Instead of QE give money directly to people

[highnote]

Instead of Quantitative Easing, the Fed could have given every household $56,000 instead.

https://finance.yahoo.com/news/instead-qe-fed-could-given-094500275.html

[Robert Goren]

A total lack of understanding of QE displayed the writer of the article. What he wrote might have some validity if he knew what QE is. What he did is equilivant to writing about cow and say you are writing about a dog. QE can be criticized on some levels and has been a lot. I agree with at least some of the criticism. But this author hasn't clue about the difference between monetary policy and fiscal policy.

Note; The Fiscal Times is yet another online "paper" that appeared after Obama's election. It like Fox News claims to be fair and balanced. Considering its start up funding, I have my doubts.

[AndyC]

A total lack of understanding of QE displayed the writer of the article. What he wrote might have some validity if he knew what QE is. What he did is equilivant to writing about cow and say you are writing about a dog. QE can be criticized on some levels and has been a lot. I agree with at least some of the criticism. But this author hasn't clue about the difference between monetary policy and fiscal policy.

Note; The Fiscal Times is yet another online "paper" that appeared after Obama's election. It like Fox News claims to be fair and balanced. Considering its start up funding, I have my doubts.


He was writing about what Mark Blythe and Eric Lonergan suggested. Perhaps you have a response to what they suggested.

[boxcar]

He was writing about what Mark Blythe and Eric Lonergan suggested. Perhaps you have a response to what they suggested.

That was his "thoughtful" response. :D

Boxcar

[Clocker]

Without getting into the economic consequences, the plan displays an ignorance of how the Fed works, and of the legal restrictions on it.


"Instead of trying to drag down the top, governments should boost the bottom," they write in an article titled: "Print Less But Transfer More: Why Central Banks Should Give Money Directly to the People."



Contrary to popular opinion, the Fed does not print money. It can create money out of thin air, but the only way it can do this is by purchasing debt (e.g., Treasury securities) and paying for them by creating new account balances for banks. In short, for every dollar it creates, it must hold a dollar's worth of Treasury debt. The Fed has no legal mechanism for "giving" money to anyone other than by buying bonds from that person.

The only mechanism for "giving" that money directly to people would be through the Treasury, and that would require Congressional approval. And raising the debt ceiling.

The Fed plays fast and loose with the rules, but it complies with the letter of the law.

[highnote]

I still prefer getting a check for $56,000.

[Clocker]

I still prefer getting a check for $56,000.

Then sell off all those Treasury bonds you have been sitting on. ;)

[highnote]

Then sell off all those Treasury bonds you have been sitting on. ;)


Nope. I had to work for them. I just want a check from the Big Brother.

[thaskalos]

Nope. I had to work for them. I just want a check from the Big Brother.

Big Brother won't send a check to just anybody... :)

[highnote]

Big Brother won't send a check to just anybody... :)


I seem to recall getting a $100 tax rebate check or a stimulus check when one of the Bushes was president.

[Robert Goren]

Without getting into the economic consequences, the plan displays an ignorance of how the Fed works, and of the legal restrictions on it.



Contrary to popular opinion, the Fed does not print money. It can create money out of thin air, but the only way it can do this is by purchasing debt (e.g., Treasury securities) and paying for them by creating new account balances for banks. In short, for every dollar it creates, it must hold a dollar's worth of Treasury debt. The Fed has no legal mechanism for "giving" money to anyone other than by buying bonds from that person.

The only mechanism for "giving" that money directly to people would be through the Treasury, and that would require Congressional approval. And raising the debt ceiling.

The Fed plays fast and loose with the rules, but it complies with the letter of the law.You explained it better than I ever could. I find it amazing that so many otherwise knowledgeable people can't get that straight.

[Robert Goren]

I still prefer getting a check for $56,000. You have talk to your congressman and/or senators about that.

[Clocker]

You explained it better than I ever could. I find it amazing that so many otherwise knowledgeable people can't get that straight.

Part of it is just the insider jargon. People who really know what is going on often call it printing money, even though they know that no such thing is happening in reality.

As you said earlier, the other problem is the lack of understanding of the difference between monetary policy and fiscal policy. Monetary policy is what the Federal Reserve does, independently of the Congress and the administration. Fiscal policy is taxing and spending. The Fed has no power or ability to tax or spend.

