tag:blogger.com,1999:blog-8387134575347301650.post720962925785909405..comments2014-08-18T16:44:40.040+01:00Comments on An Occasional Letter From The Collection Agency: The Future Actions of The Federal Reserve And US Govt Are KnownThe Collection Agencyhttp://www.blogger.com/profile/09889696891409987315noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-8387134575347301650.post-87590550418587748952008-04-10T16:39:00.000+01:002008-04-10T16:39:00.000+01:00Thank you for staying with me - I totally mistook ...Thank you for staying with me - I totally mistook your restraint for something else. <BR/><BR/>The link to the Eggertsson article was out, so I looked for it. I accidentally came across a photo and bio. <BR/><BR/>You've shone a light on something I'm not sure I was ready to see. I feel like I'm watching the last lifeboat disappearing over the horizon.<BR/><BR/>Thank you for your article.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8387134575347301650.post-55403775459985295162008-04-10T16:10:00.000+01:002008-04-10T16:10:00.000+01:00The original link was to Eggertsson at the NY Fed ...The original link was to Eggertsson at the NY Fed site. For some reason it has become "404 page not found", so the link now goes to the IMF. There was no attempt to hide Eggertsson's credentials. Well, not by me anyway.<BR/><BR/>The smoke and mirrors by me was deliberate. I had to write the article without allowing my own judgement to show through, it was written from the perspective of Bernanke and Co using a monetarist "bent". I am not in the monetarist / Keynesian camp.<BR/><BR/>Thats why I couldn't give a definitive yes or no in the conclusion. It would have diverted away from the subject.The Collection Agencyhttps://www.blogger.com/profile/09889696891409987315noreply@blogger.comtag:blogger.com,1999:blog-8387134575347301650.post-77214013574712376402008-04-10T15:32:00.000+01:002008-04-10T15:32:00.000+01:00"Readers need to look at what Eggertsson is propos..."Readers need to look at what Eggertsson is proposing and how the delivery of currency (money, nominal bonds) would occur. <BR/><BR/>Remember the title of Eggertsson's article as you read his proposals.<BR/><BR/>I can think of no other article when it is neccessary to leave behind previous inflation/deflation bias to see what they intend to do."<BR/><BR/>Yes, I do see what you're saying - this is the program the Fed is (and has been) following. I just meant to point out the obvious - this policy is a wealth redistribution mechanism. I'm not sure why you're pussy-footing around that though. I mean Eggertsson works for the Fed. You might have pointed that out.<BR/><BR/>This policy is going to crush the real economy eventually - its probably the main cause of the recent successive bubbles(malinvestments crashing).<BR/><BR/>It is irresponsible, I get your point. I guess they're doing it to what? boil the frog, put off a social crisis? My questions are/were largely rhetorical, but I'm wondering why all the smoke and mirrors when presenting smoke and mirrors?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8387134575347301650.post-75911899035492463252008-04-10T09:47:00.000+01:002008-04-10T09:47:00.000+01:00"I finished Greenspan's book last week and distinc...<I>"I finished Greenspan's book last week and distinctly remember him criticizing the Bush administration for overspending and increasing debt. Supposedly, Bush just brushed-off the Fed's critique on the administration's inflated budget and tax cuts. According to the book, Bush had made promises while campaigning that had to be kept regardless of squandering and misusing the budget surplus. This hardly sounds like the Fed and the govt being in "lockstep," at least not during Greenspan's stay.</I>"<BR/><BR/>---------<BR/><BR/>Indeed, you are right that AliG criticised the size of the deficit. Within the Eggertsson Theory this would be the correct thing to do as it highlights the <I>inflationary expectations</I> of high Govt debt issuance during a period of low nominal interest rates. It would be "credible" for AliG to make such remarks.The Collection Agencyhttps://www.blogger.com/profile/09889696891409987315noreply@blogger.comtag:blogger.com,1999:blog-8387134575347301650.post-84227692189140930622008-04-10T01:41:00.000+01:002008-04-10T01:41:00.000+01:00What an excellent Macroeconomic essay. I just have...What an excellent Macroeconomic essay. I just have one qualm:<BR/><BR/>"It is becoming clear that Fed and US Govt policy have been in lockstep for some time and that the groundwork for fending off a deflationary attack was laid out over 7 years ago."<BR/><BR/>I finished Greenspan's book last week and distinctly remember him criticizing the Bush administration for overspending and increasing debt. Supposedly, Bush just brushed-off the Fed's critique on the administration's inflated budget and tax cuts. According to the book, Bush had made promises while campaigning that had to be kept regardless of squandering and misusing the budget surplus. This hardly sounds like the Fed and the govt being in "lockstep," at least not during Greenspan's stay.<BR/><BR/>I'm having a hard time reconciling these inconsistencies between the author and Greenspan's book. <BR/><BR/>Brilliant paper and theory nonetheless.