Wednesday, May 27, 2009

Using monetary policy for stimulus

Economists who like to work from the wealth curve should be worried that the poor are not sufficiently monetized. They should think of monetary policy that keep the poor within the currency system.

That is why I have been promoting the concept of subsidizing the medium term savings account of the poor. The concept is to make the behavior of the poor more coherent wit the economy. Give them an extra incentive to optimize their six month planning behavior with a few points subsidy to their six month bank account.

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