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QE For The People - What Could Go Wrong?
A number of economists propose in the FT to implement what has been dubbed "QE for the people".
They start off quite well, noting:
"The evidence suggests that conventional QE is an unreliable tool for boosting GDP or employment. Bank of England research shows that it benefits the well-off, who gain from increasing asset prices, much more than the poorest."
As is often the case with these things, they go on to propose something even worse than what's already being implemented:
"Rather than being injected into the financial markets, the new money created by eurozone central banks could be used to finance government spending"
Government spending already benefits from QE at the moment. Since Draghi's announcement, Italian and German borrowing costs have dropped. And then we haven't even discussed all the other ways the ECB has found to prop up sovereigns, such as the cheap LTRO loans to banks, who channeled the money through to governments, especially in Spain and Italy. This is so well-known that it was called the "Sarkozy trade" - a term adopted by markets after the French president suggested that governments urge banks flush with ECB cash to buy their bonds. So why try more of the same?
Those calling for a "political Europe" should take notice that large-scale transfers have already been implemented within the Eurozone since 2010, through the EFSF, ESM and primarily (German economist Hans-Werner Sinn estimates to the tune of 75%) through the ECB. When one receives a loan with an interest rate which is lower than the market level, one receives a gift, in economic terms.
The economists argue that "mixing monetary and fiscal policy" isn't a problem because "traditional monetary policy no longer works".
They must have missed the alternative of Austrian economics. Post-World War II Germany and its relatively strict hard money policies can perhaps be instructive for a model that has been tested. Japan has been trying excessively loose Keynesian monetary policies after its bust around 1990, with negative results. But the authors seem to prefer to apply the principle "When in trouble, double".
A particular problem with financing governments through the printing press is that Parliaments are being bypassed, exactly the reason why politicians prefer to let Mario Draghi do the brunt of the dirty work in the euro crisis.
I hope it doesn't come as a shock to anyone, but my suggestion is the following: governments should be funded by taxes alone, democratically controlled through Parliaments. Ideally these taxes should consist in one invoice per citizen, detailing the services received. Perhaps socialists may want to add a “solidarity” invoice to rich people, raising funds which can be transferred on in a transparent way to those perceived to be in need. Clearly this system is way too transparent for the sake of any political purpose and would mean the end of a whole industry of tax advisors, but perhaps it may one day serve as a model for any future new country.
An alternative put forward by the authors which goes to the heart of their "QE for the people" - proposal is the following:
"Each eurozone citizen could be given €175 per month, for 19 months, which they could use to pay down existing debts or spend as they please. By directly boosting spending and employment, either approach would be far more effective than the ECB’s plans for conventional QE"
Why be so modest and only give €175 per month, someone may suggest? However, money shouldn’t be manipulated to support economic growth. On the contrary, manipulating its value will create uncertainty and hurt economic growth.
One could compare money to a voucher in a cloak room. If Sophie has received a voucher in exchange for storing her jacket, she wouldn't exactly like it if Mario Draghi, the manager of the cloak room, gives a voucher to his girlfriend, Angela, without asking her to put up some collateral. Whereas people would know that Sophie's voucher is backed by value (her jacket), her voucher would lose value in case the voucher-supply would be increased artificially, to the benefit of the cloak room's manager's friends.
Shall we then see hyperinflation? Warnings of hyperinflation have been wrong in the past, and some Austrian-leaning economists like Mish have been countering warnings from their Austrian friends.
Our monetary system is still not completely controlled by governments. After a central-bank induced bubble has bust, like in 2008, when one would expect prices to go down again after they have been rising in an unsustainable way, monetary pumping still may not be sufficient to counter deflationary forces. On the other hand, even modest printing may result in hyperinflation in case citizens lose trust in currency managed by the government, or if for example a remarkably solid alternative currency emerges and becomes popular, despite the fact that one needs to use government currency for contracts and taxes (let me disclose I have my doubts whether bitcoin will ever fulfill this role, but it certainly has proven to be able to circumvent capital controls).
In other words, the proposal to give each eurozone citizen €175 per month may not unleash hyperinflation, but it may counter certain natural deflationary forces, such as those in Spain, where the euro and its easy money fueled a toxic real estate bubble which left the banking system full of bad debt after it busted. If this proposed flow of "helicopter money" would effectively be injected and prop up prices, Spanish entrepeneur Conchita may decide not to open her sandwich place after all, given how rent prices would remain too elevated.
That's not to say that in all circumstances it would be wrong for Central Banks to increase the money supply. In a system where money would be entirely private, the market may still opt for a system whereby the monetary mass increases in case value is created (after innovation, for example) and decreases in case value is destroyed (after natural disasters, investment bubbles or wars, for example). Going back to the example of the cloak room, it's obvious that more vouchers are needed when new people arrive with jackets. If the government takes over the money supply from the private sector, as it has done everywhere, it should attempt to mimic what would happen in a scenario of private money.
