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What would all of you say to this scenario -
So let's say that to keep foreigners happy (keep the US$$$ high) FED says to the banks
'thou shalt not lend below 12% interest rates, but thou MUST lend to stay in business'
At the same time, to keep housing up, the FED and the controller of the currency allow lending to anyone and everyone - even delinquencies. Whatever (small) limits there now are on bank lending are removed completely. The banks are allowed almost limitless loans based on miniscule reserves.
Would this be do-able? The US$ stays high, house prices stay high. The new liquidity allows corporations to spend, spend, spend - thus - capital spending and employment rise.
Bonds would probably sink when the bond traders see this happening, but hey - even if you break some eggs, that doesn't guarantee you an omelette.
So let's say that to keep foreigners happy (keep the US$$$ high) FED says to the banks
'thou shalt not lend below 12% interest rates, but thou MUST lend to stay in business'
At the same time, to keep housing up, the FED and the controller of the currency allow lending to anyone and everyone - even delinquencies. Whatever (small) limits there now are on bank lending are removed completely. The banks are allowed almost limitless loans based on miniscule reserves.
Would this be do-able? The US$ stays high, house prices stay high. The new liquidity allows corporations to spend, spend, spend - thus - capital spending and employment rise.
Bonds would probably sink when the bond traders see this happening, but hey - even if you break some eggs, that doesn't guarantee you an omelette.
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