Hey Fed: Just Print Food Stamps!

The four year anniversary of zero interest rate policy will be here in a couple days and what do we have to show for it: 46 million people on food stamps. Yes 15% of Americans buy their groceries with the help of Uncle Sam. Barry Ritholtz’s Big Picture Blog reports that 14% of all grocery sales are made via food stamps, so,

we wouldn’t be surprised someday that the central bank actually begins to print food stamps. This wouldn’t pack the potential punch of creating “high powered” bank reserves, which can be multiplied in a healthy financial system through credit creation, however. But at least the “printed money food stamps” would lead to direct demand creation, rather than, as most of it does now, sit on deposit at the Fed in the form of excess bank reserves.

Barry says, “No problem now, but if the Fed loses cred with such a ballooned balance sheet, the demand for money could become more unstable or collapse.”

The Fed can’t create groceries or oil or anything but money out of thin air.

That’s all you need to know.