In the case of Spain, that apparently means allowing deflation. I have understanding for those who claim that it's just madness to allow deflation in such a highly (privately) indebted country, but if that is true, it probably means we need to look at how to best organise defaults, rather than distorting decisions regarding saving and investing through manipulation of the value of money, as the authors propose. In the case of Spain, that means restructuring the banking system, something which has been done to a certain extent, with the help of a 40 billion euro bailout, but clearly not sufficiently, given the high amount of remaining bad debt. In the case of the whole eurozone, it means looking at alternatives to the current, dysfunctional currency union.
Given the massive mistakes which were made by central banks from Weimar to Bernanke and the relentless attempts to use the printing press to finance governments (after all, the Bank of England was set up to finance the King's wars), it probably shouldn't take much to convince people of alternatives, and not more of the same, right?
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Debt jubilee for citizens: students, retirees, mortgage holders - everyone in the 99%.
The past 20 years in financial markets has been a debt jubilee for the banksters and the corporatocracy, so why not?
Oh yeah - how would they get the little people to scrub their toilets, mix them drinks, and cook their lobster bisque.
Never mind.
Debt = wealth
One man's debt is another man's wealth
The Jubilee would obviously slash the wealth of the 0.001% and we can't have that.
Well, we might just have to take it back one day.
What could go right! I'll take a couple billion.
Ah, more money printing to cure the problems of money printing. Wonderful. Put it on my EBT card.
Long wheel barrels for real. Deflation is a central banks biggest enemy, + the Plebs can then invest in stawks again right before it crashes.
"The Jubilee would obviously slash the wealth of the 0.001% and we can't have that."
Really? How exactly would that happen.
The 99 would no longer be indebted to the 1. They would lose the perpetual wealth of reproducing debt slaves. Gold is supposed to be a store of the value of labor it took to mine, yes? What if you could skip the gold and simply live off everyone else's labor? Different kind of wealth. Ultimate kind of wealth, in their eyes.
Because somebody's debt is somebody's else wealth.
http://en.wikipedia.org/wiki/Debt_of_developing_countries#Recent_debt_re...
Debt relief is nothing new and doesn't help the countries in which it's been implemented. The system they have which created the debt remains after forgiveness and new debt returns.
"Debt relief is nothing new and doesn't help the countries in which it's been implemented. The system they have which created the debt remains after forgiveness and new debt returns."
Yes, this is true. It is also utterly inevitable when you have a debt-based fiat currency regime in place, since the only way money can even exist is as a debt instrument, and if you pay back all of the debt in such a regime you end up with zero currency in circulation.
It's kind of like saying "people who get pushed into a pool end up wet, and what losers they are for being wet, we should hate them." I'm thinking it may be more appropriate to hate the bastards who set up the rotten, vicious game that victimizes us all instead. Silly me.
The article switches gears very swifly from the Title's stated premise.
The title is "QE For The People - What Could Go Wrong?"
But the first half of the article itself should be titled: "QE For The Government - What Could Go Wrong?"
QE for the people would involve handing an equivalent amount to every man, woman and child who is a citizen. The article only touches briefly, in the second half, on what the plusses and minuses of that approach would be.
But since Pandora's box is already opened: Good enough for the goose, good enough for the gander.
Back in 2008 a blog proposed giving every individual tax payer (1040 &(a, ez)) $100,000 with the stipulation that they must buy a car.
The logic was that the auto crisis would have been reversed, a lot of mortgages would have been paid down/off, and other debt settled: Banking Crisis solved.
At the time the estimated cost was over $11 trillion. Reviewing, the estimate was a little overshot. Number of returns filed for 2007 were 96,251,167. At $100,000 each that would come to $9,625,116,700,000. A bit less than $10 trillion that would have been a direct injection of capital while relieving distressed homeowners of debt.
Instead we had $billions given to car companies, idiot programs like 'cash for clunkers' that immediately drove up the low end price of a used car, TARP, Shovel Ready Jobs, $16 trillion pushed into US banks, and another $16 trillion secretly provided to European banks...with thousands of homes seized and other assorted bullshit.
That the thieves/whores/useless idiots of our war criminal government, along with 'our' central bank, chose to do what they did should be enough to drive anyone with just one marble left in their noggin to realize that we have an illegitimate government and should take action to help others recognize the fact.
That the court system not only allowed this, but abetted the crimes, is proof that the courts are in the same criminal pool.
Other than the rank and file military, a good 90% of those in government should face war crimes charges at the Hague.
As to the odious debt left behind, not one dollar was created on behalf of the American people.
Yeah but after about 2.5 hours of that program a new care would cost $125,000. Free "money" doesn't work. But yes, it would have been better to blow up the system by sharing whatever wealth was being conjured rather than confiscate it and use it to control everyone.
