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It Begins: "Central Banks Should Hand Consumers Cash Directly"
... A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman's famous "helicopter drop" of money
- Ben Bernanke, Deflation: Making Sure "It" Doesn't Happen Here, November 21, 2002
A year ago, when it became abundantly clear that all of the Fed's attempts to boost the economy have failed, leading instead to a record divergence between the "1%" who were benefiting from the Fed's aritficial inflation of financial assets, and everyone else (a topic that would become one of the most discussed issues of 2014) and with no help coming from a hopelessly broken Congress (who can forget the infamous plea by a desperate Wall Street lobby-funding recipient "Get to work Mr. Chariman"), we wrote that "Bernanke's Helicopter Is Warming Up."
The reasoning was very simple: in a country (and world) drowning with debt, there are only two options to extinguish said debt: inflate it away or default. Anything else is kicking the can while making the problem even worse. Because while the Fed has been successful at recreating the world's biggest asset bubble (in history), it has failed to stimulate broad, "benign" demand-pull inflation as the trickle down effects of its "wealth effect" have failed to materialize 6 years after the launch of the Fed's unconventional monetary policies.
In other words, a world stuck in the last phase before complete Keynesian collapse, had no choice but to gamble "all in" with the last and only bluff it had left before admitting the economic system it had labored under, one which has borrowed so extensively from the future to fund the present that there is no future left, has failed.
The only question left was when would the trial balloons for such monetary paradrops start to emerge.
We now know the answer, and it is today.
Moments ago a stunning article appearing in the "Foreign Affairs" publication of the influential and policy-setting Council of Foreign Relations, titled "Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People."
In it we read the now conventional admission of failure by Keynesians, who however, unwilling to actually admit they have been wrong, urge the even more conventional solution: do more of the same that has lead to the current financial cataclysm, only in this case the authors advocate no longer pretending that the traditional monetary channels work but to, literally, paradrop money. To wit:
To some extent, low inflation reflects intense competition in an increasingly globalized economy. But it also occurs when people and businesses are too hesitant to spend their money, which keeps unemployment high and wage growth low. In the eurozone, inflation has recently dropped perilously close to zero. And some countries, such as Portugal and Spain, may already be experiencing deflation. At best, the current policies are not working; at worst, they will lead to further instability and prolonged stagnation.
Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries’ tax-paying households a certain amount of money. The government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality.
A third, and most important outcome, would be the one we have forecast from the beginning of this ridiculous central bank experiment: "hyperinflation" (which is not simply runaway inflation as it is often incorrectly designated - it is outright evisceration of the prevailing monetary system), which has been avoided for now, but which is inevitable in a world in which only the wholesale destruction of the fiat reserve currency is the one option left to inflate away the debt overhang.
So without further ado, here is the first official trial balloon - the article that one day soon will be seen as the canary in the paradropmine, and the piece that will finally get the rotor of Bernanke's, now Yellen's infamous helicopter finally spinning. Highlights ours:
Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People
From Foreign Affairs, by Mark Blyth and Eric Lonergan
In the decades following World War II, Japan’s economy grew so quickly and for so long that experts came to describe it as nothing short of miraculous. During the country’s last big boom, between 1986 and 1991, its economy expanded by nearly $1 trillion. But then, in a story with clear parallels for today, Japan’s asset bubble burst, and its markets went into a deep dive. Government debt ballooned, and annual growth slowed to less than one percent. By 1998, the economy was shrinking.
That December, a Princeton economics professor named Ben Bernanke argued that central bankers could still turn the country around. Japan was essentially suffering from a deficiency of demand: interest rates were already low, but consumers were not buying, firms were not borrowing, and investors were not betting. It was a self-fulfilling prophesy: pessimism about the economy was preventing a recovery. Bernanke argued that the Bank of Japan needed to act more aggressively and suggested it consider an unconventional approach: give Japanese households cash directly. Consumers could use the new windfalls to spend their way out of the recession, driving up demand and raising prices.
As Bernanke made clear, the concept was not new: in the 1930s, the British economist John Maynard Keynes proposed burying bottles of bank notes in old coal mines; once unearthed (like gold), the cash would create new wealth and spur spending. The conservative economist Milton Friedman also saw the appeal of direct money transfers, which he likened to dropping cash out of a helicopter. Japan never tried using them, however, and the country’s economy has never fully recovered. Between 1993 and 2003, Japan’s annual growth rates averaged less than one percent.
Today, most economists agree that like Japan in the late 1990s, the global economy is suffering from insufficient spending, a problem that stems from a larger failure of governance. Central banks, including the U.S. Federal Reserve, have taken aggressive action, consistently lowering interest rates such that today they hover near zero. They have also pumped trillions of dollars’ worth of new money into the financial system. Yet such policies have only fed a damaging cycle of booms and busts, warping incentives and distorting asset prices, and now economic growth is stagnating while inequality gets worse. It’s well past time, then, for U.S. policymakers -- as well as their counterparts in other developed countries -- to consider a version of Friedman’s helicopter drops. In the short term, such cash transfers could jump-start the economy. Over the long term, they could reduce dependence on the banking system for growth and reverse the trend of rising inequality. The transfers wouldn’t cause damaging inflation, and few doubt that they would work. The only real question is why no government has tried them.
EASY MONEY
In theory, governments can boost spending in two ways: through fiscal policies (such as lowering taxes or increasing government spending) or through monetary policies (such as reducing interest rates or increasing the money supply). But over the past few decades, policymakers in many countries have come to rely almost exclusively on the latter. The shift has occurred for a number of reasons. Particularly in the United States, partisan divides over fiscal policy have grown too wide to bridge, as the left and the right have waged bitter fights over whether to increase government spending or cut tax rates. More generally, tax rebates and stimulus packages tend to face greater political hurdles than monetary policy shifts. Presidents and prime ministers need approval from their legislatures to pass a budget; that takes time, and the resulting tax breaks and government investments often benefit powerful constituencies rather than the economy as a whole. Many central banks, by contrast, are politically independent and can cut interest rates with a single conference call. Moreover, there is simply no real consensus about how to use taxes or spending to efficiently stimulate the economy.
Steady growth from the late 1980s to the early years of this century seemed to vindicate this emphasis on monetary policy. The approach presented major drawbacks, however. Unlike fiscal policy, which directly affects spending, monetary policy operates in an indirect fashion. Low interest rates reduce the cost of borrowing and drive up the prices of stocks, bonds, and homes. But stimulating the economy in this way is expensive and inefficient, and can create dangerous bubbles -- in real estate, for example -- and encourage companies and households to take on dangerous levels of debt.
That is precisely what happened during Alan Greenspan’s tenure as Fed chair, from 1997 to 2006: Washington relied too heavily on monetary policy to increase spending. Commentators often blame Greenspan for sowing the seeds of the 2008 financial crisis by keeping interest rates too low during the early years of this century. But Greenspan’s approach was merely a reaction to Congress’ unwillingness to use its fiscal tools. Moreover, Greenspan was completely honest about what he was doing. In testimony to Congress in 2002, he explained how Fed policy was affecting ordinary Americans:
"Particularly important in buoying spending [are] the very low levels of mortgage interest rates, which [encourage] households to purchase homes, refinance debt and lower debt service burdens, and extract equity from homes to finance expenditures. Fixed mortgage rates remain at historically low levels and thus should continue to fuel reasonably strong housing demand and, through equity extraction, to support consumer spending as well."
Of course, Greenspan’s model crashed and burned spectacularly when the housing market imploded in 2008. Yet nothing has really changed since then. The United States merely patched its financial sector back together and resumed the same policies that created 30 years of financial bubbles. Consider what Bernanke, who came out of the academy to serve as Greenspan’s successor, did with his policy of “quantitative easing,” through which the Fed increased the money supply by purchasing billions of dollars’ worth of mortgage-backed securities and government bonds. Bernanke aimed to boost stock and bond prices in the same way that Greenspan had lifted home values. Their ends were ultimately the same: to increase consumer spending.
