Free Money
Thomas Barkin joins Minneapolis Fed President Neel Kashkari in the free money call.
Barkin says the Economy Faces ‘Sinkhole’ Without More Fiscal Support.
“Four months ago, when we did the first stimulus, we thought the economy faced a pothole and the stimulus put a plate over it so we could navigate. Now escalation of the virus may be making that pothole into a sinkhole and creating a need for a longer plate,” Barkin said in webcast remarks to the Northern Virginia Chamber of Commerce. “If Congress takes support away too abruptly … the unemployed, their landlords, the places they shop will then feel the full brunt.”
This is a second attempt by a Fed president to get Congress to extend $600 weekly unemployment checks.
Yesterday I commented Fed’s Kashkari Urges Congress to Hand Out More Free Money
“So while historically we would worry about racking up too much debt, we’re generating the savings ourselves. That means Congress has the resources to support those who are most hurting,” he said.
“Right now the U.S. can fund itself at very, very low rates. Congress should use this opportunity to support the American people and the American economy.”
“If we were to lock down hard for a month or six weeks, we could get the case count down so that our testing and our contact tracing was actually enough to control it,” Kashkari said.
We Owe Ourselves
We owe the money to ourselves, so let’s lock the economy down for six weeks and see what happens.
In other news, I put a signed “I Owe Me” $1,000,000 note in my piggybank today so I have an extra million to spend at 0% interest, the amount of interest I am charging myself.
Six Week Lockdown
Kashkari proposes the path Melbourne Australia has taken.
“Where you slept last night is where you’ll need to stay for the next six weeks,” said Daniel Andrews, premier of Victoria.
Only one person per household will be allowed to leave their homes once a day — outside of curfew hours
For details, please see Millions Locked Down Under Draconian Covid Rules in Australia.
Fed Independence?
The Fed hollers every time Trump or Congress meddles in monetary policy, but the Fed repeatedly meddles in fiscal policy.
And here’s a new one: The Fed is willing to interject its beliefs about medical policy as well.
Mish
Isn’t it nice to have assets, & borrow from yourself! Well, that’s what the gvmt is doing. I like the comment about zero interest & a $1m, note to self. Now, the % rate is less than 3%-. Most consumers have never seen that %, ( in boomers days.) 12% in WA. St. 70/80’s & that was cheap compared to the south @ 20-30%. Geez, I would still be in my house. Thanks a lot!
Monetary Gifting is the new paradigm. The pandemic is a huge teaching moment about the efficacy of direct and reciprocal monetary gifting. Now all we need to recognize is that a 50% discount at retail sale by every retail merchant, all of which
is rebated back to that merchant by the monetary authority, and everyone’s purchasing power is doubled. Thus both systemic and individual monetary scarcity and inflation are resigned to the dust bin of history.
If we do not abolish the FED we will end up in a authoritarian dictatorship…
Why doesn’t the government just print and give $1 billions to every citizen? The american people own all the money anyway.
Agreed, I’d like a $billion! But that didn’t work so well in Zimbabwe, did it?
No better, nor worse, than in America, I suppose.
If money is free and or fake, why do we have poor people and rich people?
“Over 100 CEOs beg Congress: Don’t let small businesses fail permanently” link to us.yahoo.com
If the “Free Money” is not released, the long term damage to the economy will be quite expensive. This should preferably be a result of considered planning and actions taken by our elected president and congress, instead of emergency measures by the Fed. Whining about some poor bloke unfairly benefiting, or that it is only meant to bail out the banks, is just that. People are important, banks are important, and its the the job of our president and congress to figure out how to do this fairly and transparently in the best interest of the country and its people.
“People are important, banks are important, and its the the job of our president and congress to figure out how to do this fairly and transparently in the best interest of the country and its people.”
People are important. Only, at most, 2% of what money center banks do, is important. Or even desirable. The remaining 98+%, is acting as pure recipients of, and cheerleaders for, nothing but crass theft from anyone productive.
What is also important, as a direct consequence of people being important, is those important people being able to afford things. Which resolves to lowering prices being important. For everything, but specifically the prices of those things which the flood of Fed freshprint/debasement-theft has driven up the price of: Assets, and it’s attendant, rent charged for those.
