The politicians always seem to be the last people to get it. But anyone who actually works in the corporate world knows that the central economic concern these days, the thing that is holding us all back economically, is not uncertainty about tax rates. They also know the core problem is not frustration with regulation and red tape. Nor is the problem an epidemic of nocturnal terrors about government deficits. The problem is this: not enough customers. And the problem of not enough customers right now is exacerbated by the fact that there is also low confidence that there will be more customers in the foreseeable future. With low confidence that broad prosperity will return to customers, the willingness to invest and hire aggressively is limited. And since so manybusinesses perceive the world the same way, the combined effect of their general unwillingness to hire is persistent high unemployment, and a self-reinforcing perpetuation of the low demand that is the cause of the unwillingness to hire in the first place.Read it at New Economic Perspectives
So one thing this country needs is the political determination to act at the national level to inject demand into the economy by putting increased purchasing power into the bank accounts of those most likely to make use of that purchasing power. But something more is needed. It is not sufficient to bestow a little temporary stimulus on the economy, because businesses do not invest for the long term in people and equipment just to satisfy a temporary uptick in demand. A more convincing form of national leadership is called for – something that convinces investors than sustained and durable demand is on the way.
What’s The Plan?
by Dan Kervick
8 comments:
To have a Plan you have to have a Purpose.
The purpose has to be real, else your commitment to it will NOT be real.
If the purpose is to 'make money' (used to be described as lust) you haven't got a plan that has even a remote connection to or recognition of 200,000 years of evolution of homo sapiens; or the evolution of all the remaining species and beautiful environments of planet earth!
It usually takes a tilt of the tectonic plates to wake people up (for five minutes). To see how precious existence is! To see how incredible it is, just to exist; to be alive so that you can enjoy.
What is the purpose of a human being?
What is the potential of a human being?
Our plan? Our direction? Our compass?
For too long we have been given a purpose by others. Blind leading the blind!
To find oneself would have to be a major part of a good Plan.
If politicians are always last to get it, then why in the bloody hell do MMTers advocate for maintaining political control of money production?
If entrepreneurs get it before everyone else, including politicians, then why not have entrepreneurs be responsible for the production of money? Indeed, why not the production of security and protection also?
Or is that when we are supposed to do a 180 and reverse things and say politicians know better than everyone else?
Crocodile tears this Dan Kervick character is shedding.
MF, with a scandal breaking just about everyday, you want to turn money creation over to bankers? At least govt is accountable through elections. Bankers are not.
Oh right, the public will just use honest banks and all the dishonest people will go out of business. Really?
If entrepreneurs get it before everyone else, including politicians, then why not have entrepreneurs be responsible for the production of money? Indeed, why not the production of security and protection also?
Those seem to me like about the most terrible ideas imaginable. "Free market" policing? Another term for that is "gang warfare." Competitive currencies? We have those in civil wars. Dan's point is that economic innovation and risk taking requires a certain substrate of stability and predictability for entrepreneurs to think the risk is worth it. There is a reason that the post WWII period was one of broad based growth and prosperity. There was central planning, investment, debt forgiveness. But most importantly, the basic pecking order questions were for a while settled. How much of Europe's potential has been wasted, spanning several hundred years, because the several States were always competing for precedence?
We have had private credit creation since the founding of the U.S. Is that what you mean by "entrepreneurs being responsible for the production of money?"
Here's T. Jeffersons opinion in an 1815 letter to Albert Gallatin on giving the nation's credit creation powers to "entrepreneurs:"
"The treasury, lacking confidence in the country, delivered itself bound hand and foot to bold and bankrupt adventurers pretending to have money, whom it could have crushed at any moment. These jugglers were at the feet of the government. For it was not, any confidence in their frothy bubbles, but the lack of all other money which induced people to take their paper..."
That quote sounds like it could apply peculiarly well to the last 3.5 years, I would think.
Agree with Dan Kervick. Kervick has my vote !
As Michael Hudson likes to say, all economies are planned, it's just a question of whether the plan is created by government, for the people, or by the bankers, for the bankers.
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Tom Hickey:
MF, with a scandal breaking just about everyday, you want to turn money creation over to bankers?
Not bankers, INDIVIDUALS.
Let's bankrupt the bastard bankers once and for all! If their paper notes and loans can be competed with in the area of money, then no longer do we have to use their currency to pay taxes! We can deal with any money we want, and their entire pile of Federal Reserve notes become worthless toilet paper. No more corrupt bankers.
Why are you so surprised that banks with central bank backstop have corruption? It's textbook moral hazard.
You point to scandals in the government monopolized monetary system, as if that is an argument AGAINST a monetary system without government monopoly?
I want to turn money production over to private citizens. That means not just bankers. That means ANYONE who produces ANYTHING that others might find useful as a store of value that has liquid purchasing power. These people don't have to be Wall Street bankers. Competition is open to everyone.
It would be like me saying I want a free market in computer software, and then you say "You mean you want to turn over software development to Microsoft?!?!"
Money in a free society would probably not even be paper notes, but something more valuable that can't be devalued as easily.
At least govt is accountable through elections. Bankers are not.