The overall effects of Bernanke’s policies have also been similar to those of Greenspan’s. Higher asset prices have encouraged a modest recovery in spending, but at great risk to the financial system and at a huge cost to taxpayers. Yet other governments have still followed Bernanke’s lead. Japan’s central bank, for example, has tried to use its own policy of quantitative easing to lift its stock market. So far, however, Tokyo’s efforts have failed to counteract the country’s chronic underconsumption. In the eurozone, the European Central Bank has attempted to increase incentives for spending by making its interest rates negative, charging commercial banks 0.1 percent to deposit cash. But there is little evidence that this policy has increased spending.
China is already struggling to cope with the consequences of similar policies, which it adopted in the wake of the 2008 financial crisis. To keep the country’s economy afloat, Beijing aggressively cut interest rates and gave banks the green light to hand out an unprecedented number of loans. The results were a dramatic rise in asset prices and substantial new borrowing by individuals and financial firms, which led to dangerous instability. Chinese policymakers are now trying to sustain overall spending while reducing debt and making prices more stable. Like other governments, Beijing seems short on ideas about just how to do this. It doesn’t want to keep loosening monetary policy. But it hasn’t yet found a different way forward.
The broader global economy, meanwhile, may have already entered a bond bubble and could soon witness a stock bubble. Housing markets around the world, from Tel Aviv to Toronto, have overheated. Many in the private sector don’t want to take out any more loans; they believe their debt levels are already too high. That’s especially bad news for central bankers: when households and businesses refuse to rapidly increase their borrowing, monetary policy can’t do much to increase their spending. Over the past 15 years, the world’s major central banks have expanded their balance sheets by around $6 trillion, primarily through quantitative easing and other so-called liquidity operations. Yet in much of the developed world, inflation has barely budged.
To some extent, low inflation reflects intense competition in an increasingly globalized economy. But it also occurs when people and businesses are too hesitant to spend their money, which keeps unemployment high and wage growth low. In the eurozone, inflation has recently dropped perilously close to zero. And some countries, such as Portugal and Spain, may already be experiencing deflation. At best, the current policies are not working; at worst, they will lead to further instability and prolonged stagnation.
MAKE IT RAIN
Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries’ tax-paying households a certain amount of money. The government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality.
Such an approach would represent the first significant innovation in monetary policy since the inception of central banking, yet it would not be a radical departure from the status quo. Most citizens already trust their central banks to manipulate interest rates. And rate changes are just as redistributive as cash transfers. When interest rates go down, for example, those borrowing at adjustable rates end up benefiting, whereas those who save -- and thus depend more on interest income -- lose out.
Most economists agree that cash transfers from a central bank would stimulate demand. But policymakers nonetheless continue to resist the notion. In a 2012 speech, Mervyn King, then governor of the Bank of England, argued that transfers technically counted as fiscal policy, which falls outside the purview of central bankers, a view that his Japanese counterpart, Haruhiko Kuroda, echoed this past March. Such arguments, however, are merely semantic. Distinctions between monetary and fiscal policies are a function of what governments ask their central banks to do. In other words, cash transfers would become a tool of monetary policy as soon as the banks began using them.
Other critics warn that such helicopter drops could cause inflation. The transfers, however, would be a flexible tool. Central bankers could ramp them up whenever they saw fit and raise interest rates to offset any inflationary effects, although they probably wouldn’t have to do the latter: in recent years, low inflation rates have proved remarkably resilient, even following round after round of quantitative easing. Three trends explain why. First, technological innovation has driven down consumer prices and globalization has kept wages from rising. Second, the recurring financial panics of the past few decades have encouraged many lower-income economies to increase savings -- in the form of currency reserves -- as a form of insurance. That means they have been spending far less than they could, starving their economies of investments in such areas as infrastructure and defense, which would provide employment and drive up prices. Finally, throughout the developed world, increased life expectancies have led some private citizens to focus on saving for the longer term (think Japan). As a result, middle-aged adults and the elderly have started spending less on goods and services. These structural roots of today’s low inflation will only strengthen in the coming years, as global competition intensifies, fears of financial crises persist, and populations in Europe and the United States continue to age. If anything, policymakers should be more worried about deflation, which is already troubling the eurozone.
There is no need, then, for central banks to abandon their traditional focus on keeping demand high and inflation on target. Cash transfers stand a better chance of achieving those goals than do interest-rate shifts and quantitative easing, and at a much lower cost. Because they are more efficient, helicopter drops would require the banks to print much less money. By depositing the funds directly into millions of individual accounts -- spurring spending immediately -- central bankers wouldn’t need to print quantities of money equivalent to 20 percent of GDP.
The transfers’ overall impact would depend on their so-called fiscal multiplier, which measures how much GDP would rise for every $100 transferred. In the United States, the tax rebates provided by the Economic Stimulus Act of 2008, which amounted to roughly one percent of GDP, can serve as a useful guide: they are estimated to have had a multiplier of around 1.3. That means that an infusion of cash equivalent to two percent of GDP would likely grow the economy by about 2.6 percent. Transfers on that scale -- less than five percent of GDP -- would probably suffice to generate economic growth.
LET THEM HAVE CASH
Using cash transfers, central banks could boost spending without assuming the risks of keeping interest rates low. But transfers would only marginally address growing income inequality, another major threat to economic growth over the long term. In the past three decades, the wages of the bottom 40 percent of earners in developed countries have stagnated, while the very top earners have seen their incomes soar. The Bank of England estimates that the richest five percent of British households now own 40 percent of the total wealth of the United Kingdom -- a phenomenon now common across the developed world.
To reduce the gap between rich and poor, the French economist Thomas Piketty and others have proposed a global tax on wealth. But such a policy would be impractical. For one thing, the wealthy would probably use their political influence and financial resources to oppose the tax or avoid paying it. Around $29 trillion in offshore assets already lies beyond the reach of state treasuries, and the new tax would only add to that pile. In addition, the majority of the people who would likely have to pay -- the top ten percent of earners -- are not all that rich. Typically, the majority of households in the highest income tax brackets are upper-middle class, not superwealthy. Further burdening this group would be a hard sell politically and, as France’s recent budget problems demonstrate, would yield little financial benefit. Finally, taxes on capital would discourage private investment and innovation.
There is another way: instead of trying to drag down the top, governments could boost the bottom. Central banks could issue debt and use the proceeds to invest in a global equity index, a bundle of diverse investments with a value that rises and falls with the market, which they could hold in sovereign wealth funds. The Bank of England, the European Central Bank, and the Federal Reserve already own assets in excess of 20 percent of their countries’ GDPs, so there is no reason why they could not invest those assets in global equities on behalf of their citizens. After around 15 years, the funds could distribute their equity holdings to the lowest-earning 80 percent of taxpayers. The payments could be made to tax-exempt individual savings accounts, and governments could place simple constraints on how the capital could be used.
For example, beneficiaries could be required to retain the funds as savings or to use them to finance their education, pay off debts, start a business, or invest in a home. Such restrictions would encourage the recipients to think of the transfers as investments in the future rather than as lottery winnings. The goal, moreover, would be to increase wealth at the bottom end of the income distribution over the long run, which would do much to lower inequality.
Best of all, the system would be self-financing. Most governments can now issue debt at a real interest rate of close to zero. If they raised capital that way or liquidated the assets they currently possess, they could enjoy a five percent real rate of return -- a conservative estimate, given historical returns and current valuations. Thanks to the effect of compound interest, the profits from these funds could amount to around a 100 percent capital gain after just 15 years. Say a government issued debt equivalent to 20 percent of GDP at a real interest rate of zero and then invested the capital in an index of global equities. After 15 years, it could repay the debt generated and also transfer the excess capital to households. This is not alchemy. It’s a policy that would make the so-called equity risk premium -- the excess return that investors receive in exchange for putting their capital at risk -- work for everyone.
MO' MONEY, FEWER PROBLEMS
As things currently stand, the prevailing monetary policies have gone almost completely unchallenged, with the exception of proposals by Keynesian economists such as Lawrence Summers and Paul Krugman, who have called for government-financed spending on infrastructure and research. Such investments, the reasoning goes, would create jobs while making the United States more competitive. And now seems like the perfect time to raise the funds to pay for such work: governments can borrow for ten years at real interest rates of close to zero.
