Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive.
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I previously have written about Modern Monetary Theory’s JG (Jobs Guarantee)
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
I won’t repeat the many, many reasons why I believe JG to be a bad idea — or bad ideas, as every time I discuss JG with an adherent, I am treated to a different version, beginning with the fundamental question, “Who is the employer, the government or the private sector?” — and that is but one of my complaints.
I also feel that lack of money, not lack of jobs, is the key problem. There are millions of jobs available. Look in your local newspaper or at such sites as Monster.com, and you’ll see thousands upon thousands of jobs being advertised. Private industry spends millions to find people to fill those jobs.
But they are the wrong jobs from the standpoint of pay, geography, skills needed, time, etc., etc. — and those are exactly the kinds of jobs JG would provide.
No, I don’t think having the government compete with private employment agencies, newspapers and online job searches will benefit the economy.
Given the choice of JG vs GI (Guaranteed Income), I’d lean toward GI. It’s simpler, accomplishes the primary goal of providing money to people who need money, and we already do something in the same genre: Social Security.
Yet GI also has a fundamental problem. If, for instance, everyone were guaranteed an annual income of, say, $10K, who would accept a full-time job paying $12K (assuming GI is a net income guarantee)? In essence, that employee would be working full time for $2K.
So the minimum wage functionally (though not legally) would be at least $20K annually, which would punish many employers, while not adding much to the economy’s money supply.
I suggest the problem(s) facing our economy are two-fold:
1. The economy has too little money.
2. The “not-rich People” (the 99%) have too little money.
So I propose we simply give a monthly Economic Bonus (EB) to every man, woman and child in America, regardless of any other income or wealth they may have. You would receive the same EB as I receive and as Bill Gates receives.
No need to go through the convoluted steps our gigantic tax code demands, to determine what is income, and what kind of income it is, and when you received it and how you received it, etc., etc. If you live in America, and you’re alive, you receive your monthly EB.
The economy benefits by receiving dollars and the 99% also benefit by receiving dollars. The rich benefit, too, but that’s good. It’s just more dollars for the economy, and it costs no one anything.
How much should the EB be? My early thought is $1K per month for everyone above the age of 21, and $500 per month for everyone below that age. You may have a different amount in mind.
The government already has done something similar, though it unnecessarily took into consideration income. In a weak attempt to moderate the Great Recession, the government mailed every taxpayer a check for as much as $500. (Had they sent $5,000 instead, the recession would have ended, but that’s another issue.)
I know that sending money to “lazy” people who don’t work, goes against our Puritan grain, but we should get over that notion. There are many reasons people don’t have enough money, and laziness isn’t anywhere near the top of the list.
Bottom line: Send every man, woman and child in America an Economic Bonus, and we will have solved the vast majority of economic problems facing America.
Or is that solution too easy for those who believe the medicine must be bitter, to be effective?
Rodger Malcolm Mitchell
Monetary Sovereignty
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The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
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THE RECESSION CLOCK
As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise. Federal deficit growth is absolutely, positively necessary for economic growth. Period.
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
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Hi Rodger,
A big thing that would be helpful in educating people about monetary sovereignty/MMT and its approach to macroeconomics (and its accompanying rationale for effectively managing government finances and offering solutions) is to explain why this approach is NOT considered socialism or communism.This is a major misconception from my impression when a try to explain it to others. Uneducated people tend to think that any kind of government involvement is inherently leading to socialism which it is not.
You may have already done this explanation, but I just did not find it on your blog.
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This is a fantastic thread! BTW, thanks for repro-ing the PEW poll results. Very informative.
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Hi Rodger,
What do you think of Obama’s proposed “retirement savings bond” (MyRA)?
http://www.usatoday.com/story/news/2014/01/28/obama-state-of-the-union-myra-savings-plan/4992743/
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It’s a “forced” savings, which is good. It’s safe, as far as actual dollars go, which also is good.
But the interest is pegged lower than inflation, which is awful.
Not sure what the advantage is for the average worker.
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The current inflation rate is 1.5 %:
http://www.usinflationcalculator.com/inflation/current-inflation-rates/
The current interest rate on the G-Fund of the federal TSP is 2.5%.
https://www.tsp.gov/planningtools/loan/loan.shtml
What if the federal government offered the G-Fund to all citizens? How about the entire TSP plan as a national retirement plan in addition to social security?
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Or 1.89%, depending on the date: (https://www.tsp.gov/investmentfunds/monthly/monthlyReturns.shtml)
In the past 10 years, inflation has ranged from 4% to effectively 0%, depending on who’s counting. http://research.stlouisfed.org/fredgraph.png?g=rtJ
But, we’re talking about pennies, even in the unlikely event that inflation is lower than the G-fund for the next 10 years. A net return of 1% is OK for a multi-billion dollar bank, but not for the average saver.
How about simply cutting taxes ala #7 in the “Nine Steps to Prosperity.” Why all the convoluted solutions to a convoluted tax system. They write dopey tax laws, then come up with dopey solutions to those tax laws.
In essence, you asked me which Rube Goldberg machine I prefer.
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@Rodger: Where is the factual proof that federal taxes do not fund the federal government? For example, where is it codified in the federal register as to what happens to the money collected by the IRS? My tax check that I send in with my federal return is made payable to the “U.S. Treasury” – Where is it in the regulations (or anywhere else) that explicitly states that this money is just “deleted” from my checking account, and not actually transferred to some “federal government” account to fund federal government operations? If this is indeed true, then federal income taxes and the IRS should be abolished – what is the point? Aren’t there more effect ways to drain dollars from the economy and manage the dollar supply?
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When you pay state and local taxes, the dollars remain part of the U.S. money supply. They are in the checking and savings accounts at privately owned banks used by your local government and are part of M2.
When you pay federal taxes, the dollars no longer are in the U.S. money supply, and are no long part of any money measure. While the Treasury keeps track of credits and debits, the Treasury holds no actual dollars (otherwise those big sheets of printed “dollars” also would be counted as money.
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It seems to me that federal income taxes and the federal “debt” are the biggest frauds in history – This stuff is unbelievable. The American people are being massively deceived.
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The Fair Tax people, bless their little hearts, have many things right. They propose to eliminate virtually all federal taxes, including FICA, shut down the IRS, repeal the 16th amendment, and pay every American citizen a “prebate” (way too small unfortunately). The problem is that they think there must be revenue neutrality – that is – replacing lost income tax “revenue” with an equivalent amount of new sales tax “revenue” which amounts to a 23% national sales tax. If they would just adjust that 23% sales tax down to 0% then they might be onto something.
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“Yet GI also has a fundamental problem. If, for instance, everyone were guaranteed an annual income of, say, $10K, who would accept a full-time job paying $12K (assuming GI is a net income guarantee)? In essence, that employee would be working full time for $2K.
So the minimum wage functionally (though not legally) would be at least $20K annually, which would punish many employers, while not adding much to the economy’s money supply.”
Could you explain these two paragraphs. Are they even related? Thanks.
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Imagine if you do no work at all, you will receive $10K, but if you work for a full year, you will receive $12K. That year’s worth of work will have netted you only $2K extra. You will have worked a year to net $2K.
Would you work a full year to obtain extra $2K? Probably not.
So how much would an employer need to pay you, for you to give up your free $10K in exchange for his salary. My guess was: At least $20K, in which your year’s labor would have netted you an extra $10K.
So a Guaranteed Income of $10K probably would translate into a functional minimum wage of about $20K. Almost no one would accept a job for less.
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…and $20K, on a broad average, would equate to a living wage, if I remember the investigations I’ve recently done.
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I was thinking of a basic survival (i.e., unconditional) income of say $8K for an adult. Half of that, lets say, for minors (under age 18) living in a household with an adult. Welfare programs such as food stamps, housing, energy, phone and transportation subsidies, Medicaid, etc., would remain in place in the beginning and be phased out or tweaked as new programs such as universal medical coverage, free education, etc., kicked in and as overall economic conditions and job availability changed and improved.
Today an adult on Supplemental Security Income (SSI) (administered by the Social Security Administration) for the disabled poor and the over 65 poor gets about $8K per annum (tax-free) plus a variety of the above named welfare freebies so nothing would change in that respect BUT…
EVERYBODY (including the satanically-inspired Bill Gates and such as Mayor Bloomberg) would be FREE… FREE at last… to work or not to work as many hours and as many jobs as they desired to supplement their basic survival income. Many would work, others would make music, some would kick back and smoke weed, others would invent, others would make love, others would not be able to work or would choose not to work, others would continue spewing out their lies and would continue their thieving ways and would continue running for public office based on those lies and that thievery…
Is not FREEDOM the goal? The end of WAGE, DEBT and WELFARE slavery? We would all be FREE. No more scams and BS promises. No more governmental bureaucratic abuse of the poor. Freedom would start at the BOTTOM, at the REAL grass roots. Where else? All the welfare bums and welfare queens would be FREE at last.
Is not the end of POVERTY the goal? Poverty would end with the stroke of a pen. Ah, say the skeptics, but who would work to produce the goods and services that we all want and need? The answer is simple and straight forward. Healthy people want to work and want to create. Those who don’t have a psychological or a physical problem. We’ll send them to rehab. And we will teach the children the value and dignity of human labor.
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@luismagno2010, nice to hear your thoughts. Consider, though, the meaning of a living income/wage. It’s the amount required to keep people out of poverty. The amount to pay for physical and security needs. Right now that figure, which varies on geographical area and other circumstances, is, on a broad average, about $20K-$25K per year (~ $10-$12 per hour). I do agree that (economic) FREEDOM is the goal, but you’ll have to raise your sights. Remember, according to MS theories, the more money in circulation, the better the economy.
Here’s a general math question for anyone. To put a guaranteed living income in perspective, what would it “cost” to pay every household an average of $20K per year, compared to the current $75B per month of QE?
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Scrap the Welfare State and Give People Free Money
A guaranteed income would reduce the humiliations of the current welfare system while promoting individual responsibility.
Matthew Feeney | November 26, 2013
http://reason.com/archives/2013/11/26/scrap-the-welfare-state-give-people-free
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Unconditional Basic income, (Switzerland is proposing $2800 a Month).
The amount should be enough to live in dignity without a Job.
Any additional Income would be additional to Basic Income.
Employers would need to offer a decent wage to lure workers.
This would likely replace all safety net programs including Social security.
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Yes, Unconditional Basic Income is being proposed — in euro countries, of all places!
Sadly, euro countries, being monetarily non-sovereign, can’t afford it, though Switzerland, being Monetarily Sovereign.
The key word is “Unconditional,” which hopefully in execution, will eliminate any form of a means or income test.
See: http://www.basicincome.org/bien/aboutbasicincome.html
Actually, employers would not have to offer much more, if anything, than they now offer. All salaries would be on top of the Basic Income.
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Thanks a good site
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I think it should be federal law that unemployment insurance pay a minimum of $500 per week.
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This solution will cause more issues than we have today. Not only will it punish businesses, it will not help anyone. Not one bit.
How good would it do if you give everyone money – only to see the prices they pay go up by at least the same amount. At the same time, smaller businesses will find it harder to make the changes and weather input price increases. Many smaller businesses will disappear as a result.
You want jobs, there are 2 ways to get them back (but nobody wants them). 1) gold standard 2) remove minimum wage
I am actually writing a post which will provide the answers and solutions to many of the issues around the lack of jobs.
http://sucesofinanciero.blogspot.com/
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No need for inflation. The Fed can control inflation with interest rate control, just as it now controls inflation. Raising interest rates increases the demand for money, which fights inflation. The Fed has proved that.
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Roger,
The Fed has proved that it has been causing inflation for the last 40 years. The US dollar has lost 82% of purchasing power since full fractional reserve was introduced in 1971.
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Most economists believe a small amount of inflation benefits the economy and that deflation injures the economy.
To maintain a small amount amount of inflation, and to prevent deflation, the Fed’s target rate is 2.5% – 3%. Over the past half century, we’ve been averaging about 3%, and recently it’s been more like 1.5%
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Of COURSE a small amount of inflation is necessary.
When population & econ activity both evolve (as they do), you need a larger amount of currency every month, simply to maintain adequate liquidity for the new electorate in the new context.
Then it’s a senseless struggle between grandparents hoarding fiat for themselves vs providing options for the grandchildren.
ps: the grandchildren ALWAYS win; otherwise we wouldn’t still be here
http://econintersect.com/b2evolution/blog2.php/2012/12/16/redefining-fiscal-policy-outcomes-so-that-our-definition-of-successful-investing-isn-t-depriving-our-grandchildren-of-options
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THANK YOU, MR. ERICKSON. I read the link you posted, and, though I haven’t translated what you’ve written into lay-speak, it seems to me to be tremendously appropriate. I’m very attracted to models that seek unifying principles among disciplines, and your analysis seems transcending and practical. I’ll study it to understand better.
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Roger,
They sure won’t win because of those receiving GI (if implemented – which it won’t anyway), that’s for sure.
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I am assuming a monetarily sovereign government with no or tightly controlled fractional reserve private banking. I have a problem with the idea of controlling inflation and deflation by manipulating the interest rate.
It seems to me that the cure that you are proposing is the cause of the inflation or deflation in the first place. Inflation and deflation can be controlled by the measured creation of public money directed to productive purposes.
Inflation and deflation arise from the wanton creation of private money for speculative and non-productive purposes. But a monetarily sovereign government would not allow that to occur in the first place.
What am I missing?
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I agree that the way to create jobs is to eliminate the minimum wage. In fact, why not lower wages to zero? Plantantion slaves in the antebellum South had no wages, and no unemployment. They lived in paradise.
And why not lower monetary exchanges to zero? Who needs money anyway? Of course, no one will be able to buy anything, which means that all jobs will end, but at least the consumer economy will take off.
Eliminating the minimum wage would cause the wealth gap to grow wider than ever, since the rich owners of capital do not depend on wages for their income.
That’s the spirit!
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I appreciate the irony!
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Oh puleeze,
Do you really think we will go back to having slaves? What folks don’t understand is that wages are relative. I would rather make $1.50 an hour and be able to put 20% down on a house, have at minimum a family car paid, clothe the family, feed the family, and save a little. Than making $500 an hour and not be able to afford half of that.
I thought money was a scorecard? Why doesn’t that logic apply here?
