Sunday, November 28, 2010

Off the top of my head

I propose another central banker rule. The central banker should seek to make the maximum profit for central government, act as a cash income source for the legislature. An interesting rule would have the central bank buy bonds when it feels they are cheap, and sell them when they seem high. Here we make the central bank the cash business of government, the more the central bank earns, the more government spends.

In this scenario, the money driver is a circular flow through Congress. Congress earns lots of money via a profitable private sector, thus the virtuous cycle. Congress and the private sector will seek the most harmonious and profitable business flow, they will inevitably match their real production spectra to maximize efficiency, for that leads to the greatest velocity and the most cash flow.

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