David Smith's column from the The Sunday Times (£) asks whether economists and policymakers are barking up the wrong tree.
"Some would say there was too much credit pouring in before the crisis, and that is true. But there is plainly too little now.
The Bank used to think M4 growth of 9% a year was consistent with economic growth of 2.5%-3% and hitting the inflation target. That may have changed as a result of a shift in the velocity of money but not that much. 1.5% M4 growth is inconsistent with sustained recovery and chronically weak credit growth will hold back growth.
Responding by boosting government spending or cutting taxes is at best oblique, at worst irrelevant, like trying to fix a leak in the roof by replacing the windows. What the economy needs is s sustained private sector-led recovery, and what that needs is an adequate supply of credit.
David's point is that if we're going to have a 'Plan B', then supply and demand side fiscal measures may be 'barking up the wrong tree' because we've got a credit problem.
And more to the point, he says QE hasn't worked because the MPC has chosen the wrong type of QE - buying government bonds rathr than lending to the private sector.
So, while the International Monetary Fund suggested last week more QE (and temporary tax cuts) might be needed if growth grinds to a halt, that would be a bad idea. It does not solve the problem of dangerously weak credit growth.
The only person who has said much publicly on this is Adam Posen, the monetary policy committee's Japan expert. Though I do not agree with him in his regular vote for more QE, which would be a futile gesture, he was early on to 'the likely failure of lenders to support recovery'. He, like others, would have preferred it if QE had not been conducted overwhelmingly by the purchase of government bonds. Policy has failed to get credit flowing."
And because a picture is worth a thousand words, David demonstrates this policy failure in the chart below, which shows the meagre growth in M4 money (the broadest measure of the amount of notes, coins and deposits floating around in the economy) since the crisis set in.
It does make you wonder.