Stanley Fischer's Novel Idea: "We'd Be Better Off With A Price For Using Money"

Tyler Durden's picture

Submitted by David Stockman via Contra Corner blog,

The end game of central bank lunacy is surely near. Even the Fed heads appear to be mumbling bits and pieces of truth in public.

Former Philly Fed President Charles Plosser, for example, told Bloomberg TV this morning that central bankers “wring their hands all the time,” are very “concerned about credibility,” and are “pretty good at conjuring up reasons not to act.”

Having screwed up his mutinous courage, he then let loose with words that haven’t been heard from a central banker in decades, if ever:

The Fed “shouldn’t be afraid a recession might come,” he exclaimed, “there’s a real problem here”.

Then again, Plosser recently retired and perhaps it wasn’t all that voluntary. By contrast, Stanley Fischer is in line to takeover the joint, and perhaps soon.

That’s because Janet Yellen is surely finished whether the Donald wins or loses. Her dithering and double-talk have become a laughingstock even in the Wall Street casino.

So you might have thought the good professor from MIT—-by way of the IMF and Bank Of Israel—– would be carefully parsing his words. Instead, he was apparently moved during a speech to economics students to confess that he is more or less flummoxed by his own policies:

WASHINGTON—Federal Reserve Vice Chairman Stanley Fischer on Tuesday expressed frustration with ultralow interest rates, saying they should rise over time.

 

“It bothers me, it really bothers me,” he said when asked about low rates at an event for economics students at Howard University in Washington…….I don’t like it, but I don’t want to raise the interest rate too much. I think we should at some point. I don’t know when,” he said. “The interest rate I believe is not at zero at a normal level and it should be [normal] at some point, not immediately.”

 

“I think there’s also a problem in going to a zero interest rate in the sense that it says that capital isn’t very productive, there’s not much going on in the economy,” Mr. Fischer said, adding that “we would be better off if there was a price for using money.”

Well, now. Imagine exactly that!

Apparently, the day traders and robo machines, who are back gunning for the all-time high chart points again this week, wouldn’t be caught dead even trying. Indeed, at 2171 or 24.95X  LTM earnings, the S&P 500 is hanging by a thread. That is, its priced for permanent paralysis at the Fed—even when its presumptive leader wants to raise rates but just doesn’t exactly “know when”.

The reason for Fischer’s confusion, of course, is that like all Keynesian economists he is desperately searching for some evidence that the nation’s GDP bathtub is near to being filled to the brim. At that point, presumably, it would be time to declare full-employment victory and begin to normalize rates.

In fact, in the same speech the Fed vice-chairman averred that the US is  “beginning to see the fruits of a higher pressure labor market” and that “we think of 3% as a rate that’s consistent with a reasonable rate of inflation.”

The man has a keen sense for rounding errors. During the last four years, the hourly wage rate for private non-supervisory employees has increased at a 2.32% annual rate, while in the most recent 12 months that has accelerated to 2.51%. Apparently, 19 bps on the average rate of wage gain means that the “slack” is nearly drained out of the US labor market.

Oh, c’mon. The truth is, there are about 180 billion annual labor hours attributable to the adult population under 68 years of age not employed in the monetized economy and only about 240 billion hours that are. You could call that a 43% unemployment rate and be done with it.

On the other hand, you could recognize that 75 billion hours are accounted for by unmonetized homemakers, 40 billion by debt-mules called “students” and 18 billion by working age adults who profess to have back pain and psychic anxieties that warrant disability payments rather than shouldering their share of society’s work requirement.

Beyond that, there are tens of billions of potential labor hours that have been off-shored owing to the China Price for goods and the India Price for services; and tens of billions more among adults under 35 who are still in mom and pop’s basement playing video games between part-time gigs at McDonald’s.

Yet any and all of these endless hours of “slack” labor could be pulled into paid employment. It just depends upon an endless array of factors—such as anti-dumping cases, student loan rules, day care costs, Obamacare coverage regulations and much more—–that are beyond Stanley Fischer’s ability to impact or to even imagine.

At the end of the day, this blithering academic fool is apparently willing to deprive Wall Street indefinitely of the very thing upon which a capitalist economy depends to remain stable, healthy and productive. That is, an honest price for money and capital.

