Mish, government did quite well in building Hoover Dam. I would not say that government is incapable of forcing economic growth with projects. Only libertarians with a doctrine that doesn't fit the success shown regarding large projects would forget about the Hoover Damn.

An argument that government is a bit too weak these days. However, I don't think stimulus that causes interest rates to rise too quickly because of structured finance is a good idea. But Trump wants massive stimulus, so perhaps Trump is closer to Krugman on this subject than to you! Not saying either are right.

Prof, Alan #Greenspan has been reading you. He says #stagflation is his fear, which you seem to be saying as well. Killing the collateral could make things even worse than that.

So, banks are hoarding #bonds for this new rule and #banks are hoarding bonds as non banking financial institutions play a dangerous game of basing their collateral stability on equities as collateral. That appears to be another slippery slope: www.talkmarkets.com/.../bizarre-collateral-in-securities-lending-exposed-by-bank-of-mellon

We know #bonds are used for collateral in derivatives markets. They must bolster #derivatives bets that may protect stock positions. If that is really huge, then the stock market could be constrained from going much higher. The new normal may be changing the relationship between stocks and bonds.

Everybody who is interested in bonds should read this article.

Even the housing #bubble of the last decade could not overcome the conundrum over time.

Great article, Gary! Hope is that a little #inflation and reflation would cause banks to lend, but if Trump wants massive inflation and a housing #bubble he could hurt the economy and make the coming recession far worse.

Articles like these set back the true understanding of what #HelicopterMoney really is. It is not deficit spending. It is a monetary action, not a governmental action. www.talkmarkets.com/.../helicopter-money-is-being-misrepresented-by-bill-gross-and-others Having said that, Old Mitch in the senate seems cool to big deficit spending.

Perhaps people underestimate the New Normal, with wages as part of GDP being down compared to capital formation, compared to any recovery in the past. That does not bode well for continued expansion.

Two issues for me. The senate is not interested in infrastructure programs or it will look like it stopped Obama on purpose. Second, Lambert says we are at the end of the business cycle, so it would seem like the party is over before it starts.