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Fed's "Modest Proposal" To Boost US Growth: Issue More Debt
Everyone knows that the solution to debt is more debt.
That’s an immutable truth, as critical to the pseudoscience of economics as Newton’s first law is to physics. We know it to be true because it’s propagated by one of the greatest economic minds in the history of the world:
So a lot of debt is good, and a whole lot of debt is better. But you already knew that. Nothing out of the ordinary there.
You might also have caught on to the fact that the cabal of central planners who occasionally meet in the Eccles Building (which, hilariously, is named after the man who once told a congressional committee that forcing “the Fed to buy government securities for the purpose of defending a fixed pattern of interest rates.. makes the entire banking system .. and engine of inflation") and discuss how best to destroy your savings, disappear the middle class, and exacerbate the wealth divide has been hard at work for the past seven years enabling the Treasury ponzi scheme that helps keep the US government afloat.
This multi-trillion dollar effort to artificially suppress government bond yields has, along with Fed funds rate tinkering, succeeded in driving rates into the ground. Unfortunately for the PhD economist-turned central planner crowd, there’s this thing called physical currency, and damned if it doesn’t have the really inconvenient effect of creating an effective lower bound on rates. After all, if you push rates too far below zero, rational actors will eschew bank deposits in favor of the mattress.
Of course you could just take physical currency into the back alley and execute it, then bury it in a shallow grave, and then you’d be free to micromanage the economy at every turn. And while the calls for a cash ban are indeed getting louder as central banks bump up against the limits of monetary policy, eliminating cash might be the last straw for the huddled masses and because no one wants to see the torch-wielding villagers storm the Ivory Tower, the powers that be need to come up with a new solution to give them more room to ease in the event a 1937-style post-liftoff collapse happens and the Fed is forced to go right back to ZIRP and QE.
As it turns out, such a solution was right under the FOMC’s nose: the problem can be fixed with more debt.
Here’s Bloomberg:
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said it could be a good idea for the U.S. government to issue more debt as this would help lift the economy’s long-run neutral rate of interest.
Increasing the supply of assets available to investors “would push downward on debt prices, and so upward on the long-run neutral real interest rate,” Kocherlakota said Thursday in Frankfurt in remarks prepared for delivery at a conference hosted by Germany’s Bundesbank.
Lifting the so-called neutral rate, which prevails when Fed policy is neither stimulating nor restraining growth, would in turn benefit Fed policy makers by creating more space between the benchmark federal funds rate and zero, he said.
There you go. Krugman’s law to the rescue. But before anyone gets too indignant at this latest example of Keynesian insanity, note that Kocherlakota isn’t saying fiscal policymakers should issue more debt. He’s only saying that if fiscal policymakers did issue more debt, the Fed would really appreciate it:
"I want to be clear at the outset that I am not saying that it is appropriate for fiscal policymakers to increase the long-run level of public debt. I am simply pointing to one benefit associated with such an increase: It allows the central bank to be more effective in mitigating the impact of adverse shocks to aggregate demand."
Of course "mitigating the impact of adverse shocks to aggregate demand" is simply another way of saying "boosting economic output," so what Kocherlakota is actually saying is this: "We may very well end up needing more room to ease policy rates as well as more debt to monetize and increasing the long-run level of public debt accomplishes both goals."
Or, more simply: "Let's kick this can a bit further down the road and do the exact opposite of what we need to do in order to find a long-term, sustainable solution."
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Since ’07, $11 trillion of global QE, $57 trillion of more debthttp://investmentwatchblog.com/since-07-11-trillion-of-global-qe-57-tril...
Debt is already sky-high. US debt and unfunded liabilities per taxpayer is at least $1,400,000. We need a new drug.
Kotlikoff says, “I told them the real (2014) deficit was $5 trillion, not the $500 billion or $300 billion or whatever it was announced to be this year. Almost all the liabilities of the government are being kept off the books by bogus accounting. . . . The government is 58% underfinanced . . . . Social Security is 33% underfinanced . . . . So, the entire government enterprise is in worse fiscal shape than Social Security is, but they are both in terrible shape.” So, how much is America on the hook for in the future? Kotlikoff contends, “If you take all the expenditures that the government is expected to make, as projected by the Congressional Budget Office (CBO), all the spending on defense, repairing the roads, paying for the Supreme Court Justices’ salaries, Social Security, Medicare, Medicaid, welfare, everything and take all those expenditures into the future . . . and compare that to all the taxes that are projected to come in, and the difference is $210 trillion. That’s the fiscal gap. That’s our true debt.”
http://usawatchdog.com/financial-system-will-collapse-just-a-matter-of-w...