So after 94 months of no price at all for “using money”,  the great and mighty Stanley Fischer still does not espy a sufficient fraction of gain in the rate of wage inflation. While he is waiting, of course, the robo-machines rage and the mother of all financial bubbles keeps on inflating.

In the Trumpian vernacular: pathetic!

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venturen's picture

 "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

SafelyGraze's picture

price for using money

already in place, to serve you better!

hugs,
the IRS 

f_symbols's picture
f_symbols (not verified) SafelyGraze Sep 29, 2016 12:11 PM

My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do... http://tiny.cc/477bfy

AGuy's picture

"price for using money...hugs, the IRS "

I think you misunderstood Stanley's statement. He means there should be a price to borrow money so that investors\banks loaning money can make money. Since Interest rates are at zero, there i no incentitive for investors to provide loans.

That' said, I doesn't matter what the Fed membets think. The real problem is that that US Federal Gov't owes $20T and cannot afford higher interest rates. Ditto for corp. America that borrowed trillions for stock buy-backs, bankrupt states & citites, and over extended consumers.

Interest rates will only go up when there is a dollar crisis, which is probably years off because the other industrial powers have even worse problems than the USA.

 

 

SafelyGraze's picture

a price for when you borrow it

a price for when you receive it (as wages)

a price for when you spend it 

a price for when you hold it 

fortunately there's not a price incurred by lending it

Elco the Constitutionalist's picture
Elco the Constitutionalist (not verified) AGuy Sep 29, 2016 5:47 PM

Usury us never a good thing. Money is not the root of all evil, usury is.

Kirk2NCC1701's picture

We'd be better off, with a price on Banksters' heads.

"Wanted, Dead or Alive..."

TheReplacement's picture

I agreed with this post more.  Just the heads.  Don't need the bodies.

bigkahuna's picture

If that does not get you a hoard of people outside your house to separate you from your head, nothing will.

Ignatius's picture

He's afraid a recession might come?  Well, atleast that is a step up from our current depression, no?  Let's try to be positive here, people, Fischer atleast wants to start moving in the right direction.

Stormtrooper's picture

Simple solution, END THE FED!!  Let the marketplace set money rates.

ShorTed's picture

There you go making sense again.  But what are these things you call "markets"?

venturen's picture

you need to break up the mega banks and reintroduce the glass stegall!

lester1's picture

I'm sure that zionist Stanley Fischer has his gold bullion stored nice and ready for that one way trip to Tel Aviv when shit goes down.

Kagemusho's picture

He'll have lots of company. For example, where do you think the former Comptroller of the Pentagon is right now? You know, the one who was in charge when Rumsfeld announced on the day before 9/11 that 2.3 Trillion (now estimated to be 9 Trillion) went missing?

George Washington was right about people with dual allegiances. His Farewell Address makes that clear: http://avalon.law.yale.edu/18th_century/washing.asp

The nation which indulges towards another a habitual hatred or a habitual fondness is in some degree a slave. It is a slave to its animosity or to its affection, either of which is sufficient to lead it astray from its duty and its interest. Antipathy in one nation against another disposes each more readily to offer insult and injury, to lay hold of slight causes of umbrage, and to be haughty and intractable, when accidental or trifling occasions of dispute occur. Hence, frequent collisions, obstinate, envenomed, and bloody contests. The nation, prompted by ill-will and resentment, sometimes impels to war the government, contrary to the best calculations of policy. The government sometimes participates in the national propensity, and adopts through passion what reason would reject; at other times it makes the animosity of the nation subservient to projects of hostility instigated by pride, ambition, and other sinister and pernicious motives. The peace often, sometimes perhaps the liberty, of nations, has been the victim..

So likewise, a passionate attachment of one nation for another produces a variety of evils. Sympathy for the favorite nation, facilitating the illusion of an imaginary common interest in cases where no real common interest exists, and infusing into one the enmities of the other, betrays the former into a participation in the quarrels and wars of the latter without adequate inducement or justification. It leads also to concessions to the favorite nation of privileges denied to others which is apt doubly to injure the nation making the concessions; by unnecessarily parting with what ought to have been retained, and by exciting jealousy, ill-will, and a disposition to retaliate, in the parties from whom equal privileges are withheld. And it gives to ambitious, corrupted, or deluded citizens (who devote themselves to the favorite nation), facility to betray or sacrifice the interests of their own country, without odium, sometimes even with popularity; gilding, with the appearances of a virtuous sense of obligation, a commendable deference for public opinion, or a laudable zeal for public good, the base or foolish compliances of ambition, corruption, or infatuation...

