SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Non-Tech : Derivatives: Darth Vader's Revenge
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Mark Adams who wrote (686)12/12/1998 10:11:00 PM
From: Frodo Baxter  Read Replies (1) of 2794
 
>We know that adding liquidity may not result in added consumption.

We do? Real fed funds costs ~3.3%. The recent average is about 2%. The Fed has 475 basis points remaining to play with. They can drop the real fed funds rate to -1.5%, or more if you account for the inflationary effects. Do you have any idea the kind of consumption you can unleash with that? I doubt it.

Of course, there's always someone who will bring up a specious comparison with Japan. The difference, of course, is that Japan's banking system is bankrupt and money pumping must by necessity first recapitalize the banks.

>The government must take that liquidity and apply it to productive projects of some fashion- ie the International Space station, environmental remediation, research education etc. I say this though I dislike debt and deficit spending.

Spoken like a true Keynesian. How about a tax cut instead?

>They need to create enough work/demand to soak up the capacity, as many of us are busy enjoying our leisure and not thinking too much about how to apply our newfound wealth. At least not beyond throwing money at stocks and business managers who aren't sure how to deploy it.

So the problem is that we're too rich, is it? This is an, umm, interesting notion. As for soaking up capacity, well. Hmm. Have you checked what the unemployment rate is? 4.4%... what was NAIRU supposed to be again?
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News