Sounds like global QE needs to be increased by $46 trillion to create a balance.
The Keynesians will never admit failure of their ideology, and will always push for more debt. If the market participants refuse they will change the rules to incentivize more debt no matter the cost. How about instead of continuing the march toward bankruptcy and deflationary Armageddon or currency collapse we take a small step toward sound money, explained here.
should rename it The Illinois/Greece Syndrome!
Hasn't Japan proved all these assholes to be wrong, especially Krugman? Have we lost our analytical ability as a society? The reason that economics is referred to as "The dismal science" is because, in real Science, there is a hypothesis which is tested and if not supported by repeated observations, is eliminated. In economics, this does not apply, as demonstrated by QE. ALthough, of course, there might be other reasons??
We are sprinting downhill now and our legs can barely keep up. FOWARD!!!
The best way to solve a debt crisis is to issue more debt? Ummmmkaaaay.
But, it will expedite complete financial annihilation, which is coming either way.
I'm waiting for the new $1000 bill to be introduced into circulation... It will have a picture of Krusty the Klown and you'll be able to buy a Snicker's bar with it in the new normal...
Pffffft, $1,000?!? We eagerly anticipate the $1,000,000 with Barry on it and the $1,000,000,000 with Caityln/Bruce on it.
And all the rehab centers need to install wet bars, a free Norco window and crack smoking rooms to accelerate the recovery process.
Phooey, we're raising rates.....!
Have we lost our analytical ability as a society?
We have lost our representative government; the U.S. Congress has been pulled from the people by the bankers, by the Fed.
End the Fed
End this joke of a Stock Market
End all the middlemen, scammers, manipulators and all the other scumbags who have no interest in investing money to help companies grow.
Time to take a hard look at CrowdFunding concept
Get out of capitalism's way.
this is music to our politicians' ears. This is exactly why keynes was so popular in the first place, and why he remains so- he gives feckless politicians the moral and acedemic cover to do what they all want to do anyway: spend money, and lots of it. Don't have enough money to fund every pet project they want to use to funnel taxpayer money to themselves and their friends? borrow it or print it. anytime anyone accuses you of running up too much debt, just point to "nobel prize winning economist" paul krugman, who says all this is neccessary to create 'aggregate demand' or some other made up bullshit that only exists in the minds of fucktards like krugman. Love all the krugman memes, by the way, I thought id seen them all, but apparently not.
The hole isn't deep enough, so dig faster. I really would love to see them try to outlaw cash, the rioting of the free shit army would be awesome......
Here's the plan: it's called do nothing, let them hang themselves with the math while pointing and laughing at them for being morons.
The only problem with Kotlikoff, if you have paid attention to his interviews throughout the past 6 or so years, is that, guess what his solution is for this problem...? More, Bigger, Better ---- GOVERNMENT...
"We need a new drug."
One the Fed won't stop
One that won't crash my stocks
Or make the bond bubble pop
We need a new drug
One that won't hurt our head
One that won't make my mouth too dry
Or make the markets red
One that won't make us nervous
Wondering when to sell
One that makes us cheer when we hear that closing bell
When we hear that bell
Hear that bell, baby
Issue more debt?
Now there's a NEW IDEA!
Thank God our leaders are capable of such ORIGINAL THINKING!!
We don't need original thinking at all. There are tried and true means and methods of doing things. Leaders who are willing to just do what worked in the distant past would suffice.
The funny thing is, that is the lesser of 2 evils.
You can either keep borrowing until you default, or try some of that "austerity" medicine, and default anyway.
So its probably better to go down with a bang, instead of going down on yourself, before you go down.
Austerity does not equal default. Austerity equals savings.
Austerity is reducing government largesse for the people while maintaining/increasing it for the insiders.
Austerity is a lie.
