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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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We don't have a real economy......and you forgot to put 'sarc' in your comment.
Wow, money for nothing. Everyone can feel like a Kardashian, politician or bankster for at least a day.
"...Trouble comin' every day...."
Universal Basic Income Experiment by Unicef
The basic income experiment was backed by a major research program involving 93 staff in all. Twelve non-participant villages, or controls, in the area were studied alongside the cash transfer villages to provide comparative statistics. Detailed studies took place in all the villages at the beginning, mid-point and end of the project. While I was in Madhya Pradesh, the nucleus of the study team held a final “wrap” meeting to prepare for the final report that Unicef, will publish in December, as well as for the briefer, more popular book. Renana Jhabvala, SEWA’s national co-ordinator, and Guy Standing, who is the de facto director of the background research, shared the direction of the meeting.
Some preliminary results have been made known. The figures bear out the conclusions that Guy, Renana and the team had reached - that far from encouraging laziness, the cash transfers have brought “more work, more productivity”, largely because they have inspired more “own account” farm and other working opportunities as an alternative to wage labor. Over one in five of the basic income villages increased their work activities, twice as many as in the control villages, and most of the villagers attributed the new farm or new business activity to the provision of the grants. Basic income villagers increased their livestock by 70 per cent Sarath says: “So basic income is not only a welfare story, it is a growth story too – inclusive and bottom-up growth that has stimulated the local economy.”
http://isa-global-dialogue.net/indias-great-experiment-the-transformativ...
All I can say is that if they ever were to go through with this insanity, I would directly put anything they gave me into precious metals for as long (not long) as the Idiocracy existed.
Of course this nonsense and its evaluation took no account of the effect on whoever had their wealth forcibly appropriated to fund this boondoggle.
Still a top-down, centrally-planned scheme run by the elite. I don't like it. And no one is for skinning the rich; the SUPERWEATHLY, on the otherhand... .
Yes, I remember the "stimulus" about a $300 check in the mail.
Been a while...trying to remember what I did with the $300....
Start a new business?
Buy a house?
Or a luxury auto?
Go on an extended Obama-fancy type vacation?
Oh wait! I remember...it paid the energy, water and phone bill plus a couple trips to BurgerKing.
So now I have nothing to show for it.
Guess I should have started the new business.
You can buy a lot of businesses for $300 you know.
/s
$300 bucks buys enough malt liquor to get tight enough to wobble down to the jewelry store and steal you some grillz so you and yo homeys can be stuntin'.
if you filed returns those years, what you did with that $300 advance on taxes was to pay it back.
What credibility do central bankers have presently that makes their suggestion likely to be adopted? Maybe if a few central bankers were hung in the public square, confidence in the fiat-based monetary system might be restored.
http://www.breitbart.com/Big-Government/2014/08/26/Jerry-Brown-to-Mexica...
Guess where the nuke ff is going to be
Someone is just talking their book, they just want those payday loans repaid by the Central Bank if the drop is for everyone, otherwise they want the drop only for bankrupt banks etc.
Anyone ever go to the helicopter drop where they added a frozen turkey to the ping pong balls?
What these people won't do to avoid taking their losses is just...astounding.
Why even HAVE an economy if you're going to do all the buying yourself? Giving people money that you HOPE they'll spend on 'stuff' so the prices don't come down is the SAME FUCKING THING as buying the shit yourself!
Fuck YOU, central banks! Deflation is coming...like it or not. Nobody WANTS more crap, no one can AFFORD more crap, no one will BUY that crap. So give it up, it's over..OVER!
Central planning doesn't work. You just aren't all that good at running everything, at micro-managing this global monstrosity you've created...on the contrary, Fed, you made it worse by meddling! NOTHING you do, Yellen, will fix the mess...nothing!
Either all the debt gets written-off and we start over, or massive defaults bring the whole thing down. There IS no third option of just "giving people cash"...
Why? Why would you "give people cash"? Just to prop up your over-valued assets so a bunch of rich guys don't cry? I got news for you...they're gonna be crying a lot louder when the whole economy tanks and wipes out ALL their money. Better off to let them suffer the devaluation and keep the underlying structure from collapsing and taking EVERYTHING out. Let them take their medicine already, so we can all drive the fuck ON!
