David_N
DP Veteran
- Joined
- Sep 26, 2015
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- Location
- The United States
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- Political Leaning
- Liberal
Imagine that the world economy takes a turn for the worse and slips back into recession. Central banks double down on their quantitative easing programmes. That doesn’t boost growth or bring an end to deflation. They push interest rates deep into negative territory. That doesn’t work either.
At this point, politicians opt for the helicopter money approach. That’s where central banks print money so finance ministries can hand it out to citizens in the hope that they will spend the unexpected windfall.
Indeed, the Japanese government is toying with the idea of distributing shopping vouchers to all households, which they could use for child care or other spending.
It's going to happen once the world economy begins to go downhill once again. I'd say it's getting closer.
https://www.theguardian.com/busines.../07/helicopter-money-is-closer-than-you-think
It's going to happen once the world economy begins to go downhill once again. I'd say it's getting closer.
In the case of a burst bubble threatening recession it makes sense to inject spending power in the pockets of the population.
That is best done from a position of low debt.
Is the helicopter over my workplace as we speak?
I might have to leave early.
Is the helicopter over my workplace as we speak?
I might have to leave early.
Godammit!It's not literal. Think about a "voucher" for food and essentials.
Its called humor. Maybe not good humor but humor. And now I want ice cream for some reason.You'd know the answer to that... if you'd read the article in the OP.
Godammit!
Its called humor. Maybe not good humor but humor. And now I want ice cream for some reason.
So the $300 - $600 incentive that Bush and Obama gave us back in '08 was "helicopter money" if I'm getting the gist of things. Though that was more money literal.
I think the real issue with these kinds of "incentives" if that is even the right word is that by the time they happen its too little too late. If an economy is getting a little rocky but not already in the toilet then sure, it might help people spend money on other things when they don't have to worry about keeping their family fed for a bit. But when things are horrendous, any extra money is "catch up" money which doesn't really help anyone except utility companies and their ilk. Or, if there is extra money, it is being saved while families sit and wait to see which direction the economy is going to go in.
This is a tough one to poll to, because people will rarely say "free" stuff is bad if there is a chance they are the receivers of "free" stuff. Its like holding an ice cream cone up to a kid and saying "Would it be bad for me to give this to you?"
That's just my two Abrahams.
Yes, I would tend to agree... all else being equal. But, for one thing, we don't always get to choose our current position. But we do get to (must, actually) choose our next step.
The fascinating thing about economics is the complexity and the dynamic nature of the issues. I studied Economic History in grad school, and absolutely appreciate the role a historical perspective plays in formulating good policy. At the same time... there are no direct analogues. The old saw about 'history doesn't repeat itself, but it often rhymes' is still true.
That said, I believe that we're gonna be forced to address the topic somehow. The notions of negative interest rates, helicopter money, and/or guaranteed minimum income are not being discussed currently out of the blue. Now... none of those may end up being THE solution. Or maybe each of them will be PART of the solution. But I suspect the future will look more like Denmark than Rwanda. And if you have hope for the advancement of the species... I'd imagine you would prefer that.
True, except we did more or less choose our present position of debt.
It's going to happen once the world economy begins to go downhill once again. I'd say it's getting closer.
https://www.theguardian.com/busines.../07/helicopter-money-is-closer-than-you-think
It's going to happen once the world economy begins to go downhill once again. I'd say it's getting closer.
https://www.theguardian.com/busines.../07/helicopter-money-is-closer-than-you-think
Yes, I would tend to agree... all else being equal. But, for one thing, we don't always get to choose our current position. But we do get to (must, actually) choose our next step.
The fascinating thing about economics is the complexity and the dynamic nature of the issues. I studied Economic History in grad school, and absolutely appreciate the role a historical perspective plays in formulating good policy. At the same time... there are no direct analogues. The old saw about 'history doesn't repeat itself, but it often rhymes' is still true.
