Tags: schwartz | fed | print | money

Schwartz: Forget Stimulus, Print More Money

By Julie Crawshaw   |   Wednesday, 21 Jan 2009 10:39 AM

Anna Schwartz — an economist associated with the National Bureau of Economic Research for 67 years — wants the Obama administration to continue former Treasury Secretary Henry Paulson’s plan to buy troubled mortgage-related securities.

And Schwartz wants the government to pay for them with Fed-created money.

"If they get the Fed printing money, that might help — and it probably would be the most successful anti-depression policy that they could choose," Schwartz told Investment News.

"The Treasury never thought out how it would price the dubious assets it would buy, which is why the program went nowhere.”

If the new administration were to adopt that strategy today, it would have to find experts who can design a program, examine the assets, and price them, Schwartz says.

Schwartz strongly opposes Obama’s proposals to revive the sagging U.S. economy by funding infrastructure projects, however.

"How can the federal government become a repairer of bridges and a builder of roadways?” Schwartz asks.

"They will spend a lot of money on these programs when the government has no real ability to manage them or execute them."

The U.K. recently did exactly what Schwartz says the United States should do: It empowered the Bank of England to print money and buy assets direct from companies and banks, the Financial Times reports.

The British central bank will set up a new facility allowing it to buy billions of high-quality corporate assets that could also be used to boost money supply.

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Anna Schwartz — an economist associated with the National Bureau of Economic Research for 67 years — wants the Obama administration to continue former Treasury Secretary Henry Paulson’s plan to buy troubled mortgage-related securities.And Schwartz wants the government to...
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