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Just as inequality creates a need for stimulus, they argue, stimulus eventually creates more inequality. Particularly when your predominant stimulus tool is '
by thedudeabides5 6y ago
Just as inequality creates a need for stimulus, they argue, stimulus eventually creates more inequality.
Particularly when your predominant stimulus tool is 'print money to buy assets rich people have.'
- duaoebg 6y agoIf rich people sold the assets they wouldn’t have them anymore. The mechanism is more that rich have access to lower interest rates. The proportional difference of interest rates between the rich and poor increases as the risk free interest rate decrease.
- jamesboehmer 6y ago> If rich people sold the assets they wouldn’t have them anymore. But they’d have more money, presumably more than what they paid for the assets. Not that money and goods are exactly fungible, but buying assets from the wealthy makes them wealthier, not poorer or status quo.
- pa7x1 6y agoI think we will look back into economic history to our times in surprising disbelief at how simplistic our central bank policy is. A bit like how we laugh at how doctors used leeches to treat various ailments. From 1929, central bankers learnt that liquidity can be a terrifying disease in an economy, 2008 showed that printing helps and here they go with their newly learned tool trying to fix all problems. Now they have to figure out that if you only inject that liquidity from the top, the inflation appears in certain kind of assets (mostly financial) and has a hard time reaching the rest of the economy, causing ever-rising inequality. I think a more refined approach will be developed at some point, where they will start using two levers to steer the function of the economy. Money printing from below via UBI and regulating the inflation of day-to-day assets and money-printing from above and regulating the inflation of financial assets. This could allow finer control balancing target inflation rates of different assets and preventing rising inequality to tear down society.
- gallegojaime 6y agoUBI as a macroeconomic lever to pull is an intriguing idea - hadn't thought of that consequence. Although it figures changing the amounts would get extremely political.
- RobertoG 6y agoThere is the idea of job guarantee as an automatic stabilizer too. The government grants a job to anyone that wants to work at a minimum wage salary. When unemployment grow, the government automatically expend more in the economy because more people access to the job guarantee. When the economy recovers the private sector take workers away from the job guarantee through paying a little more than the minimum wage (or the same and better conditions) and the government spending is reduced. It's both an inflation and an unemployment stabilizer. UBI doesn't have those properties.
- deleted 6y ago[deleted]
- jmaygarden 6y agoWhat's the incentive to perform if you cannot be fired? A "guaranteed job" might as well be a simple unemployment check.
- dredmorbius 6y agoJob satisfaction / better jobs. The guaranteed job need not be pleasant. Hell, many already aren't. But a job would be guaranteed and would meet basic needs.
- generatorguy 6y agopeople would rather be unemployed than have an unpleasant minimum wage job.
- paulpauper 6y ago1.2 trillion of the CARES act went to households and small biz. It is not like the rich were the primary beneficiaries of this stimulus.