The problem with these proposals is that infrastructure spending takes too long to revive an ailing economy. In the United Kingdom, for example, policymakers have taken years to reach an agreement on building the high-speed rail project known as HS2 and an equally long time to settle on a plan to add a third runway at London’s Heathrow Airport. Such large, long-term investments are needed. But they shouldn’t be rushed. Just ask Berliners about the unnecessary new airport that the German government is building for over $5 billion, and which is now some five years behind schedule. Governments should thus continue to invest in infrastructure and research, but when facing insufficient demand, they should tackle the spending problem quickly and directly.
If cash transfers represent such a sure thing, then why has no one tried them? The answer, in part, comes down to an accident of history: central banks were not designed to manage spending. The first central banks, many of which were founded in the late nineteenth century, were designed to carry out a few basic functions: issue currency, provide liquidity to the government bond market, and mitigate banking panics. They mainly engaged in so-called open-market operations -- essentially, the purchase and sale of government bonds -- which provided banks with liquidity and determined the rate of interest in money markets. Quantitative easing, the latest variant of that bond-buying function, proved capable of stabilizing money markets in 2009, but at too high a cost considering what little growth it achieved.
A second factor explaining the persistence of the old way of doing business involves central banks’ balance sheets. Conventional accounting treats money -- bank notes and reserves -- as a liability. So if one of these banks were to issue cash transfers in excess of its assets, it could technically have a negative net worth. Yet it makes no sense to worry about the solvency of central banks: after all, they can always print more money.
The most powerful sources of resistance to cash transfers are political and ideological. In the United States, for example, the Fed is extremely resistant to legislative changes affecting monetary policy for fear of congressional actions that would limit its freedom of action in a future crisis (such as preventing it from bailing out foreign banks). Moreover, many American conservatives consider cash transfers to be socialist handouts. In Europe, which one might think would provide more fertile ground for such transfers, the German fear of inflation that led the European Central Bank to hike rates in 2011, in the middle of the greatest recession since the 1930s, suggests that ideological resistance can be found there, too.
Those who don’t like the idea of cash giveaways, however, should imagine that poor households received an unanticipated inheritance or tax rebate. An inheritance is a wealth transfer that has not been earned by the recipient, and its timing and amount lie outside the beneficiary’s control. Although the gift may come from a family member, in financial terms, it’s the same as a direct money transfer from the government. Poor people, of course, rarely have rich relatives and so rarely get inheritances -- but under the plan being proposed here, they would, every time it looked as though their country was at risk of entering a recession.
Unless one subscribes to the view that recessions are either therapeutic or deserved, there is no reason governments should not try to end them if they can, and cash transfers are a uniquely effective way of doing so. For one thing, they would quickly increase spending, and central banks could implement them instantaneously, unlike infrastructure spending or changes to the tax code, which typically require legislation. And in contrast to interest-rate cuts, cash transfers would affect demand directly, without the side effects of distorting financial markets and asset prices. They would also would help address inequality -- without skinning the rich.
Ideology aside, the main barriers to implementing this policy are surmountable. And the time is long past for this kind of innovation. Central banks are now trying to run twenty-first-century economies with a set of policy tools invented over a century ago. By relying too heavily on those tactics, they have ended up embracing policies with perverse consequences and poor payoffs. All it will take to change course is the courage, brains, and leadership to try something new.
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"Oh, and the cash will not come in the form of a check, but a JP Morgan debit card. The card cannot be used to pay down debts, but all new Apple products will be eligible for purchase using the card. The card loses 10% of it's value everyday until the balance is zero. $10 charge to check your balance. Taxpayers will not be eligible for this program, but those who qualify for Earned Income Tax Credits will. Taxpayers will be asked to pay a 1 time 10% tax on their income, in additon to their normal rate, to help finance the logistics of this program. (mainly banking fees relating to this massive project) This will reduce the income inequality and greatly benefit the lower rungs of society. Taxpayers already have jobs, so they are not in need of any assistance."
In another life I spent some time in the Central Valley of California.
This region operates upon a 200 year tradition of migrant and child labor - organic robots.
This continues to this day.
However, what is different is that traditional migrants have been settling in for the last 50 years, starting families and otherwise being an established part of the country. Most of this has been made possible by their hard work, but also by massive and varied public assistance programs.
Section 8 and housing vouchers are but one example.
The reason I mention this is that exactly because "the government" hands out so many housing vouchers to this growing segment of the population - in some areas it is a full third of the working population which likely has two-thirds of all the children that local real estate markets just say 'OK, I'll take your money - even if you are illegals' and raise the rent by 30%.
Where a low end run down 2 bedroom 1 bath 80 year old functionally obsolete would rent for $500/mo out there it is $850.
Add a bedroom and you are talking $1200.
It is no differnt than the Dakota oil fields.
Supply/Demand. Money printing is not a solution CFR.
Handing out money in the name of "basic income" might stave off revolution for a while, but it just injects more inflation into the system - just like all the insane medical costs thanks to costs scheduled brokered by big pharma and congress and the like.
If you hand out $2000/mo for basic income to everyone I guarantee you the price of bacon will go to $20 a pound within a year. The Value Menu starts at $5.
If you want to straighten out the real economy publicly assassinate a room filled with central bankers and their shareholders.
That and begin to extinguish debt. Until debt levels drop in real terms the problems will continue.
Debt is not about money. It is about keeping that slavery obligation over someone's head for a lifetime.
That is what this is about. Debt Slavery and otherwise rising up against the plantation owners at the banks.
Blaming Bush again.
This time it is his fault because he didn't give away enough to make a difference.
This country is past the point of any political party mandating fiscal responsibility.
The end is nigh.
I used to think that the joke: BS = bull sh*t, MS = more sh*t, PhD = piled higher and deeper was a sophomoric joke about the value of an academic education. This article demonstrates once and for all that it's not a joke, it's a sad reality. This has to be the most sophomoric article ever published in Foreign Affairs (and I'm a subscriber).
They did try it in Australia.
Everybody bought a new TV and went to Bali.
Duh!
http://www.forbes.com/sites/kenrapoza/2014/08/25/russia-economy-in-troub...
Russia’s Economic Development Minister, Alexei Ulyukayev, said the economy had many obstacles and entered a negative growth cycle. In an op-ed published in the Vedomosti newspaper Monday, Ulyukayev wrote, “ It could be said that we have entered a negative stage of the economic cycle. Lack of demand is a significant obstacle on the way to restoring steady growth.”
Sanctions are not helping matters.
Join the club. No nation will escape a negative GDP.
Ha,ha ... you got to smile. (this is the UK).
If you take a slightly different viewpoint aee that the more money the population has the more they will spend on cheap imports ... oooo that's nice. The problem with this it starts driving the trade defecit because THE MONEY DOES NOT REMAIN IN THE NATIONAL ECONOMY. So what they chose to do instead (in the UK) was implement austerity to try and restrict this flow of money out of the economy you can't buy with no money.
Now any attempt to stimulate the economy the money also flows into holding bank accounts at best but does not reenter the economy. How many millions you worth?
The puzzle for the central banks is how do you inject money into the economy and keep it flowing instead of into hedge funds etc. or alternatively outwards buying imports.
Now you can keep stimulatng the economy all to no avail and even helicopter money makes no difference if the money is being hoarded or flowis out of the country as FAST AS YOU CREATE IT. The USA and the west in general is in exactly the same shit and all stimulus is doing is creating a hefty debt like Japan you can never get rid of.
DO CARRY ON, NOT MY DEBT THE CENTRAL BANKERS AND THOSE THAT GOT IT CAN PAY THE DEBT.
THE MONEY DOES NOT REMAIN IN THE NATIONAL ECONOMY.
YES IT DOES. You think they physically ship it out? You think they move the electronic pounds over to China for them to spend there? What are they going to buy with GBP in China? No, the money gets exchanged back into the currency the goods were produced under.
Therefore the money remains exactly where it is in the national economy[1] and THE EXCHANGE RATE CHANGES. In the case of a British person buying chinese goods, the British GBP are buying Chinease RMB pushing up the value of the RMB and down on the value of the GBP thereby making Chinese people wealthier and British people poorer. Except that in steps the central bank, government and whoever else to manipulate rates and expropriate the wealth instead.
HTH
[1] Doesn't apply so much for USD being the world reserve currency.
