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The Top 0.1% Loves A Guaranteed Minimum Income: With One Caveat
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Why wouldn't the top 1/10th of 1% love a central bank-funded guaranteed minimum income?
It is widely assumed that the super-wealthy top 1/10th of 1% are against a guaranteed minimum income (GMI) (also known as guaranteed basic income or basic income guarantee) because this would somehow limit their wealth and power.
On the contrary--the top 1/10th of 1% are fine with a guaranteed minimum income for households, with one tiny caveat: as long as they don't have to pay for it. But wait, you say: that's the entire idea: tax the rich and redistribute the money to those below.
Ah, but you're forgetting the magical power of central banks and treasuries of the world to create money out of thin air. As the top 1/10th of 1% understand, the GMI could be paid with freshly issued money--a method of funding that leaves the top 1/10th of 1% untouched beyond the taxes they already pay (substantial in many cases).
But wait, you say: printing and distributing helicopter money is highly inflationary. (Helicopter money refers to former Fed chairman Ben Bernanke's famous claim that deflation could be reversed by dropping money from helicopters.)
Not only is printing money inflationary, it soon burdens the nation with crushing debts. So goes the conventional line of thinking: printing money is inflationary and borrowing money by selling bonds leads to crushing interest payments on the ever-rising debt.
But what if the conventional thinking is wrong? Consider the following thought experiment:
1. The central bank pushes interest rates to near-zero as a permanent policy.
2. The government funds a guaranteed minimum income (GMI) by selling $1 trillion in freshly issued bonds every year.
3. The central bank buys the $1 trillion in freshly issued bonds with $1 trillion in freshly issued money. This is known as monetizing the debt.
4. Five years later, the government declares a debt jubilee and voids the $5 trillion in bonds. In effect, the government defaults on the bonds.
5. The central bank writes the $5 trillion in bonds off its balance sheet. In essence, the government and central bank balance sheets return to square one: the $5 trillion was paid out to millions of households in GMI payments, The government is not bankrupt and neither is the central bank. the writedown has no impact on the bank's other assets nor on the government's ability to sell more bonds to the central bank.
As for inflation: the $5 trillion in new money simply offset the massive deflationary forces of technology and global competition. If you doubt this could work in the real world, then please explain how Japan has been able to run enormous government deficits that are essentially funded by the Bank of Japan in precisely the fashion described above for 20 years with near-zero inflation and no reduction in state finances, financial stability or the central bank's ability to create new money at will.
Why couldn't the government of Japan void the bonds held by the Bank of Japan and clear the balance sheets of both entities? The central bank certainly doesn't need the interest income to survive; it can print however much money it wants.
The structural forces of deflation in Japan's economy have simply been stalled by the flood of deficit spending/new money. It turns out inflation is not the issue when labor costs are stagnant and the structural forces of technology and global competition keep pushing prices lower.
Stagnation/recession is also deflationary.
For all these reasons, I expect various forms of guaranteed minimum income to become accepted policy, but they won't be paid for with taxes--they'll be paid for with freshly issued fiat currency. To the astonishment of those basing their projections on the 1970s or other periods of inflation, printing and distributing money directly to households will not be as inflationary as anticipated because many of the primary global trends are massively deflationary: overcapacity, stagnation, global wage arbitrage, declining costs for technology, robotics and software, etc.
You print $5 trillion in bonds, I buy them with $5 trillion in new money, you default and I write off the asset of the $5 trillion in bonds. Rinse and repeat. The money was distributed to households who spent it in the real economy, supporting the enterprises owned by the top 1/10th of 1%.
Why wouldn't the top 1/10th of 1% love a central bank-funded guaranteed minimum income? The program puts money in the hands of consumers who lack paid work, and a percentage of their helicopter money consumption flows to the top 1/10th of 1%. It's a sweet deal for those receiving the GMI and those who own the assets and enterprises.
The last thing the top 1/10th of 1% wants is a desperate, politically charged underclass with no money to buy the goods and services that generate the income of the top 1/10th of 1%. The best way to keep the underclasses passive and powerless while insuring they have enough money to continue consuming is to arrange for the central bank to issue them money in the form of a popularly acclaimed guaranteed minimum income.
Helicopter money here we come.
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and if helicopter $$$ doesn't work....Nobel peace prize bombs will.
Get me some, bitchez! And here I've been wasting my money on lottery tickets every week.
It's not inflationary because you are destroying the incomes of the people who are doing the work in the society i.e. the middle class.
It doesn't matter how much money you print. We live in a world of "things". And it's not a virtual world like an "Internet of things".
For the most part, printing more money does not affect the way that "things" are manufactured and produced. Mainly, printing money and distributing said monies just changes who can afford to buy those "things", and who can afford to manufacture those "things".