Morons!
We need a new economy with two parts...one for real people, and another for brain-dean bankers and financiers to sit in a corner with and fondle to their heart's content.
spot on
One tends to think that many of these people are simply trying to maintain the comfort of status quo until their natural death and since most are Baby Boomers, they probably don't care about sustainability or the repercussions of their actions at this point. Besides, the vacations at Martha's Vineyard, gives them plenty of time to dismiss any of the static noise about the depletion of the savings of Terrorists who don't use all their savings to invest in inflating the stock values that they got into after the crash when the plan to artificially blow up the equities market was accepted.
The Australian government did this after the GFC in 2008. Everyone who had a child at school got about $1000, for each child. Everyone who paid tax in the previous year got $1000. Folks on pensions got $1000. And on it went. Some families got many thousands. It actually did boost spending for quite a while. Some folks used it to pay down debt, some spent up on flat screen TVs etc, some used it for groceries.
The governmental also boosted building activity by subsidising insulation in houses and the building of and shovel ready projects for schools around Australia. These make work projects were a huge misallocation of resources but it fed the building unions which are the life blood of the Labour Government at the time.
It was credited with having saved Australia from the effects of the GFC. Of course China printing money to buy our resources helped us enormously and is probably due more of the credit!
Now the bill is due and the conservative government is having to take the axe to much spending. Folks are screaming, especially those on the public teat.
"It was credited with having saved Australia from the effects of the GFC. Of course China printing money to buy our resources helped us enormously and is probably due more of the credit!
Now the bill is due and the conservative government is having to take the axe to much spending."
It is actually is credited with creating a greater problem down the road. It just postponed the effect, rather than saved from the effect.
Same with helicopter Ben. Running up the FED's balance sheet to over 4 trillion didn't save us from anything. The debt bubble is now even bigger.
A slight correction to the above. Some of us workers who were paying above average taxes received NOTHING -- we just paid and continue to do so.
...and don't forget the $5k 'baby bonus'.
Back then, the Oz gov't spent money they didn't have (borrowed from future generations) to reassure the peeps that 'everything was alright' (and buy votes). Fat lot of good it did too... that gov't is no longer in power, Oz is in a bigger mess now and future generations will pick up the tab. Aussie Aussie Aussie, Oi Oi Oi!
Its already raining money, problem is that the mega banks have a giant rain catch system that vacuums it all up before it hits the floor.
Why has no government tried it? Simple answer, because they need something to hide behind and obfuscate about. Direct transfer is too obvious. End of story.
Give us cash. Then buy gold with it.
Wasn't this script done before, with the money that GWB gave back to America, and the only result was that more money flowed off our shores and went to china, as the most popular items (TVs) obviously originate there. Stupid is as stupid does, I suppose.
This is an effort to create further dependency of the masses on the governing structure.
a statistically insignificant amount of this on a regular basis definitely has potential as a behavioral cue for training the public.
"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."
Most economists aren't very bright, then. Busts don't happen due to insufficient spending. Busts happen due to the excessive spending booms that precede them. Japan kept zombie banks alive, instead of clearing the system, which has kept a dead weight placing a drag on the economy.
As Mises said, there is no preventing the final crash of a debt fueled boom. Japan and all others are trying to prevent the final crash, which is preventing real recovery.
Why not simply make everything free for everyone? It will completely eliminate theft.
We'll give it to the banks, the corporations, the fed, Isreal, and every other fucking thing. But God forbid we should ever give it directly to the plebs.
I assume the term "moral hazard" hasn't been mentioned in their office.
I sense panic and despairation.
"Yet it makes no sense to worry about the solvency of central banks: after all, they can always print more money."
But someone has to borrow it.
And we thought Ben's "helicopter" comment was just hypebole!
While it's nice for the CFR to be interetsed in taking care of majority for once (Probably cause the rich are starting to have nightmares about the next bubble pop), this plan would just be a further distortion of the markets and economies.
The demand isn't coming back until people feel wealthier. That comes from debt reduction and ownership - something that'll only come when asset prices come down into a sphere that matches average wages.
If these lunatics did send money to people, inflation aside, how long do you think it would take the blood sucking lawyers to suck it all up, especially considering that the funds would be transferred through the banks, and that they will have detailed inside information long before the wogs are even told?
