#Monetarism is almost dead, but helicopter money translates to the real economy. So, getting base money into the hands of the people would work. However, interest rates have to be monitored because so many bonds are being used as collateral. The banks are vulnerable.
#NGDP Targeting would create too much inflation for those bonds being used as collateral if #GDP was low, requiring a lot of inflation. There is a reason why the Fed stopped listening to Scott Sumner. And that is that these clearinghouses were created in order to protect the counterparties, but they use trillions of dollars of bonds. The Fed now has massive demand for bonds that will extend for many, many years, unless the clearinghouses themselves fail. Therefore, NGDP Targeting will not ever be accepted by the #CentralBanks, IMO.
Sumner was right about the Fed ignoring NGDP leading to the Great Recession. But now the Fed has insatiable demand for bonds and is content.
I appreciate the thoughtful reply. While bonds presently have a higher rating than gold, I don't believe this will be true several years down the road. Furthermore, there are a shortage of bonds, because of the massive #liquidity injections by #CentralBanks. Bonds can be in short supply when Central Banks print money to buy them.
Actually, the #Fed and Central Banks are running out of assets to buy. This is why several analysts believe the next Central Bank BULLET will be outright #HelicopterMoney.
Lastly, the production of energy is different than comparing outstanding #EnergyDerivatives to the Interest Rate Derivative Market. While it's true that the Interest Rate Derivative Market totally overwhelms anything else by several orders of magnitude, I would like to kindly remind you financial instruments are worthless without the burning of energy. Burning #energy translates to economic activity. Profitable economic activity translates to a functioning financial system.
When U.S. and global expensive oil production declines in earnest, this will cause a serious dislocation in the Financial System that will result in collapse. Unfortunately, this will be a depressionary collapse we never come out of.
NGDP Futures Targeting – Still Doesn’t Work….
#Monetarism is almost dead, but helicopter money translates to the real economy. So, getting base money into the hands of the people would work. However, interest rates have to be monitored because so many bonds are being used as collateral. The banks are vulnerable.
#NGDP Targeting would create too much inflation for those bonds being used as collateral if #GDP was low, requiring a lot of inflation. There is a reason why the Fed stopped listening to Scott Sumner. And that is that these clearinghouses were created in order to protect the counterparties, but they use trillions of dollars of bonds. The Fed now has massive demand for bonds that will extend for many, many years, unless the clearinghouses themselves fail. Therefore, NGDP Targeting will not ever be accepted by the #CentralBanks, IMO.
Sumner was right about the Fed ignoring NGDP leading to the Great Recession. But now the Fed has insatiable demand for bonds and is content.
The Subprime U.S. Economy: Disintegrating Due To Subprime Auto, Housing, Bond & Energy Debt
Gary,
I appreciate the thoughtful reply. While bonds presently have a higher rating than gold, I don't believe this will be true several years down the road. Furthermore, there are a shortage of bonds, because of the massive #liquidity injections by #CentralBanks. Bonds can be in short supply when Central Banks print money to buy them.
Actually, the #Fed and Central Banks are running out of assets to buy. This is why several analysts believe the next Central Bank BULLET will be outright #HelicopterMoney.
Lastly, the production of energy is different than comparing outstanding #EnergyDerivatives to the Interest Rate Derivative Market. While it's true that the Interest Rate Derivative Market totally overwhelms anything else by several orders of magnitude, I would like to kindly remind you financial instruments are worthless without the burning of energy. Burning #energy translates to economic activity. Profitable economic activity translates to a functioning financial system.
When U.S. and global expensive oil production declines in earnest, this will cause a serious dislocation in the Financial System that will result in collapse. Unfortunately, this will be a depressionary collapse we never come out of.
Of course.. this is my humble opinion.
Steve