Apologies, I got carried away... wall of text incoming.

@RedSky

I agree, monetary policy at low rates has very little to offer in terms of economic stimulus. Then again, the focus almost solely on monetary policy is part of the problem. Fiscal policy can have a massive impact, both directly (government purchases of goods and services) and indirectly (increase in automatic stabilizers). But for that you either need to be in control of your central bank, so that you can engage in Overt Monetary Financing ("printing" money). Or you need the blessing of the private banks, which is particularly true for a Vollgeld system.

The budget is the core of a parliamentary democracy, and to be at the whim of the folks at Deutsche Bank, HSBC or Credit Suisse -- no, thank you very much. We saw how that played out in Greece.

Anyway, the central bank can do miraculous things: if it provides funds to the democratically elected body in charge of the budget, aka parliament/the government. Trying to "motivate" the private banks to stock up on cheap reserves to stimulate lending is just a sign of ideology.

The great Michal Kalecki, in his essay The Political Aspects of Full Employment, summarized the general issue of government spending quite clearly. The industrial leaders stand in opposition to government spending aimed at full employment for three distinct reasons: a) dislike of government interference in the problem of employment as such; b) dislike of the direction of government spending (public investment and subsidizing consumption); c) dislike of the social and political changes resulting from the maintenance of full employment.

I'd say control over your currency is too great a tool to leave it in the hands of unelected managers. Clement Attlee knew very well why he had to nationalize the Bank of England in '46.

Back to the issue of inflation, I'd like to make two points. First, how big a role should inflation really play when talking policy. Second, what's the influence of a central bank on inflation.

Where does it come from, this focus on inflation. People usually talk about government spending when discussing inflation. Private spending is rarely brought up, even though it can be just as inflationary. So let's ignore private spending for a moment and talk purely government spending: should a deficit/surplus not be judged primarily by how well it helps us achieve our macroeconomic goals? Or more clearly, why should we sacrifice full employment or our general welfare on the altar of inflation? Yes, that's over the top. But so is the angst of inflation.

I'd say let's stick with Abba Lerner's concept of functional finance and judge deficits/surpluses purely by how well they help us achieve our macroeconomic goals. Besides, the US has run massive deficits during the GFC, so much in fact, that a great number of monetarists saw hyperinflation just around the corner. Still waiting for it. Same for Japan. Massive deficits... and deflation.

As long as spending, both private and government, doesn't push the economy beyond its limits (full employment, real resources, production capacity), out-of-control inflation just doesn't materialize. Plus, suppressing inflation is actually one thing central banks can do quite well. Unlike causing inflation, which both Japan and the EU are showcases off. Draghi can dance naked on the table, monetary policy (QE, mainly) won't push inflation upwards.

Which brings me to the second point: what's inflation, what's the cause of inflation, how can central banks manipulate it.

CPI is often used as a measure of inflation, but I prefer the GDP deflator. CPI doesn't account for externalities that you cannot influence, whatever you do. Prime case: the price of oil. Monetary policy of the Bank of Sweden has no influence on the price of oil. The GDP inflator, however, accounts for every economic activity within your currency zone -- much more useful.

General theory says, this measure of inflation goes up when demand surpasses supply. And vice versa. The primary factor of demand is domestic purchasing power, therefore wages. If you suppress wages, you suppress inflation. If you push wages, you push inflation. More specifically, you can see a direct correlation between unit labour costs and the GDP deflator in every country at any time. Here's a general graph for multiple countries, and the St. Louis FED provides a beauty for the US.

That's why it's easy for central banks to combat inflation, but almost impossible to fight deflation.

Systemic corruption will bring this planet to its knees.

And we're all to blame. Unless we're willing to be actively involved in the democratic process, unless we're willing to use our overwhelming manpower to DEMAND justice and fairness, unless we drill into our children how important it is to be just and fair and involved, we will be exploited. And it IS happening on a grand scale.

It doesn't have to be like this, with the corruption in banking, politics, the tax loop-holes for the super rich and the toxic policies introduced for the benefit of corporations. All we have to do is decide to stand up together, for each other, and show them by our actions that we will not take it anymore.

My government won't even prosecute HSBC for illegal activity starving this country (and yours, probably) of untold billions in tax revenue, yet on a daily basis they stand in front of the cameras and tell us how lazy benefits claimants have bled our country dry. They have personally stolen millions from us, standing there in a suit confidently telling us they're going to crack down on cash-in-hand builders and the like. I suspect if we start down that particular rabbit hole, we will be left in awe of just how deep it goes - right to the very top of probably every single developed nation's government, possibly for decades. They have been fostering this environment for a long time, steering us to a point where they hold all the cards.