Maybe it's time to just get it over with. Let them eat fiat! Then, when everyone has seen the logical conclusion of Keynesianism, we can go back to doing it the right way.
Further, maybe we could term it "the Hopium Cycle"?
You know this is one of the cleverest pieces yet. It took the writers 2/3 of the way thru the article before they mentioned offloading the Fed's balance sheet in the form of loans to enable them to transfer the money. I'm sure S&P will mark it AAA. This is thievery, plain and simple. At least now we know how the Fed is going to reduce their balance sheet.
Send me cash Janet. I'll buy more fucking ammo and rice with it.
Send me cash Janet.
I'll make more fucking ammo and grow more rice with it.
I'll be rich off the sweat of others.
Is action before the run on US Bank account settlements or after ECB begins their version of Central planning Quantitative Sleazing?
Jackson Asshole imbeciles must really be on heavy meds. It will not happen. CFR are just adults trying to re experience their first wet dream.
So, the central banks put cash directly into the hands of individuals. Each according to their need I suppose.
Not sure what the difference between this method and increasing welfare benefits/reducing taxes on the lower paid (so you have to earn 80,000 bucks and pay tax on that or simply take welfare checks).
Oh yes, this means that central bank officials control fiscal policy directly. Of course. No votes, but redistribute wealth directly. Well, unless the central banks want to only pay the very weatlhy people cash so they can stop that pesky chair from rocking with stacks of 100 dollar bills.
Who thinks up this stuff? Abolish central banks immediately and simply print money direct into everyone's bank account? I mean really? Moral hazard much, why would anyone lift the economy up if they can get paid when it stays down? Muppets.
Pure fiat. Model straight up, no reality. What could possibly go wrong?
No matter what the Council on Foreign Relations proposes, it will fail.
The Council on Foreign Relations is exactly what brought down the United States of America through their regressive foreign policy and
their penchant towards their targets and victims. The Council on Foreign Relations is a terrorist organization bent on Empire building that was evidenced through their operatives in the White House administration back in the Bush era governance. Paul Wolfowitz and Donald Rumsfeld, as well as, Dickhead Cheney are the irresponsible
participants that everyone should be looking at. Helicopter drops of cash will not work and the only possibility for Americans en masse is to allow the 'system' to crash and burn into the Hell that they carved out for us. Clearly, we have empirical justification to let the 'system' implode and start over with a 1% in prison for the remainder of their lives. In brief, jail the perps in the investment banking industry and take possession of their property obtained by crimes against humanity.
"After around 15 years, the funds could distribute their equity holdings to the lowest-earning 80 percent of taxpayers."
Well, thank god! I only need to pay into some new centrally planned system for 15 more years before they start feeding me some fiat scraps.
Sign me up!
This was always going to be the endpoint. I always thought I would die before it happened in earnest, but I now doubt that.
This kind of scheme only works if inflation remains under control. Once we have a huge oil price spike, a simple print and hand out cash plan won't look so smart anymore.
"Once we have a huge oil price spike"
When?
Triggers?
I thought this sentence was the most important one:
"Most citizens already trust their central banks to manipulate interest rates."
Most citizens are brain-dead zombie sheeple, who have been conditioned to live inside of a fundamentally fraudulent financial accounting system, for generation after generation, to the degree to which it is now practically impossible to imagine anything else.
The trajectory of civilization was for the runaway "successes" of backing up lies with violence, or enforcing frauds, so much, for so long, to result in a civilization where the ratio of egregiously blatant lies to relatively objective truths is more than 100 to 1.
Meanwhile, it seems a sign of the times that even the CFR is shaking itself apart. (The posts above by hedgeless_horseman were excellent in their description of the CFR.) Last week, Zero Hedge featured another CFR related Bizarro Mirror World article:
http://www.zerohedge.com/news/2014-08-21/council-foreign-relations-ukraine-crisis-west’s-–-not-putin’s-–-fault
Council On Foreign Relations: The Ukraine Crisis Is the West’s – Not Putin’s – Fault
And now, for another double dose of "truthiness," this article, which takes the notion that making "money" out of nothing was a good idea to the next level of absurdity! In my view, there are no practically possible better resolutions to our runaway political economy problems, because the vast majority of people do not understand the monetary system, because they have been conditioned to not want to understand. The ruling classes have been far too successful in reducing the people that they ruled over to become incompetent political idiots.
Theoretically, what would make sense would be for more people to recognize that money is measurement backed by murder, in ways whereby the flows of energy from the natural world, through human systems, and back to the natural world, were more scientifically understood. The political economy should be understood to always be inside the natural ecology! However, the actual ways that human energy systems developed resulted in that flow of energy to follow its own path of least action, or least resistance, while the direction of that flow was done by the most labile components inside of the human systems. In other words, it was quite consistent with human civilization being a general energy system that human affairs were controlled by the most dishonest and violent people, who directed events to follow the path of least morality.
That was so successful, for so long, that most sheeple trust the wolves:
"Most citizens already trust their central banks to manipulate interest rates."
@Radical Marijuana - Thank you for your lyrical poetical post. It is a pleasure to read.
Please don't let con men ruin your love of life.
"ratio of egregiously blatant lies to relatively objective truths is more than 100 to 1"
Although that feels true now, if it were actually true we wouldn't be here because life could not exist.
Please, add 7 zeroes to my checking account immediately, please. Also, please tell me in advance when you'll be doing this so I can prepare.
Can we refer to this as the Angel Gabriel Plan in honor of Murray Rothbard?
Absolutely.
"Suppose that Joe Doakes and his merry men have invented a perfect counterfeit: under a gold standard, a brass or plastic object that would look exactly like a gold coin, or, in the present paper money standard, a $10 bill that exactly simulates a $10 Federal Reserve Note. What would happen?
In the first place, the aggregate money supply of the country would increase by the amount counterfeited; equally important, the new money will appear first in the hands of the counterfeiters themselves. Counterfeiting, in short, involves a twofold process: (1) increasing the total supply of money, thereby driving up the prices of goods and services and driving down the purchasing power of the money-unit; and (2) changing the distribution of income and wealth, by putting disproportionately more money into the hands of the counterfeiters.
The first part of the process, increasing the total money supply in the country, was the focus of the "quantity theory" of the British classical economists from David Hume to Ricardo, and continues to be the focus of Milton Friedman and the monetarist "Chicago school." David Hume, in order to demonstrate the inflationary and non-productive effect of paper money, in effect postulated what I like to call the "Angel Gabriel" model, in which the Angel, after hearing pleas for more money, magically doubled each person's stock of money overnight. (In this case, the Angel Gabriel would be the "counterfeiter," albeit for benevolent motives.) It is clear that while everyone would be euphoric from their seeming doubling of monetary wealth, society would in no way be better off: for there would be no increase in capital or productivity or supply of goods. As people rushed out and spent the new money, the only impact would be an approximate doubling of all prices, and the purchasing power of the dollar or franc would be cut in half, with no social benefit being conferred. An increase of money can only dilute the effectiveness of each unit of money. Milton Friedman's more modern though equally magical version is that of his "helicopter effect," in which he postulates that the annual increase of money created by the Federal Reserve is showered on each person proportionately to his current money stock by magical governmental helicopters."
The Case Against The Fed
M. Rothbard 1994
the japanese did try a direct money drop and savvy mrs. watanabe saved it knowing that deflation is as good as interest payments on savings. americans aren't so smart so the scheme would work especially if the money could circulate locally for the longest time possible before it repatriates to china. so waht is a little inflation for chance to buy a couipla ipuds?
the unintended consequence of the social security system was/is to replace savings and pensions for retirement. a .gov wage subsidy would limit labor pay. what a great idea!
"americans aren't so smart"
Still roaring. The most funny / obvious thing I have read. Strikes me funny today anyway.
As a whole, this is true. We're reaping the wind from decades of dumping money into social schemes that produce a negative outcome from overt intentions (possibly a favorible outcome from covert intentions though). Maybe McCarthy was mostly right?
Instead of letting markets clear, the powers that be continue to advance ever more socialist policies, which history tells us are destined to fail. At least infrastructure spending was a legitimate use of government funds and what they should have been doing all along.