[Robert Goren]

I seem to recall getting a $100 tax rebate check or a stimulus check when one of the Bushes was president. W sent them out during the summer of 2001 and again in May of 2008. I seem to remember getting one from Ford and/or Nixon too. There may have been others too. There will no doubt be more in the future even though their effectiveness is open to question.

[highnote]

W sent them out during the summer of 2001 and again in May of 2008. I seem to remember getting one from Ford and/or Nixon too. There may have been others too. There will no doubt be more in the future even though their effectiveness is open to question.

I'd prefer a $56,000 check. If they want stimulus I'd give them stimulus.

[Clocker]

If Obama finds out you guys were accepting checks from GOP presidents you are going to be on the IRS naughty list. :eek:

[DJofSD]

A total lack of understanding of QE displayed the writer of the article. What he wrote might have some validity if he knew what QE is. What he did is equilivant to writing about cow and say you are writing about a dog. QE can be criticized on some levels and has been a lot. I agree with at least some of the criticism. But this author hasn't clue about the difference between monetary policy and fiscal policy.

Note; The Fiscal Times is yet another online "paper" that appeared after Obama's election. It like Fox News claims to be fair and balanced. Considering its start up funding, I have my doubts.

http://www.youtube.com/watch?v=PTUY16CkS-k

[Clocker]

Ben Bernanke, October 15, 2002:

I worry about the effects on the long-run stability and efficiency of our financial system if the Fed attempts to substitute its judgments for those of the market.

[Hoofless_Wonder]

W sent them out during the summer of 2001 and again in May of 2008. I seem to remember getting one from Ford and/or Nixon too. There may have been others too. There will no doubt be more in the future even though their effectiveness is open to question.

So, the next time we get one we should short the market?

I seem to recall that $100 or $150 rebate check I got was eventually going to cost Uncle Sam over $500 when paid back.

What the Fed does may not be technically printing money, but the effect is similar - the U.S dollar is devalued, equity prices are propped up, the economy continues to stagnate, and the accumulation of wealth continues to be transferred....up.

[Robert Goren]

So, the next time we get one we should short the market?

I seem to recall that $100 or $150 rebate check I got was eventually going to cost Uncle Sam over $500 when paid back.

What the Fed does may not be technically printing money, but the effect is similar - the U.S dollar is devalued, equity prices are propped up, the economy continues to stagnate, and the accumulation of wealth continues to be transferred....up.Try telling that to anybody in that exports Made-in-the-USA products. Take a look at the exchange rates or even the price of such things as Crude or Gold over past year or so. You stop watching Jared Loughner videos and try living in the real world. The US dollar is stronger it has been in a very long time.

[Hoofless_Wonder]

Try telling that to anybody in that exports Made-in-the-USA products. Take a look at the exchange rates or even the price of such things as Crude or Gold over past year or so. You stop watching Jared Loughner videos and try living in the real world. The US dollar is stronger it has been in a very long time.

I've never watched a Jared Loughner video, and don't have a clue who he is, but I do follow Karl Denninger at the Ticker Forum. His book Leverage and many blog posts have pointed out the folly of QE, and the intentional destruction of the dollar via long-term inflation.

In the real world I live in, the value of the dollar isn't measured solely on exchange rates, nor is it measured in prices "over the last year or so". Today my salary is as high as any point in my career, yet the cost of housing, gas, food, health care, etc., have me feeling like I'm just treading water, and at the same point I was 15 years ago. At least I'm ahead of most of my peers.

The FED's QE policy is not only putting off the inevitable, but making the "reset" worse, when it does happen. And it will - the chickens are coming home to roost, in an economy soon, near you.

[Clocker]

and the intentional destruction of the dollar via long-term inflation.

Nothing to worry about. The Federal Reserve has redefined inflation out of existence. The Fed now uses "core inflation" as its measure. Core inflation does not include food or energy, because, they say, those prices are too volatile. Feel better now?

[badcompany]

In a way QE does give money to the people, by delaying the day of reckoning which would otherwise come in the way increased taxation and cuts to entitlement programs.

[Clocker]

In a way QE does give money to the people, by delaying the day of reckoning which would otherwise come in the way increased taxation and cuts to entitlement programs.

