PETALING JAYA: An economist has dismissed a deputy minister’s suggestion for Bank Negara Malaysia to print and distribute money to those who are in the B40 category to increase their ability to spend, describing it as “naive”.
In an interview with BFM 89.9, Deputy Youth and Sports Minister Wan Ahmad Fayshal had said this is among the measures which could be coupled with his call for a targeted debt jubilee.
Wan Fayshal has since said many have misunderstood his comments, adding that they relate to the modern monetary theory (MMT) which has been advocated by academics.
But Center for Market Education CEO Carmelo Ferlito said MMT and the idea of printing money was flawed and that if printing and distributing money to stimulate consumption worked, then poverty would never be an issue.
“Obviously, in reality, things do not work like that,” he told FMT.
The value of money, he said, is inversely related to the quantity of goods available.
“So if we put more money into the system, the value of money will decrease and at best, people will only be richer in nominal terms.
“In reality, you will see an increase in prices of goods to offset the higher availability of money.”
Ferlito said this is what has happened in Venezuela where banknotes are just discarded on the street because they have lost their value.
Other countries which had implemented such a policy, he said, ended up abandoning it after it resulted in rampant inflation and weaker currencies.
“The best way to help people now is not to give them the false impression of being richer in monetary terms but implementing a strategy to ensure economic growth.
“Economic growth will create job opportunities which the market needs. Ultimately, this is what will see people earning and earning more,” he said.