But the thing is, we are currently recovering from a major recession. The Fed’s QE was employed to prevent deflation, which would’ve been a much worse scenario than inflation.
No, you get one puppy the first month, two puppies the second month, four puppies the third month…
You’ll soon be a puppy millionaire.
LinusK was correct, btw. The Fed routinely conducts open market operations by simply writing a check (which creates a corresponding liability on their books, but really who cares?) Cite, or any decent text on macroeconomics.
Well, there’s no necessary need to require the Fed to hold the bonds indefinitely (though Hellestal may demur on this point by emphasizing its effect on expectations). But yeah, $20,000 would work as well. The difference being is that the Terr proposal would last at most 2-3 months and runs the risk of overshoot.
During times of recession, extra demand tends to feed into output, more so than prices. During normal times, a large program like this will tend to feed more into price increases or inflation. At any rate, with core inflation less than 1.5% now (IIRC), we could use somewhat higher inflation. For one thing, a strong negative shock could put us in deflationary territory, which is bad. For another, inflation in the 2-4% zone gives greater scope for wage adjustment: workers really don’t like having their wages cut and a wage freeze permits this to happen with less drama. More details here.
There are some operational issues with the LinusK plan. (Might quarterly payments be more straightforward? Wouldn’t direct deposit be better? Are his inflation targets too high? Might he target a price path instead?) But in general the plan can be traced back to a speech Bernanke made in the early 2000s, and Milton Friedman before that. It has solid economic grounding.
It’s interesting reading Bernanke’s speech. Sometimes he seems to clearly understand the truth about money (“we have the technology, called the printing press…”). Other times he veers off into economics doublethink, like when he blames Japanese deflation on an “overhang” of government debt. (As if it were possible for Japan to have both “too much debt”, and deflation.) I wonder if he’s covering he tracks. It would make more sense than the other possibility: that he understands the nature of money, and doesn’t.
I thought his reference to buying foreign government bonds was interesting, too. It’s my understanding that that practice - “printing” money to buy foreign bonds - is how certain countries (China) are able to maintain their trade surpluses.
I almost think, sometimes (and I’m trying not to be conspiratorial) that there’s a concerted effort to mislead the public when it comes to money and economics. Who was it who said, that in economics, the study of money is used to disguise truth?
Wait a minute – around here, a studio apartment is a thousand dollars a month. Or not a whole lot less.
Certainly not enough less to adequately provide for water bills, electricity & gas bills, and minimally nourishing food. Most of the people I know who survive on a disability payment ($850 - $900) also have a rent subsidy. Those who don’t, live outdoors.
The program wouldn’t reduce disability payments or any other assistance anyone was getting. It would put a floor on income, not a ceiling.
Having said that, if all you were getting was $1000 a month, you probably couldn’t live where you live, at least not without a roommate.
That’s not a meaningful objection. The obvious solution is to move to an area with low cost of living and/or live with roommates. A decade ago my wife and I lived quite comfortably on less than two thousand dollars per month, and we didn’t have to live in a doublewide or eat mac&cheese to do it.
Agreed, so your saying then when I was working and pulling in close to 100k a year I would be eligible for the $1000 a month. However since I broke my back at work and am now on disability and receiving Social Security benefits (which, like all of us I paid for during my working life) I would receive nothing? I guess in your plan the rich really do get richer.
Yes: when you were working, and getting no benefits, you’d get an extra 1k. When you stopped working, and started getting other benefits (disability and Social Security) the payments would be reduced by the amount of other benefits.
In no case could you get less than you’re getting now: you could only get more (if the other benefits were less than $1000), or the same (if they were more).
The idea is to stimulate the demand for work (create more jobs) while also give people an incentive to work (to fill the additional job openings).