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Mon Jan 28, 2013, 06:11 AM

 

Solution to all economic problems = give free money to people (it's good enough for the banksters..)

I know my crackpot ideas are unlikely to achieve much beyond a few subscribers to my newsletter, but increasingly I become convinced that the solution to all economic problems is "give free money to people."

We give lots of free money to people, actually. We just tend to give it to banksters. I saw some panicked stuff today about ZOMG THE FED BALANCE SHEET IS $3 TRILLION or something similar, which essentially means the Fed has created 3 trillion bucks out of nothing and purchased financial assets with it. That isn't precisely a gift, but it boosts asset prices, and most of us don't own many financial assets. Rich people do.

So Fed action of this type benefits the wealthy, with the vague hope it improves the broader macroeconomy.

Unless gastritis broke my calculator, 3 trillion fedbucks translates to about 10 grand in free money for each of us.

I think I advocated the "mail every SS # holder a 10 grand check" at some point. Would be happy to hear from the Very Serious People why this would be worse policy. It's impossible to imagine it wouldn't be welfare enhancing. Tell me why if I'm wrong.

http://www.eschatonblog.com/2013/01/crazy-ideas.html

25 replies, 2618 views

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Reply Solution to all economic problems = give free money to people (it's good enough for the banksters..) (Original post)
HiPointDem Jan 2013 OP
Scootaloo Jan 2013 #1
hobbit709 Jan 2013 #3
tama Jan 2013 #2
xchrom Jan 2013 #4
fasttense Jan 2013 #5
quaker bill Jan 2013 #6
KansDem Jan 2013 #11
docgee Jan 2013 #14
KansDem Jan 2013 #17
quaker bill Jan 2013 #22
Downwinder Jan 2013 #7
Flatulo Jan 2013 #12
ProSense Jan 2013 #8
AnnieK401 Jan 2013 #9
spartan61 Jan 2013 #10
RC Jan 2013 #13
Orrex Jan 2013 #15
raouldukelives Jan 2013 #16
econoclast Jan 2013 #18
HiPointDem Jan 2013 #20
econoclast Jan 2013 #23
HiPointDem Jan 2013 #24
DogPawsBiscuitsNGrav Jan 2013 #19
woo me with science Jan 2013 #21
reformist2 Jan 2013 #25

Response to HiPointDem (Original post)

Mon Jan 28, 2013, 06:26 AM

1. Bottom-up economics works; trickle-down fails

wealth cycles from bottom to top, is collected as taxes and fees by hte government, and returned to the bottom to start the cycling over in the former.

Wealth simply stagnates at the top with the latter, cutting off 98% pf the population from the wealth cycle, creating an stagnant economy even while stock markets boom and spreadsheets are all-black

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Response to Scootaloo (Reply #1)

Mon Jan 28, 2013, 06:31 AM

3. The only trickle down is warm, yellow and smells funny.

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 06:29 AM

2. Democratize money creation

 

No monopoly for few corporate persons. All citizens of a money creation system should be equal. Simplest form would be money creation as citizen salary. Taxation, nullification etc. methods can be used to maintain purchasing power, preventing inflation and accumulation of money in hands of few. There are more detailed system thought about and being developed, we can build quantum computers, developing well functioning monetary system is easy compared to that.

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 06:32 AM

4. i think it was kenya? where some NGO gave money

to the poor -- to some success.

i think people can make decisions about what they need -- which is what i like about this idea.

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 06:52 AM

5. It would work much better to stimulate the economy.

Poor and middle class spend almost all the money they make just to survive. They keep the money moving and circulating. The rich hoard it and cause the economy to stagnate.

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 06:53 AM

6. Here is the difference

It is fairly simple. In exchange for $3 trillion in new bucks, $3 trillion in troubled assets were removed. (actually it was more than that, but the 1:1 ratio "face value" exchange was maintained). "Real" money was exchanged for what had become "funny" money.

In your plan, there would be no 1:1, it would be just opening the spigot. Now, no doubt, I would love to receive a check for $10,000. However if everyone got one, it would be inflationary. Why? Because unlike the bankers who unfortunately have largely sat on the money, we would start spending it immediately.

