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Shalom Hamou
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Our Goal: Propose as soon as possible an economy after the inevitable financial crash has occurred. That market economy is free of credit. So it will strip the banks from their relevance. Registration for ☮ La Nouvelle Économie. will be closed the day of the crash at the close of the NYSE,... More
My company:
☮ La Nouvelle Économie.
My blog:
☮ La Nouvelle Économie.
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  • What They Didn't Tell You at Jackson Hole.


    I have been studying since April 1994 the necessary advant of a Keynes' Liquidity Trap: what is classicaly defined at a condition when short-term rates are at 0% and no classical monetary policy, lowering the target discount rate, is effective in getting out of a recession.

    Obviously when short-term rates are already at 0% there is no quick fix. However since 1994 the researchers at the Fed, the BoJ, the ECB and the BIS have made numerous research on how to exit the Keynes' Liquidity Trap which, probably to hide them from the public they renamed “Zero Lower Limit” which makes it hard to find on Google or even “Zero Limit” a term that is used in numerous scientific domains.

    Having studied that phenomenon for so long and devoted such an amount of energy I can pretend to be an expert on the subject.

    I am listing here the different system that has been studied:

    Keynes' Fiscal Policy:

    It has been badly implemented and it has reached its limit as the “market” and the public believe it is “bad”. Anyway it is my analysis that Keynes' Fiscal Policy can only relieve short-term woes and that the only event that did pull the “market” and the economy out of the “Liquidity Trap” was the vast Liquidation and Fiscal Policy that were the consequences of WWII.

    Making a Statement on Long-Term Commitment to Low Short Term Rates:

    We all know now that it does not work and anyhow if it was working no one can envision how a deficit of consumption can be dealt in a sustainable way with an increase of productive investments when short-term rates are at 0%.

    Exporting the Liquidity Trap:

    The idea here is to lower the value of the currency against foreign currencies in order to increase export and fill the deficit in domestic consumption. That has partially worked for Japan for some time but it is obviously not working when the Liquidity Trap is a real one, a Global One.

    Quantitative Easing:

    That has already been tested and was almost working when long-term yield dropped from a prevalent 5.3% which was consistent with the previous state of the economy so bringing them far below the 4.60% rate that is the fair value of Long-Term Yield did provide a boost for investments compounded with the optimism that comes with higher stock indices.

    This is the last, untested Fed Tool:

    The Deflation Bias and Committing to Being Irresponsible:

    by Gauti B. Eggertsson of the New York Fed

    I model deflation, at zero nominal interest rate, in a microfounded general equilibrium model. I show that one can analyze deflation as a credibility problem if three conditions are satisfied. First: The government's only policy instrument is increasing the money supply by open market operations in short-term bonds. Second: The economy is subject to large negative demand shocks. Third: The government cannot commit to future policy. I call the credibility problem that arises under these conditions the deflation bias. I propose several policies to solve it. They all involve printing money or issuing nominal debt. In addition they require cutting taxes, buying real assets such as stocks, or purchasing foreign exchange. The government "credibly commits to being irresponsible" by pursuing these policies. It commits to higher money supply in the future so that the private sector expects inflation instead of deflation. This is optimal since it curbs deflation and increases output by lowering the real rate of return.

    It seems on the face of it that the Fed buying stocks would be illegal. Well that wouldn't prevent them from doing it would it?

    will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan. Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively. However, their responses,when not confused or inconsistent, have generally relied on various technical or legal objections—-objections which, I will argue, could be overcome if the will to do so existed. My objective here is not to score academic debating points. Rather it is to try in a straightforward way to make the case that, far from being powerless, the Bank of Japan could achieve a great deal if it were willing to abandon its excessive caution and its defensive response to criticism.

    Japanese Monetary Policy: A Case of Self-Induced Paralysis?

    Ben S. Bernanke

    Princeton University

    December 1999

    * For presentation at the ASSA meetings, Boston MA, January 9, 2000."


    Ben S. Bernanke is an intelligent fool, he is not stupid. That is why he never talked about the subject at Jackson Hole.

    How do we know they have Committed to Be Irresponsible?

    We have several arguments:

    They can't let a Market Crash Develop:

    That would clearly trigger a Global Wave of pessimism which would impair any improvement of the economy. A Market Crash would signal a Deep Depression and the End of Individualistic Capitalism.

    An Empty Speech, Yet the Market Goes Up:

    The Speech of Chairman Ben S. Bernanke was obviously exempt of any news that could cheer up the Market. Yet after a short downturn the Market took a sharp turn upward. Who did buy? Who wanted to show that the speech was causing some renewed optimism. 