If any of these 100 CEOs are competent enough to run a viable AND valuable business, they’ll run it better once their costs are lowered. Lowering costs, means clearing debt, as well as lowering economic rents. Exactly neither of which benefits from The Fed doubling down even further on the debasement theft which is all any possible central bank can even theoretically ever engage in.
The competents out of those CEO’s (all zero to five of them and declining……), benefit from going through bankruptcy to clear debt. Just as they benefit from their landlords going bankrupt. Such that his debt is cleared, his space is foreclosed on and fire sold to someone who don’t need as much rent to make ends meet. While America as a whole benefits from those who consume a lot of what America produces, having to do something productive in order to be able to afford doing so. Not just sitting there idle, while living off of rent seeking and interest.
There is a hard zero benefit to an economy, from people living large, off of artificially bilking those trying to run a competitive business, in rent and interest. Idle rent collection and interest are pure drags on anyone productive, hence on the economy as a whole.
Yet, such a massive structure of completely economically destructive rent seeking, culminating at the money center banks and everyone and everything in their vicinity, is what the Fed is benefitting. It’s all they ever have benefitted, and all they ever will benefit. Because, it is all they possibly can benefit.
What America needs to do, is go through bankruptcy. Debt cleared, assets foreclosed on then firesold. That, along with ending The Fed, $20/oz gold and zero activity taxation, will lower costs sufficiently to make productive Americans competitive again. While continuing to bail out purely parasitic do-nothing-ever leeches in the FIRE and “legal” rackets, will accomplish nothing but the exact opposite. Guaranteed. You can take it to the math department, since “take it to the bank” no longer means much.
” at most, 2% of what money center banks do, is important”
I don’t agree with this extreme characterization. I do think sensible regulation of what banks can and can’t do is important to ensure banks are not taking inappropriate risks for the benefit of shareholders that are being backstopped by the US government. The focus should be on quality regulation that balances capitalist and public interests. This is achievable.
“What America needs to do, is go through bankruptcy. Debt cleared, assets foreclosed on then firesold.”
When I read comments like this I immediately write off anything the author says. If you want to have meaningful discussion, it is helpful to make comments that are meaningful and realistic.
Also, I get it that you feel disenfranchised by the current system, I probably would feel that way too if I was in your position. Neither political party has done enough to address issues that give rise to this frustration, though I think one bears much more of the fault in this regard. I think working towards ensuring the system works as it should through incremental improvement is preferable over the radical changes you are advocating.
“I think working towards ensuring the system works as it should through incremental improvement is preferable over the radical changes you are advocating.”
Any “system” built solely around robbing productive people for the benefit of parasitic leeches, cannot be “improved” at the edges into something neither worth vile nor ultimately sustainable. Not any more than “we must work together to be nicer to our niggas,” is any sort of “solution” to the problem of slavery.
American companies, and American workers, are increasingly, and largely already, woefully uncompetitive with competitors pretty much anywhere. Being uncompetitive is just another way of saying they are too expensive. Which again is just another way of saying their costs are too high. And, as Germany, Japan and increasingly even places like China demonstrates, it has nothing to do with “American workers being paid too much.” As they are not.
Rather, it is all the other costs, which are higher in America. And, again as Germany and Japan and others demonstrate, not at all because “we” demand cleaner air and water, more vacation time, better health and education, nor anything of the sort.
Instead, costs are higher here, because those attempting to do anything productive work, have to carry more leeches in greater splendor in America, than anywhere else.
And the processes which forces productive people to do all this costly, competitiveness destroying carrying, are built around money center banking and the rest of the FIRE and “legal” rackets.
If you meet a rich, or even simply well off, person in America today, he is overwhelmingly likely to have made far and away most of his money, not from producing anything of value which he has then sold for profit to people free to ignore him if they wish. Instead, the vast majority of the wealth of the wealthy, have come as a result of asset pumping by The Fed: Housing prices, rents, stock appreciation, commissions for trading those two back and forth as well as for selling “insurance”, picking random numbers while pretending to do work “managing money”, getting a cut from dragging people to kangaroo courts for robbing, “stock options” in pumped up never-made-a-buck “companies” etc., etc.
