An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Saturday, August 24, 2013
Randy Wray — What Do You Want in a New Fed Chair? Hint: Larry Summers Doesn’t Have It
The world wants a new fed chairman to balance the budget, sequester, AND raise rates so that the world will go down the tubes.
It is a little obvious now it's time to ask MMT community to ask how the USA is going to do to emerging markets what the EU german Nordic bank holders did to the PIIGS
Of mice and men ? no.
Of PIIGS and BRICs (tm), yes ... googleheim 2013 all rights reserved.
Whoever they get HAS to be monetarist to at least some degree...
So E. Warren doesnt work for them because she is not known professionally as a monetarist as much as a consumer advocate or whatever...
If you need someone to lead a committee that raises and lowers interest rates to "manage the economy" that person HAS to be a monetarist... so one thing for sure is that we are going to get a monetarist...
I increasingly find myself 'outside looking in' on all of this...
I dont think we will see such a "MMT economy" any time soon...
Short term, what the citizens have been trained to expect is lets say perhaps a 6% 10-yr UST bond...
So if a middle class couple has managed to save $250k in an ERISA account and get 6%, that is 15k per year or over 1k per month, retirement income...
Recently the 10 -yr was at 2% which is 5k per year from a 250k ERISA account... big difference for middle class savers...
So short term, I advocate for policy to get these people their lost income back... thru higher risk free rates...
We can continue to advocate for better longer term policies, but in the mean time, savers are getting hurt right now...
I think whoever they get to put in there will at least end the QE as the "money managers" now are getting hurt also as the supply of USTs is pinched for them to acquire for their clients... they have less inventory to broker...
Not sure if they will raise rates any time soon though as there does not seem to be any "inflationary" pressures so they will probably hold off on rates...
Fiscal wise, it doesnt look like we will get any meaningful increase in the govt top-line spending until 2015 so next year will probably still be "muddle thru" then it looks like we may get a 200b+ yoy increase from '14 into '15 and if so, things may really start to pick up to the point where they would consider a rate increase...
tho to your point, another problem with oil supply and they imo could do another Volcker on us and crank up rates in the face of "inflation" to 20% again and reset everything to usher in another 30 years just like we had from 1980 thru 2008... I'm sure they would love that!
Hang in there goog glad to see you back in the comments... rsp,
The world wants a new fed chairman to balance the budget, sequester, AND raise rates so that the world will go down the tubes.
ReplyDeleteIt is a little obvious now it's time to ask MMT community to ask how the USA is going to do to emerging markets what the EU german Nordic bank holders did to the PIIGS
Of mice and men ? no.
Of PIIGS and BRICs (tm), yes ... googleheim 2013 all rights reserved.
Whoever they get HAS to be monetarist to at least some degree...
ReplyDeleteSo E. Warren doesnt work for them because she is not known professionally as a monetarist as much as a consumer advocate or whatever...
If you need someone to lead a committee that raises and lowers interest rates to "manage the economy" that person HAS to be a monetarist... so one thing for sure is that we are going to get a monetarist...
rsp,
Another point:
ReplyDelete"Like the toddler with the plastic steering wheel attached to her car seat, the Fed Chairperson will think she/he is driving the car."
These people ARE actually driving the car... they are NOT "in the car seat" they are behind the actual steering wheel...
If they start to raise interest rates it is going to help many middle class savers...
rsp,
Matt
ReplyDeleteAre you with or against raising rates?
Reminds me of Paul Volker 80's show.
It will definitely persuade the brics to follow us.
How will savings promote MMT Economy?
goog,
ReplyDeleteI increasingly find myself 'outside looking in' on all of this...
I dont think we will see such a "MMT economy" any time soon...
Short term, what the citizens have been trained to expect is lets say perhaps a 6% 10-yr UST bond...
So if a middle class couple has managed to save $250k in an ERISA account and get 6%, that is 15k per year or over 1k per month, retirement income...
Recently the 10 -yr was at 2% which is 5k per year from a 250k ERISA account... big difference for middle class savers...
So short term, I advocate for policy to get these people their lost income back... thru higher risk free rates...
We can continue to advocate for better longer term policies, but in the mean time, savers are getting hurt right now...
I think whoever they get to put in there will at least end the QE as the "money managers" now are getting hurt also as the supply of USTs is pinched for them to acquire for their clients... they have less inventory to broker...
Not sure if they will raise rates any time soon though as there does not seem to be any "inflationary" pressures so they will probably hold off on rates...
Fiscal wise, it doesnt look like we will get any meaningful increase in the govt top-line spending until 2015 so next year will probably still be "muddle thru" then it looks like we may get a 200b+ yoy increase from '14 into '15 and if so, things may really start to pick up to the point where they would consider a rate increase...
tho to your point, another problem with oil supply and they imo could do another Volcker on us and crank up rates in the face of "inflation" to 20% again and reset everything to usher in another 30 years just like we had from 1980 thru 2008... I'm sure they would love that!
Hang in there goog glad to see you back in the comments... rsp,
rsp,