Print Less but Transfer More
The theory behind this article is that central banks should give money directly to the people rather than what they are doing now. It is a different take on monetary expansion. While this has not been tried before it is hard to say what the outcome would be.
Personally I am skeptical about this strategy. I feel that simply giving people money will further encourage them to make purchases that are of a very short term nature and those same people would just come back with their hands out for more money.
Click here to read the full article. There is also an audio file to listen to.
I am curious as to how all of you, our listeners feel about this.
That’s pretty amazing flying!
These guys train very hard and the new generation war planes are great. I think the pilot may have got the order to hit the spy plane if accident happens. There is not a lot they can do to expel the US planes since US consider they own the ocean. Even a direct collission in 2001 just detered US for a short period of time.
J- 11B is the improved version of Su-27 but mass produced in China. They got the production licence about 10 years ago. It is not the best plane but it is still great mechanically.
Will not happen. The fat cats would not get their money. Who do you think is getting all the bail outs, stimulus, and kickbacks. Not the average or poor joe. Even if it were to happen, which it will not, the little guy would get a little and the rest would be skimmed off the top. Government crime inc. We need to get back to free markets and stop the corruption. That is the only way things will get fixed and that is not going to happen either, sadly.
Exactly tj. I think this will never happen as well.
I hate to disagree Cory but I actually think it will be tried. Kind of like the programs that were introduced to get us all to take cash for our clunkers. That was just a way to get cash into the system while destroying good assets and in the process boost demand for more autos. But nobody has good ideas anymore. How do you get cash into peoples hands if they won’t borrow. How do you expand credit when students and consumers are already both tapped out? If we are going to just dish out dollars can we not incentivize it some way. For example, give five bucks for every new tree that gets planted or something useful like that. Nobody respects free money. Nobody. They know in their hearts they are going to pay for it in the end anyway.
There is no theory other than utter stupidity in handing out money directly to people.
It is already being done CFS. Half the population already gets benefits of one kind or another. Those are handouts for welfare, pensions, disability, subsidies, food stamps, prescriptions and medical care etcetera. But that is achieved through fiscal means and is supposedly tax based implying that the cost would be ultimately covered through government tax revenues. Doing the same through monetary means is a whole lot trickier. How can the expense be recovered? At least with MBS’s there is an assumption that those securities are assets that can be sold back into the market at some point in the future. Same with Treasuries that can in theory be recycled out to willing buyers who prefer government debt. But there is not a mechanism to recover money that is just printed and handed out to Joe Bloke and Sarah somebody unless there is an assumption that so much new tax revenue is created that the idea pays for itself. If that is the case though why not just roll back taxes instead?
I feel this will lead to disaster since people will become lazy, irresponsible, highly dependent and inflation is instant. People will get mad at government and resort in violence once the money stops.
It has been done in hostory many times. When the government in China did it in 1940s, we got hyper inflation in three years. People turnt to communists to save them from inflation by joining PLA. After communists took over, they did not dare to increase the money supply over 30 years for fear of inflation. It combined with low productivity of communism to result in 30 years stagnant living standard.
Economists are increasingly desperate and stupid.
Yes, this idea pretty much stinks because it appeals directly to the greed of the bottom layer of society and amounts to little more than a bribe to gain the cooperation of the poor to permit ever more damage to the economy.
The other thing is that this smacks of desperation.
Anyone else notice that the article noted it would be better to lift the bottom up rather than drag the top down? In other words “please, please, please” don’t tax the wealthy. Instead we think it is better to fill the pockets of the poor who will turn around and enrich us all the more once the spending is over and done.
Plus, when it backfires we can lay the blame on the folks who took the money and spent it all. In other words, all of society thus becomes complicit in the wrecking of our system. Who the hell really believes handing out free money is a solution to anything when what we needed all along was a cleansing of debt through the usual methods.
This crackpot idea will only buy a little more time before the great reckoning but it will no doubt make the final conclusion as miserable as might be imagined. If ginning up money out of thin air was really a great solution then why are all the countries who are trying the idea broke or heading for bankruptcy?