Maybe not...
http://www.zerohedge.com/news/2014-05-16/where-worlds-unsold-cars-go-die
proposed giving every individual tax payer (1040 &(a, ez)) $100,000 with the stipulation that they must buy a car
Then compact cars would have become almost unaffordable by now.
You sure that wasn't some Eco-fashist blog?
The idea strikes me as the least worst option.
Fundamentally, since 2007 we appear to have been bouncing around 'the Minsky moment', ie, we're at a debt saturation point. Asset prices are unsustainably high, and CBs (and the governments they're in cahoots with) cannot allow their prices to fall. Hence ever declining (real) interest rates. But these measures solve nothing, because they don't reduce debt levels. So, the question is: how do 'we' reduce debt levels without unfairly handing money out only to selected groups (bankers and debtors). Obvious - we hand it out to everyone.
But instead of dolling out a huge wad like 100,000 in one lump to everyone (which would spark a huge inflationary hump), handing out (say) 1,000 a month would be much less disruptive, if i) interest rates were raised, and ii) if the recipients were obliged to pay off any debts with it.
I would infinitely prefer to be in a free market monetary regime where competing currencies are issued by private institutions, and no bailouts of any kind. But we are where we are.
That's exactly what they will do, it makes perfect political sense. The Fed is not getting their desired inflation as the banks are hoarding the cash, corps are buying their own stocks and it's going into emerging markets. You wan't to see hyperinflation? First you must throw money from helicopters.
Moral hazard, what's that?
retribution must be paid...
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
Bush tried this in what 2008 giving all tax payers below a certain threshold a $600 check with a speech saying GO SPEND....
Needs to be BIGGERer
As long as banksters have the power, they won't let it happen:
... if more money were going to the market, then they would lose much of their value and we would lose profits because we are the ones who print money! That's why we invented inflation, to keep governments in fear and directing money back to us through the so-called Quantitative Easing Policies. [...] When money start to spread in the society "above acceptable limits", we create financial crises to take them back. We dictate governments to take measures and apply austerity policies directing money back to us. We keep money valuable to everyone and secure our profits.
Hang 'em high.
"Hang 'em high. "
High, low: -who cares as long as they hang?
I'm not actually picky about whether we use gallows, trees, lamp posts or basketball hoops either....
Y'all best not be polluting my trees with those dangly demon drapes. You are going to have to use someone else's land for hanging those vicious criminals. And no, you may not bury them on my land either. If anyone thinks Fukashima is toxic...
LOL "QE to the people".
Pretty sad that governments have to step in and cover the rising costo f living they created, and not the banks and corporations that bankroll and run the government.
But we knew that already.
There will never be, "QE for the people" unless it is run "By the People"
"When in trouble bubble" is more like it.
Yet again individuals are paying more in taxes than corporations and "financial enterprises.". Long after all of us have lost our jobs, savings, station, standing, etc " the entity lives on."
The Navy, Exxon, "terrorism." The whole thing is a scam when it comes to being paid for.
Clearly "post 9/11" has been a poor jobs program...let alone a good small business creator.
We always have the Manichean Struggle of course.
Who needs Switzerland when you have TBTF?
The only way to beat this system is to believe in something larger.
Trying to imagine something bigger than the US Navy is really hard right now.
I can and I have of course...but even that is not enough.
<CCC>
Cancel the USURY, Close the banks & Castrate the banksters.........
Qard Hassan ;-)
THE SCUM hide the truth!
"Stop whoring for Wall Street"
http://www.showrealhist.com/yTRIAL.html
http://patrick.net/?p=1223928
how is giving money to the government QE for the people. Just give the people the money directly and eliminate the thieving middleman
Isn't that what we're doing already and we see who that benefits.
Someone should notify the media, call a regulator, call your congressman, tell a priest. We're fucked ain't we?
Just get married and you'll never get fucked again.
Too easy.
Government spending is not for the people, it's for the government.
QE for the people is called $10,000 to every man, woman, and undecided.
A big, fat tax cut comes pretty durn close, though.
Government spending is for the bank since it is all financed and that means the bank gets transaction fees, handling fees, filing fees, and principle and interest payments (mainly interest).
QE for the people would also be for the banks. See above.
A tax cut is close to the same as QE for the (working, nonworking, citizen, legal alien, illegal alien) the people.
In all cases, the working people have to pay it back for eternity to the bank.
Money is not about money it is about power, specifically control. To actually gift the money to the public would be willing surrender of that power, which they will NEVER do. Taxation and government spending are to direct our financial behaviors, financial being our principle exercise of liberty and freedom.
I bet the first candidate to mention QE for the people wins in 2016. Scratch that. The one that bids the highest wins.
It's for THE people, not for people as All men and women.
