Eggertsson - Redux and Update

By: Mick P | Tue, Sep 23, 2008
Print Email

An Occasional Letter From The Collection Agency

It is time for a short update to the series of artices that started with The Future Actions of The Federal Reserve And US Govt Are Known

Many people have been wondering what the cost of all this intervention may be. I firmly believe that Bernanke, Paulson and the US Government are following the ideas laid out in Eggertsson's work "An interpretation of The Deflation Bias and Committing to Being Irresponsible".

The following is from the work that Eggertsson did and I interpreted. It shows that the plan to buy assets was long in place before the current problems. One of those credited in the paperby Eggertsson is Ben Bernanke:

What Eggertsson means is if tax cuts are so large as to cut govt spending by 10% (tax breaks forever?) then to keep an inflationary bias as a credible outcome (keep inflation expectations in the mind of Institutions, Business and Joe Public) would require the use of a sum equivalent to 70% of US GDP to buy "real assets".

Or, as I said in April:

In that light remarks such as these now make sense:

and this:

The last line is a white lie. His sole interest is to avoid deflation, at all costs.

So, what are the possible ranges of increase in deficit spending/asset buying that may be required?

Read it and weep oh humble taxpayer, the benefit goes once again to the Bankers and the corrupt financial system. You have just had your money used to "buy high".



Mick P

Author: Mick P

Mick P (Collection Agency)
About Collection Agency

An Occasional Letter From The Collection Agency in association with Live Charts UK.

For some years now I have written an ongoing letter, using macro-economics, to try and peer into the economic future 6 to 18 months ahead. The letter was posted on a financial bulletin board to allow others discuss its topic.The letter contains no recommendations to buy or sell, indeed I leave that to all the other letters out there and to the readers own judgement. The letter is designed to make us all think about what may be coming, what macro trends are occurring and how that will affect future trends and how those trends will filter down to everyday life and help spot weak or strong areas to focus on for trading or investing.

To contact Michael or discuss the letters topic E Mail

Copyright © 2006-2009 Mick P

All Images, XHTML Renderings, and Source Code Copyright ©