Are central banks (BOJ, EU and USA) setting up the biggest crash ever?

[Toddsterpatriot]

why not explain?

Well, people like Bill Gross think that helicopter money is QE, which is where banks trade bonds with the Fed for cash created out of nothing. Well, why not have cash created out of nothing without taking scarce bonds out of circulation? Why not have it help the average person? No bonds involved. No fuss, no mess. When you take bonds out of circulation and keep them at the Fed, bond yields go down even more!!! And we are trying to avoid negative bond rates and a cashless society.

Well, why not have cash created out of nothing without taking scarce bonds out of circulation?

$13.8 trillion in Treasury debt held by the public, only $2.46 trillion of that is held by the Fed. Less than 18%.

Well, why not have cash created out of nothing without taking scarce bonds out of circulation?

How much should the Fed print and hand out?

When you take bonds out of circulation and keep them at the Fed, bond yields go down even more!!!

The Fed hasn't expanded their balance sheet since October 2014.

 

[Gary Anderson]

Well, why not have cash created out of nothing without taking scarce bonds out of circulation?

$13.8 trillion in Treasury debt held by the public, only $2.46 trillion of that is held by the Fed. Less than 18%.

Well, why not have cash created out of nothing without taking scarce bonds out of circulation?

How much should the Fed print and hand out?

When you take bonds out of circulation and keep them at the Fed, bond yields go down even more!!!

The Fed hasn't expanded their balance sheet since October 2014.

Todd, any bonds taken out of circulation is bad. Yields continue to go down worldwide for sovereign bonds. As far as how much, I don't know. It has to be in the trillions. As far as not expanding the balance sheet, it needs to be whittled down if there is any worry about helicopter money being tried. Here is the chart that shows the Fed may not be expanding but it isn't contracting either: Helicopter Money Is Being Misrepresented By Bill Gross And Others

 

[Toddsterpatriot]

Well, why not have cash created out of nothing without taking scarce bonds out of circulation?

$13.8 trillion in Treasury debt held by the public, only $2.46 trillion of that is held by the Fed. Less than 18%.

Well, why not have cash created out of nothing without taking scarce bonds out of circulation?

How much should the Fed print and hand out?

When you take bonds out of circulation and keep them at the Fed, bond yields go down even more!!!

The Fed hasn't expanded their balance sheet since October 2014.

Todd, any bonds taken out of circulation is bad. Yields continue to go down worldwide for sovereign bonds. As far as how much, I don't know. It has to be in the trillions. As far as not expanding the balance sheet, it needs to be whittled down if there is any worry about helicopter money being tried. Here is the chart that shows the Fed may not be expanding but it isn't contracting either: Helicopter Money Is Being Misrepresented By Bill Gross And Others

Todd, any bonds taken out of circulation is bad.

Can you prove it?

Yields continue to go down worldwide for sovereign bonds.

And?

As far as how much, I don't know. It has to be in the trillions.

Based on what?

the Fed may not be expanding but it isn't contracting either:

Right. So they haven't taken any bonds out of circulation for a year and a half.

 

[Gary Anderson]

1. Todd, the proof is in the diminishing yields.
2. Sorry, helicopter money has to be in the trillions. There is already 4 trillion in base money in existence sitting at the banks not being loaned out. So, a trillion or two more will not destroy the central bank.
3. They have not taken bonds out of circulation but the threat is always there. People are buying long bonds like there is no tomorrow to buy them.

 

[Gary Anderson]

It avoids NIRP because the government just prints the money- for free!!

You want negative bond yields don't you? That is where we are heading if something isn't done.

 

[EdwardBaiamonte]

Why not have it help the average person?.

why not tell us how you'd do that??????????

 

[Toddsterpatriot]

1. Todd, the proof is in the diminishing yields.
2. Sorry, helicopter money has to be in the trillions. There is already 4 trillion in base money in existence sitting at the banks not being loaned out. So, a trillion or two more will not destroy the central bank.
3. They have not taken bonds out of circulation but the threat is always there. People are buying long bonds like there is no tomorrow to buy them.

1. Todd, the proof is in the diminishing yields.

Diminishing yields is proof that Fed bond purchases are bad?

There is already 4 trillion in base money in existence sitting at the banks not being loaned out.

Quick question for you, if the banks lent out $4 trillion tomorrow, how much base money would be sitting at the banks?

 

[CrusaderFrank]

It avoids NIRP because the government just prints the money- for free!!

You want negative bond yields don't you? That is where we are heading if something isn't done.

We're headed to the biggest financial catastrophe in human history

 

[Gary Anderson]

We're headed to the biggest financial catastrophe in human history

That is possible unless we get off the zero bound.

