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The resources for subsidies come from the taxpayer. Plus how you and who you subsidize becomes political. Lots of complications.

mindslight 2y ago
The resources for subsidies come from printing new money (which is possible by having the world reserve currency), and then spending that new money for deliberate purposes instead of just giving it to the banksters to bid up the asset bubbles. In an imaginary world where we had a Congress that served the People and a mentally competent President, of course. Who gets subsidized is indeed political, but I don't see a way to sidestep that since there's centralization as soon as you take action to prevent the currency from deflating.
- DonHopkins 2y ago
  Political patronage and cruelty is the point.
- hgomersall 2y ago
  To be clear, the US is not unique in its ability to do this. Many other countries would benefit from understanding it! In the UK we have a government wanting to build a growth strategy around finance. It's like a parody that nobody gets (yet).
- dgoldstein0 2y ago
  But Congress doesn't actually decide to print new money? When they decide to spend they have to raise taxes or issue debt (treasuries). The federal reserve, on the other hand, controls interest rates and other mechanisms which actually result in money "bring created" for practical purposes.
  - mindslight 2y ago
    Yes, that is one of the mechanisms that has hamstrung us from being able to appropriately respond to the economic effects of offshoring. It can obviously be changed. Or the mechanisms themselves might not actually have to be changed if we could cast off this myopic political red herring about "the deficit". What we perceive as the balance sheet of "the government" needs to include The Fed, Fannie/Freddie, etc. Treasuries owned by other countries are the equivalent of a big savings account. Treasuries owned by the Fed are the same as all the other other debt owned by the Fed - monetary creation / monetary inflation.
xorcist 2y ago
Nobody says it is effective, only that it is possible. One way could be to send the message to the market that a certain area is strategically important and any startups will have access to extremely cheap loans and not have to worry about natural resources or personel. Then follow up on those promises, take a step back, watch the Cambrian explosion that follows and when the businesses seems to have grown legs simply scale back funding and watch them fight it out. One could even say that is exactly what has happened in the world several times over. It is not unique to China.

mindslight 2y ago

The resources for subsidies come from printing new money (which is possible by having the world reserve currency), and then spending that new money for deliberate purposes instead of just giving it to the banksters to bid up the asset bubbles. In an imaginary world where we had a Congress that served the People and a mentally competent President, of course. Who gets subsidized is indeed political, but I don't see a way to sidestep that since there's centralization as soon as you take action to prevent the currency from deflating.

DonHopkins 2y ago
Political patronage and cruelty is the point.
hgomersall 2y ago
To be clear, the US is not unique in its ability to do this. Many other countries would benefit from understanding it! In the UK we have a government wanting to build a growth strategy around finance. It's like a parody that nobody gets (yet).
dgoldstein0 2y ago
But Congress doesn't actually decide to print new money? When they decide to spend they have to raise taxes or issue debt (treasuries). The federal reserve, on the other hand, controls interest rates and other mechanisms which actually result in money "bring created" for practical purposes.
- mindslight 2y ago
  Yes, that is one of the mechanisms that has hamstrung us from being able to appropriately respond to the economic effects of offshoring. It can obviously be changed. Or the mechanisms themselves might not actually have to be changed if we could cast off this myopic political red herring about "the deficit". What we perceive as the balance sheet of "the government" needs to include The Fed, Fannie/Freddie, etc. Treasuries owned by other countries are the equivalent of a big savings account. Treasuries owned by the Fed are the same as all the other other debt owned by the Fed - monetary creation / monetary inflation.

xorcist 2y ago

Nobody says it is effective, only that it is possible. One way could be to send the message to the market that a certain area is strategically important and any startups will have access to extremely cheap loans and not have to worry about natural resources or personel. Then follow up on those promises, take a step back, watch the Cambrian explosion that follows and when the businesses seems to have grown legs simply scale back funding and watch them fight it out. One could even say that is exactly what has happened in the world several times over. It is not unique to China.