Worried about income inequality? Sheila Blair has a cure for the problem. Just make the federal government treat everybody the way it treats big banks.
Are you concerned about growing income inequality in America? Are you resentful of all that wealth concentrated in the 1 percent? I’ve got the perfect solution, a modest proposal that involves just a small adjustment in the Federal Reserve’s easy monetary policy. Best of all, it will mean that none of us have to work for a living anymore.
For several years now, the Fed has been making money available to the financial sector at near-zero interest rates. Big banks and hedge funds, among others, have taken this cheap money and invested it in securities with high yields. This type of profit-making, called the “carry trade,†has been enormously profitable for them.
So why not let everyone participate?
Under my plan, each American household could borrow $10 million from the Fed at zero interest. The more conservative among us can take that money and buy 10-year Treasury bonds. At the current 2 percent annual interest rate, we can pocket a nice $200,000 a year to live on. The more adventuresome can buy 10-year Greek debt at 21 percent, for an annual income of $2.1 million. Or if Greece is a little too risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a year. (No sense in getting greedy.)
Think of what we can do with all that money. We can pay off our underwater mortgages and replenish our retirement accounts without spending one day schlepping into the office. With a few quick keystrokes, we’ll be golden for the next 10 years.
Read the whole thing.
I bet she can convert a lot of conservatives into going along with this one.
No Man
It’s similar to what FNMA and FHMLC were doing.
Here is how it’s done. The Fed opens a checking account in your family name; deposits $10,000,000; and sends home a check book. The checks are drawn on a FRB. They are as good as gold; except they can create $100,000,000 trillion a day and gold is what it is.
The Fed does this when it buys US Treasury debt or lends to banks at the discount window. Banks do it too; but they’re limited by the need to maintain capital and reserves.
Ms Bair’s is a “modest proposal” similar to Swift’s essay suggesting solving 18th century Ireland’s hunger and population problems by bearing and eating infants.
Arguably, Ms. Bair, FDIC Chairman, was one of the three competent persons in the federal government since Bush left.
They are searching for the other two.
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