 

[Gary Anderson]

I deem that less important than the fact that increasing the monetary base has not led to the desired outcome ever. With all due respect to the late uncle Miltie he never demonstrated or even proposed a hypothesis as to why this would work as opposed to being less political than other methods. All the attempts to reduce distress from illiquidity fail to account for the following.

The economy is chaotical and therefore also fractal. I am unaware of any economist who has attempted to compute the fractional exponents that drive the economy and without that it is an impossibility to determine if the economy is or is not in a singularity or even if it has come out of one.

Data collection costs exceed the value of the data collected. For example, initial GDP growth figures turn out to have an error rate of +/- 1.3% so at growth rates of less than 6.5% GDP/qtr uncertainty is massive when first published.and the US probably has the lowest uncertainty of any trillion or greater economy.

Increasing returns industries like Watt's steam engine that was born in the same year as modern economics cannot be identified much less accounted for except in the rearview mirror.

You will notice I am not saying you are wrong but there is no body of data to support your conclusion nor any body of data to refute your position either.

That could be true, however, it was contemplated in the Great Depression as George Selgin of CATO has said, because bond yields were at zero. However, we just had WW2 fix things. I would rather have helicopter money try first before war!!!

 

[Gary Anderson]

Why not have it help the average person?.

why not tell us how you'd do that??????????

That is the whole point of helicopter money. A gift to everyone in the nation. A significant one too. Unlike QE, which requires banks trade in scarce bonds for excess reserves, and only helps banks, this would not require bonds and would help everyone and ultimately get us off the zero lower bound.

 

[Gary Anderson]

Quick question for you, if the banks lent out $4 trillion tomorrow, how much base money would be sitting at the banks?

3.6 trillion if I got the arithmetic correct. For every dollar, the banks can lend 10 to 1. So, if they loaned out $4 trillion, it would use up 10 percent of the available base money.

 

[Toddsterpatriot]

Quick question for you, if the banks lent out $4 trillion tomorrow, how much base money would be sitting at the banks?

3.6 trillion if I got the arithmetic correct. For every dollar, the banks can lend 10 to 1. So, if they loaned out $4 trillion, it would use up 10 percent of the available base money.

3.6 trillion if I got the arithmetic correct.

Nope.

So, if they loaned out $4 trillion, it would use up 10 percent of the available base money

Loans don't use up base money.

 

[william the wie]

I deem that less important than the fact that increasing the monetary base has not led to the desired outcome ever. With all due respect to the late uncle Miltie he never demonstrated or even proposed a hypothesis as to why this would work as opposed to being less political than other methods. All the attempts to reduce distress from illiquidity fail to account for the following.

The economy is chaotical and therefore also fractal. I am unaware of any economist who has attempted to compute the fractional exponents that drive the economy and without that it is an impossibility to determine if the economy is or is not in a singularity or even if it has come out of one.

Data collection costs exceed the value of the data collected. For example, initial GDP growth figures turn out to have an error rate of +/- 1.3% so at growth rates of less than 6.5% GDP/qtr uncertainty is massive when first published.and the US probably has the lowest uncertainty of any trillion or greater economy.

Increasing returns industries like Watt's steam engine that was born in the same year as modern economics cannot be identified much less accounted for except in the rearview mirror.

You will notice I am not saying you are wrong but there is no body of data to support your conclusion nor any body of data to refute your position either.

That could be true, however, it was contemplated in the Great Depression as George Selgin of CATO has said, because bond yields were at zero. However, we just had WW2 fix things. I would rather have helicopter money try first before war!!!

That is a false assumption based on inadequate research.. The Great Depression correlates with the dust bowl drought as to both entry and exit. James Grant should be available at the local library and he did do research on the US farmland bubbles created by the Crimean and Russo-Turkish Wars. The aftermath of the WWI closure of grain shipments from Russia tracks very well with the earlier closures of the Dardanelles in the earlier wars when adjusted for length of closure.

 

[Dovahkiin]

It's obvious by now Krugmanomics of stupidly priced credit issued by central banks is just setting up the planet for the biggest failure in human history.

Japan is its THIRD FULL DECADE of a slump, have dropped rates to ZERO and is only causing more grief as citizens are literally stuffing their cash in home safes. The BOJ is the largest issuer/purchaser of debt in the country, is drowning their country in debt and choking off sane investment. AND KRUGMAN JUST TOLD THE GOVERNMENT TO SPEND AND BORROW EVEN MORE!

China is in a slow motion collapse that will probably end in world war. They are liquidating their reserves and borrowing another years worth of GDP just to stay afloat.

The EU is also in stupidland with essentially 0% financing and their economies are all stuck

During Obama's Reign of stupid, the US has borrowed an extra years worth of GDP and only has an inflated stock market to show for it.

This must end very badly, there no graceful exit and the Central Banks KNOW they're setting up a global economic collapse, unprecedented in history. There's no one left to bail anyone out! The lender of last resort are all tapped out.

