The Right Coast

Editor: Thomas A. Smith
University of San Diego
School of Law

A Member of the Law Professor Blogs Network

Friday, December 14, 2012

The Federal Reserve's Zombie Economy | Fox Business

The end game: Fix a U.S. jobs crisis borne out of a debt crisis. Avoid social unrest and protectionism. Drive down borrowing costs by buying U.S. Treasuries, with the central bank now buying two-thirds of the U.S. Treasury’s annual output. Get long-term mortgage rates down to 3% to lift homes out of negative equity.

Give bailouts to zombie companies and zombie consumers to start spending money again by making money really cheap. The financially undead who can only just barely pay their fixed operating expenses and interest costs only on their debts (and not reduce principal).

Also, let the U.S. government avoid tough fiscal decisions so political cronies can get re-elected by spending whatever they want on “stimulus,” with the Federal Reserve only charging the federal government a quarter of a percentage point in interest for its massive Treasury purchases. Don’t ever raise rates, you’ll rock the Treasury and muni bond markets and not flush out rotten politicians who don’t know what they’re doing with your tax dollars.


Zombie socialism: what a concept. --ts

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