Federal Reserve always wants millions of people to be out of work…
Put more bluntly, it’s worth at least thinking about what Bernie Sanders would do to mitigate the impact of Jerome Powell.
Buffer stock of employed versus buffer stock of unemployed.
MarketWatch
Opinion: Proposals to guarantee jobs spotlight uncomfortable truth about Fed
MarketWatch
Opinion: Proposals to guarantee jobs spotlight uncomfortable truth about Fed
Greg Robb | Senior Economics Reporter
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But the threat of sanctions as a tool to protect U.S. intellectual property (IP) is a canard — we’re not concerned that China is stealing our IP, we’re scared that it is out-innovating the West and is ahead in AI.US getting out-innovated?
Opinion:Why Chinese companies including Alibaba and Tencent have an edge over U.S. rivals
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5 comments:
The new alternative form of electronic money would have a disciplinary effect on commercial banks. They would be forced to alter their business models to attract depositors; for example, taking fewer risks or holding more capital and offering higher interest rates. from Why the Fed should give everyone a checking account
By Greg Robb
Published: May 1, 2018 8:40 a.m. ET
So far so good.
The Fed could set the interest rates on the household accounts as its main policy tool. ibid [bold added]
But then a fumble economically, politically and ethically. Economically because SOME savings are legitimate for liquidity and contingency needs. Politically because forcing individuals, especially poor ones, to consume or invest (especially with the hated banks) shall be perceived as very unfair. Ethically because accounts at the cb, being inherently risk-free, should return AT MOST 0% to avoid welfare proportional to welfare balance. Plus, given that SOME savings are legitimate for liquidity and contingency needs, as mentioned above, neither should negative rates be imposed on individual accounts. That leaves just one ethical option for individual accounts: 0% up to a maximum balance of, say, $250,000, the current insured deposit limit.
One potential downside is there might be a bank panic if customers quickly shift funds to central-bank accounts, in which case the Fed could have to step in. ibid
Which is why privileges for the banks should be PROGRESSIVELY eliminated so that when ALL privileges for the banks, credit unions, etc. have been eliminated the only individual citizen depositors remaining in the banks, credit unions, etc. shall be, like gamblers at Las Vegas, 100% voluntary.
But allowing individual citizen accounts at the central bank is inadequate if we desire, as we should, an additional risk-free, always liquid payment system consisting of individual citizen AND business, State and local government, etc. accounts at the central bank.
to avoid welfare proportional to welfare balance. should instead be to avoid welfare proportional to account balance. [bold added]
The article on Fed checking accounts says “The Fed could set the interest rates on the household accounts as its main policy tool.” There’s a slight problem there: that idea clashes with the permanent zero interest rate idea favored by some MMTers (me included).
I.e. if the rate of interest on those checking accounts was zero, or even on the low side, people would empty their Fed accounts and put the money into commercial bank checking accounts (where, after all, the taxpayer guarantees total safety).
But that would raise an awkward question, namely: why should the taxpayer have to stand behind a purely COMMERCIAL arrangement – i.e. “I can have a bank lend out my money with the taxpayer carrying the risk”, when there’s a totally safe alternative at the central bank?
Rumor has it that that is one reason Ben Dyson, founder of Positive Money has moved to the Bank of England. I.e. he is allegedly working to bring about central bank checking accounts, so that we then have to face the above awkward question. Ben doesn’t approve of taxpayers backing commercial ventures, so he is allegedly working to hasten the downfall of totally safe commercial bank accounts.
Talk about skullduggery...:-)
Ralph I believe the BOE is ahead of the curve on bank regulatory reform where they removed the requirement for U.K. banks to have to maintain regulatory capital against cb deposits anyway... so what you point out is a natural progression of the policy as reserve assets don’t matter anymore from a regulatory standpoint over there... you guys will never have another banking crisis like the 2008 one from now on due to this regulatory mod...
The similar policy mod here in the us is languishing in the House for now ... so we are still at risk for another 2008 type event for now...
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