That’s how you get ahead in America in the Fed era. Not by doing something productive or useful. And since none of the above activities create any value at all, all that wealth has to come from somewhere else. With that somewhere else, being the only place where wealth is created: Productive people in productive organizations doing productive work.
In the process driving up the cost for those guys, until they can no longer compete with neither Chinese workers and organizations forced to carry a communist party on their backs, nor with German ones who have vacation half the year and make 3x what Americans make.
And you’re not talking a few percent here and there. Housing and commercial space prices are several multiples too expensive, when compared to where they would be in a free market. While 95+% of all dollars out there today, have simply been printed out of thin air and handed to connected banksters in return for them doing nothing of value at all.
In 1921, there may have been a case for holding hands and let’s all get along and talk about how we can right the wrongs wrought by the then still fairly limited Fed. But by now, that possibility has been closed as of eons ago. 95+%! That’s the share of the money people have, which have simply been redistributed their way by The Fed. With only the remaining less than 5% having been earned. And, conveniently for The Fed, the redistribution is indirect enough to be a one-way function, at any even remotely detailed level of granularity. How the heck are you going to right that one, without complaints from those who have been handed the 95+%, and spent a chunk of that loot on titulating themselves as if they were some sort of useful part of a functioning economy and society?
Stuki you think the parasite is government taxation, I think the parasite is the business “owners”. The ownership class keeping rents and prices going up to strip working people of every last dollar earned….
….And what if “working people” simply don’t pay them any rent? And if necessary stick a gun in their face if they get too confrontational abut it? Who comes to their rescue again, if not the same guys who stole the wealth in the first place, and handed it to them?
Or, somewhat less extreme and more palatable to most: What if those working people simply get together and build themselves some more houses, such that rents and housing prices are brought down closer to market levels? Again, who do you think will be there to prevent them from exercising their God given freedom to do so?
When it comes right down to it, it’s always government. Without an all powerful, totalitarian, massively asymmetrically armed government doing their bidding, there is no mechanism for the 1% to do nothing but live off of crassly robbing the remaining 99% into destitution. It’s government restrictions preventing the housing, healthcare, “legal” and other pure rackets, from being markets. Get the government out of the way, and people wold simply build whatever housing they felt they needed. For a fraction of what the current rackets are trying to force their kids into starvation by making them pay. And pick up their medicines at the lowest price available anywhere on earth. As well as only bothering to go play childish “courtroom drama” games with idiots, when they felt like it.
And maybe this is the reson why. Just look at this chart. This is true depression era off the cliff information:
This chart is the direct result of lots of money printing. A completely useless and meaningless datum.
P_T I don’t think it is useless at all. Yes they are creating electronic FRNs at a pace never even dreamed of prior to today, but those will do nothing in the economy if they just sit in one place with no velocity. The real problem and one that certainly will be very meaningful is what is going to happen if those trillions and trillions do start to change hands and gain velocity, and I can practically guarantee that one day soon they will. As soon as we near a vaccine or effective treatment for Covid all the pent up demand and just furious desire to get of of the house, go to dinner, buy a car, see a movie, even get back to work, is going to cause that number to spike about as quickly as it has fallen. The result of that will be stupendous GDP performance but also stupendous inflation and leaves the question how does the Fed deal with that?
They could go the Volker route and jack up i rates to 20%. The money is mostly electronic so they could just delete it with some keystrokes, but they will be on a tightrope trying to keep growth moving and nit quashing it with a typical badly timed reaction.
Any other thoughts about what can happen if this chart suddenly goes parabolic and people start to spend again?
“They could go the Volker route and jack up i rates to 20%. The money is mostly electronic so they could just delete it”
It no longer works that way anymore. The money belongs to somebody, but just sitting in the pockets of banks as deposits since the financial crisis. Since then, every round sees excess reserves balloon and velocity tank. And since then, the Fed has been paying interest on excess reserves as incentive to keep it in the banker’s pockets.
For the rest of us, when we give money to someone to use, they pay us interest on it. Imagine getting paid interest on the money sitting in your own pocket and belonging to someone else. Rather bazar I’d say.
