Sunday, February 28, 2016

What is the Tyler bet?

Tyler Cowen: Central banks around the world could raise rates of price inflation, and boost aggregate demand, if they were allowed to buy corporate bonds and other higher-yielding assets.  Admittedly this could require changes in law and custom in many countries[.]
There is no economic theory which says central banks could not do this, as supposed liquidity traps would not apply.  These are not nearly equivalent assets with nearly equivalent yields.
The central bank is not stable in any connection between the SP500 and inflation.  Too many parties handle that chain, none of them member banks.  The result is a severe cycle.
Banker bot handles the issue

Banker bot simply runs the SP500 bets, and member banks are betters in the SP500.  Hence, banker bot can keep the queues of buyers and sellers from becoming unstable.  So, sure, a currency banker for the SP500, why not? Just do not think inflation has any role. 

Basically, the banker bot runs a futures desk, with a published amount of liquidity to float.  When  the liquidity of the market breeches the liquidity target (the queues of long and short become mutually unstable), then  the bot pays off according to the current price. A good idea? Sure, but its happening now, on Ethereum, and the central bank is not involved.

No comments: