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Considering ZIRP as an almost permanent condition, lowering interest rates will not be an effective option to avert the worst effects of the next recession should it come sooner, rather than later.
Economic growth is flagging, worldwide unemployment and financial insecurity is unabated, the wealth and income gaps seem to be widening still.
What tools do Central Bank's have at their disposal if another recession occurs before - or because of - a rise in interest rates?
They say QE has averted a depression, but by many accounts has done little to help the middle class and below, contributing greatly, according to some, of another asset bubble in the financial markets.
And the rich got richer.
Is giving everyone a bunch of $$$ by fiat, called 'helicopter money' a rational, and justifiable response to such a scenario?
Most economists believe it would work, but is it a good idea?
What would you do in such a circumstance , or are you even concerned?
People who believe the Fed uses helicopters and fireplaces (e.g., Milton Friedman) are epically disconnected from the real world and deserve simply to be ignored.
It depends on who you give the money to. Poor people will spend it immediately, rich people not so much. Also QE didn't result in massive inflation because the money didn't get past the banks and in the hands of people.
It can be argued that the Fed is attempting to promote Keynesian policies with the hope hat this time they will work,
Yet what as resulted is more or less the same results we saw in the 1930's, with the banks pretty much refusing to use their windfalls to lend to businesses and individuals to aid them in expanding, hiring, starting new businesses.
People who believe the Fed uses helicopters and fireplaces (e.g., Milton Friedman) are epically disconnected from the real world and deserve simply to be ignored.
Sorry, but I don't understand your post.
Surely no one thought that real helicopters would be used, but is merely a euphemism for direct payments of 'new money' to the population.
This concept is gaining increasing buzz in some economic writings and differs from traditional money expansion in some distinctive ways.
It depends on who you give the money to. Poor people will spend it immediately, rich people not so much. Also QE didn't result in massive inflation because the money didn't get past the banks and in the hands of people.
It resulted in epic asset price inflation, setting up another financial bubble. It didn't hit mainstreet (yet) but it did go somewhere.
It resulted in epic asset price inflation, setting up another financial bubble. It didn't hit mainstreet (yet) but it did go somewhere.
Epic or reinflated? Also generally inflation is the rise in prices of goods and services which hasn't happend as many parrot that the printing press would have caused, it didn't because it's locked up in banks.
Also QE didn't result in massive inflation because the money didn't get past the banks and in the hands of people.
Inflation wouldn't be a bad thing. Relatively. And it can be done without effecting inflation much at all.
I propose that the HM be used to pay down any debt first (if you have any), with spending limits if you don't (like a deposit that you can only draw x$/mo). This will put people in a better financial condition, and reduce consumer debt without increasing inflation too much. Willingness of the government to support consumer demand will improve business confidence and investment. Another benefit will be to reduce the US$ exchange rate and reduce our trade deficit... another thing that will increase business investment.
Inflation wouldn't be a bad thing. Relatively. And it can be done without effecting inflation much at all.
I propose that the HM be used to pay down any debt first (if you have any), with spending limits if you don't (like a deposit that you can only draw x$/mo). This will put people in a better financial condition, and reduce consumer debt without increasing inflation too much. Willingness of the government to support consumer demand will improve business confidence and investment. Another benefit will be to reduce the US$ exchange rate and reduce our trade deficit... another thing that will increase business investment.
If you pay down debt how does that help,stimulate the econ?
It resulted in epic asset price inflation, setting up another financial bubble. It didn't hit mainstreet (yet) but it did go somewhere.
Sorry but if it ain't here yet, it ain't gonna "trickle down."
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