When Foreign Affairs, the mouthpiece of the policy-setting Council on Foreign Relations, runs an article recommending that the Federal Reserve do a money drop directly on the 99%, you know the central bank must be down to its last bullet. The publication’s September/October 2014 issue featured a startling proposal by Mark Blyth and Eric Lonergan titled “Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People.” It’s the sort of thing normally heard only from money reformers and Social Credit enthusiasts far from the mainstream. What’s going on?
The Fed, it seems, has finally run out of other ammo. It has to taper its quantitative easing program, which is eating up the Treasuries and mortgage-backed securities needed as collateral for the repo market— the engine of the bankers’ shell game.
Meanwhile, the economy continues to teeter on the edge of deflation. The Fed needs to pump up the money supply and stimulate demand in some other way. All else having failed, it is reduced to trying what money reformers have been advocating for decades: Get money into the pockets of the people who actually spend it on goods and services.