I wish the Fed would research sending checks to tax payers as a stimulus strategy. Because it appears the low interest rate (and QE) strategy isn't as effective as it once was - in part due to uncooperative banks.
If/when the time comes to put the breaks on the economy, the money could be removed from circulation with a slight uptick in taxes of some sort (income, gas, tariffs, whatever) -- but unlike a normal tax, we would apply it against the Fed's balance sheet and not place it in government coffers.
Milton Friedman and Ben Bernanke have called this idea helicopter money.
Results were mixed - The dollars amounts weren't really a windfall to most people, so some additional spending went on. But most people realized they would need to repay that money at tax time, and held onto it.
I'm suggesting the Federal Reserve do this -- not the federal government. The federal government can't create money, so the stimulus effect is lessened.
> I wish the Fed would research sending checks to tax payers as a stimulus strategy.
That's a fiscal (not monetary) stimulus strategy, outside of the Fed's purview but something Congress can do: its been done (the most direct example being the one-time tax rebates in the Economic Stimulus Act of 2008.)
> Because it appears the low interest rate (and QE) strategy isn't as effective as it once was - in part due to uncooperative banks.
Monetary stimulus has always been a limited tool useful for smoothing things out, with most major effects requiring fiscal stimulus. The Feds job is to manage the money supply, with certain economic goals in mind. Broader efforts to manage the economy are reserved to Congress.
I'm not sure expecting more of the Fed is the right response to Congress not taking effective action on stimulus.
If/when the time comes to put the breaks on the economy, the money could be removed from circulation with a slight uptick in taxes of some sort (income, gas, tariffs, whatever) -- but unlike a normal tax, we would apply it against the Fed's balance sheet and not place it in government coffers.
Milton Friedman and Ben Bernanke have called this idea helicopter money.
http://www.economist.com/blogs/buttonwood/2014/11/reviving-e...