Youth and Sports deputy minister Wan Ahmad Fayhsal Wan Ahmad Kamal has defended his proposal to help the people by forgiving debt and “printing money”.
Taking to Facebook yesterday, Wan Ahmad Fayhsal said his critics had “misunderstood” his points and made false assumptions.
“Many misunderstood when criticising forgiving debt and money creation which I talked about on BFM,” he said.
“Honestly, this is a technical topic and needs further discussion on the origins of money and modern banking.
In the BFM radio interview on Monday, the deputy minister proposed a “helicopter money” policy “where the central bank can directly print money and give it to the people so that they can spend it”.
Former PNB chairperson Jalil Rasheed in a separate tweet said that printing money would devalue the ringgit and that such money creation policies were only feasible in the US due to the dollar’s demand and strength.
Fayhsal, in defending his suggestions, shared a Bersatu Youth Economic Bureau post which cited modern monetary theory (MMT) experts as saying that printing money wouldn’t lead to inflation.
Instead, the youth wing bureau said inflation occurs when a country fails to produce enough food or goods for money to be spent on.
They also said that according to MMT, the circulation of money into the market needs to be balanced with the output of goods to stabilise the market’s demand and supply.
An economist, when asked to review the Bersatu Youth post, said that while the MMT is compelling in facing a dire economy, it was also “a bit too extreme”.
“The MMT is a bit too extreme in the sense that the government can freely spend their money as they can always finance it through the issuance of fiat money (printing money).
“Basically, borrowing from its own currency. The problem with this theory is it doesn’t address the risks of moral hazards,” the economist said on condition of anonymity.
The economist explained that money is a medium of exchange which needs to be earned with effort.
In economic terms, this means the factors of production such as labour, capital, land and entrepreneurs need to be developed.
“If the moral hazard is not being addressed it will have an impact on productivity, and given that lower output will be produced, it could result in inflation.
“Moral hazard here refers to a reluctance to work harder and diligently because money becomes so easily available especially if the channel is done via cash transfer programmes and subsidies,” they said.
The economist added that ideally, the government needs to craft assistance that would alleviate the people’s financial troubles while also encouraging the people to uplift themselves in terms of value-adding activities.
Meanwhile, former deputy youth and sports minister Steven Sim urged Prime Minister Muhyiddin Yassin to reprimand Fayhsal and get him to withdraw his printing money proposal.
“Wan Ahmad Fayhsal’s suggestion to print money displayed his economic naivete.
“He ignores basic economics of the disastrous consequences of loss of confidence in the monetary system, hyperinflation and the ultimate collapse of the economy,” Sim said in a statement.
Umno Youth chief Asyraf Wajdi Dusuki said Fayhsal – his Bersatu counterpart – should focus on more realistic and practical suggestions.
This includes joining Umno in urging the government to extend the loan moratorium to all borrowers and allowing everyone to withdraw from their EPF Account 1 – MKINI
MALAY MAIL / MKINI