That said, I believe that we're gonna be forced to address the topic somehow. The notions of negative interest rates, helicopter money, and/or guaranteed minimum income are not being discussed currently out of the blue. Now... none of those may end up being THE solution. Or maybe each of them will be PART of the solution. But I suspect the future will look more like Denmark than Rwanda. And if you have hope for the advancement of the species... I'd imagine you would prefer that.
Wait. I thought Obama and Bernanke and the FED had solved all our economic problems. Now you say we are close to slip back into recession??
8 Trillion dollars in new spending later and David blames " Austerity "...
Lol !
Huh? I'm talking about other countries. Quit posting nonsense. Other posters have addressed your BS about Japan over and over again to no avail. Ever heard of a liquidity trap? An aging population? The highest savings rate I've seen? You don't even know how slowly they responded to the crisis, and it was slow.. But they'd be far worse off without the stimuluses.
Yes, other posters have tried to address my comments about Japans failed stimulus to no avail
They're and you're still wrong. All those structural issues you just mentioned. Telll me, how does " fiscal stimulus " address any of them.
Oh, it would seem you've learned a new word
" Liquidity trap "...fancy term for describing a economy filled with consumers who despite being the recipeient of decades of " stimulus to increase aggregate demand " still lack the confidence to spend
Maybe MORE stimulus is will convince them to stop savings....:roll:
Why don't you explain how you would go about fixing these "structural issues" you keep talking about? Instead of, you know, just saying we have "structural issues" over and over and over and over....
(Don't forget to be specific.)
Huh? I'm talking about other countries. Quit posting nonsense. Other posters have addressed your BS about Japan over and over again to no avail. Ever heard of a liquidity trap? An aging population? The highest savings rate I've seen? You don't even know how slowly they responded to the crisis, and it was slow.. But they'd be far worse off without the stimuluses.
Oh I don think you care one bit about what's dragging our economy down. But Ill play you game.
Big U.S. firms hold $2.1 trillion overseas to avoid taxes: study | Reuters
Corporations hoarding Trillions in offshore accounts means that money isn't being invested in the American economy where it can lead to new job creation. WHY are Corporations hoarding profits off-shore ? It's not because they're " greedy or mean " or even unpatriotic. They're obviously reacting to bad tax and regulatory policy
Those corporations are just sheltering their profits from tax, and that's all that your article said. Businesses don't get taxed on investment; in fact, investment is a way to lower your taxes. They aren't investing because the demand isn't there to justify more investment.
So you can blather on all you want about the lack of business investment, but you have your reasoning completely ass-backwards. Which is typical for supply-siders.
Yes, they're sheltering their profit's from tax, when have US Corporations ever stashed this much capital offshore ?
They're reacting to bad policy implemented by the demand siders in the Obama administration. The same people that came up with Cash for Clunkers and Stimulus, the same people that decided a Capital gains taxe increase was a good idea.
And no Corporations are not waiting for the demand fairy to show up before they'll invest those profits back into their economy and back into their business
If that were the case private sector investment or the lack of would be the same no matter what part of the Country you lived in.
Its not. There are huge undeniable distinctions when it comes to private sector investment on a State level.
Whats backwards is implementing demand side initiatives in a economy thats dependent on private sector investment.
You see wealth and capital stagnating at the top and then blame supply side economics when in fact demand side initaives are to blame.
We've had 8 years of unprecedented deficit spending and Monetary stimulus and what has it accomplished ?
Nothing good.
Japans been trying it since the early 90s and their NIKKEI is half of what it was in 1996 and their GDP is nearly the same.
As for reasons why we're still struggling after 8 years of massive spending and monetary stimulus the best demand siders can do is to either blame Bush, blame the GOP for their supposed unprecedented obstructionism, but thats a ridiculous excuse
All Presidents have had to work with oppositional Congresses. Reagan, Bush, Clinton had to work with Newt Gingrich of all people, but he did.
Another excuse is the claim that the fallout from the 2008 Financial crisis was far greater than anyone knew.
That we need to double down on the same policies that have chased investment Capital offshore and that have led to anemic GDP growth quarter after quarter after quarter
... Whats backwards is implementing demand side initiatives in a economy thats dependent on private sector investment.
....
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