QE for People, not Financial Markets -- You need to be Fed Up with The Fed !!

The Federal Reserve System has taken the most extraordinary actions in its 102-year history since the 2007 - 2009 Great Recession, maintaining a key interest rate near zero-percent for seven years while creating $3.6 trillion in bank reserves. This initiative, dubbed Quantitative Easing or QE, has become the most important Fed policy of our generation. Quantitative Easing is largely responsible for the dramatic increase in stock prices since the Great Recession. The US and other nations have become addicted to QE as they attempt to avoid another drastic fall inequities. Welcome to The Atlantis Report. This idea, known as QE for People, is gaining support among economists. QE for People would do much more to sustainably boost the productive economy, reduce inequality instead of increasing it, and provide us with the investment we need. People's Quantitative Easing is a policy that was first proposed by the socialist Jeremy Corbyn. The idea is that the Bank of England should create money to fund government investment. The idea has been highly criticized, and some called it "economically illiterate". The idea has been used on Bernie Sanders's website and endorsed by Yanis Varoufakis. In the UK, the Labour Party has proposed a “People’s QE,” whereby the central bank would print money to finance direct fiscal transfers to households – rather than to bankers and investors.' There's a world of difference between, on the one hand, 'printing' money and giving it to households, and, on the other hand, using it to finance investment, especially in public infrastructure. With the latter, if there is a crash, at least we emerge from it with a more solid basis for sustainable recovery and growth. We might do a little damage, but at least we have something to show for it - unlike the current, failed, vogue for Quantitative Easing. The case for a National Investment Bank is unanswerable. In the wake of the 2008 financial crisis, central banks created trillions of dollars of new money, and poured it into financial markets. Central banks have become the go-to institution of modern economies. They injected trillions of dollars of liquidity – through a process known as quantitative easing – first to prevent financial meltdown and later to stimulate the economy. The untold story behind these measures, and behind the changing roles of central banks generally, is that they have come at a considerable cost. ‘Quantitative Easing’ (QE) was supposed to prevent deflation and restore economic growth. But the money didn’t go to ordinary people: it went to the rich, who didn’t need it. It went to big corporations and banks – the same banks whose reckless lending caused the crash. This led to a decade of stagnation, not recovery. Irresponsible bank lending caused the crisis of 2008, and increased inequality dramatically. Bernanke's Quantitative Easing rewarded banks, and increased inequality further. In spite of such historically rapid and massive Fed intervention, the economy was still sinking toward — if not more in-depth into — recession. Since September The Fed had responded with a quarter of a trillion dollars to save the economy from what it claimed was a mere blip. Since then, the recession-causing Repocalypse has roared around the world, forcing the Fed to amplify its response again. The Fed’s planners just cannot outrun the little monster they created. It is growing as quickly as they increase their running speed. The repo crisis has multiplied like a virus through the financial system. Bear in mind that the Fed is continuing to add $60 billion more new money on top of that each month all the way to April and that several times since September they’ve already had to increase what they said they would do, so may have to increase it more still. By the time we are done, based on the Fed’s schedule for its new QE, the Repo crash will have turned out to be so massive that the Fed will have flooded the economy with, at least, HALF A TRILLION dollars just to prevent the crisis from happening again and causing major banking/credit problems . These new repos are only supposed to aggregate to an additional $55 billion, but there we go again with the Fed having to add more and more ammo to combat something it continues to say it has under control. It is again stretching the term length of repos to new terms because shorter-term repos to banks are endlessly rolling over but not doing the job. The little monster is growing as quickly as the Fed increases its responses. This is extraordinary in the truest sense of the word. We’ve never seen anything like it in the repo market. News of the Fed’s constant failure to fully appreciate and address the scale of the funding shortage that began in September keeps pouring in so fast that I am scrambling just to keep up with the news of the Fed’s new steps as I research and make videos about what it has already done! QE has failed. QE failed to address the central problem -too much private debt- making recovery impossible. This was a massive bust of an extended credit cycle, not a business cycle. More debt will not help. Virtually nothing has yet been done to fix the problems revealed by the Great Recession of 2007-2008, caused in part by failures at the central bank level. That failure to act essentially guarantees we will eventually see the same problems return, possibly even worse for not having dealt with them properly a decade ago. The government should have given