Kaua võib - Euroopa, raisk, raha trükkima !
Kommentaari jätmiseks loo konto või logi sisse
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Kaua nad raisk seal jauravad, euro korralikku inflasse ja makske siis oma võlad ära.
And all will be happy. -
põhiline on ehitada trükimasin, mis trükib inflatsioonist kiiremini.
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Kõik istuvad ja ootavad, näpp p-s ja vaatavad mida börs teeb. Isegi Eesti taksojuhid lükkavad oma uue auto ostu börsi tõttu hetkel edasi. What da heck. Reaalmajanduse inimesed peaks oma bus-i ikka rahulikult edasi ajama.Massipsühhoos on kogu sellest jamast saanud.
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Põlissoomalsed, rapeid, ei oleks happy.
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Richard W. Fisher
Dallas FED
Connecting the Dots: Texas Employment Growth; a Dissenting Vote; and the Ugly Truth (With Reference to P.G. Wodehouse)
Remarks at the Midland Community Forum. Midland, Texas, August 17, 2011
FOMC Decision
Now to the second matter I wish to discuss with you today: my decision to dissent from the commitment of the majority of my colleagues on the FOMC in their decision to hold the base interest rate for interbank lending―the fed funds rate, the anchor of the yield curve―at its current level well into 2013.
I have posited both within the FOMC and publicly for some time that there is abundant liquidity available to finance economic expansion and job creation in America. The banking system is awash with liquidity. It is a rare day when the discount windows―the lending facilities of the 12 Federal Reserve banks―experience significant activity. Domestic banks are flush; they have on deposit at the 12 Federal Reserve banks some $1.6 trillion in excess reserves, earning a mere 25 basis points―a quarter of 1 percent per annum―rather than earning significantly higher interest rates from making loans to operating businesses. These excess bank reserves are waiting on the sidelines to be lent to businesses. Nondepository financial firms—private equity funds and the like―have substantial amounts of investable cash at their disposal. U.S. corporations are sitting on an abundance of cash―some estimate excess working capital on publicly traded corporations’ books exceeds $1 trillion―well above their working capital needs. Nonpublicly held businesses that are creditworthy have increasing access to bank credit at historically low nominal rates.
I have said many times that through the initiatives we took to counter the crisis of 2008–09, and the dramatic extension of the balance sheet that ensued, the Fed has refilled the tanks needed to fuel economic expansion and domestic job creation. Though I questioned the efficacy of the expansion of our balance sheet through the purchase of Treasury securities known as “QE2,” I have come to expect that the Federal Open Market Committee would continue to anchor the base lending rate at current levels and also maintain our abnormally large balance sheet, now with footings of almost $2.9 trillion, for “an extended period.”
I do not believe it wise to commit to more than that, or to signal further accommodation, when the cheap and abundant liquidity we have made available is presently lying fallow, and when the velocity of money remains so subdued as to be practically comatose. At the FOMC meeting, the committee announced that it “currently anticipates that economic conditions … are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.” In monetary parlance, that is language designed to signal that we are on hold until then.
I voted against that commitment-cum-signal. In the press’ reporting of my dissenting vote and those of the other two members of the FOMC who voted against that commitment―Mr. Kocherlakota, my counterpart from the Minneapolis Fed, and Mr. Plosser, my counterpart from Philadelphia―there was substantial speculation as to the reasons for our dissent. I will let my other two colleagues speak for themselves; I can only speak for myself. Let me make clear why I was opposed to freezing the fed funds rate for two years.
First, in reporting my views to the committee, I noted my concern for the fragility of the U.S. economy and weak job creation. It might be noted by the press here today that although I am constantly preoccupied with price stability―in the aviary of central bankers, I am known as a “hawk” on inflation―I did not voice concern for the prospect of inflationary pressures in the foreseeable future. Indeed, the Dallas Fed’s trimmed mean analysis of the inflationary developments in June indicated that the trimmed mean PCE turned in its softest reading of the year. The trimmed mean analysis we do at the Dallas Fed focuses on the price movements of personal consumption expenditures. It is an analysis that tracks the price movements of 178 items that people actually buy, such as beer, haircuts, shoe repair, food and energy prices. In June, the trimmed mean came in at an annualized rate of 1.3 percent, versus 2.1 percent for the first five months of the year. The 12-month rate was 1.5 percent.
My concern is not with immediate inflationary pressures. Core producer prices are still increasing at a higher than desirable rate. But I have suggested to my colleagues that while many companies have begun and will likely continue to raise prices to counter rising costs that derive from a range of factors—including the run-up of commodity prices in 2010 and increases in the costs of production in China—weak demand is beginning to temper the ability of providers of goods and services to significantly raise prices to consumers.
