- Copper, oil and the S&P 500
- Stymied by the 50 day EMA
- Full text of Republicans' letter to Bernanke
- Food prices at risk of spike higher
- IMF cuts growth forecast
- Major economies should be ready with more stimulus
- Latin America well placed to survive slowdown
- Narrowing yield curve could mean an approaching recession in Japan
- South Korea tries to avert capital flight
- Copper continues to fall
Wednesday, September 21, 2011
Bonddad Linkfest
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4 comments:
I'm probably wrong because this just seems too simple -- and I'm not so arrogant as to think that I'm smarter than Bernanke -- but isn't Operation Twist a complete waste of time? Its stated purpose is to increase long-term consumer and business spending by increasing the availability of loanable funds, thus reducing their rate, thus making long-term loans cheaper. But this presupposes that "the problem" is an undersupply of loanable funds, when in fact, "the problem" is not a lack of supply, but a lack of aggregate demand. And so even a reduction of long-term rates to something close to zero would not spur the economy, because even an abundant supply of cash won't get businesses without customers to spend that cash. All Operation Twist will accomplish is to put more cash in the coffers of those who -- quite literally -- already have more cash than they know what to do with.
The Bonddad Blog Link Fest Bonddad My use tax is centered around insurance serf. I am an author of a book of American Law Captive Insurance.
Jimdotz -
It may be futile, but consider that Congress has taken action off the table. Ben is the ONLY person in Washington actually trying to keep the economy afloat. Unfortunately, he doesn't have any legislative authority; he can only fiddle with monetary policy. And even then, he can only increase the money supply through the banks, which won't play along for free. The thing is, people aren't in the mood to borrow money at ANY rate because they're afraid of losing their jobs. People borrowed even with higher rates in prior decades because jobs were plentiful, ergo, there was confidence they could make payments.
There is another way to get money into the hands of Americans AND lower the unemployment rate (which will increase demand for loans) -- Congress buying up private sector productivity. I mean, a jobs bill. But then it'd increase the deficit and put money in the hands of working Americans WITHOUT giving the banks a cut, and we can't have those, can we? Because putting people directly to work repairing our infrastructure isn't bootstrappy enough. . . or something.
P.S. Long story short, Ben isn't doing anything particularly smart. He is doing what he can, which isn't much, but far more than anyone else is doing.
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