A hedge fund founder is backing Jeremy Corbyn's 'People's QE'

There's support for the new Labour leader from a rather unlikely quarter.

by Rachel Savage
Last Updated: 28 Sep 2015

Of all of the types of people you’d expect to be a Jeremy Corbyn fan, hedge fund founder is not one of them. But Paul Marshall, the co-founder of one of London’s top funds, has said the new Labour leader’s flagship economic policy isn’t actually a bad idea.

If ‘People’s Quantitative Easing’, the inflation-fanning idea of forcing the Bank of England to print money to fund infrastructure projects, ‘were kept as something to implement the next time the country faces a financial crisis, it would carry quite a lot of respectability,’ the Marshall Wace chairman wrote in an FT opinion piece.

Meanwhile, the current QE programme, where the Bank of England printed money to buy up £375bn government bonds (which are still on its books) from financial institutions between 2009 and 2012, bailed out the drowning banks while making people like him richer, he argued.

The former Liberal Democrat donor pointed out the bond-buying programme had boosted the prices of all other assets, from equities to property, meaning ‘all of us who work in financial markets owe a debt to QE.’

He has a point. But the banks still needed support to stay afloat and to lend to consumers and businesses, so arguably standard QE was the only option after the enormous direct bailouts exhausted the public’s patience.

Corbyn, for his part, should rethink his blanket criticism of ‘the involvement of hedge funds and funny money in politics,’ if he wants to build the economic credibility that he and his team are decidedly lacking right now.

Marshall is, not completely outrageously, arguing ‘those of who want free markets to retain their legitimacy’ have to acknowledge the Left’s anger and own up to the ‘clear wealth effects’ of QE. In short, he’s offering an olive branch. Corbyn would be wise to take it.

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