As for debt forgiveness, how is an organization like CALPERS supposed to forgive debt given that 58 cents of every dollar is made through investment earnings? In one way or another, CALPERS is invested in our government debt, mortgage, car loans, banks, and companies. Forgive debt owed to CALPERS and The State of California Citizens are on the hook to pay more for pensions via debt or taxes. See how that works?
Hey, I didn’t make the rules of this game. I’m just saying there are other parties expecting returns, including quasi-governmental agencies like CALPERS. Just take a look at these pensions!!!
Debt slavery. Why do you think they keep supporting the revocation of the 14th amendment? Once they get rid of that one, the 13th is next, and then they can just revoke your citizenship for non-payment of debts, and then use you for slave labor.
a free market won’t save us either though because there are just some things free markets do terribly, including:
common infrastructure: healthcare, phone lines, utilities.
paying for externalities: esp climate change.
stopping monopolies, reducing barriers to entries, price fixing.
handling the fact people are not rational: esp racism in markets and services
some of it can be fixed by free markets with heavy progressive taxation, but by no means can all of it be fixed that way.
there’s no perfect, self-regulating system that maximizes humane outputs.
a major problem in the us is people not realizing that government has a role to play as the balancer of these things. we therefore have allowed government to be “hands off” in all of the places that it needs to be hands-on… and have allowed the biggest companies to use the remainder of governmental power in their favor
If the USD loses its status as a reserve currency, you’ll see things get bad very fast. Russia and China stand to benefit from such a situation, so one has to wonder what they have planned in that eventuality.
Barring a real progressive movement transforming things as FDR did with the New Deal, that’s where I see the U.S. headed – and sooner than one might thing. There might be a UBI at that point, but it will be designed to keep most people in constant penury while still maintaining a sham consumer economy. As a rule of thumb, if you’re not close to free-and-clear on owning your home when the system collapses, you and your children and grandchildren will always be in thrall to a landlord (the only thing worse is to be in that position outside the greater urban area of an alpha or beta city – then it’s “Welcome to Ameristan”).
More than likely. The domestic American markets being de-coupled from the real U.S. economy (as Cory describes) will act as a bit of a buffer for the rest of the world, but it’s unsustainable. One way or another, Wall Street will have to confront the fact that it’s nothing without Main Street and when that happens the global economy will get hit, too.
i mean, yes, but … wall street is already decoupled from main street. like, you’d think that the value of money would have to be based on the price of bread ( or gold, what have you ) but it doesn’t really have to be an actual real world item anymore.
stocks seem like their own thing with their own economics and their own perceived value now. some of those perceived values do derive from main street - how many widgets is aapl projected to sell, and how closely did they hit that goal - but it’s not clear to me at all how much it matters.
as long as investors are willing to trade with each other, it could be bottle caps or whatever, as long as there are players willing to trade it works
yeah, if there’s no food or something everyone dies regardless of income. but so far, the rich seem to be able to stay rich by trading between themselves
The rich need people to provide their security; how long do you think those ‘hard men’ are going to serve their masters when things get really bad, with food security gone to Hell and only those that can protect themselves having any measure of safety? They will wipe out their wealthy employer and his family and take it all for themselves.
That can only go on so long. The markets being decoupled from the real economy is (in the larger historical scheme of things) a relatively recent phenomenon in America, maybe going back to the jobless recovery of that became permanent around 2011. The oligarchs and their pet politicians are still figuring out how to keep this going by maintaining a sham consumer economy for the peons (which is why the formerly unspeakable concept of a UBI is being discussed by members of both parties).
Forestalling that is the other trick they have to figure out. There’s ample historical precedent for them to study on how to keep the guard labour content without letting them get above themselves (fortunately for them, the job of thug-for-hire doesn’t tend to attract creative intellects and the educated but does tend to draw in those satisfied with exerting petty power over others).
The ‘guard labour’ for mobile wealthy individuals consists of mostly highly trained experts in military activities, with a strong grasp of security systems and similar IT technology and high capacity for tactical and strategic analysis. These are not your archetypal goons with guns and wannabe cops, we’re talking about the best people in the security business. They aren’t stupid and make the rednecks with rifles in pickup trucks look as smart as ground squirrels.
The craziest part is that, if passed, the aid bill with money for the unemployed and funding to bail out struggling state and local governments (who would otherwise need to make drastic cuts to services such as, among other things, the police) would be very popular among ordinary republican voters, and possibly increase Trump’s chance of re-election. The Democrats could have sat back, done nothing, and watched the country burn for political advantage (as the GOP did in 2009) but instead they put country ahead of party here, and the Republicans still said no.
Not sure how Russia would come out if the US dollar collapsed, but I’m pretty sure China would feel some major pain. China holds a tremendous amount of US debt, and the yuan has been pegged to the dollar for a while. Long-term, China probably would come out ahead, since the yuan fundamentally is much stronger than the Chinese government allows - they’d have a ton of buying power, but their exports would suffer if the yuan began to float freely.
I think some of the Senate Republicans realize this, but too many are too shortsighted to see anything other than “bootstraps good, government bad,” even when all the bootstraps have been taken away by a collapsed economy.
as pointed out by somebody else ( eek, who? ) above the republicans want the states to go bankrupt. mcconnell i think had even said that
it enables the republicans to force concessions on the states during bankruptcy to divert more funds from public services to private ones: schools, utilities, pensions, park maintenance services, you name it.
it’s the exact same game plan with the post office, or as what happened in flint michigan.
wealthy people are going to make it through regardless. in fact, as the pandemic shows: they’ll just get more and more wealthy along the way.
the part that’s not clear to me is if republicans are just greedy, racist, and classist… or if some of them actually believe that after a painful transition including even more mass sickness, homelessness, and death that the world will somehow be more just
they don’t seem to concerned about science and fact, so i guess anything is possible.
