If we can agree with the late Wynne Godley that the separation of central bank monetary policy from fiscal policy is one of the core design flaws of the eurozone, and we can acknowledge that the expansionary fiscal consolidations promised five years ago have proven anything but expansionary, then it is clear that effective demand must be revived by other measures. If private sector investment demand is going to continue to prove to weak (especially relative to private saving preferences), and if the increase in trade balance is going to continue to be made largely through import contraction (on the back of weak final domestic demand), then economic growth can only return if countries abandon austerity measures. Simply put, peripheral nations in the eurozone must regain control of their fiscal policy, and must actively pursue full employment growth policies.
To accomplish this, the following alternative public financing instrument may need to be unilaterally adopted in each peripheral nation in the eurozone....
New Economic Perspectives
How to Exit Austerity, Without Exiting the Euro
Rob Parenteau, CFA | sole proprietor of MacroStrategy Edge, editor of the Richebacher Letter, and a research associate with the Levy Economics Institute
Rob Parenteau, CFA | sole proprietor of MacroStrategy Edge, editor of the Richebacher Letter, and a research associate with the Levy Economics Institute
Thank you Matt.
ReplyDeleteCan we see some posts which clarify the libor rate manipulation which was used by banks so they would win the casino derivative swaps so credit unions and municipalities would have to pay ?
If interest rates rose then the banks were supposed to pay to the credit unions and cities like Detroit.
If interest rates fell, then the credit unions and cities like Detroit were supposed to pay.
So the banks rigged the libor so that they would win.
Now Detroit has lost and pensions are taken away from police and firemen.
The banks also increased the margins on their customer's lines of credits because they knew they would be rigging the rates to go down so they could win on ALL FRONTS.
i.e. small business lines of credit and probably home equity lines of credit :
the lines of credit rates consist of wall street prime and a margin.
Since they rigged the main rate to go down, the margin had to be fudge factored so they increased this on their products.
Since the prime rate was rigged, then that means the Federal Reserve helped.
Aren't you guys tired (after 300+ years) of the debate regarding central bank autonomy? We will forever oscillate (so long as the Lord allows) between the two states (government controlled vs bank controlled) because central banking causes an unstable economy.
ReplyDeleteF.,
ReplyDelete"government controlled vs bank controlled"
Rather: "the just vs the corrupt"
rsp,
Franko,
ReplyDeleteA monetary sovereign has no need to borrow so if it does borrows it is handing out disguised welfare and not welfare to those who need it most but to those with the most fiat they desire to hoard risk-free.
As for a monetary sovereign lending, that is again disguised welfare if the ability to repay is a positive contributor to the determination of who gets the loans and who doesn't since so-called creditworthiness is morally irrelevant to the requirement of Equal Protection Under the Law. Otoh, equal grants to the entire population do not violate Equal Protection Under the Law.
for govt student loans and grants you are loaned and granted more if your income is LOWER....
ReplyDeletegovt loans on homes are universally granted, but are capped at 417k... now you have to provide proof of ability to pay, but before with so-called "NINJA" loans you did not, but these type of loans have been misguidedly demonized/ridiculed as "control frauds" or something so those are no longer available to a family with a hard time documenting their income the way the GSEs like it to be documented.
Your "disguised welfare if the ability to repay is a positive contributor to the determination of who gets the loans" is the only way it is now that the NINJA loans were attacked and demonized... I know some self-employed people who got NINJA loans back some years and they have worked out well for them.... Bill Black will not agree with you that 'ability to repay' should not be a criteria and govt should just do NINJA loans...
rsp.
Franko,
ReplyDeleteGrants are fine if they are equal and universal or, if not, promote the general welfare. Example: A one-time grant for the purchase of a home would be fine as long as the grants were equal and available to every citizen as they turned 18.
But loans of fiat are altogether different unless every citizen, rich or penniless, is treated exactly the same way with regard to amounts and repayment terms in which case you could more easily just give fiat away since repayment would be entirely voluntary anyway.
The monetary sovereign should NEVER lend. But who cares since the monetary sovereign can spend or grant as much new fiat into existence as necessary? And if one is not worthy of a grant then he is not worthy of a loan either since, in both cases, new purchasing power is created and thus taxes by inflation those who are not eligible. Taxation by inflation is legitimate to some extent but NOT if the inflation falls on the poor to benefit the rich, the most so-called creditworthy.
ReplyDelete