the money to individuals to spend the economy to health, rather than giving it to corporations who used most of the funds distributed to complete "stock buybacks". In this video we make the case for a ‘people’s QE’, in which the money goes directly to ordinary people and small businesses. This is the fairest and most effective way of restoring crisis-hit economies and helping to solve the long-term challenges of ageing populations, automation and climate change. People's Quantitative Easing (PQE) is a policy proposed by Jeremy Corbyn during the 2015 Labour leadership election, which would require the Bank of England to create money to finance government investment via a National Investment Bank. Corbyn proposes to have the Bank of England create money to invest in housing and public transport, described by Corbyn as "People's Quantitative Easing". This would aim to turn the UK into a high-skill, high-tech economy and to build more council houses in order to lower long-term housing benefit costs. To achieve this, the Bank would purchase bonds for a state-owned "National Investment Bank". The policy is based on ideas put forward by the political economist Richard Murphy. Murphy argues it is a policy designed for use in 2020, in the event the economy remains flat despite traditional quantitative easing, with low inflation, low interest rates, high unemployment and low wages. If the economy is growing actively, People's Quantitative Easing would not be needed as increasing tax revenues would pay for necessary investment. Difference with helicopter money. Economics professor Simon Wren-Lewis explains that the difference between People's QE and Milton Friedman's helicopter money (which some people also call "QE for the people") is that instead of central banks distributing newly created money directly to individuals, creating consumer demand without involving government, People's Quantitative Easing finances investment projects that are initiated by government. Therefore, according to Wren-Lewis, the government could be inclined to pressure the Bank of England to QE, thus impinging on central bank independence. Every round of QE must increase in size in order to sustain the debts created in the previous round. The US repo funding problem was partially due to the huge US deficit. It was becoming very difficult to fund it and also roll over the other debts. The next recession will result in $2 Trillion deficits in the US and what do you suppose that is going to do to investor, individual and business confidence. The junk hitting the fan is much closer than most people realize. Changing the way Central Banks apprehend monetary policy, and the toolkit they use is increasingly important. Vital, in fact. And Central Banks being very conservative institutions, are naturally reluctant to embrace radical change. Yet it must be done, and the sooner, the better. Central banks may have become independent of governments, but have instead become worryingly dependent on financial markets. The Central Banks are a cabal of unelected academics who made decisions without the slightest understanding of the real world, just a slavish devo­tion to their theoretical models. In a world rendered unsafe by banks that were too big to fail, we came to understand that the Fed was simply too big to fight. What really happened to our economy after the fateful date of December 8, 2008, when the Federal Open Market Committee approved a grand and unprecedented ex­periment: lowering interest rates to zero and flooding America with easy money. As feared, millions of individuals, small businesses, and major corporations made rational choices that didn’t line up with the Fed’s “wealth effect” models. The result: eight years and counting of a sluggish “recovery” that barely feels like a recovery at all. While easy money has kept Wall Street and the wealthy afloat and thriving, Main Street isn’t doing so well. Nearly half of men eighteen to thirty-four live with their parents, the highest level since the end of the Great Depression. Incomes are barely increasing for anyone not in the top ten percent of earners. And for those approaching or already in retirement, extremely low-interest rates have caused their savings to stagnate. Millions have been left vulnerable and afraid. Perhaps worst of all, when the next financial crisis arrives, the Fed will have no tools left for managing the panic that ensues. And then what? Let's propose Modern Monetary Theory, helicopter money, anything, except fiscal policy. Fiscal policy remains anathema despite the evidence that fiscal policy does not crowd out private investment or increases inflation or interest rates. It should be reconsidered as a bona fide option in the policy arsenal. Central banking around the world has become a growth industry, populated with PhD economists and a few former investment bankers. These unelected men -- and a few women, most notably Yellen -- control the world's economic system. They are arguably more powerful than the world's political leaders chosen by voters. And what's outrageous is that the Fed continues to rely on models created by hundreds of elitist PhD economists even though those models are wrong more often than they are correct. They've done great economic harm to the taxpayers of this country. Every American must understand this extraordinarily powerful institution and how it affects his or her everyday life, and fight back. You need to be Fed Up with The Fed.








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