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@sucesofinanciero, IMO, we already have slaves; wage slaves and debt slaves. In general, most people work to live; to provide the “essentials” you mention above, sans house, family car, clothes, and savings. A recent, accredited study shows that 70% of employed people are dissatisfied with their current jobs. Wage slaves.
Again, IMO, we are at the point where it’s possible to create the scenario wherein people can live to work, instead of working to live; to spend their time doing something that’s meaningful to them, instead of spending their time in support of unsustainable continued growth.
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Jeff,
It amazes me how you believe that we have wage slaves (I assume you mean they don’t make enough to support themselves), yet you think the solution is giving them a token.
I guess everyone here believes on demand side economics, there must be “more” money for there to be demand. I think this thinking is completely flawed because suppliers produce for real incomes, not nominal incomes. By increasing the money supply, you are increasing nominal incomes – not real incomes. In fact, you are confiscating (or stealing it if you prefer) it.
If the government implements programs such as GI, you can rest assured that real incomes will plummet for businesses (businesses pay to produce goods and services while the folks that will receive GI will not), and the supply side of the equation will also plummet. Not only will not not resolve the issue of inequality, you will make it worst. Businesses are neither stupid nor able to take losses consecutively.
The proof is in our faces, yet we refuse to acknowledge it.
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Wage slaves are those who are forced to work a job that is overall meaningless to them in order to provide their physical and security needs: the reported 70% of workers who are disengaged from their jobs (http://www.forbes.com/sites/larrymyler/2013/09/02/why-are-70-of-employees-disengaged-and-what-can-you-do-about-it/).
To have to accept employment that’s not fulfilling in order to meet your survival needs, and not be able to do what inspires you in life is my definition of wage slavery. It is no longer necessary to do this in today’s world of abundance. Thought experiment: why do people usually want to retire? Could it be because they have the economic freedom to do what they really want to do?
Could I politely ask where you got the idea of “giving them a token”? I suggest giving “them” (all of us) a guaranteed living income, or a Basic Income Guarantee.
Still waiting for your analysis of how ending slavery “destroyed” the businesses of slave owners. Waiting…waiting…
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“Wage slaves are those who are [forced] to work a job that is overall [meaningless] to them in order to provide their [physical and security needs]: the reported 70% of workers who are disengaged from their jobs”
I highlighted the words that should almost made me cry. First off, all jobs are right to work, meaning the employer can hire you and fire you at will. You can also quit at will. Nobody is forcing anyone to work.
Second of all, it’s not the employee that has to find the job “meaningful”, there is a need, a business wants to fill that need and hires people to fulfill that need. I bet that the output of the job is meaningful, especially when the same employee is receiving the good or service. What you are proposing is that we ban all “meaningless” jobs, only to see you complain how “the private industry is not making it happen”.
Thirdly, I bet that by “physical and security needs”, you are not referring to physical safety from crimes and are referring to “free” stuff.
Jeff,
You want someone to produce some good and service, so that the government can give you money, so that you don’t have to work to pay for that good and service. Are you proposing that we now have slaves to ensure you fulfill your dream?
You either wants slaves or you dont.
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@Bapoy, @sucesofinanciero, or whomever you are today, continuing this conversation is not a productive use of time. It’s clear that any points of view outside your own philosophies, apparently aligned with Ayn Rand’s Objectivism and the 19th century Austrian School of economics, are beyond your consideration. You are a “true believer” and incapable of considering the need for monetary reform.
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@sucesofinanciero, I interpret your ideas to be locked in neo-Malthusian thinking of scarcity, more appropriate to 18th and 19th century thinking and reality than the new economic paradigm that’s exploding in the 21st century. Consequently, I don’t think you have any answers or solutions to offer. Sorry to be rude, but I encourage you to expand your perspectives.
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PS – when you say, “Not only will it punish businesses…”, I understand that to mean it will deprive some businesses of wage slaves. Anyone who works for less than a living wage is, by definition, a wage slave. Again, the analogy…the Emancipation Proclamation deprived slave owners (businesses) of unpaid labor.
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Wages in nominal terms mean nothing. Wages in real terms is what is important. As I said on my response to Roger, I would rather make $1.50 an hour if that bought me more than $500 an hour. Wouldn’t you?
Those in the 18th – 19th century thinking are those that see mere digits as goods and services. I see goods and services – which I can purchase using a currency. What’s more important to you – what you get for your money or the money itself?
Sorry if this comes out rude, it’s not meant to.
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The “IF” you propose is a false argument. Your relativism – $1.50 vs $500 per hour – isn’t borne out by current reality.
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Also,
A “living wage” varies by individual, city, state, region. Maybe someone can live on $600 a month, but many can’t. So what’s a living wage?
We have people living in poverty who would be extremely happy to take a job at any rate, irrespective of what you want to call it. I suggest that this idea of giving them “money” will allow them to buy exactly the same thing they are buying today – and hence will leave them in the same situation, in poverty. Some can’t see the forest from the trees.
Would removing the minimum wage not allow competitors to come back into the market (since labor costs would plummet), with many people willing to take up the job. Would that not allow these folks to put food on the table while at the same time, the same folks will be creating goods and services which would benefit society as a whole.
I get confused by the socialist arguments – some days it’s a social contract, other days it’s not. Yet, today you have folks working extremely hard to survive while others (healthy) are just waiting for the next government check. Does that not sound like a one way street? Where is the social part in that – socialists?
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You are correct that, as I said, living wage varies by geographic area, among other factors.
“So what’s a living wage?” (ps – I’d prefer to talk about living income)
It’s self-defining. It’s that amount that provides for the physical and security needs of people, and thus allows them to live. Without these lower level needs being met, people’s lives are at unnecessary risk.
Here’s one way to determine a living wage with relative ease: http://livingwage.mit.edu/
“We have people living in poverty who would be extremely happy to take a job at any rate…”
We have people living in poverty who are already working, sometimes more than one job. This is because of depressed wages/income.
“Would removing the minimum wage…”, etc.
One way that minimum wages could be dispensed with is by providing a living income for everyone. Short of that, removing minimum wages would, as you say, cause labor costs to plummet even further, increasing poverty even more. To what advantage are more goods and services when people can’t afford to buy them? And would you share your thoughts re: my Emancipation/slavery analogy above?
“… socialist arguments…”. Capitalism, socialism, communism: all terms from the past, and becoming more and more irrelevant as a new monetary paradigm is developed that reflects abundance instead of scarcity: a monetary policy that serves We, the People, vis-a-vis the financial aristocracy, in the 21st Century and into the future. GOLD STANDARD? REALLY? So, so retro.
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“To what advantage is more goods and services if people can’t buy them?” Jeff..
I guess you have not heard of supply and demand? If you have, than you would know that more goods and services means lower prices – for everyone.
You ask how good is it that we have more goods and services if people don’t have the money to buy them with? Well, how good is “more money” if you don’t have anything to buy with it?
Welfare benefits are up 200% in the last 10 years – why hasn’t that helped the poor? Here is a hint: More money will not help the poor, they need more stuff produced first. You should keep an eye in Venezuela, a really good example of what happens when you try to give everyone “free” things and control the market. I’m sure Maduro is having a really good time – till he lasts.
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@sucesofinanciero, yes, I have heard of supply and demand, and since I’m not an economist or a student of the financial arts, I’m still not sure which drives which. If there’s limited supply, costs go up, right, and those on limited incomes are disadvantaged. What if there’s an abundance of money? Wouldn’t the demand for goods and services go up?
Oh, and still waiting for your opinion on how going back to the gold standard is going to help us.
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PS – @sucesofinanciero, I have been taking in interest in what’s going on in Venezuela, and, apparently, there are significant problems with their economy. In part, I understand, by collapsing demand for their oil, with much of it committed to China to repay loans; another significant amount of oil subsidized to Cuba and their own populace. Reading between the lines, I also suspect that, being pariahs of International Banking, there may be some forces that we are not aware of. Wouldn’t be the first time the World Bank and IMF tried to apply the Washington Solution. But I’ll stay tuned.
In the meantime, does anyone know if Venezuela is monetarily sovereign?
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Jeff,
Gold does a few things that fiat/fractional reserve lacks, and it’s not that’s impossible to print. On a gold standard, the amount of credit that an economy can support is very low, since every credit is a claim on a tangible asset. Government bonds are not backed by tangible wealth,and hence are hard to sell. This meanings that the government or the private sector cannot easily issue credit and confiscate wealth via inflation. This means that all the wealth created stays where it should, with the businesses and the laborers.
Another thing that gold does, the most important, is that debt remains minimal between nations – because gold will flow out of the nations with higher deficits, resulting in a reduction of the money supply, decline in domestic prices, and an increase in competitiveness – the opposite would be true for countries with a surplus. It’s a self correcting mechanism – meaning that all jobs could not go to China, or India.
Because of the limited supply, a gold standard is deflationary. 99% of the economists out there are Keynesians and will immediately discard this, stating that deflation is quote bad unquote. I still haven’t found one that could explain how lower prices are “bad” for me or anyone else. I challenge you to find one single economist that can logically explain why deflation is bad.
So again, money stays with those that produce and jobs stay home. I think that solves alot of the issues we have today.
Keep in mind that the US was NOT on a gold standard after 1913, it was on a gold/fractional reserve standard.
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Venezuela has 100% complete control of the Bolivar – it’s a monetary sovereign as per Roger’s definition.
1) collapse in oil demand: OPEC prices have remained at around $105 per barrel since August of 2013. World demand is up over 1% year over year. No, it’s not collapse in demand.
2) Why did Venezuela, a monetary sovereign, get a loan from China? Even if their monetary sovereignty couldn’t save them, why not just repay using Bolivars? I’m sure China would be thrilled and probably won’t bomb them (aren’t they communists buddies after all?). Also, if it was a loan – it means Venezuela received the funds before having to pay them – where did the funds go?
3) Washing solution: by that token, why not just blame everything on your own government – while at the same time asking them to give us handouts. Which one is it – is our government good or bad? It’s Venezuela’s issue if they want to continue down the path of self destruction – just to proof (actually disproof is more like it) that communism works. Bunch of morons.
Keep an eye on Venezuela for a sneak peak at what monetary sovereignty can do for us.
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The US could not handle a “lower prices” economy. For example, at the end of the year, the best workers would see their wages drop 5% and the less valuable workers would see their wages drop 10%. In theory this would be ok as long as prices dropped by at least 5-10%, but in practice it would be a mess. You can not have consistently dropping prices without consistently dropping wages because total spending equals total income.
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Ian,
You are making a huge mistake by thinking in nominal terms. Say nominal wages did drop – so what? If real wages dropped, than I would call that an issue, otherwise – fine by me. As I said, I would rather make 25k a year being able to supply for my family, than making 50k and not being able to.
In the gold standard, productivity would increase more than today – since the producers and laborers would keep the purchasing power. How’s that for an incentive?
The government should increase taxes as the population deems required – I don’t have an issue with taxes. Taxes are the ethical way of charging people for the services the government produces – inflating the money supply is theft and it’s the way it’s done today. It’s another tax, the symptoms are lower purchasing power for businesses and laborers, and all the complains we hear about poverty. And before anyone comes blasting the “but there is no inflation even with the fed printing” line, there is no inflation today because the inflation already happened. The debt/credit bubble popped and the housing crash destroyed a chunk of that debt (money), hence we are not seeing inflation. Credit acts as money, but is easily defaulted on unlike giving people money – which does not.
The government is playing hudiny on the MMT and MS folks and they are eating it up. Austrian know the truth.
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“In the gold standard, productivity would increase more than today . . . ”
Which gold standard? The one we were on during the Great Depression? Or the one we were on when the government came close to not being able to pay its bills, during the Nixon administration?
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Roger,
Please read my comment. I stated “Keep in mind that the US was NOT on a gold standard after 1913, it was on a gold/fractional reserve standard.”
The US was NOT on a gold standard during the great depression – in fact, what led to the great depression was the Fed’s attempt to forestall a recession and the inflow of gold from Britain in 1927.
There is no way to stop recessions – those who have attempted have created bigger bubbles – as has our government and Fed today. We are close to another slowdown – thanks the Fed and the government for that.
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Regards the Nixon issue… was it gold’s fault that the US issued debt on top of the same gold (fraud) to pay for needless wars and social spending?
No sir,
It was fractional reserve lending which allow the Fed to create the credit out of thin air, hand it over to the government – and devalue the people’s purchasing power.
How can anyone pay debts after pledging the same gold over and over and over and over.
Anyone not seeing the issue with fractional reserve and deficit spending – has their eyes closed.
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Suces…thanks for providing opposite views to add to the discussion. You have a good blog. You assume that a basic income will cause inflation, but the key driver of inflation is wage inflation. This should be self evident, since the largest cost of production is labor, either by a direct employee or the labor needed to produce the part. It will be hard to generate wage inflation in 2014 with high unemployment and technological advances. If the basic income were high enough, since total income = total spending, the increase inspending would transfer to a rise in wages. I don’t think $500 per person per month is enough to cause significant wage inflation. Let’s start off with that for a year. The basic income can be adjusted after a year.
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Actually, the key driver of inflation, for at least the past 56 years, has been oil prices: See: https://mythfighter.com/2010/04/06/more-thoughts-on-inflation/
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EBonus =electronic debit card/account. The prescribed value of the card (or any electronic financial transaction) would based on instantaneous market tendencies. In the not too distant future, real time trans financial data will calculate the correct supply/demand relationships resulting in actual market price(s) including any ‘necessary’ inflation , which will be reflected in the price you pay for goods and services at point of sale. This of course will benefit both suppliers, sellers and consumers. Stop living in the dark ages.
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Steve;
There was a time when I thought it was a good idea for a retailer to determine the price he wished to sell, but I have decided to “stop living in the dark ages,” as you suggest.
But you have opened my eyes. I see it’s much better to go to the store for a gallon of milk and have my credit card analyze the stock market and the CPI (by some method) and determine for the retailer and for me, what I should pay for that milk.
(I hope it decides the price is so low, that retailer will lose money. It’s the benefit of advancing into the “light ages.”)
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We might one day get a basic income (or guaranteed income) if the public applies enough pressure.
