The two pioneers of modern monetary economics – Irving Fisher and Knut Wicksell – were passionately concerned to find monetary arrangements that would insure against arbitrary redistributions of income and wealth. They saw such distributive effects as offenses against social justice and consequently as a threat to social and political stability.Are these sentences worth keeping in mind when arguing about the sustainability? Well, the case is rather clear and applicable to whatever country, including Spain:
* The Fed is supplying the banks with reserves at a near-zero rate. Not much results in bank lending to business, but banks can buy Treasuries that pay 3% to 4%.However, it is all about "arbitrary redistributions of income and wealth":
* This hefty subsidy to the banking system is ultimately borne by taxpayers. Neither the subsidy, nor the tax liability has been voted for by Congress.
* The bailouts of the banks during the crisis were clear for all to see and caused widespread outrage; now the public is being told that they are being repaid at no cost to the taxpayer.I am wondering is there a way to return to normal interest rates at all? I do not see how this ends well either, but cream lickers at efficient frontiers will sing the song of victory!
* What the public is not told is that the repayments come to a substantial extent out of revenues paid by taxpayers for the banks to hold Treasuries.
* Both parties supported the bailouts so neither party seems ready to protest the claim that they are being repaid at no cost to taxpayers.