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Trump Shock: Selgin,Coppola and Lambert

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This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/trump-shock-selgincoppola-and-lambert?post=116521&uid=4798

The discussion of asset inflation and the failure to get money into the hands of real people takes on an ever more urgent conversation since Donald Trump has been elected president. The Trump Shock may be real. And if and when The Donald should stimulate the economy is a real issue as well, as we can see later in this article. But we have to know why asset purchasing by the Fed did little for main street.

George Selgin has discussed the problem of asset purchases on the CATO Alt-M blog. He essentially agrees with Frances Coppola, that asset purchases have not caused a broad prosperity as they should have. He gives a detailed explanation as to the reason for this. It all revolves around interest on reserves. He said:
As for interest on reserves, although it failed to establish an above-zero “lower bound” on the effective federal …

Frances Coppola on M and Helicopter Money

This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/frances-coppola-on-m-and-helicopter-money?post=116232&uid=4798

Frances Coppola is a very helpful blogger and economist who is widely published and well respected. She takes a dim view of asset inflation as many economists rightly do. She knows that there has to be a better way to stimulate the economies of the developed nations. While she believes deficit spending is superior to QE, She is not opposed to helicopter money but is possibly denying its value as opposed to fiscal deficit spending. More on that later.

But first, we should see what her argument is against QE. Basically, she explains in a fantastic and fundamental way, the QTM, the Quantity Theory of Money, MV=PY. Basically she says that the left side of the equation MV, meaning money supply times velocity is affected by the right side of the equation, PY, which is price level times yearly output. So, MV is affected by PY, not…