5 ms·

They are also starting to threaten jail time for people who collect but who aren’t supposed to. They should really just do helicopter money

toomuchtodo 6y ago
> They should really just do helicopter money Central banks should be delegated the authority to issue deposit accounts and debit cards to all citizens, but apparently the world hasn’t ended enough for us to do that yet (which would make helicopter money super simple).
- jariel 6y ago
  Wow, no way. This is way outside the bounds of what central banks do. Remember that 'helicopter money' from central banks is not actually 'free money giveaway' it's just talked about like that. When the Federal Government gives away money like this to citizens, it's more literally free money and it has to come from somewhere: either taxpayers or from debt.
  - toomuchtodo 6y ago
    The US Federal Reserve is buying individual corporate bonds now (and has already put about $7 trillion [!!!] on its balance sheet). Bank of England is straight up printing pounds, directly financing the deficit, to pay for the U.K. economic support for the COVID response. Remember, fiat is an artificial construct, and we can change the rules and how monetary and fiscal policy works at any time. It’s just a complex spreadsheet and cell formulas with enormous impact. When a government gives away money, it’s borrowed or taxpayer money. When a central bank does it, it devalues the currency (behold the value of a reserve currency!). Regardless of the hangover, you still do it if it’s necessary. I digress; central banks can do whatever we need them to as a society. It’s their job to responsibly pull the macroeconomic levers to meet their mandates.
    - jariel 6y ago
      "central banks can do whatever we need them to as a society." Not really, Central Banks are not part of the government and they can't do things outside the very narrow scope of authority we give them. Especially the Fed, which is a privately owned entity run by the banks themselves. The Fed is the last place we want to manage social security programs. That job is for the government. Now, it just so happens as you point out they have some magic levers such as the ability to take on stuff onto their balance sheet, but using that outside the scope of their policy is another thing altogether. So yes, we can make 'money, financing and banking' do what we want, but if we do - it will absolutely not be 'The Central Bank' - it will be some other new kind of entity, designed differently, with different power structures and different objectives.
      - toomuchtodo 6y ago
        As I said: > It’s their job to responsibly pull the macroeconomic levers to meet their mandates. > "central banks can do whatever we need them to as a society." <-- This is where we can modify their mandate at any time through legislation.
        jariel 6y ago
        "This is where we can modify their mandate at any time through legislation." We really can't. To would so be a fundamental reconstruction of governance, tantamount to constitutional changes. The central bank running current accounts for citizens and doling out money in a manner similar to how it tries to manage inflation using purchases on the free market etc. is so far beyond the premise of a 'Central Bank' that it's not a 'Central Bank'. It makes the entity inherently politicized, as it becomes nary impossible to set 'targets' that aren't political. So yes, we could dump the Central Bank and create a new entity that does 'Central Banking And Other Things' but there isn't even an intellectual framework for that, let alone some kind of reference anywhere in the world that could be used as a guide. Putting the power of the printing press that close to 'giving out money' in a populist way is pretty scary anyhow and I wouldn't see the point in doing it at all. If there are progressive social measures to be made, it might be for example related to how we structure what goes on the Feds balance sheet, and why, etc.. If we want to hand out UBI or something like that, it happens under government & the Treasury, not the central bank.