My concern is with the transmission mechanism for activating the use of the liquidity we have created, which remains on the sidelines of the economy. I posit that nonmonetary factors, not monetary policy, are retarding the willingness and ability of job creators to put to work the liquidity that we have provided.
I have spoken to this many times in public. Those with the capacity to hire American workers―small businesses as well as large, publicly traded or private―are immobilized. Not because they lack entrepreneurial zeal or do not wish to grow; not because they can’t access cheap and available credit. Rather, they simply cannot budget or manage for the uncertainty of fiscal and regulatory policy. In an environment where they are already uncertain of potential growth in demand for their goods and services and have yet to see a significant pickup in top-line revenue, there is palpable angst surrounding the cost of doing business. According to my business contacts, the opera buffa of the debt ceiling negotiations compounded this uncertainty, leaving business decisionmakers frozen in their tracks.
I would suggest that unless you were on another planet, no consumer with access to a television, radio or the Internet could have escaped hearing their president, senators and their congressperson telling them the sky was falling. With the leadership of the nation―Republicans and Democrats alike―and every talking head in the media making clear hour after hour, day after day in the run-up to Aug. 2 that a financial disaster was lurking around the corner, it does not take much imagination to envision consumers deciding to forego or delay some discretionary expenditure they had planned. Instead, they might well be inclined to hunker down to weather the perfect storm they were being warned was rapidly approaching. Watching the drama as it unfolded, I could imagine consumers turning to each other in millions of households, saying: “Honey, we need to cancel that trip we were planning and that gizmo or service we wanted to buy. We better save more and spend less.” Small wonder that, following the somewhat encouraging retail activity reported in July, the Michigan survey measure of consumer sentiment released just recently had a distinctly sour tone.
Importantly, from a business operator’s perspective, nothing was clarified, except that there will be undefined change in taxes, spending and subsidies and other fiscal incentives or disincentives. The message was simply that some combination of revenue enhancement and spending growth cutbacks will take place. The particulars are left to one’s imagination and the outcome of deliberations among 12 members of the Legislature.
Now, put yourself in the shoes of a business operator. On the revenue side, you have yet to see a robust recovery in demand; growing your top-line revenue is vexing. You have been driving profits or just maintaining your margins through cost reduction and achieving maximum operating efficiency. You have money in your pocket or a banker increasingly willing to give you credit if and when you decide to expand. But you have no idea where the government will be cutting back on spending, what measures will be taken on the taxation front and how all this will affect your cost structure or customer base. Your most likely reaction is to cross your arms, plant your feet and say: “Show me. I am not going to hire new workers or build a new plant until I have been shown what will come out of this agreement.” Moreover, you might now say to yourself, “I understand from the Federal Reserve that I don’t have to worry about the cost of borrowing for another two years. Given that I don’t know how I am going to be hit by whatever new initiatives the Congress will come up with, but I do know that credit will remain cheap through the next election, what incentive do I have to invest and expand now? Why shouldn’t I wait until the sky is clear?”
Based on past behavior of fiscal policy makers, businesses understandably regard the debt ceiling agreement and the political outcome of negotiations between Congress and the president with the suspicion akin to how the British humorist P.G. Wodehouse regarded his aunts: “It is no use telling me there are bad aunts and good aunts,” he wrote. “At the core they are all alike. Sooner or later, out pops the cloven hoof.”[2]
It will be devilishly difficult for businesses to commit to adding significantly to their head count or to meaningful capital expansion in the United States until clarity is achieved on the particulars of how Congress will bend the curve of deficit and debt expansion and the “cloven hooves” are revealed. No amount of monetary accommodation can substitute for that needed clarity. In fact, it can only make it worse if business comes to suspect that the central bank is laying the groundwork for eventually inflating our way out of our fiscal predicament rather than staying above the political fray—thus creating another tranche of uncertainty.
In the interest of full disclosure, I should add that I was also concerned that just by tweaking the language the way the committee did, our action might be interpreted as encouraging the view that there is an FOMC so-called “Bernanke put” that would be too easily activated in response to a reversal in the financial markets. For those of you unfamiliar with the expression “Bernanke put,” or more generally, a “central bank put,” this term refers to the concept that a central bank will allow the stock market to rise significantly without tightening monetary policy, but will ease monetary policy whenever there is a stock market “correction.” Given the extent of the drop in the stock market leading up to and following Standard & Poor’s downgrade of U.S. debt, combined with the FOMC’s commitment to hold short-term rates near zero until mid-year 2013, some cynical observers might interpret such a policy action as a “Bernanke put.” My long-standing belief is that the Federal Reserve should never enact such asymmetric policies to protect stock market traders and investors. I believe my FOMC colleagues share this view.
