經濟,財務,統計學,數理科學與政治評論

Dear American people:

  In the principle of Economics' textbook, market failure is what we concern. Now the 2008 financial crisis is an example of market failure. In the situation of market failure, we all know that the supply-demand can not longer perform well as used to be. So we need a wise dictator to reallocate a lot of resources in order to help people have their lives back. That is the reason why Fed has accumulated 4 trillion MBS and other gobernment bonds in its balance sheet. Mr. Ben Bernanke plays his role as the dictator to order the market selling those bonds to the Fed. This time American people show the world again that science does prevail. American people are with good luck to have Mr. Ben Bernanke, Mrs. Yellen, Mr. Paul Krugman and Mr. Obama. They all play their proper roles in the crisis solving. But all the remedy is only half way.

  First of all, the wealth of US society is largerly decreasing from the 1980's when American people learnt so much from the culture of their horrible credit card using. American do not have enough wealth to keep the usual living standard anymore. It is the reason why we see the free-falling property prices and a lot of non-sustainable asset prices. It is not the fault of hedge funders. It is not the fault of investment bankers. It is the inevitable thing when American people get used to those good old days and stop to think how come those easy lives can go on without any cost. For real, in order to keep the living standard, American people need to accumulate even larger wealth instead less. It means that American people have to save even more to push those asset prices even higher. If American people do not have those wealth accumulation, then they have to borrow from other nations to support their living standard. It is the reason why Fed uses the bond buying strategy to help American people have a decent life as used to be. American people still have to keep in mind that, in the end, the 4 trillion bonds has to be sold back to the market eventually. It is not a free lunch. That is the reason why people are preaching "It is the time that American people have to save a lot." Then American people can use those savings to buy back those bonds stocked in the Fed's book to prepare for their retirements. It is not yet to say the 2008's crisis is over. It is not. All those recovery processes just begin now. We may have to wait for another decade to see American people have saving rate more than 15%. When the time comes, American people can absorb the 4 trillion bonds totally. Then the recovery process can be said to near the end.

  It is the perfect example of financial market failure for the crisis in 2008 in the USA that is due to the lack of funding of the USA. Fed's Mr. Ben Bernanke uses the unconventional way to resolve this painful issue, but it has to pay a big prize if those bonds Fed holds go default. That is the reason why we do keep our eyes on the growth rate of USA. Unless the GDP growth rate is too low, people still have faith that American people can save even more than the ages of 1980's and 1990's. American people have to save more to solve the problem of Fed's larger book. When the time comes, we will see that Fed's balance sheet can shrink back to 800 million US dollars. Before it, the things we have to do are (1)Keep the USA to grow even more, (2)Keep the unemplyment rate of USA even lower, (3)Let American people to find a new way to grow in this dynamic world. All those things can help the Fed to accumulate a great deal of interest payments from those bonds it absorbs.

  To be honest, people do not want to say something ugly. But the tax code change may be also a good solution. Because the wealth people do have their ways to create personal wealth, let those wealth people to take the burden is fair. The reason behind is a stable society create even more wealth for those wealth people. In simple terms, it means that those wealthy people can get even wealthier just because the society is stable and their money machine can run even smoother without interuption. It also means when the society needs help, those wealthy people have to take the burden more instead of less becasue they benefit  more than the poor. If those wealthy people can pay even more taxes, then the US government can use those funds to pay back its ordinary bond issues and buy back those bonds from the Fed. Then the Fed's balance sheet can be shrunk. If we can not expect the thing happens, then we have to wait ordinary American people to have more money in theor pockets in order to pay more taxes. At the time, the US government can use those tax collection to buy back those bonds from the Fed and write them down. It is another way to decrease the balance sheet of Fed. Of course, the latter one needs many years to resolve the Fed's problem right now. But the first solution needs concensus from all American people that the higher tax paid from wealthy people will not hurt those people much. The reason is obvious that they have their money machine in  their hands. And the money machine just bring them even larger wealth when the GDP growth rate can be kept around 2.5% or more each year. So they have responsible to pay more in order to help the nation, we call it the USA, and the poor. It is the sprit of Christian, the ability one helps the inability one.

  Anther way to resolve the 4 trillion in Fed's book may be try to let those printed greenback flow back to the USA. Investment immigration policy is what the Republican preach. People do not know if it does work or not. Let those wealthy people become Americans may bring a big fortune to the States. And it will increase different taxes revenue. Then the US government can use them to buy back those bonds from the Fed and write them out. To be honest, it is not a logical idea. The reason is the USA has the most numbers of wealthy people in the world. You have Bill Gates, Warren Buffets and other wealthy people. They are all Americans. Depend on other nation's wealthy people to become Americans is pretty dumb and illogic. The Republican have to think seriously about the issue of tax code change. It is not just for the present American people, but also for the future generation.