4 ms·

California doesn’t have a central bank, so it’s not like it can print money out of thin air like the Federal Reserve. If they’re giving out stimulus, they must

California doesn’t have a central bank, so it’s not like it can print money out of thin air like the Federal Reserve. If they’re giving out stimulus, they must be getting it from tax payers, right?

kube-system 4y ago
Technically speaking, not all state government revenue is tax revenue; states can issue bonds or other debt
- count 4y ago
  Which is repaid via?
  - kube-system 4y ago
    Issuing more debt? :)
- lampshades 4y ago
  But someone has to buy the bonds if they want to give out the stimulus as dollars. What are they doing in California? I haven’t been paying attention.
  - milkshakes 4y ago
    they have a budget surplus
    - dragonwriter 4y ago
      Not just a budget surplus (revenue above planned spending), but revenue that exceeds a State Constitutional cap on what the State government is allowed to spend (unless it is directed to very specific spending categories which are unlimited), and thus has triggered an obligation to return funds via some rebate mechanism.
NineStarPoint 4y ago
California state debt actually went down from 2019->2021, so yeah must be from taxes.
jollyllama 4y ago
If there's an institution willing to give them a loan, then the money can be created ex nihilo, just like a person takes out a mortage on a home.
dragonwriter 4y ago
> California doesn’t have a central bank, so it’s not like it can print money out of thin air like the Federal Reserve. The whole point of an independent central bank is that the fiscal authority (Congress) cannot print money out of thin air to monetize spending, either; monetary policy is based on macroeconomic conditions, not fiscal demands. OTOH, the federal government inherently has a much lower cost of borrowing than the states, and California, like many (almost all, I think, though the details vary) has a State Constitutional requirement for a balanced operating budget and effectively relies on federal deficit spending for countercyclical spending. > If they’re giving out stimulus, they must be getting it from tax payers, right? Yes, the inflation relief tax rebate is paid out of current tax revenue (in fact, it is a plan to fulfill a constitutional mandate to return surplus tax revenue beyond a certain spending limit if not spent on education and infrastructure) and is not characterized as “stimulus”, contrary to the upthread misrepresentation. It's redistribution which probably has a very slight stimulative (and thus inflationary) effect because it goes to people with a higher propensity to spend in the domestic economy, per marginal dollar, than those it comes from, in order to relieve more of the impacts of inflation at the lower end of the income distribution.

kube-system 4y ago

Technically speaking, not all state government revenue is tax revenue; states can issue bonds or other debt

count 4y ago
Which is repaid via?
- kube-system 4y ago
  Issuing more debt? :)
lampshades 4y ago
But someone has to buy the bonds if they want to give out the stimulus as dollars. What are they doing in California? I haven’t been paying attention.
- milkshakes 4y ago
  they have a budget surplus
  - dragonwriter 4y ago
    Not just a budget surplus (revenue above planned spending), but revenue that exceeds a State Constitutional cap on what the State government is allowed to spend (unless it is directed to very specific spending categories which are unlimited), and thus has triggered an obligation to return funds via some rebate mechanism.

NineStarPoint 4y ago

California state debt actually went down from 2019->2021, so yeah must be from taxes.

jollyllama 4y ago

If there's an institution willing to give them a loan, then the money can be created ex nihilo, just like a person takes out a mortage on a home.

dragonwriter 4y ago

> California doesn’t have a central bank, so it’s not like it can print money out of thin air like the Federal Reserve. The whole point of an independent central bank is that the fiscal authority (Congress) cannot print money out of thin air to monetize spending, either; monetary policy is based on macroeconomic conditions, not fiscal demands. OTOH, the federal government inherently has a much lower cost of borrowing than the states, and California, like many (almost all, I think, though the details vary) has a State Constitutional requirement for a balanced operating budget and effectively relies on federal deficit spending for countercyclical spending. > If they’re giving out stimulus, they must be getting it from tax payers, right? Yes, the inflation relief tax rebate is paid out of current tax revenue (in fact, it is a plan to fulfill a constitutional mandate to return surplus tax revenue beyond a certain spending limit if not spent on education and infrastructure) and is not characterized as “stimulus”, contrary to the upthread misrepresentation. It's redistribution which probably has a very slight stimulative (and thus inflationary) effect because it goes to people with a higher propensity to spend in the domestic economy, per marginal dollar, than those it comes from, in order to relieve more of the impacts of inflation at the lower end of the income distribution.