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It's Not Just About Fiscal Policy.

...another in the "I've explained this so many times on social media, maybe I should just make a web page" series:

Basic Definitions

Fiscal Policy is simply put, making the government sums add up. Counting how much money comes in. Counting how much money goes out. Making the books balance.

Monetary Policy is a bit more complex. Government can legally create and destroy currency. This means they can print a bit more when they need it (or destroy it when they don't). Printing a bit causes a bit of inflation, printing a lot causes a lot of inflation.

Note: Usually government don't create the money themselves, they just control how much money is created by private banks when making loans, by setting interest rates.


How Monetary Policy can be used SENSIBLY

Government can use this additional money to invest in profit making infrastructure. An example: Royal Mail was making around £400 million a year profit when the Conservative government sold it for around two to three billion. So basically in 5 to 10 years (one or two terms of government), it would have made that money anyway, and they'd still have it and the £400 million a year income. Instead they sold it to their mates, so their mates could have the profit instead. The same is true of other, even more essential monopolies such as water.

So it's not just about fiscal policy. If you get away from neoliberal dogma (That everything must be privatised including the creation of money), there are plenty of ways for government to make money. It's not just about Fiscal Policy.

Note: When we talk about creating new money, if your first concern is "That will create inflation":

In 1960 there was only about £10 billion pounds in total when you add everyone's accounts and cash together. There is now about £2.5 Trillion pounds in total. That's an increase of 250 times as much money in circulation as there was in 1960.

We coped with the inflation when private banks were creating the new money, we can cope if government is doing it.

If you're actually interested in this, or have questions or arguments, I've gone into it in a lot more detail when rambling about Free Money for Governments as well as when pointing out how Austerity was a Scam.