Dallas-Fed Umlaufgebühr für Geld - 500 Beiträge pro Seite

[LostLilith]

http://moneycentral.msn.com/content/p51071.asp


It`s positively diabolical. Some Dallas Fed economists suggest perking up the economy by taking a piece of every dollar you have the gall to save.
By Bill Fleckenstein
There`s always a loss of pride involved when we own up to our mistakes. It`s a moment in time, though. It passes. Then we are enriched for what those mistakes have taught us. But when pride turns into hubris, there`s no learning from one`s mistakes. In fact, hubris sometimes drives the need to actively cover them up. That is the story of our Fed.
A few weeks ago, I was sent a paper by Evan Koenig and Jim Dolmas of the Federal Reserve Bank of Dallas, titled "Monetary Policy in a Zero-Interest-Rate Economy." I started to write up my thoughts about it, but I was so incensed that I had to set them aside. I returned to the paper recently, only to feel the same sense of outrage. What it proposes is one of the most maniacal, diabolical ideas this group of idiots has come up with so far. I urge everyone to read this paper and consider what its implications are. This will be on the final, guaranteed. To read the text of the paper, click on the link at left.
Fed pens Frankensteinian nonfiction
Koenig and Dolmas start out by not understanding that deflation is a consequence of prior policy actions that create a bubble and have severe economic consequences. They fall into the trap that many people do, thinking that deflation is a disease, rather than the symptom of a previous disease -- wildly excessive monetary policy and the misallocation of capital associated with it. What they do is talk about how our experience in the 1930s and Japan`s problems were a function of central banks not acting quickly enough. They fail to recognize that the problem is a function of the fact that the central banks acted like complete drunken fools in the first place. That precipitated the ensuing economic problems -- and today`s environment that doesn`t have enough inflation to suit the Fed.
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They then go on to talk about the challenges of, in essence, diddling the market in a near-zero-interest-rate environment. (In the past, I have likened this to the problems encountered by physicists near a black hole. Things are just different.) The Fed is so panicked about the stagnant economy that it`s thinking about resorting to mad experiments to get its own way, i.e., make the economy do as it commands. Now as regular readers know, I don`t really expect to see deflation. But the fact that the Fed would contemplate these measures is absolutely frightening.
Capital punishment for savers
There’s a lot of chatter in this paper about the Fed helping the economy by buying real goods and services, or other domestic securities, such as longer-term Treasurys. But here’s the most staggering idea in the paper: It contemplates taxing your savings.
Koenig and Dolmas propose what they admit is a radical idea: a "stamp tax." In this, a currency would have to be stamped periodically, and you would be charged for your currency, "in order to retain its status as legal tender. The stamp fee could be calibrated to generate any negative, nominal interest rate the central bank desired." They toss out a few numbers, say 1% a month, to validate your currency. In other words, it would cost you 12% a year to have the gall to save money.
So basically, these unelected morons are contemplating a new law -- "Thou shalt not save, thou shalt spend." And, if you don`t, we`re going to confiscate your money, via a tax, after we`ve already confiscated your money via debasement.
It is truly breathtaking to witness the measure of hubris, arrogance and wanton disrespect of people`s money on the part of these idiots. That they would even entertain the idea of such a penalty (not that they will necessarily be able to get away with it) boggles the mind. That`s the mindset of this group of lunatics, that it would cast itself as a dictator from ancient times, with the public there to do its bidding.
Meantime on Wall Street, the current mindset can best be described as remarkably bullish. Investors Intelligence recently reported that that its investor sentiment index indicated 60% bulls and just 16% bears -- a reading that has not been more lopsided since the spring of 1987, which I believe is saying something. I myself have not been operating bearishly, as I have been waiting for this rally to play itself out. I have a very dim outlook for the second half. Yet virtually no one seems to share that view, other than my good friend Fred Hickey, editor of the influential High-Tech Strategist newsletter, or Morgan Stanley chief economist Stephen Roach (more about him in a minute). As I continue to reappraise my assessment, I ask myself, what is it that these folks see that I do not see? Why is it that they are so lathered up about this particular moment in time?
A few things come to mind that separate the environment right now from other bear market rallies:
Many people were just tired of being bearish.
The market has been rallying for a time now, and it`s currently up on the year.
In February and March, many folks feared terrorism and war. Those fears in particular made me nervous about being short back then (i.e., folks were bearish for the wrong reasons). But these reasons don`t tempt me to change my view.
Lip service vs. embracing the bubble
More importantly, it strikes me that many people fail to understand that we had a bubble, and that it has created long-lasting, unavoidable repercussions. They can say the words, "We had a bubble," but they never get beyond that to accept the implications. So, when you put a summation sign in front of all this, it adds up to folks being particularly optimistic (more so than at any time in 16 years) about right here, right now, when in fact, it`s just another bear market rally and rate cut.
Perhaps the cumulative effect of the previous 12 cuts will make the 13th magical. Perhaps the cumulative effect of what`s gone on from a downsizing standpoint may matter. Perhaps the economy will see a bounce, but I find it unlikely that we will see anything more than that, if we even get that. To summarize, the bulls have yet to come up with a persuasive argument for their case. I still firmly believe that the second half is going to be a disappointment, both in the economy and the stock market.
Sentiment is getting set up for a letdown
Further, since so many people have swung their views around so hard, betting heavily on second-half wonders, I believe that sentiment is now more binary than ever. If disappointment starts to rear its ugly head, we will see a real wipeout in the equity market. That could happen later this year, even if the economy does better for a short period. (As an aside, and to repeat my recent comments, the Fed has now positioned itself so that in the event of an economic recovery, the law of unintended consequences might surface, in terms of a bond market wipeout -- especially if the Japanese bond market starts to decline.) And that`s the situation in which we find ourselves, with very few skeptics remaining. Yet, the people making the bullish case, though they could possibly turn out to be right, have nothing new to bolster their prior arguments, which have not worked.
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The only person who inhabits the Wall Street mainstream and has voiced concern about the bubble and its aftermath these past three to five years is Stephen Roach. In his piece titled "Endless Bubble," he paints the picture of a Fed in the serial bubble-blowing business. First, the Fed created the stock market bubble. Now, to try to solve the problems of the bust, it`s creating a bubble in the bond market. "The result," he writes, "is a seemingly endless array of bubbles that only heightens the perils of the post-bubble endgame. . . . The legacy of these bubbles is a sad testament to the excesses of an increasingly wealth-dependent U.S. economy: Consumers have now become addicted to the `extra` purchasing power they can extract from overvalued assets." This is as succinct and brilliant a discussion as you`ll find on the subject.
Time to own up to the bubble
My favorite part, however, was his conclusion: "The biggest difference between my bearish view of the world and the more sanguine views of others can be traced to the bubble. More than three years after America`s equity bubble popped, there is an understandable temptation to believe that it`s time to move on. A massive dose of fiscal and monetary stimulus, in conjunction with a sharp rebound in the stock market, adds to that conviction.
"As I see it, however, the legacy of this monstrous bubble endures -- not just in financial markets but also in the form of the excesses that it has fostered in the real economy and in its balance-sheet underpinnings. Until those excesses are purged, I maintain my view that America still needs to be seen through the lens of a post-bubble workout. As one bubble morphs into the next one, the moral hazard dilemma only deepens. And the endgame -- including the risks of deflation and a dollar crisis -- appears all the more treacherous...."

