HERE IT COMES! PRINT & DISTRIBUTE CASH? ‘GENIUS IDEA’ – MOVEMENT FOR MONETARY JUSTICE LAUDS BERSATU YOUTH CHIEF’S ‘INITIATIVE’ – EVEN AS AZMIN WARNS OF ‘SLOW U-SHAPED RECOVERY BECAUSE BEST APPROACH IS MCO TO CONTAIN VIRUS’ – ALSO CONFIDENT OF WINNING ‘BIGGER MAJORITY’ IN GE15 ‘BASED ON TRACK RECORD OF THE PAST 8 MONTHS’ – WHEREAS HE USED TO CITE HIS ‘TRACK RECORD AS MB’ DURING GE14 WON ON THE BACK OF THE PAKATAN PACT HE BETRAYED IN QUEST TO BE PM

PETALING JAYA: An economist has backed a deputy minister’s idea for the central bank to print and distribute cash to the people, describing it as “bold and out-of-the-box”.

Speaking to FMT, Movement for Monetary Justice chairman Ahamed Kameel Mydin Meera said such a move was justified during a recession as liquidity levels would be low.

He said low liquidity would suppress demand and discourage new investments in the economy, which would in turn affect the ability of banks to issue new loans.

These factors made it important for the government to jumpstart the economy.

He also said cash handouts would see money injected into the economy, increasing the demand for goods and services. “This will surely help businesses and preserve employment.”

Ahamed Kameel Mydin Meera.

Kameel said Deputy Youth and Sports Minister Wan Ahmad Fayhsal’s idea was in line with modern monetary theory.

“In this theory, the government can have whatever money it needs for fiscal expenditures – with checks and balances put in place, of course – and use taxation to control inflation.”

He acknowledged the argument that printing and distributing cash would lead to inflation and devalue the currency, but said this could be avoided with prudent management.

Geoffrey Williams of HELP University described the idea as “perfectly sensible” and said it was used in the form of quantitative easing after the Great Depression in the 1930s, in Japan in the late 1990s, and after the global financial crisis of 2008.

Geoffrey Williams.

He said Malaysia could use it to pursue former prime minister Najib Razak’s proposal that the Employees Provident Fund (EPF) allow contributors to withdraw RM10,000 from their Account 1.

“The way this would work would be for EPF to sell some of its holdings of Malaysian government securities (MGS) to Bank Negara, which can pay for them by printing new money. This can then be distributed to EPF members through the i-Sinar programme.

“It would mean that EPF would not need to liquidate equity-based assets and so this would protect share prices and the stock market.”

Williams believes that allowing the withdrawal of contributors’ existing funds is not a good idea in general.

“Quantitative easing to buy MGS from financial institutions is a better alternative,” he said.

Malaysia set for ‘slow’ U-shaped recovery, says Azminsharethis sharing button

International Trade and Industry Minister Mohamed Azmin Ali says economic recovery will be more U-shaped than V.

KUALA LUMPUR: Malaysia’s economic recovery will likely be more U-shaped than V, dampened by renewed restrictions amid a resurgence of Covid-19 infections, according to International Trade and Industry Minister Mohamed Azmin Ali.

The government is seeking to stamp out the virus without hurting businesses by bringing back a national lockdown, Azmin said in an interview with Bloomberg TV. Still, he said, more could be done to flatten the curve of rising cases.

“It looks like that is the situation now but the pace is still slow,” he said when asked about the prospect for a U-shaped recovery.

“The best approach is to adopt MCO to contain the virus, but that will cost the economy,” he said, referring to the movement control order that battered the economy earlier this year.

A growing cluster of infections that emerged in late September has forced the government to renew a ban on most social and cultural activities and impose fresh curbs on movements in most of the country. The restrictions threaten the US$365 billion economy just as it was showing signs of improvement.

Malaysia’s gross domestic product contracted at a slower pace in the September quarter, rebounding from a decades-low fall as the nation began easing its lockdown in May. High-frequency indicators since then suggest “firm support” for revival, Bank Negara Malaysia governor Nor Shamsiah Mohd Yunus said last week.

However, a recent surge in virus cases could upend the outlook. New infections in the nation stayed above 1,000 for several days this week, and stood at 1,290 yesterday.

Political test

Prime Minister Muhyiddin Yassin’s government is set to face another challenge next week. The coalition’s razor-thin majority in Parliament will be put to the test when MPs vote on the 2021 budget on Thursday.

The past two weeks have seen MPs from both sides of the aisle withholding their support unless changes are made. Failing to pass the budget would count as losing a no-confidence vote.

“There’s no reason for the MPs to not support the budget and to defeat it when the budget is meant for the people and economic activities in Malaysia,” Azmin said. “The finance minister has taken all views into consideration.”

Azmin, who was recently appointed the Perikatan Nasional’s election director, said they were prepared to face a general election.

“With our track record for the last eight months, we will secure a bigger majority in the next general election,” he said.

However, the virus situation does not warrant holding any election at present, he added.

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