I agree mostly with ptunic.
(I'm completely setting aside the point that his post was specifically aimed at the original topic in the thread, and now discussion has veered off into who's to blame, and somehow trying to associate ptunics post with that...)
Owning the world's reserve currency gives the US much more flexibility than say Zimbabwe to monkey with money supply with fewer immediate implications.
I worry when I hear the radio entertainers/finance experts call for expanding the availability of consumer debt, as high debt levels is already part of our systemic problem. It's a shame that our economy has become so dependent on consumers spoending $ they don't have and then rolling their debt forward.
If banks are slowing velocity and reducing money in the economy (by hoarding govt handouts or returning to more prudent lending practices, depending on your viewpoint) the fed has the ability to step in and make it availble by printing $/buying treasuries. The fed would do best in "steering" this replacement money to places where it doesn't exacerbate problems like consumer over-indebtedness. That's why I think the idea of selectively buying longer term business debt can work. Lending overnight to large businesses' treasuries simply for cash management purposes is also good idea, for the time where the legacy players in the corp debt market are holding back.
The key is that the fed has to withdraw all of these injections as the traditional market participants re-enter and make side-line money available to the economy again.
As a complete aside, I have hope that a targeted government investment in nanotechnology could make a huge difference for our economy and country (world, for that matter) about 15 - 20 years out. I've been privately advocating this for years. There'd be too much lag between investment and return to help us out of he current mess, but it would revolutionize our economy more than electricity or internet. I'm dissappointed that there isn't anything in the stimulus package for nanotechnology.
(I'm completely setting aside the point that his post was specifically aimed at the original topic in the thread, and now discussion has veered off into who's to blame, and somehow trying to associate ptunics post with that...)
Owning the world's reserve currency gives the US much more flexibility than say Zimbabwe to monkey with money supply with fewer immediate implications.
I worry when I hear the radio entertainers/finance experts call for expanding the availability of consumer debt, as high debt levels is already part of our systemic problem. It's a shame that our economy has become so dependent on consumers spoending $ they don't have and then rolling their debt forward.
If banks are slowing velocity and reducing money in the economy (by hoarding govt handouts or returning to more prudent lending practices, depending on your viewpoint) the fed has the ability to step in and make it availble by printing $/buying treasuries. The fed would do best in "steering" this replacement money to places where it doesn't exacerbate problems like consumer over-indebtedness. That's why I think the idea of selectively buying longer term business debt can work. Lending overnight to large businesses' treasuries simply for cash management purposes is also good idea, for the time where the legacy players in the corp debt market are holding back.
The key is that the fed has to withdraw all of these injections as the traditional market participants re-enter and make side-line money available to the economy again.
As a complete aside, I have hope that a targeted government investment in nanotechnology could make a huge difference for our economy and country (world, for that matter) about 15 - 20 years out. I've been privately advocating this for years. There'd be too much lag between investment and return to help us out of he current mess, but it would revolutionize our economy more than electricity or internet. I'm dissappointed that there isn't anything in the stimulus package for nanotechnology.