I hate to think i've become a tinfoil hatter, but just look at what's going on.... How can they say that they'll pursue benefits claimants and VAT-dodges to the end of the earth, but not say a single word about HSBC helping millionaires and billionaires not to pay tax? How can i possibly not see that as a conspiracy? They don't go after HSBC because they are DONORS and FRIENDS.

This isn't stuff i'm making up. It's true, it's real and it's a fucking scary Orwellian nightmare. The guy who leaked the HSBC stuff very recently announced that there are a lot more devastating revelations to come!! (which i read courtesy of al jazeera)

Not everyone who profited from the collapse were criminal bankers, there were a few independent finance people that saw there was a bubble and placed bets accordingly just by doing good research.

Still, there are quite a few people in the banking industry that should be in jail for what they did in the housing crisis. There's more going on aside from that, NOBODY went to jail when HSBC got caught laundering billions for drug cartels even though they clearly knew what they were doing!!!!!

Like @Grimm said, these fellas did not just profit from a flaw in the system. They spent vast amounts of time and money lobbying for changes to the system, changes which made these exploits possible in the first place. Exploits that in most cases are still in violation of the law over here, but the oversight was starved out to a point of non-existence or simply handed over to entities they should be monitoring in the first place.

As a result, the City of London in particular accumulated enough economical leverage to hold the entire country hostage, knowing full well how a sweep of the City would lead to catastrophic ripples not only through the UK and Europe, but the entire bloody world. So now they can do whatever they please without fear of repercussions as seen in the case of HSBC.

This selective application of the law breeds contempt for the law, particularly if compared to the poor who get hammered for the slightest inconsistency in their paperwork. Too big to fail undermines the free market, but too big to jail undermines the basic rule of law.

Even in the very few cases that were prosecuted, only the institution was penalised, never any high level individual. Some of those responsible need to be held accountable, otherwise the riots in Tottenham will look like child's play compared to what will happen the next time these idiots drive the entire economy to the brink of collapse.

By the way, I'm still waiting for someone to end up in jail for the rigging of Libor or ISDAfix.

Right, they are no longer engaged in this kind of fraudulent behaviour. And HSBC is no longer laundering money for drug cartels and terrorists. And the DEA is no longer making up fictional sources for the data they were handed by the NSA.

And they're all terribly sorry.

Between wars of aggression (Iraq, Afghanistan) and the violation of national sovereignty (Pakistan, Libya, Syria, Jemen, Somalia), the running of gulags (Gitmo, Baghram) and torture facilities (airport in Mogadishu), the NDAA and the war on whistleblowers on the one hand and the entire corporate corruption (too big to fail/jail in particular) on the other hand, there's plenty of reason to take a good look at what the latest administrations have been responsible for.

But hey, Benghazi and the IRS are the real scandals, right?

Not Thomas Drake, John Kiriakou and Bradley Manning or Anwar al-Awlaki, Abdulrahman al-Awlaki and Samir Khan. Certainly not HSBC or Gitmo. And neither nightly JSOC raids nor cruise missile attacks, much less torture and kidnapping.

HSBC you say?

What a surprise.

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My Best Buy and Magnolia Hi-Fi credit accounts are managed by HSBC

It is incomprehensible that there are no serious repercussions for such atrocity.

UNWANTED is right.

http://creepingsharia.wordpress.com/

http://www.thereligionofpeace.com/

http://www.stopshariahnow.org

Little by little Shariah is creeping into our society, as per the following examples:

*footbaths in banks & airports (Minneapolis)
*polygamy (USA & UK)
*forced child marriages (Europe & Canada)
*honor killings (USA, Canada, Europe)
*spousal abuse among Muslim immigrant populations (USA & Europe)
*Islamic holidays replacing American holidays like Labor Day (Tyson Foods)
*publicly funded Shariah-Islamic schools (Virginia, NY, Minnesota)
*companies creating Islamic prayer rooms (Wachovia)
*nurses required to turn beds towards Mecca five times a day (UK)
*elimination of wine and alcohol at hotels (Hyatt)
*separation of men and women for recreation activities (Harvard)
*taxi drivers refusing to pick up passengers with wine, alcohol or seeing eye dogs (Minneapolis)
*and a growing Shariah Finance investment market supported by Citibank, UBS, HSBC, Dow Jones, Standard & Pours, and nearly every national investment bank you can think of, which is branding “Shariah” as some innocuous religious accommodation required by “moderate” Muslims