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For what it's worth, I don't fundamentally disagree with the MMT viewpoint that you're coming from. But it's not so clear cut. > gives free government money to

For what it's worth, I don't fundamentally disagree with the MMT viewpoint that you're coming from. But it's not so clear cut. > gives free government money to financial institutions By this, the parent means that nonzero interest rates on government debt represents "free money" that the government pays voluntarily even though it doesn't have to. I'm not so sure. First of all, most of the institutions getting these payments hardly seem happy to be getting them, and would much rather see interest rates drop. Secondly, the money does not come free to the recipients. It comes with a very high opportunity cost. That's exactly the point, because it's an attempt to encourage people to save money when they'd rather spend it because inflation is high. A job guarantee sounds nice, and I do think we should be encouraging full employment without worrying about wage growth. But with a jobs guarantee, who decides what the job is in service of? The point of not having a command economy is that price signals should influence such decisions.

neilwilson 4y ago
"That's exactly the point, because it's an attempt to encourage people to save money when they'd rather spend it because inflation is high." Except that can't happen can it. If Loans create deposits, then to get more savings, you need more loans. You can't have one without the other. What they are trying to do its get people to pay off loans. How many people do you know who pay off loans in the middle of an inflation?
- ummonk 4y ago
  No, because bank reserves can go up. And by increasing its interest rates, the Fed reserve is encouraging banks to put more money in reserve accounts.
  - neilwilson 4y ago
    Bank reserves cannot go up in aggregate unless government spends more than it taxes and doesn't issue bonds to drain those reserves. Bank reserves are on the asset side of the bank's balance sheet. Deposits are on the liability side.
- mitthrowaway2 4y ago
  Paying off loans is equivalent to saving! As long as you aren't taking on new debt to pay off the old one. > How many people do you know who pay off loans in the middle of an inflation? If interest rates are low, nobody. If they are high, lots. Go look at r/personalfinancecanada and there's been a huge shift from "taking out a line of credit at 2% when inflation is 6% is practically free money!" to "which should I repay first, my mortgage, my credit card, or my HELOC?"
  - neilwilson 4y ago
    "If they are high, lots." And what do the aggregate numbers say, rather than the anecdotes from rich people? If you can't afford the heating then you don't pay down loans. You take out new ones.
    - mitthrowaway2 4y ago
      > And what do the aggregate numbers say, rather than the anecdotes from rich people? You don't need me to do your research for you, but the data agrees with the theory. Canadians are paying down their at a record pace. Household debt payments rose to $57.4 billion in Q3, its highest ever. https://www.theglobeandmail.com/business/economy/article-canadian-household-debt-q3-statcan/ https://www.theglobeandmail.com/business/economy/article-can... On the flipside, household debt exploded after rates dropped to zero. I think that's very uncontroversial. So either you believe the conventional wisdom that low rates increase indebtedness and high rates decrease it, or... or you'd have to take one of these positions: - every interest rate somehow stimulates borrowing or - there's one or more "goldilocks" interest rate that causes people to pay down debts but every other rate causes people to borrow.
neilwilson 4y ago
"But with a jobs guarantee, who decides what the job is in service of? " Doesn't matter (ultimately it is a political choice). The point of the job is to use up hours so you can't use them yourself. It forces the spending of time - which is the actual underlying exchange amount. If you give up your time for others, then others will give up their time for you.
- mitthrowaway2 4y ago
  The purpose of jobs isn't to kill time, but to produce things like food, shoes, and soap. It's important that it accomplishes that.
  - neilwilson 4y ago
    The purpose of jobs is to use up time. A job is a contract for employment - selling hours. If I have to use up my time to get the things I need to live, then I'm going to want to see you doing the same. At root we exchange time with each other. And that time has to be for the service of others. Service to others is the rent we pay for our room here on earth. It's a little more than just producing consumption goods - which hopefully can be mostly done by machinery. If somebody is giving up their time and they are being directed to do something pointless, who are you going to be annoyed with: the person doing the work, or the person directing the work?
    - mitthrowaway2 4y ago
      I don't know how to cordially express how much I disagree with this. The time that a job consumes is a bug, not a feature. The reason a farmer hires a carpenter is to get the barn built, not to feel better about the hours the farmer spent growing the crops that the carpenter eats. If the carpenter could snap their fingers and get the barn built instantaneously, rather than over the course of a few days, they would, and the farmer would still give them food to pay for it.