This is the difference
They are not telling lies, they just dont tell all truth...
Every time they see they might have to declare a recession they drop a few pennies or give a tax break or rebate.. just to delay the inevitable.
Due to the history of civilization being based upon systems of lies backed by violence, which became more sophisticated systems of legalized lies backed by legalized violence, it is essentially IMPOSSIBLE for any better monetary system to be developed.
Wrong, I'll take my 'QE for the people' in _physical gold bullion_, BuckO. $30 Trillion in physical gold bullion should just about be enough, but I'll let you know if I'll need more, eh.
Is that in today's dollars or QE dollars? QE dollars it is.
Here is your ounce of gold sir. Don't spend it all in one place now.
Full-Fucking-Retard.
The only reason we don't have (yet) full on Weimer Republic now is because QE never gets to the public. Its digital, nothing, vapor, wrapped up in digital cellophane bundles, sitting on digital pallets, in the ether.
It now manifests itself in digital common stawks, which also have zero value, the actual money was taken at IPO, the only "value" lies in what some other stooge is willing to give you for it. There is no legal claim on property or machinery or title with common stawks...its-fucking-vapor.
So clearly the thing to do is increase the price of hamburger to $1,000 dollars a pound and cook it with dollar bills.
Friggin nuthouse.
Is it smarter to let the rich continue to print trillions for themselves while the people have nothing?
The ideal would be to extract ourselves from direct dependency on the formal financial economy in favor of a more direct service and barter one. refuse to borrow any money, remove as much cash as possible from the banking system and minimize our exposure. The needs we have developed are the dependencies they hold over our heads. If we were willing to accept the lifestyle and hardships of a century back, it would go a long way towards our freedom...but we won't, because the modern life is far easier.
I was liking what you were saying, then you fizzled out (capitulated) at the end :-( Truly, people should aquire a plot and be working toward a self sustaining way of life, where self governance and good relations with your neighbors is central theme (and hopefully a faithful life, but I'd settle for moral and honest behavior by earths inhabitants generally). As you pointed out, convenience costs. Properly, you invent and fabricate the tools to make your life more convenient. Or trade for the tools others have built.
Nature credits, man debits.
That would be perfect really. Work on the assumption that the people, have nothing dollar wise, find alternate means of facilitating transactions.
What would those trillions in dollars buy then?
bad hair day ?
:-))
;-)
Well not really, I had to replace an exterior door yesterday which was a little frustrating but I just fail to understand how compounding the very real problem .gov and its bank has created in bailing out the "financial industry" by covering the sidewalks & streets of America with fiat will solve anything.
It won't, it will obliterate whatever remaining purchasing power their fiat has and they know it.
The debt-money has to be repudiated as fraudulent, the only way out of a ponzi is to call it the rigged ponzi it is and arrest the bastards who started and perpetuate it in the first place.
Hence their very real problem and these endless red herrings like "Public QE", they're not going to arrest themselves.
All the loose US QE money is now being used to bet against (in sizable positions) the weakest other central banks in the world.
They didn't think of that one did they?
I am going to take the PV of the FV of my share of the helicopter money and buy some silver today!
(of course at .25%)
A million to each person. Would work for the first few minutes and then everything would go Mad Max.
Just move the decimal point over two spaces.
Gimme a break. The people are idiots. There are a few of us, (I'd say most of us here) who didn't borrow our brains out for trucks, mcmansions, dirt bikes, snow mobiles or whatever. And now we're meant to watch those jerks get a bailout?
I'll guarantee you if you gave them money they wouldn't use it to pay off debt, they'd use it as collateral to get more debt.
Thats the American way. You tryin' to be unpatriotic or sumptin'?
Banksters and borrowers were both at fault for the collapse but there were 2 options to fix the system. .gov and the Fed went with option 3 recapitalizing the banks with loans at 0% leaving borrowers with either 0 or underwater (negative equity). The other 2 options were:
1. Let it collapse. The strongest banks would have survived and new banks would have been born. Borrowers loans would have been sold for pennies on the dollar and they would have been able to crawl out of the rubble and build back up. The system would have been equally depressed.
2. Bail out the borrowers with very low interest rate loans. They would have paid the banksters keeping them afloat and the borrowers would positive equity in their homes and the economy would move along.
#1 wasn't an option then and it isn't an option now. The banks are so overleveraged that big moves put them all bankrupt.
QE has been for the people.
Without it the global economy would have collapsed in 2008 and we'd all be eating grass and bark (or dead).
Which is what is going to happen when QE starts to push on a string.
Bullshit. You might have been eating grass or dead. Not my tribe. No risk no reward right?
Man up motherfucker.
Retribution will be paid...