This comes to mind : http://web.archive.org/web/20111112074159/http://www.zerohedge.com/news/...
As far as "things" go, it's kind of like a zero sum game, where money only appears to be in the driver seat. The 0.01% know this, and they know the likely trends. Look for the trends in real "things" and you will have more insight and be able to see more clearly through smoke and mirrors.
Instead of GMI, how about GMT. Guaranteed Minimum Things? Delivery on either will prove difficult with the current trends.
BDI anyone? Electricity production? Miles driven? Get real.
GMI makes sense, so long as you replace the welfare system with it. The result is you can get rid of all those welfare administrators who soak up most of the welfare money themselves.
Not going to happen. By definition we are talking about those who cannot manage money. When they blow their GMI for the month in three days on the usual trivial things and then come crying to the government saying "Baby need shoes!", do you think the typical sociology-major government welfare drone is going to tell them "Nope sorry, baby will have to go barefoot till next month and that's your problem now?" GMI will be in addition to welfare ... what, are you trying to starve the children you bigot?
Don't know WTF you're talking about. If you spend out your EBT card in 3 days, you don't get more until the 1st of the month. Baby goes hungry until Sharonda holds up a liquor store.
But you do make a good point. We already have guaranteed income. It's called welfare, soc security and all the rest. Nothing new in this hair brained article.
Buddy, I think you nailed it. The only reason people work, thereby producing things to buy, is to earn money to buy things they want. So money is an inducement to work. If the money is free, no inducement to work. No work, no things. QED
The Oligarchs are going to give the people just enough to prevent unrest until they kill most of them in WWIII. It's a brilliant and really evil plan.
Also try warning anyone that the life they're living is an illusion. They're not real receptive, so you can't save them.
That is EXACTLY what welfare is. A way to keep the inner city hoods quiet so the rest of us can work and live in peace. Not working too well, is it?
How is it that seemingly-intelligent people like Charles Hugh-Smith don't realize that Japan != United States? Just because money printing did not cause runaway inflation over there does not mean the same strategy will not cause utter failure over here.
The MMT fuck-tards will destroy the nation with this idiocy.
I have already personally argued with that douche Mosler about this very subject.
It could only work in a 100% closed society with NO imports or exports, NO emmigration or tourism of any kind, absolute independence of ALL manufacturing and energy and technology and FOOD requirements for the duration of any such program.
The US will be beseiged with emmigrants and illegals and passport jumpers and perpetual foreign students desperate to milk the welfare state forever.
Further: there can be NO government debt financing from international or external sources under such a regime as taxation can never be raised on a welfare nation to retire debts. Any debt sold would require some form of collateralization -likely distint collateralization of individual and identifiable 'citizen' taxpayers -HUMAN BEINGS will be SOLD.
IF any such Jobs Guarantee Program or Guarenteed Minimum Income is implemented there will be no wage pressures and everyone will be forced into subsistence wages by the corporations which will become fully subsidized state protected cartels owned/run by a distinct rentier Oligarchy and attendant perpetual neo-federal bureaucracy.
This is the ultimate neo-liberal ploy for instituting a feudalist/facsist state.
The planet is a closed system. Yes everyone would be dependent on the US dollar for transactions like it or not. That means no where to hide your wealth, no where to run where the US dollar was not king. One ring to rule them all.
It will work until suddenly it doesn't. Like everything the government's economists try.
That kind of sound like what we already have to me.
Middle class is just destroying earth for distactions and fast food. Better to have middle class consume less and have the poverty class better feed. Better for earth and less revolutionaries.
Thanks for your input Malthus.....
Bingo. They are feeding the middle class into a debt-shredder to protect their status as long as possible. Where the scheme in this article breaks down is where the debt is "written off". The wealth of the ruling class consists largely of debt claims on the wealth of others. If THEY take the write-off they lose their status. They will transfer the bad debt to the public treasury where it will be "written off", but that can't be done indefinetely because it represents a destruction of "wealth". Someone has to take the hit- that someone is every citizen contributing more than they take out- IE the middle class.
This certainly would work, but there is one prerequisite, the US Dollar could no longer be the worlds reserve currency.
Know your enemy
AD
It is already present. Old people collecting entitlements. Some people pay and pay and then die, never to get shit. Others barely work and live to bitch and bitch some more.
There will always be a bottom of the barrel. America's bottom is the middle in many countries. But we still bitch and moan.
Those pretentious cocksucking rich fucks, think they are special. "See my fancy car, and big house". Then the rest of the bunch of wannbees go after the same shit.
Go hop on the hamster wheel and run all you want. Count those elusive digital numbers in your fed owned bank account, brokerage accounts or you pile of gold. IN the end it will not mean but a pile of shit and continued broken thoughts.
