RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve

UK Telegraph ^ | June 27, 2010 | Ambrose Evans-Pritchard

[campaignPete R-CT]

Entitled "Deflation: Making Sure It Doesn’t Happen Here", it is a warfare manual for defeating economic slumps by use of extreme monetary stimulus once interest rates have dropped to zero, and implicitly once governments have spent themselves to near bankruptcy. "snip>"

Societe Generale's uber-bear Albert Edwards said the Fed and other central banks will be forced to print more money whatever they now say, given the "stinking fiscal mess" across the developed world. "The response to the coming deflationary maelstrom will be additional money printing that will make the recent QE seem insignificant," he said.

Despite the apparent rift with Europe, the US is arguably tightening fiscal policy just as hard. "snip>"

The Krugman doctrine of perma-deficits is ruinous - and has in fact ruined Japan. The only plausible escape route for the West is a decade of fiscal austerity offset by helicopter drops of printed money, for as long as it takes.

Some say that the Fed's QE policies have failed. I profoundly disagree. The US property market - and therefore the banks - would have imploded if the Fed had not pulled down mortgage rates so aggressively, but you can never prove a counter-factual.

The case for fresh QE is not to inflate away the debt or default on Chinese creditors by stealth devaluation. It is to prevent deflation.

[campaignPete R-CT]

Some, such as Krugman, distort these deflation fighting efforts as a justification for spending and more spending.

Evans-Pritchard is discussing the money supply. My own opinion is to come down against those who want to fight inflation during a deflationary recession. Bernanke is right on this and the Europeans are wrong.

[campaignPete R-CT]

I need to mention something about birthcertificates in the title because economy-talk gets little response here.

[combat_boots]

[Oceander]

Sounds just like Weimar Germany



A lotta good all that printing did them

[driftdiver]

Thats cause we actually have a remote chance of winning the battle of the birth certificate. Not much chance of winning the economic battle.

[combat_boots]

“Economics is Hard?”
http://market-ticker.denninger.net/archives/2458-Economics-Is-Hard.html

“FINREG Dead?”
http://market-ticker.denninger.net/archives/2459-FINREG-Dead.html

[moovova]

(...looking around...)

...where’s the thumbs-up button?

[1234]

I need to mention something about birthcertificates in the title because economy-talk gets little response here.

yes, you're in the birthcertificate zone-pls respect posting guidelines re. keywords....

[campaignPete R-CT]

As far as the wheel barrel goes, nobody is advocating unlimited increases in money supply.

As to the red ink, increasing the money supply does not increase borrowing. Although A.E.P is not a deficit hawk, he is not a STIMULATOR advocate (like Krugman).

[campaignPete R-CT]

Bender!
We need a little ECON humor! Now!

[stevie_d_64]

Yep, considering the “pre-admission” to some tough choices “WE” are going to have to make next year...Per the President...I see that we are on schedule for it to start really coming apart next year...

And guess who will be holding the empty cookie jar after the November elections...

Elections have consequences...

[campaignPete R-CT]

I am pausing from my leisurely campaigning to take issue with the hard money or tight money advocates who would drag the country into a deflation.

CT politics is hopelessly dull, even with primaries breaking out all over. Ten dull primaries: is that duller than zero primaries?

I have established a beach head in Bridgeport, the last place I expected to be. The west side. Homicide free.

[Dr. Sivana]

I am pausing from my leisurely campaigning to take issue with the hard money or tight money advocates who would drag the country into a deflation.

The problem is that many people conflate high government spending with loose money, and fiscal restraint with tight money.