If they did plan this we'll know by an increase in debt collection filings, and state legislators seeking to increase taxes/one time levies for broken mirrors.
its a good time to need a hitman. There are so many desperate for work.
They screwed up when they bailed out the banks. When they bailed them out, they should have cancelled out all loans. Banks would have been full of cash and homeowners would have been able to reborrow the money. Of course, not bailing out the banks would have been the best thing to do.
Um. Isn't that what they do now?
The only real difference between QE and even more "unconventional" money financing is that, with QE, the terms on which the money is created "are flexible and sensitive to inflationary pressures", whereas in the case of a helicopter drop, the terms are more open, both can cause distortions within a market.
Lord Turner who had been one of two leading contenders to succeed Sir Mervyn King made comments in the past that might indicate what "still more innovative and unconventional" monetary policies might look like. The outgoing Financial Services Authority chief didn't spell it out, but in the past he has talked about the possibility of pure money financing of the deficit or the so-called "helicopter drop". More on this subject in the article below.
http://brucewilds.blogspot.com/2012/10/a-helicopter-drop-for-england.html
i'll take mine in small bills please.
We did a cash drop here in Australia a few years back, which directly put about $8000 into the hands of the lowest income earners to have babies, all in hopes of stimulating our economy instantly.
With little or no financial education do think these people used it to spoil their new little rug rat with the best baby products, formula, maybe a start to an education fund.
Ah, no.
Alcohol, tobacco and playstation sales did go through the roof though. It's merely putting a bandaid over the problem
There are no quick fixes people. we must invest in our middle class and plan to rebuild it to the strengths it once was.
"You know the old saying....... Feed a man a fish........ But teach him how to fish."
The Public Be Suckered
http://patrick.net/forum/?p=1223928
am i missing something, they've been doing this with vengance since 1964, (war on poverty), remember pres. johnsons statement, i'll give these n-----s just enough money to where it won't matter, and they'll be voting democrat for the next 200 yrs..
along with the war on poverty, the taxpayer funding of the statis, socialist, communist democrat party started with vengance also, in every big city in america taxpayers made millioniares out of millions of democrat politicians, their cronies, union, community organizers, and their race baiters, to the tune of trillions of dollars, and hasn't slowed up at all, right to today.
this will be non-stop until until america is detroit.
i just take this article, as many these days as cya's, because they know what has to happen, it's close at hand, and it won't be pretty.
A brief message for the human chattel and the banks that own you...
We just wanted to let you know that the "nuclear option" to determine who will control the monetary system is still on the table.
We're just debating other options as that nuclear one is more unpleasant then we would sometines care to admit to ourselves as it requires many weeks, months and years living in a sustained enviornment underground, and we're really not too sure how the hired help will be taking things if we move in that direction!
So this is the "interim plan" to get you to shut up until "we're ready"!!!
Hello McFly! McFly!!!
you've ALREADY been handing cash to the people to the tune of trillions - welfare state, ebt, earned income credit, "in state tuition for illegals", etc etc.
You already know this isn't working.....McFly!!!
Can I use the promise of free money as collateral on a loan today?
direct disbursement from the FED to J6PK will not happen.
the stoopid CONgress will demand it go through the treasury following an ACT they "pass", in order to make the public believe it was Washington that made it happen but more importantly, so that people do not begin to understand the origin of the "money" their survival now depends on.
but, because the "money" will be disguised as from the government, disbursements will be appropriately meaningless and insufficient: you know, to keep the "job creators" appeased they are not being left out of some windfall.
THIS WILL NOT HAPPEN. the only helicopters will be the small black ones bombing innocents at family functions.
Happy Hunger Games!
It's raining shekels!
Sign me up!!
Maybe they can use it to fund more margin debt, already at records highs - check out the latest figures from NYX in this article:- 'NYSE Margin Debt Remains Cause For Concern'
OH !!! THIS IS SO-O-O EXCITING !!!
I JUST CAN'T WAIT TO TELL ALL MY FACEBOOK FRIENDS !!!
this comes down to the old political divide, the dems want to give you access to healthcare, housing and food, the reps want to give you money and you can spend it any damn way you choose. obama has the worst of both worlds, he mandates private healthcare but he doesnt give you the money to pay for it. up until 2008 i thought bush was antichrist, but obama passed him on the way to hell.