The big day of reckoning is going to happen to the Treasury. The last I saw, with the current low market interest rates, the service on the debt (annual interest payments) is about $500 billion. If interests rates get back into the "normal" range, that will double. That's another half trillion bucks a year Congress will have to budget for.

[classhandicapper]

Try telling that to anybody in that exports Made-in-the-USA products. Take a look at the exchange rates or even the price of such things as Crude or Gold over past year or so. You stop watching Jared Loughner videos and try living in the real world. The US dollar is stronger it has been in a very long time.


The dollar has been strong for several reasons.

1. The market looks forward, not at the past or at the present. The current view is that the QE program will be wound down shortly, interest rates will rise, and the economy will do fine. We'll see about that, but if it doesn't work out that way you'll see how fast the dollar, gold, etc... will reverse course.

2. Other central banks are printing money even faster than the US. It's not that markets like the dollar. They just think other currencies are even worse.

This is all cyclical. The long term fundamentals for the US Dollar remain poor.

We are in the 6th year of a recovery but we are still running a 600B deficit despite a record Dow and S&P500 generating tons of capital gains taxes etc..

Wait until the next recession and bear market. The deficit will probably balloon to 2 trillion, the dollar will hit the skids, the easy money will return and gold will go to 2K an ounce. It's not easy to time. You have to be a long term investor, but that's pretty much a lock.

[Hoofless_Wonder]

Nothing to worry about. The Federal Reserve has redefined inflation out of existence. The Fed now uses "core inflation" as its measure. Core inflation does not include food or energy, because, they say, those prices are too volatile. Feel better now?

Check. Feelin' way better...

The Fed's definition of inflation is about as accurate as their stand on the economy's "recovery". The fact that they've "saved" the banks from themselves without resolving a significant amount of debt, without keeping real inflation in check, and without improving the employment picture in any meaningful way does not set the table for pleasant times ahead.

Quite a few people think the Great Depression started in 1929 with the stock market crash, when it actually started in 1931 when the bond market dislocated. The Fed's policies have been cowardly, and have not dealt with the root cause of the stagnant economy - which IMHO is too much debt. Now they're in a pinch, as the free money they've provided banks has simply undermined bonds and fixed income portfolios. The Fed can only control interest rates to a point, and when the Great Unwinding begins, it'll be something to behold.

Fiat currencies have always failed, and there's no reason to believe the U.S. dollar is any different. With the lack of enforcement of the rule of law, it's going to be a crash of epic proportions.

[badcompany]

The big day of reckoning is going to happen to the Treasury. The last I saw, with the current low market interest rates, the service on the debt (annual interest payments) is about $500 billion. If interests rates get back into the "normal" range, that will double. That's another half trillion bucks a year Congress will have to budget for.

I haven't checked out the Fed's doings in a while. Does this include the interest on the paper on the Fed's Balance Sheet, as that amount funnels right back to the treasury?

At this point, the whole thing is a sham. In theory, the tax system could be abolished by having the Government fund itself by issuing debt, having the fed buy the excess that no one wants, and letting the currency market decide whether the government is overspending and to what extent.

[Robert Goren]

I've never watched a Jared Loughner video, and don't have a clue who he is, but I do follow Karl Denninger at the Ticker Forum. His book Leverage and many blog posts have pointed out the folly of QE, and the intentional destruction of the dollar via long-term inflation.

In the real world I live in, the value of the dollar isn't measured solely on exchange rates, nor is it measured in prices "over the last year or so". Today my salary is as high as any point in my career, yet the cost of housing, gas, food, health care, etc., have me feeling like I'm just treading water, and at the same point I was 15 years ago. At least I'm ahead of most of my peers.

The FED's QE policy is not only putting off the inevitable, but making the "reset" worse, when it does happen. And it will - the chickens are coming home to roost, in an economy soon, near you.I find it amazing that there is even one person in the United States who doesn't know Jared Loughner is. The crazy bastard who headline news a few years ago. His youtube videos echo the views of those who believe that believe the dollar is next to worthless. Google him and find out what kind of crazy company you keep.

[Robert Goren]

Check. Feelin' way better...

The Fed's definition of inflation is about as accurate as their stand on the economy's "recovery". The fact that they've "saved" the banks from themselves without resolving a significant amount of debt, without keeping real inflation in check, and without improving the employment picture in any meaningful way does not set the table for pleasant times ahead.

