Immediately after the recession took a dramatic dive in
September 2008, the Bernanke Fed implemented a policy that continues to
further damage the incentive for banks to lend to businesses. On
October 6, 2008 the Fed's Board of Governors, chaired by Ben Bernanke,
announced it would begin paying interest on the reserve balances of
the nation's banks, major lenders to medium and small size businesses.
You don't need a Ph.D. economist to know that if you pay
banks ¼ percent risk free interest to hold reserves that they can obtain
at near zero interest, that would be an incentive to hold the
reserves. The Fed pumped out huge amounts of money, with the base of
the money supply more than doubling from August 2008 to August 2010,
reaching $1.99 trillion. Guess who has over half of this money parked
in cold storage? The banks have $1.085 trillion on reserves drawing
interest, The Fed records show they were paid $2.18 billion interest on
these reserves in 2009.
A number of people spoke
about the disincentive for bank lending embedded in this policy
including Chairman Bernanke.
***
Jim McTague, Washington Editor of Barrons,
wrote in his February 2, 2009 column, "Where's the Stimulus:"
"Increasing the supply of credit might help pump up spending, too.
University of Texas Professor Robert Auerbach an economist who studied
under the late Milton Friedman, thinks he has the makings of a
malpractice suit against Federal Reserve Chairman Ben Bernanke, as the
Fed is holding a record number of reserves: $901 billion in January as
opposed to $44 billion in September, when the Fed began paying interest
on money commercial banks parked at the central bank. The banks prefer
the sure rate of return they get by sitting in cash, not making loans.
Fed, stop paying, he says."
Shortly after this article appeared
Fed Chairman Bernanke explained: "Because banks should be unwilling to
lend reserves at a rate lower than they can receive from the Fed, the
interest rate the Fed pays on bank reserves should help to set a floor
on the overnight interest rate." (National Press Club, February 18,
2009) That was an admission that the Fed's payment of interest on
reserves did impair bank lending. Bernanke's rationale for interest
payments on reserves included preventing banks from lending at lower
interest rates. That is illogical at a time when the Fed's target
interest rate for federal funds, the small market for interbank loans,
was zero to a quarter of one percent. The banks would be unlikely to
lend at negative rates of interest -- paying people to take their money
-- even without the Fed paying the banks to hold reserves.
The next month William T. Gavin, an excellent economist at the St.
Louis Federal Reserve, wrote in its MarchApril 2009 publication:
"first, for the individual bank, the risk-free rate of ¼ percent must
be the bank's perception of its best investment opportunity."
The Bernanke Fed's policy was a repetition of what the Fed did in
1936 and 1937 which helped drive the country into a second depression.
Why does Chairman Bernanke, who has studied the Great Depression of
the 1930's and has surely read the classic 1963 account of improper
actions by the Fed on bank reserves described by Milton Friedman and
Anna Schwartz, repeat the mistaken policy?
As the
economy pulled out of the deep recession in 1936 the Fed Board thought
the U.S. banks had too much excess reserves, so they began to raise the
reserves banks were required to hold. In three steps from August 1936
to May 1937 they doubled the reserve requirements for the large banks
(13 percent to 26 percent of checkable deposits) and the country banks
(7 percent to 14 percent of checkable deposits).
Friedman and Schwartz ask: "why seek to immobilize reserves at that
time?" The economy went back into a deep depression. The Bernanke Fed's
2008 to 2010 policy also immobilizes the banking system's reserves
reducing the banks' incentive to make loans.
This is a bad policy even if the banks approve. The
correct policy now should be to slowly reduce the interest paid on
bank reserves to zero and simultaneously maintain a moderate increase
in the money supply by slowly raising the short term market interest
rate targeted by the Fed. Keeping the short term target
interest rate at zero causes many problems, not the least of which is
allowing banks to borrow at a zero interest rate and sit on their
reserves so they can receive billions in interest from the taxpayers
via the Fed. Business loans from banks are vital to the nations'
recovery.
The fact that the Fed is suppressing lending
and inflation at a time when it says it is trying to encourage both
shows that the Fed is saying one thing and doing something else
entirely.
I have previously pointed out numerous other ways in which the Fed is working against its stated goals, such as:
- Reinforcing cyclical trends (when one of the Fed's main justifications is providing a counter-cyclical balance);
- Increasing unemployment (when the Fed is mandated by law to maximize employment); and
- Encouraging financial companies to make even riskier gambles in the future (when it is supposed to stabilize the financial system).
