Political Forums  

Go Back   Defending The Truth Political Forum > Political Issues > Money and Finance > Economics

LinkBack Thread Tools Display Modes
Old July 17th, 2016, 05:17 PM   #1
Put some ice on that
Sabcat's Avatar
Join Date: Dec 2013
Location: Earth
Posts: 26,152
Helicopter Money: The Biggest Fed Power Grab Yet

The Cleveland Fed’s Loretta Mester is a clueless apparatchik and Fed lifer, who joined the system in 1985 fresh out of Barnard and Princeton and has imbibed in its Keynesian groupthink and institutional arrogance ever since. So it’s not surprising that she was out flogging — albeit down under in Australia — the next step in the Fed’s rolling coup d’ etat.

We’re always assessing tools that we could use,” Mester told the ABC’s AM program. “In the US we’ve done quantitative easing and I think that’s proven to be useful.

“So it’s my view that [helicopter money] would be sort of the next step if we ever found ourselves in a situation where we wanted to be more accommodative.
This is beyond the pale because “helicopter money” isn’t some kind of new wrinkle in monetary policy, at all. It’s an old as the hills rationalization for monetization of the public debt — that is, purchase of government bonds with central bank credit conjured from thin air.

It’s the ultimate in “something for nothing” economics. That’s because most assuredly those government bonds originally funded the purchase of real labor hours, contract services or dams and aircraft carriers.

As a technical matter, helicopter money is exactly the same thing as QE. Nor does the journalistic confusion that it involves “direct” central bank funding of public debt make a wit of difference.

Suppose Washington issues treasury bonds to the 23 primary dealers on Wall Street in the regular manner. Further, assume that some or all of these dealers stick the bonds in inventory for 3 days, 3 months or even 3 years, and then sell them back to the Fed under QE (and most likely at a higher price).

So what!

The only thing different technically about “helicopter money” policy is the suggestion by Bernanke and others that the treasury bonds could be issued directly to the Fed. That would just circumvent the dwell time in dealer (or “investor”) inventories but result in exactly the same end state. In that event, of course, Wall Street wouldn’t get the skim.

But that’s not the real reason why helicopter money policy is so loathsome. The unstated essence of it is that our monetary politburo would overtly conspire and coordinate with the White House and Capitol Hill to bury future generations in crushing public debts.

They would do this by agreeing to generate incremental fiscal deficits — as if Uncle Sam’s current $19 trillion isn’t enough debt — which would be matched dollar for dollar by an increase in the Fed’s bond-buying or monetization rate. That amounts not only to teaching children how to play with matches; it’s tantamount to setting fiscal forest fires across the land.

There are a few additional meaningless bells and whistles to the theory, which we will dispatch in a moment, but the essential crime against democracy and economic rationality should be made very explicit. To wit, this is a central bank power grab like no other because it insinuates our unelected central bankers into the very heart of the fiscal process.

Needless to say, the framers delegated the powers of the purse — spending, taxing and borrowing — to the elected branch of government, and not because they were wild-eyed idealists smitten by a naïve faith in the prudence of the demos.

To the contrary, they did so because the decision to spend, tax and borrow is the very essence of state power. There is no possibility of democracy — for better or worse — if these fundamental powers are removed from popular control.

Yet that’s exactly what helicopter money policy would do. Based on some Keynesian gobbledygook about the purported gap between full-employment or “potential GDP” and actual output and employment, the Fed would essentially set the Federal deficit target.

Sabcat is online now  
Old July 17th, 2016, 06:15 PM   #2
Senior Member
Endtherepublic's Avatar
Join Date: Sep 2015
Location: earth
Posts: 699
Originally Posted by Sabcat View Post
Value of currency is related to the supply and demand cycles instituted by capitalists. It would be more logical of there was no currency available to the people, instead goods and services would be provided by the state according to ones need. This would be the only fair and equal way to provide for the people as the people provide for the state. Otherwise we stay on the road with the slave master called capitalism.
Endtherepublic is offline  

  Defending The Truth Political Forum > Political Issues > Money and Finance > Economics

biggest, fed, grab, helicopter, money, power

Thread Tools
Display Modes

Similar Threads
Thread Thread Starter Forum Replies Last Post
‘Worse Than We Thought’: TPP Is a Total Corporate Power-Grab Nightmare intangible child Current Events 1 April 28th, 2016 12:28 PM
Money Grab Hondo69 Current Events 8 March 30th, 2013 11:17 PM
Pebble Power Grab? Podium Pentothal Big Government 2 October 2nd, 2012 01:10 AM
Subordination to power: Follow the money coberst Philosophy 0 March 30th, 2008 12:07 AM
Clinton to address executive "power grab" forester814 Political Talk 5 October 28th, 2007 05:48 AM

Facebook Twitter RSS Feed

Copyright © 2005-2013 Defending The Truth. All rights reserved.