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I rarely see this spelled out, but in the more modern thinking, the working class are "creatures of flows", and the capitalist class are "creatures of stocks":
by Ericson2314 5y ago
I rarely see this spelled out, but in the more modern thinking, the working class are "creatures of flows", and the capitalist class are "creatures of stocks": i.e. the latter has meaningful assets, but the former subsists on wages.
Obviously this is just an approximation, but "class is calculus" is a very useful mental model.
By that ones, yes, the vast majority of people have negligible liquid savings. So the interest rate doesn't directly matter. Yet, the rich also "own the means of production" --- i.e. real assets, which also doesn't get inflated away. So it doesn't obviously matter for them. So what does it effect?
The essential original Keynesian insight (what most of the factions since might agree on), is that since the point of owning things in Capitalism as money, even if you aren't holding cash, the interest rate effects how easy it is to invest, but also what investments are productive w.r.t doing nothing. This spooky shit is what is supposed to give monetary policy it's power.
The differences in opinion in those factions come down to whether there is always enough to invest in, and access to credit is the limiting factor, or not. The Post-Keysnians would say relying on monetary policy alone is stupid, because (to distill in a parable) if no one can buy your stuff, it doesn't matter how cheap the factor is it's not worth it. That's when directly employing people (jobs guarantee) or handing out helicopter money can make a difference --- it's "root" demand, not some spooky shit effecting supply.
Back to the calculus stuff, an interesting idea is https://en.wikipedia.org/wiki/Demurrage https://en.wikipedia.org/wiki/Demurrage. This is "inflation for stocks not flows". In short, we want money at rest to go bad, so rich people and instutions are forced to spend and we don't grind to a halt via the paradox of thrift. But we don't want people's wages to inflate away, because they certainly cannot bargain hard enough to get enough raise to keep up. Demurrage is wonderfully hamfisted in trying to do the former but not the latter --- money at rest becomes less money, money flows retain their purchasing power.
- CuriousSkeptic 5y agoSo a monthly redistribution of, say, 10% of the money supply as public dividend would take care of that no?
- Ericson2314 5y ago> money supply Be careful this is a dangerous notion: with today's form of fiat concurrency there is net 0 money! > redistribution Likewise the "re" is sketchy. The state can pull money in, and take it out. Keeping those balanced because metal bullion skeuomorphisms is confusing. Our insistence that all money is debt is "double entry accounting fetishism" and also needlessly confusing. Distribution is good. "re" implies some sort of 0 sum, when the fact that the nominal need not be zero sum, and the future us uncertain and full of possibilities, and this is the true beauty of Capitalism we should embrace even as we are sanguine about all the terrible parts. The methodology in https://www.gc.cuny.edu/CUNY_GC/media/LISCenter/pkrugman/lerner-function-finance.pdf https://www.gc.cuny.edu/CUNY_GC/media/LISCenter/pkrugman/ler... is much better. The state can print money. The state can destroy money. The state can issue securities. The state should not subscribe to any theory a priori, but simply do the simplest thing the achieve agreed-upon goals, and avoid agreed-upon bad things. Theory can be developed afresh, and with far better empiricism, by basing it on actual experiments of the state trying out different levers and seeing what happens. Only a wealth of practical experience will overcome the highly politicized disputes. We will never achieve consensus while tiny gamut of the policy space is explored. ------- That is my long-winded way of saying I (think I agree) agree, but please find a different way to say it :).
- CuriousSkeptic 5y agoYeah, with money supply I actually was thunking of some vague future approach rather than the current setup. Be that some crypto thing, or the intriguing Sovereign Money[1] proposal. And as for redistribution, I suppose just “printing” money into peoples account would more or less have the intended effect as well. I do suspect a 10% inflation rate would lead to simple logistics costs as the nominal amounts kept changing. But yes, if only more policy was evidence based… [1] https://assets.kpmg/content/dam/kpmg/is/pdf/2016/09/KPMG-MoneyIssuance-2016.pdf https://assets.kpmg/content/dam/kpmg/is/pdf/2016/09/KPMG-Mon...
- Ericson2314 5y agoNice link! Thanks. Very into centralizing the boring parts of banks as a utility like that, and just letting private banks do their funny stuff without captive regular people, but didn't no Iceland was thinking about it somewhat seriously.
- njarboe 5y agoMoney at rest is not taxed (yet, in the US) and money that flows is. The state is going to promote the flow of money because it means more money flows to them.
- Ericson2314 5y agoWhat? The state can print all the money it wants. There are plenty of corrupt politicians but let me tell you that does not create more desire to pull in money sheesh. This money-sucker beaurocracy stuff makes for more sense with e.g. CIA selling drugs rumors than taxation. This isn't some bullion-based monarchy we live in.
- njarboe 5y agoIn the US currently, the state can borrow, not print, as much as the Fed will purchase, which seems to be unlimited amounts at the moment. Not sure what happens if we get worse inflation and the Fed wants to combat it by raising interest rates. US debt payments will balloon to be a huge part of the budget, which will necessitate borrowing more money. This isn't some bullion-based monarchy where you can just debase the silver currency with some copper to deal with your monetary problems.