Government is less accountable than bankers because elections are only once every four years, and recalls are timely and costly, especially for an individual who wants out of the relationship. Plus governments are not even accountable to the minority. They are only accountable to the majority. If a bad government has majority support, then the minority are forced to pay it and forced to obey it and forced to "exchange" with it regardless.
With private businesses on the other hand, I can choose not to do business and I don't even have to convince 51% of the population! I simply choose, on my own. Since every other individual has this option, it means that private businesses are literally at the mercy of individual customers, 24 hours a day, 7 days a week. All people need to do is stop paying money to a company that turns bad, and that company goes kaputz. The incentive for businesses to do well is therefore greatly heightened. And that is exactly what happened. Private businesses did not improve their products over the years because some SWAT team pointed their guns and said "improve or else." The business owners did that on their own because they don't want to go out of business.
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Tom Hickey:
As for bankers? Bankers are nowhere near as accountable to their customers as they would be if money was privately produced. You can't blame the non-existent free market in money for customers to be unable to bankrupt bad banks due to the Fed (part of the government) printing money to bail out the banks all the time.
You're not making any sense. Here I am saying that money production should be open to INDIVIDUALS, the way computers and shoes and movies are, and you're coming back with asking me why would I want to turn money production over to people who are benefiting by the fact that money is controlled by the state, and thus prone to moral hazard?
I mean come on.
Wanting a free market in money does not mean turning money over to the current crop of bankers who have government controlled inflation backstops and moral hazard. No, I mean allowing ANYONE to produce their own money, and see which one or which ones become accepted by other individuals. May the best money or best monies win.
What is so evil about that? What is so scary about that? Are you scared that there are so many computer manufacturers and house building companies? That everything under the Sun should be produced by a monopoly with state privilege?
Oh right, the public will just use honest banks and all the dishonest people will go out of business. Really?
Not all, but most. At least with private producers, you can choose not to exchange with them, and you won't have to leave the country. That makes private businesses far more accountable than the government. Imagine a private business that sells alcohol tried to throw millions of people into cages for buying and selling marijuana, his competition. People would pretty soon stop doing business with that organization. Oh look, we can't do that with the state. People are forced to pay the government taxes in order to finance their own prison terms!
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If you can one day understand that I am more accountable to you as an individual than the state is accountable to you as an individual, then you'll "get" what I am saying. But you still want mommy and daddy government to protect you from.....what mommy and daddy have done.
David:
"If entrepreneurs get it before everyone else, including politicians, then why not have entrepreneurs be responsible for the production of money? Indeed, why not the production of security and protection also?"
Those seem to me like about the most terrible ideas imaginable. "Free market" policing? Another term for that is "gang warfare."
Gang warfare is what we have. The state is a gang, engaging in a war against other gangs, as well as against domestic private property owners on "their turf."
Competitive currencies? We have those in civil wars.
This has got to be one of the worst attempts at logic that I have ever seen.
We also have lots of movements in Civil Wars, should we abolish movements?
Dan's point is that economic innovation and risk taking requires a certain substrate of stability and predictability for entrepreneurs to think the risk is worth it.
Entrepreneurs can predict how much money in a free market will be produced, far better than they can predict the arbitrary and quite volatile choices of central bankers.
With competitive oil production, it is easier to predict the supply of it. With a single monopolist of oil, it is much harder to predict because the entire supply rides on his personal judgment.
Economic innovation would be boosted immeasurably if entrepreneurs can know the long term trends in free market money supply. They can't do that when money is monopolized, and the control is left to the whims of central bankers. How many entrepreneurs can accurately predict what the Fed is going to do 10 years from now? It is impossible. But if money production were done in the free market, it is much easier to make 10 year predictions, to make risk taking worth it.
There is a reason that the post WWII period was one of broad based growth and prosperity. There was central planning, investment, debt forgiveness.
Then why didn't the USSR become the most prosperous nation ever? If central planning works, then why was the US, the most economically free at the time, the most prosperous, while the USSR, the least economically free at the time, was dirt poor?
Prosperity did not occur in the US because of the central planning. It occurred despite the central planning.
But most importantly, the basic pecking order questions were for a while settled. How much of Europe's potential has been wasted, spanning several hundred years, because the several States were always competing for precedence?
It will be impossible for states to go to war in a world without states.
State wars cannot occur unless there is a war against the people first, namely taxation and violation of property rights.
We have had private credit creation since the founding of the U.S. Is that what you mean by "entrepreneurs being responsible for the production of money?"
We have had government backstops since the founding of the US, with intermittent periods of relatively free banking. The US become the world's most prosperous nation without a Fed.
Here's T. Jeffersons opinion in an 1815 letter to Albert Gallatin on giving the nation's credit creation powers to "entrepreneurs:"
"The treasury, lacking confidence in the country, delivered itself bound hand and foot to bold and bankrupt adventurers pretending to have money, whom it could have crushed at any moment. These jugglers were at the feet of the government. For it was not, any confidence in their frothy bubbles, but the lack of all other money which induced people to take their paper..."
That quote sounds like it could apply peculiarly well to the last 3.5 years, I would think.
Funny, since I don't want to repeat the last 3.5, nor do I want what Jeffersons was complaining about.
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