"there’s no perfect, self-regulating system that maximizes humane outputs.
a major problem in the us is people not realizing that government has a role to play as the balancer of these things."
Yes, the government needs to play the role of balancer - of being the one agency or organization that looks at the total picture in both the near term and the long term. We have guzzled the the kool-aid that economics is the heart and driver of human existence. It’s just a tool or set of tools to provide a vital infrastructure for people. Capitalism is not some inherent law of physics. Economics should serve the people - the people should not be serving economics.
They’re not. There is only one entity that can facilitate eliminating debt. It’s right in the summary.
There’s mechanics involved in how to do it. From forgiving direct debt and getting those people to in turn forgive lower debut, but that seems difficult. The most direct answer is to give people who have debts money to pay those debts.
In more recent years, what’s been observed is that creating more money doesn’t drive inflation as long as that new money isn’t competing with existing money for the same stuff. As long as it purchases something that otherwise would not be, there’s not inflation pressure. That’s a super important trick.
So, it’s really not that hard to deal with this. It’s unpopular in some circles, but not hard.
We want to close things for public health reasons. Say a movie theater. Pull the theater’s financials, pay them enough to pay all their suppliers, employees, debts, even without taking any actual delivery as if they were open, require that they be closed. It’s the government paying the movie theater to replace all of it’s normal consumer demand exactly. There’s no competition or inflation pressure because the consumer demand has been eliminated for public heath reasons, it’s simply not allowed. Once consumer demand is allowed to purchase again, stop paying them to avoid the competition for movie theater resources.
There’s still some holes on this around edge cases. What if the movie theater was about to open but hadn’t yet, so it has no existing financials. But, missing edge cases are way less harm than missing everything.
“There’s no competition or inflation pressure because the consumer demand has been eliminated for public heath reasons, it’s simply not allowed”
I think that assumes [mandates?]…
Inflation is very low and as close to 0% as possible, to help protect consumers
Consumers don’t buy more than their fair share or hoard
Producers don’t raise prices, to help keep inflation in check
Producers don’t lower prices; they’re getting a subsidy so there’s no need to compete on price
The government keeps printing money to keep the gears of commerce moving
In other words, a centralized economy where nothing changes.
Fast forward to sometime in the future. There’s a covid vaccine or is easily curable; everyone can now move about freely. The government printing press stops. All controls are lifted.
Will inflation suddenly take off because some consumers have saved and now want goods and services? Or, will deflation take off because consumers assume prices might actually go down if they wait?
The entire concept on the relationship of government spending vs inflation is dependent on government not competing for the same resources as “not government”. It’s not a centralized economy, it’s about what resources government vs “not government” compete for.
So, today, the government has said for public health reasons a movie theater or bar can only operate at 50% capacity. There’s no competition for the remaining 50% of capacity. It’s been mandated out of existence by health policy. Not some business planing goal picking industries or winners and loser, but by an independent health policy shock.
By doing nothing, the movie theater is funding some of that lost 50%. Some if it’s funded by their variable suppliers as they consume less, but their fixed costs haven’t changed at all. If they cannot cover the costs at 50% capacity, they’ll go out of business. When they do, their creditors will pick up the cost.
I’m suggesting that the government can, and should, purchase that lost 50% instead. With conditions on the purchase that they continue to pay all the suppliers and employees as if they were still providing the lost capacity. Paying this shouldn’t cause inflation, because consumers are not competing for the same resource. In this case, because they’re not allowed to sell it to them. Could this incentive someone to build a theater that’s twice as big to capture 100% consumer demand in 50% and then sell the unused 50% to the government? Sure, if the plan was to fund anything. But, if the plan is to lock in whatever was there on the day the pandemic started, trying to freeze time, so that scheme wouldn’t work. This isn’t some ongoing forever plan, it’s an emergency measure to deal with an emergency imposed restriction after the event has already occurred as part of the recovery and mitigation effort.
Fast forward, when the the restriction is lifted, just a little to 75%. The government would reduce it’s purchase to only the 25% that’s still restricted.
Fast forward to 100% available and the government isn’t buying anything anymore now, because there’s no restriction removing the consumer demand. Any government purchase would be in direct competition and a subsidy to normal operations, causing inflation.
Will there be more money in general in the economy? Perhaps some percentage. But, in general, it would have all been spent already. Employees still have living expenses, they’re still paying them, the money is still being spent, it’s still driving the general economy. Some of the excess is still being collected in taxes. It does nothing to advance any inequalities, trying to freeze the economic picture as it was on the day the pandemic required restrictions to be imposed.
The reverse is that all the demand is substantially removed as people do less to avoid infection. Businesses fail, debt holders get nothing, people go unemployed, states revenue drops, state services are reduced. It’s a negative reinforcing spiral of recession.
This isn’t some long term forever make the government pick things to support. This is a response to an external system wide shock where policy causes restrictions required for the general good that are in opposition to what’s frequently good for individual business. A country wide temporary stabilization bailout to prevent a recession spiral.
The answer to, would consumer expectations change or return to the prior state and how would prices change is just about how they change already and what are their current expectations. With normal supply, demand and competition driving the price.