If the system had been allowed to collapse many likely would have been eating grass....instead we are feeding them. People are lined up here to excuse those who mooch from the system as some type of reward, like that will ultimately sustain anyone. Once the real shit hits the fan, no government will save us because there will be nothing left to redistribute.
" because there will be nothing left to redistribute "
and lead don't figure in your calculations because ?
Without it the global economy would have collapsed in 2008 and we'd all be eating grass and bark (or dead).
Speak for yourself Magooo. Like you said, it is going to happen anyway. It will be worse now and worse still in the future. Rip the bandaid off already.
QE for the people wouldn't be all that bad for the rich. Since they own the businesses, they'll earn that money back quite quickly.
Who it would be worst for is the middle class, as usual. Their savings would be eroded. It's unlikely that their salaries would rise as fast as inflation. Their continued contribution to society would be disincentivized.
But what if those people decided to actually save their money rather than using it for a 5% down loan for a depreciable asset? What if they actually put the money toward financial independence?
These are all risks, that regardless of how remote, the powers that be are not willing take. they will buy stock at the top of the market, but never will they leave us to our own devices from which they cannot profit. Debt insures that we stay responsive to their needs.
I agree that TPTB wouldn't be smart to concede anything that would threaten their power if they don't have to. QE for the masses would only be symbolic. It would be done in small amounts: just enough to keep the slaves happy until they degenerate into total idiots / are destroyed / the police state is completed. There's no value in ruining their subjects by working them too heavily, destroying their spirits, and turning them into rebels instead. That's why things like EBT and forgiving student debt are valuable. They give just enough "hope" to keep the people going without really threatening the upper class.
My question is how do the growing lower classes fit into this? You don't service the needs of TPTB by living off of welfare. They really seem quite useless. Perhaps they will be liquidated at some point?
There is one huge problem with that theory: Robots.
They just need to hold this thing together until they have built and can maintain a robotic infrastructure to replace human labor. At that point, Joe Sixpack is worth more dead than alive. What does the mafia do with lives that represent no value, indeed liability, to themselves?
Note: At most they need to support 500M on a global scale. A lot of those people will be worker bees who look after the technology and such. I suspect that day is less than five years away.
give the people money directly with helicopter drops creating inflation which causes a rise in interest rates. the banks are happy. therefore, it will happen.
the middle class will think it is momentarily rich(there used to be a politically incorrect phrase to describe the effect-nigger rich) before the inflation takes everything away again.
Stupid, just plain stupid. Why not force the financial institutions, bank and non bank, to mark to market. Then let the market forces choose the winners and losers.
Stupid, just plain stupid. Why not force the financial institutions, bank and non bank, to mark to market. Then let the market forces choose the winners and losers.
Neither a borrower nor a lender be.
Sovereign governments can do their own stimulus to decrease unemployment without borrowing money.
But no.
One Euro To Rule Them All.
Let's build some schools!
I wondered when it would get down to this. Print it up, give it away... Everybody's a zillionair!
QE for the people by the people?
I feel like the central banks should be giving everyone $1million unconditionally and just letting them decide what they want to spend it on. While most people will cause horrifying inflation in consumer goods, travel and real estate, some of us will buy precious metals and survival equipment.
I feel like since QE driven inflation is happening anyway, I should get the ability to guard myself against the eventual fall out.
A modest proposal: Just do a restart. Everyone gets 100 new bucks.
A modest proposal from an indecent proposal. Nice.
So, $100 and start the game all over again eh?
Tylers, damn you guys have some odd notions knocking around in your noggin.
First of all, Nazi debts were released after WW2. Germany started with a clean slate. Also, they are mercantile. That means they export more than they import, this then puts excess cash into their economy, which then becomes savings.
There is no hard money when it comes to mercantilism. In the Gold Era, mercantilist countries would collapse foreign economies as they tried to Grab the Gold. This Gold drain then undermined fractional reserve at a 10:1 leverage, accelerating depression.
Germany also had a ready population of laboring efficient people, who could make industrial goods and services that others wanted.
There is something called increment of association. All the inventors and entrepeneurs, and those who made the economy ever more efficient through their creativity, have handed that down to us as an inheritance.
Electricity, roads, education - the gifts of our ancestors are our inheritance. This inheritance does not exist to enrich plutocrats wherever they reside.
Tesla multiplied man's labor output many thousands of times, yet he died broke.
So, hell yes, money should be injected into the base of the population. It is part of labors inheritance. An NO it is not inflationary, especially in a debt depression like we are in now. Debt instruments are demanding money from the lower loop. We need debt free money, injected into the base of the population. We also need to tax away rents schemes wherever we find them.
We have a two loop economy, where the intersection between the two loops are banks. Banks vector their usury money upwards into the upper loop, where it has no debt instrument recalling it. In effect this credit money of the lower loop is where debtors live, and are in constant drain. This drain is a surplus in the upper loop.