The sad fact is that we've been helicopter dropping money. The nearly 50 million people on food stamps in the U.S. is helicpoter money as are the hundreds of other entitlement programs in place which have devasted the budget.
To argue that it is some kind of free lunch for the Fed to print money out of thin air and trade it for real productive assets in the form of stocks is not only outright theft by the government of private businesses it IS socialism. Taken to its extreme, the government prints trillions and buys all the public equities, thereby owning the means of production.
You want to see inflation in more than just asset prices, start printing lots of money and handing it out and watch with a stupid look as the world goes Weimar.
Stupid is as stupid does. The whole problem is that consumers owe too much money. The only real fix it is to offer relief on debt. Treasury should create the money, buy all consumer debt and refinance back to consumers at break even levels (1-2%).
We must be getting close to the end now to even suggest this.
Please . . just let it be over!
Does this mean I get to refi my mortgage and it will have a negative interest rate?
Only after you pay your bank a 5% fee.
My Head exploded right before the "Let them eat cash" section...
Have*
Have*
Give the money to the poor mhmm, they'll raise investment in productive assets and not roll it up to blow smoky white milky clouds mhmm..
Spoken like a true EFS!
Through carbon biosequestration, a process of capturing carbon emissions from the atmosphere through plants, we can trap or, “sequester,” carbon from the air into plants. Once the plants are harvested we can then create a substance called biochar, not through burning the plants, but slow-smoldering them to create a form of charcoal, which we then mix with nutrients and bury back into the soil.
The ancient tribes of the Amazon had this process figured out a long time ago. There’s a particular type of soil made from this active human interaction called terra preta, and it’s spectacular stuff. Compared with the surrounding soil,terra preta can contain three times as much phosphorus and nitrogen.
But what does hemp have to do with this? Hemp is one of the highest yielding biomass crops on the planet, and it takes far less water and fertilizer to grow than other high-yielding biomass plants.
But half the *working* population doesn't pay taxes, and what about the unemployed? Most workers *do* at least pay social security but that's *supposed* to be a separate account ... as if.
Or, just suspend the laws against robbing banks. To each according to his caliber.
"But half the *working* population doesn't pay taxes,"
Exactly! Who is this written for?
Throw in the "Mo Money" part, then look at all the comments....
There is a steady theme here to redirect all facts and anger toward the poor, blacks and Mexico...
While allowing little comparatively to be targeted at the real theives who stole Trillions....
Trillions don't seem to matter if the theives are white New Yorkers...but blacks stealing crumbs from an insured QuikiMart...CALL IN THE NATIONAL GUARD!!!!!!!
WTF?
FUCK YOU PAY ME
FUCK YOU PAY ME
You know what happens next and I don't mean the inflation bit. Think the free shit army on a massive scale subservent to the central banks. The riots and wars start next when the people stop being responsive to respect my authoritI police state since they can get free shit money from the banks and then the money don't buy shit anyways when the banks can't back up the services.
This ends badly unless the aim is for debt forgiveness to try to reset the the tabs back to zero but either way that don't change shit long term....
The only long term fix is a level playing field competitive currency market including government and nongovernment, public and private, debt free and credit/debt issued currency. A competitive varied ecosystem will serve everyone best since as the wind changes each type of currency will ultimately step to the plate to best suite the environmental changes. Centralized banks controlling everything and reserve currencies controlling everything being subservent to them has to go whether the institutions stay or not.
>>>>>Moreover, Greenspan was completely honest about what he was doing.
My @$$!
CFR=Rottenfellar
Did he get an offer he couldn't refuse to put out such blatent BS?
Remember Inhoff's son, a doctor also perished in a plane too.
"The reasoning was very simple: in a country (and world) drowning with debt, there are only two options to extinguish said debt: inflate it away or default."
How does one inflate away debt by causing a hamburger to cost 20 dollars?
By promising to pay for it next Tuesday?
I know this proposal will get crucified here, and I appreciate its stupidity - but the thing is, it is less harmful and stupid than what the Fed is doing now and has been doing....
Cut me a 10k check, though, and I'm not buying iShit, I'm paying down some debt and saving some interest cash - which I assume a lot of people would do, and this might not necessarily lead to lower interest rates from banks on mortgages and credit cards, etc but it could...
But in any event - when did everyone start simply accepting the idiotic idea that you can have an economy, long term, literally based on consumption? Do economics majors all avoid basic physics and math or what? But then, I'm the outlier - I don't understand why Krugmanbearpig is taken at all seriously - perhaps once, long ago, but how much proof does one require that bailouts and printing primarily benefits exactly whom you'd guess it would benefit, as the average share of public debt for each 'Merican has skyrocketed under the careful watch of our Puppet in Chief....
What is an economy other than consumption?
I think you mean tuberculosis.
Otherwise, you can not be serious.
Can you?
The large set of inter-related economic production and consumption activities which aid in determining how scarce resources are allocated. http://www.investopedia.com/terms/e/economy.aspNo, That's what aircraft carriers and cruise missiles are for.
With Cash, Let Them Eat Cake.
I'll take $1 Billion, hell - I'll even pay shipping...
I approve this message..
*debt free and punished for it since 2008
If there is a Jubilee and the pensions/Social Security systems don’t get wiped out, there’ll be a lot of ‘Death Angels’ visiting on the Blue Hairs.
Long hair dye.
<- "I came into this world kicking and screaming and covered in someone elses blood.... etc etc"
<- Long "Suicide Booths"
With high IHT and a Dignitas on every corner, who gives a shit. Fuck taking back my winnings in my bedriddenyears... 'The House' will be sorely dissapointed at my end game strategy.
" In the eurozone, inflation has recently dropped perilously close to zero."
There is nothing perilous about inflation dropping to zero. That is the true definition of stable prices.
Why would someone want to earn more money, but the money be worth less? Higher prices drive down the standard of living.
In a competent, moral, efficient, and honest society, prices should DECLINE - nothing wrong with decreasing costs. In 1985 an Apple Profie HD that cost $3,500 had 5MB of storage. Now, I can buy a 4T HD for $150.00 - what's wrong wid dat?....
Moar urgent distractions are needed.
Too funny
Here's an idea - the United States government should print its own legal tender, debt free at issuance... it should peg it 1:1 to the FRN.
Being legal tender - it should print up a US government fiatnotes in the amount owed to the Fed, cart them on over to Ms. Yellen, and declare the debt extinguihed. This will also extinguish X Trillion in that porton of the public debt nominally owed to the Fed cartel - instantly increasing the purchasing power of the dollar.
Then, the US .gov should cease to borrow from the FRS at all.
Perfect? Hardly - just a million times better than current.
This is so fucking sick.
Reading it makes me want to vomit.
It reinforces the absurdity of working for a living or working hard to get ahead.
I did like the chicks for free part.
Minburi, isn't it already silly to work for a "living"?
Remember that uproar of the working stiffs when the Romney 13% tax rate got outed? And remember how fast that bullshit got swept under the rug?
The proposal above is just a thought experiment by people too cowardly and craven to suggest a return to the dramatically higher tax structure of the 1950s and 1960s.
If you had a reason to vomit, why wasn't it for the buying of elected officials by monied interests?
"It reinforces the absurdity of working for a living or working hard to get ahead."
So the first $5 Trillion "handed" to the 1% doesn't make you sick...it was "stimulus" tha was "needed" to "save" the banking sytem and "national security"?
That was all fine? Your great, great, great, great grandkids will never be able to pay for the fist tranches....
As if "we" (the 99%) should even "pay" a dime of the 1% debt/theft....
During the course of its existence, the FED took the value of a dollar from $1 to less than $.02 - in the words of Donald Trump - YOU'RE FIRED!...
I empathize, but its not really the Fed per se, it's simply what happens when you have a debt-based/fiat/fractional reserve economy. New money constantly has to be created for the economy to grow, and given the bare function of interest - wealth aggregates upward, and the value {purchasing power} of any given unit of currency must fall, on average.
If diamonds were mined and cut faster than dollars were created, you'd see dollars able to buy more diamonds each year, but no increase in production even approaches the mathematical certainty of exponential growth in new fiat.
You can't have perpetual growth in a finite system, and much of {Keynesian} economics is sophistry designed to paper over this obdurate fact of existence in a material universe.
