Think of it this way: There are only goods and services. Financial assets are claims on them. In other words, holders of investments/assets (i.e., capitalists-investors) believe that they can convert their holdings into purchasing power to get goods and services. At the same time, workers expect to be able to exchange a unit’s worth of their contribution to the production of goods and services into buying power for goods and services. But since debt/money/ currency have no intrinsic value, the claims on them are greater than the value of what they are supposed to be able to buy, so they have to be devalued or restructured. In other words, when there are too many debt liabilities/ assets, they either have to be reduced via debt restructurings or monetized. Policy makers tend to use monetization at this stage primarily because it is stimulative rather than contractionary. But monetization simply swaps one IOU (debt) for another (newly printed money). The situation is analogous to a Ponzi scheme. Since there aren’t enough goods and services likely to be produced to back up all the IOUs, there’s a worry that people may not be willing to work in return for IOUs forever.

当金融资产不能被足够的实体资产支撑，那人们就不愿意为了一个虚无的承诺: 金融资产可以兑换成good and service而工作。美国现在就处于这种情况。美联储印钱，股市欣欣向荣，但实体经济不行，失业率一直降不下来，通胀上升，形成滞涨。当降低利率，QE都不管用的时候，就要用到Monetary policy 3.

Low interest rates together with low premiums on risky assets pose a structural challenge for monetary policy. With Monetary Policy 1 (interest rates) and Monetary Policy 2 (QE) at their limits, the central bank has very little ability to provide stimulus through these two channels—i.e., monetary policy has little “gas in the tank.” This typically happens in the later years of the long-term debt cycle (e.g., 1937-38 and now in the US), which can lead to “pushing on a string.” When this happens, policy makers need to look beyond QE to the new forms of monetary and fiscal policy characterized by Monetary Policy 3

感觉现在的美国就是在同一历史时期。

Monetary Policy 3 Monetary Policy 3 puts money more directly into the hands of spenders instead of investors/savers and incentivizes them to spend it. Because wealthy people have fewer incentives to spend the incremental money and credit they get than less wealthy people, when the wealth gap is large and the economy is weak, directing spending opportunities at less wealthy people is more productive. Logic and history show us that there is a continuum of actions to stimulate spending that have varying degrees of control to them. At one end are coordinated fiscal and monetary actions, in which fiscal policy makers provide stimulus directly through government spending or indirectly by providing incentives for nongovernment entities to spend. At the other end, the central bank can provide “helicopter money” by sending cash directly to citizens without coordination with fiscal policy makers. Typically, though not always, there is a coordination of monetary policy and fiscal policy in a way that creates incentives for people to spend on goods and services. Central banks can also exert influence through macroprudential policies that help to shape things in ways that are similar to how fiscal policies might. For simplicity, I have organized that continuum and provided references to specific priorcases of each below.

  • An increase in debt-financed fiscal spending. Sometimes this is paired with QE that buys most of the new issuance (e.g., in Japan in the 1930s, US during World War II, US and UK in the 2000s).
  • Increase in debt-financed fiscal spending, where the Treasury isn’t on the hook for the debt, because: The central bank can print money to cover debt payments (e.g., Germany in the 1930s). The central bank can lend to entities other than the government that will use it for stimulus projects(e.g., lending to development banks in China in 2008).
  • Not bothering to go through issuing debt, and instead giving newly printed money directly to the government to spend.
  • Printing money and doing direct cash transfers to households (i.e., “helicopter money”).
  • Big debt write-down accompanied by big money creation

policy 3就是直接把钱塞到实体经济手中，鼓励消费，鼓励创造就业，刺激实体经济。这儿财政政策和货币政策往往会配合。