Here’s why…
Since the Big Lie is the source of the wealth gap, the rich will do anything to protect the Big Lie, even if it means promoting a world war, promoting world peace, or letting average people have a basic income. Whatever it takes. As long as the rich can maintain the Big Lie, the wealth gap will widen. Hence the rich will make any superficial concession necessary, since it is no concession at all.
This is why the rich can co-opt any social movement. For the rich, nothing matters except the Big Lie, which they maintain at all costs. They are endlessly flexible about everything except the Big Lie, which they are absolutely rigid about, since everything depends on the Lie.
Thus, with enough pressure, the rich would allow a basic income, as long as the masses continued to believe the Big Lie that federal taxes pay for the basic income.
On a more general level, all societies with extreme inequality are based on some Big Lie. Only idiots believe the Lie, yet each idiot considers the believers of all other Big Lies to be idiots.
For example, many past historical societies maintained the Big Lie that their kings ruled by “divine right.” As long as everyone believed this Lie, the king remained in power. All his concessions were merely symbolic, temporary, and superficial, after which the power structures gravitated back into place.
Today, average Americans ridicule this Big Lie (the “divine right of kings”) yet they revere the Big Lie about federal finances. Americans are as stupid as all peoples that came before, yet they consider themselves uniquely brilliant, as did all peoples that came before.
Where there is a Big Lie, there is inequality, and vice-versa. Indeed, the Big Lie and inequality are mutually dependent. They sustain each other. Spanish conquistadores maintained the Big Lie that Native Americans needed to be “saved” (i.e. slaughtered). Many white people long maintained a Big Lie that black people were inferior, in order to maintain the inequality of slavery. In Muslim countries, inequality is maintained by a Big Lie that involves supernatural religion. In Europe the Big Lie is that the euro must be kept at all costs. All Big Lies cause mass suffering and inequality.
Given this, you can instantly tell the general IQ level of any society. If they have equality, then they are intelligent. On the other hnd, if they have great poverty and inequality, then most of them worship some Big Lie that you can expose with a few minutes’ analysis. The Big Lie (whatever it happens to be) causes mass suffering, yet most people would rather die than stop believing it.
By the way, that basic income web page promotes the Anglo-American Big Lie that the federal government needs tax revenue…
“A basic income needs to be funded….The comparatively rich would need to pay both for their own basic income and for much of the basic income of the comparatively poor. This would clearly hold if the funding were through a progressive income tax, but would also hold under a flat tax or even a regressive consumption tax…The relatively rich should contribute more to its funding than the relatively poor.”
Sigh.
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@ quatloosx
I agree with the overall intent behind your comment but I have a problem with your history and with some of your terminology. There are ANGLO-SAXON big lies promoted within the Anglosphere (Great Britain, the USA, Canada, Australia & New Zealand). The rest of the world scoffs at such ethnoracially supremacist and arrogant nonsense.
Moreover, the use of racist terminology like “white people” reveals a false understanding of what a human being is. Identifying people by the color of their skin is racist and dehumanizing but very “American”, i.e., very Anglo-Saxon American.
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Sorry you don’t like Americans, and you think I’m ANGLO-SAXON, which you also don’t like. You must be a racist to harbor those feelings. Why do you dislike people based on their nationality and ethnicity?
So, now you tell me “white people” is a racist term? I can’t keep up with the latest fad.
People used to be “colored,” but that became racist, so they became “Negro,” but that became racist, so they became “black.”
But “black” became racist so they became African-American (despite the fact that either all people originated in Africa, or many colored, black, Negro, African Americans never set foot in Africa — depending on how far back you go.)
Now “white” is racist, and I assume “Caucasian” also is racist, so today people are “ANGLO-SAXON” (in all-caps, of course). I cannot imagine how you would know any individual is “ANGLO-SAXON,” since that term very specifically refers to certain German tribes (Sorry if “German” is racist).
Henceforth, based on my heritage, I wish to be called “African-European- Asian-Hebrew-American,” and if you call me anything else, you’re racist!
And please try to rid yourself of your racist bigotry toward ANGLO-SAXON Americans.
But wait, isn’t calling someone “racist” a form of racism? Hmmm . . .
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The issue is not racism or “white people,” but group-think, and the way that entire groups (in all races) operate according to Big Lies. You missed this central point because you are blinded by your resentment of the term “white people.” You are race-bound, i.e. brainwashed.
For example…
Suppose I said that the Aztec Indians enslaved other tribes, and took captives for human sacrifice. And when the Spanish came, they slaughtered and enslaved the Aztecs and other tribes.
In response, you would not pause to consider how group-think can afflict any race, any time, any place in the world. No, you would become defensive, protesting that the Aztecs were “just as bad.”
The issue is not who is “just as bad.” The issue is group-think. You are a product of group-think, as is evident from your resentment and your getting caught up in side matters.
I could tell you that blacks are as subject to group-think as anyone else, but you wouldn’t hear me, since you only care about retaliating in knee-jerk fashion, along with millions of other people like you.
My concern is group-think, and how it is always based on lies. Slavery and racial genocide are so hideous that only a racist Big Lie can keep them going. The gap between the rich and the rest is so hideous that only a Big Lie can prevent the gap from destroying society.
Almost every society has a Big Lie.” Thus, almost every society suffers from group insanity. This includes societies of “white people.” Because of group insanity, millions of people consider it “normal” to exterminate millions of others. Whites do it to non-whites. Non-whites do it to each other.
A “culture” refers to how people use symbols to classify and represent experiences. The symbols are based on custom, taboos, and lies. Half of every culture is based on lies. Race is merely a side issue.
Your society’s lies are stupid and false.
My society’s lies are sacred and true. They are objective and universal facts, handed down from God. Their common sense is obvious to all. Anyone who questions them is a terrorist.
In the USA, poverty and inequality are “God’s will.” The poor are sinful. The rich are virtuous. The government “cannot spend money it doesn’t have.” And so on. All these lies interlock to maintain social strata and the wealth gap.
Forget racism and “white people.”
The issue is group-think and Big Lies.
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” The Big Lie (whatever it happens to be) causes mass suffering, yet most people would rather die than stop believing it.”
Roger Mitchell said, “You are a Monetarily Sovereign nation, with two major assets: The unlimited power to create your own sovereign currency, and the unlimited power to determine your economic fate.
Obviously, you don’t want such a burden. You’d rather be a slave nation. So what do you do? You voluntarily surrender those most valuable assets, and you put your nations fate into the hands of some unelected, foreign bureaucrats called the EU.
Surprise! That hasn’t worked out so well:…”
May I, Justaluckyfool paraphrase:
America ,you are a Monetary Sovereign nation…..
(read above)…SO what do you do ? You give to the Private For Profit Banks the sovereign rights to CREATE SOVEREIGN CURRENCY and the POWER TO TAX that currency giving the PFPBanks unlimited power to determine your fate !
How is that working for you?
The great USA mystery solved. We have lied as printed on our currency:
“In God We Trust” The truth is : “We Now Trust The Private For Profit Banks”.
Where we went wrong is not in establishing a Federal Reserve Bank; it is in : We have destroyed “In God We Trust” and turned that into “In Private For Profit Banks (PFPB) We Trust”.
It was the fear of giving the awesome power to one institution that allowed for legislation to give PFPB the power TO ISSUE and TAX our sovereign currency.
Whom would you now rather trust?
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@justaluckyfool, I’m confused. Some of what you write makes sense, yet I’m still having difficulty understanding what you mean. Are you saying the “answer” lies in “God We Trust”?
You write, “It was the fear of giving the awesome power to one institution…”. What institution were we afraid to give that awesome power to? The Federal Govt? A religious institution? Help me out, here.
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Thank you for the questions.@Jeff Rudisill and thank you RMM for allowing dialog.
“In God we trust” would mean IMO that mankind by free will ( something God given?) would allow “we the people ” to …
‘ ***** “Believe nothing merely because you have been told it…But whatsoever, after due examination and analysis,you find to be kind, conducive to the good, the benefit,the welfare of all beings – that doctrine believe and cling to,and take it as your guide.”- Buddha’‘
*The world was created with enough wealth for all mankind to maintain a good standard of living. We need only to form better governance.
After due examination If something in a system can cause ‘systemic failure’,wouldn’t you consider that to be such a major problem that because of its awesome capability , that is : Destruction of the entire system that it should be consider perhaps as the cause of , if not all, maybe most problems.
We have legislated self destruction by allowing Private For Profit Banks to issue our sovereign currency and also allowing Private For Profit Banks to tax that issuance. This is their weapon of mass economical and political destruction that allows inequality, injustice and servitude.
We MUST separate our central bank from the private for profit banks.
Excerpt from:
http://realmoneyecon.org/lev2/answers.html
Real Money Economics: The Details and Results.
Real Money Economics proposes to instill hard ethics into the current monetary system and not just prescribe more regulations meant to firm up an internally unstable system. The solution presented only involves 2 fundamental steps outlined below under A. and B..
Trust Banking System
Under this system, banks would be divided into 2 totally separate parts or “windows”, one being the trust depository side and the other the credit side (lending and investments). In effect this could be called “Glass-Steagall on steroids”.
1. Depository or Payment Window
In a Trust Banking System when a normal deposit is made at a bank into the depositor’s account, the funds would continue to belong to the depositor (versus exchanged for an IOU as under the current system) and the bank is simply given instructions by the depositor as to what to do with the money, e.g., when a check is presented for payment, it will be paid. This would all be covered under the standard depository agreement between the bank and the customer. 100% of the depository base will at all times be covered by cash in the vault or deposits at the Fed. The only source of income for a bank from the Depository Window would be fees for services. No deposit creation would exist in this system and thus no new money created by private banks. Further, because all deposits would at all times be fully covered, the needed oversight would be minimized as the system is autonomously stable.
2. Credit or Investment Window
Under the Trust Banking System banks would become true intermediaries (as most think that banks are today) and offer loans and other investment products from those with cash wishing to have it invested. This would be done through the Credit Window of banks but none of the funds under the Depository Window would be available for this purpose. Instead, savers and investors would subscribe to a series of offered mutual funds in say, car loans, or mortgages, or commercial loans of various kinds, and so on. These could be open or close-ended funds as desired with maturities, risk levels, and return levels published by the bank in advance. Thus credit would now be driven by savings rather than the arbitrary increase (or decrease) of high powered money and deposit creation. Savers would again be rewarded for savings and interest rates would be controlled by the market rather than largely by Fed edict and actions as now.”
SO WHY NOT do as Keynes, Minsky, Soddy and many others state:
“Separation of banks from government”
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Thanks for the explanation, @justaluckyfool. You’ve added another item on the recipe for a new monetary paradigm to consider. I’ll look more closely at Real Money Economics.
WOW! In the recent past, I’ve discovered MS, MMT, Positive Money, Zarlanga’s AMI theories, Soddy, Ellen Brown, B.I.G, and other monetary reform ideas. Out of all of these ingredients, I’m sure there’s a solution to provide economic freedom for all of humanity.
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Just who, specifically, are these “rich” people who are promoting the “Big Lie”? Can you name names?
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Most notorious are the Koch brothers and Pete Peterson. Google “conservative think tanks” and you’ll find many more.
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@Rodger: Would any democrat or liberal-leaning people make the list? What about George Soros? Any foreigners (not necessarily in the U.S., but in foreign countries, like the U.K, the E.U, Japan, etc., working to undermine their own countries)?
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Add to that list the (rest) of the 85 people recently disclosed as owning as much half of the world’s population. I would not be surprised if George Soros and Warren Buffet were on that list, along with Carlos Slim, et al.
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A thirty second solution to Job Guarantee.
January 24, 2014
A thirty second solution to (J)ob (G)uarantee.
*WHAT IF THE …The Fed Reserve were to become the CENTRAL BANK WORKING FOR THE PEOPLE (CBWFTP) instead of working for the Private For Profit Banks (PFPB) .
Let’s try this game: Substitute the words “Central Bank Working For The People” (CBWFTP) whereever” Private For Profit Banks” (PFPB) appears.
****PFPB have $100 trillion in assets as mortgages on residential and commercial real property (RE) loans. The average compound interest rate is 4% for a term of 36 years. The PFPB would have created that $100 trillion ‘out of thin air’ which would have an attachment that would require $400 trillion to be paid to the PFPB in order for the loan to be paid in full. YES, take away the smoke and mirrors. Now we must replace (reduce to zero ) the initial loan amount by subtracting $100 trillion; leaving a profit,income,taxation from ‘somewhere else’ of $300 trillion. This amount goes as profits to the PFPB. Revenue they may use for their own selfish purposes.
READ IT AGAIN,
BUT THIS TIME REPLACE “PFPB” WITH “CBWFTP”.
Why would you not want prosperity for yourselves and your children?
Why would you not want $300 trillion turned over to Congress, to be used..“to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…”
The Federal Reserve would purchase all real estate loans and modify them with terms and conditions, these loans shall be assumable at 2% interest for 36 years. The Federal Reserve would also make available $10 trillion for new residential construction. Also up to $50 trillion available for buyers mortgages.Being an American citizen with an income deems that person as ‘creditworthy’. The real asset value is in the completed product and its land value.
IF $72 trillion in loans, that would produce $4 trillion a year in REVENUE from taxation(interest).
How many jobs ?
What if $1trillion per state being available for infrastructure ?
….disaster relief?
….renewable energy?
$2TRILLION a year that that must be distributed via health,education, and welfare programs so that the loans can be paid without causing deflation. $2 TRILLION should be used to create new loans to perpetuate the system.
What would be the unintended consequence ? Perhaps a need for a larger population? Surely there would be more jobs created than available employable ?
We need only to take the advice of Keynes, Minsky, Soddy and many others: Separate the private for profit banking system from government.Have the Fed do for US what they now do for the PFPB !
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@justaluckyfool, what you write here makes a lot of sense to me, and reflects some of the questions I have. As I understand MS, the profit to the PFPB doesn’t matter, and that’s what I still don’t grok about MS. I’m having trouble reconciling my understandings that align with Zarlanga’s model at AMI, and what I understand (and believe) about MS.
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Actually, it makes zero sense, because after years of reading this blog, just a lucky fool still has no idea what Monetary Sovereignty means. It repeatedly leaves me shaking my head in wonderment.
He said, “Why would you not want $300 trillion turned over to Congress . . .”
