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Spiraling Down The Rabbit Hole: What Happens When The Ammo Is Gone?
Listen, there are people out there who are concerned about central banks not normalizing in time for
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The whole “out of ammo” thing has always struck me as kind of absurd.
There are lots of things the Fed (or ECB or BOJ) can do to fight a liquidity trap:
-Print a lot of money, say 5% of GDP, and give it to the Treasury as a “special dividend”. Whether Treasury has a tax cut, conducts additional spending, or just stops issuing bonds for while, it stimulates the economy.
-Print a lot of money, and give it to the Treasury as a “tax payment”.
-Print a lot of money, and give it to the Treasury as a “franchise fee”.
-Print a lot of money, and give it to the Treasury as a “seniorage”.
You may see a theme here. None of these things are technically difficult. What is lacking is the political will. Specifically, the (existing) rich people do not want more money to be printed. That is the problem.