naked capitalism

wunsacon says:

Some thoughts on a real “helicopter plan” include:
———–
The USG should print additional currency — in the order of magnitude of that being given to all the undeserving people and companies now — and hand them out to everyone. Consider the following:
(a) Will it be lot of money? Of course! But, I doubt it will be more than what’s being “guaranteed”, “lent”, and “invested” so far — and you know we haven’t seen the end of the bailouts.
(b) It helps everyone without regard to their culpability in creating the mess.
(c) It helps everyone without regard to their current wealth.
(d) It repairs the consumers’ balance sheets.
(e) It gets commerce and invention moving again. (The purpose of a business is to provide a good or service in an attempt to induce a potential consumer to part with his/her money. When businesses know consumers have money to spend, entrepreneurs form businesses and hire staff.)
(f) It helps the auto makers. Give me $50k and I’ll spend some of it to finally trade in my 20 year-old Honda for a new one (probably built in the US anyway).
(g) It helps current borrowers who can no longer afford their home payments. $50k will help many of them with payments. And, for those that want to sell anyway, I’ll spend half of my $50k on a downpayment for a home.
(h) It is — by comparison — TRIVIAL TO ADMINISTER. No alphabet soup of government programs to dole out the money. No Congressional hearings to argue over transparency. No multi-year hand-wringing in the media and around water coolers. Less social unrest.
(i) By obviating the need for so much of the government administration just mentioned, it avoids turning America into a command economy — which is what we’re quickly becoming.
———–

I’ve since learned from folks like ndk that the Fed can’t directly “print” without actually buying something. But, whatever the Fed can’t do *now* can be changed via an act of Congress. Right?

Anonymous says:

Cheers, Yves. I’ll have a toast for you.

Anonymous says:

“Why the Federal Reserve should LITERALLY throw money out of helicopters.”

*Sigh* I get that Keynesians hate savers, but do they always have to be so damned obnoxious about it?

I always console myself by buying a little more gold. It’s partly a method of silent protest against insanity like Hempton’s.

the paper noose says:

Look like Estonia et. al. feeling some pain:

http://www.msnbc.msn.com/id/28850497/

donebenson says:

Regarding Cassandra and Bronte’s discussion on inflation/deflation:

Gold has now rallied enough, and longer term treasury bonds have declined in price enough to suspect that inflation may be winning over deflation, despite what ‘logic’ may say regarding velocity and the power of debt destruction holding the economy hostage.

If it is not inflation that is influencing precious metals and long bonds, then it may be fear for the safety of paper currencies, as most central banks are competing to increase their money supplies. Either way, the rise in gold and long bond yields raise disturbing questions.

Anonymous says:

That Fuld $10 mansion article is a treasure!

donebenson says:

To David Pearson:

Thanks very much for your inciteful comments, both on NC and on Cassandra.

artichoke says:

To all the savers who don’t want inflation: it’s not too late. You can still invest in inflation hedges, or buy things at depressed prices. You haven’t lost anything yet! So stop getting your knickers in a twist …

(I know, you’re actually waiting to buy at even more depressed prices, but maybe this is the bottom, if the PTB inflate.)

wunsacon says:

>> Responsible saver said…
>> To all proponents of helicopter drops: Go Fuck Yourselves!!!

Our choices were/are:
(a) Tell Fannie/Freddie bondholders "we told you it's not our debt, so get lost!"

We did NOT do that, unfortunately. So, WHAT NEXT, PAL??? Right now, in a collapsing economy, the debt is no longer repayable. We WILL default. The question now becomes: HOW?

That brings me to 2 options:
(b) Explicit default.
(c) Technical default thru inflation, enough to devalue debts and make them servicable again.

Still with me? I believe (b) would be far worse than (c). Therefore, I prefer (c).

If we're going to do (c), why must we give the money to the banks that were a critical part of this disaster?? A real helicopter drop means money goes into YOUR pocket, along with everyone else's, per capita.

What is your problem with that?

If you hate the idea and worship gold, then buy it in advance of the policy. Trade what you believe. You'll get your share of the helicopter drop AND you'll make money from your gold trade. That PUTS YOU AHEAD OF THE RECKLESS HOME BUYERS, whose homes won't appreciate in value nearly as much as your gold. So, what's not to like? Everyone wins except the bondholders of the world — whom I was against bailing out in the first place!

Do you get it? Once the USG backed the face value of so many bonds for the benefit of bondholders, the only way to make non-bondholders "whole" is to give them money, too.

In the end, my goal is to make everyone just about as "rich" as they would've been (in real terms) had we never bailed out anyone. But, by giving money to everyone, we'll stop deflation.

A helicopter drop means people get to spend it however they want, too. Want to pay down debt? Fine. Want to buy gold? Fine. Isn't that better than having the government spend your money for you?

Anonymous says:

$50 mil getaway private jet sheezz, Americans have to pay for that too.

These people better not step out side the euro zone or some nefarious types maybe inclined to give them a private walkabout in the countryside. Not unlike the Mob when they came down under to hold talks about expanding out side the States, funny they never came back, must not like feral pig hunting. Same goes for saltwater crocks in central America.

Skippy

Anonymous says:

Interesting piece over at Reality Sandwich arguing our financial woes stem from a lack of resilience (and the concurrent overabundance of efficiency) in our monetary regime:
Part I
http://www.realitysandwich.com/reinventing_money_ecosystemic_approach_part_1

Part II http://www.realitysandwich.com/reinventing_money_ecosystemic_approach_part_2

Responsible saver says:

2 wunsacon: I understand that there are ways to protect my savings and I am taking the necessary measures. However, I am against any bailouts, be it a big bank bailout or a general bailout through inflation. I am tired of people acting like idiots and then demanding inflation to “fix” the problems they have caused. I was responsible, I have not participated in the madness and it makes me angry that idiots accuse the responsible savers of destroying the economy by opposing “free” lunches for the irresponsible “me first” dickheads.
Inflation IS BAD, that’s econ 101, it distorts economic calculation, creates fake profits and fake booms and transfers wealth from productive people to the state and well connected oligarchy.
So once again to all proponents of helicopter drops: Go Fuck Yourselves!!!

Anonymous says:

“it distorts economic calculation, creates fake profits and fake booms and transfers wealth from productive people to the state”

Responsible saver, this argument will fall on deaf ears because inflationists see all of these effects as *good* things.

And the fact that you were responsible and others weren’t doesn’t matter either, because “we’re all in this together.”