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You should read into Modern Monetary Theory. The government can print the money by issuing treasuries: there's no need for the money to come from anywhere. Soci
by fny 6y ago
You should read into Modern Monetary Theory. The government can print the money by issuing treasuries: there's no need for the money to come from anywhere. Social security can easily be paid for. Interest on debt is never a problem.
The base argument is that any government that issues its own currency can never default, so it can incur large deficit spending that creates a surplus in the private economy.
The difficulty is whether that surplus is put to produce growth which would offset the inflation that conjuring money creates. If everyone sits at home doing nothing, you bet inflation will happen. If it's used as a cushion, perhaps not.
- throwsoundpop 6y ago> If everyone sits at home doing nothing, you bet inflation will happen Why would people sitting at home doing nothing be detrimental to growth? Growth doesn't necessarily require masses of people to do more work; it can be achieved through productivity gains, e.g. improvements in tooling, and research + development.
- ralusek 6y agoThat would involve them not sitting at home doing nothing...
- bhupy 6y agoQuestion: why not abolish all taxes, then? If we can just MMT the current Federal budget, why should anyone pay taxes?
- rapind 6y agoYou can implement a progressive tax using UBI and a flat tax instead and thus get rid of all the loopholes and tax screwery. IMO this is what all countries should do. Corruption loves complexity.
- hpkuarg 6y agoI dream of the day that a land value tax, and only a land value tax, covers all government services. In fact, one could argue that the size of government that a land value tax supports is the maximum size.
- bhupy 6y agoAll excellent ideas. Unfortunately I think a Federal LVT would require a Constitutional amendment, but nothing stopping us from doing this at the State level.
- fny 6y agoAn MMT theorist would argue that taxation is used to withdraw money from circulation and redistribute income. They advocate for using fiscal policy to drive monetary policy. I just want to state for clarity's sake that I don't espouse the policies of MMT theorists. It's just a framework that appears to have some analytical merit. For example, despite the roaring deficits, why has demand for treasuries not decreased? Why did QE and high government spending not cause inflation? Why do surpluses tend to trigger recessions?
- grandmczeb 6y agoIt’s important to note “Modern Monetary Theory” (aka MMT) is almost unanimously rejected by mainstream academics[1]. Its largest proponents are political leaders rather than economists. [1] http://www.igmchicago.org/surveys/modern-monetary-theory/ http://www.igmchicago.org/surveys/modern-monetary-theory/
- jpxw 6y agoMMT is an absolute joke, I’m glad at least someone has called it out here.
- fny 6y agoIt's also important to note that main stream academics all thought the stimulus during the financial crisis would be inflationary, and they were wrong. Now, I'm not advocating for the government to print money galore since more dollars chasing fewer resources means inflation, but I think there's a decent case to be made that the current debt level is sustainable if we can gain efficiency to match the rate of currency growth. Also, I should add--I do not think UBI is a wise path.
- imtringued 6y agoThe reason why we don't see consumer price inflation is that most central bank policies do not actually involve consumer goods. Stocks, education and housing are inflating according to conventional economics. If you were to fund a UBI by printing money then the printed money would be spent on consumer goods and you would see consumer inflation.