5 ms·

Probably dumb question: if debt and deficits don’t matter and a country can just print money - how does that explain cases where countries have defaulted and ot

by erentz 8y ago

Probably dumb question: if debt and deficits don’t matter and a country can just print money - how does that explain cases where countries have defaulted and other countries and their own citizens lose confidence in the currency? I also don’t understand how the jobs guarantee is supposed to work. Presumably if we had work to be done we would have open positions for it. Now we have to magic up jobs, which means diluting jobs other people currently do and the income the currently derive from it, or make pointless “dig and fill” hole jobs. Won’t all this just make everything a hell of a lot less efficient? And won’t it worsen potential economic recovery? You’re depriving potential new industries or business from labour because that labour is working for the government. You’re also preventing government departments (or wherever those jobs go) from improving their own services. To pick a historical example, instead of moving to computerizing records taking away jobs it would now be necessary to continue to do things on a typewriter because you need to keep the jobs. This in turn removes money flowing from the government to computer industry, which helps to drive up and develop whole new businesses and industry that drive the economy. That is, is there not a risk that the way the jobs guarantee is described as helping during the downturns could actually hinder recovery and development of new industry? OTOH why I like UBI is it still leaves all those incentives to do new things in place.

ergothus 8y ago
> Presumably if we had work to be done we would have open positions for it. I don't follow the presumption. There's no shortage of work out there to be done, we just don't have the means to PAY for it under the current system. Now, you might not think MMT does either (in real terms), but the world is NOT short of work to be done. > Now we have to magic up jobs, which means diluting jobs other people currently do ...which doesn't follow if your first point fails.
- erentz 8y ago
  > There's no shortage of work out there to be done Ok, I have to agree with this to a certain point as it’s an argument I find myself making in change resisting organizations. But the implication here is that there will always be no shortage of low end minimum wage work and that the best way to discover and assign that work is via a centralized means. So with a jobs guarantee we have to invent a government system that identifies and assigns jobs that need doing in an efficient manner. No one has done that yet. > which doesn't follow if your first point fails. I’m not sure it’s entirely failed. Because although the ideal is “there is always more work you can shift to once this job is done” that is simply not what happens in practice. People and organizations don’t behave that way. Try working in an organization facing disruption, or an old developing world government department where people rely on it for their job, etc. It is full of resistence to anything that might put at threat peoples jobs. I’ve worked at places as recently as 2010 that still had telex operators who came to work and sat their doing nothing all day because the telex systems had been decommissioned. This is what you get with jobs guarantees.
  - mason55 8y ago
    > But the implication here is that there will always be no shortage of low end minimum wage work I'm not following how that's implied? I think the implication is that there's no shortage of work that has positive value but less positive value than people are willing to pay for it. Anyway, the idea is that if the economy is in good shape and most people are employed then the gov't is providing fewer jobs. If you have more slack then the number of gov't jobs goes up as the gov't spends more money (i.e. pays the people it's employing) and so the balance between spending and production doesn't change, thus keeping inflation in check.
    - erentz 8y ago
      > I'm not following how that's implied? The proposed job guarantee talked about is a $15 per hour minimum wage job.
thadjo 8y ago
> Probably dumb question: if debt and deficits don’t matter and a country can just print money - how does that explain cases where countries have defaulted and other countries and their own citizens lose confidence in the currency? I think the idea is that deficits don't matter if you print money and offset any inflation (1) some sort of jobs program, (2) taxes which can take money back out of the economy and cool inflation, and maybe (3) more traditional ways of tweaking interest rates.
conanbatt 8y ago
> how does that explain cases where countries have defaulted and other countries and their own citizens lose confidence in the currency? Other countries cant issue dollars which is the world exchange currency. When you print out your countries cash, your currency exchange value drops and then you have to reduce your imports. Its easy for a country like argentina, for example, to keep a negative balance trade, run out of dollars and then it cant pay unless it devaluates the currency so much , outside money comes flooding in. The US can print out its own money, but the major risk I perceive is that it wrecks its exchange rate. If the dollar loses value, first it actually adjusts the prosperty of the american people relative to imports/exports, but also risks its world-reserve status. It is often underestimated how profitable it is for the US to be financed by the entire earth on trade. If that changed..it would be a serious, irreversible economic damage.

by erentz 8y ago

ergothus 8y ago

> Presumably if we had work to be done we would have open positions for it. I don't follow the presumption. There's no shortage of work out there to be done, we just don't have the means to PAY for it under the current system. Now, you might not think MMT does either (in real terms), but the world is NOT short of work to be done. > Now we have to magic up jobs, which means diluting jobs other people currently do ...which doesn't follow if your first point fails.

erentz 8y ago
> There's no shortage of work out there to be done Ok, I have to agree with this to a certain point as it’s an argument I find myself making in change resisting organizations. But the implication here is that there will always be no shortage of low end minimum wage work and that the best way to discover and assign that work is via a centralized means. So with a jobs guarantee we have to invent a government system that identifies and assigns jobs that need doing in an efficient manner. No one has done that yet. > which doesn't follow if your first point fails. I’m not sure it’s entirely failed. Because although the ideal is “there is always more work you can shift to once this job is done” that is simply not what happens in practice. People and organizations don’t behave that way. Try working in an organization facing disruption, or an old developing world government department where people rely on it for their job, etc. It is full of resistence to anything that might put at threat peoples jobs. I’ve worked at places as recently as 2010 that still had telex operators who came to work and sat their doing nothing all day because the telex systems had been decommissioned. This is what you get with jobs guarantees.
- mason55 8y ago
  > But the implication here is that there will always be no shortage of low end minimum wage work I'm not following how that's implied? I think the implication is that there's no shortage of work that has positive value but less positive value than people are willing to pay for it. Anyway, the idea is that if the economy is in good shape and most people are employed then the gov't is providing fewer jobs. If you have more slack then the number of gov't jobs goes up as the gov't spends more money (i.e. pays the people it's employing) and so the balance between spending and production doesn't change, thus keeping inflation in check.
  - erentz 8y ago
    > I'm not following how that's implied? The proposed job guarantee talked about is a $15 per hour minimum wage job.

thadjo 8y ago

> Probably dumb question: if debt and deficits don’t matter and a country can just print money - how does that explain cases where countries have defaulted and other countries and their own citizens lose confidence in the currency? I think the idea is that deficits don't matter if you print money and offset any inflation (1) some sort of jobs program, (2) taxes which can take money back out of the economy and cool inflation, and maybe (3) more traditional ways of tweaking interest rates.

conanbatt 8y ago

> how does that explain cases where countries have defaulted and other countries and their own citizens lose confidence in the currency? Other countries cant issue dollars which is the world exchange currency. When you print out your countries cash, your currency exchange value drops and then you have to reduce your imports. Its easy for a country like argentina, for example, to keep a negative balance trade, run out of dollars and then it cant pay unless it devaluates the currency so much , outside money comes flooding in. The US can print out its own money, but the major risk I perceive is that it wrecks its exchange rate. If the dollar loses value, first it actually adjusts the prosperty of the american people relative to imports/exports, but also risks its world-reserve status. It is often underestimated how profitable it is for the US to be financed by the entire earth on trade. If that changed..it would be a serious, irreversible economic damage.