Skippy

The those that say money printing will solve deflation, are ya mad? Inflation and deflation can occur at the same time on different asset classes. So while consumer spending is decreasing, commodity prices could be increasing. So while the investor could see deflation in stock and real estate values. The common man will see hyperinflation in buying daily necessities.

Moderate inflation is a great insurance against a liquidity trap, which is a serious concern. It also spreads the cost of the downturn so that some falls on the holders on currency instruments, which is fair and wise with costs like what we face.

“The nuclear option, conceived in America but untried in Japan, is to finance public spending or tax cuts by printing money. This requires the central bank to go along with the fiscal authorities (which may prove easier in America than in Europe). It could work like this: the government announces a tax rebate and issues bonds to finance it. But instead of selling them to private investors, it lodges them with the central bank in exchange for a deposit. It draws on this account to clear the cheques mailed to taxpayers. This scheme is essentially the same as the proverbial “helicopter drop” of money, but with neater accounting and a less erratic distribution of cash. It bypasses banks and money markets, and puts money directly into people’s pockets. “

Using this method to give consumers vouchers (maybe with a 1 year duration) could force consumption. If the consumer still had a job, they could use wages to pay down debt and vouchers to stimulate the economy. Would probably lead to extreme inflation.