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Old 02-10-2017, 12:57 PM
donquixote99's Avatar
donquixote99 donquixote99 is offline
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Guaranteed Income as Quantitative Easing

Fact one: Top Tenth of 1 Percenters Reaps All the Riches (Bloomberg)

Fact two: What they are doing with all that money gives us the economy we've got. Anemic growth and low-wage jobs are it, going forward. The money goes into bidding up assets (the stock market) and government bonds (buying guaranteed income). To a large degree, the money becomes static, tied up in non-productive assets, and economically ineffective.

Fact three: Government keeps incurring debt because it can't tax enough to cover current needs. It can't tax enough because the political power of the top .1% prevents it. They don't want the government taking their money, when instead they can loan it to the government and get interest on it forever.

Fact four: desperate to promote increased economic growth, the Federal Reserve has undertaken a program of 'quantitative easing,' in which large amounts of money are created and made available as reserves to commercial banks, enabling them to increase loans and investment. The stimulative results of this program have been disappointing.

Fact five: increased demand from the consumer sector would be the most certain factor to produce increased economic growth. However, downward pressure on employment and wages from globalization and automation precludes robust earnings growth in the consumer sector. This downward-pressure on the consumer sector will only increase in the future.

Fact six: massive government support for consumer demand, in the form of guaranteed annual income for consumers, has bee proposed as a method of stimulating the economy and restoring satisfactory rates of growth. However, the cost is deemed too great, as it will remain politically impossible to raise taxes on the high-income sector to fund a 'transfer' of income. Funding with debt would likewise lead to a burgeoning debt that will be too expensive to service.

Proposal: end quantitative easing program for creation of bank reserves, and instead fund guaranteed annual incomes by creating the necessary money. As long as this funds creation is kept within necessary bounds, it will not result in hyper-inflation, even as the current quantitative-easing program has not proved to be inflationary. Like current quantitative easing, it will simply counterbalance the deflationary effect of the withdrawal of huge sums into the relatively economically-inert cash hordes of super-weathly individuals and their corporations.

This proposal should enjoy support from all sectors; the super-wealthy will both like that it does not require taxation of their income, and be gratified as, over time, increased growth adds multiple zeros the the number-scores that denote their status. Because the program will allow them to continue to 'reap all the riches,' and indeed, counts on it to provide the sink that counterbalances the money-creation. And of course, it will also provide the benefit of a better life to those no longer necessary to the economy.
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Last edited by donquixote99; 02-10-2017 at 01:11 PM.
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