"People's QE" plan not a taboo for all UK economists - poll

* Majority of economists say "People's QE" ineffective

* Six of 20 economists say it would be effective in downturn

* Inflation, central bank independence a concern

By Ana Nicolaci da Costa

LONDON, Sept 30 (Reuters) - The "People's Quantitative Easing" plan set out by the new leader of Britain's opposition Labour Party is too radical for most economists, but some say the idea of central banks printing money for government spending is not unthinkable.

Most economists in a Reuters poll rejected the proposal but six out of 20 analysts said it would be an effective tool to revive the economy in the event of a new downturn.

"There are issues one would have to iron out if one were to try to execute such a plan, for example the independence of monetary policy is in question if you are to execute People's QE," said Sam Alderson, an economist at consultants Cebr.

"But in terms of the economics, it should boost aggregate demand, and in that sense it should help to engender some sort of recovery."

Alderson said concerns about the inflationary impact of creating more money would not be a big issue if done during an economic downturn and more investment in infrastructure would help ease long-term price pressures.

Labour's new left-wing leader Jeremy Corbyn has backed the idea of the government creating a national investment bank which would issue bonds. The Bank of England would buy the bonds to help fund government spending including on infrastructure projects.

The proposal raises red flags for most economists. It (Other OTC: ITGL - news) takes the central bank into the realms of fiscal policy, which some say could challenge its much-cherished independence and the credibility of its currency.

"If the central bank prints money and the central bank has credibility, markets will be much more accepting," Philip Shaw, economist at Investec (LSE: INVP.L - news) said.

"If the government prints money, certainly in the past that backsled to some pretty nasty bouts of inflation and markets might suspect that governments will begin printing money at an inappropriate time some time in the future."

"WHO'S TO JUDGE?"

Central banks have already ventured beyond their traditional limits after launching massive government bond-buying programmes to offset the hit to growth from the financial crisis.

Some economists say it might not be a big leap for policymakers to try a new version of quantitative easing that pumps money more directly into investment rather than trying to encourage it via bond purchases in the financial markets.

"(With current QE) there is a transfer going on across the central bank balance sheet to one part of the economy," Huw Pill, chief European economist at Goldman Sachs (NYSE: GS-PB - news) said.

"The pre-crisis conventional wisdom was you wouldn't let that type of thing happen and any form of that was bad. Now (Frankfurt: 11N.F - news) you've got to a situation where you've let some forms of that happen and I would say that was a very good and necessary thing ... but once you're saying we will do it for some but not for others, who's to judge?"

Paul Marshall, chairman of hedge fund Marshall Wace, last week said monetary policy had extended "well beyond its technocratic bounds into the realms of wealth distribution" and it made sense for Labour to look for "other versions of QE that do not so directly benefit bankers and the rich." (Additional Reporting by William Schomberg in London; polling by Khushboo Mittal in Bangalore; Editing by Andrew Heavens)