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Monetary | stimulus

monetary stimulus Topic in The Credit Debacle Catalog

monetary stimulus work (1).

naked capitalism Mon 2009-12-28 14:50 EST

A look back at the debate on the role of monetary and fiscal stimulus in depression

Edward Harrison

...regarding stimulus and the role of government in a debt-deflationary environment...does fiscal or monetary stimulus work?...the real debate about whether or not to try fiscal stimulus revolves around the role of government and its limitations. Ideologues on one side see government as a parasite which interferes with the free market. On the other side, ideologues see government as the only way out of a crisis of this magnitude. The key sticking point is not just the size of government, but also its effectiveness -- the political will to effect change rather than to favor constituents...So, how has this worked out in practice? Not so well.

Debate; Depression; fiscal stimulus; looking; Monetary; naked capitalism; role.

The Baseline Scenario Mon 2009-10-12 09:41 EDT

Escape from Punchbowlism

StatsGuy

When the Fed pumps money into the system to prevent deflation, the disincentive to holding cash/reserves is supposed to get money moving and thus restore the savings/investment equilibrium. In a sense, the goal is to decrease the incentive to use money as a store of value and therefore increase its use as a medium of exchange. Unfortunately, many conventional macroeconomists (unlike their brethren in the real-world finance schools) haven't admitted that this monetary stimulus ``leaks'' out of their models (which focus on closed domestic economies without moral hazard). Where does it go?

Baseline Scenario; escape; Punchbowl.

Jesse's Café Américain Sun 2009-10-11 15:55 EDT

The Speculative Bubble in Equities and the Case for Deflation, Stagflation and Implosion

Jesse

As part of their program of 'quantitative easing' which is another name for currency devaluation through extraordinary expansion of the monetary base, the Fed has very obviously created an inflationary bubble in the US equity market...The monetary stimulus of the Fed and the Treasury to help the economy is similar to relief aid sent to a suffering Third World country. It is intercepted and seized by a despotic regime and allocated to its local warlords, with very little going to help the people...quantitative easing that is not part of an overall program to reform, regulate, and renew the system to change and correct the elements that caused the crisis in the first place, is nothing more than a Ponzi scheme...The most probable path is a lingering death for the dollar over the next ten years, with a productive economy that continues to stagger forward under the rule of the financial oligarchs.

Case; deflation; Equities; implosion; Jesse's Café Américain; Speculative bubbles; Stagflation.

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