The U.S. government is Monetarily Sovereign. It has the unlimited ability to create its sovereign currency, the dollar. Thus the U.S. government (Congress and the President) cannot run short of dollars. Period.
If the government wished to pay a $999 trillion bill tomorrow, it has the power to do so. Turning over $300 trillion to Congress is nonsensical at best, and deliberately ignorant at worst.
That said, I agree and have stated in every post, that there should be no private banks. All banks should be federally owned as there is no public purpose served by privately owned banks.
See: Point #9 in the “Nine Steps to Prosperity.”
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What actually makes sense to me is the overall concept of using sovereign money, an asset of the government, therefore an asset of We, the People, for the “general Welfare if its citizens, vis-a-vis, private Banksters.
I wondered why, during the melt-down, if the issue was “bad mortgages”, why give the banks the money? Why not give the money to the mortgage holders, with the caveat that they had to use it to pay their mortgages? The banks would become solvent, and a big social problem would be averted. But I guess the banks had to keep their debt (cake) AND the money to repay that debt (eat it too).
Also, what hew and cry would arise throughout the US if the government nationalized all banks? Wouldn’t it be politically advantageous, at least for now, to allow banks to continue commercial banking but remove their perceived role in creating and controlling money: to Nationalize the Fed’s missions to stabilize money while moderating unemployment; i.e., getting private banks out of the Fed?
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I don’t believe the problem is “money” per se. For example, QE added money to the economy, but it had little effect due to the simultaneous removal of an equivalent amount of bonds. I think the problem is more one of wealth than money.
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The problem with QE is that it added no dollars to the economy and in fact reduced the amount of interest the government was paying into the private sector.
When the Fed buys a T-bond owned by an individual, all that happens is the individual’s T-bond account is debited and the individual’s checking account is credited by the same amount.
Dollars merely moved from one the individual’s accounts to another of the individual’s accounts.
Not sure how you define “wealth,” but the federal government easily is able to add money to the economy, and that money buys “wealth,” however you define it.
The lack of money translates into the lack of wealth.
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Sorry for being confused again. Did/does the monthly QE, as practiced by the Fed, buy EXISTING T-bonds (and T-bills and T-notes?) from individuals, or does it buy newly created T-securities from the Treasury? If the later, wouldn’t that in effect create new money?
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It happens to be the former, but it doesn’t make any difference. The purchase of T-securities by any entity, does not create dollars.
The dollars must exist, first. Then, they are moved from checking accounts to T-security accounts.
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NEITHER. The FED made a direct purchase of assets (MBSs) and placed those assets on their balance sheet. No new money issued just a transfer from the TBTF balance sheets to the FED balance sheet.
That’s what a Central Bank working for the Private for profit Banks can do-take their poison fruit and eat it.How great is that for the banks?
Yet if this same Central Bank was working for the PEOPLE it could have made the same purchases while not only helping the homeowners but also could have created more than 2 million jobs. If only it had purchased the “Ms” of the MBSs; the actual mortgages that back the banks securities. Then modify those loans and make then so affordable that the housing market would become stabilized and construction and employment would increase.
Krugman (01-25-14),”Jobs and inequality are closely linked if not identical issues.” Perhaps, just maybe, we might some day agree : The
discovery of the possible “systemic failure” of 2008-9 was the inequality, injustice of the monetary system created by the legislated changes that allows “Private For Profit Banks to issue our currency and to tax that currency.”
QE purchase of assets is the Fed making a purchase without spending.
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@justaluckyfool, are you saying that QE transactions involve the purchase of Mortgage Backed Securities from the Too Big To Fail banks, and NOT T-securities? Just trying to understand, here. Thanks.
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The purchase of T-securities by the Federal Reserve does indeed create dollars, and that’s exactly what QE is designed to do – in order to keep rates low. It’s putting a bid on bonds when the market didn’t (which would have driven up rates). It’s pure manipulation of the markets.
The issue with QE is that although investors are getting a low interest rate, other investors are losing interest income on a loan. Those losing income at this point are the large pension funds and insurance companies that normally invest in bonds.
The Fed has painted itself into an ugly corner here.
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“the problem with QE is that it added no dollars”
QE did indeed add dollars and removed bonds. I agree that private sector net worth or “wealth” remained essentially unchanged, which is the important part. And I agree with the point of your post. But your argument would be clearer if you used a term like net worth, wealth or equity instead of “dollars” or “money”.
Dollars don’t necessarily equal wealth.
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“Dollars” (as a sovereign currency) do equal wealth. It is guaranteed exchangeable for ANYTHING (of value).Yes, even should $10,000 has an exchange value of 1cent.
All money is wealth;not all wealth is money.
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Exactly correct.
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Wealth equals assets minus liabilities. Money is one type of asset. Bonds are another. QE was an asset swap that increased the former and reduced the latter.
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Although the propaganda from the Fed might make you think dollars were added, in fact dollars were moved, not added.
The T-securities were purchased from private parties who had dollars in T-security accounts at the Federal Reserve bank. When the Fed bought those T-securities, the dollars in T-security accounts were transferred to private checking accounts. No new dollars were created.
Think of it this way: The federal government creates dollars by paying bills in excess of taxes. T-securities are issued in the same amount as as that deficit spending.
Since dollars already were created by spending, T-securities don’t create additional dollars. Otherwise, double dollars would be created;
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BUT in the case of QE3 (infinity) the Fed is making an outright purchase of a bank asset that has been created “out of thin air” a security that is backed by bank loans already in existence . In this case, The Fed is not deficit spending, it is not placing new Treasuries on the market. It is taking the “temporary money” made by the TBTF banks off their (banks) balance sheets and putting it on the Feds balance sheets.
Once again I ask what if the FED were to do for the people what they do for the PFPB ? We could overnight create over 5 million jobs by eliminating FICA and making the first $100,000 of income tax exempt.
Do for us what we have allowed PFPB to do. ISSUE OUR CURRENCY AND TAX IT.
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The Basic Income Guarantee is specifically NOT a net income that gets reduced by whatever people earn in a job. It is a fixed amount for every man and woman, and in some plans, every child too.
See the latest B.I.G. newsletter, here: http://www.opednews.com/articles/USBIG-NewsFlash-Vol-14-N-by-Karl-Widerquist-130802-882.html
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Right. That’s why I never liked the name, “B.I.G.” It’s not an income guarantee. It does nothing to guarantee Bill Gates’s income.
It’s a bonus — an economic bonus. But I guess it’s too late to change after all these years.
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Again, I’d like to think of it as a US Citizen’s Dividend, but a rose by any other name, you know… 🙂
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Yes to both – it is a citizen’s dividend AND it would guarantee Bill Gates’ income never falls below the Basic amount. The importance of dropping means-testing cannot be over-stated. This means that people will not be discouraged from looking for work, as the EITC does, since any additional income would be 100% additional (minus taxes on that alone – a topic for another thread). It would mean that people would no longer have to work for employers who don’t pay a living wage, just so they could qualify for gov’t benefits to make up the difference. It would mean real, living wage, jobs would have to be offered. It would also mean that volunteer opportunities, or things that people actually WANT to do but which don’t pay well, would not go unstaffed.
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PS – it would guarantee that Bill Gate’s income does not fall below the Basic amount, though, right?
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I would call your proposal a “Universal Basic Income Guarantee” (or U-BIG) to distinguish it from a means-tested BIG.
I disagree with you about interest rates alone being enough to control inflation, but we have already debated that issue in the past and I won’t beat it to death.
I favor a means-tested BIG, though I think a U-BIG could be made to work acceptably well.
There are pros and cons to both types of BIGs:
MEANS-TESTED: costs far less so there is less inflationary pressure and less need to raise taxes (you think you can control inflation with interest rates alone but I suspect higher taxes would be required to throttle aggregate demand). In any event, high interest rates are effectively a tax and disproportionately hurt certain sectors of the economy, like construction.
During a boom, higher wages and more and better job opportunities would entice people to leave the BIG and enter the job market. During a bust, more people would draw the BIG — so a means-tested BIG would act as an automatic stabilizer (yes, I realize that automatic stabilizers are not needed if wise economists are running the country, but last time I checked that was not the case).
The disadvantage to a means-tested BIG is, as you pointed out, it creates disincentives to accept low paying jobs. The disincentives could be reduced, but not eliminated, by gradually tapering off the BIG. In any event, if the minimum wage is substantially more than a BIG (say $250/week BIG vs. $360/week minimum wage) there would still be a significant financial incentive to work, plus some people simply like to work, plus many minimum wage jobs are performed by teenagers who would not qualify for my means-tested BIG (let us say that you have to be 18 and out of high school to qualify for my means-tested BIG).
UNIVERSAL: simple to administer and “fair.” People don’t view a U-BIG as “welfare” since everyone gets it (everyone is equally “guilty.”)
But does a U-BIG really eliminate the disincentives to accept low paying jobs? I say it does not. Some people would still be tempted to live off the U-BIG rather than do unpleasant, low paying jobs like flip burgers or clean toilets.
A U-BIG would not provide much of an automatic stabilizer (though if wise economists were running the country they could raise the U-BIG during recessions and lower the U-BIG during booms. Last time I checked, our country was not run by wise economists).
And then there is the inflation issue. If there are 200 million adults in America, our theoretical U-BIG would pump roughly an additional $2.4 trillion into the economy each year (maybe less since the U-BIG could replace some existing welfare programs). People would buy more fuel, fuel prices would go up, and your proposed higher interest rates would have little impact on fuel prices. My guess is that we’d have to raise taxes substantially to throttle aggregate demand. I personally am not opposed to raising taxes as long as it is done in a progressive manor, and I think the U-BIG plus higher progressive taxes combo would still work and still benefit the previously-poor, but higher taxes are always a tough sell, politically speaking.
(Note: a U-BIG might not be very inflationary in a small country like Switzerland, since even if everyone in Switzerland doubled their fuel consumption it would barely make a ripple in global fuel consumption.)
Compare that to the cost of a means-tested BIG — we’ll guess that 20 million people draw the means-tested BIG , pumping an additional $240 billion into the economy (maybe less since the means-tested BIG could replace some existing welfare programs). We can probably agree that our weak economy has enough excess capacity to absorb an additional $240 billion without having to raise taxes.
In conclusion, I agree with you that some sort of BIG would be preferable to a “coercive” (Bill Mitchell’s word) Job Guarantee involving dead end minimum wage jobs. I believe that either a U-BIG or a Means-tested BIG could be made to work acceptably well, but I favor a means-tested BIG because little or no tax increase would be needed, and because a means-tested BIG would provide an automatic stabilizer.
Thank you for posting on this subject.
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@ Dan Lynch…
Contrary to what most people believe, inflation is a not a product of the supply of money.
Inflation is a product of the ratio between
[a] the supply of money
and
[b] The demand for money, goods, and services
If the ratio remains somewhat constant, such that demand rises with the money supply, then there is little or no inflation.
However, if the money supply falls (as it is now doing because of austerity), but demand remains high, then there is danger of deflation. This puts downward pressure on prices. Unfortunately prices resist this pressure, and remain high, since energy remains expensive, and there are still debts, rents, taxes, and medical bills to pay.
Put another way, when there is severe deflation (i.e. depression) the price of food does not automatically go down. Instead, people simply make do with less food and with fewer consumer goods and services across the board.
Bottom line: the inflation bogeyman is purely imaginary. Massive infusions of money into the US economy would not cause inflation, as long as the money actually got into the economy, and was not siphoned off by the rich. In the latter case there would not be inflation or deflation. There would simply be a further widening of the wealth gap.
Elsewhere you write, “My guess is that we’d have to raise taxes substantially to throttle aggregate demand.”
Why throttle demand? As long as demand and supply are more or less in balance, everything is great.
You write, “I personally am not opposed to raising taxes as long as it is done in a progressive manor…but higher taxes are always a tough sell, politically speaking.”
Do you mean state, county, and municipal taxes, or federal taxes? The federal government has no need or use for tax revenue, and in fact destroys it upon receipt. The FICA tax does not pay for Social Security or Medicare.
Instead of increasing federal taxes, we should lower them, preferably to zero. That would give workers an instant boost in their take-home pay. It would also boost the profits of businesses, since they would not have to pay an equivalent FICA tax for each employee.
You say that increasing taxes would be a tough sell politically. I wish that were true. The rich don’t like paying taxes, but the poor don’t mind, since the poor believe (falsely) that taxes pay for the federal government. On 1 Jan 2013 the FICA tax was increased by two percent. Average Americans didn’t squawk, since they are powerless, and since they think the FICA tax pays for Social Security and Medicare.
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Dan,
There it is again: The inflation scare. Does it never end? Next, will you tell me about the Weimar Republic and Zimbabwe? 🙂
I wonder how many good stimulative proposals and gap-narrowing plans have been throttled by the inflation bugaboo. I wish I had a nickel for each (but then someone would Henny Penny me about a possible inflation.)
And here we are, having pumped large amounts of money into the economy, with virtually no inflation, and what scares the Fed most? Deflation.
As for fuel prices, The world is awash in oil. The price of oil is controlled by oil producing nations and the oil companies. Because of fracking, the U.S. is functionally fuel self sufficient.
I’m sure you have read my post demonstrating effectively zero relationship between federal spending and inflation: And this has been true even during periods of massive spending. See: https://mythfighter.com/2010/04/06/more-thoughts-on-inflation/
The formula for the value of money is based on Supply AND DEMAND. Why do people focus solely on Supply? It’s a mystery, especially since interest increases Demand.
Anyway, then we come to your comment: ” . . . high interest rates are effectively a tax . . . “ Really?
Taxes are paid by the private sector to the public sector. Interest is paid by the private sector to the private sector. Huge difference.
The federal government collects very little interest. On the contrary, the federal government pays lots of interest, and higher rates, would cause the government to pump more interest money into the private sector, which is stimulative.
We effectively are in a recession. Every investor, from the smallest savings account holder to the largest bond holder suffers today from low interest rates. The economy is short of dollars. And the gap between the rich and the rest is widening.
So what’s the concern? Growing the economy? Closing the gap? No. It’s inflation, inflation, inflation and inflation.
It absolutely amazes.
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I have proved that the Fed issued credit which has to either be repaid or defaulted, and also, trillions in debt have been written off while the fed pumped liquidity.