Against the insidious wiles of foreign influence (I conjure you to believe me, fellow-citizens) the jealousy of a free people ought to be constantly awake, since history and experience prove that foreign influence is one of the most baneful foes of republican government. But that jealousy to be useful must be impartial; else it becomes the instrument of the very influence to be avoided, instead of a defense against it. Excessive partiality for one foreign nation and excessive dislike of another cause those whom they actuate to see danger only on one side, and serve to veil and even second the arts of influence on the other. Real patriots who may resist the intrigues of the favorite are liable to become suspected and odious, while its tools and dupes usurp the applause and confidence of the people, to surrender their interests. (Emphasis mine - Kagemusho)

Real patriots who point out such things wind up being the targets of the hasbaraniki. But for how much longer shall this stand, when America might fall from the parasite's diseases?

 

conraddobler's picture

What's amazing about that speech is the reading level it requires to understand it compared to modern speeches.

Probably a good reason for the mess we're in.

 

 

Uzda Farce's picture
Uzda Farce (not verified) Kagemusho Sep 29, 2016 11:54 AM

Stanley Fischer and Dov Zakheim are also members of the Rockefeller/CFR, along with Bill Clinton, Jacob Lew, Janet Yellen, Robert Rubin, Lloyd Blankfein and George Soros. See member lists at cfr dot org.

King Tut's picture
King Tut (not verified) lester1 Sep 29, 2016 11:44 AM

Wow "via the Bank of Israel"- et tu,  ZH? 

Uzda Farce's picture
Uzda Farce (not verified) King Tut Sep 29, 2016 12:20 PM

Fischer's resume also includes the London School of Economics, Univ of Chicago, World Bank, IMF, Citigroup, Council on Foreign Relations, Trilateral Commission, Bilderberg Group, Group of 30, and Peterson Institute. All are interconnected.

The Bell Rang's picture

Why bother with this total bullshit. They can't raise rates.......can't pay a higher rate on the debt....period !!

inosent's picture

ponzi is as ponzi does.

Consuelo's picture

 

 

Let me help you there...

 

Goyim does as Tribe says.

 

RagnarRedux's picture

Those dual-citizen Jews are so smart, clever, enlightened and benevolent. What would we ever do without them?!

BabaLooey's picture

We'd do a WHOLE LOT BETTER

 

what do I win for that concise, lucid CORRECT answer?

Critical Path's picture

Just glad to I was able to participate (as a guinea pig) in the largest central bank experiment ever. - granted in the end I probably will see 10-15% of my life spent in an economic waste land (probably longer after the dominos fall).  At least as a participation trophy I'll at some point see the Fed's credibility destroyed by the market, and just maybe, the charter as a whole abolished.  

conraddobler's picture

The good news is if they get their way you won't spend much MORE time at ALL in the economic wasteland.

The bad news?

That's because they intend to kill most of us off shortly.

Tenshin Headache's picture

Stanley Fisher finally "gets" the time value of money. There's hope for the Fed yet. Soon he will spot the pitfalls of unrestrained credit creation in support of senseless fiscal policy.

Zero-Hegemon's picture

You might as well make me pay for the privilege of using a ruler or tape measure.

Grandad Grumps's picture

The people of the US and the rest of the world already have many "prices" for using money in the way of taxes.

Most people fail to see that money is a tool of slavery. It replaced the whip. However, for people to be able to eat, be clothed and have shelter they must work to earn money.

Money is not freedom. Money is the main tool of modern slavery.

Who is more fearful than those who have money and power? They are always afraid of not having enough or loing theirs. The people who have no money or power have very little to fear.

detached.amusement's picture

I'll upvote even though it irks me with the conflation of money and currency

Offthebeach's picture

Prior to the Federal Reserve/Tax on labor Act we had private money, in competition.

This was quite irritating to Central Finance, central Fed government, empire delusionists, Marxists, Crony "Capitalists" and countless others.

