Of course, the money transfer should go directly to the businesses. This is what Ann Petifor and the New Economics foundation would say. Mark Warner advocates allocating some of the TARP bailout to small businesses. He beleives that the banks provide a due diligence. If Congress directly allcoated the money, there would be political pressure to lend to certain businesses in certain districts... John Edmund's book, Brave New Wealthy World excoriates the inefficiency in the developing world when government connected banks make loan decisions to crony capitalists. The reporter pointed out a business that had the same loan for thirty years and has been paying each payment on time. The bank is now calling the loan, apparently to shore up its balance sheet. Yet obviously, he never paid it off. Would not that business be better off with a share loan, the bank takes a share of gross revenue.
Monday, October 19, 2009
Fiscal Stimulus Transfer Money from Savers to Spenders (and Wall Street Investment Bankers )
Governments are flooding the economy with money to create monetary
and fiscal stimulus. This lowers interest rates and Wall Street
hedge firms and others use this to make money. As Martin Sloan says,
they use leverage or "borrowed money." The result is that savers get little
interest
if they keep their money in prime money market fund or treasury
bills. But it is not just Wall Street Investment Bankers with their
big buck bonuses. It is a transfer of wealth from savers to spenders,
that is individuals who borrowed big for the too-large home.
And much of this has been going for a long time, and one of the problems
is that government officials such as the fed did not do anything
about asset bubbles, thinking that just reducing inflation
sufficient. A share economy eliminates asset bubbles as people make
their money off the revenue from their investments not by buying and
selling them.
Labels:
fiscal stimulus,
interest,
money stimulus,
share economy,
thrift
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