And see this.
Postscript: If the Fed really wants to stimulate the economy, it should try Steve Keen's idea.
Food
We used Einstein Brothers for breakfast and lunch. We planned food for about 100 people and it worked out very well, with food taken to the after-party too. We simply booked online, chose a ton of food and it arrived at 8:15 for breakfast and 11 a.m. or so for lunch. Breakfast consisted of bagels with various schmears, coffees (remember decaf too) and some bagel poppers (think donut holes). Lunch was boxes of bagel sandwiches (remember vegetarian option), iced tea, lemonade, cookies (three kinds I think), chips (including chips that don't suck, like Sunchips) and gherkins.
Set up was very easy, there were a couple of fold out tables and a few people volunteered to set up the boxes, etc., along with the staff from EB. At the end of the day I asked everyone in the room to help clean up one item (we had boxes, empty cups, etc., etc.) and it was done very quickly.
Breakfast mingling took from 8:30-9 a.m. or so. Lunch was one hour: noon-1 p.m. It was a nice enough day that people wandered outside, chatted and so on.
Website
As a hangover from last year, I happily used Google Sites to host www.wherecamp5280.org for free. It has a super simple editing interface. I only built a couple of very simple pages listing the details upfront as you can see.
Tickets
Eventbrite was pretty awesome. You set up your event, add ticket types (with different prices), link to it and you're done. It's entirely free to use if your tickets are free. For wherecamp, the majority of the tickets were free. You can also use their iPhone app to scan peoples tickets if you like, but I didn't do this as it's free and it would have just been a hassle for very little benefit. Tip: tell the attendees this so they don't print out the paper ticket! Also see sponsorship next:
Sponsorship
I used Eventbrite again. This worked out fantastically. Usually people spend a ton of time setting out sponsor levels, making a brochure and all that stuff about what a sponsor gets for their money. What I did instead was set up Eventbrite "tickets" that were priced as powers of two. So $16, $32, $64... $1024. Sponsors could then simply go in to Eventbrite and buy a ticket. This was wonderful for me as I didn't have to screw around with checks and bank transfers.
It was wonderful for sponsors as they could buy a "ticket" and expense that, whereas sponsorship is sometimes a much harder thing to get and has to go through other channels. One big thing to learn from though is that powers of two is a cute way to get sponsorship, but it doesn't match very well to what can be expensed. Often people can expense things with some rule like "so long as it's less than $1,000." Next time I will price things like $190, $490, $950 and so on.
As for "what do the sponsors get," I didn't produce a brochure or have anything particularly in mind. I've run conferences before which do do this and that's fine but this was a volunteer event. If the sponsors didn't come through, all I had to do was not order food (the major cost) and instead point people at nearby cafes, etc. It helps that I've run conferences before and therefore have a level of trust from the people sponsoring to not fuck it all up. I was asked a couple of times, but simply said it was a volunteer conference therefore time was short and we couldn't really produce brochures, etc.
Next page: How about actually getting the sponsors?
bench_craft_company
Can Mobile Phones Think?: Tech <b>News</b> «
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Sun TV <b>News</b> application approved - Need to know - Macleans.ca
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Jade Raymond making Splinter Cell 6 <b>News</b> - Page 1 | Eurogamer.net
Read our news of Jade Raymond making Splinter Cell 6.
bench_craft_company
Can Mobile Phones Think?: Tech <b>News</b> «
Nokia's Beta Labs today released a new experimental application called Situations, and it portends a future where context awareness drives the mobile experience, and points to a time when our handsets will do the thinking on our behalf, ...
Sun TV <b>News</b> application approved - Need to know - Macleans.ca
Sun TV News has been green-lit by the CRTC after a long war with the regulator and critics who are opposed to the 24-7 news-and-opinion channel nicknamed “Fox News North.” The CRTC had previously refused to grant the Quebecor property a ...
Jade Raymond making Splinter Cell 6 <b>News</b> - Page 1 | Eurogamer.net
Read our news of Jade Raymond making Splinter Cell 6.
bench_craft_company
Immediately after the recession took a dramatic dive in
September 2008, the Bernanke Fed implemented a policy that continues to
further damage the incentive for banks to lend to businesses. On
October 6, 2008 the Fed's Board of Governors, chaired by Ben Bernanke,
announced it would begin paying interest on the reserve balances of
the nation's banks, major lenders to medium and small size businesses.
