Joe Salerno: Economics is Broken

[Suzanimal]

Listen at link

Joseph T. Salerno
Jeff Deist

On the heels of the Fed's annual meeting in Jackson Hole, "extraordinary" monetary policy may be the new normal. Janet Yellen refuses to raise rates for now, and Former Chair Ben Bernanke openly questions whether the Fed's Treasury-laden balance sheet—swollen after successive rounds of QE—will ever be unwound. Real growth is flat, real incomes are stagnant, inflation is higher than the government admits, and millions of Americans still haven't recovered from the Crash of '08.

Is economics broken? Have we entered a new era of technocratic impotence, where mainstream economists simply have run out of monetary policy tools? Can we undo the damage caused by the Fed's relentless attack on savers? Do most professional economists understand the role of interest rates at all? And what kind of revolution is needed to save economics as a profession?

Dr. Joe Salerno, professor of economics and Academic VP of the Mises Institute, joins us to makes sense of it all.

https://mises.org/library/joe-salerno-economics-broken

https://www.youtube.com/watch?v=P4zodhtpfFc

[Chester Copperpot]

I like Joe Salerno ever since I watched "Money, Banking, and the Federal Reserve".... Theres something about his speech delivery I like.

[Suzanimal]

I like Joe Salerno ever since I watched "Money, Banking, and the Federal Reserve".... Theres something about his speech delivery I like.

Me, too. He's great at the Mises HS seminars. My kids love his talks.

[Chester Copperpot]

i only listened to the first two minutes but I like what I hear so far.. saved this for later to watch on the TV... thanks susie!

[Zippyjuan]

Trump wants low rates to finance his huge borrowing to build his wall and hugely expand the military.

Should rates be higher? Rates are the cost of borrowing money. Price inflation (the risks of your money being worth less in the future if you make a loan) is very low so that means lenders are willing to accept low rates on loans. Is there a high demand for borrowing money? Is it higher than the supply? If demand is higher, then the price of borrowing will be higher. There is no high demand for money (relative to supply) so there is no pressure there to raise rates.

Are savers losing money? They always have. Banks have always paid less on savings accounts than the rate of inflation. That was true when rates were higher than they are today as it is now.

Can the Fed unwind their balance sheet? Not quickly. That would crash the market. If they decide to work down their balance sheet (IF), the most likely scenario would not be selling the assets but let them gradually mature and not replace them. Currently they are rolling over maturing securities.

Can the economy grow over three percent? Probably not for a long time. Technological gains which increased productivity are hitting limits and gains are coming much more slowly. Another big factor is demographics. The US population is barely growing (some other advanced economies are actually losing population). The US population is growing less than one percent a year now at 0.7%. That means that it only needs go grow at one percent to be growing in real terms. Globally it is growing 1.1% a year. Slow population growth means a slow growth in customers for businesses.

[timosman]

Nice job Zippy, really nice job. Want some more?

[Zippyjuan]

A well reasoned and well argued discussion of the points raised. Thank you for your important contribution to the thread.

[ILUVRP]

i think bernanke did a much better job than yellen , she is nothing but a shill / pimp for wall street .

[LibForestPaul]

>>Trump wants low rates to finance his huge borrowing to build his wall and hugely expand the military. - A nation state does is not required to borrow fiat currency.

>>Should rates be higher? Rates are the cost of borrowing money. Fiat money is not borrowed, it is created through debt.
>>Price inflation. - Is the trickle down affect of an arbitrary increase in the supply of money
>> There is no high demand for money (relative to supply) so there is no pressure there to raise rates. - Those in power see no need at this time to raise rates for controlling the masses

>>Are savers losing money? - They always will in a debt based monetary system.

>>Can the Fed unwind their balance sheet? Not quickly. Not until the want to crash the market.

>> Can the economy grow over three percent? -Define economy, define growth, and prove that it should grow by 3%\
>>Slow population growth means - The plan of destroying the middle class is showing fruition. New job seekers are unable to find jobs, and will likely live at a means far below their parents, staying home unable to be independent. A perfect social class for the next stage of global governance.

[Zippyjuan]

Fiat money is not borrowed, it is created through debt.

Borrowing = debt.

They always will in a debt based monetary system.

Can you provide an example of a monetary system without debt? Only thing I can come up with is a completely barter system but even in that you can have debt. "I will trade you one apple for your orange but I don't have the apple right now- can I get that to you later?"