Connecting the Dots
Now, how do you connect the dots between Texas’ record of economic growth and my dissenting vote?
Despite the fact that Texas has severely limited social services and an education system that faces great challenges, people and businesses have been picking up stakes and moving to Texas in significant numbers over a prolonged period.[3] It should be noted that in the last census, Texas gained population and congressional seats, while California’s population growth and congressional representation was static and New York’s was diminished. Jobs have been created for American workers in Texas in several different sectors, not just in the oil and gas and mining sectors. People have taken those jobs of their own free will, even though the jobs may not measure up to the compensation levels everyone would like. And yet Texas, like all states, is subject to the same monetary policy as all the rest: We have the same interest rates and access to capital as the residents of any of the other 49 states, for the Federal Reserve conducts monetary policy and regulates financial institutions under its purview for the nation at large. From this, I draw the conclusion that private sector capital and jobs will go to where taxes and spending and regulatory policy are most conducive to growth.
Therein lies a lesson for our fiscal policy makers as they grapple with their monumental task of reconfiguring fiscal policy and eliminating the prevailing uncertainty about their remedy.
We live in a world that, through steadfast sacrifice of the American treasure and with blood and capable diplomacy, won the Cold War, induced the Chinese to pull back the Bamboo Curtain and opened up the majority of the world to once unimaginable economic opportunity. China, the rest of Southeast Asia, Eastern Europe, India, most of Latin America and significant swathes of Africa are eager to improve the lot of their people through full participation in the global economy. In doing so, they have become serious competitors for capital, including that plentiful and affordable capital we at the Federal Reserve have created.
In a cyberized, globalized world, those with the means to create jobs will gravitate to those places that provide the best prospect for a return on the investment of the abundant capital on business’ balance sheets or available to them in the marketplace or from eager bankers. Just as many people and firms within the United States have relocated to Texas from other states, investment will flow to countries anywhere in the world where it is most welcome.
Our fiscal authorities must not only figure out the way to contain the nation’s runaway deficits and public debt accumulation, but they must do so in a manner that is competitive with others who seek access to our money, and do so in a manner that does not pull the rug out from under the meager recovery we are experiencing. The Committee of 12 and the president have an awesome task. Essentially, they must reboot our entire system of economic incentives and come forward with an updated tax and spending and regulatory regime that incentivizes businesses to invest in the United States and create jobs for American workers rather than gravitate to foreign shores. And they must do so in a manner that avoids engaging in a race to the bottom, but rather, puts us back on the path to ever higher achievement of prosperity.
The sooner they get on it, the better. Uncertainty is corrosive; it is hurting job creation and capital expansion when we need it most. As Margaret Thatcher would say: “Don’t dawdle. And don’t go wobbly on us, Congress.” Monetary policy cannot substitute for what you must get on with doing. Get on with your job.
The Ugly Truth
I think I have made it pretty clear today that I believe what is restraining our economy is not monetary policy but fiscal misfeasance in Washington. We elect our national leaders to safeguard our country. An integral part of that consists of safeguarding the nation’s fiscal probity. Pointing fingers at the Fed only diminishes credibility―the ugly truth is that the problem lies not with monetary policy but in the need to construct a modern, appropriate set of fiscal and regulatory levers and pulleys to better incentivize the private sector to channel money into productive use in expanding our economy and enriching our people. Only Congress, working together with the president, has the power to write the rules and provide the incentives to correct the course of the great ship we know and love as America. I hope you, as the voters who put them in office, will demand no less of them.
Thank you. I will be happy to do my level best to avoid answering any questions you might have.
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About the Author: Richard W. Fisher is president and CEO of the Federal Reserve Bank of Dallas.
Notes: The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System.
See “Minimum Wage Workers in Texas,” Bureau of Labor Statistics, March 28, 2011, http://www.bls.gov/ro6/fax/minwage_tx.htm.
The Code of the Woosters, by P.G. Wodehouse, New York: Doubleday, Doran, 1938.
See “Texas: What Makes Us Exceptional? Where Are We Vulnerable?,” speech by Richard W. Fisher before the 2010 Pre-Session Legislative Conference, Dec. 2, 2010. -
momentum. lingist oleks lihtsalt ka piisanud :)
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Paistab olevat tänuväärt katse tuua Kristjan1 ära finantskriisi teemast. Eraldi MMT vs. teised teemat oleks ammu juba vaja olnud.
