The Economic Outlook: The View from the Federal Reserve
House Budget, The Economic Outlook: The View from the Federal Reserve, November 14, 2019
A second witness should have been called. Nomi Prins is THE expert on the relationship between monetary policy and the economy, or rather the inability for quantitative easing to actually trickle down to the Main Street economy, both here and abroad. Her latest book, Collusion, is a must read on these issues.
My conclusion from her work is that quantitative easing has done wonders for the financial sector, precisely because it creates Monopoly money for Mergers and Acquisitions, “new products” such as Collateralized Debt Obligations and cryptocurrency, and currency speculation. It is a pure form of Modern Monetary Theory, which is fine until it is loosed into the general economy, which is when asset bubbles become Ponzi schemes.
Asset Bubbles would not be a problem, except that the pawns in these games are real workers, both here and abroad. Treating workers in this way is part of the global race for the bottom. When the bubbles burst, the speculators can usually walk away (or have already done so) with plenty of personal liquidity. Workers, however, cannot cash their paychecks without massive federal intervention, assuming they keep their jobs. When these jobs are lost, they find out how the other half lives – which is badly on the meager assistance provided by government.
The Obama Administration felt that mortgage borrowers who bought at the top of the market had only themselves to blame, which was odd considering that the economic adviser, who will remain nameless, set up the financial “reforms” that caused the housing boom in the first place (along with help from the Federal Reserve).
A non-inflationary cure for what had become a Depression, one we are finally coming out of, would have been mortgage asset write-downs. As money is created from a keyboard, it could have been destroyed – as these debts are included in M3. Deflation had, in fact, occurred. This is the very definition of a depression. Write-downs would have simply acknowledged this.
The recent Tax Cut and Jobs Act is another form of trickle-down economics. It has enriched the CEO class, which profits from increasing rent-seeking – the coin of the realm in earning bonuses. See attachment one for further analysis.
Attachment Two contains analyses from last month’s hearing on the Fiscal Tool Kit.
If the witness indicates that Federal Reserve policy can have an impact as a financial cure, please do not drink the Kool-Aid. That Fed Economists still believe that asset inflation is a form of investment tells you all you need to know about the soundness of their advice.
Attachment One – TCJA
Attachment Two - Strengthening Our Fiscal Toolkit: Policy Options to Improve Economic Resiliency, October 16, 2019
A second witness should have been called. Nomi Prins is THE expert on the relationship between monetary policy and the economy, or rather the inability for quantitative easing to actually trickle down to the Main Street economy, both here and abroad. Her latest book, Collusion, is a must read on these issues.
My conclusion from her work is that quantitative easing has done wonders for the financial sector, precisely because it creates Monopoly money for Mergers and Acquisitions, “new products” such as Collateralized Debt Obligations and cryptocurrency, and currency speculation. It is a pure form of Modern Monetary Theory, which is fine until it is loosed into the general economy, which is when asset bubbles become Ponzi schemes.
Asset Bubbles would not be a problem, except that the pawns in these games are real workers, both here and abroad. Treating workers in this way is part of the global race for the bottom. When the bubbles burst, the speculators can usually walk away (or have already done so) with plenty of personal liquidity. Workers, however, cannot cash their paychecks without massive federal intervention, assuming they keep their jobs. When these jobs are lost, they find out how the other half lives – which is badly on the meager assistance provided by government.
The Obama Administration felt that mortgage borrowers who bought at the top of the market had only themselves to blame, which was odd considering that the economic adviser, who will remain nameless, set up the financial “reforms” that caused the housing boom in the first place (along with help from the Federal Reserve).
A non-inflationary cure for what had become a Depression, one we are finally coming out of, would have been mortgage asset write-downs. As money is created from a keyboard, it could have been destroyed – as these debts are included in M3. Deflation had, in fact, occurred. This is the very definition of a depression. Write-downs would have simply acknowledged this.
The recent Tax Cut and Jobs Act is another form of trickle-down economics. It has enriched the CEO class, which profits from increasing rent-seeking – the coin of the realm in earning bonuses. See attachment one for further analysis.
Attachment Two contains analyses from last month’s hearing on the Fiscal Tool Kit.
If the witness indicates that Federal Reserve policy can have an impact as a financial cure, please do not drink the Kool-Aid. That Fed Economists still believe that asset inflation is a form of investment tells you all you need to know about the soundness of their advice.
Attachment One – TCJA
Attachment Two - Strengthening Our Fiscal Toolkit: Policy Options to Improve Economic Resiliency, October 16, 2019
posted by Michael Bindner at 10:00 AM
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