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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

in case you thought Dallas Fed Pres Fisher understands monetary operations and banking

Posted by Sada Mosler on October 2nd, 2010

Fisher Speech

Summary from MNS:
FED: Dallas Fed Pres Fisher (votes on FOMC in ’11) is a hawk on QE2.
Says “it is not clear that the benefits of further quantitative
easing outweigh the costs,” especially if U.S. has “anemic recovery, but
not one that slips into reverse gear.” Barring further shock, he has
“concerns about the efficacy of further expanding the Fed’s balance
sheet until our political authorities better align fiscal and regulatory
initiatives with the needs of job creators. Otherwise, further
quantitative easing might be pushing on a string. In the worst case, it
could flood the engine of the economy with gas that might later ignite
inflation.”

4 Responses to “in case you thought Dallas Fed Pres Fisher understands monetary operations and banking”

  1. Unforgiven Says:

    Warren -

    What is inflation in functional MMT terms? Say you made Prez, gave the system an MMT overhaul and we’ve got full employment. What would make you say “Wake up the guys at the IRS; we need to raise taxes”? How would you recognize and head off the next bubble?

    Reply

    WARREN MOSLER Reply:

    first, i’d be prepared to cut taxes as soon as any bubble collapsed and threated a hike in unemployment.

    that’s the most important take away. there will always be surprise negative shocks. the point is to not let them result in unemployment hikes

    Reply

  2. beowulf Says:

    OT but apparently nobody understands monetary operations and banking.

    On a rainy Tuesday in March 2009, U.S. military and intelligence officials gathered in a war room north of Washington to watch a simulated conflict flicker across a bank of video screens.

    The struggle was pitting the U.S. against China. And China was winning hands down, writes Eric J. Weiner in “The Shadow Market,” a bleak survey of how flush authoritarian governments deploy financial means to achieve geopolitical ends.

    The weapons were dollars, stocks and bonds, not bullets and bombs. The soldiers were Wall Street bankers, hedge-fund traders and economists. For two days, they explored what would happen if the world sank into economic warfare. The outcome was alarming.

    “There was no way for America to win,” Weiner says

    Whenever the U.S. did something Beijing didn’t like, China began dumping a fraction of its dollar-backed assets, driving down the currency, sowing economic chaos and prompting U.S. leaders to appease the Chinese.
    http://www.bloomberg.com/news/2010-09-23/china-sabotages-dollar-defeats-u-s-in-alarming-financial-war-game-books.html

    Geez. To paraphrase Churchill, you may take the most gallant sailor banker, the most intrepid airman trader or the most audacious soldier economist, put them at a table together- what do you get? The sum of all fears.

    Warren, when you get back to the sunshine, you should ask Alan Grayson or one of the other congressmen you’ve spoken with to request the Pentagon provide a copy of the war game report for your feedback.

    “There’s no way to win” is an unacceptable conclusion to any military planning exercise concerning the sovereignty of the United States Government. In fact, its quite possibly illegal (50 US 407).

    § 407. Study or plan of surrender; use of appropriations
    No part of the funds appropriated in any act shall be used to pay
    (1) any person, firm, or corporation, or any combinations of persons, firms, or corporations, to conduct a study or to plan when and how or in what circumstances the Government of the United States should surrender this country and its people to any foreign power,

    (2) the salary or compensation of any employee or official of the Government of the United States who proposes or contracts or who has entered into contracts for the making of studies or plans for the surrender by the Government of the United States of this country and its people to any foreign power in any event or under any circumstances.

    Reply

  3. Calgacus Says:

    Their problem seems to be that they define “winning” as “losing” and vice versa. e.g. – “U.S. complaints that the yuan was undervalued.” Why would anyone sane complain that their money or assets were overvalued by someone else? So the US gov should rejoice at the results.

    Another of Weiner’s examples of “big-money hardball” is equally silly – Abdel Basset Ali al-Megrahi was released because the wheels of Scottish justice were in motion and he was very likely to be released on appeal, as there was never any non-fabricated evidence he had anything to do with Lockerbie. As much of the skulduggery had come to light, this would have embarassed a lot of powerful people in the UK and US. Sounds like the kind of book that you should trust to get the exact opposite of the truth.

    Reply

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