After years of silence, monetary policy is once again a topic of political discussion. A week ago Theresa May’s conference speech surprised many observers with a radical change of tune: “While monetary policy with super-low rates and quantitative easing have provided emergency medicine, we have to acknowledge some of the bad side effects. People with assets have got richer, while people without have not … A change has got to come.”

The prime minister made similar comments during her first speech after taking office and the significance of these remarks should not be underestimated. Over the past couple of decades there has been a broad consensus that the Bank of England should be left to carry out monetary policy in total isolation from the government’s fiscal policy. That consensus is beginning to break.

May understands that monetary policy is not working for the majority of people. Quantitative easing (QE) is increasing inequality, and low interest rates aren’t the solution for an economy that is still burdened with high levels of private debt. The tools are broken.

The Bank of England governor, Mark Carney, responded to the prime minister’s comments by admitting that some had benefited more than others from QE. However, he put the responsibility of addressing inequality squarely with the government, stating: “Every monetary policy action has distributional consequences. It is not for the central bank to address these consequences. It is for the government to offset them.”

But more economists are pointing out that monetary policy is in intellectual crisis. Central banks’ tools of low interest rates and QE are clearly failing to boost the economy. Low interest rates have failed to stimulate the economy – we had one of the slowest recoveries from a recession in history – because people and businesses don’t want to take on more debt.

Low interest rates only work by encouraging more private sector borrowing. But levels of private debt are still very high so there isn’t much room to take on even more. And of course, as the IMF recently noted, the best indicator that a financial crisis isn’t far off is a buildup of private debt – so it’s not something central banks should be encouraging lightly.

QE is failing on its own terms and is having disastrous consequences. A growing number of economists are warning that QE is a key driver of inequality. This was confirmed by the Bank’s research, which found that QE has made the top 5% of households richer by an average of £128,000 each.

Then there’s the question of corporate QE. The Bank revealed details of its plans for buying £10bn of corporate bonds through its new QE programme. Carney explained that to qualify, the companies would have to make a “material contribution to the UK economy”. So many were shocked when the list included foreign-owned corporations with limited UK operations, such as Apple and AT&T. It strikes many people as extraordinary that the Bank should be picking and choosing companies like this at all. David Blanchflower, a former MPC member, who was heading up Labour’s review of the Bank described the Bank’s corporate bond purchases as “unmandated fiscal policy”.

It’s becoming clear that monetary policy has impacts that are of enormous political significance, and it isn’t being closely scrutinised by parliament. At a parliamentary debate on the effectiveness of quantitative easing on 15 September only eight MPs spoke. But more economists and politicians are waking up to the fact that you can’t carry out monetary and fiscal policy operating in total isolation, and if we want to rebalance our economy away from housing bubbles and an oversized financial sector, then monetary policy needs a serious rethink.

An idea that is gaining traction is that monetary and fiscal policy could work together to deliver “monetary financing”. Under this proposal, new money would be created by the Bank as with QE, but instead would be spent into the economy by the government to boost investment, employment and incomes. It’s an idea known as people’s QE.

This might sound radical, but currently, it’s considered good if banks create money, regardless of whether they use it to lend to businesses or to blow up property bubbles. However, it’s considered taboo if the central bank creates money to finance government spending for the real economy. It’s time to break that taboo.