Cash payments to the poor reduce poverty but they don’t necessarily reduce income inequality. If you make the poor less poor and the rich more rich you have done nothing to reduce inequality. The only way you can reduce inequality is to take from the rich and then take more from the rich. Anything you give to the poor goes to the rich. We have to give more to the poor but it is a delusion to think that reduces inequality. Giving the poor borrowed money is a windfall to the rich and poor. If it creates inflation then it is a blow to the middle class. Fortunately inflation has stay low.
The printing of money happens when the Fed buys Treasury bonds. We have printed about 5 trillion dollars in the last two decades. When your central bank owns your debt it is not really debt, especially when the refund your interest.
I could make an argument that money was printed via the now 4 phases of QE. This printing of money has not been a problem since inflation has remained low. You could even make an argument that this printing of money was necessary.
The tax cuts were not necessary or even helpful. The money did not go where it was needed. It was delusional to think that business would use the money to build factories or raise wages. Businesses had access to more than enough capital if they thought that building factories or raising wages were good business decisions. When a business decides it is better to buy its own stock instead of expanding research or production it is telling.
The only thing modern about MMT is that some people are coming to MMT now. MMT is economics as it has been forever, economics has not changed the economic environment has changed. Supply has become inelastic. Supply does not really increase with demand. Supply is unlimited except where it is artificially restrained by cartels. Scarcity is the result of politics not production.
Stop being defensive and engage on the issues.
The National Debt has no impact on these rates.
Yes the National Debt has an impact on Mortgage and Auto Loan rates. Not directly but sentimentally which is what sets the spread between bond rates and consumer loan rates. The greater the level of indebtedness in society the greater the risk premium.
Deposits are created when banks extend credit, or the Federal government spends.
The deposits related to reserves are the deposits made to banks by people and intuitions for the purpose of holding our cash. Checking, savings, certificates of deposit, those deposits. Banks can only lend a portion of those deposits to other parties and the rest must be held as reserves.
Do you understand that we are in the middle of a run on banks. Not consumer retail banks but investment banks. People are selling their stocks and bonds and moving to cash but banks can’t find enough cash to cover the sales. That is why we are having liquidity problems at the repo window.
People are being told to stay calm and don’t sell. Seriously, would stock prices be falling if nobody was selling. If retail investors are being told not to sell then who is doing the selling. If institutional investors are selling why should not retail investors sell?
This is because the poor immediately spend their incomes back into the economy out of necessity.
Right, that is my point. Any money you give to the poor you are giving indirectly to the rich. I did not say we should not do it or that it did not help the poor. My point was why don’t the rich want us to give money to the poor since it all goes back to the rich anyway.
You responded, I thought, that the rich did not support giving to the poor because it would reveal their understanding that the money was coming back to them and they wanted to keep that a secret.
The alternative is that the rich want to increase income inequality. They don’t want to raise up the poor, they want to increase the rich/poor divide.
Which do you think it is or do you have a different idea.
TEK