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8387134575347301650.post-74020063919170760252008-04-10T00:17:00.000+01:002008-04-10T00:17:00.000+01:00Hi all,again, in the spirit of the article, I am n...Hi all,<BR/><BR/>again, in the spirit of the article, I am not going to answer direct questions such as:<BR/><BR/>"Why wouldn't this lead to social instability? Wages fall behind inflation, leaving consumers unable to increase spending." <BR/><BR/>Readers need to look at what Eggertsson is proposing and how the delivery of currency (money, nominal bonds) would occur. <BR/><BR/>Remember the title of Eggertsson's article as you read his proposals.<BR/><BR/>I can think of no other article when it is neccessary to leave behind previous inflation/deflation bias to see what they intend to do.The Collection Agencyhttps://www.blogger.com/profile/09889696891409987315noreply@blogger.comtag:blogger.com,1999:blog-8387134575347301650.post-33898672546144347322008-04-09T23:13:00.000+01:002008-04-09T23:13:00.000+01:00It would seem that all the Fed needs to do to comb...It would seem that all the Fed needs to do to combat deflation is simply back-out all the hedonistic adjustments to the inflation indicators since the Michael Boskin economic advisor era.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8387134575347301650.post-58529330457001326392008-04-09T22:58:00.000+01:002008-04-09T22:58:00.000+01:00Why wouldn't this lead to social instability? Wage...Why wouldn't this lead to social instability? Wages fall behind inflation, leaving consumers unable to increase spending. What's to prevent malinvestments from building up and distorting the real economy? <BR/><BR/>I think what you are seeing is the increase in debt/money going into speculation on commodities (because of inflation expectations). That causes a general rise in prices, but is going to cause social instability if the money doesn't make its way into consumers hands. The next step is what bread lines?<BR/><BR/>I don't see that this is going to stimulate the economy. It will create inflation, but the real economy will continue to deflate unless malinvestment is somehow sorted out.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8387134575347301650.post-54312324725745319342008-04-09T17:20:00.000+01:002008-04-09T17:20:00.000+01:00Excellent interpretation of Helicopter Ben's focus...Excellent interpretation of Helicopter Ben's focus. If correct, then Ben is employing an untested and unproven macroeconomics theory. In short, it is Ben's little experiment. <BR/><BR/>Ben Bernanke is attempting to manipulate and regulate human behaviour, emotions and expectations. While you didn't cover it, it appears that Ben's model also includes the manipulation of gold markets (i.e. keeping the price of gold artificially low(er) via IMF & Central Banks' bogus selling of gold). Historically, gold is the gauge of confidence in fiat money, especially if the currency is being de-based.<BR/><BR/>The weakness of Ben's macroeconomic experiment is his reluctance to weigh in on political issues:<BR/>(quote)<BR/>Bernanke, when questioned about taxation policy, said that it was none of his business, his exclusive remit being monetary policy, and said that fiscal policy and wider society related issues were what politicians were for and got elected for.<BR/>(unquote)<BR/>ref: http://en.wikipedia.org/wiki/Ben_Bernanke<BR/><BR/>and by default, his inability to comprehend the current geopolitical environment, especially in the Middle East where USA is faced with many enemies holding trillions of USD derived from sales of oil. Should the Arabs decide to unleash their trillions of USD into the (undervalued, inflation un-adjusted) gold market and propel the price of gold into the stratosphere, it will be interpreted as an hyper-inflationary signal sending markets into uncontrollable frenzy. While it appears that the Feds are attempting to manipulate the price of gold, the flood of liquidity is putting more and more ammunition into the wrong hands. Would you not agree?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8387134575347301650.post-42557388243203438002008-04-09T14:42:00.000+01:002008-04-09T14:42:00.000+01:00The problem is that this is not Japan 1995 or US 1...The problem is that this is not Japan 1995 or US 1931. The problem in the US is not an economy that is overly productive. <BR/><BR/>There is not too much excess capacity (except in housing). The US problem is too much consumption, and not enough productive capacity outside of the "highly innovative" finance sector.<BR/><BR/>Because Bernanke misunderstands the fundamental nature of the problem, between overproduction and overconsumption, his Rx will be a disaster in the making.<BR/><BR/>IMO obviously. Anonymously.<BR/><BR/>Cheers ;-)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8387134575347301650.post-7628626332083443072008-04-09T08:21:00.000+01:002008-04-09T08:21:00.000+01:00Whoa, steady Colin, I'm bigheaded enough already :...Whoa, steady Colin, I'm bigheaded enough already :-)<BR/><BR/>Thanks.<BR/><BR/>If the plan works then yes, the $ suffers, unless other Central Banks do the same. Note the UK, BofE injected £15Bn yesterday, £ took a kicking.The Collection Agencyhttps://www.blogger.com/profile/09889696891409987315noreply@blogger.comtag:blogger.com,1999:blog-8387134575347301650.post-23327225172993741502008-04-08T22:19:00.000+01:002008-04-08T22:19:00.000+01:00First!This is the most brilliant macroeconomics an...First!<BR/><BR/>This is the most brilliant macroeconomics analysis I have ever read.<BR/><BR/>What are the implications for the US Dollar , considering the US Current Account Deficit? It would seem to me to be profoundly negative . . .Anonymousnoreply@blogger.com