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Reuters: A breakthrough speech on monetary policy - QE for the public!

REUTERS - Consider the U.S. Federal Reserve.

At present the Fed prints $85 billion of new money monthly and distributes it to banks and Wall Street investors by buying government bonds. And the Fed has promised to continue this monthly “quantitative easing” until such time as unemployment drops and is clearly and sustainably declining to more normal levels.

Now suppose instead that the Fed divided its $85 billion monthly money production into 300 million checks of $283 each and sent these to every man, woman and child in America. Suppose, moreover, that the Fed promised to keep sending out these checks, worth more than $1,000 a month for a four-person household, until the United States reached its unemployment target – and the Fed chairman added that he would increase the checks to $1,500 or $2,000 a month for that household if $1,000 monthly proved insufficient.

There can be little doubt that this deluge of free money would stimulate consumer spending and revive employment – and no doubt that it would be infinitely more effective than distributing money to bond investors and banks through QE.

More: http://blogs.reuters.com/anatole-kaletsky/2013/02/07/a-break...

I proposed the idea first: http://www.dailypaul.com/262297/obama-supporters-have-got-it...



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We live in a society that

can only exist by invading and stealing resources from other people. Our government claims it cares about gun violence WHILE it sends bombs and machine guns to "rebels" around the world. We live in a sick, immoral and boring society. Giving people money will NOT result in them embracing the system, they will simply do nothing because our current society sucks and isn't worth buying into.

QE to the public

is definitely the last signs of life from a dieing currency. I say it's a great idea since they are not going to to what is necessary to save this currency we might as well speed things up and finish it off so we can get back to sound money. The longer they drag it out the more painful it will be. I would rather go through a couple years of outright depression then 10 years of inflation and near depression recession.

The bold effort the present bank had made to control the government ... are but premonitions of the fate that await the American people should they be deluded into a perpetuation of this institution or the establishment of another like it-Andrew Jackson

Its a question of corruption

The newly created money can either try make its way to the public via the banks or go direct to the people.

The only reason the Fed issues money through the banks is to give them an inflationary advantage known in economics as the Cantillon effect.

The reality is the Fed should not be empowered to create anything monetary in the first place, but the interesting facts here are that the Fed is choosing an inferior, yet more corrupt way of distributing the money according to their own economic theories.

You often hear Fed economists discussing the liquidity trap and needing to get banks to lend, well then why not just bypass the banks? The answer is simple... corruption and perhaps also a lack of belief in the actual theory of artificially propping consumer demand.

Rothbard would call this - The Angel Gabriel Model

whereby the result would be to reduce the purchasing power of the dollar by the approximate fraction that the money supply increased.

A good example would be that of a prison economic system:

One night while all the inmates are asleep, the guards hall in tons of cartons of cigarettes. When the prisoners awake in the morning, they are initially overcome with joy. However, they soon find that all the other goods they wish to purchase with the cigarettes have supplies that have remained the same. Everyone now has plenty of cigarettes, and all of the other goods will now come at a very high cost in terms of smokes. Inevitably, alternative bartering systems would be established.

at least its better than

at least its better than giving all the cigarettes to the leaders of the skinhead gang

23

you got it right

neutral money is far grander than having your purchasing power robbed by elitists.

I have an idea...

They could upload a photo of a 100 dollar bill to photobucket and we could just print them as we needed.

FED "Money" is Collective Debt

if you don't understand that yet, STUDY.

This sounds like a Nancy Pelosi proposal. Give everyone in America a million bucks and we'll all be rich!

no, Pelosi's proposal would be

"We have to spend the money first to see where it went"

Cyril's picture

+10 (wished for) LMAO !

+10 (wished for) LMAO !

Spot on.

http://www.youtu.be/hV-05TLiiLU

She tried to complement the sentence with a semantic workaround a second later... and nuked herself even deeper. Precious.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Google

"Operation Bernhard"

How does increasing the number of units of exchange increase the supply of exchangeable goods?

Why don't you go to the bank

Why don't you go to the bank an just get a loan?

Who is going to pay the loan, the "rich" people? Who is going to provide the employment? Who is going to finance the delivery of goods to market, rich people?