Anyway, to prevent inflation, in theory all they have to do is raise the interest paid on excess reserves to keep it out of the economy. We will see how the theory pans out. If you think the wealth gap is large now…..
The fed ended reserve requirements.
Since Melbourne was brought back up again I figure I’ll leave my comments here. I live in Melbourne.
Regarding mishes questions:
~~What’s Going On?~~
Australia has had minimal covid cases since May. An outbreak occurred in Melbourne and the state and country want to get it under control.
~~Do these measures fit the outbreak?~~
In the context of Australia. Yes. In the context of the US. No. Melbourne’s new daily cases per capita are still half that of the US and vastly lower than severe outbreaks in the US.
~~What if someone was in a hotel? Someone else’s house?~~
That is taking the comments too literally. People are to stay in their primary place of residence.
Melbourne has gone into 80% lockdown due to the desire to get rid of the virus. It is what is necessary IF that is your goal. New Zealand achieved this successfully with an even stronger lockdown than what Melbourne has now.
Australia got close to achieving this with much lighter restrictions but due to some mistakes and bad luck, it resurged in Melbourne. The rest of Australia is doing mostly fine and they are going to keep their borders shut to other states and especially Victoria (Melbourne) until things are under control. This latter point has helped push Victoria into the strong measures.
It is my belief that most of Melbourne’s populace is reluctantly accepting the need for these ‘draconian’ measures. Certainly all my peers are accepting them. Of course you will get plenty of people complaining about them, Aussies are exceptionally good at complaining. But we will largely and compliantly accept it.
Will they continue to accept these measures repeated when the virus pops up again in a few weeks/months and then again and again?
Europeans Are Waking Up to Government Covid Tyranny. Why Are We Still Asleep?
Written by Ron Paul
Monday August 3, 2020
Ron Paul sitting in his bunker on a pile of gold with a mask and tinfoil hat on!
Having the world’s dominant military and reserve currency means never having to repay your debts. Who’s gonna collect?
Open the floodgates. 100 trillion isn’t enough.
Hows that in person school re-opening going there in Manatee County FL?? Samoset Elementary employees sent home by COVID-19. It was teachers’ first day back
Frorida leading the way again!
Well actually according to the Fed itself, we are going to recover pretty well: link to zerohedge.com
Not sure the need for free money.
Month over month so it should be easy to spike after the worst quarterly decline in history. Not time to go to the strip club yet.
“we’re generating the savings ourselves.”
No, illiterate monkeyboy; “We” are not. Printing money is not “generating savings”. Hence you are not generating savings. Hence no “we” that you are part of, is generating savings. I do understand comprehension of even the simplest of logic, effectively bars one from admission to any position of influence in progressive dystopias, but that doesn’t mean logic somehow has been banished. Just that all idiots in all positions of power, are in fact, tah-dah, idiots.
Instead what “you” are proposing, is not to “generate savings.” But rather to, as always, steal; by way of debasement; the savings someone else has “generated.” So that you can then spend it. Such that then, even those guys no longer have any savings, despite having originally generated some. Then; what does stupid little you, think will then happen to those people’s willingness to generate further saving,s as a result of this having it stolen from them? Or, more accurately, what would stupid little you think would happen; if you did, in fact, posess the aptitude to actually engage in sometime as quaint as thinking?
Based on one of Mish’s earlier blogs, the free money is being used to pay off credit cards, which reduces defaults of UNSECURED credit. “Free money” is about saving banks more than the economy.
Remaining line of credit is what passes for a savings account for the poors. They’ll be back into it soon enough.
The richies know that the next Occupy Wallstreet will make the last one look like a game. Class warfare will get very ugly as soon as it becomes clear enough to enough people that they are going backwards while connected twits like this keep counting their millions without a care in the world.
Unless the Fed starts dropping money to the masses there is going to be a major revolt.
But they claim they cannot. They say they can’t infringe upon what is congressional territory. They would hand the government trillions at zero interest but the GOP says no. Please do not faint but I agree with the GOP is right for once, the $600 per week PUA is too much. Or, if we are going to reset prices and income they have left me and other 100% disabled vets out, we get $716 per week with no opportunity to make more. All I know is nobody should be getting more than disabled vets for sitting on their asses. And if they do get more the vets should get that as well. But we are ALWAYS left out. This along with vast increases in minimum wage will make certain that the very bottom of the economic pile is where you will find vets.
