What sort of crap is this?
Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.
That move would free the Fed to cut interest rates below zero. People would be delighted to lend money at negative 3 percent, since losing 3 percent is better than losing 10.
No, people would immediately go to the closet and retrieve their shotgun, load it, and proceed to use it on the party or parties that declared their intent to randomly destroy their money.
This is the sort of "justification" that Mankiw uses for such a concept (note that the actual idea was floated by one of his "students" as a means to implement his insanity):
Of course, some people might decide that at those rates, they would rather spend the money — for example, by buying a new car. But because expanding aggregate demand is precisely the goal of the interest rate cut, such an incentive isn’t a flaw — it’s a benefit.
No it's not.
Americans have tolerated a silent form of this theft for a long time, born out of the intentional provision of excess liquidity to prevent the incompetent and even fraudulent lending and borrowing by both private interests and government from having to be faced.
This has resulted in the mathematical laws of exponents running far further than it ever should have - a path that began in earnest after the 1987 market crash and has continued ever since.
Call it a conspiracy if you want, call it bad judgment, call it criminal fraud and looting. But so far, this form of theft and deception has been hidden under the guise of alleged "prosperity" - even though it was in fact nothing more than leverage laid upon leverage, debt laid upon debt.
In the 1960s, 70s and early 80s Americans didn't have much household debt. They had put down 20% or more on their homes and if they bought a car on credit it was usually done on a four year loan and only for their primary vehicle - if they owned more than one car the other was usually paid for and owned free and clear. When Americans went to the store to buy something, whether it be groceries, a frying pan, a lawn mower or TV they whipped out the checkbook and paid for it - in cash.
All of this changed in the 1980s. Credit cards were marketed to everyone, including those who clearly couldn't manage credit to save their own lives. If you wanted a new car you got one - even if you owed a bunch on your present car - by rolling over that debt into the new loan.
The alleged "prosperity" was, for most Americans, false. Oh sure, there were people who really did prosper. There were and are people who were prudent. Who lived below their means. Who saved. Who invested.
Now Mankiw proposes to steal that money too to prop up that which is mathematically impossible to sustain:
Having the central bank embrace inflation would shock economists and Fed watchers who view price stability as the foremost goal of monetary policy. But there are worse things than inflation. And guess what? We have them today. A little more inflation might be preferable to rising unemployment or a series of fiscal measures that pile on debt bequeathed to future generations.
We cannot continue to play this game Greg. The mathematics are never wrong. The scam has been run to not only its natural concluding point but has been pressed well beyond it. You and your ilk through America's so-called "elite institutions of economics" have pressed economic, monetary and fiscal policies that are intellectually and mathematically bankrupt.
There is no solution that leads to sustainable prosperity for the country other than deflating the excessive debt - which means deflating prices for capital goods, most particularly real estate, to sustainable levels and defaulting the debt that cannot be serviced.
Having gotten caught by the immutable laws of mathematics you and others, including Bernanke, have now turned to obfuscation, lies and proposals to steal in broad daylight as your level of panic over being held to account for the putrid insanity of the previous 30 years becomes apparent to all.
You, sir, need to be fired - along with your entire department.
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