The upper loop may or may not shower the lower loop, depending on how many luxury goods they want to buy. Mostly they hold on to their ill gotten gains, looking for good deals. How many pair of pants can a few plutocrats wear any way.
When you pay back your loan, the usury is front loaded. This usury passes through your double entry ledger, and does not decrement the principle by much. Only on the back end of the loan do you buy down the principle. A 150K home may be 400K over 30 years, so the usury is substantial.
This means that bankers get first use of your credit, and they pass it on to the upper loop. First use gives more purchasing power before money is debased through prices rises. Bankers also control the interest rate valve, thus controlling credit volume in supply.
Type, Path, and Volume are money attributes that matter, and if you don't analyze it in this way, you are missing much of the picture.
We need an economy that has a money supply with a large percentage of debt free floating money in it. This floating money will be savings and used for transactions, so the lower loop may trade their output fairly. This money will cycle into debt instruments decrmenting them, so people are no longer on a usury tread mill.
Already, our credit money system is welfare for the rich, as it transfers purchasing power to the upper loop. QE held asset prices high and channeled purchasing power directly into the upper loop.
There is no upper and lower loop, just credit money chasing more credit money ad-infinitum in an inverted pyramid. At the bottom is new 'money' and at the top is interest rate swaps and rehypothecation and various other exotic assets related to the real world in some exotic way, marked to some fantasy model that assumes a perpetual stream of new debts being created at the bottom and yielding new flows to the 'assets' top. If there is no inflation (which is debatable) it's because the peasants are constantly kicking up tribute to the upper levels. Creating debt free money really could create inflation if the rate of extraction to the top slows some, or if the flows to the top suddenly collapse and hot money flows back into the real world of real goods, as nobody trusts anybody and the real counterparty risk in the system is finally exposed. Until then party on.
QE == Quick Execution
QE == Quantitative Easing
All the world needs is the appropriate kind of QE.
PS: guillotine "execution", not market order "execution".
Tylers
Another error of cause and effect. Bank of England was not created to finance King's wars. Although, creditors like the Rothschilds use this mechanism to spread debts and thus enslave populations.
BOE was chartered July 1694, with a 12 year charter. Corporations in those days had to prove they worked in the public trust, and hence had charters. Corporation comes from corporeal, and is men at arms. The first corporations, Dutch East India and British East India had their own armies to ensure contract compliance.
Bank of England was a PRIVATE BANK WITH SHAREHOLDERS. The first 1300 shareholders supposedly were to capitalize bank with Gold, but they didn't of course. Gold holders lied, go figure. Much of the bank was bought with Talley sticks, hence the term "stock." The stock exchange in Wall Street was selected because of Birch tree that could be made into sticks.
Talley sticks still circulated in England at the time of BOE formation.
The Dutch house of Orange attacked England relentlessly, preparing the ground for insertion of BOE. They used Calvanism as their advance guard. Calvanism in turn was funded by Jewish agents out of Amsterdamns stock exchange system. Calvanism is old testament which puts Jews in a good light, and is friendly to usury. Jewish agents also printed Bibles at great cost to themselves and sent them to England. This was to undermine Catholicism and their usury restrictions. Each sheepherder in England was to have his own Bible.
Remember also the Jews were kicked out of England around the time of William the Conqueror's son, and this is when Talley sticks came into wide use. Gold and Silver were allowed to go with the Jews, and this collapsed the money supply. This talley stick money system would not be allowed to stand as an example to the world, and besides with the East West silver/gold caravan routes broken, Jews needed to ally with a shipping power. So, from being kicked out to knocking on the door relentlessly - which also means funding Cromwell, they got back in and formed BOE.
BOE promptly put their now English population into debt, thus digging private money power in like a tick. They also married into the aristocracy, creating the black nobility, a term which came from darker Sephardic features.
BOE then turned their sights on the new world, with objective of harvesting them with private debt means.
QE for the people was implemented in Australia during the Lehman collapse.
It was means tested and I forget the amount but it was about $3000 Aussie, for tax payers below a certain threshold.
It worked well and the economy jumped immediately.
Only problem it was dubbed as the "Harvey Norman" gift, as a lot of people brought large TV's and the money went to China.
I think a one off payment is better, as a regular smaller amount is just absorbed into day to day bills. psychological effect better in one payment.
That is exactly why QE for the people is a bailout for the big boys.
In a economy of 70% consumer sending, the consumer cannot spend (in the US). This gooses the consumer spending a big the same as cash for clunkers, as any boondogle....
I think so too. If business knows that every individual is going to be receving xx amount each week or month, then prices will rise by a percentage to handle the small increases every month. If the entire amount of the QE is divided up equally, well, prices will go up, but they won't necessarily raise prices as much because the consumer has the option to put it away, invest, or buy stuff.
Finance government spending? What's wrong with these people?
