Richard D. Wolff

I understand that hawkish fiscal policy can function as a gap-filling mechanism for aggregate demand by increasing public debt in order to circulate much needed money in the economy. I also understand that hawkish monetary policy creates private debt via encouragement of private actors to borrow from banks in order to stimulate aggregate demand. Moreover, after the US central bank underwent QE, inflationary pressures affected only real estate and equity prices, and not other goods/services. To me, QE demonstrated its ineffectual nature since aggregate demand did not pick up due to lower borrowing costs. However, I have heard from intellectuals like Michael Hudson that if QE targeted private individuals (central bank deposits money into all its franchised depository institutions like BOA, Chase, etc. for the purpose of eliminating private debt/increasing private savings for the use of stimulating demand), then QE would be effective. At the same time, I've heard from intellectuals like Warren Mosler that fiscal policy is a better tool in affecting aggregate demand. Assuming that the central bank does not undergo Hudson's version of QE, if we rely on individuals to take on debt in order to stimulate the economy, it puts a heavier burden on an already debt-saddled private sector. In addition, those who can borrow understand that using such funds for real investments gives lower returns than the equity markets. If one is a corporation, the corporation will likely borrow to sit on the money or perform share buybacks instead of expanding employment or R&D (since corporation acknowledges the lack of demand). I was wondering whether you can comment on the difference between fiscal and monetary policy, and whether such difference affects your judgment in what the proper course of government action should be?