“All I know is nobody should be getting more than disabled vets for sitting on their asses. And if they do get more the vets should get that as well. ”
Thats some strong gimmie gimmie right there.
No read what I said, I think it is too much, but if they are going to do it anyway then they have to give it to veterans. We served your lazy entitled ass by putting our lives on the line and have no right to sue for damages, even when our bosses got us hurt intentionally. There is a VAST fucking difference between the welfare mentality and demanding what is OWED to you and like it or not you do owe your disabled vets a DECENT fucking life when you use them up!
They should not be living homeless on the streets. They should not have politicians and right wing fascists saying they want too much.
What kind of piece of shit says that a vet asking for a fair deal is a gimme gimme gimmie attitude?
Look in the mirror Z. I do not usually pick on people personally here, but what you said earns the DEPLORABLE of the day award!
Option #2
Close gap of inequality by cramming down the price of assets held by the top 20%.
LOL. This country is bourgeois. People are not complaining/demoing for social justice. They are looking to join the upper class.
Just give everyone a free iPhone every year, and I guarantee the masses will shut up.
iPhone is not enough. I need more. Looking for a free Lamborghini.
Yuppies with iPhones are protesting “racism” and, really, Trump. When Trump and the virus are gone/controlled, but the economy still sucks, all that blame is going to be directed at someone else.
Never keep up with the Joneses. Drag them down to your level.
The fed either needs to spread the wealth or stop the bailouts PERIOD.
“We’re generating the savings ourselves”
What a statement. Not only do these bozos on the Fed not understand inflation, now they are having a hard time understanding the concept of savings.
Yes, I laughed at that phrase. Larry Summers used to say that mumbo jumbo malarkey. Kashkari just said the same. I looked at the savings rate (in latest personal income report from BEA). There was a spike in Q2’s saving rate, but nowhere near enough to cover massive fiscal deficit. The july report also had revisions to 2019 savings rate. Guess what? 11 out of 12 months the savings rate revised DOWN.
Headline – “Millions live free of virus after successful “Draconian” lockdown in NZ.
We promptly fixed our pothole before it could get bigger. Too many idiots in the US for this sensible strategy to work there. Individual rights and freedom are fine, but to enjoy these, it is also necessary to have a culture of taking individual responsibility (and not just for oneself), which starts at the top.
Note that US government debt is very different from individual debt. I keep seeing them being treated as the same thing, including in the above post. The US is one of the wealthiest countries, and can easily afford the extra gov spending. Just search “wealth by country” on google. I really don’t get those that complain about extra gov spending when its needed, as long as the spending is done in a fair and transparent manner…oh…
Why is the US wealthy though? It produces mostly junk and things that people don’t quite need.
While I think US consumerism/consumption is a bit out of kilter, i don’t think this is limited to the US. Characterizing as “mostly junk and things people don’t need” seems a bit excessive? I would say the US is wealthy due to the hard work and ingenuity of most Americans, which has benefited many of us, and not benefited many as well.
Since when are a bunch of stupid ass bankers medical experts! Here’s what you get with a hard shutdown: More destroyed businesses and more people dependent on them. This is all way too fishy.
And btw……them bringing it up is a test to see what kind of backlash there is. What they’ve gotten away with thus id say there will be no revolt whatsoever.
Not fishy at all, but extremely and openly corrupt. They all have easy access to free money and are willing and able to pickup those assets at rock bottom prices and rent them back to TPTB.
Obviously a plot by the fish people to corrupt our precious bodily fluids.
“Right now the U.S. can fund itself at very, very low rates. Congress should use this opportunity to support the American people and the American economy.”
…
Right now.
And in a year? 5 years?
Low rates just means everyone … and I do mean EVERYONE … hits the debt trough for second and thirds. At SOME point the debt burden will be so great entities won’t even be able to service it absent severe cuts to current consumption (or in the case of govt debt, raise taxes).
