I am already telling my wife to get her money OUT of 401k’s and other vehicles specifically because of garbage like this. The next step the gov’t is going to do is they will seize all tax free ira’s…convert them to US treasuries(aka bonds) and say if you want it that’s what you have to do. These bonds will be effectively worthless since the gov’t is broke!!!!!
Listen to Paul opine:
What should it be doing? Conventional monetary policy, in which the Fed drives down short-term interest rates by buying short-term U.S. government debt, has reached its limit: those short-term rates are already near zero, and cant go significantly lower. (Investors wont buy bonds that yield negative interest, since they can always hoard cash instead.) But the message of Mr. Bernankes 2002 speech was that there are other things the Fed can do. It can buy longer-term government debt. It can buy private-sector debt. It can try to move expectations by announcing that it will keep short-term rates low for a long time. It can raise its long-run inflation target, to help convince the private sector that borrowing is a good idea and hoarding cash a mistake.
The Fed has done pretty much all but the last. It bought government debt. It bought private (Fannie and Freddie are not government “agencies” as the law defines them) debt. It announced that it would leave short rates at 0-0.25% for “an extended period.”
But now Krugman crosses a particular line in asking that The Fed explicitly raise an inflation target – that is, intentionally seek to destroy the savings and investments of all Americans.
What Krugman refuses to understand (because he is a hard-core lefty collectivist) is that capital formation comes from savings. That is, new businesses form from surplus capital excess of requirements.