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abesiki,
eesti autojuhte saad sa naerda veel täpselt üks ja kolmeveearnd korda;
börs on ilus asi - samas, ainuke reegel mis kehtib kõigele süsteemidele (arvutile, jalaravimile, riigile) on - kõik korrumpeerub; kõik kaotab aegamööda mõtte ja usalduse. -
frede, siiamaani on siiski maailm summa summarium liikunud järjst positiivsema ja seaduspärasema mudeli poole. Kui see oleks vastupidi taoksime juba ammu üksteisele kivide ja puunuiadega vasta pead.
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jääb tunne, et mingi ringkond "halle kardinale" enam ei taha sellist euroopa liitu ning käib tegevus selle "hävitamiseks" - peatage lasnamäe
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tulu, kriisid tuegvdavad riiki, kriise on vaja hoopis riikide tugevdamiseks mitte lammutamiseks.
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Siin on üks üsna hea seletus, mis internetist leidsin. Meie opereerime praegu monetarismi järgi, sest valdav enamus poliitikuid ja igasugu muid tegelinskeid on seda õppinud.
Kaks erinevat vaadet ja üsna kokkuvõtlik seletus. Minu hinnangul oli monetarism hea teooria kullastandardi korral, kuid täna ei kirjelda see rahandussüsteemi adekvaatselt.
Olenemata sellest, kas sa oled fiskalist või monetarist, pooldad sa majanduse poliitilist juhtimist. Lihtsalt soovitad erinevaid tööriistu kasutada selleks. Austerlased pooldavad kulda rahana ja nemad ei poolda poliitilist juhtimist.
Monetarism v. Fiscalism
MV = PY is an identity that means the amount of money (M) multiplied by the turnover of money (V for velocity) is identical to the amount of economic activity (Y) multiplied by the price level (P). MV = PY also appears as MV = PT. Here the T in place of Y stands for transactions.
What this says, in effect, is that purchases during a period are equal to sales over the period. Or, since what is spent is someone else's income, income equals expenditure over the period. MV represents money spent, and PY, or PT represents money earned. Give and take are always equal as a matter of accounting.
Generally, what is of interest in macroeconomics is Y, since Y is aggregate income (demand) and also aggregate product (supply), that is, Y (national income) equals GDP (gross domestic product). This is written as the identity, Y = C (for household consumption expenditure) + I (for firm capital expenditure) + G (for government fiscal expenditure) + (X - M), signifying net exports, that is, the trade balance. Summing this, national income (aggregate demand) equals national expenditure (aggregate supply).
Monetarism v. Fiscalism
On one hand, monetarists target money supply as the independent variable of economic policy since they view it as the chief means to control firm investment, hence, income leading to demand. For in their view, supply, which comes from investment, creates its own demand, which comes from income, iaw Say's law, in that firm expenditure funds household income.
On the other hand, fiscalists target income since income is the basis of effective demand, and in their analysis demand draws forth supply, since firms invest in response to effective demand for their goods. Effective demand sends a signal to firms to invest.
Strict monetarists reject fiscalism as ineffective. Fiscalists reject monetarism in a non-convertible floating rate system as inefficient if not also ineffective. New Keynesians accept fiscalism in a so-called liquidity trap but not otherwise. This is the basic kerfuffle going on in many current debates.
The basis of the debate between monetarists and fiscalists that is now raging is over whether monetary or fiscal policy is most appropriate, although some economists argue that neither is appropriate and the government should but out and let "the free market" take its course. This is crucial to understanding the debate between MMT and mainstream economists, most of whom are monetarists or have monetarist tendencies.
Monetarism
Monetarists are most concerned with M rather than Y, since their focus is inflation. While all economists agree that MV = PY, Milton Friedman used this identity to ground the quantity theory of money (QTM), which explains inflation in terms of change in M, or money supply. QTM holds that increases in M (money supply) imply a corresponding increase in P (price level), i.e., inflation, presuming that V (money turnover or velocity) and Y (product) are constant.
For monetarists, M (money supply) is the independent variable in MV = PY, changes in which influence the price level. So, according to monetarists, M needs to be controlled through changes in interest rates, since it is the interest rate channel that affects the relationship of saving and investment as primary determinants of economic activity.
The relationship of saving and investment is adjusted through interest rates to encourage investment without provoking inflation. In this view, saving funds investment. The central bank sets interest rates iaw inflationary expectations to adjust the balance of savings and investment, increasing rates to encourage saving when inflationary expectations rise, and lowering them to encourage investment when inflationary expectations are low enough.
