Monday, Jan 26, 2009
Cheap Financial Stimulus
Bronte Capital: Why the Federal Reserve should LITERALLY throw money out of helicopters
Problem is people aren't spending. You need to convince people not to hold money. You have to really convince people that there will be inflation. The Federal Reserve should hire a couple of hundred helicopters and load each one 10 million dollars in neatly bound parcels of $1000 each. Total cost $2 billion plus trivial helicopter hire. Of course people will fall off roofs after searching for money that might have landed on their house. They might die... All of this increases the visible recklessness of the policy. It may actually induce mass spending of American dollars for (self-fulfilling fear of inflation)– a massive stimulus. And it will do it all for $2 billon. Obama has a stimulus package of $1.2 trillion – or about 600 times as large. This is relatively cheap.
17 Comments
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1. hubbers said...
The solution to fiscal madness is not further fiscal madness.
2. paul said...
I think Mervyn King is trying to do something similar in the UK by threatening to rev up the money printing presses.
The only effect it has is to make investors flee the pound of course.
3. mountain goat said...
I don't agree with the post by the way, I just think it shows how crazy things are getting. Reminds me of this - “Owners of capital will stimulate the working class to buy more and more expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism.” - Karl Marx: 1867
4. jamonit said...
hmm..working people bought 'technology' in 1867? Or houses for that matter.
5. matt_the_hat said...
So much for GB's no-one predicted the credit cruch, this guy has been dead for over 100 years and he gets it. I think Marx would have blogged on HPC
6. Browneconomy said...
Wasn't one of Keynes ideas to bury £1 notes in bottles and then sell the rights to dig them up - the income multiplier would result in the ecconmy moving again as "prospectors" would buy spades etc.
Unfortunately the world is a lot more complicated now
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8. plato said...
mountain goat...@ 14:08
Great quote..........the direction headed is spot on.
9. Yechef said...
I'm not sure Marx actually said this - do a quick google search. Anybody confirm this came from Marx's writings?
10. Allan Dias said...
There is a small (but important) problem with this idea. What if people used the money to pay down their debts and don't increase their spending.? You're left with the problem but you're 2 billion down.
11. wiltshire said...
Jamonit, Marx was suggesting (in 1867) that the "owners of capital WILL" (i.e. in the future) stimulate the working class to increasingly consume - goods, houses and services - and grow increasingly indebted by doing so. Sounds about right to me.
12. jamonit said...
Yes Wiltshire...not meaning to be cynical about the meaning of the quote, but I'd like to see the original source as I'm surprised to see Marx speaking of such modern types of purchase...surprised that he imagined the working classes buying houses and technology...he's quoted here as saying 'technology', not services. The quote also comes up, again without a reference, on the David Icke site I notice [if you google it].
13. mountain goat said...
I found the quote refered to here.
14. plato said...
???????
Houses are pretty ancient. Technology is an ancient Greek word. 19th century is but a tick of the clock.
15. jamonit said...
I'm not decrying the content of the quote. It's just that my first reaction was surprise that Marx' working class in the 19th Cent were buying houses and, presumably, pocket watches. I thought they had enough trouble buying food and warmth and paying the rent. And so I'd like to see it verified that this is Marx, and not some internet myth. That's all. Good quote if it's real.
16. jamonit said...
aha..see here for more doubters... http://groups.google.com/group/alt.war.vietnam/browse_thread/thread/4a09bb9a36ec27eb
I swapped 'technology' for 'services' when searching on google
17. jamonit said...
or here... http://meganmcardle.theatlantic.com/archives/2009/01/faux_marx.php
I'll stop there.