When fed started raising interest rates to curb inflation, the prevalent wisdom was that the average consumer has too much money because of low rates and is spending way too much. The thought was raising rates would curb their spending and bring prices down slowly. However, it turns out the average consumer is very principled with money and is handling it very well. The rich/corporations like banks, VCs, companies fe…
It requires great political training to believe the best person to spend your money isn't you — e.g. some people believe the poor can't be trusted with money, and so on (socialism etc)
corporations cant be trusted to spend the peoples money.
Hum... I only disagree that people keeping calling it "modern". The actually modern theory has a much more complex lifecycle for money. Yep, government spending creates it, and taxing destroys it, but between all the kinds of money and the entities that can create them, it's not automatic that the government numbers are the important ones.
As far as I know, MMT accepts all of the theory of money supply. The main break with mainstream economics is in asserting that government spending beyond taxes collected need not be financed with borrowing. The borrowing is an option, which may be desirable, but a government could also choose to print the money instead, and doing so wouldn't automatically be inflationary. In many ways, this is a recognition of the fa…
Well yeah and I think the main difference is that MMT ( and it has been called chartalism as well) recognizes that money derives it value from the state via the imposition of taxes at the barrel of a gun ( you goto jail if you don't pay). So money, at the federal level, ( and there is broad money which is money at the bank level) is essentially a tax liability. Therefore in order to provision itself, the state (feds), must first spend money into existence before collecting taxes as a point of logic. Therefore federal deficits are a necessity . The only question is how big ? And , given the imposition of taxes, the private sector is unemployed in the currency in which the tax is levied, so it must make itself available for employment in order to pay taxes. Thats how the government provisions itself. And you can say the government causes unemployment when it taxes and should therefore as a social goal, guarantee work to anyone at a living wake. So called Job guarantee, which MMT thinks is better than an income guarantee. There rest of the economy you build up from there. Its gets more complicated when you factor in banking and bank money which is the form of money that makes up 90% + of the money supply.
Your comment seems pretty unserious, but modern monetary theory ( https://en.wikipedia.org/wiki/Modern_Monetary_Theory ) adherents assert that the point of taxes is not to "fund" anything, but to engineer incentives, redistribute wealth, and remove excess money. And that, yes, we should simply print money, to the extent that we need to, subject to the constraint that excess money causes inflation in specific circumst…
I wish MMT adherents would lobby harder to tax capital gains at the same rate as labour.
I'd say get rid of all federal taxes except a real estate tax which I find to be fair. The bigger , the more valuable the more you pay. And then distribute money to the states on a per capita basis. States have funding problems. Especially during downturn and they provide much of the valuable services to live day to day. We need new sewers and state and county roads. Municipal infrastructure needs improvement.
FDIC - Federal Deposit Insurance Corporation It is not the Fed itself, but a separate entity that doesn't receive any federal funding. The $250k insurance you hear about is not free, it has a cost associated with it: https://www.fdic.gov/deposit/insurance/assessments/proposed.... Just like your $25k car has an insurance premium, these bank accounts are also insured because they pay a premium. Now if your car's value…
The Fed government as an issuer of currency can fund anything to infinity so long as Congress authorizes it. They change numbers in a spread sheet to create money. Rules like FDIC insurance are vestiges of a gold standard era when money was not fungible.
Since 2008 EU banks have gotten more stringent requirements per regulations compared to the US, the degree of additional risk is hard to know for sure without a large scale collapse.
What are you basing this on? What are some of the ways EU banks (does it not vary by country?) have gotten more stringent requirements per regulations compared to the US?
All EU banks (afaik) need to follow Basel III regulations, while smaller US banks don't have to due to lobbying
On the other hand, imagine what level of services we could have if it wasn't for the tax dodgers and cash in hand payments. I reckon we could fund universal basic income just from whitening the economy, in any given country.
Imagine if we just had a land value tax to replace all other taxes. Can't dodge that particular tax, unless someone is able to hide a piece of land from being seen. > I reckon we could fund universal basic income just from whitening the economy, in any given country. I reckon that no economy, no matter how advanced, is so productive that you can provide a systemic incentive for everyone to not produce anything yet st…
There's an ample body of research on basic income now that indicates that almost everyone still works under it. The people who don't are people we shouldn't be requiring to work, like the disabled, new parents (still usually only one), and full-time students.
It is much more likely that the effect will fade over time, as people who are traumatized and exhausted from being forced to work terrible jobs for inhumane hours recover and once against find themselves ready to do something more active and productive.
CBDC is a another puzzle piece of a future dystopia. We're exchanging freedom for the sake of a security façade.
On the other hand, imagine what level of services we could have if it wasn't for the tax dodgers and cash in hand payments. I reckon we could fund universal basic income just from whitening the economy, in any given country.
I don't think the answer is that simple. Sure, cash users are an easy target here, but upon closer inspection things just don't add up. Targeting cash users would have some deeply negative side effects for everyone.
To quote patio11: "The optimal amount of fraud is non-zero". The financial system needs slack, otherwise it destroys itself.
The fed has a spreadsheet for which it can enter infinite amounts.
No it can't. It's pretty near the end. The world is actively moving away from dollars if you paid attention.
In order for China to continue to export to America which they obviously want todo, they have to maintain exchange rates stable. The only way for them to do this is to accumulate dollars.
CBDC is a another puzzle piece of a future dystopia. We're exchanging freedom for the sake of a security façade.
On the other hand, imagine what level of services we could have if it wasn't for the tax dodgers and cash in hand payments. I reckon we could fund universal basic income just from whitening the economy, in any given country.
What makes you think that the increased tax revenue would go to anything benefitting regular citizens?