4 ms·

Counter-intuitive concepts might seem stupid at first, but if you think through the mechanics you might see that it could actually work. For me, I have to remi

by panarky 13y ago

Counter-intuitive concepts might seem stupid at first, but if you think through the mechanics you might see that it could actually work. For me, I have to remind myself that money is just a social construct. The real economy consists of people working and deploying physical plant and equipment to create things other people want. Today we find that the real economy has a lot of idle resources. People who want to work don't have jobs. Factories and equipment are idle or under-utilized. If spreading some green pieces of paper around will get the real economy moving again, the standard of living for most people will rise. It seems wrong at first glance, but it's even more wrong to allow all these resources to waste away, unused, when so much could be done.

Mz 13y ago
The problem is that it is like pouring water evenly over the surface of the globe, removing both oceans and continents. Yes, we need to find a way to more fairly and humanely distribute the available resources. I just don't think this is really it. If you tie it to nothing, it isn't likely to work or be sustainable. What will it be tied to in order to ensure that it doesn't just wreck the economy? That piece seems to go unaddressed. My understanding is that in Alaska, everyone gets a check instead of paying taxes but it is because of the Alaska oil pipeline. When that pipeline runs dry. so will the "free money." It comes from somewhere. It doesn't just get printed out of thin air. Oil gets sold, the state redistributes the money to its citizens. It isn't just some magical manipulation on paper because money is relatively abstract, so people seem to think manipulating it really works. No, it really doesn't.
- nzp 13y ago
  Selling something (in this case oil) doesn't really make a difference. You haven't explained how is it different, you just said that it is different. All else being equal, what would change if Alaska just printed the money it now gets from selling oil? Because in current situation there is still some excess money that gets distributed "for free", so let's abstract the source of this money, and see if there is something wrong going on with Alaskan economy because of this "free money" being distributed.
- panarky 13y ago
  Yes, it's a mind-bender. My thinking used to center on the money, and the inevitable inflation if you debase money by printing more of it for free. But the evidence of the last six years proves how wrong my thinking was. Dollars are not like shares of stock, that get diluted when you create more of them. When there's a lot of slack in the real economy, when people aren't working, and factories are idle, printing money doesn't cause inflation. Today, I think about the real economy of workers and trucks and factories instead of money. If we print $1000 per month per person and give it away for free, it's very possible to get the real economy moving, raise standards of living substantially, and incur very little cost in the real economy of work, goods and services. For what it's worth, here's a radio show that turned my understanding of money upside down. Skip ahead to the 10th minute for the story on how Brazil created a totally fictitious virtual currency, named it the "real", and ended decades of debilitating inflation. http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money http://www.thisamericanlife.org/radio-archives/episode/423/t...
  - dllthomas 13y ago
    "If we print $1000 per month per person and give it away for free, it's very possible to get the real economy moving, raise standards of living substantially, and incur very little cost in the real economy of work, goods and services." I'm a staunch support of a moderate basic income, and I'm open to printing some of that, but this seems absurd. In the first year, you'd be printing more dollars than we have in circulation. I can't imagine demand for dollars would keep up.
- innguest 13y ago
  > When that pipeline runs dry. so will the "free money." Only because you say so. Now imagine the money doesn't stop flowing when the pipe runs dry. You'll realize the connection we make between the pipeline and the checks Alaskans receive is completely imaginary.
pdonis 13y ago
the real economy has a lot of idle resources But many of those resources are idle because they were misallocated--for example, they were allocated to building more and more McMansions because of the housing bubble, rather than, for example, on fixing roads and bridges and other deteriorating infrastructure. Or they were allocated to building 18 million cars and light trucks a year in North America, when the market now demands only 11 million. To some extent "helicopter money" as described in the article might help; perhaps if everyone got a $2000 check the demand for vehicles would go up to, say, 14 million a year. But would it go all the way back up to 18 million a year? I doubt it; a significant piece of that demand was people assuming that they needed a new car every 2-3 years; now many of them have had their cars for 5 or 6 years and are realizing that hey, they can save money by not buying a new car as often, without any real reduction in quality of life. That lost demand won't come back. Nor should it. If the economy was set up to make stuff that people don't really need, that's a waste of resources that could be better allocated elsewhere. That's why I'm skeptical of the "aggregate demand" idea; it basically implies that all that's needed is for people to buy more stuff, without any analysis of the actual comparative value of the stuff.
- panarky 13y ago
  Sure, resources were misallocated. But we're now six years into this, it's been a largely jobless recovery, infrastructure is crumbling before our eyes, and those misallocated resources are now sitting idle. If you forget about money for a second, it seems like there are a lot of jobs that need doing, and a lot of resources that are idle. Bridges need to be built, highways need to be paved, kids need teachers and tutors, and we're firing cops and firefighters like never before. Why can't we match up some of those jobs that need doing with the people, trucks, and factories that are idle? Why isn't the free market doing a better job re-allocating those resources to more productive uses?
  - pdonis 13y ago
    it seems like there are a lot of jobs that need doing, and a lot of resources that are idle. No argument here. Why can't we match up some of those jobs that need doing with the people, trucks, and factories that are idle? Because most bridges, highways, schools, police and fire departments, etc. are owned by governments, not by private industry, and governments suck at doing what you suggest. Why isn't the free market doing a better job re-allocating those resources to more productive uses? Because governments effectively have a monopoly on many of the productive uses that currently need resources (since they own the infrastructure that needs to be fixed).