Finance government spending? What's wrong with these people?
Here is my QE plan for the middle class. I am not a fan of QE but if they are going to do it lets at least give it a cahnce to work. This plan evens the playing field and puts people back in charge. Love to hear constructive feedback. If that is poosible here.
QE For The Middle Class
Expanding Economic Growth by Making Quantitative Easing Work for the Middle Class
The federal government and central banks made a gallant effort to restart the economy after the implosion of 2007. Massive stimulus through Quantitative Easing and the American Recovery and Reinvestment Act restarted the economy and kept it from falling further into an economic depression. Our critique of the effort to jump-start the economy, whether monetary or fiscal policy, is that it has all been top down and completely missed the middle class thus unsustainable. Even so called “middle class” programs like cheaper cars and home loans are debt-based and have been more help to industry than the consumer. (a) We are proposing a much more sustainable, radical and effective way to create long-term growth through applying the principle of Quantitative Easing (QE) and empowering local communities by creating substantive wealth creation opportunities specifically for middle class families which will create more expansive growth.
Over the last seven years, the Federal Reserve has made cheap money available to Wall Street banks to make money and shore up their balance sheets. It should change course and make inexpensive capital easily accessible to average Americans who have investment money. And why shouldn’t it? The current interest rates in the Unites States make savings accounts, CDs and other traditional investment vehicles virtually worthless. This paper suggests that local organizations like a community development group, credit union or local bank should be used as an investment vehicle for middle class Americans. Individuals could bring forward investment capital and borrow money from the Federal Reserve at the federal funds rate. The investment vehicle would facilitate the transaction. The money is loaned for community development projects or other investment opportunity in the community.(B) It is a middle up approach to wealth creation.
Here is an example. A local nonprofit, the Brighton Apartments, needs to borrow $5 million at 3% to retire its bonds and complete physical plant upgrades. A neighborhood investor could access this investment vehicle by putting up his or her own savings to invest $60,000 with an average 5-1 leverage (c). In other words, the investor would loan the Brighton $300,000 but only put up $60,000 of his or her own capital. The investor would borrow $240,000 from this Fed investment vehicle at .25% and loan it back to the Brighton at 3%. Other investors in the community could become part of the community development project. Brighton would get the $5 million it needs at a reasonable rate and the local community grows wealth though investing.
The equation follows this path: (3%x 5(60,000)= 9,000 interest) Minus (.25%(240,000) =$600) in interest cost for a net of $8,400, which is roughly a 14% return on a yearly basis.
The wealth creation application does not end there. Under the plan, about 1/3 of the earnings are required to be spent in local community-based businesses. What further sets this economic endeavor apart is that first benefactors are asked to invest in others by spending money locally, empowering even more businesses and people. This is in stark contrast to how the other spending focused stimulus programs have operated.
The proposal is a much more effective way to create growth through the principle of QE than the current system. The proposal empowers local communities by creating powerful wealth creation and free market opportunities specifically for middle class families. The plan recognizes there are serious structural economic issues blocking economic growth and that escape velocity is not possible without more QE. A middle class-focused plan switches the punch bowl away from the top and creates a QE plan that enriches the middle class and even the working poor.
QE can be used for Main Street and create a powerful economic multiplier by allowing the middle class to use the same leverage tools by using savings for capital investments and increasing personal and community wealth that is sustainable. It lays a strong foundation for widespread economic growth. In this plan, middle class savings are no longer the enemy (“paradox of thrift”) but the very engine for economic growth. The middle class will get higher returns of 600 - 1,500 basis points more than basic money markets today and also benefit from tighter spreads as a borrower. This plan replaces “trickle down” with “middle down and around” monetary policy.
Let's be clear -- if there is not some type of QE program for the middle class, there is no way to bridge the gap of income inequality and increase economic activity. This inequality occurs for several reasons but mostly access to capital. Specifically, access to capital as it is created and leveraged. Access to capital allows for the purchase of assets at their cheapest, and leverage and arbitrage allow manipulation of markets for accelerated profits.
The current economic growth has been propped up by $12 trillion in global Quantitative Easing by central banks. The process has created a multinational wealth explosion in stocks, bonds, derivatives and real estate for the top 10%. However, during this explosion, the planet’s middle class has actually lost ground as the top 10% have taken 106% of asset appreciation. This new global wealth has been obtained by the top due to its easy access to money creation and then leveraging it without risk. This is known as the “Bernanke Put.”
But the economic expansion needs to be more inclusive, as every great economic expansion in modern history has occurred due to the energy of an expanding, robust middle class. Over the past seven years, business and property ownership has not increased, unlike the economic expansions of the 1950s, 1960s, 1980s and 1990s. In addition, real wages are down in the new global economy due to global wage arbitrage and technology. The focus needs to be on more than growing GDP, because GDP now focuses on the top 10%.
