THE LATEST IN GOVERNMENT “STIMULUS …”
By ROBERT ROMANO || Pulling a modern day Marie “Let Them Eat Cake” Antoinette, Brown University professor Mark Blyth and hedge fund manager Eric Lonergan boldly propose to do what no central bank has done before: Just print money and give it to people.
Seriously. You can’t make this stuff up.
Writing in Foreign Affairs in an article sub-titled, “Why central banks should give money directly to the people,” Blyth and Lonergan marvel how traditional approaches to monetary policy designed to boost lending and credit creation — and thus spending and aggregate demand — have led to boom-to-bust cycles of asset price distortions followed by crashes.
In the process, economic growth was harmed, unemployment rose, and after the crash, a true recovery has appeared distant.
That part is all true. The modern financial economy has a fundamental flaw in that it relies too much on new debt to spur growth, as opposed to real production and innovation.
Yet. Blyth and Lonergan’s ambitious plan — “cash transfers could jump-start the economy” — printing hundreds of billions or even trillions of dollars is not the solution.
They would also print about 20 percent of the Gross Domestic Product — about $3.5 trillion — and put it in the stock market, benefitting Wall Street with yet another corporate handout. And then after 15 years, it would pay out to the people.
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