Quite a few people think the Great Depression started in 1929 with the stock market crash, when it actually started in 1931 when the bond market dislocated. The Fed's policies have been cowardly, and have not dealt with the root cause of the stagnant economy - which IMHO is too much debt. Now they're in a pinch, as the free money they've provided banks has simply undermined bonds and fixed income portfolios. The Fed can only control interest rates to a point, and when the Great Unwinding begins, it'll be something to behold.

Fiat currencies have always failed, and there's no reason to believe the U.S. dollar is any different. With the lack of enforcement of the rule of law, it's going to be a crash of epic proportions.It did start in 1929 when the markets crash. That was when the bankers had lost their depositors money. Unlike today when banks are closely audited, many they banks were able to hid their losses for a couple of years. Once the first bank run began, it was all over. Hebron, Ne where I went to high school had 5 banks in 1928 was down to 1 in 1931. There are still a couple of buildings there with large bank vaults being used to store liquor.

[lamboguy]

i don't trust banks today either. someday you will see the biggest re distribution of wealth known to man, when the banks go belly up the next time. it only takes 1 or 2 real bad derivative trades and the bank is gonzo and so is your cash that you have in it. personally i don't trust banks, insurance company's, financial institutions, or for that matter most large corporations that fleece you out of your money. even worse are the political powers that tell you what to do.

in boston, the newly elected mayor just went to Ireland for 12 days on the citizens dime.

the outgoing governor just took 58 staffers with him on an escapade somewhere in this world on the citizens dime. right after they gave the casino license to Wynn, and shut down the racetrack. as soon as i knew the faces that were deciding the casino licenses i knew there was no chance in hell that Sufolk was going to have a license. its a bag job, yet people think this is a normal process and the government is out to protect the people's interest's.

[Hoofless_Wonder]

I find it amazing that there is even one person in the United States who doesn't know Jared Loughner is. The crazy bastard who headline news a few years ago. His youtube videos echo the views of those who believe that believe the dollar is next to worthless. Google him and find out what kind of crazy company you keep.

Ah, that guy. His marksmanship sure is shitty. I didn't realize that everyone who thought the dollar was being debased is somehow compared to this guy - gonna have to connect the dots for me there, Detective. I prefer to think I'm more like Marc Faber, who's also negative on the dollar:

http://www.moneycontrol.com/news/international-markets/bubbleeverything-everywhere-marc-faber_1185075.html

He also spends a lot of time in Hong Kong, and probably slinks by Sha Tin now and then....

[Hoofless_Wonder]

It did start in 1929 when the markets crash. That was when the bankers had lost their depositors money. Unlike today when banks are closely audited, many they banks were able to hid their losses for a couple of years. Once the first bank run began, it was all over. Hebron, Ne where I went to high school had 5 banks in 1928 was down to 1 in 1931. There are still a couple of buildings there with large bank vaults being used to store liquor.

Banks are closely audited? Maybe the regionals and state banks, but there's a boatload of worthless paper still choking the majors, and the government auditors are looking the other way.

http://en.wikipedia.org/wiki/Great_Depression

Reread your history. The death spiral of deflation began in 1931.

I'm surprised you're such a big fan of the dollar, since NOTHING real stands behind it, except the future earning power of the next generation of burger flippers at McDonald's.....

[classhandicapper]

Ah, that guy. His marksmanship sure is shitty. I didn't realize that everyone who thought the dollar was being debased is somehow compared to this guy - gonna have to connect the dots for me there, Detective. I prefer to think I'm more like Marc Faber, who's also negative on the dollar:

http://www.moneycontrol.com/news/international-markets/bubbleeverything-everywhere-marc-faber_1185075.html

He also spends a lot of time in Hong Kong, and probably slinks by Sha Tin now and then....

Guys like Marc Faber, Jimmy Rodgers, Peter Schiff, Fred Hickey etc.. are long term investors that understand how the economic and monetary system really works, tell the truth as they see it, and put their money where their mouth is.

My favorite by far among them is Jimmy Rodgers. Not only does he put his money where his mouth is, he took is family to the far east and is teaching his child Chinese because that's where the future is long term.

[Robert Goren]

Banks are closely audited? Maybe the regionals and state banks, but there's a boatload of worthless paper still choking the majors, and the government auditors are looking the other way.

http://en.wikipedia.org/wiki/Great_Depression

Reread your history. The death spiral of deflation began in 1931.