Which is why you ought to drink better Scotch.
‘but its not really the Fed per se’
Technically, it’s the voters who went along with the system. Shoot that F’er looking back from the mirror!
Since its all paper bullshit anyway, and quadrillion is the new trillion, just cut everyone over the age of 25 a check for 200K. Limit it to those born first or second in their family. And before issuing the check, deduct any amount received from public funds, ie EBT, SSI, SSDI TANF, etc, going back 5 years. Then tell 'em your off the government teat, good luck to ya.
Yeah, there would be a huge spike in inflation, but it wouldn't last because most people would be broke again within a year. Savers would actually come out ahead.
/sarc....no I think I mean it.
trip kitchen:
Excellent idea...but you conveniently forgot to deduct Jet subsidies, oil subsidies, corporate farm subsidies, meat and dairy subsidies, USAID billions for propaganda (like this article)...etc....
You didn't even address the "blank check Military contractors"...DOH!
Why is it everyone here only sees black people stealing "crumbs"?
Who are the "real" welfare recipients? You know the ones that have killed life for all of us....?
Apply your rule above to the 1% and there will be no "poor" black people stealing you crumbs...you'll all have loaves and know how to fish....
I bet you got yourself put on a watch list for that post.
M12, that was a back of the envelope thought experiment, didn't really work out a final draft. Not sure why you bought race into it, it wasn't even on my radar. Was actually thinking of a few non minority associates of mine completly gaming the system.
Doesn't matter anyway, I was thinking bigger picture, as in, how many people are out there busting their ass could benefit society as a whole if they didn't have to hold down 2 or 3 crap jobs to just keep above water? Just a few industrius people with the time and funds to perfect their over-unity energy device (or whatever) could make many of those subsidies you mentioned a moot point.
Rainbows and unicorns? Probably. That's about all thats left.
The IRS runs ACA. My oh my.
Anyway how are they going to recruit children to live like rats & fight and die for them if they're handing out free jellybeans? If thats the CFR-UN plan for Baha Ullah domination, it won't last 2 generations. First the ruthless opportunists will sweep the generation of swine out of the way, then pulverize the population into the stone age. Then other countries will kill them all, sweep up and "utilize the resources".
I wonder what kind of inflation 3 Trillion will cause when the banks finally decide to set it free and lever it up 100x?
Makes sense to me. Many consumers would use it to pay off debt, which would go back into the hands of the banks anyway, which they can then lend back out which they would do anyway. But now you have consumers with less or no debt, in better shape to spend. Can't hurt but try. After all, look at all the rest of the junk they tried. You couldn't do worse, that's for sure.
Paying off debt is deflationary, that's the last thing they want. This will either do absolutely nothing or create just enough velocity to get inflation going full retard, depending upon how much they make it rain.
Illegals: It's all about payroll tax. The gov will gladly take it out of their paycheck check, knowing full well they will never have to pay it back in Social Security.
Since they work for less, employers would rather hire them than American workers.
I used to think that too, but the incoming illegal aliens aren't going to pick up the same sorts of jobs that the Boomers are retiring from, those jobs will either not exist any longer, or will be entirely outsourced or automated at some point. The illegal aliens will be going into jobs that are currently in the process of being automated now(low skilled labor). We'll just end up with more parasites on the system instead of hosts for the social welfare programs.
THE END
"...the global economy is suffering from insufficient spending,..."
This is just economically illiterate claptrap. Economic growth is not the result of "spending", it is the result of saving and production.
Not in a system that is reliant on 70% consumer spending.
:) problem is US consumers spend on imported goods.
We have too. There is no US based Manufacturing left. Everything is made overseas. Is this a trick Question?
It's a trick, no question about it!
Actually, there is. People still make handcrafted stuff everyday and there are people out there who buy it. It's just that the individual can't make 50 million units at a Wal-Mart dictated price, so most folks never see it. But it's there, oh yes, it is there.
Well that settles it then,
the chicken definitely comes before the egg
The only reason currencies are still worth anything is because the productive populace around the world has to work to get their hands on them. If they start giving currency away who would do the work for the crooks? Not even bankers are that stupid.
No mention of abolishing the immoral income tax? That would be the fastest way to put money in people's hands.
As is governments borrow their own currencies into existing from a cartel of private banks, and use the income tax to pay for interest on said, ever increasing borrowings! It is retarded, the whole financial system is based on an 18C concept.
There are also plenty of ways to sterilize money as put forward by MPE and others for decades. In MPE a central authority monetizes a promissory note (interest, usury, riba free), the repayment schedule is set as the lifetime depreciation of the asset.
So for a house costing 100,000 dollars you would pay 100,000 instead of 300,000 as in the current system. The payments would be affordable since they are set to the lifetime of a house 50-100 years realistically. If the person dies or wished to sell before the term loan, the remaining value of the asset still covers the outstanding loan. As is currently everyone is working their rear ends of to make huge interest payments to clowns that have been given the monopoly on money creation (otherwise known as a banking charter).
Thus money is sterilized as the asset is consumed. No one in central banking would consider this since it would put an end to their endless scamming.
I am more apt to believe that we will see more articles like this and that the mantra of giving away free money to the poor and middle class will become louder. Not because it will fix the problems of our crashing fiat system but because the government and central bankers will be able to blame the free cash give away to Americans for the hyperinflation and reset that is already assured at this point. Convince the people that the payout to the poor created the problem not the 30 years of debt, deficit spending and money printing.
A perfectly timed money drop to the poor after all the fleecing has occurred by the .1%. And hyperinflation is already assured. Drop cash to the people to help deflect blame. This is a great way to setup the “Government to the rescue” scenario.
wait - is this one bread, or is it circuses?
Moldy bread and scary circus clowns.
Bernankewise the Klown! All bonds float down here, Georgie, they allllLLLLLL float!
There is a huge disparity right now between wage expectations and wages offered for employment opportunities. The trade journals in the employment business are full of stories about these issues. Those seeking work are holding out for multiple offers and changing jobs for a pittance. The people who have dropped out of the work force are comfortable with taking cash jobs and handouts from uncle sam.
Want to make it worse? Start handing out free money.
Inflation is the middle class killer, they are intent on seeing that this is the case.
Tell me please they are not really this foolish.
sschu
Of course they'e not this foolish.
They get Plenty More Foolishness than this on the go, just you wait!
ha! ha! I remember when Bush Jr. did that with gov handout, I think I got $600 and spent it getting my van repaired.
The best way to spur activity is to give the taxpayers a year or two hiatus of paying taxes.
"A money-financed tax cut"
The moment I saw the word 'money' being used instead of 'currency', I stopped reading.
They did try it. I remember getting a $1600 tax rebate at the end of Bush's term 2007-08. Most spent it on paying down cc and other debt. It didn't stimulate shit. Why not give everyone a million dollars? Why only $1600? Those stingy fucks.
I say that about minimum wage, if more is better, then pay everyone a million dollars.
Japa also tried it. They gave away consumer vouchers to be spent. However the Japanese used what they could get for them to pay down debt.
Well, let's remember what happened in 2008 with George Bush's "Prebate" program where households (or taxpayers) each got between 600 and 1200 bucks depending upon income and tax bracket, I think. We all got free money. But wait, we had to declare that as income so it could be taxed. Effectively it was supposed to be an 'early' tax refund -- we were getting some of our refund a few months before we were supposed to.
Does anyone really believe that handing out a paltry 1000 bucks or whatever to the masses is going to stimulate spending? I remember surveys from that era asking what people were going to do with the money. Answer -- pay bills. No new purchases, just catch up on old debt. Not effect on the economy.
So I don't think anyone is going to be getting money in their account this way anytime soon. Our currency will be devalued soon enough.
stupid. it bought votes. period. nothing else. n*ggars were happy. best buy didn't get looted. everybody got a free flat panel or an i-toy.
WOO HOO! Free money. Now you're talkin' What could possibly go wrong?
The authors of Blythe and Lonergan are 2 Britsh (well 1 Scottish if Scots vote for Independence) dooshbags from Brown University and Oxford Univ respectively.
I mean real dooshbags. Their whole existence as socio- monetary "seers" is based upon "money" being in fiat form. Nothing in their sophomoric bleatings recognize the individual right to do what they want with the monetary returns from their own labor. These shrill pencil neck geeks need a good feckin' hammering ..
