November 19, 2013

I may be right, and I may be wrong. But do you not find it in at least curious that what I argue is not even discussed?

Sir, Henny Sender writes “Five years after the meltdown, it is clear the Fed´s quantitative easing is not about a real economic recovery, it is only about generating the liquidity that gives rise to incomes for the rest of us are not rising at all”, “Fed easing fuels growth in wealth over real economy”, November 19.

As you know very well I hold that is because the financial transmission channel is totally damaged. Capital requirements for banks based on ex ante perceived risks, more risk more capital, less risk less capital, make it completely impossible for banks to allocate credit efficiently in the real economy.

I may be right and I may be wrong, but do you not find it curious somehow that the possible distortion these capital requirements might produce is not even discussed?

And that is not because I am a complete loony. As you know very few, much less in high places, like as an Executive Director of the World Bank, warned in such clear terms about the problems.

Boy you sure seem like a very complacent bunch of journalists to me.