That is completely different than giving people money. That’s insane in my book.
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I have proved that the Fed issued credit which has to either be repaid or defaulted, and also, trillions in debt have been written off while the fed pumped liquidity.You are right that the Fed doesn’t do much (except for not regulating / backing crooked banks) It just does monetary – exchanging already existing credits/debts for other ones. All it means is playing around with interest rates, which are / would have been very low in any case.
That is completely different than giving people money. That’s insane in my book. Depends on how much money the government gives. The government has given rebates of a few hundred etc. without much effect. But yes, a big BIG – lots of free money, enough to have a middle class lifestyle, for everyone – say $35,000/yr forever is insane. In no time it would cause (hyper)inflation. Ordinary people understand this, as do MMTers. Unfortunately many go from one kind of magical thinking – neoclassical / commodity theory of money / mainstream economics – to another – this includes some academics who propose a BIG and some MMT fans who think this is a bright new idea. A much saner variant of the BIG is a means-tested one, often called an NIT (negative income tax). But this could also be inflationary and has other serious problems. The main proposal of MMT is the JG, which Rodger mistakenly opposes. MMT academics support a JG plus a small BIG,( a NIT perhaps, though there are problems with that) – money for people who can’t work. As today’s welfare states rightly do now. But a JG would create the soundest, strongest money of all time along with the prosperity of full employment; it is nothing but common sense.
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A middle-class lifestyle for everyone?
Yes, that would indeed be insane! In fact, the decades in which the USA still had a middle class were MADNESS!
Also, you say that Rodger “mistakenly opposes” a JG.
Rodger simply has a few questions, like what is a JG? Can anyone define it in clear and exact terms? Can you explain precisely how it would be implemented? What specific government agencies would be involved? What particular kinds of jobs would it entail? What would they pay? Who would do the hiring and firing? Would there be any firing? What exactly is meant by the loaded term “guarantee”?
Every time you try to answer any of these specific questions about the JG, you create a thousand new questions, none of which ever get answered.
Therefore, what you call “common sense” is merely a fog of vague notions that no one has come close to nailing down in nuts-and-bolts fashion.
Before we start calling the tooth fairy “common sense,” maybe we should first give an objective example that really exists in the actual world.
I myself favor Rodger’s “Nine Steps to Prosperity,” or some variant thereof, in which people get a “guaranteed income.” That is, I favor an expansion of Social Security and Medicare, which already exist, work well, and are proven.
Ah, but there’s that inflation bogeyman in the way. Right?
What I want to know is this…
Why are some people so blindly and fanatically attached to this JG fantasy? Do you want people to have jobs? Why, so people can have incomes? There are many ways to give them incomes. So they can have “meaningful productive lives”? There are many ways to give people that too.
But then, you don’t need to think about these things, since a JG is “common sense.” Right? Just implement a JG and be done with it. Right?
Right. Now, if only someone knew what a JG actually is, and could explain it…
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I was attempting to persuade sucesofinanciero of the common ground between MMT and her present beliefs, the points where she was correct – and where many here are not. Not trying to answer Rodger’s questions which have been consistently answered many times in many places, though I don’t recall having been asked or having answered personally. Unfortunately exchanges can often degenerate into rudeness.
For one, Rodger asks whether it will be through public or private employers. The answer is public. The only person who thinks that a JG should be run through private for-profit employers is Ralph Musgrave. IMHO, this comes from not understanding MMT and “the nature of money”. Everybody else correctly says this is a terrible idea.
It is extremely easy to define the JG. It is a job = government money for work, guaranteed to anyone ready, willing and able to work. Anybody who shows up. How “guarantee” is a loaded term I do not understand.
The JG is common sense. Human labor is scarce and valuable, and all economists agree is the source of essentially all value. There is not the slightest reason to think that the “private sector” will ever fully employ everyone. So today’s monetary economies always force people to not work. This is insane. They starve & everybody else is deprived of the benefit of their work, for no reason whatsoever. Poor people love the JG , because they are in touch with reality and know that wealth doesn’t appear, can’t appear by magic, unlike so many who mean well on the intertubes.
The JG is an incredibly well-tested program. Basically it is just a Depression era WPA, modernized. The WPA, the New Deal employment programs were spectacularly successful – which is why absurd lies and raving lunacies have been written about them since Brown in the 50s down to Christina Romer today. The whole world had a full employment policy – an inexplicit kind of Job “90-95-98 or whatever % Guarantee”. That led to the postwar era, the greatest prosperity the world has ever seen.
Yes, that would indeed be insane! In fact, the decades in which the USA still had a middle class were MADNESS! Yes, but the middle class prosperity era was caused by MMT / Keynes / JG thinking. It was ended largely by misidentifying this correct economics with ” tons of free money for all” / BIG / “Keynesian” / inflationary nonsense. The inflation of the 70s was the opportunity to end full employment worldwide, because elites didn’t like middle class prosperity. There is explicit documentation of this.
Why are some people so blindly and fanatically attached to this JG fantasy? Because they understand the theory and the great success of JG programs, and understand that good things don’t happen by wishing them into existence = the big BIG = tons of money for everyone. BIG = hyperinflation. BIG = big lie. Rodger’s recommendations are fine. They are a lot better than the idiocy of a BIG, and the only thing Rodger is missing is the JG, which I hope to persuade him to accept. Just as I hope to make sucesofinaciero an MMT / MS er. 🙂
Just implement a JG and be done with it. Yes. A JG at a reasonable living wage, and you have eternal prosperity for all. Because a monetary economy without a JG is an obscenely immoral idea – it is a tragedy it hasn’t been explicitly in place for centuries. Just the same way that slavery is an obscenity. The JG is how humans run everything, every economic enterprise except national economies, which are usually directed by raving maniacs using the stupidest ideas of all time.
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@Calgacus, I also appreciate your opinions on JG, but disagree with your analysis that it is a better solution than a Basic Income Guarantee.
You CORRECTLY observe, IMO, “Human labor is … valuable, and all economists agree is the source of essentially all value. There is not the slightest reason to think that the “private sector” will ever fully employ everyone. So today’s monetary economies always force people to not work. This is insane. They starve & everybody else is deprived of the benefit of their work, for no reason whatsoever.”
I’m assuming that a JG program would provide a living wage, otherwise it would be as unhelpful as the “wage slavery” engaged in by private employers. But would it provide meaningful employment; i.e., meaningful to the employee? Or would it add to the 70% of employees who are disengaged at their jobs? Would the govt. offer employment as trash collectors, or sewer cleaners; or would it offer jobs to create musical compositions, or new art works? Who would decide what employment opportunities would be available?
Riddle me this. How would a $35K income (your figure) granted as a Citizens’ Dividend for living in a prosperous country (BIG), cause inflation, when a $35K income “paid” to a govt employee with a JG not cause inflation?
I think most of us are searching for solutions to the economic problems facing our world, and that many are attached to their own “well thought out solutions”. Hopefully, this is why we exchange ideas.
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What you know as money is the problem. Money is worthless if there is nothing to buy with it. Care to explain how the things will get produced if you are “giving” people money to buy things business had to SPEND purchasing power to produce.
Does that equation balance? Let’s see….
People get Free Money to purchase goods and services without producing them.
Businesses get to spend purchasing power to produce goods and services and gain pieces of paper in return.
Does that up to you?
Sure, keep dreaming if you think businesses will continue to produce in an environment like that. As I said above, keep an eye on Venezuela, they are sovereign and have implemented MMT/MS, you call it – any socialist/communist idea has been tried over there.
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People are given enough to improve their lives, not so much that they wouldn’t work. Assuming you work now, would you stop working if, for instance, FICA were eliminated? Would you stop working if all federal taxes were eliminated?
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[1] If getting more money into the hands of the public is not the answer, then let’s just stay in the current depression. In fact, since you say there are no goods or services available for purchase, let’s suck even more money out of the economy. That should jump-start things, aye? Leeches causing anemia? No problem. There is not much blood left to suck out anyway. We’ll just apply more leeches.
[2] Regarding Venezuela, all you know is the sewage that is spoon-fed to you by the plutocrat-owned corporate media. Have you ever lived outside the USA? How old are you anyway? Never mind. Speaking of mindless knee-jerk buzz words like “Venezuela,” you forgot to mention Zimbabwe and Weimar Germany. And since you have a nervous tic about “communism” (which doesn’t exist in Venezuela), how does this square with China? (Incidentally Venezuela has a Communist Party, and it hates the government as much as the Church and the rich and the US government and you do.)
[3] Some people ask questions and raise objections because they seek answers and solutions. Other people raise objections just to be contrary. They are like neglected children who become delinquents in order to get noticed. For them, negative attention is better than no attention. They would rather be punished and reviled than be ignored altogether. In their insecurity, they care about no one but themselves. Their only concern is their inner hollowness, which they desperately try to fill by spouting nonsense in the hope of getting a response. Any response. They don’t care how absurd and meaningless the exchanges are, as long as they are noticed by daddy or mommy.
Of course, I’m not referring to you. 😉
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Roger,
You ask “Assuming you work now, would you stop working if, for instance, FICA were eliminated? Would you stop working if all federal taxes were eliminated?”.
If the US stops collecting taxes, the government would collapse immediately. Not because of lack of money, but because it would continue to spend trillions, which would hit the economy and will be immediately spent – diluting every single dollar out there. You should thank taxes for diminishing the impact of the printing; nonetheless, there is a deficit.
I would stop working if I had to work 40 hours and my neighbor could afford the same things I did (or more) without having to work. And if I was a business and had losses in real terms by the time I square my balance sheet – I’d stop producing too. Everyone else would too – perhaps 1% of suckers won’t stop working.
The only way handouts are possible is by confiscating the goods and services from someone else. People work, the government prints and gives handouts, some get freebies (at the expense of the workers). The workers go to the store to purchase what they’ve work to produce, those with freebies show up first – and drive up the price. This is our reality.
Quat,
The leeches have been in place since 1913 – you have it backwards. And what’s sucking the economy dry is what you think will fix the issue, the handouts. There have been handouts and they’ve increased with time, welfare benefits doubled in the last 10 years alone. Where is the beef?
Venezuela is a sovereign and has been trying to give everything to it’s poor population at the expense of the working class. It has not worked there, and it won’t work here. I posted a logical comment – and the response I got is “you are stupid”. Is that the best you can do?
Since nobody is challenging my logic, including you, I assume you are referring to yourself in the last comment. 😉
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@Suces Let’s not get carried away with un realistic hypotheticals like no Federal taxes. Rodger said that to make a point. There is a cycle — businesses pay employees; people spend money; businesses pay employees…but the cycle has been disrupted. Rodger supports giving people a limited amount of money to get the cycle going again. If the economy takes off and inflation shoots up then savings can be encouraged via higher interest rates or money can be removed by higher taxes.
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Suceso – on Venezuela – the poor are the working class, What has happened there is that the government is trying to remove the stranglehold that a parasitic do nothing neofeudal elite has had on the economy, and letting the working class share in some of the wealth that they have created. This has been very successful, in spite of the usage of imperfect economic policies tending to the mainstream occasionally and therefore getting many things upside down. MMT would do better and be much less inflationary – but people live a lot better in Venezuela than before Chavez. That’s just a fact.
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Calgacus,
Thank you for your defense of your JG, although perhaps not of Randy Wray’s JG. Randy has claimed that the necessary departments are in place, and all that would be required is one additional person to run things.
The problem of giving anyone “who shows up” a government job, is not trivial. Which government job would you yourself accept? Stop and think.
As I have written many times, there is no shortage of jobs. There is a shortage of jobs appropriate to each individual. Look in your local newspaper or go online to such sites as Monster.com, Indeed.com, etc.
You will find millions of jobs, in the form of advertisements being paid for by hopeful employers. If jobs were unavailable, why would employers spend good money trying to find employees?
Perhaps you believe people are jobless, not because jobs are unavailable, but because employers are too selective, and this may be true. In the JG world, would the government hire anyone who applied, no matter how ill-prepared that person might be?
Would there be any criteria? The physical ability to work? The ability to think? Would criminals be hired? Pedophiles? Past rapists? The lame, the halt, the lazy, the insane, the almost insane? White supremists? Religious bigots?
What exactly are the criteria? And exactly who would be denied a job?
Stop for a moment and visualize the workplace that will employ anyone who “shows up.” It would be dangerous, unhappy chaos.
Then there is supervision. What powers does a supervisor have? Under what circumstances would a person receive a raise, be punished (how?) or be fired?;
And as for a fired person, what would happen to that person, afterward? Would he be given another job under JG?
Then we come to salary. Some “JGers” say the salary should be at minimum wage, to compete with private industry. Is competing with private industry a good idea? With which specific industries should the government compete? Construction (like WPA)? Or perhaps, should it compete with theaters?
What happens to the industries that are subject to competition by an employer that doesn’t need to make a profit?
I’ve read many thousands of words about JG, and despite your protestations, I’ve found that every author seems to visualize a different JG. But, the devil is in the details, and the details have not been well considered — at least not by an experienced business person.
And those are but a few of the issues. There are many more, and the fundamental issue is the JGers belief that people lack jobs, when in reality, they lack money.
It is money, not jobs, that is the key to economic growth and economic gap reduction. Offer a person a job without money, and the economy will not benefit. Offer a person money without a job and the economy will benefit.
So the goal, the real goal, is to get money into the hands of the people.
Sometime in the future, there will be very few jobs for people. Automation will do most of the jobs, and we people will benefit. Some day, the vast majority of us will be retired. Yet we can live good lives, because machines will do the work.
Bottom line: The goal is money, money, money — not jobs — and that seems to be lost on JGers, who seem to live in the 1930’s.
And that is why I have recommended the “Nine Steps to Prosperity.”
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Thank you for your defense of your JG, although perhaps not of Randy Wray’s JG. “My” JG is Randy Wray’s JG is Minsky’s JG.
I support the barest bones, most general JG – and I don’t give a damn about the details, as long as it is a real JG. Something which I claim ordinary, poor people, homeless people, the victims of today’s criminal economics understand instantly, but sadly the great majority of internet debaters don’t, because they’re too well off and isolated from reality.
