[arete]

With Treasury bill rates so near zero, the Fed will need to be open to alternatives to standard policy and stand ready to vigorously pursue them if the economy remains weak.

I don't even know why the FED is discussing all these silly measures. Kudlow and Cramer say the economy is recovering strongly and we are about to boom into high growth. It's party time!

Richard W.

[arete]

FYI and a coiled string ping to the (un)ususal suspects.

Comments and opinions welcome.

Richard W.

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[David]

This article is a disertation by the Dallas Fed on the practical methods by which the fed could impose a carry tax on unspent money--your savings account; your general depository savings and soforth; your checking account. If you keep money savings, the fed would impose a carry tax on your savings in order to incentivize you to spend the money.

Outrageous!

The paper is a demonstration that someone at the fed has thought through the pratical ramifications of how they would do this. I tend to doubt they would follow through--ever. It is part of a Greenspan effort to jawbone what he perceives as disinflation.

You also need to wonder about the concept in the climate of today's bond market movement--the 10 year T Bond rate went up 7.4 basis points which is a large move in any economic climate. Certainly a move contrary to deflationary expectations.

[Beck_isright]

"The strategy for eliminating the zero bound, therefore, is to make money pay a negative nominal interest rate, by imposing some type of "carry tax"on currency and deposits."

There's that phrase I introduced a month ago again...hmmmm, but I'm a "gold kook" according to several here on FR.

[elbucko]

It's party time!

Or it's "Brother, can you spare a dime?", time.

[Bedford Forrest]

Notice how the little JBT econometricians lurking in the bowels of the Dallas Fed exhibit not even a scintilla of embarrassment at the fascist stench of their coercive, cocked revolver up your nostril, proposals. How dare you unwashed peons hold cash just because we, your annointed, godlike superiors, have taxed and regulated the economy into a deep slough of despond? Do any of these pinheads understand that when the velocity of money falls below a certain point, they can tax cash holdings until they hold ALL the cash - and THEN what, for crying out loud, a tax on zero balances? If Greenspun really floated this rubbish, he has lost his mind.

[reed_inthe_wind]

This can be done through purchases of assets that are not perfect substitutes for money. We will consider three possible candidates:
2. Real goods and services


Unlike Richard Nixon – I am not a Keynesian. But if I were, my advice would be to purchase land instead of bonds. Choose fifty medium size cities. Map out a decent mass transit system, and purchase the land and necessary right-of-way as a way to put dollars into the economy. This replaces monetary policy. Then, in FDR fashion, put people to work building fifty mass transit systems – this is akin to fiscal policy. This plan can be implemented in stages that take into account regional economic conditions.