somebody here said in response to my comments of mr. mosler predicted every major collapsetoday including the.com bubble and real estate bubble. can someone point to specific articles or other material on the web documenting this? I am particularly interested in his rationale for the then upcoming real estate bumble.
Interesting Dimitri Papadimitrious paper up at Levy Institute. The Levy Institute, with underwriting from the Labour Institute of the Greek General Confederation of Workers, has helped design and implement a program of direct job creation throughout Greece. Two-year projects, financed using European Structural Funds, have already begun… For those interested in the policy side, the report also provides a solid introduction to the conceptual justification behind a direct job creation program along the lines of Hyman Minsky’s “employer of last resort” idea… http://www.multiplier-effect.org/?p=2822
I suppose the Fed could set up a lending facility to finance this Eurozone-wide, call it the Eisenhower Fund, or to minimize the domestic political blowback, the Reagan Fund.
Aside from the human suffering it would relieve,which is reason enough to do it, one advantage of this approach is it wouldn’t take long for state governors here to ask why they can’t participate in the program (Austerians could hardly complain, it wouldn’t add to the federal deficit).
Sorry to go off topic, but I have a Fed operations question: I was under the impression that the Fed could not legally buy treasury bonds in the primary market but that it had to purchase them in the secondary market. But I believe I read somewhere recently – perhaps here – that the Fed is permitted a limited amount of primary market purchases each year. Can anybody direct me to an authoritative answer to this question. I’m under the gun to get a correct answer because I need to get it right in an essay I’m publishing. Thanks in advance for any help!
Thanks Unforgiven. I saw your reply on the Mike Norman’s blog and came here as you have suggested. I have been googling the topic like crazy, but so far all I can come up with are things that deal with the primary dealers, nothing on the statutes governing the Fed. The thing is, I’m pretty sure I read something about this on one of the MMT blogs recently, with a link to a web page discussing the statute. But I can’t locate it now.
Getting it right and putting your money where your mouth is are two very different things. Let’s say you believe Portugal is the next Greece. To buy Portugal protection or short Portugese bonds, you are short that coupon at that price so you are paying out the yield to maturity on Portugese bonds while earning libor. That cost is enormous…approximately 12% per year. So, one year from now, Portugese debt has declined in value by 10% and you can pat yourself on the back and say how right you were but you just lost 2%.