I'm surprised you're such a big fan of the dollar, since NOTHING real stands behind it, except the future earning power of the next generation of burger flippers at McDonald's..... What stand behind any currency including gold is the belief that you are able to exchange for a good or a service. If you can't do that then it useless.
What caused the deflationary spiral of 1931 was the loss of money held in failed banks. Less money means less demand means deflation.
You have a point of sorts about todays audits, but they are certainly way better than no audits. The reassuring thing about todays audits is the banks are always complaining about the audit rules.

[Robert Goren]

Guys like Marc Faber, Jimmy Rodgers, Peter Schiff, Fred Hickey etc.. are long term investors that understand how the economic and monetary system really works, tell the truth as they see it, and put their money where their mouth is.

My favorite by far among them is Jimmy Rodgers. Not only does he put his money where his mouth is, he took is family to the far east and is teaching his child Chinese because that's where the future is long term. amazing! Are you a free marketer? If so why China? Outside of Cuba, there is not a country anywhere where government intervenes in the economy more.

[AndyC]

amazing! Are you a free marketer? If so why China? Outside of Cuba, there is not a country anywhere where government intervenes in the economy more.

Really? I think your understanding of the economy in China is lacking.

http://www.businessweek.com/smallbiz/content/mar2010/sb20100311_996919.htm

[classhandicapper]

amazing! Are you a free marketer? If so why China? Outside of Cuba, there is not a country anywhere where government intervenes in the economy more.

He does not live in China. I believe he lives in Singapore. However, it's pretty clear the economic future of the world is in Asia and speaking Chinese will be a huge asset. Plus, the Chinese are slowly heading in the right direction while western Europe and the US are heading in the wrong direction. So if you have a young child and want her/him to be located where all the action is going to when they are an adult, you move to the far east and teach them Chinese.

My top choice would be Australia because I don't want to learn a new language and the racing is great. Australia has a very bright future as long as the government doesn't follow the path of the US and Europe. It should try to align with Russia, China, and the rest of the far east in breaking ties to the US Dollar reserve system and possibly giving a bigger role to hard assets. Australia would be in an incredible position if that happens.

[Robert Goren]

If I want a young child of mine to learn a foreign language, it would be Portuguese. Anybody who thinks the Chinese is going let Americans make money off them must live in Colorado.

[Robert Goren]

He does not live in China. I believe he lives in Singapore. However, it's pretty clear the economic future of the world is in Asia and speaking Chinese will be a huge asset. Plus, the Chinese are slowly heading in the right direction while western Europe and the US are heading in the wrong direction. So if you have a young child and want her/him to be located where all the action is going to when they are an adult, you move to the far east and teach them Chinese.

My top choice would be Australia because I don't want to learn a new language and the racing is great. Australia has a very bright future as long as the government doesn't follow the path of the US and Europe. It should try to align with Russia, China, and the rest of the far east in breaking ties to the US Dollar reserve system and possibly giving a bigger role to hard assets. Australia would be in an incredible position if that happens. No guns, you know in Australia.

[Clocker]

No guns, you know in Australia.

No one is perfect. They did have the good sense to repeal their carbon taxes. Maybe they will see the light on weapons eventually.

[classhandicapper]

No guns, you know in Australia.

I don't own a gun now, but I'd be more comfortable there given there are fewer nitwits I need to protect myself from.

[classhandicapper]

If I want a young child of mine to learn a foreign language, it would be Portuguese. Anybody who thinks the Chinese is going let Americans make money off them must live in Colorado.

There are already people doing private business deals and creating partnerships with the Chinese. The Chinese are even doing IPOs in our markets.

You are stuck in the last century.

The west is heading towards government expansion, centralized decision making, higher debt, higher taxes, market manipulation, central bank intervention, unsound money and economic stagnation. The east already went down that path and failed. They have been restructuring and moving in the correct direction, albeit as slowly as we are moving in the wrong direction. It will take time, but it's time to "head east young man".

It's pretty sick when you think about. I'm a fairly hard line libertarian and free market thinker that finds the communists, socialists, and all authoritarian and totalitarians regimes beyond repulsive, but I'm more bullish about a communist country and an ex KGB dictator than I am about the US. :bang: