Egad the 'doom-loop'

The global response to the pandemic confirms that we have not solved the problems that brought us the Great Recession more than a decade ago. The world remains trapped in a “global doom loop” in which governments and central banks must ensure the survival of “universal banks” (banks that engage in capital markets activities) and “shadow banks” (large nonbank financial institutions such as private equity firms, hedge funds, insurance companies and mutual funds). Central banks must buy troubled financial assets to ensure the stability of financial markets and forestall threats to the survival of financial giants. Meanwhile, financial giants underwrite rapidly rising levels of debt for governments, businesses and households.

He wants more financial repression, more seigniorage taxes, more doom loop. He cannot help himself.

Shall we engage in financial repression to save our politicians? Evidently the politicians think yes, but the Antificants who are kicked out of banking do not any financial repression, they want bank accounts without a 2% Fed tax on transactions.  We are headed for a bunch of fraudulent claims on this subject.

And here is Powell and the deflation machine:

After the stock market closed today, the Federal Reserve announced that “in light of the economic uncertainty,” and to provide “a cushion against loan losses,” and to support lending, it would extend for another quarter, so through December 31, the blanket prohibition on share buybacks by large banks (banks with over $100 billion in assets). For the same reasons, it would also cap dividend payments tied to a formula based on recent income.

The Fed said that according to a stress test and additional analysis, whose results were released in June, “all large banks were sufficiently capitalized” to deal with the fallout from the Pandemic.

How does NGDP targeting work in a regime of financial repression?  Something has not been thought out and the fraud uncovered.  Having the banks increase cash balances is deflationary, folks. It is tight money. And the central banks does this because it has taxed collateral to about one percent per year, half the interest charges are going to be central bank fees.