It the rich people make the loan they will decide what kind of employees they need. They will decide what will be produced and how it is delivered to market and when. Maybe they don't want economic recovery, maybe they want the National Parks and the Interstate System, Hoover Dam, etc.

Having government borrow what people can't afford on their own is fiscal insanity.

We are slave to our debt already. The solution is not more debt!

Free includes debt-free!

Velocity

The velocity of the money would be wayy too high and accelerate the collapse. Alot ot the money would go to paying off the student loan, credit card debt to further inflate the bubble rapidly

Yes and no.

Velocity of money, yes, if SPENT. However, if it's to retire debt, since debt is money under our FIAT currency (lent into existance) system, retiring debt would be DEFLATIONARY in nature (under the current monetary system.)

Hence, it would balance out.

When the Fed "QE"s the banks, that's all the banks are doing. They sure as h*ll are not lending the majority of those trillions into the economy. They are paying off their bad debts.

On Deflation.....

"Velocity of money, yes, if SPENT. However, if it's to retire debt, since debt is money under our FIAT currency (lent into existance) system, retiring debt would be DEFLATIONARY in nature (under the current monetary system.)"

Yes. This is why the federal budget surplus (1997-2001) was deflationary. That is what triggered the collapse of the internet bubble. However, the same would be true under a gold standard.

Ed Rombach

Only in the short to short-medium term...

....as malinvestments by government are worked out of the system.

You have to ask yourself though is what the government spends money on value add? Or just velocity inflationary?

Would prosperity and productivity growth be hurt in the medium to long term by allowing government malinvestment be worked out of the system? Quite the contrary, people would be better off as that money goes to productive uses demanded by the free market.

I think that is wrong. the

I think that is wrong. the money to make the debt was given to the seller, the seller took the money and did what he wanted to do with it. You can not "destroy" money.

Then we wouldn't have to perpetually bailout the banks.

We would kill two birds with one stone.

lol.

Give people money until they get a job....... and if $1000 a month doesn't entice them into employment, then $2000 ought to do it!!!

Kinda shows the utter ridiculousness of everything the gov't does.

Is there a political corollary to Poe's Law?... Cuz I can no longer tell if this stuff is real or satire!!!

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

Why is it any different.....

... than helicoptering it onto banks?

Does it entice the banks to do THEIR jobs? Nope. It entices them to be more reckless.

Think of it like a stock split.

If a stock splits, aren't you going to take your shares. Right now we are not getting our shares. It is only equitable.

Why would I think of it as

Why would I think of it as splitting stocks? it's not.

i think of it exactly the way it is: Trying to decrease unemployment by making employment unnecessary. It's ludicrous.

People are unemployed NOW because they labored away at making things that their customers didn't want to buy, so their employers had to let them go. You can't fix that by handing out money. This is a most basic common sense kind of idea. We all know this to be true, but those people that we recognize as "gov't" are an impossibly slow lot, and seriously suggest ideas like this.

... which is why I can never tell if these kinds of proposals are serious or satirical, lol.

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

QE does not help the economy, it bails out the banks.

.

If the Fed really wanted to

If the Fed really wanted to stimulate the economy they would abolish the income tax for everybody and just print the $2.3 trillion per year instead.

LOL

That might work for a year maybe two.

However, you need to look at the Grace Commission report from 1986, one of the fruits of Ron Paul's efforts beginning in 1976 that the Reagan administration finally undertook.

It clearly showed that the sole REASON for the IRS and income taxes was to REPAY the Fed and bondholders!

Hence, if you did what you suggested, then bondholders would know they would not get repaid in US goods or equities but in newly issued bonds.

That wouldn't work for very long.

How does free money = work?

If you give people free money, and promise to continue this every month, what's the incentive for finding employment? It would be better than giving to the banks, yes, but it just shows the folly of ALL quantitative easings.

Bush did this.

I think the odds are that it would "stimulate" the economy better than the trickle down ideas. (I had a fried who called "Trickle Down economics" "Pissing on the poor.."

That said, still seems immoral to me to take from one and give to another...or deliberately debase a currency.

Michael Nystrom's picture

Oh boy

Here we go. This assures hyperinflation.

The only way to make sense out of change is to plunge into it, move with it, and join the dance. - Alan Watts

If inflation gets too hot,

just cut down on buying Treasury bonds and MBS.