Now this is funny!
Mika Brzezenski who Hosts MSNBC Morning Joe finishes interviewing an Israeli official on Gaza and after says "Keep it right here on morning Jew"
AHAHAHAHAHAHAHHAH!
http://www.dailymail.co.uk/news/article-2711737/Keep-right-Morning-Jew-H...
her father himself is a chazar jew from Poland. So whats up? She is a member of the tribe.
Great fucking plan!
Honestly, this is the most sense I've heard coming from policy makers since 2008. Obviously, giving money to US zombie banks and then to European zombie banks has done nothing. They are either using it to shore up their broken balance sheets or diverting it to more CDS gambling. All those trillions never made it into the real economy...at least what's left of it. Giving money to crony capitalist corporations has likewise done nothing. It simply gets syphoned off in bonuses and handed right back to banker derivatives. Again, the money never makes it into the real economy. Give it to the people who are in the real economy.
Duh.
And why do you guys keep calling this "Keynesian"? Last I checked, Keynes advocated government underspending in booms and overspending coupled with government make-work projects during busts. There's been nothing like Keynesianism in this country for decades. Call it what it is: "crony capitalism."
K Thx
most likely cash transfers would cause inflation in unexpected areas and would not fix deflation in desired areas
much better way to stimulate economy is to pay part of the price of products you wish people spend more on - e.g. if household desires to buy a house for $500k the central bank could directly pay part of the sum for them lets say $100k or so. Do it across products you want to stimulate...
Compliance training, crowd control, population control, faction creating, ad nauseum infinitum.
The hand that giveth will be the hand that taketh away.
Not enough people can be wiped out in a stock market crash to make one useful.
Must find another way to create false (psychological) dependency on the ptb.
People will beg and plead for governance.
Awesome sauce. And soilent green is people covered in it.
Soon anyone still thinking for themselves will be unable to bank, even at a credit union.
On another note, long time no see ZH!
>>>
influential and policy-setting Council of Foreign Relations...
<<<
_influential_?
_policy-setting_??
Really? Look who the principals are...Zakaria, Jolie,...
To me, no influence and no importance.
Watson
Mark Blyth and Eric Lonergan
these are krugshits aliass aren't they. If the world sis not have enough fuckung retards spouting non stop fucking drivel these fucking cretins fall out of the sky.
For fucks sake. They will go to any fucking length at all to avoid actually doing some fucking work.
Everything must be free , fucking socialist cock suckers. So fucking clueless you just want to blow the fuckers away to get rid them once and for all.
Australian economist Steve Keen proposed something like this a couple years ago.. give the people $100,000 with the caveat that they must pay down debt first:
http://globaleconomicanalysis.blogspot.com/2012/07/steve-keen-goes-off-d...
Here is just one of the investment pundits predicting an end to the reserve currency status of Federal Reserve Notes: http://pro.sovereignsociety.com/SVS911/ESVSQ828/?email=gpapp%40mnsi.net&a=10 The US military, speaking through the Joint US Japan Committee under the Status of Forces Agreement, and the County Executives of America have accepted the offer to replace Federal Reserve Notes with currency of gold from the Global Debt Facility. This is what JF Kennedy and Ronald Reagan had in mind before the banking cartel and the Bank for International Settlements got in the way. https://s3.amazonaws.com/khudes/Twitter8.26.14.pdf No wonder the Fed is scrambling.
Kinda late as the presentation predicts... "Our House of Cards Will Collapse by July 2014"...
Social welfare state already does this at a very large scale. Sure, why not ramp it up even more? Why would ANYONE even bother to work, ever? We all get to spend thousands of fiat $s, Euros, Yens... The economy will boom (and then - BOOOM !) How great will that be. /sarc #got EBT ?
How long would this 'system' last if people were not coerced (forced by threat of violence) to pay tax?
Under a free honest capitalist system, the modern day bankers would be locked up....on day one.
Problem: There is too much debt
Solution: Increase debt
When do I get my Nobel Prize?
I got free money in 09 as a tax credit for buying a house. Give me moar. I promise to spend it. Just tell me what you want me to buy. That's how planned economies work right? Venezuela has a free shit economy and that's really working out well. Let's do the same.