by panarky 13y ago

Mz 13y ago

The problem is that it is like pouring water evenly over the surface of the globe, removing both oceans and continents. Yes, we need to find a way to more fairly and humanely distribute the available resources. I just don't think this is really it. If you tie it to nothing, it isn't likely to work or be sustainable. What will it be tied to in order to ensure that it doesn't just wreck the economy? That piece seems to go unaddressed. My understanding is that in Alaska, everyone gets a check instead of paying taxes but it is because of the Alaska oil pipeline. When that pipeline runs dry. so will the "free money." It comes from somewhere. It doesn't just get printed out of thin air. Oil gets sold, the state redistributes the money to its citizens. It isn't just some magical manipulation on paper because money is relatively abstract, so people seem to think manipulating it really works. No, it really doesn't.

nzp 13y ago
Selling something (in this case oil) doesn't really make a difference. You haven't explained how is it different, you just said that it is different. All else being equal, what would change if Alaska just printed the money it now gets from selling oil? Because in current situation there is still some excess money that gets distributed "for free", so let's abstract the source of this money, and see if there is something wrong going on with Alaskan economy because of this "free money" being distributed.
panarky 13y ago
Yes, it's a mind-bender. My thinking used to center on the money, and the inevitable inflation if you debase money by printing more of it for free. But the evidence of the last six years proves how wrong my thinking was. Dollars are not like shares of stock, that get diluted when you create more of them. When there's a lot of slack in the real economy, when people aren't working, and factories are idle, printing money doesn't cause inflation. Today, I think about the real economy of workers and trucks and factories instead of money. If we print $1000 per month per person and give it away for free, it's very possible to get the real economy moving, raise standards of living substantially, and incur very little cost in the real economy of work, goods and services. For what it's worth, here's a radio show that turned my understanding of money upside down. Skip ahead to the 10th minute for the story on how Brazil created a totally fictitious virtual currency, named it the "real", and ended decades of debilitating inflation. http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money http://www.thisamericanlife.org/radio-archives/episode/423/t...
- dllthomas 13y ago
  "If we print $1000 per month per person and give it away for free, it's very possible to get the real economy moving, raise standards of living substantially, and incur very little cost in the real economy of work, goods and services." I'm a staunch support of a moderate basic income, and I'm open to printing some of that, but this seems absurd. In the first year, you'd be printing more dollars than we have in circulation. I can't imagine demand for dollars would keep up.
innguest 13y ago
> When that pipeline runs dry. so will the "free money." Only because you say so. Now imagine the money doesn't stop flowing when the pipe runs dry. You'll realize the connection we make between the pipeline and the checks Alaskans receive is completely imaginary.

pdonis 13y ago

the real economy has a lot of idle resources But many of those resources are idle because they were misallocated--for example, they were allocated to building more and more McMansions because of the housing bubble, rather than, for example, on fixing roads and bridges and other deteriorating infrastructure. Or they were allocated to building 18 million cars and light trucks a year in North America, when the market now demands only 11 million. To some extent "helicopter money" as described in the article might help; perhaps if everyone got a $2000 check the demand for vehicles would go up to, say, 14 million a year. But would it go all the way back up to 18 million a year? I doubt it; a significant piece of that demand was people assuming that they needed a new car every 2-3 years; now many of them have had their cars for 5 or 6 years and are realizing that hey, they can save money by not buying a new car as often, without any real reduction in quality of life. That lost demand won't come back. Nor should it. If the economy was set up to make stuff that people don't really need, that's a waste of resources that could be better allocated elsewhere. That's why I'm skeptical of the "aggregate demand" idea; it basically implies that all that's needed is for people to buy more stuff, without any analysis of the actual comparative value of the stuff.

panarky 13y ago
Sure, resources were misallocated. But we're now six years into this, it's been a largely jobless recovery, infrastructure is crumbling before our eyes, and those misallocated resources are now sitting idle. If you forget about money for a second, it seems like there are a lot of jobs that need doing, and a lot of resources that are idle. Bridges need to be built, highways need to be paved, kids need teachers and tutors, and we're firing cops and firefighters like never before. Why can't we match up some of those jobs that need doing with the people, trucks, and factories that are idle? Why isn't the free market doing a better job re-allocating those resources to more productive uses?
- pdonis 13y ago
  it seems like there are a lot of jobs that need doing, and a lot of resources that are idle. No argument here. Why can't we match up some of those jobs that need doing with the people, trucks, and factories that are idle? Because most bridges, highways, schools, police and fire departments, etc. are owned by governments, not by private industry, and governments suck at doing what you suggest. Why isn't the free market doing a better job re-allocating those resources to more productive uses? Because governments effectively have a monopoly on many of the productive uses that currently need resources (since they own the infrastructure that needs to be fixed).