Anyone pushing austerity is a liar.
Modest proposal
Send the FED and the FED shills to the hague for crimes against humanity.
In case Tyler's satirical title escapes anybody...
"A Modest Proposal" is a book published anonymously by Jonathon Swift based on the notion that selling children as food to rich people would improve the economy.
How long before the squid sells kids as asset backed securities?
just put a bullet in his head
No man, they have accidents now. They fall on 20 nails to the head on the way to their car, fall out windows for being clumsy and die by getting pegged with dragon dildoes.
Yes, a series of accidents, the first one accidentally kneeling on two large nails, one thru each kneecap and being accidentally unable to remove them for a week before then next unfortunate accident.
Bankers will continue to commit crimes until justice stops them.
Grimaldus
Naw, there's a far more lethal weapon in the arsenal to deal with the larger systemic issue. Bad math skills in combination with greed. The Math acts without mercy or a second thought, it merely gives the opportunity for people who's greed for wealth outstrip their common sense. The same math and greed that has acted as the fifth column through out the history of earth that has taken the heads of royals, crushed empires and destroyed nations. The accidents are just internal and external groups taking the opportunity under the smoke of 'war' to whack each other in the confusion. If it plays out like Rome, they'll be "accident-ing" each other for around 600 years.
Duh. How else can we "grow?" Pray to the fusion gods?
Better idea, break all the windows in the USSA, starting at the Fed
I would prefer they wreck the building...with the people inside!
Actually, "mitigating the impact of adverse shocks to aggregate demand" is another way of saying "making rich people richer and hoping beyond all hope that the wealth effect is a real thing and not a fucking figment of our imaginations."
replace our with your
beginning the calls for fiscal stimulus. shocker. i said that this will happen sometime in H2 this year. And so it begins. Get those $2400 rebate checks printing!!!
No, creating more debt decreases demand. Anyone who claims to think otherwise is most likely a moron or a liar.
People calculate in their head the load of debt that they can pay back and still have shoes and food when they get old. More, debt at whatever cost, is not worth the risk of becoming homeless and starving at any age.
The purpose of debt is to enslave people and transfer wealth away from those in debt ... period.
you have it wrong....I increase your debt and give it to the people that will hire me...ie Goldman. Social losses and private profit!
Would somebody please ***** this mother######!!!!
If a shock lasts more than 6 years can we still call it a shock?
I thought we were almost into year 44 (1971 Tricky Dick leaves gold standard) now, but hell, what do I know.
What happened to this guy? At first, he seemed to be a reasonable, somewhat hawkish guy. Then, a few years back he drinks some Kool Aid and becomes the most dovish idoitic socialist in the history of central banking.
Pretty obvious he wants the government to issue more debt so he can QE it into oblivion and ultimately cancel it.
If it ain't working, just do more because you have to be right. You just have to.
Yes I am now ashamed to be a Minnesotan
My Dad hosts Saturdya morning Bridge games at his house. Sometimes Kocherlakota's predecessor at the Mineapolis Fed plays, or his wife does. I am tempted to learn Bridge just so I can get to know them and be able to probe his mind to find out why they think the way they do. Oh sure I play Hearts and Spades and 500 an all the other pre-bridge trick games. But those are but a pale shadow to the game of Bridge. My eyes glossed over as my Dad was explaining how it works.
Krugman has the sex appeal of therapeutic shoes. Amazingly if you rotate Kruger's pic 180o he looks the same.
"If you shoot yourself in the head enough times you will no longer have to shoot yourself in the head." -P. Krugman
Looks like a pedophile no matter how I rotate it.
A love me a balanced budget but [tin foil hat on]........
Is more public debt issuance a threat to the big sovereign bond holders because it would dilute the value of their current holdings?
Does this make sense (probably not)?
Here is my modest proposal GO FUCK YOURSELVE!
Why don't we test your ideas? It involves you getting in your car. Locate a significant concreate wall and head for it. Accelarate to 100 MPH put on the radio and if you'r feeling uncertain about the whole enterprise, don't worry raise the volume on your radio and take the pedal to the metal. I am sure everything will be just fine.
