Back in June I said that rather than targeting interest rates, which are now at zero, the Fed should target stock prices and buy S&P futures. That would be a very direct transmission mechanism to the real economy as it would boost firm capital and it would have a positive wealth effect for households, which hold about as much stock as real estate. It would also fund underfunded pensions.
Well, some are catching on to my idea! Money manager, James Altucher said this:
|The Fed should regularly buy S&P 500 futures before the open, at midday and near the close, when it'll get the most bang for its buck, Altucher says. "They've been spending a $1 trillion [plus] in the mortgage market," he notes. "Now I'm saying, spend 1% in the stock market. It's the same idea. Let's do it where it impacts people the most - where it impacts Main Street."|
Gee, he must be reading this blog!