Narayana Kocherlakota, current President of the Minneapolis
Federal Reserve Bank, said in a speech (9-26-13): “Doing whatever it takes in the next few years will mean something different. It will mean that the FOMC is willing to continue to use the unconventional monetary policy tools that it has employed in the past few years. Indeed, it will mean that the FOMC is willing to use any of its congressionally authorized tools to achieve the goal of higher employment, no matter how unconventional those tools might be.
Moreover, doing whatever it takes will mean keeping a historically unusual amount of monetary stimulus in place—and possibly providing more stimulus—even as: Interest rates remain near historic lows. Economic growth rises above historical averages. Per capita employment begins to rise appreciably. Asset prices rise to unusually high levels, leading to concerns about “bubbles.” The medium-term inflation outlook rises temporarily above 2 percent. It may not be easy to stick to this path.”
Well, now we’re talking….
Kocherlakota certainly deserves credit for his frank acknowledgements that maintaining liquidity is paramount to forestalling a deflationary crisis.
However, the Fed’s 4½ year policy of aiming their high-powered liquidity hoses at the financial services industry (primarily the big Primary Dealers) is a proven failure. The trillions of dollars they have showered on the PD’s and other ‘connected’ players has not generated economic growth. Real (inflation-adjusted) Median Household has been sliding for 5 years. Economic liberty for the large majority of Americans had been in decline.
It is time to shift gears and provide direct credit extensions to U.S. citizens.
The Leviticus 25 Plan – the $64,000 solution.