CROSS THE STREAMS!!: The Two Leading Investment Banks--Goldman Sachs & Morgan Stanley--Join the 99%

[kpete]

CROSS THE STREAMS!!: The Two Leading Investment Banks--Goldman Sachs and Morgan Stanley--Join the 99%...

Goldman Advises The Fed To Go Nuclear And Set A Target For Nominal GDP

…and beg for expansionary economic policies to reduce unemployment.

Specifically, Morgan Stanley's economic forecasters like Richard Berner and David Greenlaw have long been advocates of a Housing Jubilee: use of the government's power and resources in the housing market for a reduction in the burdens of mortgage debts. Now Goldman Sachs's forecaster Jan Hatzius calls for the Federal Reserve to buy bonds and expand its balance sheet to $3, $4, $5 trillion--whatever it takes--to target nominal GDP to its pre-Lesser Depression path.

Joe Weisenthal reports:

Goldman Advises The Fed To Go Nuclear, And Set A Target For Nominal GDP: In his latest US Economics Analyst note, Goldman's Jan Hatzius offers up his suggestion for the next phase of Fed policy: http://www.businessinsider.com/goldman-advises-the-fed-to-go-nominal-gdp-targeting-2011-10

With short-term interest rates near zero and the economy still weak, we believe that the best way for Fed officials to ease policy significantly further would be to target a nominal GDP path… indicating that they will use additional asset purchases to help bring actual nominal GDP back to trend over time. The case would strengthen further if deflation risks reappeared clearly on the radar screen…. The specific path in Exhibit 1 is calculated as the level of nominal GDP in 2007 extrapolated forward at a rate of 4½% per year. We can think of this number as the sum of real potential GDP growth of 2½% and inflation as measured by the GDP deflator of about 2%. The specific numbers matter less than the Fed’s willingness to a target path that is anchored at a point like 2007, when the economy was near full employment, and that they indicate that they will pursue this target aggressively…

Or, to paraphrase, in the words of Dr. Ray Stantz:

CROSS THE STREAMS!!

http://delong.typepad.com/sdj/2011/10/the-two-leading-investment-banks-goldman-sachs-and-morgan-staneley-join-the-99.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BradDelongsSemi-dailyJournal+%28Brad+DeLong%27s+Semi-Daily+Journal%29

[ixion]

1. I guess the gathering crowds are making them nervous

and they should be nervous.

[roamer65]

2. ...and send the dollar straight into the shitter.

This kind of action...a "QE3 on steroids" will start a currency devalution war.

This kind of monetary action does not benefit the 99%. It only takes toxic assets off the books of the banks and converts them to cash, which will not be loaned because people do not want to borrow it.

There are only two ways we can get people back to work again, either MASSIVE public works projects or another World War.

I know which one they will choose.

[Scuba]

3. Yeah, but I was never too clear on the meaning of "bad". Care to elaborate?

[phasma ex machina]

4. The OWS movement will include all 100% after the banksters and their Fed join. nt

[Dover]

5. Can someone explain this in kindergarten English?..How would Big Bird say it?..n/t

[FarCenter]

8. It says, "If the government does this, we will make huge amounts of profit".

[jeff47]

9. "Do what Krugman has been asking you" (nt)

[On the Road]

10. In Practice, the Federal Reserve's Most Important Decision Sets Interest Rates

They may raise them to control inflation during a boom and lower them to stimulate growth during a recession.

The proposal is to make the Fed responsible for economic growth at X%. This would supposedly make the Fed more activist in pursuing growth by unconventional means. The bankers may want them to buy up lots of their bad mortgages, but the basic proposal is much more general than that.

[Dover]

11. Thank you! n/t

[lunatica]

6. So I read the except and

either it doesn't say a damn thing with a lot of jargon or I'm stupid.

I know I'm not stupid.

[Warpy]

7. Nothing will be done until Stupid's fucking tax cuts expire

and perhaps by then we'll have elected a new Congress without all the right wing extremists in it.

Well, I can dream.

[calimary]

12. Yeah, I know what you mean. I dream that, too.

[JCMach1]

13. Cheap money only helps the banks... not the 99%