You don't need a Ph.D. economist to know that if you pay
banks ¼ percent risk free interest to hold reserves that they can obtain
at near zero interest, that would be an incentive to hold the
reserves. The Fed pumped out huge amounts of money, with the base of
the money supply more than doubling from August 2008 to August 2010,
reaching $1.99 trillion. Guess who has over half of this money parked
in cold storage? The banks have $1.085 trillion on reserves drawing
interest, The Fed records show they were paid $2.18 billion interest on
these reserves in 2009.
A number of people spoke
about the disincentive for bank lending embedded in this policy
including Chairman Bernanke.
***
Jim McTague, Washington Editor of Barrons,
wrote in his February 2, 2009 column, "Where's the Stimulus:"
"Increasing the supply of credit might help pump up spending, too.
University of Texas Professor Robert Auerbach an economist who studied
under the late Milton Friedman, thinks he has the makings of a
malpractice suit against Federal Reserve Chairman Ben Bernanke, as the
Fed is holding a record number of reserves: $901 billion in January as
opposed to $44 billion in September, when the Fed began paying interest
on money commercial banks parked at the central bank. The banks prefer
the sure rate of return they get by sitting in cash, not making loans.
Fed, stop paying, he says."
Shortly after this article appeared
Fed Chairman Bernanke explained: "Because banks should be unwilling to
lend reserves at a rate lower than they can receive from the Fed, the
interest rate the Fed pays on bank reserves should help to set a floor
on the overnight interest rate." (National Press Club, February 18,
2009) That was an admission that the Fed's payment of interest on
reserves did impair bank lending. Bernanke's rationale for interest
payments on reserves included preventing banks from lending at lower
interest rates. That is illogical at a time when the Fed's target
interest rate for federal funds, the small market for interbank loans,
was zero to a quarter of one percent. The banks would be unlikely to
lend at negative rates of interest -- paying people to take their money
-- even without the Fed paying the banks to hold reserves.
The next month William T. Gavin, an excellent economist at the St.
Louis Federal Reserve, wrote in its MarchApril 2009 publication:
"first, for the individual bank, the risk-free rate of ¼ percent must
be the bank's perception of its best investment opportunity."
The Bernanke Fed's policy was a repetition of what the Fed did in
1936 and 1937 which helped drive the country into a second depression.
Why does Chairman Bernanke, who has studied the Great Depression of
the 1930's and has surely read the classic 1963 account of improper
actions by the Fed on bank reserves described by Milton Friedman and
Anna Schwartz, repeat the mistaken policy?
As the
economy pulled out of the deep recession in 1936 the Fed Board thought
the U.S. banks had too much excess reserves, so they began to raise the
reserves banks were required to hold. In three steps from August 1936
to May 1937 they doubled the reserve requirements for the large banks
(13 percent to 26 percent of checkable deposits) and the country banks
(7 percent to 14 percent of checkable deposits).
Friedman and Schwartz ask: "why seek to immobilize reserves at that
time?" The economy went back into a deep depression. The Bernanke Fed's
2008 to 2010 policy also immobilizes the banking system's reserves
reducing the banks' incentive to make loans.
This is a bad policy even if the banks approve. The
correct policy now should be to slowly reduce the interest paid on
bank reserves to zero and simultaneously maintain a moderate increase
in the money supply by slowly raising the short term market interest
rate targeted by the Fed. Keeping the short term target
interest rate at zero causes many problems, not the least of which is
allowing banks to borrow at a zero interest rate and sit on their
reserves so they can receive billions in interest from the taxpayers
via the Fed. Business loans from banks are vital to the nations'
recovery.
The fact that the Fed is suppressing lending
and inflation at a time when it says it is trying to encourage both
shows that the Fed is saying one thing and doing something else
entirely.
I have previously pointed out numerous other ways in which the Fed is working against its stated goals, such as:
- Reinforcing cyclical trends (when one of the Fed's main justifications is providing a counter-cyclical balance);
- Increasing unemployment (when the Fed is mandated by law to maximize employment); and
- Encouraging financial companies to make even riskier gambles in the future (when it is supposed to stabilize the financial system).
And see this.
Postscript: If the Fed really wants to stimulate the economy, it should try Steve Keen's idea.
