Sheila Bair's Modest Proposal To Fix Everything: Hyperinflation

Tyler Durden's picture

This one is actually quite funny, although we feel that the MMTers, the Neo-Keynesians, the Econ 101 textbook fanatics, and the government apparatchiks out there will fail to appreciate the humor. However, we are a little concerned how many of those in charge read into this a little too much, and decide to make this official policy...

From the Washington Post:

Fix income inequality with $10 million loans for everyone!

By Sheila Bair, Published: April 13

Are you concerned about growing income inequality in America? Are you resentful of all that wealth concentrated in the 1 percent? I’ve got the perfect solution, a modest proposal that involves just a small adjustment in the Federal Reserve’s easy monetary policy. Best of all, it will mean that none of us have to work for a living anymore.

For several years now, the Fed has been making money available to the financial sector at near-zero interest rates. Big banks and hedge funds, among others, have taken this cheap money and invested it in securities with high yields. This type of profit-making, called the “carry trade,” has been enormously profitable for them.

So why not let everyone participate?

Under my plan, each American household could borrow $10 million from the Fed at zero interest. The more conservative among us can take that money and buy 10-year Treasury bonds. At the current 2 percent annual interest rate, we can pocket a nice $200,000 a year to live on. The more adventuresome can buy 10-year Greek debt at 21 percent, for an annual income of $2.1 million. Or if Greece is a little too risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a year. (No sense in getting greedy.)

Think of what we can do with all that money. We can pay off our underwater mortgages and replenish our retirement accounts without spending one day schlepping into the office. With a few quick keystrokes, we’ll be golden for the next 10 years.

Of course, we will have to persuade Congress to pass a law authorizing all this Fed lending, but that shouldn’t be hard. Congress is really good at spending money, so long as lawmakers don’t have to come up with a way to pay for it. Just look at the way the Democrats agreed to extend the Bush tax cuts if the Republicans agreed to cut Social Security taxes and extend unemployment benefits. Who says bipartisanship is dead?

And while that deal blew bigger holes in the deficit, my proposal won’t cost taxpayers anything because the Fed is just going to print the money. All we need is about $1,200 trillion, or $10 million for 120 million households. We will all cross our hearts and promise to pay the money back in full after 10 years so the Fed won’t lose any dough. It can hold our Portuguese debt as collateral just to make sure.

Because we will be making money in basically the same way as hedge fund managers, we should have to pay only 15 percent in taxes, just like they do. And since we will be earning money through investments, not work, we won’t have to pay Social Security taxes or Medicare premiums. That means no more money will go into these programs, but so what? No one will need them anymore, with all the cash we’ll be raking in thanks to our cheap loans from the Fed.

Come to think of it, by getting rid of work, we can eliminate a lot of government programs. For instance, who needs unemployment benefits and job retraining when everyone has joined the investor class? And forget the trade deficit. Heck, we want those foreign workers to keep providing us with goods and services.

We can stop worrying about education, too. Who needs to understand the value of pi or the history of civilization when all you have to do to make a living is order up a few trades? Let the kids stay home with us. They can play video games while we pop bonbons and watch the soaps and talk shows. The liberals will love this plan because it reduces income inequality; the conservatives will love it because it promotes family time.

I’m really excited! This is the best American financial innovation since liar loans and pick-a-payment mortgages. I can’t wait to get my super PAC started to help candidates who support this important cause. I think I will call my proposal the “Get Rid of Employment and Education Directive.”

Some may worry about inflation and long-term stability under my proposal. I say they lack faith in our country. So what if it cost 50 billion marks to mail a letter when the German central bank tried printing money to pay idle workers in 1923?

That couldn’t happen here. This is America. Why should hedge funds and big financial institutions get all the goodies?

Look out 1 percent, here we come.

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GeneMarchbanks's picture

LOLz @ headline... here we go...

bernorange's picture

Uncle Scrooge explains the proposal for people who don't like to read:

DeadFred's picture

What's the web address to sign up? Can we get the money in an EBT card? Seriously, where are the important details!

Bicycle Repairman's picture

I'm with Sheila on this.  One minor note, I want my check 6 months before anyone else.

Thanks in advance.

FEDbuster's picture

I had this idea four years ago (after TARP 1.0), and no one embraced it then either.  I must admit I didn't throw out $10 million per person, mine was a modest $10K VISA card for every American to spend within one year.  If you're going to throw gas on the BBQ to get the coals hot, you might as well spread it around.

TruthInSunshine's picture

This is the actual Paul Krugman plan that he's been working on for he entire length of his Nobel Laureate career, and he's quite pissed that Sheila Bair must have somehow gotten ahold of his notes, and leaked his plan in the form of this op/ed.

He had planned on publishing this blueprint for salvaging the fractional reserve economic foundation of our society in his final book, that would be his magnum opus, that was to be titled:

Digging Our Way To Prosperity: How Ctrl+Print Could Have Saved The Roman Empire Had They Possessed This Technology



johnu1978's picture

I think I'm suffering from Doom Porn overload!!!



Edible Plant Tours - Primitive Skills Classes

AldousHuxley's picture

here are your choices:

  1. hyperinflation
  2. depression
  3. bankster bailout
  4. clawback of bankster bonuses, bankruptcy of banks, criminal trial of politicians and banksters, power to working class over executive pigs with private charter flight to Davos to just talk about issues, reconsideration of globalism, etc.


But the correct solution is the most difficult and depression is the most painful, so US elites have decided to go with bankster bailouts then hyperinflation once the bankster bets are posted on commodities.

whstlblwr's picture

Bair is criticizing the Fed in the Post? Shut the fuck up.

lasvegaspersona's picture

we have front row seats for the greatest show of our lifetimes here at Zerohedge

porn or just wholesome entertainment it is exciting

and unlike porn there is a plot, figure it out and win a prize

cossack55's picture

We've all figured it out and are just impatiently waiting for the Money Shot.