[LostLilith]

dazu, etwas älter:


http://ideas.repec.org/p/fip/fedrwp/00-3.html

und


Reuters
UPDATE - Dallas Fed eyes long-term debt in deflation fight
Thursday May 29, 5:01 pm ET

WASHINGTON, May 29 (Reuters) - Buying longer-term government debt could prove to be the Federal Reserve`s best anti-deflation tool if it ran out of room to cut interest rates, but such a strategy is not without problems, researchers at the Dallas Federal Reserve Bank said.

In a paper posted on the regional Fed bank`s Web site earlier this week, economists Evan Koenig and Jim Dolmas said the issue is ripe for consideration because the Fed has little room to maneuver on short-term interest rates and the economy may need more stimulus.

"Since August ... the incipient (economic) recovery hasn`t unfolded according to plan," the researchers said in the paper, which was based on a presentation they had made to the regional Fed bank`s Board of Directors.

"We`re hopeful that positive trends will re-emerge now that the Iraq situation has been more-or-less resolved. But if we`re wrong, or if another adverse shock hits the world economy, then new stimulus will be required."

The authors said that if the benchmark overnight rate were to drop much further from its current low of 1.25 percent, popular money market mutual funds could find it difficult to cover their costs -- an issue Fed chief Alan Greenspan (News) touched on in congressional testimony last week.

Because of the market stress a low overnight rate might cause, many economists on Wall Street think the Fed could turn to so-called unconventional policy tools once the rate reached 0.75 percentage point if further stimulus were needed.

Dallas Fed Research Director Harvey Rosenblum has said Fed policymakers would discuss "unconventional" tools at their next meeting on June 24-25.

The authors outline a number of tactics the Fed could use, but hone in on the idea of buying longer-term government debt.

"In the event it must act alone, the Fed`s best policy option is probably open-market purchases of longer-term government bonds," they said. The Fed currently conducts open market operations in short-term securities only.

They warn, however, that calibrating such operations could prove difficult.

"No one, we believe, has a good quantitative sense of the mechanics of this strategy -- that is, what size operations are needed to secure a given stimulus?" Koenig and Dolmas said.

"If standard policy options are exhausted, the Fed`s quiver is by no means empty. But the arrows that remain are less familiar and, perhaps, not quite as straight as the ones that have already been fired."

One of the other measures they said the Fed could pursue would be to substantially weaken the dollar.

But they cautioned that a policy of foreign exchange intervention would, in effect, be conducting a monetary contraction in the economies of U.S. trading partners.

"If the foreign central bank was attempting to pursue a neutral or expansionary policy, the Fed`s action might generate some consternation or even a policy response," they warned.

The researchers also said it would be possible for the Fed to essentially underwrite a large expansion of fiscal policy by purchasing any fresh government debt.

They further said the idea of instituting a "carry tax" on money merited further study as a possible way to eliminate the so-called zero-bound problem that comes with interest rates.

"This is particularly the case if achieving and maintaining price stability makes bumping up against the zero interest rate bound a more frequent event," they said.

Since interest rates cannot drop below zero, a central bank faces a limit in the degree to which it can rely on lowering rates to spur growth.

A carry tax would lower the value of currency the longer it is held without making a transaction, offering a means to put in place what would effectively be a negative interest rate.