That wall could be thousands of miles away and the back seat has 10,000 lbs of cocaine in it and a couple hookers are in the trunk. Let the good times roll for the bankers, no matter what's going on in the real world.
When it's really serious, you have to lie.
does there ever come a point where someone of high office tells the fed, imf, etc. that their projections for growth have been way off therefore their policies must be wrong?
Lol....., you've got a lot to learn about who really runs things.
No.
EU Anthem.
https://www.youtube.com/watch?v=WlBiLNN1NhQ
Aliki: "does there ever come a point where someone of high office tells the fed......"
Surely you jest..... the fed answers to no one.
https://www.youtube.com/watch?v=J8fxk3bBTi4
Cowards and cunts. Vote "fuck off" in 2016.
Spoil the ballot paper. Fuck'em.
We left out the one where Paul Krugman called for boosting the economy by building massive weapon systems to prepare for fighting an invasion from outerspace by extraterrestrials. Prima facie evidence of complete insanity and my personal favorite.
Rube Goldberg now works for the defense industries. He probably had a hand in the F-35 project.
so long as Gov-Co International can continue to buy financial assets today with tax revenues from the future - everything is going to be okay -
Years from now economic text books will show QE and ZIRP stimulus from the US Federal Reserve to be the biggest financial scams in human history.
Quantitative Easing (QE) was engineered to provide the Fed's "primary dealer" banks with free money printed out of thin air (MBS purchases). The Fed then directs their "primary dealers" to buy up stocks to keep this stock market going higher and higher no matter what. QE is designed to protect the assets of the wealthy .1% from deflation due to the current economic depression on main street. QE4 is coming later this year.
0% interest rates, (ZIRP) is theft from older people who have saved their whole lives. Seniors are going to get wiped out in the coming crash having moved their savings into the risky stock market. Then, The Fed's 0% rate policy also fuels more mal-investment and corporate stock buybacks that artificially inflates the stock market.
The Fed has no intentions to ever raise interest rates because they know there is way to much debt out there now. You would see public and private debt defaults causing a severe recession and an eventual depression.
Even a small rate hike would tank the stock market. Wealth would evaporate. It would hurt the oligarchs and the Fed's wall street friends paper wealth. Plus, when 2016 comes Democrat Fed Chair Janet Yellen wont risk crashing the markets while Democrat Hillary Clinton is running for President.
This stock market is the "mother of all bubbles". We all know bubbles don't last, and this is going to end very badly! Get out of this market while you still can. Move your money to gold and silver, cash, real estate, land, art, and other physical assets that cannot evaporate.
Good luck to all !
moar is the answer to every question
Listen up fuckos. Unless you are part of the Tribe all of your "cash" and other "assets" parked inside OUR SYSTEM belongs to us. There are no exit doors available to you bitchez.
If you have an issue or complaint contact the following:
nailgun@jpmorgan.com
trav7777...in a debt as money system, growth of debt is required, not optional....
... >>> more of this >>> http://www.usdebtclock.org/
OFM, I'm totally going apeshit over this one....
" ... pseudoscience of economics ..."
You forgot the word "Keynesian."
Why not just have THE central bank print enough funny money to cover every nations debt, buy everyone a house, pay off all student and private debt, and wipe out all corporate debt. That would get the world economic engine really going. Free shit for everyone. Everyone a winner. Everyone is a trust funder.
MOAR debt? Well yes of course. Bankers and politicians go into debt to pay back the money they have stolen.
Everything they have and everything their families have as long as they live.
Grimaldus
if you have a debt money ponzi system the enevitable cycle is a severe collapse of the economy due to debt saturation and a ponzi collapse. You can spend you way out with demand side stimulus as FDR did if using debt free created money, or you must have a debt jubilee even if called that by another name. This as was granted Germany from war reparations after WWI with the birth of the BIS. The only way to avoid the next catastrophic and misery filled economic collapse due to the amounts of debt in the system is rescinding debt, while unwinding or cancelling the derivatives trade. Greece would be the place to start but TPTB want full payment of debt and of the compounding interest on the interest : an eg of this is Canada where the taxpayer has paid over a trillion dollars on the national debt wherein the amount borrowed, expenditures over revenues is 37 billion since confederation in 1867 to today; with the CDN national debt still amounting to over 650 billion dollars all owed to the banking class. When the enevitable happens we must remember who is to blame and reject their problem reaction solution meme and fight for monetary reform and a system wherein money is created debt free and banking is rigorously contained under severe penalties that are rigorously enforced so that bankers feel the regulations in their bones. Either that or place banking on a full reserve system. As there can never be a real free market system, with scale of economy now in force, then if a command economy is de rigeur let's make certain the people command the economy and not corporate boards of directors or the people's representatives as government.
