Tuesday, October 04, 2011

"The world wants more US government debt. The US Treasury should supply it." Yes, and lock in low rates for the next 30 years. The debt limit prevents this, of course. But if monetary stimulus is the goal, then there are probably ways around that. The bigger problem is that "Central Banks have a tendency to want to vacuum up excess money because of concerns about inflation," even when inflation expectations are extremely low. Targeting higher inflation is not popular at the Fed nor amongst the general populace. Perhaps someday income targeting will be popular.

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