The Fed has zero interest (both literally and metaphorically) to give the plebes anything.
Well no they don't...until those bumps (off) in the night start being reported.
One question tho, just who is guaranteed this income? the productive middle-class? or the ones already getting a minimum income?
What was the point of this article?
No... the only thing guaranteed in the plebes future is conscription..
It would be the rest of the world that "guarantees" this income. They sell labor for US dollars as long as they do this you can guarantee all you like.
Its a way of tieing everyone to the US dollar, supplier and consumer.
Everyone would get a SS check that they would then use to pay their taxes. it works untill WW3.
This might be a last ditch effort to save the System, .. does not make the idea any more reasonable or sustainable, it might buy another 10-15 years or so, then KAbOOOM!
If you concede that our current system is just make believe, keeping score with promises backed by nothing at all, why not?
Seems like we are at (or near) peak everything, including peak humans, barring some kind of injection of resources from outside our planet.
And it is looking like we may have passed peak employment.
Posted this a couple of times, but really is a mind bender. Coming soon...computers that do damn near everything left to do that robots and other machines don't already have covered. Per this guy even the so-called knowledge workers will be less in demand as you will need only a handful of knowledge workers to conduct the artificial intelligence of a super computer that can think and learn.
https://www.youtube.com/watch?v=t4kyRyKyOpo
So, yeah, why not a guaranteed minimum income while we wait for our excess population to die off naturally? Beats war, famine, and disease in my opinion.
This is something I've posted a few times that seems more and more prescient as policies like this get seriously debated. Well worth the read. Just as it starts getting depressing and you think there's no way out, an alternative is introduced...
I watched the TEDX video and it is sobering. Thanks for posting that, Plane Jain
Wake me up when there's a robot to do the brakes on my car, unclog my toilet and fold clothes without being setup, turned on, positioned, operated and observed, powered down, maintained, and stored.
Robots have a long way to go to being mainstream, and driving around specifically built warehouses, and welding the same 2 pieces of metal together over and over don't count.
For a robot to put brakes on your car, you would need to buy a new car, for unclogging the toilet you would need to buy a new toilet, so on and so forth. Its possable untill the power goes out then you dont have a car or toilet but thats a problem for another time.
Like the free shit train is different than the helicopter?
Unfortunately, that which cannot be sustained, won't be, period. Instead of pockets of hyperinflation, similar to pre-WWI and WWII, the entire planet gets to experience just how fast "low prices" becomes shortages...
we all know the TPTB will never admit that inflation exists, hence we go straight to shortages... ...just like the former Soviet Union the prices will always be "low" and everything will be "fixed"...
All because we the people failed to let the bad businesses and bad banks fucking fail!!!
How can you say that?
Just look at the sceaming suckcess of GM & Dodge.. )
Unconditional Basic Income, in place of existing social programs, costs less and delivers more. The trade off is that lots of government workers would lose their jobs if they abolished SNAP, unemployment, welfare, and replaced it with an automated system that just gave everyone $1000 every month.
Federico Pistoni on Unconditional Basic Income trials in India:
https://www.youtube.com/watch?v=-vnB16E36EQ
The potential set of recipients are those who don't need to reproduce.
Unless you mean everyone, that doesn't make sense. Unconditional means no conditions, everyone gets it.
So in a short time the unproductive weeds in the garden will displace the entire crop.
That's why socialism is a failure.
Yes, radical socialists like Milton Friedman, Gary Johnson, and all those other libertarian socialists.
https://www.youtube.com/watch?v=-vnB16E36EQ
Monopoly anyone. Wealth can only be increased by production. All the rest is FLUFF.
Or... by rolling good dice.
Works until it doesn't. Then the rest of the world hangs the bankers and employees.
Hocus Pocus. Money isn't wealth. It is a claim on wealth. Real wealth can only be created by adding value.
All printed money eventually reverts to its intrinsic value, Zero.
Hello-
Thank you for your inquiry regarding the Guaranteed Minimum Income (GMI). Based on the information you provided, you are not currently eligible to participate in the program (on the receiving end). We will be reaching out soon however to address new tax guidelines and how you can help support this program.
Warmly,
Y
Wiping 5 trillion of the books doesn't come without consequences. If .gov declares a debt jubilee and the fed wipes 5 trillion off it's balance sheet that debt doesn't just disappear, it shows up in massive destruction of the currency, which is their goal in the first place. The question becomes, what happens to the faith in the fed's funny money after the fact.
So you're saying the mere posting of a journal entry ushers in the consequence? Not likely. Just like national debt has yet to materialize into any significant consequence world wide.
