE (i.e. pay itself)

13/18 The government would then print £65 bln worth of bank notes that looked the same as regular ones, but had a big red "best before" date stamp on them, based on the estimated vaccination schedule. Every time somebody completed a vaccination course, they'd get £1,000 worth.

14/18 The benefits would be huge. First, if the government wants to get full-spectrum vaccination, this would pretty much guarantee it. Everybody would do it for a grand, especially given the 2021 economy. By the government's logic, this would allow full reopening. Secondly...

15/18 ...as we know, in a debt-deflation depression, people don't spend. But this would be a grand of cash they'd have to spend or lose. As companies could use the scrip to pay tax, they would accept it as legal tender, lifting demand, and thus protecting jobs. Better yet...

16/18...because it's physical 'money' it would have to be spent in our high streets, in our pubs and in our restaurants. You couldn't use it online, so it would be the Red Lion, the greengrocer and the PC World (and their staff) that would get the biggest benefits, not Amazon.

17/18 Upshots? It would be inflationary, but that'd be A Good Thing in a depression. It would help the sectors most hit by Covid. It would protect jobs. It would supercharge recovery. It would not increase debt. It would mainly help the poor; more QE would mainly help the rich.

18/18 I'd actually be interested to hear your opinions on this. How would you view such a scheme? Also, I want to reward people who actually read 18 posts of my drivel. Therefore, follows or shoutouts for those who retweet. Thanks!

ADDENDUM 1

It Seems that only people I've mentioned in this thread can respond. Why? How do I change that? @jack @TwitterSupport