The US economy is about a $14 to $15 trillion a year operation. Now if you suddenly kick that up to a $17 to $18 trillion a year operation it would be a big deal. It would also be a big deal the next year, when you stopped pumping money in. It is just too large a jolt to the system IMHO.

The idea has merit, but I think it would need to be moderated a bit to spread the impact over a number of years

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Response to quaker bill (Reply #6)

Mon Jan 28, 2013, 08:59 AM

11. I wouldn't necessarily "spend it."

I would use the $10,000 to remove my "troubled assets."

I mean, if it's good enough for the banksters, it's good enough for me!

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Response to KansDem (Reply #11)

Mon Jan 28, 2013, 09:17 AM

14. right - many would pay off debt, so it would go back to the banksters anyway... lol nt

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Response to docgee (Reply #14)

Mon Jan 28, 2013, 12:32 PM

17. Yeah, but it would be a "one-time payment"



After that, the banksters will have to start working for a living!

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Response to KansDem (Reply #11)

Mon Jan 28, 2013, 05:54 PM

22. You might not, and I might not

But alot of people would. This is the point.

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 07:06 AM

7. It is not too far fetched. I'm payed $20 a day to stay out of jail.

Last edited Mon Jan 28, 2013, 08:24 AM - Edit history (1)

+$10 a day to pay Medicare expenses. If I go to jail I lose the Social Security and Medicare. In jail I will cost tax payers $200 a day. With our prison expenses we could save money by paying everybody $20 a day to stay out of prison.

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Response to Downwinder (Reply #7)

Mon Jan 28, 2013, 09:06 AM

12. That's interesting. I've never heard of that. It certainly seems smarter than locking people

up, as long as they're non-violent.

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 07:16 AM

8. The Republican Party

has been working for decades to perfect their "blame-the-poor" arguments.

Krugman:

From Welfare Queens to Disabled Deadbeats

If you want to understand the trouble Republicans are in, one good place to start is with the obsession the right has lately developed with the rising disability rolls. The growing number of Americans receiving disability payments has, for many on the right, become a symbol of our economic and moral decay; we’re becoming a nation of malingerers.

<...>

I mean, when Reagan ranted about welfare queens driving Cadillacs, he was inventing a fake problem — but his rant resonated with angry white voters, who understood perfectly well who Reagan was targeting. But Americans on disability as moochers? That isn’t, as far as I can tell, an especially nonwhite group — and it’s a group that is surely as likely to elicit sympathy as disdain. There’s just no way it can serve the kind of political purpose the old welfare-kicking rhetoric used to perform.

The same goes, more broadly, for the whole nation of takers thing. First of all, a lot of the “taking” involves Social Security and Medicare. And even the growth in means-tested programs is largely accounted for by the Earned Income Tax Credit — which requires and rewards work — and the expansion of Medicaid/CHIP to cover more children. Again, not the greatest of political targets.

The point, I think, is that right-wing intellectuals and politicians live in a bubble in which denunciations of those bums on disability and those greedy children getting free health care are greeted with shouts of approval — but now have to deal with a country where the same remarks come across as greedy and heartless (because they are).

- more -

http://krugman.blogs.nytimes.com/2013/01/27/from-welfare-queens-to-disabled-deadbeats/

Social programs are being decimated. Wages are falling. Unions are under attack. Blame the poor for not fighting back, not just the poor, but the homeless.

Democrats have to beat that back, which is what the President did in his inaugural speech.

Robert Reich: The GOP Crackup: How Obama is Unraveling Reagan Republicanism
http://www.democraticunderground.com/10022264824

Here's a great piece related to the OP topic:

To Beat Back Poverty, Pay the Poor

By TINA ROSENBERG

<...>

Today, however, Brazil’s level of economic inequality is dropping at a faster rate than that of almost any other country. Between 2003 and 2009, the income of poor Brazilians has grown seven times as much as the income of rich Brazilians. Poverty has fallen during that time from 22 percent of the population to 7 percent.

Contrast this with the United States, where from 1980 to 2005, more than four-fifths of the increase in Americans’ income went to the top 1 percent of earners. (see this great series in Slate by Timothy Noah on American inequality) Productivity among low and middle-income American workers increased, but their incomes did not. If current trends continue, the United States may soon be more unequal than Brazil.