The only real potential for consequence, as this article mentions, is 'a desperate, politcally charged underclass with no money/food'. But central bank policy guarantee this to be a non issue, through things like GMI.
GMI will pacify the underclass there now, and the middle class that will be there in the future. There will be no abrupt crash.
Wipping away 5 trillion is no mere journal entry. That 5 trillion was used for real goods and services. Based on your statement the fed could buy up all of the government debt and just wipe it clean with no consequence to the currency. If you think that our printing and national debt is not showing up in the world then you aren't paying attention.
Was used. Past tense. Economy already benefited from it. Writing off a loan/receivable (from issuing currency) doesn't negate the past economic benefit.
An 'expense' on the back of a currency maybe.
But my point is that anyone can see that a large and growing oustanding receivable (growing national debt) is JUST AS INDICATIVE as the 'wipping away' (realization) of the loss. Hence, a mere journal entry.
And that is precisely what they have done, and the world has done. So what exactly is your definition of consequence?
Wow.
"So what exactly is your definition of consequence? "
The banking and insurance and retirement systems are all to some extent or other predicated upon the continued issuance and payment of vig on the issuance. What backs the banks if there are no treasuries? Where is the low-risk portfolio of the annuity/insurance management spectrum going to be re-allocated to?
Let us not even contemplate what would happen to trillions of notional leverage in the derivative stacks if the base collateralization asset that has been re-hypothecated God only knows how many times is suddenly called in for absolute liquidation.
What happened in tech in 1999, what happened in home loans in 2008. What is happening in the stock market and oil now. Deflation, inflation, and bubbles are real. How many lost decades does Japan have to have before people admit it hasn't been working and more and bigger is not the answer.
What increases prosperity is not more money, it is producing more goods with less resources. In short, the more goods available to buy around the world the less they will cost and the more prosperous we will all be. Anything that leads to producing less goods for more manpower, raw materials, etc makes us all less prosperous. To the extent you encourage people not to work, you rig the system to produce less to go around. People cannot buy what does not exist and prices will go up as the supply of goods decreases.
This system may appear to do something in the short term, but once prices equalize the poor will still exist and will not be able to afford a the new minimum standard of living. So a new minimum guaranteed income will be needed at a higher level. The cycle will continue until rampant inflation collapses everything.
Precisely. When the US becomes the only buyer of US debt, we've got a very large problem.
Tyler, we can't read the picture...
AKA putting the pedal to the metal.
The best way to work it is to link it with radical monetary reform, along the lines of The Chicago Plan. The plan is to end endogenous money creation by the banks with debt free fiat issued by the treasury. The plan also includes a transition to full reserve lending. In my estimation, the transition would mean a rather large implosion of the monetary ponzi, which would do wonders to reduce inequality. Best of all, we would no longer be ruled by "independent" (and unaccountable) central banks.
Martin Wolf discussed such a plan in the Financial Times last year, noting that "This will not happen now. But remember the possibility. When the next crisis comes – and it surely will – we need to be ready."
http://www.ft.com/intl/cms/s/0/7f000b18-ca44-11e3-bb92-00144feabdc0.html...
The plan was originally proposed after the great depression, in the 1930s, by economist Irving Fisher. The Federal Reserve issued a forgotten working paper on it, written by Benes and Kumhof, in 2011. Kucinich incorporated it into his forgotten NEED Act (HR2990) from 2011. Nobody talked about it because, of course, banksters would lose their power.
Here is another thought experiment:
All taxes of any kind are handled by "new money" and then defaulted. There is no difference.
Vivala printer!
No offense CHS but you're losing what's left of your tenuous grasp on reality.
I'm of the opinion that he's explaining their game plan, not his.
It does seem like CHS has one foot in each of two worlds. One foot in the Martenson, Tverberg, Heinberg, Tullet Prebon, Korowicz, and Hayek world, and one in the Bernanke, Yellen, Greenspan, Krugman, Keynes world.
Double Agent maybe?
I would say that neither foot is firmly planted. Of Two Minds.. perhaps the other mind should have reviewed this before it made it's way to ZH. Tyler - you need to filter this stuff man. This is getting out of hand.
"The $5 Trillion would be offset by deflationary forces of technology...." - Seriously? Solid argument.
Imagine you had 99% of the worlds wealth and let's say total world wealth (TWW for fun) was $100 Tn, including both financial and real assets. If you issued $5 Tn (TWW $105 Tn), gave it to someone else who then bought $5Tn of stuff from you seeing as you own everything, then you cancel out the $5 Tn, TTW is back to $100 Tn of which you only have $94 Tn. Explain to me why the top 1 % would want this?
" Explain to me why the top 1 % would want this?"
