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Sheila Bair's Modest Proposal To Fix Everything: Hyperinflation
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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slewie has already paved the way for the negative interest loan, sheila (-3% is the solution)
now, stop screwing around and get out there and sell it! you go, girl! L0L!!!
I prefer my plan better.
Everyone take their yellow legal pad out to the Garage (if one does not have a garage, pretend, this in America where everything is possible) and make a list of the assets there. Mark to Magic Market at $1,000,000,000.00 and head to the FED window. Once there, turn that piece of paper over for immdediate monetization at .25%. Run don't walk to Treasury, pick up the spread on the 10 year and live large.
My plan is based on assets (real wealth you understand and you can trust me) and doesn't have Ms. Bair's 10 year life cycle. One just rolls over the shit assets in the garage and perpetual prosperity ensues.
If anyone wants to look in the garage, go Zimmerman on their ass and stand your ground.
Stikethrough didn't take at two locations above. Any advice on why this would be? Could be Magic is the Market Marking and the assets are shit, why strikethrough in Benny's world.
She's just pissed because it never occurred to her to tell the failed banks to simply create assets out of thin air.
great! --- we can all be a bunch of useless assholes --------
While most of you are deeply imbedded into social networking, many central planners are learning about your likes & dislikes. As each day goes on, the Media is aiding to your emotions by planting stories to provoke anger, fear or Edward Barany’s collective buying habits to develop new corporate revenue streams. What is this planned think tank objective?
Cultural Mapping
Building a Creative Economy
It is these people that westerners decided to elect to lead them. There is something wrong with us, westerners.
- Rule of Rules: The value of a fiat currency is defined by it's EXCHANGEABILITY with Real Goods and Services, which are Hard Currency or differently called as Money.
- If one creates out of nothing the fiat currency and simply credits people's bank accounts, there will be excessive amounts of dollars.....for the same amount of goods.
- However, here is the trick. Everybody is assuming that resource producing countries will accept to exchange electronic dollars and euros for real stuff. I think the oposite is happening.
- China is unloading UST to convert them with hoarded oil, copper, gold, silver, grains etc. Also, China is building ghost cities in order to convert asap electrons with real stuff (useless ghost cities, but they think it's better than owning electrons.)
- Saudi Arabia is pre-selling its oil at set prices by them (and no, there is no crude oil free market, S.Arabia simply says this is the price and die if you want). They immediately are using exchanged USTs to announce big projects.
- China has a recent history, in 19th century, when they only wanted to export to England and others and disallowed imports (does it ring a bell?). England was paying with Opium and Silver. After China refused to open up the market, England forbid payment with Silver and started paying only with Opium, hence Opium Wars (I am not making this up). Most of chinese population got really, literally stoned during those times, since opium was so cheap and so abundant, until total ban.
- Same thing during Weimar Republic. The french invaded Ruhr to get paid in real stuff, 900.000 Gold Marks (not paper marks). Americans loaned money to Germany to fight hyperinflation, but only if Germans mortgaged their railways and other industries to those american loans, hence real stuff exchangeability, again.
- Hence, my conclusion, Sheila Bair's and all MMTers proposals could lead to hyperinflation, but I suspect it could be far, far, far worse.
It could lead to rejection of US$ exchangeability with Real Goods in the world. Hence, americans may suffer from hyperinflation, but chances are american may deeply suffer from lack of goods that are mainly imported, lack of crude oil, lack of plastic imports from China, lack of anything that americans do not make and have been used to having without worry.
I think it's time to worry. Currently the world is running in PRACTICAL BARTER SYSTEM, where dollars are used only as accounting units to make the computers work, IMO (time to go to the gym).
I strongly suspect that our friend AnAnonymous is still buying the opium.
The sweet smoke of Chinese citizenism neighborhood opium parlorism allowing him to speak directly to his brain: "I just want to make you fly, on a pink cloud very high."
The Peoples Liberation Opium makes easy the flying highness, like a baby cake walk.
Such is the eternal nature of Chinese citizenism non-contradictory oxymoronicism.
But hey, it is self justifying.
You forgot to mention the one thing that is most important and that defines Chinese Citizenism: the endless hypocritical self-righteousness (and of course, the blobbing-up).
Chinese Citizenism without hypocrisy? Make me laugh!
That would be like a Chinese roadside without human feces!
Or like a Chinese city without all the sweatshop laborers, enforced abortions, roadside shittings, public spitting, and running dog imperialist grabbing of Tibetans' ancestral lands --- inconceivable to the hive-like Chinese citizenism mind.
Such is the eternal nature of European Easter Island American Chinese citizenism, in which logic only impedes the collective march of the insatiable squinty-eyed human ants towards the picnic basket of world resources, all to be blobbed-up and taken back to the nest for the Politboro queen to enjoy while the workers must be content with fetus soup and fried bear penises.
.
Ah, ah, fetus soup and fried bear penises are reserved for Party members only.
Workers must be content with umbilical cord broth and ginger-marinated twice-cooked bear scrota.
For Party members, the world is their roadside.
LOL This exchange is quite artistic.
On another China related note, I didn't know Bloomberg has instant comment moderation.
I commented on this article as to how they just make up the data on the go, always lie, but Bloomberg did not show my comment.
I wanted to show this link, that even the Chief Data Collector in China does not believe his own data, but the world...does.
The Chinese central bank uses USDs as their reserves behind the Yuan they print. More USDs, more yuan -- good as gold. This was agreed upon by all (even though the Chinese probably weren't at the negotiating table) in the 1920s. Gold and/or USDs to back their and everyone else's (except US' and UK's) money.
i feel sorry for the fkers who commented on the op-ed saying: what a fantastic idea sheila, let's do it.
LET'S DO IT SHEILA , FKING DO IT, GIVE EVERYONE 10M TOMORROW, I HAVE MY GOLD AND I DON'T GIVE A SHIT.
I hope to get to the coin dealer before you do tomorrow to buy my $10 mil in gold.
Since when did Uncle Scrooge have a Scottish brogue ? You Brits gotta put your skid marks on everything ? Monedas 2012 Comedy Jihad Word Cartoons
Financial Instability Mini-Documentaryhttp://youtu.be/9JD6uuiiZPY
Ben B is not going to like Sheila's smart remarks.
What does Sheila look like....we know her head is full of "cotton ware and rags" ? Bitch got "back" ? Monedas 2012 Obama: An empty suit with a loaded tele-prompter !
Or we could just make the minimum wage $100/hour. That would fix everything!
it would if you kept the M3 from increasing. eventualy trikle-up would actually work
Why is Mercedes reporting their best sales ever in the US? Is this the Twilight Zone?
Government workers like to pretend they are important, productive people with meaningful lives ! What better way than rubbing your un-employed neighbor's nose in your Mercedes exhaust pipe ? Monedas 2012 Those Secret Service Agents caught cavorting with coke hookers in Colombia were......SENT HOME !!! A George Carlin moment indeed !
it is theFreeMoneyZone
Please contribute today to the Ron Paul money bomb. Invest in your future and donate now! It is your one way to save all you have.
https://secure.ronpaul2012.com/?dp=1&pid=dpmb
Ron Paul is America's LAST CHANCE to survive, barring any planned events to create the false justification to go get mean ol Iran.
I already gave $100 to Ron Paul's campaign, and I may give more; however, given that interest in his campaign has plateaued, and perhaps even decreased, I see only one solution remaining.
As much as I like RP, TPTB have won again - we get to choose between Fric and Frac, and on it goes into Idiocracy.
But I like your one solution remaining.
...and that would bring Gold to what....$700,000/oz???
Actually you are not too far off. And, it WOULD work
I wonder how many would use their 10 million to go out and buy as much gold as possible?
Bernanke can wow those college students/future Feders ! Let's see him address the Zero Hedger's on mud wrestling night ? Monedas 2012 His reception from the Student Loan crowd was underwhelming ?
If Bernanke had found a way to take the Trillions just handed to the Bankers and funnel that money to the American People then we would be in a recovery by now. The Bankers would have won, the American People would have won and we would be well on our way to huge GDP growth.
If Bernanke had just given 1% loans to buy a House (even for a year) there would be no inventory of Houses on the Market. People would be out from under their underwater Morgages as prices would recover. Banks would not be holding all of those underwater Mortgages and dealing with Forclosures. But, instead he decided to give the Money to the Banks who acted like Scrooge, hoarded all of the Money and would not lend anyone any money no matter what. Or to say the Banks acted like the Soup Nazi, No Loan for you.
Bernanke does not seem to realize that to stimulate the economy he cannot just give Money to the Banks and hope they do the prudent thing as that was what got us into this mess to begin with. Banks acting in their own self interest and screw everyone else. Bernanke should have found a way to get those Trillions to the average American that would have spent it, saved it, bought houses or cars with the Money.
Why oh, why are Economists so short sighted. It is like they have blinders on most of the time.
The plan never was to bail out the American public
No body should have got a bailout in my opinion. If you made a dumb deal then sorry for you, billion dollar banker or Mcmansion dwelling Wal mart serf.
That is the way it should work, let the chips fall where they may. Things will return to normal more quickly.
Oh please! The purpose and mission of the Fed has always been to be the ultimate backstop for Wall Street BANKERS. Nothing else. So no one should be surprised that the Fed is doing just that. The BS about inflation and employment is just a sop to public opinion.
