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re: Hedge fund manager Daniel J. Arbess calls for direct money printing to Treasury
Posted on 5/19/13 at 12:59 pm to Doc Fenton
Posted on 5/19/13 at 12:59 pm to Doc Fenton
Doc, you know coupons paid to the Fed get immediately remitted back the the Treasury already. The only thing that is actually paid is the principal which can be rolled pretty easily. We've gone at this enough you know I'm one of the biggest Fed supporters and QE defenders, but this situation just creates the biggest moral hazard in history. Interest is controlled by supply/demand of our debt so the Fed can smooth out the economic and market thirst for our debt but principal is still controlled by the budget. The budget is controlled by politicians, and if you think Keynesiasm creates a blank check for the government this would be creating a money tree. Politicians are short sighted enough.
2
Posted on 5/19/13 at 7:26 pm to BennyAndTheInkJets
quote:+1. Something tells me Bernanke's criteria for a crisis is not quite the same as the criteria politicians would be wont to use in a given situation. I might be more in favor of it in a country with a balanced budget amendment in it's constitution and congressional term limits.
Politicians are short sighted enough.
Posted on 5/20/13 at 12:01 am to BennyAndTheInkJets
quote:
Interest is controlled by supply/demand of our debt so the Fed can smooth out the economic and market thirst for our debt but principal is still controlled by the budget. The budget is controlled by politicians, and if you think Keynesiasm creates a blank check for the government this would be creating a money tree.
I just can't possibly fathom how it would be any worse than what we've seen the last 5 years, and I also can't understand why a blank check for government to cut taxes until inflation arrives is any worse than a blank check to completely override the pricing mechanism for money & interest rates.
Like I always say, ZIRP is more dangerous than people think. This would be a more honest way to pay for government expenditure, in my opinion. It makes far more sense to just cut taxes across the board and make up for it with a counteracting inflation tax, rather than to pick winners and losers and subsidize the financial industry while creating odd pockets of asset price bubbles as the remainder of the economy continues to erode.
The CPI index fell from March to April this year for the first time since 2003. Things are not looking good.
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