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Travesty | 68 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Travesty
Authored by: Anonymous on Friday, June 15 2012 @ 05:38 AM EDT
Some time ago the going "joke" was that economists were
invented to make weather forecasters look good.
(They both used a fantastic amount of computing horse power
for not very spectacular results.)
Weather forecaster has improved markedly where I normally
live, but economic forecasting????
Chris B

[ Reply to This | Parent | # ]

  • Travesty - Authored by: Anonymous on Friday, June 15 2012 @ 07:23 AM EDT
    • Travesty - Authored by: Anonymous on Friday, June 15 2012 @ 11:36 AM EDT
  • Travesty - Authored by: ThrPilgrim on Friday, June 15 2012 @ 07:53 AM EDT
  • Economists - Authored by: Imaginos1892 on Friday, June 15 2012 @ 04:07 PM EDT
    • Economists - Authored by: PJ on Saturday, June 16 2012 @ 01:12 PM EDT
Travesty
Authored by: Wol on Friday, June 15 2012 @ 07:28 AM EDT
And to my mind this "quantitative easing" is daft. The idea is right,
but where's the dampener?

The problem we have at the moment is that a few years ago the "velocity of
money" was a cyclone, now it's thick treacle. In other words, when the
banks were lending like there's no tomorrow, pounds were going in and out the
revolving door fast enough to make the head spin - the same pound could be lent
one day, paid back by someone else an hour later, and lent out again an hour
later still. Now the banks won't lend, the money isn't flowing, and nobody can
find credit.

What they should do (and I've probably said this before) is buy all the
mortgages off the banks, set up SMALL mutual societies to hold them, and as the
mortgagees pay off the loans, the societies pay the government back.

Same thing with small business - get Rotary Clubs and other business
organisations to set up Credit Unions. maybe funding them, again, buy buying
debts off the banks.

This has two useful effects. It recapitalises the banks for what they *should*
be doing, which is lending to people who need money, and selling the loans on to
investors like pension funds (but BAN funds from owning shares in other funds -
this is what hid the risk that caused the crisis), but it also puts in place a
strong negative feedback. If the economy starts to boom, all these loans get
repaid and the money goes back to the treasury. So the money supply can't get
out of hand. The government, of course, can increase the money supply by more of
the same, more loans to building societies and credit unions, and/or becoming an
investor in loan stocks themselves.

But the system is *designed* to damp down, not spiral out of control ...

Cheers,
Wol

[ Reply to This | Parent | # ]

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