This view presumes a credit-based monetary system, in which money is borrowed into existence from a central bank that is independent of the Treasury, or from the private sector, instead of being issued directly by the Treasury. This assumes that loanable funds are based on fractional reserve banking and the so-called money multiplier, such that deposits (saving) create reserves that fund loans. By adjusting reserves through monetary operations involving interest rate setting and reserve requirements, the central bank can therefore control the endogenous money supply in this view, and since the Treasury issues debt instruments sold to the private sector in order to obtain reserves needed for fiscal expenditure, it competes for loanable funds to the degree that expenditure exceeds revenue from taxation, thereby "crowding out" private investment.
In this view, interest rates are used to target inflation expectation, using unemployment as a tool wrt a rule that is based on a presumption of a natural rate of unemployment defined as "full employment." This creates a buffer stock of unemployed, which implies permanent idle resources. Idle resources are inefficient and wasteful, which economists agree should be avoided if possible.
This is admittedly somewhat of an oversimplification since the monetarist position has evolved since Friedman developed it, but it gives the basic idea as a heuristic device.
Keynesians dispute QTM. For a Post Keynesian explanation of QTM, see John T. Harvey, Money Growth Does Not Cause Inflation (Forbes, May 14, 2011).
Fiscalism and MMT
For fiscalists, employment is of primary concern. Y (income) is the independent variable in PY = MV, changes in which affect effective demand. So fiscalists hold that Y needs to be controlled through fiscal policy, which affects effective demand. Effective demand draws forth investment to meet profit opportunity, and effective demand is income-dependent, since consumption cannot be funded by drawing down savings, selling assets, or financed by borrowing sustainably. If supply and demand are stabilized at optimal resource use, they unemployment is reduced.
The holy grail of macroeconomics is full employment along with price stability, which implies highly efficient use of resources while controlling price level.
In the first place, MMT rejects the monetarist explanation virtually in toto, claiming that it is based on an incorrect view of actual operations of the Treasury, central bank, and commercial banking, and how they interact. Secondly, MMT explains how to succeed in the quest for the holy grail through employment of the sectoral balance approach developed by Wynne Godley and functional finance developed by Abba Lerner. The thrust of this approach is to maintain effective demand sufficient for purchase of production (supply) at full employment by offsetting non-government saving desire with the currency issuer's fiscal balance. This stabilizes aggregate demand and aggregate supply at full employment (adjusting aggregate demand wrt changes in population and productivity) without risking inflation arising owing to excessive demand.
Note that this does not apply to price level rising due to supply shock, such as an oil crisis provoked by a cartel exerting a monopoly, or shortage of real resources., e.g. due to natural disaster, war, or climate. This is a separate issue and must be addressed differently according to MMT.
In a non-convertible floating rate monetary system, the currency issuer is not constrained operationally. The only constraint is real resources. If effective demand outruns the capacity of the economy to expand to meet it, then inflation will result. If effective demand falls short of the capacity of the economy to produce at full employment, then the economy will contract, an output gap open, and unemployment will rise.
This view is based on a Treasury-based monetary regime, in which money is created through currency issuance mediated by government fiscal expenditure. Issuance of Treasury securities to offset deficits functions as a reserve drain, which functions as a monetary operation that enables the central bank to hit its target rate rather than being a fiscal operation involving financing. Similarly, taxes are seen not as a funding operation for government expenditure, but as a means to withdraw non-government net financial assets created government expenditure, in order to control effective demand and thereby reduce inflationary pressure as needed iaw the sectoral balance approach and functional finance.
This view is quite the opposite of the credit-based monetary presumptions of monetarists, which MMT regards as appropriate to a convertible fixed rate regime like the gold standard but not to the current non-convertible floating rate system that began when President Nixon shut the gold window on August 15, 1971, and was later adopted by most nations, excepting those that pegged their currencies, ran currency boards, or gave up currency sovereignty as did members of the European Monetary Union in adopting the euro as a common currency.
It is important to note that MMT economists are NOT recommending the adoption of a Treasury-based monetary system. Rather, they are asserting that the present monetary system is already Treasury-based operationally, even when governments choose to impose political restraints that mimic obsolete practices and create the impression that these are operationally necessary.
MMT also recommends an employer assurance program (ELR, JG) to create a buffer stock of employed that the private sector can draw on as needed. This reduces idle resources and presents the possibility of achieving actual full employment (allowing 2% for transitional) along with price stability, which monetarism presumes inflationary. The ELR program also establishes a wage floor as price anchor for price stability.
