No, Taking Away Unemployment Benefits Doesn’t Make People Get Jobs

[imagep]

Because it's doesn't.

So then why are people arguing against a higher minimum wage?

 

[Renae]

So then why are people arguing against a higher minimum wage?

Because we hate poor people and dont want to see them succeed in life obviously. If we pay them more then that would take money away from rich people who deserve it. If these min wage workers were worth anything they wouldnt be min wage workers.


I'm sure that there are people on this board that believe the above and since you asked such an uninformed question I figure you're one of them so I am not going to waste my time saying what you'll just ignore.

 

[Buddha C]

You are a cruel bastard...

At least that is what it seems like on the surface. But you are also correct.

Any form of government means tested benefits creates the moral hazard that we will make people more dependent and less independent. It's much more cruel to incentivize people into becoming dependent pets, than it is to incentivize them to become independent.

I totally agree with this part of your ideology.

Great Depression #2 proponent I hear :O?

 

[imagep]

And the money wont be there if a living wage is instituted, force the corporations to raise wages and they will leave, make the government print money and you will need a wheelbarrow of cash to buy bread. Its been done before, and it doesnt work....

At least the people of Weirmar had wheelbarrows full of cash! A decade later, they had the strongest economy on earth.

Inflation is an inconvenience, nothing more.

 

[imagep]

Hyperinflation in the Weimar Republic - Wikipedia, the free encyclopedia

Social Democracy for the 21st Century: A Post Keynesian Perspective: Real Output Loss in the Austrian and German Hyperinflations of the 1920s

The inflation problem in a Germany started in 1921...but GDP grew in '21 and '22.

So that indicates that inflation does not equate to a bad economy.

Only in 1923, when hyperinflation was out of control, did the GDP drop.

And then only for one year.

Hyperinflation can cause GDP loss...but GDP loss is not necessary to create hyperinflation.

Your correlation is backwards. the drop in GDP was caused by the shutdown of their industrial base. Hyperinflation was caused by the drop in GDP - too few goods being produced to meet demand.

 

[Buddha C]

Oddly enough I remember hearing/reading something about a British devaluation that helped them in the Great Depression. Any thoughts?

 

[DA60]

So that indicates that inflation does not equate to a bad economy.

That's your assumption...not mine.

GDP rising does not mean all is well...especially when food prices are doubling every week.

Your correlation is backwards. the drop in GDP was caused by the shutdown of their industrial base. Hyperinflation was caused by the drop in GDP - too few goods being produced to meet demand.

As I showed, the hyperinflation was beginning before GDP apparently dropped.

 

[Buddha C]

Surprisingly enough I'm extremely Chauvinistic and anti-Feminist.

Some of you should know this.

I had a rough idea in my head, and it feels amazing to be so vindicated. I always wanted to ban women from the work force (fiscally of course, not in a civil law sense)

But Lo!

ImageP errantly got me re-interested in Nazi depression-era economics and I ran into this beautiful thing which is essentially a *actual* embodiment of an intellectual theory I've been jiggling in my head for years

(Oh, and like the Fascists I believe in a strong Home unit [I come from a 'Broken Home', it really ain't nuffin but it can be improved upon])

Initially, the loans required that the bride stop work immediately[1] and not take another position during the life of the loan unless the husband was earning less than 125 RM per month.[2] Planners hoped that the loan programme would cause 800,000 women to leave the workforce over the first four years, and there was an associated programme of subsidies for household goods manufacture intended to provide jobs for another 200,000 men.[7] In November 1933, the Völkischer Beobachter featured as a "shining" example the mass wedding and subsequent resignations of 122 female employees of the Reemtsma cigarette factory in Berlin, who thereby freed jobs for unemployed men.[8] By 1937, full employment had been achieved and women workers were needed, so the requirement was removed and the loan made available to all young people of documented Aryan ancestry and genetic fitness.

 

[JohnfrmClevelan]

Look, when the crisis started in 2007 The Fed was holding about $800 billion on their books, now its over $4 trillion and counting, thats not out in circulation yet, its just sitting there- they are using it to pay interest to help prop up the banks- but they will have to unwind that sooner or later. Hyperinflation wont be caused by money in circulation, it will be caused by new money going into circulation.

Do you understand how new money "goes into circulation"?

Oh? Werent you and your colleague advocating giving everyone in the country a living wage by printing unlimited money?