It's intentional too

Japan is its THIRD FULL DECADE of a slump

Liquidity trap. They can't use monetary policy to fix their problems. Aging population, responding to late to the crisis in the "lost decade," pumping money into businesses, a lack of inflation. The only possible solution is what some call "Helicopter money."

literally stuffing their cash in home safes.

That's one of the main problems.. spending is everything.

AND KRUGMAN JUST TOLD THE GOVERNMENT TO SPEND AND BORROW EVEN MORE!

He is correct.

China is in a slow motion collapse that will probably end in world war. They are liquidating their reserves and borrowing another years worth of GDP just to stay afloat.

China is a currency issuer. Their problems will come from private debt, if anything.

he EU is also in stupidland with essentially 0% financing and their economies are all stuck

Widespread austerity, stuck to the same currency. Who would've thought?

During Obama's Reign of stupid, the US has borrowed an extra years worth of GDP and only has an inflated stock market to show for it.

Not nearly enough. The stimulus should've been much longer and we shouldn't have shifted to deficit reduction.

there no graceful exit

Lies. Fiscal policy.

 

[william the wie]

Got to disagree strongly economists build models based on what they think they can measure. This leads to a whole host of fallacies.

The 1921-38 Farmland crash and 1923-6 caused and cured the great depression but the number crunching ability to prove that was not available until the 1990s so we have econometric models that are known to be based on fallacy and are counter-factual to boot.

Balance sheet and cashflow national accounts are quite lacking despite the fact that again in the meltdown they were proven to be far more important than national income to economic stability.

There are whole schools of economics dedicated to the defense of such errors.

Increasing returns found in such industries as bio-tech, nano-tech, LEDs, 3D printing, robotics and other forms of high tech are hard to model so they are not modeled.

Therefore until current economic models are replaced with something that better describes reality the use of the standard model is insanely dangerous.

 

[Toddsterpatriot]

It's obvious by now Krugmanomics of stupidly priced credit issued by central banks is just setting up the planet for the biggest failure in human history.

Japan is its THIRD FULL DECADE of a slump, have dropped rates to ZERO and is only causing more grief as citizens are literally stuffing their cash in home safes. The BOJ is the largest issuer/purchaser of debt in the country, is drowning their country in debt and choking off sane investment. AND KRUGMAN JUST TOLD THE GOVERNMENT TO SPEND AND BORROW EVEN MORE!

China is in a slow motion collapse that will probably end in world war. They are liquidating their reserves and borrowing another years worth of GDP just to stay afloat.

The EU is also in stupidland with essentially 0% financing and their economies are all stuck

During Obama's Reign of stupid, the US has borrowed an extra years worth of GDP and only has an inflated stock market to show for it.

This must end very badly, there no graceful exit and the Central Banks KNOW they're setting up a global economic collapse, unprecedented in history. There's no one left to bail anyone out! The lender of last resort are all tapped out.

It's intentional too

Japan is its THIRD FULL DECADE of a slump

Liquidity trap. They can't use monetary policy to fix their problems. Aging population, responding to late to the crisis in the "lost decade," pumping money into businesses, a lack of inflation. The only possible solution is what some call "Helicopter money."

literally stuffing their cash in home safes.

That's one of the main problems.. spending is everything.

AND KRUGMAN JUST TOLD THE GOVERNMENT TO SPEND AND BORROW EVEN MORE!

He is correct.

China is in a slow motion collapse that will probably end in world war. They are liquidating their reserves and borrowing another years worth of GDP just to stay afloat.

China is a currency issuer. Their problems will come from private debt, if anything.

he EU is also in stupidland with essentially 0% financing and their economies are all stuck

Widespread austerity, stuck to the same currency. Who would've thought?

During Obama's Reign of stupid, the US has borrowed an extra years worth of GDP and only has an inflated stock market to show for it.

Not nearly enough. The stimulus should've been much longer and we shouldn't have shifted to deficit reduction.

there no graceful exit

Lies. Fiscal policy.

Not nearly enough. The stimulus should've been much longer and we shouldn't have shifted to deficit reduction.

Cut taxes, instead of raising welfare/disability payments.
A 15% corporate rate would be a good start.
Cut 10% of Federal regulations a year.

 

[Toro]

Thinking about buying some gold stocks. They are acting great.

 

[william the wie]

Thinking about buying some gold stocks. They are acting great.

Sounds good to me but then again I was just bitch slapped by the etrade stock screen. I was setting up my June-Dec covered puts. I got less than a full screen and at least one listing was a different class stock of another listing. I hate it when some code tells me I'm too picky. I do have AU in my March-Sept.list.

 

[Toro]

I lost a lot of money shorting last quarter. Made a ton of money on the way down, covered, then on the bounce, re-shorted.

There isn't much interesting on the long side, except gold and maybe REITs, which just broke out.

Go helicopter money!