It May Be Time for the Fed to Go Negative

[Rich Toscano]

[quote=bsrsharma]
My question is: why resort to such a cockamamie idea instead of old fashioned inflation to prevent people from hoarding cash. If the Fed just buys about $1T of treasury paper from market every month, it should easily be able to set at least a 10% p.a. inflation. At that rate, most assets will be bought.[/quote]

BSR – I don’t think they are exclusive… Mankiw is describing one way in which they could promote price inflation by reducing the demand for money. The monetization you describe is another way, though Mankiw’s is broader and more focused on households.

This article was pretty much jaw-dropping to me. This guy is suggesting we openly punish people who save instead of running out and squandering every penny on things they don’t feel they need. (They already punish saving to an extent, but this takes it to a whole new level in terms of both openness and extent). As if the long-term prosperity of society is optimized by maximizing short-term consumption rather than saving wealth. This type of thinking is every bit as backwards as the housing bubble boosterism we heard in 2005, imho.

Mankiw is the author of one of the most widely used economics text, iirc, in addition to having been a presidential economic adviser to the last administration. So this is beyond a mainstream guy — he is one of the authorities in the field of economics.

This just goes to show how short-sighted and misguided mainstream economics is. And, by extension, economic policy, since it is informed by mainstream economics.

Rich

[4plexowner]

Amen, Rich!

Keynesian economics is in the process of being discredited – there is no end-game for the Keynesian / fiat-currency game – it eventually gets to the point where it can only be sustained by more and more ridiculous schemes (anyone paying attention these last 18 months? hello!!!)

eventually the schemes become ridiculous enough that even the sheeple wake up and say, “Baa!!!” (I think that means, “enough”, in sheep-talk)

[4plexowner]

Amen, Rich!

Keynesian economics is in the process of being discredited – there is no end-game for the Keynesian / fiat-currency game – it eventually gets to the point where it can only be sustained by more and more ridiculous schemes (anyone paying attention these last 18 months? hello!!!)

eventually the schemes become ridiculous enough that even the sheeple wake up and say, “Baa!!!” (I think that means, “enough”, in sheep-talk)

[4plexowner]

Amen, Rich!

Keynesian economics is in the process of being discredited – there is no end-game for the Keynesian / fiat-currency game – it eventually gets to the point where it can only be sustained by more and more ridiculous schemes (anyone paying attention these last 18 months? hello!!!)

eventually the schemes become ridiculous enough that even the sheeple wake up and say, “Baa!!!” (I think that means, “enough”, in sheep-talk)

[4plexowner]

Amen, Rich!

Keynesian economics is in the process of being discredited – there is no end-game for the Keynesian / fiat-currency game – it eventually gets to the point where it can only be sustained by more and more ridiculous schemes (anyone paying attention these last 18 months? hello!!!)

eventually the schemes become ridiculous enough that even the sheeple wake up and say, “Baa!!!” (I think that means, “enough”, in sheep-talk)

[4plexowner]

Amen, Rich!

Keynesian economics is in the process of being discredited – there is no end-game for the Keynesian / fiat-currency game – it eventually gets to the point where it can only be sustained by more and more ridiculous schemes (anyone paying attention these last 18 months? hello!!!)

eventually the schemes become ridiculous enough that even the sheeple wake up and say, “Baa!!!” (I think that means, “enough”, in sheep-talk)

[4plexowner]

“I think they call that a double top”

that’s certainly one way to look at it

here’s another:

in an inflationary environment (2002-2008) gold rose from $300 to $1000 demonstrating its value as an inflation hedge

in a deflationary environment (2009) gold once again rose to $1000 demonstrating its value as a deflation hedge

I’m just saying …

[4plexowner]

“I think they call that a double top”

that’s certainly one way to look at it

here’s another:

in an inflationary environment (2002-2008) gold rose from $300 to $1000 demonstrating its value as an inflation hedge

in a deflationary environment (2009) gold once again rose to $1000 demonstrating its value as a deflation hedge

I’m just saying …

[4plexowner]

“I think they call that a double top”

that’s certainly one way to look at it

here’s another:

in an inflationary environment (2002-2008) gold rose from $300 to $1000 demonstrating its value as an inflation hedge

in a deflationary environment (2009) gold once again rose to $1000 demonstrating its value as a deflation hedge

I’m just saying …

[4plexowner]

“I think they call that a double top”

that’s certainly one way to look at it

here’s another:

in an inflationary environment (2002-2008) gold rose from $300 to $1000 demonstrating its value as an inflation hedge

in a deflationary environment (2009) gold once again rose to $1000 demonstrating its value as a deflation hedge

I’m just saying …

[4plexowner]

“I think they call that a double top”

that’s certainly one way to look at it

here’s another:

in an inflationary environment (2002-2008) gold rose from $300 to $1000 demonstrating its value as an inflation hedge

in a deflationary environment (2009) gold once again rose to $1000 demonstrating its value as a deflation hedge

I’m just saying …

[Nor-LA-SD-guy]

OK
Better Idea
Just start throwing that stuff out of the helicopters already, just make sure to pass over my house.

[Nor-LA-SD-guy]

OK
Better Idea
Just start throwing that stuff out of the helicopters already, just make sure to pass over my house.

[Nor-LA-SD-guy]

OK
Better Idea
Just start throwing that stuff out of the helicopters already, just make sure to pass over my house.

[Nor-LA-SD-guy]

OK
Better Idea
Just start throwing that stuff out of the helicopters already, just make sure to pass over my house.

[Author]

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