neilwilson 4y ago

"That's exactly the point, because it's an attempt to encourage people to save money when they'd rather spend it because inflation is high." Except that can't happen can it. If Loans create deposits, then to get more savings, you need more loans. You can't have one without the other. What they are trying to do its get people to pay off loans. How many people do you know who pay off loans in the middle of an inflation?

ummonk 4y ago
No, because bank reserves can go up. And by increasing its interest rates, the Fed reserve is encouraging banks to put more money in reserve accounts.
- neilwilson 4y ago
  Bank reserves cannot go up in aggregate unless government spends more than it taxes and doesn't issue bonds to drain those reserves. Bank reserves are on the asset side of the bank's balance sheet. Deposits are on the liability side.
mitthrowaway2 4y ago
Paying off loans is equivalent to saving! As long as you aren't taking on new debt to pay off the old one. > How many people do you know who pay off loans in the middle of an inflation? If interest rates are low, nobody. If they are high, lots. Go look at r/personalfinancecanada and there's been a huge shift from "taking out a line of credit at 2% when inflation is 6% is practically free money!" to "which should I repay first, my mortgage, my credit card, or my HELOC?"
- neilwilson 4y ago
  "If they are high, lots." And what do the aggregate numbers say, rather than the anecdotes from rich people? If you can't afford the heating then you don't pay down loans. You take out new ones.
  - mitthrowaway2 4y ago
    > And what do the aggregate numbers say, rather than the anecdotes from rich people? You don't need me to do your research for you, but the data agrees with the theory. Canadians are paying down their at a record pace. Household debt payments rose to $57.4 billion in Q3, its highest ever. https://www.theglobeandmail.com/business/economy/article-canadian-household-debt-q3-statcan/ https://www.theglobeandmail.com/business/economy/article-can... On the flipside, household debt exploded after rates dropped to zero. I think that's very uncontroversial. So either you believe the conventional wisdom that low rates increase indebtedness and high rates decrease it, or... or you'd have to take one of these positions: - every interest rate somehow stimulates borrowing or - there's one or more "goldilocks" interest rate that causes people to pay down debts but every other rate causes people to borrow.

neilwilson 4y ago

"But with a jobs guarantee, who decides what the job is in service of? " Doesn't matter (ultimately it is a political choice). The point of the job is to use up hours so you can't use them yourself. It forces the spending of time - which is the actual underlying exchange amount. If you give up your time for others, then others will give up their time for you.

mitthrowaway2 4y ago
The purpose of jobs isn't to kill time, but to produce things like food, shoes, and soap. It's important that it accomplishes that.
- neilwilson 4y ago
  The purpose of jobs is to use up time. A job is a contract for employment - selling hours. If I have to use up my time to get the things I need to live, then I'm going to want to see you doing the same. At root we exchange time with each other. And that time has to be for the service of others. Service to others is the rent we pay for our room here on earth. It's a little more than just producing consumption goods - which hopefully can be mostly done by machinery. If somebody is giving up their time and they are being directed to do something pointless, who are you going to be annoyed with: the person doing the work, or the person directing the work?
  - mitthrowaway2 4y ago
    I don't know how to cordially express how much I disagree with this. The time that a job consumes is a bug, not a feature. The reason a farmer hires a carpenter is to get the barn built, not to feel better about the hours the farmer spent growing the crops that the carpenter eats. If the carpenter could snap their fingers and get the barn built instantaneously, rather than over the course of a few days, they would, and the farmer would still give them food to pay for it.