Comments and Balance sheets for http://www.businessinsider.com/mohamed-a-el-er ian-business-insider-interview-2016-4?pundits_only=0&comments_page=1#comment-571 68ed48ceb9543025d6e00 "central banks were willing and able to buy time for the system by borrowing growth and financial returns from the future." Why don't central banks create enough money for happiness in the present, and encourage disruptive innovation to expand production possibility to whatever we want it to be? "there simply isn't enough liquidity to allow for a paradigm change to be reflected in a portfolio repositioning. There are very good structural reasons for that. The shrinkage of the broker-dealer community ..." Why can't central banks provide liquidity directly to individuals, decreasing need for dealers? "the period up to 2007, 2008 was the unfortunate romance. The notion that financial services could power economic growth, that it was the next level of capitalism, spread across the world. People thought you went from agricultural to industry to manufacturing, and then, if you're really good, you make it to finance. Phase one will be seen as falling in love with the wrong engine of economic growth." Society assets | liabilities --------------------------------------------- Agriculture | Labor Industry | General Welfare Manufacturing | Leisure Finance | Innovation Growth | "Phase two is what I call 'whatever it takes,' and that is a collective realization that we were on the verge of a devastating multiyear depression that would undermine not just this generation, but the next generation as well. And the world threw at the wall all sorts of policy solutions that would have been unthinkable much earlier." Fed assets | liabilities ----------------------------------------------------- Treasuries | Currency Mortgage-backed Assets | Reverse Repo Unlimited swap lines | Reserves 0 interest loans | | "The third phase was the frustrating handoff that started at about 2010 in the US and 2014 in Europe. The patient is out of the hospital, but it cannot run. And at that point we needed a handoff from 'whatever it takes' to investing in new engines of growth. That is the handoff that failed. Instead, we've continued to rely on central banks, and they themselves have been forced deeper and deeper into experimental territory -- the leading example of that is negative rates. Who would have ever thought we'd be living in a world of negative nominal interest rates? The chapter in history yet to be written is where do we go when this exhausts itself." Fed assets | liabilities ----------------------------------------------------- Treasuries | Currency Bonds | Basic Income Unlimited swap lines | Indexation General Welfare | Reserves | The General Welfare assumes the value necessary to make assets equal liabilities. The goal is a societal balance sheet that simplifies to: Society assets | liabilities ----------------------------------- Knowledge | The Good | Money is just a tool to help us know everything.