tag:blogger.com,1999:blog-9612609.post4924094728139627343..comments2023-09-29T06:58:20.125-07:00Comments on Badtux the Snarky Penguin: TIme for economic doom and gloom post againBadTuxhttp://www.blogger.com/profile/01345749557330760251noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-9612609.post-68667536252963706402009-06-13T03:13:18.343-07:002009-06-13T03:13:18.343-07:00is that the banks just wont lend because of deflat...is that the banks just wont lend because of deflation or fear that they wont get paid back (or paid back in less valued dollars)<br /><br />or is there just no demand for anything - people are not spending at all - i know i am notDistributorcaphttps://www.blogger.com/profile/10149154929149577121noreply@blogger.comtag:blogger.com,1999:blog-9612609.post-21707875982098902522009-06-12T14:58:31.210-07:002009-06-12T14:58:31.210-07:00I think it's a serious mistake. Right now ther...I think it's a serious mistake. Right now there's no need to monetize the debt because current Treasury short-term rates and the flow of funds data shows that current Treasury borrowing is in fact draining mattress money rather than eating into investment funding destined for other parts of the economy. But monetizing debt is one of the fundamental tools of Federal Reserve open market operations, and Bernanke is in violation of his fundamental duties as a central banker to arbitrarily take it off the table as a tool to use for re-inflating the money supply.<br /><br />In short, I believe Bernanke is allowing political considerations to override his duties as a central banker the most important of which is to prevent deflation and print sufficient money as necessary in order to have the small amount of inflation needed for capitalism to properly function (since only a small amount of inflation can get money out from mattresses and put it to use creating economic activity), and this is not good. Not good at all. Add Bernanke to the list of Neros fiddling. Sigh.<br /><br />- Badtux the Monetary PenguinBadTuxhttps://www.blogger.com/profile/01345749557330760251noreply@blogger.comtag:blogger.com,1999:blog-9612609.post-31575259691762842322009-06-12T14:26:00.307-07:002009-06-12T14:26:00.307-07:00Tux, what is your take on Bernanke saying that he ...Tux, what is your take on Bernanke saying that he is not going to monetize the debt? Similarly, with the restlessness of the bond "vigilantes". It almost seems that the banks, through the fed and bond "vigilantes", are saying we got ours and the rest of you can do without.Anonymousnoreply@blogger.com