Posted on 07/16/2016 10:01:58 PM PDT by amorphous
The Cleveland Fed’s Loretta Mester is a clueless apparatchik and Fed lifer, who joined the system in 1985 fresh out of Barnard and Princeton and has imbibed in its Keynesian groupthink and institutional arrogance ever since. So it’s not surprising that she was out flogging—-albeit downunder in Australia—- the next step in the Fed’s rolling coup d’ etat.
We’re always assessing tools that we could use,” Mester told the ABC’s AM program. “In the US we’ve done quantitative easing and I think that’s proven to be useful.
“So it’s my view that [helicopter money] would be sort of the next step if we ever found ourselves in a situation where we wanted to be more accommodative.
This is beyond the pale because “helicopter money” isn’t some kind of new wrinkle in monetary policy, at all. It’s an old as the hills rationalization for monetization of the public debt—–that is, purchase of government bonds with central bank credit conjured from thin air.
(Excerpt) Read more at davidstockmanscontracorner.com ...
I think of this more like what the FED did during the worst early phases of the downturn: Give money to friends to freely spend without ever paying it back.
Somewhere, I have a FR article post talking about this. They found friends who said, “I will gladly spend the FED’s money if they gave it to me,” and they got it.
The reasoning was that the FED is prohibited from directly buying products, services, and stocks, but the FED has no prohibition from giving grants to people so that the friends “help stimulate the economy.”
Completely disgusting thinking. It only went to libs.
In the article it states that by far the biggest deficit spender of all time is Ronald Reagan. Not even close to Obama. This is the meme of all Liberals.
The Federal Reserve has succeeded in doing one thing well: convincing Americans that they really are trying to improve economy, when in fact they are focused primarily and almost solely on the success of the banks and the banking system. If actions taken to save the banks destroys people’s savings, pensions and the value of the US currency in order to prop up the banks, OH WELL!
Shakespeare should have instead written: “First, we kill all the banksters, THEN we kill all the lawyers!”
Agreed. FED has robbed savers and seniors to reward the BIG banks making bigger profits. No wonder economy is tepid. Less interest and dividends = less money to spend.
As I recall, they ‘dumped’ $85 billion dollars of air money into the economy (parts of it anyway) for the first 5-6 years of Obama’s tyranny. Half in T-bills that supposedly ‘legitimizes’ the debt, and the other half in Mortgage Backed Securities MBSs in the stock market. Basically, 6 Trillion Dollars of it.
Only a true-believer Keynesian could invert the definition of money. To them, money can magically create goods and services instead of stand as a measure of goods and services. This idiocy can only be achieved when a government allows a fiat money system. Once that’s done, it is in the short term political interest to game the currency. This will work until the point it doesn’t.
The Federal Reserve is the foundation of the progressive-left nanny-state. With unbacked, fiat money, massive debt and manipulated interest rates in the hands of political central planners - Fed.gov and all their cronies will never be denied funding. In turn, this has created now 3 generations of Americans who expect government to be their sugar-daddy, and vote that way.
Until conservatives understand that, they will continue to watch as the country slides away.
For those who haven't seen it, 'The Big Short' (Available on Netflix) is an excellent movie based on the '08 crash. It will give you an idea of the fraud prevalent in the system then; doubtless even worse today.
Since it was written (May '16), I believe it has been proven that many central banks are themselves purchasing equities with money from air.
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This seems to prove that no bubble bursts for long with the Federal Reserve at the helm, but there are limits on what the Fed can do when this bubble bursts, as it inevitably will, as surely as night follows day.
The Fed can't lower interest rates below zero without signaling that the economy is well and truly broken, and it can't force people who are wary of debt to borrow more, even if it effectively pays borrowers to take on more debt.
All the Fed can do is extend new debt to unqualified borrowers who will default at the first sneeze. This will trigger the collapse of whatever new credit-fueled bubble the Fed might generate.
The political winds are also changing. The public's passive acceptance of central banks' let's make the rich richer and everyone else poorer policies may be ending, and demands to put the heads of central bankers on spikes in the town square (figuratively speaking) may increase exponentially.
It's looking increasingly likely that third time's the charm: this set of bubbles is the last one central banks can blow. And when markets free-fall and don't reflate into new bubbles, pension funds will expire, as they were fated to do the day central banks chose zero interest rates forever as their cure for a broken economic model.
http://www.zerohedge.com/news/2016-05-27/heres-why-all-pension-funds-are-doomed-doomed-doomed
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