The Federal Reserve’s current QE recipe will not solve these problems of the middle class nor will many of the other programs for growing wealth. Pro-stimulus Democrats fail to see that 80% of the government’s spending contracts go to corporate America, escaping the hands of small local businesses. Republican tax cuts and corporate protectionism only encourage more gouging of the American worker by sending more jobs overseas and contracting the velocity of small business transactions. Both parties are missing the issue of how the Federal Reserve is executing QE policies that are hastening income inequality and diminishing the middle class, which causes a concentration of assets and stymies economic activity on the local and national level.
Ultimately, the current QE application by the Federal Reserve encourages short-term financial engineering over long-term capital investments by making capital cheap. ROI in the short-term is much higher on corporate stock buybacks than it is to invest in facility upgrades and hiring to do R&D. Its focus on increasing wealth through the stock market has actually encouraged companies to cut labor and other capitalization costs to increase the bottom line in order to justify high stock prices. QE in its current format not only fails to deliver for the vast majority it actually is a long-term economic destabilizer.
If our application of QE is enacted our models suggest that GDP could grow 3.4% compared to the 2.6% to 2.8% currently projected by the Federal Reserve. It will add $84 billion in economic activity in its first year, and increase GDP by $1 trillion by year 5. Velocity of money will reverse trend and increase, and wages will increase due to increased local demand and free market principles. A strong economic foundation will develop, reducing risk and allowing corporations to focus on expansion and revenue growth instead of financial engineering. This is turn will lead to increased employment opportunities.
This plan offers a powerful monetary alternative for the Federal Reserve and forms an accommodating money creation option for regional economies that is Main Street focused. Under the plan for QE, savers get first access to capital, earn returns much greater than inflation, increase local spending and velocity of money, plus small businesses, nonprofits, the middle class and poor get access to community generated credit. The plan pays out interest and reinvests funds. And all the lending leads to ownership of property, process and profit. This is what will change the economic front.
In the end, this brings back what banks are supposed to do, with a modern financial twist, by using the Fed model of QE to create money for the middle class. So far, QE has never been focused on the middle class wealth creation. If the Federal Reserve had been doing this for the last six years, our economic outlook would be much better. This model reinvests in the middle class and is doable because it bypasses a dysfunctional Congress and empowers an accommodating Federal Reserve board to inject stimulus into local communities, hopefully reducing the politics and empowering Main Street to become the foundation for economic growth.
The Author: Curtis Brown
Contact: outofozeconomics@gmail.com
Web: outofozeconomics.weeble.com for more research
All thoughtful feedback and question will garner a response
Main point: This is an investment vehicle for middle class familes. It is not a low rate lending vehicle for neighborhood projects. Low rates are part of the new normal. Lower rates are not critical for economic growth.
(a) Our frustration goes even further that current application of QE gave money first to the rich/banks and their use of leverage (30-1) increased ownership of assets and the revenue they produce. And while the rich used ZIRP to increase investment the middle class used to to increase debt. This has resulted in the deepening the income and wealth divide that continues to decrease the velocity of money.
(B) The primary objective of this plan is to increase the net worth and spending power of middle class families not provide cheap credit for projects. While cheap credit helps projects pencil out and that is a good thing the bigger problems has been the loss of interest income to retiring baby-boomers who have been forced to reduce spending because of the lack of interest revenue. This number is now approaching a trillion dollars.
(c) Leverage is everything in this proposal. No leverage. No way to fix income inequality. Wage reduction began in 1968 and has taken 40 years to create this mess.
But what about the Bankster Yachts?
Much less can go wrong that to the banks as to the people you get trickle up I mean flow like Niagara Falls up.
Give everyone who files a tax return for under 25 50 for 2 a rebate for 10,000 and see what how fast it is spent.
Economic problems and alleged solutions are small potatoes compared to the destruction of life support system of Spaceship Earth along with the humans it supports. Fortunately there are many different solutions for saving mankind and the Planet Earth. Also, fortunately all the solutions involve killing off the financial Royalty of the 1%; preferably as soon as possible. Unfortunately, this key requirement is not going to be realized.
However, there is good news: The 1% will die gasping for the last molecules of privatized air not long after the rest of us. I.E. the 99% who couldn’t afford privatized air and therefore had already died gasping for air, the life support of Spaceship Earth having finally collapsed.
That is messed up. The situatuion is quite confusing they are just sugar coating it. Meet and Greet Manchester
Proposals for a national dividend or lower taxes paid for with debt-free money have been around a long time, since at least Major Douglas.
Unfortunately, carrying them out involves putting control of the money supply in the hands of the people. Good luck with that.
"QE for the people"
If we strung the bankers upside down in major intersections and well traveled parks throught these 50 states, and stuffed them with Franklins, we could play pinata.