What If We Ditched Quantitative Easing and Just Printed (And Distributed) Cash? Charles Hugh Smith, Of Two Minds
What if the Federal Reserve and U.S. Treasury stopped trying to stimulate the economy by encouraging more borrowing with "quantitative easing" and instead "dropped money from helicopters" into households' accounts? .... What seems clear is that expanding bank credit through quantitative easing policies of funneling trillions of dollars into banks isn't working. Putting the same money thrown into banks ($4 trillion) into households' accounts would certainly put the money where it could either be spent or used to pay down debt--both of which are direct "cures" to over-indebtedness and a no-growth economy. The sums of money squandered on bailing out banks are difficult to grasp. So I'll make it easy: if the Treasury printed up $1.3 trillion in cash, that would be enough to give $10,000 to all 130 million households in the U.S. Even $10,000 to each household would enable a lot of debt to be paid off. Those without any debt could save/invest/spend it. That would certainly do more for the economy than throwing another $1.3 trillion to "extend and pretend" the banks' insolvency. .... Would some people squander a one-time "last chance to set a new course" helicopter drop? Of course some people will. But that's not the point. The point is that the nation has received zero value from trillions in quantitative easing, and so if even 10% of the 130 million households do something useful with their $10,000 in cash then that would be one heck of a lot more than we've gotten from the trillions thrown down the rathole of a venal, corrupted, insolvent banking sector. Throwing money at banks hasn't done anything but reward financial Power Elites via privatizing their gains and transferring their losses to the taxpayers. Throwing money at households won't solve the nation's problems either, but it would give households a one-time chance to do something useful with a chunk of cash. If 90% of the households blew it, then it would still end up somewhere in the economy, which is more than can be said of the trillions thrown away on QE. (Emphasis is from the original.)
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What seems clear is that expanding bank credit through quantitative easing policies of funneling trillions of dollars into banks isn't working. Putting the same money thrown into banks ($4 trillion) into households' accounts would certainly put the money where it could either be spent or used to pay down debt--both of which are direct "cures" to over-indebtedness and a no-growth economy.
The sums of money squandered on bailing out banks are difficult to grasp. So I'll make it easy: if the Treasury printed up $1.3 trillion in cash, that would be enough to give $10,000 to all 130 million households in the U.S. Even $10,000 to each household would enable a lot of debt to be paid off. Those without any debt could save/invest/spend it. That would certainly do more for the economy than throwing another $1.3 trillion to "extend and pretend" the banks' insolvency.
Would some people squander a one-time "last chance to set a new course" helicopter drop? Of course some people will. But that's not the point. The point is that the nation has received zero value from trillions in quantitative easing, and so if even 10% of the 130 million households do something useful with their $10,000 in cash then that would be one heck of a lot more than we've gotten from the trillions thrown down the rathole of a venal, corrupted, insolvent banking sector.
Throwing money at banks hasn't done anything but reward financial Power Elites via privatizing their gains and transferring their losses to the taxpayers. Throwing money at households won't solve the nation's problems either, but it would give households a one-time chance to do something useful with a chunk of cash. If 90% of the households blew it, then it would still end up somewhere in the economy, which is more than can be said of the trillions thrown away on QE. (Emphasis is from the original.)
This is along the lines of what the Modern Monetary Theory, MMT, proponents say, for example. If there is unused labor available in the society a sovereign government with its own currency, which trades freely against other currencies, can always spend directly to employ that labor up to the point that it starts to cause wage inflation without other serious consequences - and should do so. If the government spends on important national priorities, such as making the country self sufficient in renewable energy and renewable based national transportation, it would be a strong positive development.
The problem with this is that it dilutes the perceived wealth of the elite and violates all of their ideas about how things should work. But those very ideas are what have led us into a financial catastrophe, from which only some of that elite has benefited.
Good to see such ideas presented on Business Insider!
Kooks of the world, UNITE! You have nothing to loose but your dysfunctional elites! As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