These fuckwits think they can camoflage their collectivist, neo Kenysian dribble as some sort of "new" idea similarly to what the Media did for Clinton's "3rd Way" bullshit. The 3rd was was essentially a new form of corruption where a "left wing" meets right wing and everyone is happy... according to the New Media....especially Robert Rubin, Sandy Weill, and the banks.
If we know this handout is coming, best to max out those credit cards buying PMs and pay back in the future.
I am in full agreement except for that "pay back" terminology. What does "pay back" mean......in layman's terms please?
600.00 under Bush Jr didn't gonna cause a spark. I say let's light her up. 1 million per person. Now were cookin with gas.
Sure, but I'll accept only half that amount to get the money a day before everyone else! :)
Need cash now?
NOW NOW NOW?
call 1800 CASH NOW
J.G. Bernankworth - get your cash NOWWWWWW!!
The only way out is to halve the debt and to double the interest rate. While this may seem non-sensical the reality is that a 25 year loan at around 6% would have the repayment period cut by at least 6-7 years if the original repayments were kept up.
Moreover, any new contributions to retirement funds would be earning a decent return and thus be able to meet the long term expectations of pension recipients.
What a hoot! Yesterday we had “1984” and “Brave new World”- Today, we have “Animal Farm” coming from the central banksters favorite apparatus of indispensable and exceptional pigs at the Council on Foreign Relations. The CFR want to take the central bankster ponzi scheme to a higher level to advance their agenda on a national and international level on behalf of the banksters and to insure that they are not brought to Justice. Ha. Ha. The CFR pigs squeal “All animals are created equal, but some animals are more equal than others”. Ha. Ha.
In actuality, Hand outs to the American People is not a brilliant idea, its a bankster idea. First, its not a job. Second the hand out will end up being paid back to the banksters in the form of existing debt payments IE; student loans, mortgage payments, bankruptcy payments etc. Remember we are a nation of debtors and the parasite criminal cartel of banksters extract the juice from us. Ha. Ha.
Economics is not a science, it is merely the allocation and distribution of resource.
Think of the industrial revolution when there were new industries invented that grew jobs and brought prosperity that spread throughout the nation.
Think of the opportunity of high technology we had in computer science and the internet that could have grown jobs and prosperity in the USA today. That technology, and others, were moved to China to make that nation number 1.
Remember the saying “as goes General Motors, so goes the USA”- Communist Traitors!
Make a list and scream: No more! Hang the criminals for Treason!
Recent economic theory and practice has been "one which has borrowed so extensively from the future to fund the present that there is no future left"
I have to give kudos for expressing the fundamental nature of the relevant issue so clearly (the "issue" being how debt impacts the economy). While I and others have mentioned this in ZH comments from time to time, this key (and very simple) insight is often absent from articles.
What many people don't seem to realize (but this article does), is why the massive fiat printing has not already caused massive inflation or hyperinflation. While part of the reason is external factors (shifting inflation to other parts of the world), the main reason the dollar hasn't inflated away in a puff of smoke is because [supposedly] ALL the fiat created by central banks were ALL loans that must be paid back, not "free gifts" that forever increase the quantity of fiat flying around the planet. When loans get "paid back", the fiat vanishes, leaving the total quantity of fiat unchanged. In theory anyway. And so, bond and fiat currency investors do not freak out.
Anyway, these proposals had to come. No alternatives exist except to allow the natural forces of the real market play out... which would put every large (and maybe medium) size bank and financial corporation out of business in short order as borrowers default.
And so, hyperinflation it will be. Eventually (timing is always the most difficult unknown to unravel).
-----
PS: Anything that eventually comes out of the CFR or any modern think tank is sure to contain nefarious "fine print" that directs the vast majority of "free money" directly into the hands of the predators-that-be and their corporate cronies. Guaranteed. It may be wrapped up in pretty "for poor working folks" ribbons, but absolutely, positively without doubt the main benefits will flow directly into the pockets of the predators at the top of the fiat chain. For example, at the end, when the bill is signed into law, it will deliver the free fiat to people in proportion to their debts, with provisions that require the fiat [partially] pay off those debts. Which means lenders can lend huge piles of fiat to people without assets, skills or jobs with ZERO standards and expect to be paid back anyway. Which should be enough to get several million more productive folks to SHRUG.
BTW, this and similar future proposals are expressly designed for Hillary. How many americans will vote for NOT receiving piles of free cash. If these kind of proposals start to be taken seriously, you can be sure this is 100% designed to elect Hillary.
honestann = 100% - but with hyperinflation within the US.. there has to be a war.. and I mean a real war (Russia / China) in order for the sheeple to stay in line. This won't happen this time. Russia and China are too smart this time around. They know that all they have to do is wait and continue to store gold and PMs ..... and the hyperinflation will cripple US and Europe...
Thus either the Fabians in the US and European banking circles are "overthrown" or the beginning of the period to be called "The New Dark Ages" will be upon us.
I essentially agree, except I'm not so sure enough people will "get out of line" to seriously impact the dominance of the current crop of (NWO-style) predators-that-be. Look at how much abuse frugal, responsible, productive folks accept already. They're not like previous generations of frugal, responsible, productive folks, at least not intellectually. Most of them are not sufficiently sure of themselves (their ideas) to "get sufficiently out of line to topple the predators" (to put it in your terms).
I'm also not sure how much bullying China and Russia will tolerate. Financial bullying, yes... they will accept that (as they accumulate endless tons of precious metals and other physical assets). But the USSA can push them over the edge by starting to significantly meddle within their borders. They won't tolerate unlimited abuse of this kind, and thus may eventually be forced into a "shooting war".
Except not a conventional "shooting war", but rather a "nuking war". This may become completely inevitable as it becomes more and more clear the status-quo CANNOT be extended very much further. And the predators-that-be in the USSA and other large western welfare-warfare-police-states have absolutely no [remotely viable] ideas for any replacement system (that they would accept) other than global thermonuclear war.
The signs of this have been visible, though not covered in mainstream media, and rarely mentioned even in alternate media. For example, recently the USSA "retired" its promise to never start a nuclear war (only respond if attacked). And the think tanks and neo-cons started talking about how nuclear war with China and Russia are viable, thinkable and even wise and appropriate options... as long as the USSA is first to attack. The western oligarchy has long had a long term goal to eliminate 90% or more of human population on the planet... except after so much time this is now one of their medium-term or short-term goals.
Though we may not guess or predict this global political chess game plays out the same way, we agree in principle and result. Either the NWO oligarchy is destroyed, or mankind is finished (or at ?best? thrown into another (worse) dark age). Why worse? Many reasons, including the fact the predators will seriously trash the environment in the process, half of many [easily accessible] resources are already consumed, and the remaining predators will have most if not all remaining highly advanced technologies to monitor and control those humans who do survive.
The fine details are always difficult to predict, but obviously we both have a pretty good understanding of generally how events will play out.
JOKE:
Ben Bernanke and Obama are in a helicopter flying over Ferguson.
BERNANKE SAYS: I think I will drop a $100 bill and make someone down there happy.
OBAMA: Why don't you drop two $50 and make 2 people happy?
BERNANKE: Then again I could drop ten $10 notes and make 10 people happy
OBAMA: Come to think of it you might as well drop 100 $1 bills and make 100 people happy.
HELICOPTER PILOT: Then again you might BOTH jump out and make EVERYONE HAPPY.
Hey I know, some people from the fed could go around dumping buckets of money over people's heads. Then that person could nominate somebody else to get a bucket of money dumped over their heads. The Money Bucket Challenge would be a huge hit.
Fantastic. That is a great examle of the Fabian authors idea of using the benefits of modern technology to benefit mankind. What took the Fed so long ... sheesh...
Buried this far down, I seriously doubt that anyone will read this, but what the hell, it gets it off my chest.
Instead of giving people cash, just wipe all debts clean. You owe on a home, debt gone, you own it free and clear. You owe on a car, here's your title free and clear. You have credit card debt, not anymore. Slates wiped clean, you all get to start over at zero, make your bed.
