The Traders Crucible

Here is a full list of why monetary policy sucks:

• promotes debt slavery
• works very slowly
• ignores the lowest 30% of earners
• anti-democratic.  [Update: "why TC - thats crazy talk!"  and I reply  " You dare doubt me?  look here. "Money Quote: "But the central bank can only achieve that control if it is willing to commit to letting the fiscal authority default."]
• difficult to manage
• It must – must – end in a massive real estate bust – which destroys the primary store of value for the lower 80% of the population.
• Difficult to observe effectiveness
• Uses real estate lending as a transmission mechanism
• Indirect instead of direct action
• Promotes a rentier class (thanks Neil!)
• Promotes a massive banking system
• Zero lower bound

• Can’t be very effective in a real estate crash.
• Promotes the military industrial complex to the exclusion of social welfare

There’s probably more.  We’ve been blinded by economists talking about monetary policy as some abstract concept that magically makes the economy grow or contract a bit more.  Monetary policy works because it transmits through lending, primarily through real estate lending.  

There are gigantic problems even when the real estate channel is working.  When the real estate channel is broken – like it is today – the problems result in Japan.

[Update: A shout out to Clonal Antibody. We had a discussion a while back that has been sitting in my mind ever since we had it, and this is part of what I've been thinking about...]