Central banks’ expansion

Once you are short on wealth and long on numbers, it’s just a faster and faster set of tricks to keep it covered up until the day of reckoning comes. Bernie must be sitting in his cell laughing and identifying with each phase of increasing ridiculous machinations of these characters.

The more I try to understand economics, the more I realise that it is truly the “dismal science”. I can struggle and attain an understanding of one aspect of banking only to have to revisit and revise.

Surely the Bernank is in the same boat? And as for all the politicians, well, how on earth would they find the time to try and understand how an economy works? Impossible.

To take the sentence

”
For instance, many investors and the broader public seem to view sterilized QE more favorably than unsterilized QE, even though we believe the distinction should be considered nearly irrelevant from a macroeconomic perspective”
Now who are these “many investors”? And maybe more importantly who is the “the broader public”?For the first time I come across the words “sterilized QE”. I think that I get the concept that the money supply has not changed through the FED’s operations, but really, 99.99999% of the population do not have a friggin clue what it “sterilised QE” or “unsterilised QE” means, so I doubt whether they will view “sterilised QE” more favourably than “unsterilised QE”.

Are they all going to rush out and shout, “hey! we’re all getting this Bernanke sterilised QE, I’m so happy, so much better than not sterilising it”?

Certainly in their day to day financial transactions they will not consider anything more than “money in” versus “money out”.

There used to be a time where surplus work over that required for living expenses generated extra income which could be invested or saved. Now the banks do not rely on savings but can get limitless amounts of magic cash from the FED at almost zero rates. Thereby breaking a feedback mechanism which would limit the growth of an economy to its productivity.

Yes, we needed it all today, that stuff which we could possibly pay for from future earnings. 

Impatient lot, aren’t we?

So come on, let’s all go off and get the iPAD 3 on the ‘never never’, that IPAD 2 is, well, so old.

But here it is, my solution.

Let’s all go back to using paper money, yes, real bits of paper. No more credit/debit cards.

The government could earn massive amounts through  seigniorage, transactions would not go through the banks, putting the 3% tax they extract from every transaction back into the pockets of the people. And as the governments could pay all its employees and bills with paper and not bank account credit entries, there would be a substantial amount of debt free money injected into the economy, enabling the public to pay down the debts.