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Commentary On “Alan Blinder: A Tale of Two Downgrades”
By admin | February 21, 2012
The Fed pumped too much money into just one market, i.e. the market for government securities. The effect of that was to drive the interest rate down to virtually nothing, and now there is no stimulative effect from pumping more money into that market. What they should have done (and it’s not too late), is targeted their purchases in a more balanced manner. Pump the money in thru the securities market, but also thru other asset markets. Most particularly, I’ve suggested that Congress should put income producing real estate estate on their list of approved open market purchases. It’s hard to go wrong on that since the real estate market is so illiquid right now, and the prices are so low. Buy it, hold it and collect the income, then resell it to the private economy at a profit when inflationary pressures begin to surface.
Topics: Real Estate | Comments Off
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