Chairman Ben S. Bernanke, Quantitative Easing Can't Work!

Open letter to Chairman Ben S. Bernanke announcing that the right monetary or fiscal policy, including the barbaric Quantitative Easing, will not get us out of the Depression. We propose him our short run solution.
 
 
MC Shalom
MC Shalom
 
Spread the Word
Listed Under

Tags:
Liquidity Trap
Recession
Depression
Quantitative Easing
Fiscal Policy
Monetary Policy
Greenspan

Industrys:
Banking
Finance
Non-profit

Location:
Tel Aviv - Tel Aviv - Israel

Jan. 11, 2009 - PRLog -- Mister Chairman,


As you know, Mister Chairman, in a Liquidity Trap although Saving (S) is abnormally high investment (I) is next to 0.

Hence, the Keynesian paradigm I = S is not verified.

The purpose of Quantitative Easing being to lower the yield on long-term government debt and provide liquidity to the Market, it doesn't create $1 of investment.

The last thing the Market needs in a Liquidity Trap is liquidity. This is why, Mister Chairman, we call it a Liquidity Trap.

Force-feeding it will achieve no purpose whatsoever.

Quantitative Easing does diminish the yield on long-term US Treasury debt but lowers marginally, if at all, the asked yield on savings.

Long-term treasury bonds are hence unfairly priced.

But purchasing risky assets on the open market at an excessive price you are maintaining the demand for long-term assets in an unstable equilibrium.

When this disequilibrium resolves, and it necessarily will, the Market will turn chaotic.

This and other issues are explored in the tract I wrote to your intention:

A Specific Application of Employment, Interest and Money
Plea for a New World Economic Order


Abstract:

This tract makes a critical analysis of credit based, free market economy, Capitalism, and proves that its dysfunctions are the result of the existence of credit.

It shows that income / wealth disparity, cause and consequence of credit and of the level of long-term interest-rates, is the first order hidden variable, possibly the only one, of economic development.

It solves most of the puzzles of macro economy: among which Unemployment, Business Cycles, Under Development, Trade Deficits, International Division of Labor, the Price of Minerals, Stagflation, Greenspan Conundrum, Ben S. Bernanke Saving Glut, Deflation and Keynes' Liquidity Trap...

It shows that no fiscal or monetary policy, including the barbaric Quantitative Easing will get us out of depression.


If short-term risk free interest rates are at 0.00% doesn't that mean that credit is worthless?

A Credit Free, Free Market Economy will correct all of those dysfunctions

You Need, Hence, Mister Chairman, Abolish Interest Bearing Credit and Cancel All Interest Bearing Debt.
.
The alternative would be to wait till, on the long run, most of our productive assets get physically destroyed either by war or by rust. It will be either awfully deadly or dramatically long.


A Specific Application of Employment, Interest and Money
http://edsk.org/interest.html

Our Proposed Exit Strategy out of Credit
http://edsk.org/


I am, Mister Chairman, Yours Sincerely,

Shalom P. Hamou AKA 'MC Shalom'
Chief Economist - Master Conductor
1776 - Annuit Cœptis

# # #

1776 - Annuit Cœptis proposes an alternative economic system in order to solve the present economic crisis on the short run. A Credit Free, Free Market Economy, A Specific Application of Employment, Interest & Money. If short-term risk free interest rates are at 0.00% doesn't that mean that credit is worthless? We Need Hence Abolish Interest Bearing Credit and Cancel All Interest Bearing Debt. In This Age of Turbulence People Need an Exit Strategy out of Credit, The Adventures in a New World Economic Order.
End
Source:Shalom P. Hamou
Email:***@edsk.org Email Verified
Phone:+972 54 441 7640
Zip:69671
Tags:Liquidity Trap, Recession, Depression, Quantitative Easing, Fiscal Policy, Monetary Policy, Greenspan
Industry:Banking, Finance, Non-profit
Location:Tel Aviv - Tel Aviv - Israel
Account Email Address Verified     Disclaimer     Report Abuse
1776 - Annuit Cœptis PRs
Trending News
Top Daily News
Top Weekly News



Like PRLog?
9K2K1K
Click to Share