Several factors contribute to Brazil’s astounding feat. But a major part of Brazil’s achievement is due to a single social program that is now transforming how countries all over the world help their poor.

The program, called Bolsa Familia (Family Grant) in Brazil, goes by different names in different places. In Mexico, where it first began on a national scale and has been equally successful at reducing poverty, it is Oportunidades. The generic term for the program is conditional cash transfers. The idea is to give regular payments to poor families, in the form of cash or electronic transfers into their bank accounts, if they meet certain requirements. The requirements vary, but many countries employ those used by Mexico: families must keep their children in school and go for regular medical checkups, and mom must attend workshops on subjects like nutrition or disease prevention. The payments almost always go to women, as they are the most likely to spend the money on their families. The elegant idea behind conditional cash transfers is to combat poverty today while breaking the cycle of poverty for tomorrow.

- more -

http://opinionator.blogs.nytimes.com/2011/01/03/to-beat-back-poverty-pay-the-poor/


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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 08:00 AM

9. Works for me!

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 08:47 AM

10. Didn't dumbya,

on a much smaller scale, try to do his when he sent out $600 checks? I don't think it improved the economy but created a larger deficit. Maybe he was just trying to buy votes.

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Response to spartan61 (Reply #10)

Mon Jan 28, 2013, 09:14 AM

13. Actually that was more of a one shot bribe.

 

People bought it until they discovered they had to pay taxes on it. That hurt some people.

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 09:20 AM

15. If we give money to the poor, it ultimately helps the wealthy too

It also helps a great many people--and the economy at large--along the way.

If we give money to the wealthy, it helps the wealthy and no one else.

During the collapse of the housing bubble, rather than injecting cash directly into the banks, I proposed that the money instead be given to the borrowers by paying of a big chunk of their delinquent mortgages; this would have the effect of relieving some (most? all?) of their debt while also getting money to the banks, though perhaps not as quickly as one big, fat multi-billion dollar check.

Instead, the banks got to benefit twice (cash infusion from the Fed, and they still held the mortgages) while the homeowners got screwed. Again.

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 09:33 AM

16. It may be our greatest tool in battling climate change.

People need at least the bare essentials. If they can be provided with those in exchange for not being a sore on the environment, the cost would be small in the long run and the possible extra bonus of having trees would appeal to our great grandchildren.

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 12:55 PM

18. Actually ... That's kind'a whats happening

Most if the Feds 3 trillion dollars in assets are US government securities (1.7 trillion) and mortgage backed securities (1 trillion)

The Fed is buying older US government securities from banks and brokers so that said banks and brokers will have available funds to buy the new issued US government securities. So the feds printing presses arent supporting the banks but the Treasury and the deficit. Same wirh mortgage backed securities.

So ... If you work for the Federal govt, are in the military, work for a defense contractor, get federal assistance etc. then the feds created dollars are going to you. If you sold a house, bought a house, work im construction etc. the feds money printing supports you.

Thats why they do it.

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Response to econoclast (Reply #18)

Mon Jan 28, 2013, 03:21 PM

20. the writer acknowledges it; his point is it would be better just to give directly than letting it

 

'trickle down' from the banksters

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Response to HiPointDem (Reply #20)

Mon Jan 28, 2013, 06:06 PM

23. But it IS going directly not trickeling down

Us govt securities on the fed balance sheet created money that goes to the treasury which spends it as part of everything the govt spends money on. Wages of federal workers etc.

Mortgage backed sec on the fed balance sheet do directly into every mortgage in america. You built a house? Used a mortgage? The carpenters are paid with the feds created money.

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Response to econoclast (Reply #23)

Mon Jan 28, 2013, 06:24 PM

24. your definition of 'directly' & mine are different.

 

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 01:03 PM

19. It would give a much needed boost to the economy. Think of all the people

 

who would do home improvements, fix cars and so on. Money always trickles up. Not so much trickles down.

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 03:35 PM

21. Demand side economics.

Isn't it striking, how we have been conditioned to accept bailouts of corporations as normal, but the idea of bailing out the people so aberrant as to be UnSerious and inconceivable.

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Response to HiPointDem (Original post)

Mon Jan 28, 2013, 06:26 PM

25. +1. As long as there aren't enough (decent) jobs to go around, it's the ONLY answer!

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