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There are three solutions: 1) Government makes more treasuries, sells them to the fed, and spends the money on infrastructure. That increases government debt,
by fragsworth 7y ago
There are three solutions:
1) Government makes more treasuries, sells them to the fed, and spends the money on infrastructure. That increases government debt, but improves our deflation situation and shrinks the loan bubble a bit. Preventing a deleveraging.
2) Government literally prints money, and gives it to people. That will rapidly increase inflation, which will increase corporate profits, shrinking the loan bubble a bit, preventing a deleveraging.
3) Don't do 1 or 2 because it basically redistributes wealth. Wait for rich people to spend their massive wealth on CPI-style goods and services, causing poor people to eventually have and spend more money. This takes aeons.
As far as I can tell, the powers that be have decided that #3 is the solution, and absolutely refuse to have a stable monetary system that involves giving anything to poor people.
- woofie11 7y agoI think #2 is the right outcome. Perhaps not give the money to people outright, but use it to manage the situation (e.g. cover lost wages for people staying at home from work, help airlines and similar businesses stay afloat, etc.).
- JMTQp8lwXL 7y agoIn the economically prosperous portions of our nation, inflation is doing just fine. Housing prices have performed phenomenally in the past decade. The overall CPI understates inflation because there's a great number of areas that aren't economically relevant in the U.S. and consequently haven't experienced the accompanying inflation.
- jdkee 7y agoRich people don't spend their wealth sufficiently to propel the economy. https://en.wikipedia.org/wiki/Marginal_propensity_to_consume https://en.wikipedia.org/wiki/Marginal_propensity_to_consume