  - phyalow 6y ago
    All money is debt. What value do banks add in this day and age? They arent loaning all the near free money the central bank is offering to sustain commerce, so my feeling they will be cut out at some point soon.
    - imtringued 6y ago
      Not all loans are guaranteed to be paid back. The interest rates the central banks offer require you to pay every single cent back. Defaults aren't permitted. Conventional banks take on the entire risk of default and they compensate for it by requiring collateral or higher interest rates.
      - pingyong 6y ago
        >Defaults aren't permitted. So, what happens if a bank goes bankrupt?
        mcherm 6y ago
        If a bank is in danger of running out of money, then (in the US, where I work in banking) the federal regulators step in and take over the bank. They sell off assets to other banks and pay depositors their money (up to the EXTREMELY generous limits of FDIC insurance). The funds to pay for the losses come from an insurance system ("FDIC") that all banks pay into. (And in case of a widespread collapse of many banks at once, the federal government underwrites the FIDC insurance program.)
        sattoshi 6y ago
        They get bailed out
    - jariel 6y ago
      "All money is debt." No, most good money is ownership of an asset, like possibly Gold, for example. For Euros, it's ownership of high-grade assets. In the US, it's ownership of TBonds. Now, yes, TBonds are a form of debt, so there can't be a USD without the US making loans, but, the dollar itself is not debt, it's ownership of debt, which are different things. Banks #1 job is managing risk. They do the work of determining who is credit worthy, on what terms and not, making the loans and taking on the risk. That is what finance is.
marketgod 6y ago
This seemed like a concept to please the Conservatives. The NDP were against it so it doesn't seem to be part of the new bill.
clusterfish 6y ago
How do you think they will force many thousands of poor people to repay money that they don't have, neither in savings nor in income, while holding on to a minority position in government? They're just lying about being strict on TV to make everyone feel better about it. They don't have the capacity or political willpower to follow through. It's been months, it isn't urgent anymore, if they wanted to devise any sort of eligibility checks they would have done it already. But the only real eligibility requirement is being ballsy / desperate / yolo enough to claim it.
- imtringued 6y ago
  I always had the impression that with these programs that repayment isn't the goal. Yes, the government wants its money back but if say only 10% of the money was "wasted" then you can just consider that money a form of economic stimulus.
  - clusterfish 6y ago
    If it was a universal stimulus that's be great, but that 10% is a hundred-million-dollar subsidy to dishonest people and outright fraudsters. Such incentives affect people's behaviour and over long term this might even accumulate to a pretty damaging change in culture that will be very hard to fix. Some people like to complain about regular welfare programs being abused, but at least those have some controls, they're not just a web form with your bank details. Abuse rates will surely be much much higher for CERB, and that was largely preventable.
    - katbyte 6y ago
      I’m ok with it - it allowed many of my friends to survive the pandemic with out too much fuss and any controls put it to prevent abuse would have delayed much needed help
  - bregma 6y ago
    This is correct. My wife works as a professional in the field. She says outright and obvious fraud is criminal code territory, and simple dishonesty (like what most amateurs do, just lying to a government official because they think they can get away with it this week and next week doesn't exist) just gets you a permanent denial of any future payments. That means you're cut off from welfare, for example.