Supposedly it was ...it was ...( I'm laughing hysterical ) ..about crops or farmers getting paid or something.

GunnerySgtHartman's picture

Great article, but I mildly disagree with this:

The end game of central bank lunacy is surely near.

Central bank lunacy will only end when central banks end.  Until that happens, central bankers will always go off on lunatic tangents because they are the self-appointed 'smartest guys in the room.'

Bill of Rights's picture
Fed Chair Yellen Doesn’t Know What The Current Labor Force Participation Rate Is

 

https://www.youtube.com/watch?v=Y_YwQmXjIJg

 

The panic look on the dude with the tie on the right is humorous.

detached.amusement's picture

your av is always animated in my head

Gadfly's picture

 

 

There should be a price for using money.  Only the price we pay should go to a public bank owned and controlled by all U.S. citizens, to be used for our exclusive benefit.  The price we pay to use money should not go to a private central bank, where they can do whatever they want with the billions of dollars in annual interest, including starting wars and stealing other people’s resources, and controlling our politicians, the press, and our electionsIt is a private and corrupt racket -- a form of financial totalitarianism/feudalism which must be ended, the sooner the better.  Or we will forever remain in financial bondage.

Uzda Farce's picture
Uzda Farce (not verified) Gadfly Sep 29, 2016 1:00 PM

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences... The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations."

-- Carroll Quigley (CFR member, Bill Clinton mentor), "Tragedy and Hope", 1966, pg 324

adanata's picture

 

Uzda: Exactly  +10,000  ...Just missed the bit about de-population to rid themselves of the overabundance of serfs.

tricorn teacup's picture

Nationalizing the central bank monopoly will fix nothing.

SilvaDolla's picture

I have a buddy that suggests, that healthy competition is the backbone of capitalism and if we can have this healthy competition in fast food and other industries, why can't we have two competing currencies?

Do you guys think that the introduction of a second "legal" currency could stabilize our situation as the FED bucks do their death spiral?

orez65's picture

Capital is, simply, the difference between what is produced and what is consumed.

Interest rate is the price of capital.

The interest rate is a direct indication of the health of the economy. If more is consumed than it is produced then interest rates will be higher. If more is produced than it is consumed then interest rates will be lower.

What is presently occuring is that the Federal Reserve is counterfeiting capital. They are creating capital that does not exist in the real world by, literally, pulling out of their ass hole.

In order to grow real capital is needed.

 

conraddobler's picture

What is this thing you call capital?

It's like it is from some ancient forgotten land that sunk beneath the waves and only left scattered hand me down stories through the generations.

Hushed tones around the dumpster fires, people huddle in collectivst hell and listen to the tales of yore when people were free and accountable at the same time.

 

insanelysane's picture

It used to be gold and silver but the oligarchy legalized the selling of paper gold and paper silver.  They will just find a "legal" way to screw with the new currency.  See bitcoin.

GunnerySgtHartman's picture

One could argue that the barter economy is a currency all its own, beyond the control of the Fed and in competition with it.

I think that when the next crash comes, we're going to see a surge in bartering (much to the chagrin of the IRS).

SilvaDolla's picture

I can see that. I'm a fan of bartering, and do it every chance I get, but there are a couple of legitimate inefficiencies.

1) That pesky "rule of double-wants". For example: You're trying to buy petrol for your car, but all you have for trade is chickens and the guy selling gas isn't currently in need of chickens.

2) Certain bartering items have no store of value. Chickens and cows eventually die and even high tech items become worth less with each new generation of tech.

The competing currency would need to be as universal as the Debt notes, but hopefully with a BETTER store of value.

What about that executive order that JF Kennedy started to inact that would allow for the US Treasury itself to print its own money and circulate along with Fed notes? The bankers can't explode ALL of our heads.

GunnerySgtHartman's picture

Agreed on the inefficiencies.  It is not a perfect system of exchange, that's for sure.

Regarding JFK's executive order, do you mean this?

https://en.wikipedia.org/wiki/Executive_Order_11110

 

Offthebeach's picture

You are requried to pay tax on bartering.

Everything of the state, everything inside the state, nothing outside the state. Nothing. Nada. Zero. Zip.