The Fed can print money - flooding banks with liquidity in an effort to stimulate growth - but...


The Fed can print money - flooding banks with liquidity in an effort to stimulate growth - but it can't buy confidence - demand for the money - George Melloan says. One thing the Fed and the government are providing plenty of these days: uncertainty.

Comments (36)
  • apberusdisvet
    , contributor
    Comments (3096) | Send Message
     
    "uncertainty"? How about abject fear?
    24 Aug 2010, 06:19 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4291) | Send Message
     
    To contract new debts is not the way to pay old ones.

     

    GEORGE WASHINGTON, letter to James Welch, Apr. 7, 1799
    24 Aug 2010, 06:33 PM Reply Like
  • mannettino
    , contributor
    Comments (1060) | Send Message
     
    "We must go deeper into debt in order to get out of debt"
    - Vice President Joe BiteMe, 2010
    24 Aug 2010, 07:38 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4291) | Send Message
     
    Kind of like destroying the village in order to save it.
    24 Aug 2010, 08:08 PM Reply Like
  • dfbell
    , contributor
    Comments (1462) | Send Message
     
    Charming poster in your bio.
    Nice to see the level of discussion is rising.
    24 Aug 2010, 08:54 PM Reply Like
  • greenzulu
    , contributor
    Comments (205) | Send Message
     
    Everything eventually regresses to a mean.
    24 Aug 2010, 09:46 PM Reply Like
  • dfbell
    , contributor
    Comments (1462) | Send Message
     
    I was referring to mdenis not Geofster.
    25 Aug 2010, 06:21 AM Reply Like
  • davidbdc
    , contributor
    Comments (3194) | Send Message
     
    There no uncertainty...... We the people are certain that the government is corrupt, looking out for only special interests (elite) and public unions, and bankrupting the country on the backs of our children and grandchildren. Not an ounce of uncertainty in that.
    24 Aug 2010, 06:49 PM Reply Like
  • wkl
    , contributor
    Comments (312) | Send Message
     
    One can only hope that we are nearing the end of "social liberalism", and a return to "classic liberalism". Individual liberty, small government that is only in place to protect personal properties, and free trade.
    24 Aug 2010, 07:26 PM Reply Like
  • zorrow
    , contributor
    Comments (2484) | Send Message
     
    Sounds like a tee shirt, bumper sticker business in a box. Are you franchising?
    25 Aug 2010, 09:36 AM Reply Like
  • 1980XLS
    , contributor
    Comments (3360) | Send Message
     
    How does flooding banks with liquidity do anything?
    That's already been tried. Remeber Tarp? The only thing that created was record compensation for Banksters.
    How about flooding the people that actually produce anything, and jobs (small businesses) with liquidity.
    I suppose they haven't donated enough in the way of campaign contributions though.
    24 Aug 2010, 07:27 PM Reply Like
  • Bozerdog
    , contributor
    Comments (463) | Send Message
     
    Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.
    - Warren Buffett -
    24 Aug 2010, 07:27 PM Reply Like
  • dfbell
    , contributor
    Comments (1462) | Send Message
     
    Like Moody's and Conoco ?
    30 Aug 2010, 01:17 PM Reply Like
  • Tressel
    , contributor
    Comments (20) | Send Message
     
    Everyone loves to critisize these days, but everyone's proposed "solutions" are bs. The problem is low growth, high unemployment and big deficits. How is raising interest rates going to help? I'll answer that - it's not. To fix the deficit you have to cut spending and raise taxes...not exactly good for growth and unemployment. Everyone thinks there's a clear answer, but there's not. Once we can agree on that maybe we can have a serious conversation on what to do.
    24 Aug 2010, 07:56 PM Reply Like
  • mdenis39
    , contributor
    Comments (17) | Send Message
     
    Tressel - I agree, but we are at a standoff. I do not trust our govt to cut costs, so hands off my money. The govt must demonstrate that it will institute a 20% or 30% cut across the board (that way everyone's ox is gored). Until they do that for 2 consecutive years, they cannot have more tax money to blow!
    24 Aug 2010, 08:06 PM Reply Like
  • dfbell
    , contributor
    Comments (1462) | Send Message
     
    Finally a conversation with some substance rather than insults.
    So rare around here. Yes, we are in a tight spot, with plenty of blame to go around.