Food
We used Einstein Brothers for breakfast and lunch. We planned food for about 100 people and it worked out very well, with food taken to the after-party too. We simply booked online, chose a ton of food and it arrived at 8:15 for breakfast and 11 a.m. or so for lunch. Breakfast consisted of bagels with various schmears, coffees (remember decaf too) and some bagel poppers (think donut holes). Lunch was boxes of bagel sandwiches (remember vegetarian option), iced tea, lemonade, cookies (three kinds I think), chips (including chips that don't suck, like Sunchips) and gherkins.
Set up was very easy, there were a couple of fold out tables and a few people volunteered to set up the boxes, etc., along with the staff from EB. At the end of the day I asked everyone in the room to help clean up one item (we had boxes, empty cups, etc., etc.) and it was done very quickly.
Breakfast mingling took from 8:30-9 a.m. or so. Lunch was one hour: noon-1 p.m. It was a nice enough day that people wandered outside, chatted and so on.
Website
As a hangover from last year, I happily used Google Sites to host www.wherecamp5280.org for free. It has a super simple editing interface. I only built a couple of very simple pages listing the details upfront as you can see.
Tickets
Eventbrite was pretty awesome. You set up your event, add ticket types (with different prices), link to it and you're done. It's entirely free to use if your tickets are free. For wherecamp, the majority of the tickets were free. You can also use their iPhone app to scan peoples tickets if you like, but I didn't do this as it's free and it would have just been a hassle for very little benefit. Tip: tell the attendees this so they don't print out the paper ticket! Also see sponsorship next:
Sponsorship
I used Eventbrite again. This worked out fantastically. Usually people spend a ton of time setting out sponsor levels, making a brochure and all that stuff about what a sponsor gets for their money. What I did instead was set up Eventbrite "tickets" that were priced as powers of two. So $16, $32, $64... $1024. Sponsors could then simply go in to Eventbrite and buy a ticket. This was wonderful for me as I didn't have to screw around with checks and bank transfers.
It was wonderful for sponsors as they could buy a "ticket" and expense that, whereas sponsorship is sometimes a much harder thing to get and has to go through other channels. One big thing to learn from though is that powers of two is a cute way to get sponsorship, but it doesn't match very well to what can be expensed. Often people can expense things with some rule like "so long as it's less than $1,000." Next time I will price things like $190, $490, $950 and so on.
As for "what do the sponsors get," I didn't produce a brochure or have anything particularly in mind. I've run conferences before which do do this and that's fine but this was a volunteer event. If the sponsors didn't come through, all I had to do was not order food (the major cost) and instead point people at nearby cafes, etc. It helps that I've run conferences before and therefore have a level of trust from the people sponsoring to not fuck it all up. I was asked a couple of times, but simply said it was a volunteer conference therefore time was short and we couldn't really produce brochures, etc.
Next page: How about actually getting the sponsors?
bench_craft_company
Can Mobile Phones Think?: Tech <b>News</b> «
Nokia's Beta Labs today released a new experimental application called Situations, and it portends a future where context awareness drives the mobile experience, and points to a time when our handsets will do the thinking on our behalf, ...
Sun TV <b>News</b> application approved - Need to know - Macleans.ca
Sun TV News has been green-lit by the CRTC after a long war with the regulator and critics who are opposed to the 24-7 news-and-opinion channel nicknamed “Fox News North.” The CRTC had previously refused to grant the Quebecor property a ...
Jade Raymond making Splinter Cell 6 <b>News</b> - Page 1 | Eurogamer.net
Read our news of Jade Raymond making Splinter Cell 6.
bench_craft_company
Can Mobile Phones Think?: Tech <b>News</b> «
Nokia's Beta Labs today released a new experimental application called Situations, and it portends a future where context awareness drives the mobile experience, and points to a time when our handsets will do the thinking on our behalf, ...
Sun TV <b>News</b> application approved - Need to know - Macleans.ca
Sun TV News has been green-lit by the CRTC after a long war with the regulator and critics who are opposed to the 24-7 news-and-opinion channel nicknamed “Fox News North.” The CRTC had previously refused to grant the Quebecor property a ...
Jade Raymond making Splinter Cell 6 <b>News</b> - Page 1 | Eurogamer.net
Read our news of Jade Raymond making Splinter Cell 6.
bench_craft_company
