Sunday, March 17, 2019

We can do a milder impulse response than Nixon

Go half as high and spend twice as long enjoying the ride.

Debt drops from 22 to 14 over the 15 years, another 4 is gained from cash flow accounting over the 15.

We are on target to go on through with a mild bump.  All the insurance contracts will be reformed as government agencies engage in cash flow. There will be no more losses, except bit error and we can insure bankruptcy with congestion fees at the Fed.

Inflation at least below 7%, at its peak, almost always under 5%. and headed down to zero fast.  Why not? If Nixon figured this out, we should be able to do it better, not perfect, but half the hump. No breakthrough, just standard adaptive filtering to get a new Euler path.

Long term ten year cost of money goes back to 2.3%, mostly under 5%.  But it is not going to jump, except maybe pop above 4%, a few times at the start.  But, making interest payments will get a whole lot easier when large agencies have Fed accounts. That keeps the ten year down, and moves debt structure left, to the short end.  Agencies become more pro-active. Government learns better, they get feedback at run time.

Bonus clause. If the contract keeps the bounds ahead of schedule at year 10, then the Fed cen burn another 4 trilllion, make us look like Germany. What will the millennials do with almost 10 trillion in loose change? Melt ice? Go ask AOC and that bunch. I think they will figure it out.

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