The Bair article is cute but that's all. The assholes in DC have way tougher skin than that. It changes nothing and i've been waiting on the whole thing to crash but face it, until PEOPLE stand up in Greece and Spain and now maybe the French and default on the debt, the socialist bankers will print. Nothing crashes, nothing changes, they just print and print. That's why the market goes up, it's a binary trade: either it's large inflation or it's massive deflation and while the bankers have control it's inflation. There is no indication that the Greeks, Spanish or the French have the stomach to stand up and do what they should do, which is to get out of the EU and say fuck you to the bankers. In fact 60% of Greeks still want to be in the EU & keep teh Euro..........as stupis as that seems to americans.
BTW, is this a political site or a trading site? If trading, what's the trade? If political, i'm out.
"BTW, is this a political site or a trading site? If trading, what's the trade? If political, i'm out."
You are being so binary.
It's an octanary world.
Gold is a one-way trade > "for the duration" as the WW2 generation referred to the intervening time until the unknown end of the war, or, were you born yesterday?
Drucker's On Managing in Turbulent Times points out how inflationary are the Social Security transfer payments from younger productive workers to the indolent, becalmed consuming retirees. He says that won't hold up because youth will resist by demanding higher wages and setting off a wage-price spiral of classic inflation. That or any other scenario will engender inflation as no developed nation can payoff the banks' incredible derivative exposure or impossible leveraged FASB-baloney accounting without massive fiat inflation.
If you look at a few posts here and there on ZH, you'll find the topic well-covered and completely explained.
Also, please note this is also a politcal site: i.e. WilliamBanzai7's excellent posts have excellent political commentary in them. Y'all need to lighten up and get your tips from MSNBC if you are over-eager for trading ideas.
Why not?
There’s just one problem with this proposal. My wife and most of her friends would still figure out a way to blow all of their allocation on shoes in two weeks. Then what?
I do like looking at hypothetical extremes like this, because, they have a way of showing us just how absurd the reality of what’s going on is.
Thanks Sheila for the insight.
Thanks to your loyal readership of ZH, you should have nearly two weeks head start on the wifie. Surely you can get some new golf clubs and a sports car (with a full tank) by then.
Oh $HIT now you've done it ..http://www.rattlehead.com/the_end/
Amazing! But this not far-fetched and not a joke.. This is indeed how the credit economy works for the 1%. They are getting rich form asset appreciation. The 99% are doing all the work and get indebted, Then they get trapped into work-enslavement.
Many of us love to punch holes in the taxpayer funded MSM airwaves. If you don't understand now, you will in the future.
Dear ADL,
I have no wish to engage in our actions nearly ten+ years ago. We both rose our white flag and backed down. This post is not meant to agitate a hornet nest. I felt it was important for humanity to see the other side. Promise you, no further posts at my end. My white flag still flies in the wind. :) But you do realise, the illusion is exposed. Perhaps we can work together in the future. These new Roman/Sumerian gods are more destructive than helpful.
i wonder why mter didn't think of it first??
Oh, fuck me.
But wasn't Bair the one that was handing over smaller, failed banks to the TBTF banks for pennies on the dollar?
Somebody needed to tell Bair that there are three ways to deal with insolvent banks:
They are (1) a payout (liquidation), (2) a purchase and assumption, or (3) a bridge bank.
Ms. Bair seemed to only seemed to be familiar with P&A, IIRC.
The very simple cartel idea. Crash everything & buy back for pennies on the dollar. When you talk to people who write doom stories, just ask them if they have the vaccination serum for the next black plague population reduction plan. Their reaction is always priceless.
Have a heart! She just wants to increase deposits and remove da debt ... bankster system healed!
Sheila is ...a punk rocker now.
http://www.youtube.com/watch?v=_FdglLVxfFg
Oh, my God.
Is this the October surprise being telegraphed by Obama?
I think she is just trying to keep her skin because when the SHTF, the Administration will blame the FDIC for not maintaining enough protection and she will be the scape goat. When bank runs begin, she will too.
The real trick here is to tell everyone in the country that they each be given $10 million next January 1. The result would be everyone rushing to spend their money now before it's diluted. The economy would boom. Every industry would work overtime to keep up with demand. Millions would be hired. Finally, on Dec 31 the Fed will announce that the program is cancelled. The result is a booming economy and not a dime spent!
And then...?
Can't fake the funk; false growth is just that.
It would get Obama reelected!
Sheila Bair for President !
Sheila - please suck me off while you are at it. That solves both my current world problems. Money, and sex. The rest, I can grow myself. Weed for barter, feedstocks for distillation and barter. That takes care of the purchases of gold, silver, weaponry and ammo. Food for fun, timber for firewood and building. See you all on the other side of economic collapse. Banker/ Politician/ Ruling Class long pig meals for the McDonalds crowd, so they don't feel the pain of transitional calorie origination changeover.
