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I agree with the attitude of this post, but I'm puzzled that you criticize the Fed Funds rate as below inflation. This is how you create an expansionary monetar
by cynicalkane 15y ago
I agree with the attitude of this post, but I'm puzzled that you criticize the Fed Funds rate as below inflation. This is how you create an expansionary monetary policy which is the correct response to a credit-collapse recession. This enriches commerical banks, but all monetary policy is distortionary.
A good alternative might be helicopter money. I wonder how well that would do, politically.
- _dps 15y agoSorry, I didn't mean to align myself with specific monetary policy. I barely know anything about it. The only point is that I personally can't call up Bernanke for a Fed Funds loan, so the expansion of the money happens asymmetrically across society (in particular, preferentially for the Federal Reserve member banks). I regret mentioning it. I don't want this to become a Federal Reserve or monetary policy debate. My bad. Go in peace :-)
- Retric 15y agoNothing stops the fed from creating money by buying short term treasury bonds at negative interest rates.
- thomaslangston 15y agoI have no problem creating enriching commercial banks in the short term to stop a credit-collapse, but steps could be taken to correct that distortion later. None have.