AldousHuxley's picture

money shot has banksters doing your daughter so that she can pay off her debts she was forced upon (student, federal, bailouts, housing, credit, etc.)

Cathartes Aura's picture

FYI, they're doing yer sons too, even if you can't "imagine" that. . .

Manthong's picture

The best play for that 10 mil is to be first to plow it all into AAPL.  :-D

Element's picture

People are missing the salient point, not just hyperinflation and debasement, but everyone is then PERSONALLY $10 million in debt to the FED.

Now why would the FED want that?  FED = TBTF BANKS

Party of short-term parties though!

Are you good for it? ... that's ok, you can just work it off ... but the interest may be a wee problem.

Yes citizen, ZIRP is over, we had to raise rates to fight inflation ... now get back to work!


It's a pretty funny article though.

AldousHuxley's picture

if you take that $10M and buy as much commodity and equities as you can with as much leverage you can get BEFORE everyone  else, then you can profit because by the time inflation flows in to the economy you have already made your bets when everyone else's $10M will have diminished purchasing power.


That's why money Fed prints goes to BANKS first. by the time it trickles down to you in the form of wages, good are already priced higher and you only get the short term psychological effect of feeling richer.





FeralSerf's picture

They especially enjoy doing your widowed grandmother.

AldousHuxley's picture

it is difficult to identify  which party is pleasing whom in this case...depends whether your grandmother is a GILF  and how young the bankster is I guess.

Absinthe Minded's picture

Absolutely LV Persona. Watching Fight Club right now on Sundance, still a groundbreaking, thought provoking piece of work. " You don't own things, they own you." Never has there been a more true statement.

Hobbleknee's picture

3 leads to 2, which leads 1.

Reese Bobby's picture

Since #4 is out of the question I'll take #2 shit-for-commie-brains.

CPL's picture


Well there is that pesky thing of no more break lines or fuel lines being made.  I'm sure the single point of failure of any company that manufactures breaking systems for anything with wheels will ensure the factory will be rebuilt post haste.

mkhs's picture

So now we are stealing technology from the Chinese?  I am used to cheap Chinese things breaking.  If they can't make lines that don't break, they should find another line of work.

A Lunatic's picture

I embraced the shit out of it.........In fact I'm beginning to lose my patience after sitting around on the couch for four miserable damned years waiting for my check...........WTF

The Alarmist's picture

That's the difference between you and the Criminal Elite ... you sit around and wait for yours, and they show some initiative and demand and/or take theirs.

AldousHuxley's picture

no, criminal elite use some suckers to do the raping and killings. mind control. that's why media (facebook) is the most important asset to military. You no longer have to fight the war, just sell it.

LowProfile's picture

You mean like how they sold KONY2012?


Reese Bobby's picture

Blah, blah, blah...blah, blah, blah, blah, blah.  I'd like to think I's remove your sphincter the hard way before I stepped into your "freedom" shower.

dwayne elizando's picture

@A Lunatic. Dude sign up for disability. It seems to be the career of choice in my neck of the woods.

flacon's picture

Too bad she was just kidding. I wanna be wealthy too. Where's my money? Huh? Where is MY money? 



Pegasus Muse's picture

OT.  Runs under 10 minutes.  If you agree spread the word. 



Impeach Obama 2012! Join The National Campaign!


Real Estate Geek's picture

Quid = Pelosi wouldn't impeach Bush

Quo = Obama 'ain't going nowhere.'

AldousHuxley's picture

pelosi's wealth is from her husbands investments in commercial real estate. She loves inflation and bubbles.


this is how Americans "support the troops"


buy the yellow bumper stickers, but when the troops come back make them homeless.



MagicHandPuppet's picture

Fuck the (oil mercenary) "troops"

Jedi Longsabre's picture

Not the troops. Screw all the politicians that send them

engineertheeconomy's picture

With my first 950 Quadrillion Dollars I will buy all the cotton farms and get a monopoly on high quality paper

Then I will borrow another couple hundred quadrillion and buy all the factories that make ink and printing presses

There will be nothing left for the rest of you to manufacture your quadrillions and I will own the world


engineertheeconomy's picture

Another bitcoin Ponzi Scheme just what the doctor ordered

tallen's picture

Every fiat currency is a ponzi scheme.

I'm still for Project Mayhem, let the banks fail and wipe all the debts. Then we can finally start to rebuild and escape the bankster lead economy we currently live in.

lasvegaspersona's picture

I'll just print a bill with a gazillion zeros and buy your quadrillion notes by the handfull

in Zimbabwe the only way to describe the rate of inflation was with scientific notation (10 to the gazillionth plus 1)

The Big Ching-aso's picture



The eventual societal outcome of Bair's solution........................

"How much for your loaf?"

"$2,346,242.23.   No credit cards.  Cash."

"Well does he at least do dishes?"

"No,  but he does read Zero Hedge constantly while creating quality methane in the bathroom."




The Alarmist's picture

If they only take cash, they are a terrorist outfit, and they will deservingly be droned.

earleflorida's picture

are we there yet?

hold your horses - its just around the corner

Brilliant link 'bernorange' thanks

Monedas's picture

Where did Scrooge pick up the Scottish Brits gotta put your skid marks on everything ?  Monedas  2012   Comedy Jihad Word Cartoons 

GeneMarchbanks's picture

Generally I read fast enough to return and quickly add a thought but I had a lot of trouble reading this... My thoughts are dropping from my skull, I... *brain aneurysm*