Most will screw it and spend like crazy, sending demand through the roof. A few will be smart and prep for the end game, but at least the demand will be there, until it's not because the whole thing collapses except for that which is of real value.
It goes without saying that any debt write - off must be accompanied by very tight lending which does not allow for credit card craziness or borrowing for holidays etc unless that debt is paid back within 12 months.
Why ? If "they" wrote of the debt once... why wouldn't they do it again ? Don't be caught saving when you sghould be spending, prices never go down under this scenario ... this is what causes hyperinflation... the future (price) expectations of the people.
There is no way out. These feckin dooshbag authors from the Foreign Council on Dooshbaggery are tryig the Clinton / Blair 3rd way technique / bullshit. Again.. Clinton's 3rd way just reintroduced a "new" way for bankers (read Rubin and Weill here) to accumulate billions with little risk.
How do you think Bill and Hiltlary Clinton managed to get paid $120MM since 2000 for "books" that no one bought (except the Marc Rich type people, who bought thousands to start their fireplaces) and speeches ? Similar to Tony Blair... its the 3rd Way dude.
That will cause even more inflation and I with no debt at all will suffer even more.
In biblical times it was called a "jubilee" and it would happen every few years or decades. It's a great idea.
Will the debtors give back what they bought for the credits?
If not, I suggest they go straight to hell where they belong. Responsibility ? - what for. Honesty ? - ah be serious. Theft? - that's the way to go.
And remove everyone's dependency / serfdom?
You still believe anyone in charge wants to create a paradise???
The idea is to give just so much that the majority doesn't revolt (or just gives up, stops working and awaits death) but stays in serfdom.
Your "solution" is outright theft from and, in many cases, a death sentence on all those who have saved during a working life and are no longer able to work but rely on the savings they had accumulated and loaned to others. That puts you in the same camp as Bernanke and Yellen, except your "solution" is more dire.
how much money have big banks been bailed out to the tune of?
and how much is that total per person?
It has come to pass, shower them with freebies: Americans have become a wasted race, and would be regarded with shame by American Founders, I mean real American Founders. And that may be the problem: Americans have no idea who real Founders were.
For example, who has ever heard of comander Morgan. He commanded the army that won the battle at Cowpens, South Carolina: the battle that broke the back of the English army and convinced them the war was lost. Morgan was a relative unknown, while the English comander Tarleton had established a reputation of daring and never losing a battle.
But there was something different about this battle… something very different from all stories of human warfare. Despite uneven odds, Americans won the battle, captured 500 English prisoners, and marched them, in the dead of winter, 200 miles to an American stronghold.
That’s what sanitized histories will tell you. But… ah… the details, the details, they tell a different story. The Americans forged frigid streams in tattered rags and trod ground covered with ice while bare of feet. They had to hurry their march because their feet left a bloodied trail easily followed. English prisoners forged the same streams and walked the same ground; but they wore the finest clothing and shoes money could buy.
What was so significant about this?
Americans had the power to take warm clothing and shoes from their captives; but chose not to take what was not theirs; they chose, instead, to preserve their honor, not their feet.
And it was all for naught; for, who today knows it… apart from the few hundred who may have learned it from my efforts? I first reported this some twenty years ago in my essay, The Mystery and the Fraud, an examination of the original thirteenth and the un-ratified fourteenth amendments; the essay is now included in my book, The American Inquisition, 2nd ed.
No, their memories do not turn in their graves; they incline their heads as they regard current Americans, who cower in the dark night of shame. It is a judgment we, also, must give; for, these Americans have the power to redress every grievance that could be named, and they refuse to use that power; they even refuse to learn it. Their brains are little more than cesspools of indoctrination shoved in by media and education, governments and privileged commerce; for them, it is a matter of life or death to not disturb this indoctrination: they will, literally, die or kill rather than admit truth into their brains.
We should waste no more time on them.
(Follow my other comments: click my name, thanks.)
You guys are trying too hard, here is the solution:
Set the Income Tax rate to 0%, FOR EVERYBODY!
Then just have the Federal Reserve print as many Federal Reserve Notes (US Dollars) as the Government needs!
The Free Shit Army doesn't pay Income Tax on their free money they get from income tax. That wouldn't be fair to them to see other people not pay income tax. It would scare their children.
My small town used bonding to resurface really bad roads. I suggested they bond the whole budget for as much as they want so we won't have to pay a penny in property taxes.
Does the Fed return ALL of the paid annual interest back to the Treasury? I would love a substantial article or discussion on this. I have made the point about the income tax and Fed being brought into existence at the same time, but it is always met with, "yeah but they return all the interest payments to the Fed."
How do the Fed shareholders get paid?
Sorry, I'm new here..
Bottom line here is that deflation scares the hell out of bankers. They need prices to rise so they can earn that interest. The idea that our economy is based on consumption is a joke! It is based on DEBT! Debt fuels the consumption and not the other way around. There would be a helluva lot less consumption if people couldn't get loans......on everything.......can u say credit cards? Without rising prices, debt doesn't increase, loans go bad, and interest (the real goal) doesn't get paid. The whole point of the article is debt creation by central bank to raise prices that no one will mind because of the monopoly money they just got in the mail. With the ultimate goal of keeping this crappy music playing a little longer.
People are tapped out. We are stacking durable goods like cord wood. The working class (those that don't want a handout) is shrinking while the takers are expanding exponentially. Government is the number one business in the world. The system is broken. The game is about over. And printing a bunch of funny money so Hosea can go buy another iPad, just isn't going to fix anything.
The only thing that fixes this is a major crash that will clear out the system and the ensuing war required to take this country back from the bankers and foreigners. To do that will take real leadership. Seen any lately? Me neither. No hope until we get some real American leadership and people with the guts and backbone to follow it. I know.......I'll wake up in a few minutes and remember my country has been gone for a while now.
The end of the fiat currency.
The people need their debts erased instead because the cash flow would only go to paying down bills...
Damn, I can only thumb up your comment once :(
Writing down debts is the only way, and one way or another is will happen. But the bankers would probably kill anyone who put this through, so instead they will stagnate us until the banks eventually crash anyhow, then we get our write-downs ...the hard way.
318,000,000 legal Americans times $1,000,000 = $318,000,000,000,000 = $318 trillion. They want inflation? That would give them inflation.
This would trigger immediate hyper-inflation.
and KWN would publish an article entitled "I Told You So"
Tranferring more than none so far seems well worth a try. Velocity velocity velocity. Why did it take so long?
Oh because bailing banks was first incredibly stupid order of ruling class business. FInally they get it, no buyers no business. But do they?
The Free Shit Army ALREADY gets free cash to spend....what am I missing here? Is somebody suggesting they should get MOAR?
That's the question isn't it: who gets the helicopter money? Perhaps it goes where it buys the most votes?
already been there, done that down under -KRUDD in 2009 http://finance.ninemsn.com.au/pfmanagingmoney/spending/8125566/900-cash-...
Most people either bought a new TV, bought a ticket to Bali or paid off credit card debt. End result - more govt debt
My credit score is going to the Moon.
The u.s already transfers like this with welfare, food stamps, etc. With transfers all you get are entitled fergusonians who will soon be back to stealing cigars and pushing around the little guy at the mom and pop corner store. Socialists no nothing of fair but they are quick to manipulate the system to get what they want.
The guy who wrote this article is truly an idiot. An alternative would be honest accouting, living wage jobs. JPM already handles the welfare transfers for the U.S, who's getting rich? Who's feeding their families at Burger King?
The banks are criminal and I do believe they should give back all the money they have stolen. But for this author to state that the status quo of corruption of the govt and banks should remain in place with transfers is like throwing in with the criminals.
I vote for the dissolution of the fascist fabian socialists and their banks and their govts. END THE FED AND THE EU!!!
Argentina it's been doing it for several years now, and it's working great. But I think ZH only knows of Argentina from Paul Singer alone, right?
Well, it's an improvement over giving money directly to the banks so they can lend it out to us at a higher interest rate, I'll give 'em that much.
Doing my best Johnny Football money gesture...Look at my finger tips go!
https://www.youtube.com/watch?v=sdHurkbDg4k
Inflation should be zero. Only the banks want it to be above zero...
Inflation has been shown time and again to be very bad for the real economy.