A Modest Proposal: A Nation of Bankers

My friend Scott is a hedge fund manager who noted the following, with just a trace of irony in his voice:

Joe Stiglitz, in an interview from Paris with Bloomberg over the weekend, noted that “if workers do not have income, it’s very hard to see how the U.S. will generate the demand that the world economy needs.”

With all due respect to a Nobelist who’s been on the right side of many of the economic debates of the last few years, I’m surprised that the obvious and simple answer to declining worker incomes in the United States escaped him:  We all become banks, borrowing short from the Fed at zero interest, and lending long to the Treasury at 330-370 basis points. The profits from that trade can be invested in the stock market, so that we can all diversify our income streams.

Presto, household balance sheets repaired, and we’re off to the races again.

Sounds like a plan, Scott!

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