On the other hand, the program cost would be *only* 340 billion according the articles suggestion that a helicopter drop of 2% of GDP would boost growth by a factor of 1.3 times. So that would suggest achieving a one time growth rate boost of 2.6% during the year the drop was done. And it would be done for half the cost of Obama’s 2008 Fiscal intervention that rang in at 700 billion. What would be the follow up for years two, three and four though? More drops? Or is that dependent on elections? And anyway, what the hell is the real meaning of GDP anymore now that countries are fiddling with the numbers such that drugs and prostitution should be counted in order to get better numbers for public consumption? Are we in the game of just pumping up bigger numbers here or are we going to actually produce something in the process and get a little bang for the buck? I guess you could say I am cynical about this idea. Anybody else? You all need to read the article and come to your own conclusions.
GDP is a terrible statistic even before now. Defensive expenditures count as positives. Alarm systems, self-defense classes, police in schools, etc. Also day care. Also medical care for chronic degenerative disease that results from lifestyle. None of which has anything to do with an improving quality of life for our society.
As far as I can tell, the name of the game is to print enough money to keep all the debt from imploding. In the process, wealth gets increasingly concentrated in the hands of a few via the Cantillon Effect. Meanwhile we have to coerce the rest of the world into staying in the US dollar system.
Seems our leadership’s vision is more about saving their own priveleged asses than trying to produce wealth.
Exactly right GH. This idea is merely intended to keep the existing system intact just a little while longer. But it is no cure. The authors of the article are in fact asking the Fed (the Treasury and the taxpayer by default) to extend ever more credit in the form of gifted money at taxpayers expense to maintain the illusion that we are not already broke. It is quite desperate really.
I agree with peoples comments above. That said, I think this video interview of Steve Keen presents the idea in a very interesting way.
The basic idea, we need a debt jubilee. But it shouldn’t be a bailout of the criminal and irresponsible, at the expense of the responsible.
I think his idea is far better than how things will actually work out, but will never get put into practice, because the fat cats who did all this would lose. I also think that such a scheme only makes sense in the context of far-reaching reform.
None of which is practical. Crisis is assured, catastrophe very possible.
But what exactly is debt forgiveness in the case of a government if not the assumption of the debts of others or the elimination of its revenue base? For example, if the Treasury could forgive all housing debt then by default they would be paying off the banks and taking the obligations onto themselves. Banks and private lenders will certainly not be forgiving any debts except via default and bankruptcy. Alternatively the gov’t could stimulate by forgiving all tax debt but that would sure skew the revenue/expense ratios because in effect they would have no source of income to support all the past borrowing. It is an unworkable idea. There cannot be a Jubilee unless all creditors voluntarily cooperated to release all debtors from obligations. Who would make the credit card companies and banks whole again once it was done? I appreciate Steve’s idea but it will only happen in reality through a financial crash that wipes the slate clean. That is to say that assets will transfer back into the hands of sellers and lenders and in the process borrowers who become insolvent will go back to zero. Such calamities have been seen before. Only adequate financial reserves can carry you safely through such times. You must hold the correct currencies in stable institutions or in cash and cash equivalents to survive.
Not sure how one would organise and then coordinate such an endeavour but all it would take is for everyone to not pay any debt for 90 days; the ensuing collapse would be severe, but brief, because the chain-of-debt(s) is so tightly stretched. There’s your “reset”.
Isn’t that what a welfare state does they print money and hand it out. Ask The Roman historians how this turned out for ” The Holy Roman Empire.” Forget that last statement just watch “The Maury Show.” How many children do you have and how many fathers were around to raise them. Are you the baby daddy?
No Maury, that can’t be my child he doesn’t have a beard or a cell phone.
Meanwhile in south Cina Seas:
W Chinese war plane made several passes around the US Navy’s Poseidon 8 plane,coming at one point within 9 metres of the P8’s wing.
Which proves only one thing……
Chinese pilots appear to have watched the movie “Top Gun”.
Wonder if the pilot had a camera?
The Chinese plane passed the nose of the P8 at a 90-degree angel, showing its belly and most likely its weapons load, Kirby said, and conducted a barrel roll over the top of the P8 at 15 metres.