Guaranteed Income as Quantitative Easing

[donquixote99]

Originally Posted by Dondilion

But you still should address his argument re shrinking economy.

Yes I did. He basically is of the opinion that the economy will shrink because of people quitting work to exist on a smaller guaranteed wage. I think not so many will do that, and they will be more than counterbalanced by those for whom the guaranteed wage is a significant increase in consumption power.

Which way it will go isn't so easy to judge without data. I favor experiments to see. The higher the guaranteed wage, the higher the stimulative power, but also the higher the incentive for fully-employed people to quit work. You'd need to find a best level of guarantee to optimize things.

[nailer]

Originally Posted by Tom Joad

Actually the idea that Don has presented is a damned good one and just might work.

And that's what terrifies you.

DQ's plan falls apart beginning with his title unless the Fed can figure out a way to keep interests rates low in the face of significantly increasing debt.

[donquixote99]

Originally Posted by nailer

DQ's plan falls apart beginning with his title unless the Fed can figure out a way to keep interests rates low in the face of significantly increasing debt.

What makes you think debt will significantly increase?

[Tom Joad]

Originally Posted by nailer

DQ's plan falls apart beginning with his title unless the Fed can figure out a way to keep interests rates low in the face of significantly increasing debt.

We can use quantitative easing to get rid of the debt.

Just print the money and pay it off.

[Tom Joad]

Originally Posted by nailer

It can't and the consequences are dire.

http://joebageant.net/?p=246

Population growth is the rhino in the playpen, the root cause of our approaching eco-disaster that that no one honestly talks about. On the left we get an onslaught of information about what we must and must not do to prevent climate change. Good Democrats get Al Gore’s advice, which somehow never mentions the corporations doing the damage. And all of America gets feel-good electric car ads — buy your way out of the problem, or at least your guilt if you happen to have any. But nowhere do we get an honest discussion about population growth. If you care to, argue that climate change may or may not destroy us. But uncontrolled population growth is guaranteed to do the job. As an old Idaho rancher told me, "You can’t run a hundred head of cattle on half an acre."

[nailer]

Originally Posted by donquixote99

What makes you think debt will significantly increase?

You're premise begins with starting a major welfare program with borrowed money that is keeping our economy afloat. As population increases the program will grow. In addition, cost per recipient will increase over time because that's how things work. Further, the Fed will still have to continue economic stimulus borrowing for the foreseeable future. And all this will cause interest rates to rise generating even more debt.

[whell]

Originally Posted by donquixote99

You describe some pitfalls that the program would have to be designed to avoid, but to a large extent you just haven't gotten you mind around the one really radical aspect, and it's implications. I refer to the funding source, which is created money, not tax money.

Oh, I've gotten my mind around it, alright. Creating money = devaluation of currency = inflationary pressure. That was my comment above about the QE program always intended to be temporary. If you make it long term, evenually you'll get inflation. The only reason I think we've not had inflation with QE this time is that the conditions are so lousy for economic growth.

If your long term objective is to put economic pressure on the "fixed class" folks to move out of the fixed class, then inflating the cost of all goods and services, including essentials, is one way to do it, I guess. But once you let that horse - inflation - out of the barn, its awfully hard to get it back in again.

[whell]

Originally Posted by donquixote99

Yes I did. He basically is of the opinion that the economy will shrink because of people quitting work to exist on a smaller guaranteed wage.

No, that's not what I said. I said that was one of six different variables in your scenario what would put pressure on the economy and potentially result in negative growth. There were five more that I cited, and probably some more that I missed.

[Tom Joad]

Originally Posted by whell

Creating money = devaluation of currency = inflationary pressure.

Which is fine with me. Inflation hurts creditors more than it does debtors. And these days most creditors are predators. So fuck them.

[nailer]

Originally Posted by whell

Oh, I've gotten my mind around it, alright. Creating money = devaluation of currency = inflationary pressure. That was my comment above about the QE program always intended to be temporary. If you make it long term, evenually you'll get inflation. The only reason I think we've not had inflation with QE this time is that the conditions are so lousy for economic growth.

If your long term objective is to put economic pressure on the "fixed class" folks to move out of the fixed class, then inflating the cost of all goods and services, including essentials, is one way to do it, I guess. But once you let that horse - inflation - out of the barn, its awfully hard to get it back in again.

Thanks to Globalization, economic growth here will be slow for some time to come. I'm also thinking we have low inflation because there are not too many dollars chasing too few goods.