BREAKING NEWS:
IMF Director Chrisitne Lagarde charged with "negligence" by French authorities: http://www.lemonde.fr/societe/article/2014/08/27/affaire-tapie-christine-lagarde-mise-en-examen-pour-negligence_4477401_3224.html
Such a hand-out may well come as congressionally approved Slave Reparations and thereby serve four (perverse) purposes for those masters-of-deception, the ruling liberal elites: 1.) an (additional) stealth QE program to keep stocks buoyed, 2.) to advance social-justice (the greatest oxymoron of our day), 3.) to speed dissolution of america's middle class and 4.) to immortalize Obama as a "Great leader" and pave the way for the coming Barack Hussein Obama Memorial (think Lincoln Memorial) ... And all in one fell swoop.
Australia tried it under PM Rudd. It worked well and staved of recession. BUT the situation was different. Australia's payments of $900 to each taxpayer was a way to artificially fill the demand gap before it occured (ahead of the curve) until global economy could recover....which it sort of did through money printing (especially China). However it is once only thing, and if global economy doesn't recover then you got to do the nasty stuff.
Artificial stimulus through direct payments to taxpayers only works to fill a temporary demand gap, it doesn't fix anything if the problem is systemic to your own economy.
Finally, a Jubilee for Joe Average. They should have done this 7 years ago. Count my vote as a yea.
Council for foreign relations. That pretty much says it all.
OK, so let me get this straight, the article suggests having central banks 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.
Sounds brilliant, from a what's mine is mine, what's yours is mine Keynesian wealth and income distribution point of view.
Dilling deeper, we discover that more than 50% of Americans don't pay any positive amount of federal income tax (a very substantial portion of this 50% (30%) actually pays a sizable negative rate through EITC transfers, etc...now). Then, we discover that the top 25% pays over 87% of all federal income taxes, and, the top 10% pays over 70% of the total. So, the bottom 75% pays less than 13% of federal income tax. The bottom 80% pays maybe 15% of federal income tax.
Great plan, giving a group that pays virtually nothing collectively the entirety of the distribution (sarc).
It's the elite getting scared. Of course they want the economic collapse, they designed it, but not before an other bigger 911 and WOIII firmly on it's course.
Once Upon A Time In A Galaxy Far, Far Away this would have been considered Sheer Lunacy.
"Help me Obi-Wan-Kenobi. You're my only hope."
"Scotty: Take us to Currency Destruction Acceleration Warp Factor 9"
Of course this makes perfect sense: give large amounts of money to those who know least what to do with it in a Perfectly Failed Keynsian World.
Those who know least what to do with large amounts of money already have an infinite supply so why not give it to others who will do a better job of allocating it.
This actcually makes a lot of sense. Why not give money for nothing to ordinary pople to spend and get the economy going, rather than giving it to corrupt bankers who just stuff it away at the Fed. For those of you not convinced that this will actually work, read this (highly mathematical) article by Citi's chief economist W Buiter: The Simple Analytics of Helicopter Money: Why It Works – Always (just out)
In the UK we have this rather quaint albeit moronic phrase..... " kick starting the economy" as if it's something like a 60s Brit motorcycle.....FFS.
Moments ago a stunning article appearing in the "Foreign Affaird" publication of the influential and policy-setting Council of Foreign Relations...
Wow, no future AND no present.
.
This article has been linked to the News Feed:
http://www.regularwriting.com/2014/08/news-feed-41/
TPTB are so desparate to keep the 'status quo'. I do beleive that the COFR is the 'headquarter's for PINKO COMMIE FASCISM. I hope Americans see the opportunity they now have to DESTROY THE BEAST! Reject this and all attempts to maintain the 'status quo'. Otherwise your 'FREEDOM' will be a life of servivtude...
Do-able , but requires honest government .
See https://www.academia.edu/8104651/HeliDropCash_and_Happiness
You can buy happiness , and at a fairly modest cost at that .
But will it stimulate economic activity ?
Happiness will pay the Bills , but will it pay the debts ?
A debt-forgiveness ?
Bring on the Jubilee !
Hold it! Janet! I got it! Take LIVE tuna fish, and FEED 'em mayonnaise! Oh this is great.