Don't increase lending,increase the money supply

Tim Congleton writing in this morning's FT has an alternative solution to end the recession.

is an increase in their bank debt necessarily helpful for companies that are short of cash? Surely extra debt is not the answer if companies have already borrowed too much, asset prices are plunging and banks are worried about inadequate collateral for their loans. Would it not be much better if the level of bank deposits, the quantity of money, increased?

Tim has published a pamphlet for the Centre for the Study of Financial Innovation in which he proposes that

private sector spending is heavily influenced by the state of company balance sheets. In particular, the ratio of company bank deposits to their bank borrowings, which might be called “the corporate liquidity ratio”,

Thus he argues that the more bank debt that companies have, the lower is the corporate liquidity ratio and the weaker is spending in the economy. and the solution to the economic crisis is therefore not more bank lending but to increase the amount of money in the economy.

This is of course contrary to what the government is proposing and Tim's appraoch would be

for the government to borrow from the banks, and then to use the loan proceeds either to finance the budget deficit or again to buy assets from non-banks