toomuchtodo 6y ago

> They should really just do helicopter money Central banks should be delegated the authority to issue deposit accounts and debit cards to all citizens, but apparently the world hasn’t ended enough for us to do that yet (which would make helicopter money super simple).

jariel 6y ago
Wow, no way. This is way outside the bounds of what central banks do. Remember that 'helicopter money' from central banks is not actually 'free money giveaway' it's just talked about like that. When the Federal Government gives away money like this to citizens, it's more literally free money and it has to come from somewhere: either taxpayers or from debt.
- toomuchtodo 6y ago
  The US Federal Reserve is buying individual corporate bonds now (and has already put about $7 trillion [!!!] on its balance sheet). Bank of England is straight up printing pounds, directly financing the deficit, to pay for the U.K. economic support for the COVID response. Remember, fiat is an artificial construct, and we can change the rules and how monetary and fiscal policy works at any time. It’s just a complex spreadsheet and cell formulas with enormous impact. When a government gives away money, it’s borrowed or taxpayer money. When a central bank does it, it devalues the currency (behold the value of a reserve currency!). Regardless of the hangover, you still do it if it’s necessary. I digress; central banks can do whatever we need them to as a society. It’s their job to responsibly pull the macroeconomic levers to meet their mandates.
  - jariel 6y ago
    "central banks can do whatever we need them to as a society." Not really, Central Banks are not part of the government and they can't do things outside the very narrow scope of authority we give them. Especially the Fed, which is a privately owned entity run by the banks themselves. The Fed is the last place we want to manage social security programs. That job is for the government. Now, it just so happens as you point out they have some magic levers such as the ability to take on stuff onto their balance sheet, but using that outside the scope of their policy is another thing altogether. So yes, we can make 'money, financing and banking' do what we want, but if we do - it will absolutely not be 'The Central Bank' - it will be some other new kind of entity, designed differently, with different power structures and different objectives.
    - toomuchtodo 6y ago
      As I said: > It’s their job to responsibly pull the macroeconomic levers to meet their mandates. > "central banks can do whatever we need them to as a society." <-- This is where we can modify their mandate at any time through legislation.
      - jariel 6y ago
        "This is where we can modify their mandate at any time through legislation." We really can't. To would so be a fundamental reconstruction of governance, tantamount to constitutional changes. The central bank running current accounts for citizens and doling out money in a manner similar to how it tries to manage inflation using purchases on the free market etc. is so far beyond the premise of a 'Central Bank' that it's not a 'Central Bank'. It makes the entity inherently politicized, as it becomes nary impossible to set 'targets' that aren't political. So yes, we could dump the Central Bank and create a new entity that does 'Central Banking And Other Things' but there isn't even an intellectual framework for that, let alone some kind of reference anywhere in the world that could be used as a guide. Putting the power of the printing press that close to 'giving out money' in a populist way is pretty scary anyhow and I wouldn't see the point in doing it at all. If there are progressive social measures to be made, it might be for example related to how we structure what goes on the Feds balance sheet, and why, etc.. If we want to hand out UBI or something like that, it happens under government & the Treasury, not the central bank.
- phyalow 6y ago
  All money is debt. What value do banks add in this day and age? They arent loaning all the near free money the central bank is offering to sustain commerce, so my feeling they will be cut out at some point soon.
  - imtringued 6y ago
    Not all loans are guaranteed to be paid back. The interest rates the central banks offer require you to pay every single cent back. Defaults aren't permitted. Conventional banks take on the entire risk of default and they compensate for it by requiring collateral or higher interest rates.
    - pingyong 6y ago
      >Defaults aren't permitted. So, what happens if a bank goes bankrupt?
      - mcherm 6y ago
        If a bank is in danger of running out of money, then (in the US, where I work in banking) the federal regulators step in and take over the bank. They sell off assets to other banks and pay depositors their money (up to the EXTREMELY generous limits of FDIC insurance). The funds to pay for the losses come from an insurance system ("FDIC") that all banks pay into. (And in case of a widespread collapse of many banks at once, the federal government underwrites the FIDC insurance program.)
      - sattoshi 6y ago
        They get bailed out
  - jariel 6y ago
    "All money is debt." No, most good money is ownership of an asset, like possibly Gold, for example. For Euros, it's ownership of high-grade assets. In the US, it's ownership of TBonds. Now, yes, TBonds are a form of debt, so there can't be a USD without the US making loans, but, the dollar itself is not debt, it's ownership of debt, which are different things. Banks #1 job is managing risk. They do the work of determining who is credit worthy, on what terms and not, making the loans and taking on the risk. That is what finance is.

marketgod 6y ago

This seemed like a concept to please the Conservatives. The NDP were against it so it doesn't seem to be part of the new bill.

clusterfish 6y ago

How do you think they will force many thousands of poor people to repay money that they don't have, neither in savings nor in income, while holding on to a minority position in government? They're just lying about being strict on TV to make everyone feel better about it. They don't have the capacity or political willpower to follow through. It's been months, it isn't urgent anymore, if they wanted to devise any sort of eligibility checks they would have done it already. But the only real eligibility requirement is being ballsy / desperate / yolo enough to claim it.

imtringued 6y ago
I always had the impression that with these programs that repayment isn't the goal. Yes, the government wants its money back but if say only 10% of the money was "wasted" then you can just consider that money a form of economic stimulus.
- clusterfish 6y ago
  If it was a universal stimulus that's be great, but that 10% is a hundred-million-dollar subsidy to dishonest people and outright fraudsters. Such incentives affect people's behaviour and over long term this might even accumulate to a pretty damaging change in culture that will be very hard to fix. Some people like to complain about regular welfare programs being abused, but at least those have some controls, they're not just a web form with your bank details. Abuse rates will surely be much much higher for CERB, and that was largely preventable.
  - katbyte 6y ago
    I’m ok with it - it allowed many of my friends to survive the pandemic with out too much fuss and any controls put it to prevent abuse would have delayed much needed help
- bregma 6y ago
  This is correct. My wife works as a professional in the field. She says outright and obvious fraud is criminal code territory, and simple dishonesty (like what most amateurs do, just lying to a government official because they think they can get away with it this week and next week doesn't exist) just gets you a permanent denial of any future payments. That means you're cut off from welfare, for example.