IMHO, the problem is the opposite of what everybody claims. There are too many details given about the JG, not too few. Everybody’s JG is the same. What people don’t grasp is the basic concept, and how it is related to the nature of money and accounting – things so simple they repel the mind. The devil is NOT in the details. JG opposition is founded in illogical arguments that would not be made if the opponents understood what they were saying. Nobody makes such crazy arguments in any other setting where they would be applicable.
I did not intend to write a real defense of the JG and this is not my real defense. To debate you properly and show you how you are mistaken would take more time, energy and health than I have at the moment. I mainly intended to show sucesofinanciero that there are people who understand the obvious: Free money for everyone, the big BIG, enough to live an average 2014 middle class lifestyle is a joke that makes money worthless.
The problem of giving anyone “who shows up” a government job, is not trivial. Yes, it is. A child could be the top dog of the JG bureaucracy. Of course, a smart, sane grown up would do better, but as most kids know, there aren’t many of them around.
As I have written many times, there is no shortage of jobs. There is a shortage of jobs appropriate to each individual. Flatly wrong. There is a shortage of jobs. There are far more people who want a job than the total of all these ads.
Which government job would you yourself accept? Stop and think. I would accept a job that paid me money. I would prefer one that used my own skills – which would be easy for me, but not most other people.
Stop for a moment and visualize the workplace that will employ anyone who “shows up.” It would be dangerous, unhappy chaos. No, it would be a decent, sane, happy society. The USA and many other countries were far better places to live when they had more of a JG policy. This isn’t speculation, but experience, personal experience.
There are many more, and the fundamental issue is the JGers belief that people lack jobs, when in reality, they lack money. JGers, MMTers realize people lack money that is worth something – money that deserves to be called money.
It is money, not jobs, that is the key to economic growth and economic gap reduction. No, it is human labor, which ALL economists, everyone agrees is the source of essentially all wealth and value. The key is directing it. Human labor is what has backed all money throughout the ages. Nothing else. The JG just amounts to recognizing this.
Offer a person a job without money, and the economy will not benefit. Economies were run for millennia based on slave labor – jobs without money. The labor of the slaves was not worthless, otherwise they would not have been enslaved.
Offer a person money without a job and the economy will benefit. No, not if everyone gets tons of free money for nothing. The economy will be damaged by the hyperinflation. And then the predator elite will be back in charge again. Economies need money that is worth something. That is what the JG does. It would be the truest, hardest money the world has ever seen.
The goal is money, money, money — not jobs — and that seems to be lost on JGers, who seem to live in the 1930′s.No, the goal is not money, money, money. Money spent by the all-wise experts deciding how to spend government money – who always know better & know that the homeless guy in the gutter doesn’t deserve the money.
The difference is that the JG is individualistic, unlike an authoritarian BIG. The JG is REAL money, money, money. And nothing else is. The individual decides when he wants more money. And can get it! The JG is the only way a society can ensure the homeless guy gets real money. And if it doesn’t offer him a JG, it is committing a crime against him, and he has every moral right to rob – in self-defense – the society that committed the insane crime of not offering him a job.
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“I don’t give a damn about the details.”
You must have been one of the code writers for the ACA web site.
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A. Take this shovel and dig a ditch one mile wide and ten miles long by sundown.
B. By myself? How?
A. I don’t give a damn about details. You only raise questions because you’re too well off and isolated from reality.
B. By sundown?
A. Rather than get started, you want me to explain details about how to do it. I told you I don’t give a damn about–
B. But a mile wide, and ten miles —
A. Your questions are illogical because you don’t understand what you’re saying. A child could be the top dog of the ditch diggers. If I pay you to dig, then that is the only real money.
>>>Wow.
Calgacus, did you suffer a head trauma?
Incidentally, you write, “The JG is the only way a society can ensure the homeless guy gets real money. And if it doesn’t offer the homeless guy a JG, it is committing a crime against him.”
Great. Let’s imprison the Utah state legislature. In 2005, Utah figured out that E.R. visits and jail stays for homeless people were costing the state about $16,670 per person per year, whereas it cost only $11,000 to provide each homeless person with an apartment and a social worker.
Therefore Utah began giving away apartments, with no strings attached and no RIDICULOUS “jobs guarantee.”
Each participant in the Housing First program gets a caseworker to help him become self-sufficient. Even if he fails, he keeps the apartment. Result: Utah has quietly reduced homelessness by 78 percent, and is on track to end homelessness by 2015.
Other states could do the same, except they are crippled by two things:
1. American society’s compulsive desire to punish the homeless and the poor
2. American society’s fondness for getting bogged down by unworkable, impractical, and unnecessary fantasies like a “jobs guarantee.”
Also, you say the only “real” money is that paid as salaries via a “jobs guarantee.” The Utah homeless are given apartments without any JG. Therefore those apartments are not real, aye?
JG fanatics are demented, just like all cultists. The JG sounds good, but it won’t work in the real world, and it is not necessary.
I want people to have gainful employment and fruitful lives, but the JG is not the way to do it. The government can offer jobs like it did in the 1930s, but everything breaks down when we use the word “guarantee.”
Why not simply expand Social Security and Medicare?
Oh that’s right. The benefits are not “real.”
Like I said…demented.
RODGER, check out this brief item about the Utah homeless. It’s very encouraging…
http://ourfuture.org/20140117/utah-is-ending-homelessness-by-giving-people-homes
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A. Take this shovel and dig a ditch one mile wide and ten miles long by sundown.
B. All by myself? How?
A. I don’t give a damn about details. You only raise questions because you’re too well off and isolated from reality.
B. By sundown?
A. Rather than get started, you want me to explain how to do it. I told you I don’t give a damn about–
B. But a mile wide, and ten miles —
A. Your questions are illogical because you don’t understand what you’re saying. A child could be the top dog of the ditch diggers. If I pay you to dig, then that is the only real money.
>>>Wow.<<<
Calgacus, did you suffer a head trauma?
Incidentally, you write, “The JG is the only way a society can ensure the homeless guy gets real money. And if it doesn’t offer the homeless guy a JG, it is committing a crime against him.”
Then let us imprison the Utah state legislature. In 2005, Utah figured out that E.R. visits and jail stays for homeless people were costing the state about $16,670 per person per year, whereas it cost only $11,000 to provide each homeless person with an apartment and a social worker.
Therefore Utah began giving away apartments, with no strings attached and no ridiculous, unncessary “jobs guarantee.”
Each participant in the Housing First program gets a caseworker to help him become self-sufficient. Even if he fails, he keeps the apartment. Result: Utah has reduced homelessness by 78 percent, and is on track to end homelessness by 2015.
Other states could do the same, except they are crippled by two things:
1. American society’s compulsive drive to punish the homeless and the poor
2. American society’s fondness for getting bogged down by unworkable, impractical, and unnecessary fantasies like a “jobs guarantee.”
Also, you say the only “real” money is that paid as salaries via a “jobs guarantee.” The Utah homeless are given apartments without any JG. Therefore those apartments are not real, aye?
JG fanatics are demented, like all cultists. The JG sounds good, but it won’t work in the real world, and it is not necessary.
I want people to have gainful employment and fruitful lives, but the JG is not the way to do it. The government can offer jobs like it did in the 1930s, but everything breaks down when we use the word “guarantee.”
Why not simply expand Social Security and Medicare?
Oh that’s right. The benefits are not “real.”
Like I said…demented.
RODGER, check out this brief item about the Utah homeless. It’s encouraging…
http://ourfuture.org/20140117/utah-is-ending-homelessness-by-giving-people-homes
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Thank you, Rodger. You nailed it with:
“It is money, not jobs, that is the key to economic growth and economic gap reduction. Offer a person a job without money, and the economy will not benefit. Offer a person money without a job and the economy will benefit.”
I hope I can quote you on this.
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A defender of the JG said, “I don’t give a damn about the details.”
Apparently he has fallen in love with the words “Jobs Guarantee,” and believes that somehow, in some unknown way, everything will work out just fine, just as long as there is a guarantee.
Truly frightening.
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Not just frightening, Rodger, but selfish and wretched.
These demented JG cultists don’t care about the poor, the homeless, or the unemployed. They only care about chanting their mantra: “jobs guarantee, jobs guarantee, jobs guarantee.” Their absurdity exceeds even that of organized religions, since the JG cultists don’t even have a dogma. All they have is an empty slogan, plus vague and nebulous gibberish, plus anger directed at anyone who asks questions, or wants details.
It’s all so pathetic.
I say screw the JG. Let’s discuss how to get more money into average people’s hands, and let society take it from there.
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**”And those are but a few of the issues. There are many more, and the fundamental issue is the JGers belief that people lack jobs, when in reality, they lack money.
It is money, not jobs, that is the key to economic growth and economic gap reduction. Offer a person a job without money, and the economy will not benefit. Offer a person money without a job and the economy will benefit.
So the goal, the real goal, is to get money into the hands of the people.
Sometime in the future, there will be very few jobs for people. Automation will do most of the jobs, and we people will benefit. Some day, the vast majority of us will be retired. Yet we can live good lives, because machines will do the work.
Bottom line: The goal is money, money, money — not jobs — and that seems to be lost on JGers, who seem to live in the 1930′s.
And that is why I have recommended the “Nine Steps to Prosperity.”
Perfect answer if the word “JOBS” were to mean “a means to use for distribution of money to achieve equality and justice.”
This would of course include all services that are beneficial to mankind
such as caregivers,at home parents, anyone that is a member of the social group should be entitled to “a living standard” simply because they were born into the sovereign group.
But how can that be done without losing control of the quality and quantity of the sovereign currency ? The answer is so simply that it prays to be debunked ?
Take away from the PFPBthe right to ‘print’ sovereign currency as well as the right to tax that issuance by loans and GIVE IT back to the people.
AMEND the Federal Reserve so that it works for the people, and no longer give that awesome power to the private for profit banks.
May I prove to you that the Private For Profit Banks can create 100 million jobs, without deficit spending ? May I prove that IF they were working for the people (If $100 trillion ) were needed ,they would have a gain of over $100 trillion that they MUST spend in order from the $100 trillion in loans can be paid. According to MMT, loans equal deposits, NO MONEY NEEDED.
Since there is a “revenue” raised of $100 trillion how about creating even more “jobs” being eliminating FICA and giving all a basic deduction of $100,000 yearly income exemption ?
HOW do you sleep at night, not knowing if The Fed were the only entity that could issue currency (something that history has proven is a must) and taxed that issuance for us to use to promote the general welfare instead of it being “Interest Income” for the 1%.
PLEASE ASK ANYONE…TRUE OR FALSE?
Comments by Justaluckyfool ( http://bit.ly/MlQWNs )
( “You are always welcome to share, copy, plagiarize, improve, etc..any comments.)
‘ ***** “Believe nothing merely because you have been told it…But whatsoever, after due examination and analysis,you find to be kind, conducive to the good, the benefit,the welfare of all beings – that doctrine believe and cling to,and take it as your guide.”- Buddha’‘”)
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Well, if “demented JG cultists don’t care about the poor, the homeless, or the unemployed” then it follows that the poor homeless and unemployed don’t care about themselves.
For after Jesse Myerson’s piece in Rolling Stone that prominently featured the JG as the #1 recommendation out of 5, polls were taken on support for them. The JG got the most support, and the poorer people were the more they supported the JG Yougov poll.
Poor people are in touch with reality – and/or have better morality. A utopia that uses money but doesn’t have a JG is a hell for someone. It is authoritarian, dictatorial. A monetary economy without a JG is an insane, obscenely unjust idea, just as slavery was. The JG is pro- individual as much as possible, while all other arrangements for a monetary society including a BIG depend MORE on some big cheese ordering others around.
I say I don’t care about the details because the logic behind JG is universally understood. I always try to be polite, but mincing words can be less than honest. JG opponents would not say what they do if they understood what they were saying. The design is extremely easy. Every adult, every 10 year old makes harder decisions every day than how to run a JG which would result in a morally and economically superior economy to one without it, including one designed by Rodger Mitchell, whose other ideas I support. Of course we don’t need to have a 10 year old kid running it. I think Rodger Mitchell would do a better job running the US JG – probably a better job than me – if he just gave it a chance.
The JG is not A & B ditch-digging and ordering. It is A & B saying to each other – what do you think needs to be done in our community? If their ideas are sensible, doable. And the 10 year old kid (or Rodger) says, “well, that isn’t insane”. ,Then they do it, and get paid for it, at the fixed JG wage, which must be the minimum wage. (People will never work for less, if they can always get a good JG job for more.)
Of course I support the Utah legislation – we need more like it. But can Utah house the whole nation, the whole world? Note that And of course I did not mean that the only real money is that paid as JG salaries. Did you really think I did? What if unemployment were 99.9% – with today’s technology – not robot fantasies – do you think the government should offer people jobs – or let them starve?
Rodger – you used the JG idea when you ran your business. Every business does! (As does every tribe, every family, every real community) Did your randomly pick 1 employee out of 10 and decide he was to be unemployed – perhaps because the project you planned for the month turned out to need only 9 people – and still pay him to do nothing? Does that make any sense? Or if you only needed 9 people, did you find something for the other guy to do that he could accept and do? The base case, the normal way that human beings have ran their societies for hundreds of millennia is the JG. The JG is how humans run EVERYTHING – except monetary national economies. Unemployment = government using force and violence to prevent people from working for their own and everyone else’s good – is the crazy aberration.
Rodger: – you are right about so many things – and I could write a novel about how wrong I’ve been before – it took me a while to understand the JG. But could you imagine you might be wrong about this one, and that the poor and homeless and unemployed & the MMT academics might be right?
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Calgacus,
So long as you’re asking . . .
I spend many years — perhaps more years than you’ve been alive, making successes out of moribund companies.
In each case, a key problem was: The leaders did not pay attention to the details. They had a “great idea,” but everything fell apart when the execution failed, because execution is nothing more than a whole bunch of details, considered and taken care of.
I never considered executing an idea without first exploring the details.
I can understand why people would vote for a jobs guarantee. It sounds enticing. What could be bad about guaranteeing people jobs? The answer: The details.
And what is the purpose of those government jobs? To provide money to people who need money.
So why not simplify the process and provide a money guarantee? Call it “MG” instead of “JG.”
Why force people to jump through complex, convoluted hoops to get a WPA-style job, for which they will be given WPA-style wages? Just give them the money.
