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zugzwang

Nouriel Roubini Calls For Helicopters

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The clamour of voices grows one louder.

http://www.theguardian.com/business/2016/apr/01/central-banks-unconventional-monetary-policy

The next stage of unconventional unconventional monetary policy – if the risks of recession, deflation and financial crisis sharply increase – could have three components. First, central banks could tax cash to prevent banks from attempting to avoid the negative rate tax on excess reserves. With banks unable to switch into cash (thereby earning zero rates), central banks could go even more negative with policy rates.

Second, QE could evolve into a “helicopter drop” of money or direct monetary financing by central banks of larger fiscal deficits. Indeed, the recent market buzz has been about the benefits of permanent monetisation of public deficits and debt. Moreover, while QE has benefited holders of financial assets by boosting the prices of stocks, bonds, and real estate, it has also fuelled rising inequality. A helicopter drop (through tax cuts or transfers financed by newly printed money) would put money directly into the hands of households, boosting consumption.

Third, credit easing by central banks, or purchases of private assets, could broaden significantly. Think of direct purchases of stocks, high-risk corporate bonds, and banks’ bad loans.

If unconventional unconventional monetary policies sound a little crazy, it’s worth remembering that the same was said about “conventional unconventional” policies just a few years ago. And if current conditions in the advanced economies remain entrenched a decade from now, helicopter drops, debt monetisation, and taxation of cash may turn out to be the new QE, CE, FG, ZIRP, and NIRP.

Desperate times call for desperate measures.

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The fact that this is even being discussed shows that they know the game is almost over. The situation is impossible to escape from.

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They're willing to do anything, ANYTHING... rather than admit the high cost of housing means people are having to spend all their money on rent/mortgage and don't have any disposable income left over to spend in the wider economy.

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The fact that this is even being discussed shows that they know the game is almost over. The situation is impossible to escape from.

As Steve Keen has said, the one outstanding example of massive private sector deleveraging in history is the Great Depression.

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In the good old days when debts became unsustainable, a reset was achieved through a general cancellation of debts.

I wonder why that hasn't been considered in the central bank basket of "conventional unconventional" or "unconventional unconventional" options...

Edited by EssKay

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So which winners are they going to choose this time.

Clearly not the prudent and clearly none of it works except to protect and increase their own loot and to cement their position as the 1%.

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If unconventional unconventional monetary policies sound a little crazy, it’s worth remembering that the same was said about “conventional unconventional” policies just a few years ago.

Oh right. I must admit, for a moment there I was a little concerned at this, but now we know how well those "conventional unconventional" policies turned out, what's to worry about?

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As Steve Keen has said, the one outstanding example of massive private sector deleveraging in history is the Great Depression.

Was that the Great Depression that he described as ending with 'the Second World War'?

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They're willing to do anything, ANYTHING... rather than admit the banks are bust. high cost of housing means people are having to spend all their money on rent/mortgage and don't have any disposable income left over to spend in the wider economy.

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There's nothing unconventional about thieving other people's money no matter how often you repeat the word unconventional in one sentence.

It's hum drum - just call it more hum drum theft or even hum drum hum drum theft.

Edited by billybong

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