in the meantime "QE to infinity"
Soon the tinfoil hats will be worn by those that refuse to believe the truth. The bullshit is becoming so blatent that more and more sheeple are starting to unplug. I'd like to thank this fucking retard for helping prove my point to family and friends.
What narcissistic psychopath(s) smell like.
"I am simply pointing to one benefit associated with such an increase: It allows the central bank to be more effective in mitigating the impact of adverse shocks to aggregate demand."
It also causes the central bank to exacerbate the impact of adverse shocks when the credit bubble bursts.
Funny about how math works.
We could stimulate the economy by declaring war on black people. Hmmm nevermind, we already did that. It's called the War On Drugs.
Let me think about this...have the feds print 10 trillion dollars...buy all the US houses for sale...no more houses on the market...prices go up..give new home owners 100k to buy their first house...all present day home owners all become wealthy...home builders scramble to build more houses because the feds took them off the market...the economy takes off..generates more taxes...taxes pay off the borrowed 10 trillion...we all live happily as a nation...next problem please!
QE Infinity will buy time, but it won't buy an infinite amount of time. Moreover, the global banking crash is here right now, and the 'modest proposals' won't accomplish anything other than increased partisan zeal to hang more central bankster slimebuckets.
Austerity Lite now to avoid Severe Austerity later. Imagine the realignment to rational and reasonable spending that could occur - but slowly without sudden pain. People might even realize how beneficial buying from their fellow Americans would benefit them personbally. American manufacturers might realize they could consider making things here that Americans really need.
Win/win/win
Everyone knows that the solution to debt is more debt.
Debt is "an in-process promise to complete a trade." It's not something you "solve". You just deliver.
Governments "never" deliver ... they just keep rolling over trading promises they never intended to deliver on ... i.e. they perpetually DEFAULT ... and then they die.
We must all disconnect from governments. We must turn them loose and set them free (to consume themselves).
Dad, I've blown all my allowance on a bunch of stuff that didn't do me any good. Can I have more allowance so I can do it again and hope it turns out better?
It worked so well for the banks: TARP, QE.1 thru 5 or 6 or 7, $300 trillion derivatives guarantee. And see how well it worked for Greece! Woohoo!
We need BRICS to have a partial gold backed currency now to sink these fuckers.
"We may very well end up needing more room to ease policy rates as well as more debt to monetize and increasing the long-run level of public debt accomplishes both goals."
Or, more simply: "Let's kick this can a bit further down the road and do the exact opposite of what we need to do in order to find a long-term, sustainable solution."
Dig a deeper hole
Sorry... Have to call Bull Shit.
When Capitalism reaches its zenith, everyone will be an investor and no one will be doing anything.
Central Bank inflated asset bubbles will provide for all.
The biggest market in the world today is derivatives, money making money without a useful product or service in sight.
With the market in derivatives being ten times larger than global GDP we can see that making useful products and providing useful services is nearly irrelevant even today.
We are nearly there.
What could go wrong?
I mean they might as well.
Either you have Gold/Silver Bullion or you do not have Gold/Silver Bullion. You are either really Smart or you are a Dumb Mother Fucker. The choice is yours.
You can say what you want. That guy would look good in tar and feathers.Just sayin.
Think about that stall thing. They aint gonna put out that Greece fire by papering it over. As with most bad ideas the best thing to do is not take part in it.
...the only thing we really need to know is WHEN does this whole mess come apart at the seams.
That's the $210 Trillion Dollar Question.
It stops when the grown ups stop it.
Silly rabbit, debt is for banksters.
Interest is for sheeple.
Liberty is a demand. Tyranny is submission..
Most heard lament heard from those waiting their ride on the guillotine? "I should have "returned" sooner."
American democracy has become debtocracy