Quote:
|
You keep bouncing back and forth between the state of the entire economy and the effect of things done at the margin, and the result is absolute incoherence. Summers doesn't say that just any investment will work. Of course you have to repay the principal. But you're not even thinking about the marginal effect of the steps he's proposing.
|
What does this even mean? Borrowing and spending another $550bil is something done at the margins? You don't see the interplay between that kind of borrowing and the "entire economy." I'm incoherent?
Quote:
|
This makes absolutely no sense. None. Someone owns those stocks and houses right now. If their values drop, those people have less money. Transferring their assets to someone with money "on the sidelines" right now will not help those stocks and houses generate economic activity.
|
Those people already have less money. Nobody save the wealthy is living like they have the money their portfolios, or their bloated home values, suggest. Everybody knows it's a lie - that it's all propped values. That's the essential weakness of the Fed's efforts. All they've done is create speculation at the margins because nobody thinks the current monetary fix will work. Nobody thinks another Stimulus will work. Everybody with a brain is simply trying to maximize returns and park as much as they can in safe havens in fear of the next imminent slump (wall of worry, etc.). All I'm advocating is a recognition of the truth that assets are really worth 75% of their current value. The sooner we recognize that, out loud, the sooner investors will say, "This is the bottom," and start investing in things that will help to bring back sustained economic growth.