The debt will be deflated, there’s absolutely no intention to repay it in my view. At 5% per year for example it will half in about 14 years.
The debt will eventually need to be inflated away. Not sure how much we have to print for that to occur, but inflation is the only tax that can accomplish it.
I guess it makes as much sense as having the Fed paying a premium to buy up bonds from big Wall Street firms that loaded up on them when the price was down. However, it sounds more like bread and circus to quell the masses, all the same.
when do I get my check??
He’s Barkin’ Mad.
““If we were to lock down hard for a month or six weeks, we could get the case count down so that our testing and our contact tracing was actually enough to control it,” Kashkari said.”
But let’s say he is wrong. What kind of skin is he willing to personally put into the game to make up for a bad call? His net worth?
The same applies to you. If not doing it blows up (which it did) and may do again. What are you willing to pledge?
Not doing it provides more upside to everyone at the end. So everything goes down, the rich will suffer more, and once everything clears up, the rest will own more than before.
What’s not being said here is that eventually all debts will be forgiven. The rich owes more than everyone else.
“…eventually all debts will be forgiven.”
Debts will not be not forgiven. Defaults will be used by creditors to acquire ownership of valuable real assets (if I lend you $1T that I create out of nothing and you use it to finance an asset which I then foreclose upon, what did your asset cost me really?). The guys with access to the printing press are essentially buying the place in exchange for nothing other than 1’s and 0’s that they create with 12 keystrokes. If they continue, the marker those 1’s and 0’s represent may become worthless, but it will not matter to them if they own the place. If the dollar survives because of the dollar shortage resulting from the magnitude of debt being defaulted upon, then the creditors who issued the 1’s and 0’s that were vaporized will still end up owning the place. It is criminal.
I used to think like that, but nah, it won’t work out like that. Remember, the banks will have to take a loss in their accounting. They are public companies, no? Also banks don’t want to be in real estate, and all sorts of mom and pop businesses. Owning EVERYTHING also makes them too easy of a target.
Having everything be paid off is really better for everyone at the top. Banks won’t get criticized and punished for bad lending. They get to keep their profits, and their clients to whom they lend money will be back for more.
“the banks will have to take a loss in their accounting”
In this case the Fed is adding limitless new credit with no reserve requirement so banks do not have the same limitation they did in past credit cycles. Obviously banks would prefer to have others manage assets while they continue to skim their percentage based on credit lent, but if people cannot make the payments and asset prices need to be kept high, their solution seems to be hand out enough nearly free credit that strong hands will keep paying a high price for stuff with newly minted credit. In the event of imminent defaults that will materially affect the banks, I cannot see them giving up claims on underlying assets. I expect their plan will be to own the assets and possibly lease them out to companies such as Blackrock until monetary debasement allows the assets to be sold at even higher prices.
However it unfolds, based on recent decisions I expect they will just keep changing the rules until they like the outcome.
Yea! Comments are back.
Looks like the Fed is becoming the defacto leader and policy setter for the USA.
They’ve been since their funding. Some are just a bit slow on the uptake, and prone to believe in toot fairies and progressive indoctrination.
As Rothschild put it: “GIVE me control of a nation’s money supply, and I care not who makes its laws.”
Don’t know about you guys, but I’ve been the beneficiary of trickle down free money, like forever. So I fully support all the fed presidents that want more free money. It will add to the trickle, hopefully, turning it into a bigger trickle.
Anoop – There should be a government program to train all of the rest of us on how to get free trickle down money.
The only reason falling off “the cliff” appears scary, is that costs in the US are to high. Directly as result of Te Fed’s “free” money. Then indirectly as a result of the printing’s empowering of zero-to-less value add leeches, who instead of creating any wealth of their own, are busy doing their darnedest barring others from creating any as well. Just so the leeches can live off of unearned rent in a world of junta enforced artificial scarcity, instead of having to work for a living.
Printing more money for idiots in New York and a few other places, does exactly nothing but make things worse. OTOH, if “we” instead pulled back the 99% of current money which has been stolen by debasement and handed out to leeches since the Fed’s founding, costs would come down enough to make things infinitely less “fall of a cliff” like, for all and anyone but the theft beneficiary leeches themselves.