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Comment by vmception | Hacker News Reader

We are not at the end of easy money. International tolerance of our dollar and bonds show the perpetuation of easier money. The Federal Reserve can bail out every municipality if Congress got scared or convinced enough. The pandemic relief was prewritten and had nothing to do with the pandemic, almost no Congressperson read it. The extension of “credit”/unconditional Main Street bailouts was already pre analyzed to prevent private sector freezing of credit. Anything and all is possible as has been demonstrated. Econ majors have their university streaming subscription on pause because their professors have no idea anymore.

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Centralization of money creation at the national level is not ideal. There are 3142 counties in the United States. If during the process of national credit allocation we forget to send money somewhere, we could accidentally destroy a small town or create a slum.

An alternate solution would be to establish state-owned public mortgage banks, which collect interest payments on publicly held real estate loans over land areas roughly the size of a federal congressional district, that spend the interest payment revenue back into circulation on state and local infrastructure.

Public mortgage banks could also be strictly limited to issuing real estate equity loans and mortgages at 100-200% of the replacement cost of improvements whenever that is lower than the sales price.

When banks lend against the present value of future rents the property owner is pledging the surplus labor of future generations of residents as collateral and encouraged to lobby for artificial land scarcity so that rents keep going up. Capping loans in reference to the replacement cost of existing capital would help reign in this dangerous incentive while still creating liquidity for asset holders and publicly capturing interest payments that would otherwise leak out to global financial system to generate additional revenue for local infrastructure reinvestment.

I'd argue that centralization of money creation at any level is not ideal and that the monetary landscape used to be more robust in the US when many different entities could create their own notes (even if some on occasion went out of business).

And that another alternative solution would be that anyone/any entity who is willing to put a portion of currency supply risk at t0 in order to potentially have a larger share of money supply t1 should be possible (in addition to other lending activities).

> We are not at the end of easy money. International tolerance of our dollar and bonds show the perpetuation of easier money.

Things that can't go on forever, will eventually come to an end.

Or something like that... money supply can't go on forever, but it might go on longer than we think.

And it's very plausible the Fed is competent enough to avoid a dollar crash :)

I certainly wouldn't bet against the dollar, hehe :)

》International tolerance of our dollar and bonds

I see opposite, dollar may loose its status as sole reserve currency. It may take couple of years, but US is no longer perceived as bastion of stability. Countries are diversifying and dumping dollar assets. For example Russia recently:

Russia's $186 Billion Sovereign Wealth Fund Dumps All Dollar Assets

Pennies.

Stop reading Zerohedge and come back to reality.

Its good to diversify, its also true that the Federal Reserve is the biggest market whale in the universe. The gravitational pull towards the dollar is unavoidable because there isnt enough liquidity for any other form of value that exists.

The signal to watch for is US Treasury yields being unsupportable by the Fed’s purchasing program due to a greater market consensus of selling. As this does not happen and the macroeconomic trend is for US Treasury yields to also flirt with negative rates, like the rest of the planet’s major economic unions, it shows the opposite of your view.

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