Financial institutions must not be allowed to take crippling losses, even if those losses were the fault of the companies in question. The thinking of these experts changes, however, the instant the question shifts to aid to the common people. Suddenly we learn that resources are scarce.

submitted by Chipit from taibbi.substack.com

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[–]Akali 5 insightful - 3 fun5 insightful - 2 fun6 insightful - 3 fun -  (1 child)

The 200 billion stimulus is a no no because of inflation. but the 3 trillion green energy plan is a yes yes because there wont be inflation.

Let's ask the opinion of an economist on the matter. Oh wait, I'm an economist. How conveniant.

Mr. Economist, how does inflation work?

Oh, it's simple. When the central bank buy gouvernment bond with low interest rate, they give the gouvernment printed money which is then spent to increase demand without affecting the supply and therefore creating inflation.

Good good. Mr. Economist, how does stimulus works?

Oh, it's simple, the stimulus is distributed in 2 form. Tax return and lower interest rate from the FED. The tax return mean you invest your money through tax for 4-5-6-7 month and receive 0% interest. It's the same as a gouvernment bond with 0% interest. The FED also lower the director interest rate. so bank can take loan for a cheaper price and lend that money for a profit margin. This incentive the banks to give loan to company at a cheaper interest rate so company can increase supply and finance project to avoid inflation by fighting the increase in demand.

Wow wow, such a great mechanism. But Mr. Economist, does it actually work like that?

Nop! Company use that cheap money to buy stock on the stock market and gain control of their rival company. So there's no more supply increase and the stock market sky rocket while the inflation make the citizen more poor.

But but but... That's morally wrong!

But using the famous words from TODD Howards, : It just works!

So... Mr. Economist. The people need the stimulus even at the cost of some inflation.

Of course... Hum... I'll be investing in European stock market meanwhile. The USD was 0.92 Euro in April. Now it's 0.82 Euro. I first invested at 0.86 in Euro in July and already made 4% without counting the 8% yearly dividend nor the 13% growth of the european stock market.

With more stimulus. The USD will tank some more and i'll make some more juicy interest. As for the green new deal. That will be fun, interest wise.

But Mr. Economist. you don't seem to have the interest of the american people in mind.

Well, I'm not americain, I'm actually Canadian and my gouvernment is even more stupid.

[–]Zapped 3 insightful - 2 fun3 insightful - 1 fun4 insightful - 2 fun -  (0 children)

Well said.