    Given the present state of the Economy we can safely assume that a Crash should already develop as there is no way we can entice 

    Should the S

    Enjoy!! It is on ☮ La Nouvelle Économie.


    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Aug 23 4:44 PM | Link | Comment!
  • The Value of a Job is the Same as the Value of Breathing Air.

    ☮ La Nouvelle Économie. is the only plausible, if not certain, way to establish a social and economic order. No other System is offered you today. It is certainly not with old recipes that ever worked that we will solve an urgent problem we have never been confronted with.

    What appears today as a catstrophe may well be an extraordinary opportunity for humanity. To seize this opportunity we must act now. The only thing we have to fear is our own discouragement. We have no choice but to confront it if we want to limit the consequence of Chaos.
     

    Principle:

    It is not my purpose to get into the details of ☮ La Nouvelle Économie. here But I want to show one of its strong points and how its Ideology is completely different from what others propose:
     

    The Value of a Job: the Same as the Value of Breathing Air.

    Because Air is in abundance the price of air, although it is vital for us, is $0. Because we have high unemployment rate, demand for Jobs in abundance, the market price of a job is $0. It is hence the uty of society in order to create jobs and consumption powe to pay it a fair price above its market value. We will do that until full employment is reached. ☮ La Nouvelle Économie., a public body, will pay every Private Company participating in it a Marginal Value of Job for any Participating Worker. Those Companies will have to pay a mere 10% of that MVJ on top of it to its Workers (Anything above that is a free contract between the Worker and the Company.) It means that it is for the Society and not the Private Company to pay the Minimum Wage. Because that will be done in every Country the Destructive Competition between workers of different countries will be stopped. Moreover, in that process, we will give a large competitive advantage to manpower over capital goods.

    We must aim at separating those services which are technically social from those which are technically individual. The most important Agenda of ☮ La Nouvelle Économie. relate not to those activities which private individuals are already fulfilling, but to those functions which fall outside the sphere of the individual, to those decisions which are made by no one if the  ☮ La Nouvelle Économie. does not make them. The important thing for ☮ La Nouvelle Économie.  is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all.



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Aug 23 11:30 AM | Link | Comment!
  • Mission Impossible Accomplished: Predicting Chaos.
    The purpose of ☮ La Nouvelle Économie. is to offer the only way to guard against the effects of Economic, Financial and Social Chaos. 

    But the Essential Issue Here is One of Free Insurance Against a Future Potentially Catastrophic Economic and Financial Event. 

    That potential event is what we economists call a Systemic Risk. Theoretically we can't insure against it. I circumvented the problem by creating a new system that is not contaminated by our present problem and a way to access it. It is simple you just needed to think about it. 

    The main cause of all the dysfunctions of our social system is excessive income gap between the rich and the poor that has its main source in the existence of credit which discriminates in favor of the rich against the poor. 

    By establishing a Credit Free Market Economy we will have solved many of the problems we face every day that our leaders do not know how cope with. 

    You don't Risk anything to Register.

    Anyway what is your other option?


    Goal: 

    Propose as soon as possible a replacement economy after the inevitable economic and financial crash has occurred. We will limit the consequences and the resulting chaos that will necessarily take place. Our market economy is free of credit. It will strip the banks from their relevance and purpose. It is prosperous, stable,fair and peaceful. It prevents economic discrimination. 

    Prediction: 
    But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? 

    Chairman Alan Greenspan 
    At the Annual Dinner and Francis Boyer Lecture of 
    The American Enterprise Institute for Public Policy Research, 

    Washington, D.C.December 5, 1996 

    It is theoretically possible by classical mathematical means of to prdict a financial crash. However, I have developed a novel technique that allows to do what is impossible otherwise. 

    However I managed to accomplish this mission impossible with the help of another famous economist: 

    In one of the greatest investment markets in the world, namely, New York, the influence of speculation (in the above sense) is enormous. Even outside the field of finance, Americans are apt to be unduly interested in discovering what average opinion believes average opinion to be; and this national weakness finds its nemesis in the stock market. 

    John Maynard Keynes 
    The General Theory of Employment, Interest, and Money, 
    The State of Long-Term Expectation,
     
    Chapter 12, Paragraph IV 
    Friday December 13, 1935 

    The question that confronts us is how is evolving the average opinion about the future. You just have to see how many of those who are insured against the disaster that is those who have registered for free the Serial Number of a €5 note to participate in ☮ La Nouvelle Économie. 

    It is very simple you just needed to think about it. However there is no way to tell what is the number of participants that will signal the advent of the financial crash. It is therefore up to you to determine for yourself the number of participants that will signal to you the need to protect your assets. 

    Number of Participants in ☮ La Nouvelle Économie. 

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Mar 29 7:22 AM | Link | Comment!
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