1. To avoid social upheaval (i.e. not get murdered)
2. To avoid being surrounded by slums
3. To continue the advancement of technology
4. The $100 Trillion in assets are only worth that as long as they are producing; a factory that makes nothing is no longer worth anything. The pieces of paper are only worth anything as long as other people believe they are worth anything. debts are only worth anything if they are getting serviced.
5. To deter people from exiting your system
6. Why would you cancel the $5 trillion instead of reissuing it?
7. As long as people are indebted and continue servicing their debts, you can control them.
Basically if you've already won the game, the only way to keep winning is to perpetuate the game. Glad someone else here gets it.
There are no pitchforks or nailguns in Monopoly.
1. That's a tradeoff, personal security is a cost, to be sure, but perhaps the sweet sweet profits are worth it.
2. That hasn't bothered many wealthy people outside of ConUS, I don't think they have a problem with that.
3. Huh? What about all of the active suppression of technology to maintain the consumption status quo?
4. $100T is a transient number, you just explained why in the second part of your sentence. A few years from now, that $100T and a nickel will buy you a cup of coffee and a cup protector to keep your hand cool, guess what role the $100T will play?
5. Huh? Crushing Debt traps those poor saps in the system forever. Debt is slavery and hell.
6. Doesn't matter, the paintings and fancy cars will carry the wealth over to the next paradigm.
7. Bingo, however, the dog leg is a function of time and is ultimately >exponential. Occasionally, the paradigm needs to be rebooted to get as linear a conveyor belt of assets flowing from poor to rich as possible.
3. Evidence please. What technology is being suppressed? All I see is ever more money flowing into tech.
5. If the people cannot service their debts, they must default. What good is it to have everyone default? The debts are worthless and you end up with a bunch of assets that are worth far less, and require maintenance.
"On the contrary--the top 1/10th of 1% are fine with a guaranteed minimum income for households, with one tiny caveat: as long as they don't have to pay for it."
Not one quote or citation to back up the central thesis of this article. Fail.
None needed..
It was a study done over a 2 yr. period by the Pentagon, by observing video footage of face contortions of the .05%'s
Minimum wage just allows employers to get more for less. They can hire college graduates instead of high school dropouts.
Seems like a plan, and why not Uncle Warren go his. John Corzine stole others and got non (jail time), and Hank saved himself a cool $100 million in taxes to come in and put $800 billion into the banks he chose. So just send a check out every month to every working age person in the USofA, maybe $2500 and all the worlds problems will be solved.
In reality if the US defaults on 20 trillion or 200 trillion does it matter?
"As for inflation: the $5 trillion in new money simply offset the massive deflationary forces of technology and global competition. If you doubt this could work in the real world, then please explain how Japan has been able to run enormous government deficits that are essentially funded by the Bank of Japan in precisely the fashion described above for 20 years with near-zero inflation and no reduction in state finances, financial stability or the central bank's ability to create new money at will."
Because actual wealth requires vast amounts of actual resources and resources are getting more and more scarce. This will ultimately tax the rich because their billions of dollars will be able to purchase less and less actual wealth.\
I repeat. This would be a tax on the rich. (A stealth tax)
By replacing the entire tax system with this, you would save about 5-10% of GDP, since that is the amount of effort people and companies perform trying to reduce and get around paying taxes.
If all we need is a printer running without consequences, wipe all taxes away and run this scheme.
Answer: There must be some effect of wiping away 5-10 trillion a year
Japan has experienced shrinkflation on a massive scale, to the point where the gainfully employed live in fucking coffins and the growing class of young people without jobs seal themselves away in their rooms, waiting for their parents to die so they can get their assets. This is Feudalism 2.0.
"This is Feudalism 2.0. "
Hello, tmosley,
Interesting to see you here on ZH rather than over at NC.
I have ceased bothering to scream that this MMT/GMI bullshit is evil on Naked Capitalism since the ideologues running that place have drank and gotten besotted on the Kool-Aid.
IMHO, MMT/GMI is, even if well intentioned: pure monetary and fiscal quackery of the highest and most dangersous order.
There is no way that the US could seal off the economy to keep dollars from escaping any such regime, and the US could never possible support such a regime on anything approaching a global/trans-nation scale even in the most developed EU countries..
The top .1%, holding massive amounts of hard assets, then get to see the value of their assets skyrocket due to inflation while the rest of us fall further and further into debt and poverty.
You CAN ignore reality but what you CAN NOT ignore is the consequences of ignoring reality.
Since there is a guaranteed minimum income who is going to provide the products? What would be the point of working.Sure you could 'force' the plebes to show up for work but how motivated would they be?
This was tried in the USSR and PRC which both are now going fully capitalist.
It was called communism... remember?
I don't qualify for either bailouts or Helicopter money. I'd better not quit my job in the salt mines......