And as for the so-called “poll” you mentioned, let’s ask the same people: “Would you rather dig ditches for minimum wage, or would you rather receive the same money, without digging ditches?”
See how “unbiased” research works?
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Just give them the money.
Why is this so hard to understand?
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In many things, the devil IS in the details. Not unemployment, not the JG.
There are things where the devil is NOT in the details, but in the decision. Like the problem of bleeding because you stab yourself.
Saying that MMTers don’t give enough details about the JG is like someone obsessed with stabbing himself asking – but where should I stop stabbing myself – stop stabbing my leg? stop stabbing my ear? stop stabbing my throat? stop stabbing my eye? Use a sharper knife? You aren’t giving enough details! (MMT academics fall into this trap and give too many details)
No, the solution is “stop stabbing yourself”. Simple, abstract, general. A child could run the No Self-Stabbing program – a child would be better, because he hasn’t had the time to be indoctrinated in belief that you MUST stab yourself constantly to prevent bleeding.
A monetary economy without a JG is a crime against the unemployed. It is like a person stabbing himself endlessly and wondering why he is bleeding. The norm throughout human history, and in all human affairs is the JG. No successful businessman can be against the JG in practice, rather than in the theory he thinks he is following. If not, then please give me the names of your employees that you paid, but forced to do nothing for months and years on end – and tell me through what magic this helped your business.
And what is the purpose of those government jobs? To provide money to people who need money. No, that is NOT the purpose of the government jobs. The purpose is to give valuable money to people in return for something scarce and valuable – their labor – which will do productive, good, jointly-decided-on things that benefit anybody or everybody. The purpose of any government job – and ultimately, we all work for the government, because government money is the base money of modern economies – is to direct the productive activities, the division of labor using the society’s resources. The idea that societies will be more productive if they decide to randomly, violently force people to not work is insane, just as it is in a business or a family.
So why not simplify the process and provide a money guarantee? Call it “MG” instead of “JG.” Because it is impossible. The poor, homeless and unemployed know it is impossible. The overwhelming majority of the human race knows it is impossible, Basically everyone throughout history has known it is impossible. The MMT academics and even the mainstream idiots know it is impossible. Sucesofinaciero knows it is impossible.
The poor, homeless and unemployed know that the MG, the BIG is a lie. It can’t work. Good things don’t happen by wishing them into existence. Even if the whole society gets together and wishes REALLY, REALLY HARD = BIG. Only our modern extremely rich societies have been rich enough, have had so many who have had their wishes granted that they can convince themselves that things happen just by wishing.
Look, Rodger, I know you are a good guy. I know that if you were dictator of the economy, that you would design a pretty good plan, that would help most people. But surely you agree that each person can get only a finite amount of money under your plan? That at some point you have to say no, no more money for you. And that if you don’t, you let everyone have all the money they want – why, money wouldn’t be worth anything. Hyperinflation.
But if there is one person who is unemployed, who says he wants more, Dictator RMM has committed a crime against him. For who are you, who is anyone to say to someone who wants more money than they think he deserves under the plan – “No, that’s enough. You can’t get more. I don’t care if you want to work for it. My plan is perfect. No job for you. No, you can’t improve your life, my life and everybody else’s life by doing needful productive work.” Would you treat a family member, a friend, an employee (who would make you more wealthy by his working for you) that way?
It would be saying – “Your work is worthless” Basically, “You are worthless”. And this just isn’t true. It is just a lie, a mad lie that most people don’t realize they are saying.
And as for the so-called “poll” you mentioned, let’s ask the same people: “Would you rather dig ditches for minimum wage, or would you rather receive the same money, without digging ditches?”
Unlike the original quesiton, that is a very biased question, but most poor people, if it were a referendum, would probably see through the bias, and go for “ditch-digging”, because they know the other alternative is a scam.
In reality, the JG proposal is “Do you want to do something you like and are good at, are skilled at, in return for a minimum wage which is rather higher than today’s?” And if one follows the correct reasoning of the MMT academics, the poor etc and the vast majority of the human race, one realizes that the real-world alternative to the JG is NOT “would you rather receive the same money, without digging ditches?” – but – “would you rather receive a piece of shit which is worth nothing, the same as the nothing you did to get it”?
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“”Do you want to do something you like and are good at, are skilled at, in return for a minimum wage which is rather higher than today’s?”
And that is where the details come in, for the proponents of JG have decided it is beneath them to show exactly how they would accomplish that for people all over the country — people on farms, people in small town, people in big cities, people who can read and people who cannot, people who have run companies, people who never have, older men, younger women, and on and on and on.
You say giving everyone money is “impossible.” I say, that’s easy. We did it in 2008. We already give all older people money. It’s called Social Security. How about merely lowering the age, so that everyone receives Social Security. What’s so hard about that?
(I know. Hyperinflation. The last argument of the debt nuts, who have run out of arguments.)
I say finding jobs for everyone, jobs everyone likes and is good at — that’s impossible, especially when you have no plan.
And puleeze, . . you say you would rather dig ditches to receive money than receive the same money without digging ditches? At least be honest in your arguments.
You have no plan. There is no plan. There is only someone dreaming, “Hey, wouldn’t it be nice if everyone had a job?”
But maybe I’m wrong. Maybe there is a plan. Do you know the plan?
If so, what is it?
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“JOBS” (JG) is a misdirection, for surely you do not mean that ‘gainful employment’ is necessary to help establish “equality , justice and the pursuit of happiness” or to establish a good Standard Of Living .
Maybe this should be more accurately stated as “Standard Of Living Guarantee” SOLG).
Why would you be insistent that …
…a stay at home single parent be required to take a Job ?
…a veteran with PTSD be required to take a job?
…a new born child be required to take a job?
Are they not, simply because they are a member of the social group entitled to a good Standard of Living.
There is enough goods and services in this world since its creation to have all mankind achieve a good standard of living- we need only to govern properly.
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We already give all older people money. It’s called Social Security. These older people worked hard for that money. In the main, SS is deferred compensation / forced savings. And they paid an onerous and far too large SS tax to boot.
And that is where the details come in, for the proponents of JG have decided it is beneath them to show exactly how they would accomplish that for people all over the country IMHO, the problem is that MMT academics give far too many details. To the point of being debatable, of obscuring the essentials.
I say finding jobs for everyone, jobs everyone likes and is good at — that’s impossible, especially when you have no plan. Like I said, a 10 year old child could do it – with a far better result than what we do now – And added to any Rodger Malcolm Mitchell plan without a JG, a JG run by a 10 year old child would significantly improve the results.
You could run a JG program better. You did, when you ran a business. I did it on a tiny scale when I ran my own business. Like I said, the JG, full employment is how human beings, how nature does everything. The JG is everywhere if you just look. I would really like an answer to this argument from someone:
All you gotta do is just ask people the work they can do and would like to do – and let them do it. Of course if they say “astronaut” – the JG bureaucracy would say OK, but you gotta bring your own spaceship – for now we’ll find the closest thing to your abilities and desires while you get it out of the spaceshipyard. All that is needed is common sense. Of course it won’t be perfect, be a perfect fit. What is? Why would anyone want to live in a world like that?
And puleeze, . . you say you would rather dig ditches to receive money than receive the same money without digging ditches? At least be honest in your arguments. That is not what I said. Of course I personally would rather not do the work. I’m a lazy bum.
What I said is that if there were a referendum, most poor people [and I] would vote for ditch-digging – because we know the other is a lie.
Poor people think more carefully and logically about such things, while wealth and privilege seems to cause magical thinking. So poor people support Job Guarantees over Income Guarantees. I suggest any reader here actually ask a poor or homeless or unemployed person what THEY think.
Anyways – what is so BAD about the JG? Why such strong emotions about it? What would be so terrible if the USA did it – what was so terrible about the New Deal employment programs? Note that the biggest, the WPA was not the “big project” agency, that was the PWA.
Would people change their mind if they saw a successful JG country and a stagflationary mess of a BIG country?
Why do people not want to give poor people what they actually want – a job – rather than the handout they know is a lie? Why are people so convinced they are smarter than other people, than poor people?
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Could I suggest a different perspective: human needs? I’m inclined to believe that human actions and inactions are always motivated by a perceived need. A. Maslow did a pretty good job, IMO, of categorizing and stratifying human needs. The two lowest levels in his model – lowest in the sense of primacy – are physical and security needs. Humans will do what they deem necessary to meet these two survival needs, including legal ways, e.g., accepting jobs that pay non-livable incomes, or illegal ways to meet these survival needs.
If, and only if, these survival needs are met, can humans focus on higher level needs, moving toward what Maslow calls self-actualization, and what I suggest was meant by “…pursuit of happiness…” in the Declaration of Independence. I further suggest that there are NOW sufficient resources to meet everyone’s lower level needs. In the past, as little as 50 years ago, there wasn’t sufficient resources. But the game of Monopoly we’re currently playing no longer reflects reality. Pretty soon, the economic imbalance will force us to end the game.
My proposal is to provide each person with sufficient financial resources (money) to meet their survival needs, and therefore create the economic freedom that allows each person to develop his or her full potential. Such personal development will require a lot of support, since many former “wage slaves” have no concept of how they can personally develop. But if governmental structure can provide resources to “guarantee” everyone a job, it can provide equivalent resources to develop each person’s full potential. The private sector can also rally to assist others to meet their higher level needs. The point is, each person would be free, economically, to define his or her own MEANINGFUL “job”.
BTW, are JG and BIG mutually exclusive, or can we integrate two potentially transforming principles into a “sum is greater than its part” solution? What would that look like?
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My proposal is to provide each person with sufficient financial resources (money) to meet their survival needs, and therefore create the economic freedom that allows each person to develop his or her full potential.
A. Inflationary. Impossible in practice outside of the robot utopia we won’t have until we finally get the JG. More importantly:
B. Immoral. Because self-contradictory. Who are you or anyone else to say what is “sufficient”? So it will not create the maximum amount of economic freedom to allow each person to develop his or her full potential – UNLESS it is accompanied by a job offer, that gives yet more money, in return for work negotiated between the worker and the community of which he is part. And because the work costs effort and produces something, the extra money given is not devalued, does not devalue everybody else’s money too.
Extra money beyond what the bureaucrat expert KNOWS is enough for survival. For throughout the ages and now there have been legions of bureaucrats and experts who say $0 is far more than necessary for the lesser people to survive and reach their full potential. You can always improve the outcome if you give people jobs at their individual behest, rather than yet another relatively authoritarian scheme like the BIG.
BTW, are JG and BIG mutually exclusive,
Absolutely not! Glad to see your question. They will work well together. The JG and a small, non-universal BIG. If everyone who wants one has a job, everybody else has a safety net and cash income, what would be the purpose of giving lots of money to everyone, except to create lots of destructive and pointless inflation?
or can we integrate two potentially transforming principles into a “sum is greater than its part” solution? What would that look like?
That is what MMT thinkers generally suggest. An income guarantee, safety net for those who can’t or absolutely won’t work for money. And a Job Guarantee that pays more, a living wage for real work. (Of course if people have genuine individual needs beyond the basic safety net income guarantee, like medical ones, modern rich societies should take care of that gratis.)
All in all, not much different from what Bertrand Russell suggested 100 years ago in Roads to Freedom, which prominent BIG sites quote from without including the JG part.
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@Calgacus and @RMM…Hooray! I’m seeing that these two principles ARE merging, perhaps ever so slightly, but still I see points of commonality.
Both seem to agree that every person should be able to afford to pay for the survival needs (physical and security) of his or her family. This, folk, is the superordinate goal. The remaining big (not BIG) issue is whether every person should be required to be gainfully employed to receive a living income from the govt, is this correct?
Putting that question aside, for the moment, I propose that most everyone wants to be doing something meaningful with their lives, ESPECIALLY if they don’t have to worry about meeting their survival needs. Agreed, some have no idea what she or he wants to “be when they grow up”. I’m not sure I ever really found that out myself :-). Bottom line, I believe there is an intrinsic motivation to work, as long as the work is meaningful.
And here’s where I can see value for the JG argument – if the definition of a “job”, would include the development time and energy for each to become qualified for the work he or she seeks. For example, John Doe would like to become a nurse. If efforts toward becoming a nurse were considered “a job”…that is, if John’s current job is BECOMING a nurse, I could go along with the JG proposal. If JG limits the client to accepting a job from among the choices created by a govt bureaucracy, ehhh…too much state control for me. But if an existing govt job can be offered that the client would accept, which I suppose would be most of the clients, that’s a different story.
What modifications can be made to accommodate a guaranteed living income and opportunity to contribute productively to society, and not just increasing the bottom line of the 1%?
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Great to see we are converging! Thanks for your response.
The remaining big (not BIG) issue is whether every person should be required to be gainfully employed to receive a living income from the govt, is this correct?
No, that is NOT the JG. There is no requirement. The JG is purely positive – everyone can go to the government, and exchange his labor time in return for money at a fixed wage. At their volition. That’s all.
You could live on the BIG & get extra money on the JG. Because BIGs, most especially the BIG proper, the big BIG are stagflationary, and the JG is the opposite, anti-inflationary stimulus, a society with a JG can afford a bigger BIG than one without one. High unemployment is inflationary. So logical BIG supporters would support the JG.
And here’s where I can see value for the JG argument – if the definition of a “job”, would include the development time and energy for each to become qualified for the work he or she seeks. Such things depend on the wealth and conditions of the society. All the MMT academics JG proposals include such things. It is hard to think of a society in the history of humanity where studying to be a nurse would not usually be an excellent JG job.
But sometimes a society may be very poor, in the midst of war, famine, ecological collapse etc – and other jobs – studying to be a paleontologist say – might not be reasonable to offer, because the society needs to survive. It would be a negotiation, like everything else, between what the seller, the worker, and the buyer, the government(-funded) employer, wants. But as Minsky said, the JG would “take the worker as they are” as much as possible. That’s how it worked, as much as possible during the New Deal – and the GI Bill after WWII – whose dollar expenditure exceeded all the New Deal programs put together – educated thousands, millions to be nurses and some paleontologists too.