Bahaar - when everyone becomes a plumber, including 1/2 the illegal aliens - what happens to wages for plumbing? WTFU
dupe
You've got to be kidding me! Who needs a 10 million dollars! Just give me 1 million dollars; no just give me 100k; no just give me house in either nv or az; no just give me enough money to buy a house in either las vegas, nv or phoenix, az, in the waste lands and empty houses where rich are buying houses at 2,500 or more at a time.
Every body keeps dancing because the music keeps playing. The question is when is the first person going to blink out of the blue and yell "fire!".No more dancing. Suddenly people trampling each other to death as they rush for the exit. So many people, such a narrow exit.
Poignant satire.
Me first bitchez!
What a f* mess. This is going to take decades to clean up.
Here is a little condolence for those ZHer's that are just coming to the realization of how totally screwed we all are. After 8 or 9 years of worrying over what has befallen our Federation, fretting on our children's future in a debt burdened fascist state, loosing sleep over the various ways hyperinflation will manifest to impact senior citizens and responsible savers, you come to the end of that. The following 3 years bring you extreme anger at the system gamers, their media enablers and the bought and paid for political cronies who tossed regulation aside paving the way for an order that is new..
But then, relief arrives, not nary a moment too soon. Apathy and disgust saves you from the ever rising expense of alcohol and anti-depressants. Needing to obsessively discuss the injustice of a collapsing economy ends and you no longer find yourself standing alone at social gatherings. The family that looked at you will concern becomes your solace. You may even go for a walk when the realization sets in as to why we have been sold the homeland security Excesses of State. The terrorists that will be fought here in the homeland will be her most Brave and Loyal Sons and Daughters. It has become way too apparent this Juggernaut of Corporatism will not be halted by political means and the alternative is already expected. Those that bring it to you are very aware of this fact while continuing in their brazen directives as if executing on a corporate expansion. And thus the ZH creed becomes real to you, " On a long enough time line the survival rate for everyone drops zero".
How comforting.
http://bible.cc/1_corinthians/15-51.htm
Cor 4:13 back at 'cha.
This article is stupid. As The Bill Buckler snippet earlier says, the capital of the banking system, including the central bank, so government, is fictitious, has been for years.
While the government directly printing $ would see hyperinflation, that's not what it needs for hyperinflation. The credit of the government is junk NOW, it's just that like any credit bubble, it can (& has) move beyond all reasonable bounds, then double.
This article just reinforces the tired old quantity theory of money. Coming from some government stooge, I'm not surprised.
Feels sad that the "modest proposal" part of the title will be lost on most of my generation. Probably think it's an engagement with a ring smaller than 1 karat.
After one bottle of wine and two beer - frankly I don't give a shit.
One can only hope this is sattire and not belief. Assuming it is sattire, is Bair taking a pot shot at what passes for Keynesianism these days in the form of the Fed drowning the monetary system in imaginary dollars? Or perhaps an acknowledgement that the sum of the just 20 years of fiscal deficits of 1 trillion will equal 20 trillion (starting in FY2009) and hence this inot sattire, but an estimation of FACT.
That's right, the Government is now in its third year of following the very path that looks so ridiculous in the above article. The only difference is a one off payment or having the Government "manage" the wealth transfer over a longer time frame.
There are no "free" markets...there are just markets. Meat markets, gun markets, financial markets..et al. Governance in America has become a market. It will remain so until it is returned to what it was meant to be...if that were possible.
I love Sheila Bair...but no amount of money will change the facts and the game. We've been sold down the river and not given a paddle.
When you think about it it's the perfect solution; the final solution for this financial paradigm. Why not simply drop 10 million in every mailbox in USA. Everybody gets out of debt immediately, and in about 3 minutes flat the currency will go totally bananas, while the punters manically exchange it for pieces of cake, which by now will already be making its way through the grubby digestive tracts of Jamie D, Lloyd B and friends.
At least it will be all over really quick, 3 minutes good, 300 months not good, unless of course you are into a bit of S&M.
Reminds me of the old joke where the parents of a really optimistic child give him a pile of shit in the middle of his room, and so he starts enthusiastically digging in it, so they ask why he is so happy, and he replies that if there is all this horse shit, there must be a pony in there somewhere.
Peace and unicorns for everyone, bitchez.
WTF !!! ARE WE ALL GETTING INTO COLLECTIVE INSANITY?? LOL... CAN'T STOP LAUGHING... THAT IS OFFICIAL WE LIVE IN A MAD HOUSE.
I personally think this is way better than the Greg Smith letter.
But it is for the same purpose.
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