The premise of this article is fundementally flawed as the FED has no interest nor motivation to help sheeple!
INFLATION
"As for inflation: the $5 trillion in new money simply offset the massive deflationary forces of technology and global competition. If you doubt this could work in the real world, then please explain how Japan has been able to run enormous government deficits that are essentially funded by the Bank of Japan in precisely the fashion described above for 20 years with near-zero inflation and no reduction in state finances, financial stability or the central bank's ability to create new money at will."
A new Toyota once cost $3,000, but now costs $20,000. I do not call that "near-zero inflation".
Here is the kicker.
In 1982 at Y235 per dollar that $3000 represents Y705,000
In 2012 at Y78 per dollar $20,000 is Y1,560,000
While the price in dollars went up almost seven times, the revenue in Yen only is only double. Based on the weakest value of the Yen and the strongest. The Japanese company I worked for went under because the Yen strengthened from 128 per dollar to 78. The price of the product in the USA stayed the same $24.99. In two years the revenue from sales in the US was nearly cut in half. The company borrowed money based on receiving 3200 Yen per unit sold. When they received only 1950, they couldn't cover the obligations they made.
The Japanese want a weak currency.
Thank you, adr. That sounds like a Japanese person could actually purchase a Japanese car for less today than he could in 1982. I WOULD call that "no inflation". I'm not sure what life is like for Japanese people these days. Sounds like they aren't starving.
Also, I think I understand your point that borrowing money is risky if one counts on overseas sales, because of the risk that one's home currency (the currency one borrowed in) may increase in value. I guess that is why there is such a huge "Forex" market, if exporting company might feel the need to "hedge" in such markets. And that would add up to a lot of hedging, since there are a lot of exporting companies. Also, why those companies might hope for a lower "home currency" value, and might lobby their home government to do things that lower the currency's value, which might contribute to the global "races to the bottom" among different countries, to cheapen their currencies, to help exporting companies repay their borrowings. Good food for thought. Thank you again.
More money flowing within reach of greedy hands = more fraud and corruption.
This is why these politicians love big bureaucracies with nice budgets. More cream to skim.
Something like this might work:
http://www.caseyresearch.com/freeman/the-hundreds-thomas-jeffersons-forg...
The USA does the same thing, with all manner of subsidies for "poor people who irresponsibly had more kids than they can afford", paid for (mostly?) with Federal Reserve money-created-out-of-thin-air.
Also, the USA did have a "debt jubilee": it was the Great Bank Bailout of 2008. It was a jubilee whose beneficiaries were the Federal Reserve Member Banks (the 0.1%), and was paid for (completely?) with Federal Reserve money-created-out-of-thin-air.
But YOU CAN'T GET SOMETHING FOR NOTHING unless SOMEONE ELSE IS GETTING NOTHING FOR SOMETHING. The "poor people who irresponsibly had more kids than they can afford" are getting something for nothing. The Federal Reserve Member Banks are getting something for nothing. The people who are getting nothing for something are the working middle class, and the retired working middle class, whose savings are inevitably destroyed by the inflation created when the Federal Reserve floods the currency market with its money-created-out-of-thin-air.
But it hasn't worked in Japan. While you could argue they have had price stability, the percentage of Japanese who could afford to buy anything at the stable prices plummeted. Essentially the same thing as massive inflation. Young Japanese fled the country over the past 20 years leaving behind a weakened work force.
The weakened Yen after the collapse of the Japanese economy in the '90s allowed massive inflows of cash from foreign sales. This helped support the Japanese economy. Once the Yen strengthened, the economy fell apart as foreign sales could no longer cover the cost of increased debt. It also destroyed the Japanese manufacturing base as most of what was built was for export.
Japanese corporations played a shell game of booking all foreign inventory as sold, so they could borrow more debt based on the future revenue that was supposed to materialize. When the yen strengthened the foreign revenue was cut in half, making it impossible to make the debt payments. Many Japanese corporations went under.
With the Yen once again weaker, the foreign revenue steam is once again becoming a viable business strategy. This is why the Japanese government is once again able to print to infinity. As long as corporate bonds or stocks can be bought with foreign revenue created from currency devaluation, it can continue forever.
This is also why there is a rush all over the world to devalue currencies. A strong currency makes it impossible to fund more debt through currency swaps.
How are they going to write off the debt that the Fed owns without writing off the government debt that the Fed doesn't own at the same time?
Lots of the debt is owned by insurance companies and pension funds, (not to mention many foreign entities).
wattafuckinloon! once you have set off on such an absurd course, why bother keeping a balance sheet at all? "OFTWOMINDSGUY is signalling his real schizo nature.
