The Economy Got Off to a Historically Bad Start in 2014
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The Economy Got Off to a Historically Bad Start in 2014
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Re: The Economy Got Off to a Historically Bad Start in 2014
#2I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation.
After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of this recovery.
Imagine if in 2009, instead of using the traditional means to expand monetary supply, we just started sending checks to all citizens. It seems we're still waiting for the trickle down effect to kick in from the Fed's stimulus. Why are we waiting for banks to lend and businesses to hire? If the goal is to prime the economic pump with an influx of new money, put that money in the hands of people who will actually go out and buy something.
Re: The Economy Got Off to a Historically Bad Start in 2014
#3I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation. After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of th…
Just sending checks to all citizens is politically difficult, because it starts conversations about “class warfare” and “socialism”, and implies that the federal government should have a policy of explicit wealth redistribution, rather than the current hodge-podge of means tested welfare programs and monetary policy tools.
But to answer your question: yes, we’d increase liquidity, reduce unemployment and dramatically improve the lives of basically everyone in the society if we taxed capital gains as income, restored inheritance taxes to historical levels, raised the top marginal income tax rates, and closed various corporate tax loopholes, and then just took the resulting pool of cash and distributed it equally among citizens.
In the long term, the great-great grandchildren of today’s billionaires would probably end up richer, too, since the whole society would be richer.
Re: The Economy Got Off to a Historically Bad Start in 2014
#4I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation. After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of th…
> I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation.
The principle purpose of independent central banking is to put government debt on a secure footing by minimizing the risk of the government acting to monetize the debt by separating direct, day-to-day control of the money supply from the government organs responsible for borrowing and repaying debt, setting spending, etc.; it also seeks to avoid harming the economy through policies that inhibit economic activity, but actually actively promoting job growth is more about fiscal (and specific program) policy of government than monetary policy of the central bank.
Re: The Economy Got Off to a Historically Bad Start in 2014
#5I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation. After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of th…
Wouldn't your proposal cause massive inflation? My understanding is the fed are somewhat obsessed with keeping inflation down, possibly to a fault.
Re: The Economy Got Off to a Historically Bad Start in 2014
#6I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation. After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of th…
Monetary policy has very limited effect when you are up against the zero lower bound of interest rates as the US has been for quite some time.
http://krugman.blogs.nytimes.com/2013/10/15/five-on-the-floo...
Re: The Economy Got Off to a Historically Bad Start in 2014
#7I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation. After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of th…
Just sending checks to all citizens is politically difficult, because it starts conversations about “class warfare” and “socialism”, and implies that the federal government should have a policy of explicit wealth redistribution, rather than the current hodge-podge of means tested welfare programs and monetary policy tools. But to answer your question: yes, we’d increase liquidity, reduce unemployment and dramatically…
Let's put aside the Federal Government (and taxes and spending) for a moment and focus on the Federal Reserve.
The Federal Reserve printed a large amount of money in response to the crisis. (That was a silent tax on anyone holding cash.) To inject this money into the economy, they bought a bunch of securities. My question is simply: why use asset buying as a vehicle for injecting money into the economy and not cash to citizens? Cash to citizens seems more fair than picking winners and losers and propping up assets that would otherwise be worth much less. It seems the Federal Reserve's strategy of the past 5 years has done very little to reboot the economy, and has worsened wealth inequality dramatically.
Re: The Economy Got Off to a Historically Bad Start in 2014
#8Earlier quoted context omitted.
Just sending checks to all citizens is politically difficult, because it starts conversations about “class warfare” and “socialism”, and implies that the federal government should have a policy of explicit wealth redistribution, rather than the current hodge-podge of means tested welfare programs and monetary policy tools. But to answer your question: yes, we’d increase liquidity, reduce unemployment and dramatically…
Let's put aside the Federal Government (and taxes and spending) for a moment and focus on the Federal Reserve. The Federal Reserve printed a large amount of money in response to the crisis. (That was a silent tax on anyone holding cash.) To inject this money into the economy, they bought a bunch of securities. My question is simply: why use asset buying as a vehicle for injecting money into the economy and not cash t…
That would help too (the effects are somewhat similar: inflation is sort of a flat tax on wealth, and wealth distribution is extremely unequal in this country; debtors would greatly benefit), but again, you’re going to get cries of “socialism”.
Re: The Economy Got Off to a Historically Bad Start in 2014
#9I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation. After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of th…
Wouldn't your proposal cause massive inflation? My understanding is the fed are somewhat obsessed with keeping inflation down, possibly to a fault.
Feds are obsessed with keeping inflation at a certain level, not at zero. I think the target is 3%, while current inflation is around ~2%.
Re: The Economy Got Off to a Historically Bad Start in 2014
#10Earlier quoted context omitted.
Just sending checks to all citizens is politically difficult, because it starts conversations about “class warfare” and “socialism”, and implies that the federal government should have a policy of explicit wealth redistribution, rather than the current hodge-podge of means tested welfare programs and monetary policy tools. But to answer your question: yes, we’d increase liquidity, reduce unemployment and dramatically…
Let's put aside the Federal Government (and taxes and spending) for a moment and focus on the Federal Reserve. The Federal Reserve printed a large amount of money in response to the crisis. (That was a silent tax on anyone holding cash.) To inject this money into the economy, they bought a bunch of securities. My question is simply: why use asset buying as a vehicle for injecting money into the economy and not cash t…
I think the 2008 events have shown that the Fed's purpose is to keep the "financial system" happy. Regular citizens don't really count anymore.