Fed-based program: what would you do?

[opebo]

We're hours away from a make-or-break moment for the world economy, and as usual it is up to the Fed.  The GOP controlled government has destroyed the economy, so now can the Fed do anything to save the day at the last moment?

If I were in charge I would create massive new quantitative easing, but not only by buying treasury bonds - I would look for creative ways to create demand, since the elected government is incapable.

Start buying real assets and alternative debt on a massive scale.  By this I mean:

1) houses.  Buy up the excess supply of houses and have them destroyed
2) land.  Buy land until the price begins to increase rapidly, with the happy side effect of removing land from 'private' ownership.
3) stocks.  Maintain the stock market at current value, and at the same time effect Fed control of major corporations
4) 'personal debt' - purchase the personal debt of individual American citizens, and forgive it. This would include:
 4a) eliminating all credit card debt for lower income people
 4b) eliminating all student loan debt

Essentially what I'm looking for here is a takeover of the American economy by the Federal reserve on Keynesian principles.  I'm not certain if the Fed is authorized to simply send printed money to people, or to create its own 'WPA', but that would obviously be the ideal solution. 

[Beet]

1) and 2) are not good ideas because it would make the price of housing more expensive for those that currently are not home owners, about one third of the nation.

3) is not practicable.

4) Now we're talking!

These ideas are unconventional even for Keynes.

[opebo]

1) and 2) are not good ideas because it would make the price of housing more expensive for those that currently are not home owners, about one third of the nation.

Reflation hurts, Beet, but its necessary.  Deflation means no job,nothing to eat, and certainly no housing, reflation just means you're deprived of an ultra-discounted house.  I opt for reflation.

3) is not practicable.

Not practicable to buy and own stocks?  Are you kidding?  My mother owns several hundred thousands of stocks and she can't even tie her own shoes anymore, the poor thing.  I think the Fed can handle owning stocks.

[Beet]

By reflation, Keynes mean primarily the reflation of income; wages and business revenue, as reflected in the general price level. The purpose of reflation was to overcome the liquidity trap and lower the real interest rate, thus supporting the continuation of credit and activity.

Asset price reflation, is does not carry these benefits because it is not a source of income. Therefore I don't see the point of governmental attempts at asset price reflation, particularly to bubble levels. Even when government policy reflates the price of commodities, this is a problematic side effect that must be fought by cracking down on speculation.

As for not practicable, I meant it is not practicable for the Fed to be qualified in actually governing this companies as a major shareholder. I don't see the point of this policy.

[opebo]

By reflation, Keynes mean primarily the reflation of income; wages and business revenue, as reflected in the general price level. The purpose of reflation was to overcome the liquidity trap and lower the real interest rate, thus supporting the continuation of credit and activity.

Asset price reflation, is does not carry these benefits because it is not a source of income. Therefore I don't see the point of governmental attempts at asset price reflation, particularly to bubble levels. Even when government policy reflates the price of commodities, this is a problematic side effect that must be fought by cracking down on speculation.

Because, obviously, confidence is equally important to low interest rates

As for not practicable, I meant it is not practicable for the Fed to be qualified in actually governing this companies as a major shareholder. I don't see the point of this policy.

No need for micro-management any more than stockholders do.  The point of the policy is of course firstly to restore confidence, and secondly to bring corporate America more to heel.

[bullmoose88]

Whats your view on a policy whereby the feds seizing the stock portfolios of little old ladies who simply have no idea what to do with their thousands upon thousands of stocks?

[opebo]

Whats your view on a policy whereby the feds seizing the stock portfolios of little old ladies who simply have no idea what to do with their thousands upon thousands of stocks?

I proposed they buy them, not seize them, bullmoose.