     

    • What would you propose cutting to get savings?
    • What would you do about the upcoming tax-cut expiration?
    24 Aug 2010, 08:58 PM Reply Like
  • NC Trader
    , contributor
    Comments (40) | Send Message
     
    There are no good options. With every western institution (consumers, govt, businesses- especially banks) over leveraged and tapped out of real savings, deflation would destroy the economy. The fed has chosen inflation to climb our way out which keeps poor investments from being liquidated and the market resetting at a clearing price. These two forces balance out and lead to Japanese-style no-flation.
    On principle, I prefer the market to deflate and clear out the excesses built up over the last forty years, but realistically I dont know if I would like the end result.
    Disclosure- long lead and lead delivery systems.
    24 Aug 2010, 09:00 PM Reply Like
  • MiniB
    , contributor
    Comments (55) | Send Message
     
    Precisely.
    24 Aug 2010, 09:13 PM Reply Like
  • mdenis39
    , contributor
    Comments (17) | Send Message
     
    dfbell -- Proposed cuts for the Federal Govt? Every single dept, program, subsidy, EVERYTHING is cut 20% (as a start). If we cut everything, then one interest group does not have leverage over another, and every sector shares the pain. There will be wailing and screaming from most parties, but this is the most fair & perhaps the most politically feasible.

     

    As for the expiring tax cuts - keep all tax rates the same as they are today. I simply do not trust the govt to spend our money wisely or hold up their end of this bargain. If they implement and follow through with the spending cuts for 2 years, I would not protest if they doubled the tax increase. Of course, we would need to have some sort of agreement/legislation that Congress would not go back to their spending ways of years past.
    24 Aug 2010, 09:39 PM Reply Like
  • dfbell
    , contributor
    Comments (1462) | Send Message
     
    Sooooo, cut SS payments 20%?
    Cut defense 20%? Including soldiers?
    Something mundane like air traffic controllers? 20%?
    20% off the CDC?
    Federal disaster aid for floods, tornadoes, EQs and hurricanes?
    Highway and bridge (like mpls) maintenance and inspections?
    Immigration and border patrols?
    Food safety (and eggs)?
    Homeland Security? 20% off them too?

     

    just asking ....
    30 Aug 2010, 01:25 PM Reply Like
  • mdenis39
    , contributor
    Comments (17) | Send Message
     
    dbell - I would love it if we could just keep from cutting the agencies that are near and dear to my heart (or yours). But that's just the problem isn't it? If you target only certain agencies or programs, the special interests groups rise up & kill the cuts. The only feasible solution is to cut everyone. Not all 20% in one year - phase it in over a few years. We are a self-reliant, enterprising people, I'm sure we can adjust to doing more with less. Perhaps a smaller govt can be more nimble & enterprising too.
    ps - the Minneapolis bridge collapse was due to poor design before the bridge was built, not due to lack of maintenance or repairs.
    31 Aug 2010, 05:45 PM Reply Like
  • radicall
    , contributor
    Comments (533) | Send Message
     
    I think we can cut defense.. even though Defense Contractors and politicians whose constituents are affected will complain:

     

    $53 billion spent in projects, at least $5 billion in waste:
    politics.blogs.foxnews...

     

    Personally I think it was more in trillions since this whole war was unjustified.

     

    For now though - think of some of those jobs as stimulus. would you rather have them do something or collect unemployment?
    31 Aug 2010, 09:30 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4291) | Send Message
     
    Starve the parasites and the corporate fascists who enable the lackey politicians. Massive civil disobedience by the productive classes to force spending cuts."Every actual state is corrupt. Good men must not obey laws too well." ~Ralph Waldo Emerson
    24 Aug 2010, 08:15 PM Reply Like
  • radicall
    , contributor
    Comments (533) | Send Message
     
    They are starting to cut costs, part of the reason for the Q2 dip. Even those that thought they had "secure" government jobs are now scared. People just don't like spending money when they are scared hearing bad news all day long: layoffs, oil spills that nobody can control, debt and currency crises, market flash crashes.

     

    Like an article today said - liquidity can't buy confidence, for consumers or businesses.

     

    I think rather than having a negative tone - if we all try to set a positive tone for all those around us, things might look up sooner rather than later.

     

    I think all the layoffs in late 2008 were based on fear - fear that caused this recession/crisis to get as deep as it did.
    24 Aug 2010, 08:21 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    Flooding banks with liquidity to boost the bonus pool.
    24 Aug 2010, 08:32 PM Reply Like
  • tka1115
    , contributor
    Comments (34) | Send Message
     
    As my son emailed me this afternoon:

     

    It's been in the back of my mind for a year or more but it is becoming crystal clear to me that both Keynesians and Austrians are about to feel fully vindicated in their beliefs, in the same way that we are still debating the Great Depression.
    24 Aug 2010, 08:37 PM Reply Like
  • Papaswamp
    , contributor
    Comments (2241) | Send Message
     
    When nearly half of the population doesn't pay income taxes and almost 14% are on food stamps, eventually the strain on the remaining workers becomes too much. We are approaching the point where any action is useless and the house of cards must collapse in order to rebuild.....personally I think we are already there...govt intervention has been hiding the real economy.
    www.zerohedge.com/arti...
    24 Aug 2010, 08:38 PM Reply Like
  • Tom Au, CFA
    , contributor
    Comments (6875) | Send Message
     
