It's not easy being the Fed chairman. Liberals think you're in Wall Street's pocket, tea partiers think you're an elitist dictator ... and pundits everywhere think they can do your job better than you.
And maybe we can.
1. Quantitative leasing
Forget "quantitative easing." Buying $600 billion of Treasuries from banks won't save housing or the economy. Banks will just sit on the cash, and I'm not going to buy a home simply because I can get a mortgage at 3.5% instead of 4%, thank you very much.
The real problem for housing? Despite what that infamous mayoral candidate from New York City might insist, the rent on apartments is too dang low, which makes homeownership unappealing. The Fed needs a way to decrease the supply of available apartments, causing rent to skyrocket and spurring people to buy homes.
That's why the Fed should immediately go out and lease $600 billion worth of apartments. Call it "quantitative leasing."
Hey, that super-jumbo mortgage will look awfully appealing when a studio apartment goes for $4,000 a month. Homes will start selling faster than iPhones.
And all levity aside, who's more likely to spend $600 billion than landlords?
It's Econ 101: Donald Trump + $600 billion = MASSIVE stimulus.
2. Conduct "strategic defaults" on the national debt
All you wussy investors out there (read: banks and China) are hoarding Treasuries because you think they're "risk-free." You think you're invincible because the Fed's efforts to "punish" you with lower yields has made your existing Treasuries rise in price. Meanwhile, struggling businesses go without the investment they so desperately need.
Well, it's time for Bernanke/Geithner to wipe that smug smile off your face.
Effective immediately, the Treasury will default on one issue every hour until unemployment falls to 5%. Still not going to lend to small businesses, banks? Still going to manipulate your currency, China? Well then, your Treasuries will become worthless! [Insert maniacal supervillain laughter here.]
Hey, we have nothing to lose here: Either we end unemployment, or we eliminate our national debt. It's totally a win-win!
Surgically removing tongue from cheek
It's easy to sit back and criticize Bernanke for quantitative easing, TARP, and other unpopular ideas. But it is hard to think of alternatives. I've tried and, as you undoubtedly agree, failed (though admittedly, my efforts weren't exactly serious).
I know it's unpopular in this country to defer to people with Ph.Ds, but are you going to trust a talking dog over a Great Depression expert?
And please consider that, in spite of it all, 90% of us still have jobs this holiday season.
Thank you, Ben.
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