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Friday, September 19, 2014 2:27 PM

Idiotic Proposals for Fed to Give Away Money

A Fiscal Times, Yahoo Finance article by by John Grgurich claims that Instead of QE, Fed Could Have Given $56,000 to Every Household in America .

Grgurich formulated his article after reading "an intriguing piece just published in Foreign Affairs, Brown University political economist Mark Blyth and London-based hedge fund manager Eric Lonergan argue the Fed could have done better by pursuing a far different type of grand policy experiment."

The "intriguing piece" is Print Less but Transfer More, Why Central Banks Should Give Money Directly to the People.

Sheer Idiocy

  • First, the Fed cannot give away money, it can only make money available for lending. 
  • Second, the idea that the Fed should give away money is ludicrous, even it the Fed could. 
  • Third, Grgurich is in severe need of math lessons as to what actually transpired.  

The Math

According to the census department the number of US households is 115,226,802.

Base Money Supply
has gone up from $848 billion at the start of 2008 to $4.150 Trillion today. That is an increase of roughly $3.3 trillion.

An increase in money supply of $3.3 trillion is not the same thing as a gift of $3.3 trillion. At most, banks made 0.25% interest (free money) on excess reserves parked at the Fed.

The actual amount of excess reserves is $2.7 trillion.

0.25% of $2.7 trillion is $6.75 billion. That is the amount the Fed effectively gives banks, per year. Spread among 115,226,802 households the gift would be $58.58 per year (less actually because excess reserves grew over time they did not suddenly hit $2.7 trillion).

Mike "Mish" Shedlock

9:33 AM

"Surprising" MH17 Crash Update

The title of this article, "Surprising" MH17 Crash Update, is accurate only in the sense the average sheep believes the average mainstream media report.

Since that is the majority, the title is accurate. Mish readers, however, may find this report not surprising.

Reader Marina from Toronto explains via email ....

Hello Mish,

My name is Marina. I am a long-time fan of your blog and a friend of Nicole Foss at Automatic Earth.

I am also a volunteer translator for The Vineyard Saker website. Our team has just translated a very important report on the MH17 crash released by the Russian Union of Engineers.

We have included several prominent journalists and other persons in the distribution of this important document.

Union of Engineers Report

Please open your minds and download the Translated Report on MH17.

Forget about the origin and give the report a read. It may open your eyes.

Looking for another opinion? If so, please consider the Automatic Earth Commentary on MH17.

I side with Raul on Automatic Earth who says "At the very least the report should be broadly discussed in western media, and western experts asked to refute what parts of it they find fault with."

Indeed. Where is the discussion?

My take: There is no government interest in any possibility other than a preordained self-serving US conclusion. Thus, there is not, nor will there be any mainstream media analysis of that nature barring a Watergate or Snowden-type disclosure.

Mike "Mish" Shedlock

Thursday, September 18, 2014 11:45 PM

Lesson of the Day: The Political Class Always Wins

With a ramp up in fearmongering led by financial institutions and every UK political party, the preliminary votes indicate Scottish Anti-Independence Campaign Poised for Victory in Vote.

With 26 of Scotland’s 32 local authorities declared, the Better Together camp backed by Prime Minister David Cameron and the main U.K. parties had garnered 54 percent of the vote, while the “yes” campaign led by Scottish National Party leader Alex Salmond had 46 percent.

“It does look like we have secured a ‘no’ vote,” Chief Secretary to the Treasury Danny Alexander, a Liberal Democrat and the most senior Scot in the U.K. government, told Sky News as the first results trickled in. “But a ‘no’ vote is also for change, it’s our responsibility to get on with that.”
Looking Ahead

Via email, Steen Jakobsen, chief economist at Saxo Bank writes ...
We have Quebec like situation in Scotland now – The independence talk is gone for now but the next item on the agenda politically is UK referendum next year where the independence and anti-EU vote will continue to play a role. 2017 is the big year, if the promised EU votes takes place……

EU did not do themselves any favors by ruling Scotland out of EU even before the election results was known. Scots, like danes, don’t take outside pressure easy especially from something like the EU.

The main take away from macro perspective is the move towards very nationalistic and domestic driven political agendas. The EU and global agendas now plays 3rd violin as lack of growth and reforms become real issue.

The real economy is at least politically catching up to the artificial markets, so while the markets celebrate RISK ON again this morning, the politicians around Europe is taking notes: Change or lose your job! Just ask the Labor party in the UK who almost lost their ability to get back into government as 30 MP’s would have been lost overnight with a Yes.

Steen Jakobsen
Lesson Learned

For the political class, this vote was far too close for comfort. Next time, there won't be a vote.

In the case of Spain, a Catalan vote for independence scheduled later this year will simply be declared illegal. Should the vote for independence fail, the vote would of course be accepted.

Mike "Mish" Shedlock

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