    Confidence (and demand) is the name of the game, not printing more money. "You can lead a horse to water but you can't make him drink."
    24 Aug 2010, 10:17 PM Reply Like
  • CMT
    , contributor
    Comments (2) | Send Message
     
    ' I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.'-- Thomas Jefferson
    24 Aug 2010, 10:43 PM Reply Like
  • Speakeasy
    , contributor
    Comments (413) | Send Message
     
    I'm all for civil disobedience! Boycott the mainstream media that keeps Americans in the dark, consume only what you need to survive, and stock up on stuff to barter with when fiat goes awol.
    24 Aug 2010, 10:47 PM Reply Like
  • greenzulu
    , contributor
    Comments (205) | Send Message
     
    If Americans were to consume only the food they needed to survive, they would lose so much weight collectively that the rotation of the earth would accelerate and the Great Recession would end much more quickly. I'm all for it.
    24 Aug 2010, 10:55 PM Reply Like
  • zorrow
    , contributor
    Comments (2484) | Send Message
     
    "The key word here is "uncertainty." The Obama administration and Congress have dumped a huge load of highly dubious new legislation on Americans, much of it unread even by the legislators who voted for it. ObamaCare is an attempted federal takeover of a vast and complex industry. No one really knows how much chaos the financial sector "reform" act will generate. Hyperactive zealots in federal bureaucracies such as the Environmental Protection Agency have been unleashed to do silly things like attempt to reduce the planet's supply of carbon dioxide."

     

    This is like a whole industry, isn't it? The radio talk show, book, teaparty trinket business is booming. America is coming apart---but the nonsense fear monger industry is on fire. How do I invest in stupidity? It seems to be a growth industry. The only ways to stop the Davos Mafia, drug gangs, or your local rapist is with government enforcement of law; (or you're going to have to get a gun and shoot them yourself).

     

    Of course you can continue to be victims and be manipulated by the propaganda arm of the very people who sold you and this country out---- and play the "blame big government" game until ALL your money is stolen. Wise up.
    25 Aug 2010, 06:42 AM Reply Like
  • Neil459
    , contributor
    Comments (2636) | Send Message
     
    The only way the government gets away with this nonsense is because the media and the people let them. All politicians are corrupt, all government workers are power hungry and always have been. There is no change in government causing this abortion.

     

    What made America work was balance. Each constituent part of the government, Administration, Congress, Judicial, and media was afraid to go too far because the others would gang up on them. Now its a free-for-all, because the media believe the socialist propaganda they were educated with and the people only, by and large, care for what someone is willing to promise them (no matter it can never be delivered.)

     

    The media have given up their role as gate keepers and the only group left to get this back on track are good honest hardworking Americans. But, until we lose everything, finally understand that the promises are empty, and have no choice the situation will not change.

     

    Course of action:
    1. Do not pay for any major media. Do not buy from any advertisements through the major media. Let them go bankrupt.

     

    2. Be vocal locally. Let the "middle roaders" know that what is happening is NOT OK and NOT just part of the process.

     

    3. Be vocal with politician's. Let them know what you think. It won't do any good because 50% of the population is telling them the only important political idea is government handouts. Meaning that 50% of the population are letting their vote be bought.

     

    4. Hope and pray that you individually can stay higher in the survival heap than your neighbors.
    25 Aug 2010, 07:53 AM Reply Like
  • zorrow
    , contributor
    Comments (2484) | Send Message
     
    Or you might try participating in the political process and actually help vet honest candidates for government office. But wait, that would be a convoluted non productive approach. Your way is much better.
    25 Aug 2010, 08:05 AM Reply Like
  • Neil459
    , contributor
    Comments (2636) | Send Message
     
    Yea, I probably should not have skipped over that, its just that I am so tired of hearing friends and relatives say they can't do anything, that it does not matter, and therefore they do not participate in the political process. They say this because of the evening news. Its all they listen to and its all they believe.

     

    But you are right. My wife and I have voted in every election we were old enough to vote in.
    25 Aug 2010, 08:49 AM Reply Like
  • zorrow
    , contributor
    Comments (2484) | Send Message
     
    One of these days, the spinmeisters who are trying to protect their criminal clients by redirecting public anger at "Big Government" are going to run out of road, and all the Frankenstein monsters they created are going to turn on them. You can't fool all the people, all the time. Once it starts; once people no longer trust; everything can come unglued. It happened here in 1863. It's happened everywhere throughout history. Danger!! the bridge is out; but the panderers and sowers of "social discord for profit" are throwing all the fuel into the firebox they can shovel.
    25 Aug 2010, 09:15 AM Reply Like
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