The rest of the article is very MMT in all but name, and describes how the New Green Deal can be paid for while keeping inflation in check.
A final way we might combat inflation, should it ever emerge, is by use of a new infrastructure that I’ve proposed elsewhere. Suppose, for a moment, that the Fed offered what I call interest-bearing ‘Citizen Accounts’ for all citizens, instead of just offering ‘reserve accounts’ to privileged banks as it does now. Were it to do so, we’d not only eliminate our nation’s ‘financial inclusion’ problem in one swoop, we’d also gain a most powerful money modulation tool.
During deflations like that after 2008, for example, the Fed could drop debt-free ‘helicopter money’ directly into Citizen Accounts rather than giving it to banks in the hope that they’ll lend (which they didn’t – hence the notorious ‘pushing on a string’ problem of the post-2008 period). And were inflation ever to emerge, the Fed could likewise simply raise interest rates on Citizen Accounts, thereby inducing more saving and less spending.
I believe that the ‘fintech’ revolution renders something like what I’m proposing here all but inevitable. The point for present purposes, though, is simply that once this thing happens we’ll have yet another quite powerful anti-inflationary and anti-deflationary policy tool – and therefore yet more reason not to be timid about moving ahead energetically with the Green New Deal.
Have I succeeded, then? Have I convinced you both that there isn’t a ‘pay for’ challenge and that there isn’t, thanks to a multitude of theoretical, empirical, and policy lever reasons, an ‘inflation’ challenge either? If you are bold, know finance, and care about our future, you probably didn’t need much convincing. If instead you are frightened, financially untutored, or cavalier about our economy or our planet, please buck up, wise up, and suit up. It is time to say game on for the Green New Deal.
Forbes
"why not allow the general public to deposit their savings at the central bank in interest-bearing accounts as another way to control inflation"
ReplyDeleteYou already can. Have at it. Right here:
https://treasurydirect.gov/
Choose your interest bearing instrument and time frame, directly in a fed account, zero risk. Everyone can do it. No minimums.
It looks good, Ryan.
ReplyDelete> 50% of citizens do not have a savings account, let alone any measurable savings.
ReplyDeleteChoose your interest bearing instrument and time frame, directly in a fed account, zero risk. Everyone can do it. No minimums. Ryan Harris
ReplyDeleteAnd, of course, you get a debit card and/or a checkbook for your account, right?
WRONG! So at TreasuryDirect you can only SAVE fiat, not USE fiat! For that you still need an account at the usury cartel.
We will not cease being slaves of the banks till we can USE fiat - just as they do - via debit/checking accounts at the Central Bank or Treasury itself.
I knew there had to be a catch!
ReplyDeleteIf the government issues interest-bearing bonds to wealthy institutions to take money out of circulation to control inflation, then why not allow the general public to deposit their savings at the central bank in interest-bearing accounts as another way to control inflation? KV
ReplyDeleteSince deposits at the Central Bank are inherently risk-free, positive interest on them would constitute welfare proportional to account balance. Is that any way to have genuine reform that the banks dare not openly oppose? Do you defeat crooks by being crooked yourself?
This would compete with the private banks, but would this be a bad thing? KV
It would be very bad and just make it easier for the banks to oppose reform.
As for fighting inflation, genuine bank reform by itself would cause MASSIVE deflation since having GENUINE liabilities would make it much more dangerous for banks to create new liabilities to compensate for the repayment of existing liabilities.
ReplyDeleteSo the initial problem would be fighting deflation and a carefully metered Citizen's Dividend would be an ethical means to do so.
Taxes are (supposed to be) used to control inflation by taking money out of the economy.
ReplyDelete"taking money out of the economy"
ReplyDeleteEconomy is a euphemism for your wallet. Increasing taxes to "control inflation" means you've expanded the government sector to be so large, so quickly that the real "economy" (think your wallet) and you needs to be decreased. Typically "inflation" will simply cause an increase in certain prices and an increase in production capacity followed by a decrease in prices. There are few if any resources limited in developed economies. When there are no-borders, labor is effectively unlimited, simply a function of price. If you raise the JG labor price, and offer perks like free education and healthcare you can control the immigration rate rather than adjusting tax rates to control inflation.
Andrew, Fed accounts are not commercial bank accounts that offer private sector banking services like credit and debit cards. The Fed uses (or used to) use JP Morgan for that. Fed accounts only transfer money between other Fed accounts. A postal bank or credit union is some times used as a commercial alternative. I keep waiting to see the new Andrew Bank on corner near my house, harvest those banking slaves laborlfor yourself, Andrew!
ReplyDeleteFed accounts only transfer money between other Fed accounts. Ryan Harris
ReplyDeleteYes and since all citizens have an inherent right to use their Nation's fiat, then all citizens, their State and local governments, businesses, organizations, etc. should be allowed Fed accounts - and not just banks and other depository institutions.
Of course once such accounts are permitted as a fundamental right of citizens (at least), then all other privileges for banks and other depository institutions, such as government-provided deposit insurance, can and should be abolished in a responsible*, just* manner.
*e.g. Abolishing deposit insurance should be done in stages and coordinated with equal fiat distributions to all citizens to provide the new reserves needed for deposit transfers from banks, etc. to the new Fed accounts.
Taxes are (supposed to be) used to control inflation by taking money out of the economy. Noah Way
ReplyDeleteIt's true that when Federal taxes are paid, bank deposits are destroyed along with bank reserves, 1-for-1.
BUT, due to government privilege, banks are not reserve constrained anyway but capital constrained.
So, as long as they have sufficient capital, what's to prevent banks from replacing deposits that have been taxed away with new deposits ("Bank loans create bank deposits") - thus nullifying the attempt to control inflation?
It's really a very simple system if private banks are taken out of the equation.
ReplyDelete“I believe that banking institutions are more dangerous to our liberties than standing armies."
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property – until their children wake-up homeless on the continent their fathers conquered."
-- Thomas Jefferson
“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit… all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world, no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.”
-- Woodrow Wilson, after signing the Federal Reserve Act