Death of Money...I believe some sci-fi futuristic movies and TV series like Star Trek foretell how money becomes obsolete in the 21st century. Who really needs money anyway? Everybody will pursue whatever life they want, and all material basic necessities will be provided for by governments and technology.
And the government will give me a Tardes. Heck with a Mercedes Benz; it can't take me to see the dinosaurs and the moons of Mars and other cool stuff. (I mean, take me to scientifically investigate, and report, and whatever else might look good on the the application form. :0)
More currency is not needed, better distribution of current wealth desperately is. ANother stupid solution that compounds wealth disparity will lead to revolution.
It sounds like a great idea as it's their monopoly money anyways...only problem is it runs against the NWO meme about manufacturing scarcity and division amonst the masses--if everybody has a basic guaranteed worth, it becomes harder to treat them as worthless.
Opens the Pandoras box for making money obsolete...and if money was obsolete what do we need leaders for?
" it runs against the NWO meme about manufacturing scarcity and division amonst the masses--if everybody has a basic guaranteed worth, it becomes harder to treat them as worthless. "
You have 100% backwards.
How much are minimum wage workers worth? What if everyone was suddenly 'wage minimized'?
Providing money for nothing is exactly what will deepen the division between the haves and have-nots. Everything at or below the GMI will effectively become worthless. It IS class tiering: FEUDALISM.
WHo will ever pay an entry level employee more than what the state will again if it is implemented?
How do you know that people won't be REQUIRED to work ala Trotsky's dream for their little GMI check every month?
-& how do you know that the government won't farm out all those people who are effectively forced to work in order to receive their benefits?
IF the government can force place 'health insurance' ala the ACA to for-PROFIT corporations why would it not logically follow that it can force place sub-contract citizen-workers who have all been 'guaranteed' a job just as they have been 'guarenteed' 'health insurance'?
GMI is about getting checks to people. The MMT 100% employment sceme is about predicating work for those people.
It is pure Trotskyism. Forced labor. Conscription. Slavery. YOU ARE BEING SOLD.
Unlike the ACA you would not be forced to pay with currency; under GMI you would be forced to pay with labor.
Quite the contrary! By SAYING you guarantee an income you prove your "generosity" as King over the serfs! By making the currency itself nearly worthless yet required legal tender - while the Kings get to use other forms of currency and print as much as they desire with impunity .... in actuality the stupid serfs will have nothing, yet hold paper nothings and think they are rich.
Germans wouldn't fall for it again but since Americans have never experienced hyperinflation they have no idea what it will look like.
What is the difference between the 'inflationary' times of the 70's and now? Rather than analyze, the difference is postulated as established fact and then ignored. I would argue that the difference is that the world is swamped with over-investment, which is hugely deflationary. The over-investment is the result of financial repression, the allocation of resources away from consumers and into investment. Printing trillions only makes the problem worse. If you give it investors, you make financial repression even more severe. If you give it to consumers, you may reduce over-investment but now you've potentially created all kinds of other problems including a collapse in the currency -- once you print, it will become the 'easy' answer to every problem up until the currency collapses. The better solution is to reduce financial repression, globally, rather than run through repeated mal-investment bubbles that are 'fixed' by efforts to juice consumption that ultimately fail.
-- duplicate
I'm more interested in where the 0.1% store their pirate booty.
You are surrounded by it fumduk. Who do you think owns all those sky scrapers, stores, hotels, apartment complexes, etc...?
Madagascarrrrrrr?
Instead of bothering everyone with all this paper work, why don't they just sell a special printer at Wal-Mart that let's people print a few hundred a day and be done with it.
What's the difference? All the currency is going to wind up in the same hands anyways.
No it's the first thing they want. That's why we're in this mess. What might be starting to happen now - probably too late - is they are realizing that their insatiable greed caused and is continuing to cause this ongoing economic depression.
With respect to the national debt, I would paraphrase my understanding of several interesting economic thinkers (Mark Blythe, Michael Hudson, Steve Keen -- forgive me if this doesnt do your viewpoints justice):
There is fallacy of composition in believing that our understanding of household debt scales to the national level. Governments are not like households - their debt to themselves does not have to be repaid. While there is a faith/belief/confidence (which is all the system is currently based on anyway) in the social collective which the government is seen to represent/oversee, that confidence can be monetized in the form of government issued currency and its value will stand.
You can understand this by looking at the converse of it. Imagine a government which had gold bars but no faith, people didn't believe in its promise to repay. It could issue genuine, gold-backed currency, but if people did not trust its ability to repay, the fact that they actually do have gold bars and actually would exchange them for the currency would not matter. Even commodity-backed currencies are based on faith.
