Introduction: Central Banks Can Print Prosperity (03:54)
Moderator John Donvan introduces Bob Rosenkranz who discusses "quantitative easing."
Debate "Housekeeping" (06:33)
Donvan frames the debate about printing prosperity, explains the debate format, and introduces the panelists. Audience members record their preliminary votes.
For the Motion: Roger Bootle (06:53)
Founder and executive chairman of Capital Economics and author, Bootle states financial and monetary systems sometimes break down and cites three examples. Quantitative easing (QE) can halt the deflationary process. Bootle rebuts public criticisms of economic distortions.
Against the Motion: Andrew Huszar (06:29)
Senior Fellow at Rutgers Business School and former Federal Reserve official Huszar states that printing money is an unproductive tool for creating prosperity. He compares money printing to trickledown economics and states that the transmission mechanism is "inherently flawed."
For the Motion: Simon Johnson (07:16)
MIT Sloan School of Management Professor and former IMF Chief Economist Johnson states that the Federal Reserve did not respond to the financial crisis in the 1930s which resulted in the Great Depression; the central bank must "step up" during a financial crisis. Allowing central banks to money print provides a better economic outcome.
Against the Motion: Edward Conard (07:37)
Former founding member and managing director of Bain Capital, scholar, and author, Conard uses "corn economy" to explain economics and recession. Printing IOUs is an attempt to get consumers to stop saving and start spending; printing phony IOUs increases risk and reduces wealth. He states "there is no evidence that fiscal and monetary stimulus increases business investment."
Validity of Theory (04:47)
Donvan reiterates statements made by teams on both sides of the motion, central banks can print prosperity. Simon cites Milton Friedman's argument that the Federal Reserve should have printed money during the Great Depression; Conard concedes the point. Bootle argues there are times when the monetary system is close to collapse and the banks should print money.
QE1 and Done? (04:30)
Huszar states the QE stabilizes banks but does not help the average person. Panelists debate the monetary cause of the Great Depression and Ben Bernanke's position on QE. Huszar discusses QE in stages.
Quantitative Easing Post QE1 (03:14)
Johnson reiterates the debate motion; returning to pre-1930 monetary views is dangerous. Conard uses a chess analogy to refute the legitimacy of the proponents' arguments.
Using QE to Financially Revive Neighborhoods Backfired (02:59)
Bootle states that the money stays on the books of the banks and it means nothing; banks cannot extinguish the money. Huszar argues that there are consequences.
QE and Prosperity (03:29)
Conrad cites the business investment as a percentage of GDP and mortgage lending as examples of fiscal stimulus failure. Johnson argues that the financial crisis brought down investment, employment, and businesses; QE eased credit and provided a better outcome.
Economic Prosperity (03:38)
Huszar states the transmission mechanism of QE is distortionary. Bootle argues that banks purchasing bonds does not negate the mechanism. Conard states that "real savings in a real economy" makes loans easier to get.
QA: Does Demand Affect Credit Creation? (04:31)
Huszar states that fiscal stimulus and money printing has not improved the rate of growth of consumer spending. Johnson reiterates the economic status is a result of the financial crisis, not QE; Conard cites the lack of economic rebound. Huszar discusses the wealth effect during QE2.
QA: What did QE do for the Average American? (04:12)
Bootle believes QE helped make credit available and boosted consumption and investment spending. Conard states it is difficult to find evidence of a positive effective after bank bailouts. Johnson states that QE does not do enough for middle class Americans.
QA: Does Financial Recovery Occur when Wall Street Receives Money? (03:46)
Huszar states that QE exacerbates financial inequality. Conard argues that QE transfers money but does not create prosperity. Johnson cites job creation.
QA: Does the Purchase of Stocks and Dividends by Public Firms Equal Prosperity? (03:09)
Bootle states that monetary policy helped sustain the growth of demand which amounts to jobs. Huszar cites the Bank of England's report on monetary policy and the macro economy. Johnson cites the size of the credit system.
QA: Did a Lack of Permission of an Expansionary Fiscal Policy Result in QE? (04:03)
Huszar says yes and states the question is whether or not the system helps over time. Conard believes giving financial power to the Federal Reserve damages democracy and will not be beneficial. Johnson reiterates that QE resulted in a better financial situation than had nothing been done.
Why is Ben Bernanke on Your Side? (03:19)
During a volley round, panelists state why Bernanke's arguments support their position on whether or not central banks can print prosperity.
Closing Arguments For: Roger Bootle (01:55)
Bootle believes in the QE policy but that the banking system needs reform. To promote the free enterprise system, you have to be prepared to create prosperity by printing money.
Closing Arguments Against: Andrew Huszar (02:09)
Huszar argues that the Fed "papers over" an underperforming economy. He cites examples of declines in the underlying conditions of economic growth.
Closing Arguments For: Simon Johnson (02:01)
Johnson compares the debate to a House of Representatives committee meeting that considered a version of QE. He states voting against the debate gives support to those who want to place binding constraints on monetary policy.
Closing Arguments Against: Edward Conard (02:19)
Conard quotes economist Brad DeLong's comments about Bernanke. Money printing has not produced discernible economic effects.
Time to Vote (04:17)
Donvan instructs the audience to vote, thanks panelists and supporters, and introduces the next Intelligence Squared Debate.
Audience Voting Results (01:04)
Predebate For: 29% - Against: 31% - Undecided: 40% Post-debate For: 35% - Against: 54% - Undecided: 11%
Credits: Central Banks Can Print Prosperity: A Debate (00:48)
Credits: Central Banks Can Print Prosperity: A Debate
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