We've been propping up a false, unsustainable economy for quite some time. With COVID running rampant in the USA and the climate disaster looming, the only way I see getting through this in a...
We've been propping up a false, unsustainable economy for quite some time.
With COVID running rampant in the USA and the climate disaster looming, the only way I see getting through this in a reasonable timeframe is a WW2-style mobilization to organize and fix the nation (world).
Everyone likes to dump on planned economies, but that's kind of what's needed right now. "From each according to their ability to each according to their need" is more relevant than ever. The economy-as-usual needs cut back drastically, brought to sustainable levels to meet needs and contain COVID, and using the remaining labor to start rebuilding sustainable infrastructure.
People also tend to make the jump from concepts around a planned economy to a full-on command economy, despite economic planning being the major means of the WWII economies around the world....
People also tend to make the jump from concepts around a planned economy to a full-on command economy, despite economic planning being the major means of the WWII economies around the world. There's also the "issue" of efficient distribution, but we obviously aren't getting that in our current system anyway, which is a major cause of many societal ills.
If the fed really wanted to see the economy through Covid, they could start making permanent zero-interest loans to all comers, citezen and non-citizen, to fund everyone who feasibly can staying...
If the fed really wanted to see the economy through Covid, they could start making permanent zero-interest loans to all comers, citezen and non-citizen, to fund everyone who feasibly can staying home, and to let businesses pay their rent and other expenses without having to actually try and operate.
For much the same reason the Fed adjusts interest rates, this would kill the US dollar. It would effectively be printing money. Monetary policy is typically the last straw to fix an economy, but...
For much the same reason the Fed adjusts interest rates, this would kill the US dollar. It would effectively be printing money. Monetary policy is typically the last straw to fix an economy, but with the interest rates set as low as they were before COVID, we effectively hamstrung ourselves in the runup to this economic downturn.
I get where you're coming from, and the solution is still the same: Spend money to make money, but the money can from other parts of the government and it'll be mostly okay, unless it's overdone to the point of causing rampant inflation (which would take a lot of extra spending from sources that aren't the Fed).
Yes. They're different processes. The Treasury doesn't typically try to manipulate the value of the US Dollar, while that is the purpose of the Fed. If the Fed just throws money at citizens (I...
Yes. They're different processes. The Treasury doesn't typically try to manipulate the value of the US Dollar, while that is the purpose of the Fed. If the Fed just throws money at citizens (I don't even know how they'd do it), it would basically be zero-interest loans that are used to increase the amount of money in circulation, which would substantially weaken the dollar. Also, they would be loans so they would need to have a solid promise of being paid back to be worth anything.
The Treasury would operate by selling bonds on the money market (selling "debt" to private investors to get money to spend), and transferring the money from investors to taxpayers. If this is done too much, it can affect the Dollar's value, but it would be less than the Fed just throwing cash around willy-nilly.
This far precedes Trump's disastrous handling of COVID. Rates have been on a secular downward trend since the 80's In fact, Trump's blatant political pressure on the Fed to lower rates back in Feb...
This far precedes Trump's disastrous handling of COVID. Rates have been on a secular downward trend since the 80's
In fact, Trump's blatant political pressure on the Fed to lower rates back in Feb might have encouraged them to be more aggressive (with that astounding drop in interest rates early March) at just the right time.
Very much so. It feels like every time there's a crisis the answer is to drop rates, cut taxes (especially for the wealthy), and bail out banks. Maybe the real answer is to do the opposite. The...
Very much so. It feels like every time there's a crisis the answer is to drop rates, cut taxes (especially for the wealthy), and bail out banks.
Maybe the real answer is to do the opposite. The current tactics obviously haven't been working.
There are downsides. Low rates encourage asset bubbles, increase inequality, drive pensions to more risky investment behavior, and risk destabilizing the entire global economy with yet another...
There are downsides.
Low rates encourage asset bubbles, increase inequality, drive pensions to more risky investment behavior, and risk destabilizing the entire global economy with yet another financial crisis.
Plus, to the point of the original article, the fed has little they can do if there is a second wave of economic contraction due to the second wave of COVID.
We've been propping up a false, unsustainable economy for quite some time.
With COVID running rampant in the USA and the climate disaster looming, the only way I see getting through this in a reasonable timeframe is a WW2-style mobilization to organize and fix the nation (world).
Everyone likes to dump on planned economies, but that's kind of what's needed right now. "From each according to their ability to each according to their need" is more relevant than ever. The economy-as-usual needs cut back drastically, brought to sustainable levels to meet needs and contain COVID, and using the remaining labor to start rebuilding sustainable infrastructure.
People also tend to make the jump from concepts around a planned economy to a full-on command economy, despite economic planning being the major means of the WWII economies around the world. There's also the "issue" of efficient distribution, but we obviously aren't getting that in our current system anyway, which is a major cause of many societal ills.
If the fed really wanted to see the economy through Covid, they could start making permanent zero-interest loans to all comers, citezen and non-citizen, to fund everyone who feasibly can staying home, and to let businesses pay their rent and other expenses without having to actually try and operate.
For much the same reason the Fed adjusts interest rates, this would kill the US dollar. It would effectively be printing money. Monetary policy is typically the last straw to fix an economy, but with the interest rates set as low as they were before COVID, we effectively hamstrung ourselves in the runup to this economic downturn.
I get where you're coming from, and the solution is still the same: Spend money to make money, but the money can from other parts of the government and it'll be mostly okay, unless it's overdone to the point of causing rampant inflation (which would take a lot of extra spending from sources that aren't the Fed).
I'm a little confused, are you saying that spending money into existence will have different effects if it's coming from the Fed or the Treasury?
Yes. They're different processes. The Treasury doesn't typically try to manipulate the value of the US Dollar, while that is the purpose of the Fed. If the Fed just throws money at citizens (I don't even know how they'd do it), it would basically be zero-interest loans that are used to increase the amount of money in circulation, which would substantially weaken the dollar. Also, they would be loans so they would need to have a solid promise of being paid back to be worth anything.
The Treasury would operate by selling bonds on the money market (selling "debt" to private investors to get money to spend), and transferring the money from investors to taxpayers. If this is done too much, it can affect the Dollar's value, but it would be less than the Fed just throwing cash around willy-nilly.
This far precedes Trump's disastrous handling of COVID. Rates have been on a secular downward trend since the 80's
In fact, Trump's blatant political pressure on the Fed to lower rates back in Feb might have encouraged them to be more aggressive (with that astounding drop in interest rates early March) at just the right time.
Very much so. It feels like every time there's a crisis the answer is to drop rates, cut taxes (especially for the wealthy), and bail out banks.
Maybe the real answer is to do the opposite. The current tactics obviously haven't been working.
While I agree we shouldn't bail out banks or cut taxes, low interest rates are proven to increase economic activity as money becomes "cheaper"
There are downsides.
Low rates encourage asset bubbles, increase inequality, drive pensions to more risky investment behavior, and risk destabilizing the entire global economy with yet another financial crisis.
Plus, to the point of the original article, the fed has little they can do if there is a second wave of economic contraction due to the second wave of COVID.
This is correct. Thank you for this information.