I just feel that the Austrian narrative is way overblown. We have runaway 'printing' thats powered the world economy for 45 years. You know the only thing wrong with that, IMO? It wasn't the modus operandi -- not the way we created money. It was rather the distribution, with everything going into speculative schemes for the oligarchs to siphon off. The way we put a free-market face on what at heart was a government program, cue the contractors walking away with pallette-loads of cash.
If the same money that was created to be given to oligarchs -- see QE as a great example -- was instead redistributed throughout the economy, as a prop and help to small businesses, people getting educated, the poor and the middle class -- then we'd be living in a frigging golden age! Do you know what a debt-free American middle class, with houses they own and savings in the bank, could do? Starting a company would be 1000 times easier, since we would have created a pro-human situation where you didnt need to produce revenues in 3 months or shut down. We would markets that weren't so ruthlessly efficient -- and this would be a good thing! Market efficiency sucks and its a lie which has been wrong since the time of Ricardo.
I see the fear of socialism and public spending as one of the beliefs that pins up the established order more than any other. Its the same thing as a belief in "national security": a popular prejudice that people favor in much the same way that they favor Austrian/Libertarian economic "discipline". Just like the narrative of "being a man" and/or "serving your country" has caused hundreds of thousands of young American guys to take part in conflicts from Vietnam to Iraq. The narrative of "fiscal discipline" and "serving the economic gods" (my paraphrase) has been used to constrain the investment government is willing to make in its people.
Speaking of those two issues (God what a rant, sorry guys), isnt it hilarious how we build this tremendous, enormous military. Where did the money come from? Largely ex nihilo. Some of it is narco-dollars but most is just blank checks. You can build a tremendous apparatus that keeps the world in check and enthralled to US economic interests for 40 years, but you can't rejuvenate the middle classes? I just dont believe it! OK rant over, sorry.
A gold coin as a gold backed currency requires no faith, only testing to ensure it's really gold.
The top 0.01% get the helicopter money. The bottom 99.99% get sent off to war, or live in tent cities.
Tents? My, aren't we fanshy-schmanshy! Tents are for the nouveau-riche-poor, the regular poor get cardboard blankets.
GMI only "guarantees" one thing: That 100% of said "income" will barely be enough to cover the cost of Cheerios and toilet paper...
Industrial overcapacity is the real problem. Without enough consumers mopping up the products of ever escalating automation and robotic production lines, all new investments will show negative returns. Thus deflationary slumps are the only alternative to an ever increasing guaranteed minimum income for all. As production keeps on growing exponentially, so too by logic does the GMI until finally a Utopia is reached where everyone lives the lives of billionairs as envisioned by the great visionary Buckminster Fuller!
Yay! I was right! What did I win?
oh... an apocalypse?
umm... ok
The author is confused.
No debt write-off is necessary to implement this scheme.
In fact, this is more or less the scheme that Japan has been following for 20 years and the US for about 7.
Since the central bank rebates the interest on monetized bonds to the treasury, it is not necessary to ever write off the debt. It does not increase the state's real outlays in any way. It is the same as if the state had simply printed the money and spent it.
Futher, merely writing off the debt would not extinguish the money that had been created. It would continue to exist as a liability on the central bank's balance sheet, and as an asset in someone's hands (rather quickly, the ".01%" as the author notes)..
As a practical matter, the Cantillon effect would dominate. The immediate recipients would "benefit" the most, followed by by large corporations and banks, where the money would quickly flow as it is spent. From there, it would tend to blow asset bubbles in speculative markets. That is where the inflation shows up (unless the .01% start spending their money on hamburgers or something instead.
Also, it would appear that the author's numbers are off. In order to provide a $1,000 UBI to 300,000,000 people, the central bank would have to print 300,000K *1K *12 = 3.6 Trillion in printing each year.
This would tend to be inflationary for basic consumer staples, as well as blowing big asset bubbles in financial assets that the .01% buy.
And that is (part of) the reason the state deosn't play it that way. The squeaky wheel gets the oil. From the standpoint of the political and economic elite, it makes much more sense to direct the freebies at the populations that are most likely to cause trouble, while continuing to allow the remainder of the population to continue rowing the boat while becoming slowly impoverished.
Never happen, for the same reason Germany won't write off debt. Their own, personal 'morality' won't permit it, even if it is the solution to the problem.
What you have proposed will work. Why Yellen has not embraced it is amazing.
FWIW, Bernanke did not coin the idea of Helicopter money - Milton Friedman coined it in the 1970s but he was merely moderning an idea suggested by Keynes in the 1930s.
The foundation of much of Keynesian Economics is the idea for the Gubmint to hire people to bury jars of money and hire other to dig it up. The money would come from deficit financing (or sales to Fed). In his opinion, since ... "we owed it to ourselves" it made no difference and was thus not an issue.