If JG limits the client to accepting a job from among the choices created by a govt bureaucracy, ehhh…too much state control for me. But if an existing govt job can be offered that the client would accept, which I suppose would be most of the clients, that’s a different story. Not sure of the difference you mean. In addition to what I said above, a problem to avoid is – the JG is not supposed to be a tool against existing government workers by replacing them with lower wage JG ones. On state control – the true control exercised by the state is in its taxation and spending policies other than the JG. The JG is an escape from this control – a real way out for individuals. The wealthier the society and the more egalitarian it wants to be, the higher the JG wage can be and the broader the range of jobs. As the USA is still the richest society overall in the history of humanity, there is a lot of latitude.
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I have one simple question for those wanting jobs to return.
What does demand and supply says happen when the price of an item is set too high.
Bonus questions for those wanting GI.
What demand and supply say happens to price when supply (of dollars) increases. What happens when demand (of good and services) increases?
Can anyone sibgle out one single item that does not require labor, energy, and raw material costs to make. One.
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“Can anyone single out one single item that does not require labor, energy, and raw material costs to make? One?”
Sure.
Money.
Since money has no physical existence, infinite amounts of it can be made effortlessly.
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“Can anyone single out one single item that does not require labor, energy, and raw material costs to make? One?”
Quote quatloosx, “Sure.
Money.
Since money has no physical existence, infinite amounts of it can be made effortlessly.”
Exactly correct, as Soddy said,” Money is now the NOTHING that you get for SOMETHING to exchange for ANYTHING.”
Yes, you can create unlimited “money” but you must be aware of the unintended consequences of its right to “exchange for ANYTHING”. Simply because “ANYTHING” is not unlimited.
You cannot create “unlimited” good faith and credit” the real value (wealth) of money.
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So money is now nothing. And yet money is something, and its value is the “good faith and credit.” But since this “good faith” is not unlimited, then money isn’t unlimited either. And yet money is unlimited, since we can create as much as we want. But we can’t really, even though we can.
This is what happens when we honestly look at the “job guarantee.” Its details become like a mirror maze with endless contradictions, blind alleys, reflections of reflections, and no way out.
Inside the mirror maze, we run in circles, going ever deeper into trivia, absurdities, and meaningless chatter. We don’t care about helping others or ourselves. We only care about blindly running around forever. We even lie to ourselves and others, saying we would rather dig ditches for pay than receive the pay for doing nothing. Anything to keep the silliness going.
My satisfaction is to sit comfortably above it all, watching you scurry about faster and faster like a dog chasing its tail. You decide nothing, define nothing, establish nothing, and accomplish nothing.
You win. You’re right. I am wrong. You are a genius. I am a moron.
Enjoy.
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Close but no cigar….
If you knew what’s behind the financial system you’d never say that. There are various organizations involved in the creation of money, technically it’s not money – it’s debt/credit (but that’s a conversation for another day). Organizations include the Treasury, the Fed and many banks.
I will post what happens as per the documented process, as per the Fed and the Treasury (which Rodger disagrees with). First, each institution has to have a system capable of processing transactions. But in reality, they have much more than that. These institutions have huge data centers full of servers, network equipment, mainframes, cooling systems and electrical systems. Second, there are various levels of support managing and monitoring them. There is security, development, analysis, etc, etc…. It costs billions to maintain one of these data centers.
With that said, during a treasury auction – the treasury transfers bonds to the investor’s depository of choice or to the Fed. The bonds transferred to investors do not create more money. However, investors must instruct their banks to:
– use their back-end systems (those I just mentioned – which costs billions to build and maintain) to transfer funds from their accounts
– via the clearing system (Fed or CHIPS – which also costs billions)
– to the Treasury’s account at the Fed
The Fed, however, creates money (really debt/credit) for bonds transferred to the Fed (QE). In this case the Fed marks up the Treasury’s account at the Fed .
In the mean time, try to think of how much electricity these data centers consume, try to think of how many people have to be employed to build it , maintain it, secure it.
And I think we all know that paper money has tons of costs associated with it too.
No, money is not “free”.
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Just curious: How many angels can dance on the head of a pin?
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I wasn’t around in the 60s to answer that….
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With each assertion you wander farther into the meaningless mirror maze, going nowhere.
Consider what you say:
“Paper money has tons of costs associated with it too.”
“It costs billions to maintain one of these data centers.”
First of all, paper money is not money. It is currency. It represents money, but money itself has no physical existence.
If you dispute this, then you haven’t even learned Monetary Sovereignty 101.
Second, these “costs” you refer to are, again, non-physical.
Suppose it costs 1 trillion dollars an hour to run a data center. So what? We digitally credit some bank account by whatever figure we like, and that’s that.
Money is abstract units of account. It is notations in the digital ledgers of banks, nothing more.
Therefore money is free. Failure to understand this is what keeps most of mankind in poverty.
You help sustain the nightmare by your willful blindness.
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Quat,
If money is “created”, there is an action involved. Although abstracts can turn into actions, actions are not abstracts. Some actions take place for money to come into existence, and those actions take place in those systems.
Forget about the money obsession for a sec. Can these systems run themselves or do they need electricity, labor, realestate?
Stop going around the truth for once. Electricity, labor, real estate is what gives ‘money’ vale, not the other way around.
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The value of the dollar, like the value of all things, is based on Supply and Demand. (V = D/S.)
Demand is based on Risk and Reward. (D = Reward/Risk.)
The Reward for owning a dollar is Interest.
That is why, when the nation is threatened with inflation (reduced V), the Fed increases interest rates (Reward), which increases Demand, which increases the Value of a dollar, thus reducing inflation.
Electrons and the labor required to print dollar bills, have nothing to do with the Value of a dollar.
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Question.
V= S/D ; S/D = V
Must you have a Demand and a Supply to have a Value?
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I see the light now. We print, to have to raise rates, to print more to raise rates more.
Let’s see how well this strategy works when you lose control, like in some of the emerging countries, like Brazil and Turkey.
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Interest rates are not the only thing affecting Demand. That is why there has been zero relationship between federal deficit spending and inflation, since we went off the gold standard.
Despite the fact that interest rates are very low, the Fed is more concerned about deflation than inflation, which also is very low.
See: https://mythfighter.com/2010/04/06/more-thoughts-on-inflation/
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Suces..If prices rise we don’t know demand will fall. Super Bowl ticket prices are now $2,500. College costs are $60,000. Yet more people go to college than ever before. And the Super Bowl sells out.
If the supply of dollars increase maybe people will save more. Or maybe businesses will hire the 30% of the labor force not working to meet the increase in demand without having to raise prices per unit.
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Thanks for making my point.
There is only one super bowl a year and once the tickets go you have to wait for the following year.
‘Money’ is being handed to anyone wanting to attend college, demand and supply says more money chases limited education, prices go up.
Some people will save, others wont, relatively speaking the money will be spent and prices will go up by at least the same amount.
Businesses dont raise prices for the fun of it, there is something called competition – with price being the main differentiator. They increase prices only when they have, meaning – input costs outside their control. Prices will increase, there is no alternative.
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@jeff rudisill, @RMM RE:”BTW, are JG and BIG mutually exclusive, or can we integrate two potentially transforming principles into a “sum is greater than its part” solution? What would that look like?”
Could all of this really just be a question of consequences of inequality?
Because of human nature, wealth inequality is a must. The size of the gaps
creates the “injustice”. All members of this social group are entitled to “the pursuit of happiness”. A basic quality of live, a standard of living.
Are they not given this opportunity because of the extremely wide gap between the “haves and have nots”? The full wealh of the nation is 100% of the whole. We must achieve better distribution such as 50% of the people sharing 50% of the wealth.
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@justaluckyfool, if you are saying that inequality of wealth, ipso facto, is NOT the “cause” of poverty, I have to agree. I would suggest that the aspect of the “human nature” you refer to is a result of the deeply ingrained belief that there’s not enough to go around (historically correct, BTW), and the resultant behavior that each must “get as much of the 100% pie” as he or she can. I rest this belief in the observation that few people would decline a legitimate offer to increase their “share of the pie”.
What has changed is, through human ingenuity and technological advances, humans can now supply the resources to meet survival needs for all. But I don’t agree with your zero-sum approach; that there’s a fixed amount to go around. This only reinforces obsolete thinking that motivates greed. We don’t have to take wealth from anyone to provide for the needs of anyone.
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http://www.theguardian.com/world/2014/feb/01/argentina-peso-crisis-shakes-queen-cristina
Monetary sovereignty working wonders in the land of Che. How much this man gave for a cause that has killed so many after his death. Argentina has been in and out of hyperinflation every couple of years. It is what it is, the people of argentina want JG, they want GI, this what they get.
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Thank you reader DanB, who brought this article to my attention: Federal Jobs Program That Didn’t Work
To all those who “don’t give a damn about the details,” I call special attention to the very last sentence in the article.
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Yes, I have read this article before. Many of the things he says boil down to – CETA should have been simpler, more like the MMT JG. The point is – work at what? – by what measures? CETA worked fine for its purposes, for economic purposes, by any rational social or economic yardstick. Shapiro may may be right that it failed on the propaganda yardstick.
CETA employees did perform useful work — from asbestos removal to assisting in libraries and senior citizen centers. But these workers also got fobbed off to nonprofit agencies, many of them community action leftovers from the 1960s with (shocking revelation ahead) political ties. And any of this is a bad thing how? CETA workers did productive work and got paid for it – any real JG policy is essentially a win-win-win with no negatives – it is quite comparable to a “not stabbing yourself” policy.
Keynes addresses relevant points in the General Theory. Basically he notes that irrational prejudices are so ingrained that societies prefer wholly destructive expenditures, like wars – to simply tending your own garden with government full employment programs. Because jobs programs are productive, not destructive, people fall into a natural error of logic and measure them by utterly inappropriate, nearly meaningless “business” or “financial” or “efficiency” measures. (This is the cause of Ralph Musgrave’s misunderstandings.)
But what liberals should have learned long ago from CETA is that effective management matters – and that an ill-designed program can turn a laudable idea into a laughing stock. Of course effective management matters. Of course it should not turn something into a laughing stock.
But my point about a 10 year old child was that a monetary economy without a JG is such a wacky, such a terrible, such an inhuman idea that adding on even a “badly run” JG will substantially improve any economy and society. A society without a JG, CETA, WPA etc. is a far bigger laughingstock, far worse managed – it is like a retail business that thinks it can prosper by destroying its inventory and burning the store down. There are other things you need to know about living a good life than “not stabbing yourself”. But that doesn’t mean “not stabbing yourself” is not a very good idea, and that the first thing to tell someone who is stabbing himself is not: STOP!
Again, full employment, the JG is the norm in human society and always was. It is the way every business, every institution is always run. Forced unemployment in modern national monetary economies is the crazy aberration. But it can take some thought and reorientation to realize this, and even the MMT academics don’t do this sufficiently IMHO – I believe I am the most pro-JG fanatic out there.
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“I know that sending money to “lazy” people who don’t work, goes against our Puritan grain, but we should get over that notion. There are many reasons people don’t have enough money, and laziness isn’t anywhere near the top of the list.”
I have to agree with this and I’m sick and tired of people beating that same drum…happy people are more productive than unhappy people, and productivity comes in many forms and ways other than ‘making money’..that is all there is to it….these Puritans may feel all cozy and warm inside because they manage to get someone off the unemployment line and into a factory job, yet this same guy comes home and drinks himself to sleep every night because his job makes him absolutely miserable…in the end he is not productive at all, he is destructive of his health, and only serves to make the liquor companies more wealthier.
I have two sons who both have special needs, my youngest was born with Agenesis of the Corpus Callosum. For him, he will never be able to compete in the jobs market or business world because he lacks the social, competitive, and salesman skills necessary to succeed in a cut-throat world as is our current economic system. He wouldn’t know or understand what money was if it hit him fair between the eyes.
However, he is also only 10 years old and scored 455 out of 455 in a grade 7 literacy test, and has a human calculator for a brain. So he is above average in some respects, but below average when it comes to ‘what is necessary from an economic perspective’.
The things that these two boys can do, both with their minds and their hands at home and for the benefit of the family are quite impressive but not what society wants. There is no demand from society for the skills and talents they do possess if they only benefit the family, and what frightens me more than anything is that society will not give a shit about what will make them happy but will rather try and put them into social programs where they are forced to work in some factory designed for people with autism and special needs, never considering whether it will make them happy or not.
This competitive economic game is not for everyone, and people need to realize this, and they also need to get over their perceived views about what is really productive..happiness is more productive than earning money..period!
But on the flip side, most people, including myself, need to work otherwise we go insane from boredom. If I am not doing something either with my hands, or with my mind, I get extremely fidgety. So again, this notion that if people get paid some EB are going to sit on their asses and do nothing is ludicrous. It’s simply not true and unfounded and not supported by any facts nor by experience.
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It’s hard to have any respect for someone who’s research into lack of jobs constitutes looking at the paper or monster.com
Ask an actual academic who researches joblessness if there are enough jobs for the tens of millions of unemployed in your country then write a very contrite retraction.
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The problem is not lack of jobs. The problem is lack of money. There are millions of working poor, because their jobs don’t pay enough.
Those are exactly the kinds of jobs JG would supply.
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Excellent idea! The Economic Bonus is essentially a Universal Basic Income (UBI) for all, paid via money creation by our Monetarily Sovereign federal government. I have long advocated a UBI of some sort myself for several years now. There are many types, and the devil is really in the details. Andrew Yang’s proposed version, for example would be paid via a 10% VAT, and the Alaska Permanent Fund is paid via a severance tax on oil and other mineral resources. But this version is the only one that truly grasps the concept of Monetary Sovereignty.
As for the tentative dollar amount you mention, I think you are, pun intended, right on the money. And $1000 per month would in fact be enough to practically abolish material poverty completely in the USA, at least if we take the official federal poverty guideline literally. The working class would thus gain much, much more bargaining power without the economically-coercive “axe of poverty” over their heads. But I think that the full amount should be available to all by default at 18 rather than 21, since 18 is currently the legal age of majority in almost every state, and 18-20 year olds are also one of the most vulnerable age groups in terms of risk of poverty. And people under 18 who become legally emancipated earlier (and/or who graduate high school earlier) should also get the full amount as well. Or perhaps have all ages simply get the same amount, period. Otherwise, I agree with you 100%.
As for a JG, I think it is possible to have both a UBI (aka EB) and a JG, as those two things are complements rather than substitutes, but that is a topic for another discussion.
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