No, we were discussing how a living wage is not only good for people (who then have enough money to live on), but it is also good for aggregate demand. There is headroom to create new demand without leading to demand-pull inflation - you should be able to increase demand up to a point where the economy starts to suffer some shortages before prices are pushed up. Nobody ever suggested that there were no limits on this. Inflation is the limit.

Youre missing the point, its not about production and its not about aggregate demand, its about perceived value- our markets and finances are run by confidence as much as it is by numbers. The rest of the world uses the Dollar as a reserve currency because of its perceived stability, lose that perception and you will have the world abandoning the Dollar as a benchmark currency and then countries like China and the EU will sell off their Dollar denominated bonds to the tune of $12 Trillion. That will have massive repercussions on the strength of the Dollar.

When you go to buy something, do you pay what you perceive the price should be, or do you pay the number on the price tag?

The rest of the world uses the dollar as the main reserve currency because, due to our large trade deficits, there are a lot of dollars in the hands of other countries. You have to be willing to run large deficits in order for the world to have enough currency to trade with, and our deficits are far bigger than anybody else's. (The Japanese hold most of their own debt domestically.) That, plus our government doesn't do anything too stupid. That's what makes for a good reserve currency. Our country produces enough, we are politically stable, and we export a large number of fiat dollars.

If there was a massive sell-off of our bonds (there won't be), we would simply exchange dollars for those bonds. That is what stability means. Nobody's U.S. bonds will ever be defaulted on. And as long as our economy continues to produce, they will always have something of value to buy with American dollars. Perception has nothing to do with it.

All countries in the world are run by fiat currencies but thats beside the point. We are more Keynesian than chartalist (or MMT).

Explain the difference.

 

[PoS]

Do you understand how new money "goes into circulation"?

Yup. I dont know about you though since you were wondering how come inflation hasnt crept up despite all the QE so far.

No, we were discussing how a living wage is not only good for people (who then have enough money to live on), but it is also good for aggregate demand. There is headroom to create new demand without leading to demand-pull inflation - you should be able to increase demand up to a point where the economy starts to suffer some shortages before prices are pushed up. Nobody ever suggested that there were no limits on this. Inflation is the limit.

Then you arent discussing chartalism at all yet you claim on post #122 that "It doesn't happen just by the government printing money."

Be specific- because you entered into an argument where one side advocated a guaranteed living wage to be fully funded by printing money nonstop- is this your position? Yes or no?

When you go to buy something, do you pay what you perceive the price should be, or do you pay the number on the price tag?

The price will not stay the same if the US starts printing trillions in new money. Thats elementary economics.

That, plus our government doesn't do anything too stupid. That's what makes for a good reserve currency. Our country produces enough, we are politically stable, and we export a large number of fiat dollars.

That will change once you start printing massive amounts of new money. The Chinese already protested when there was a delay on the debt ceiling by Congress. Print trillions of new cash and you will see the bond market explode.

If there was a massive sell-off of our bonds (there won't be), we would simply exchange dollars for those bonds. That is what stability means. Nobody's U.S. bonds will ever be defaulted on. And as long as our economy continues to produce, they will always have something of value to buy with American dollars. Perception has nothing to do with it.

Wrong. Do it and see what happens. The other countries of the world will abandon the Dollar s a reserve currency and you will definitely see hyperinflation.

Explain the difference.

Google chartalism and Keynesian economics. Im not going to hold your hand.

 

[Buddha C]

So no one wants to talk about Marriage Loans?

Disappoint.

 

[JohnfrmClevelan]

Yup. I dont know about you though since you were wondering how come inflation hasnt crept up despite all the QE so far.

I wasn't wondering. I understand why QE hasn't led to inflation. And, unlike you, I can explain the reasoning behind my positions. You just make bald assertions.

Then you arent discussing chartalism at all yet you claim on post #122 that "It doesn't happen just by the government printing money."

This shows that you don't understand what chartalism is, or how it works. In post 122 I was referring to hyperinflation. Chartalism is a different subject.

Be specific- because you entered into an argument where one side advocated a guaranteed living wage to be fully funded by printing money nonstop- is this your position? Yes or no?

"Nonstop"? No, we never said anything like that. (Is English your first language?) I answered that very same claim, again by you, in my last post. I explained that there is a limit to deficit spending - inflation. You conveniently forget this, almost immediately. If your argument is so weak that you have to chronically misquote your opponents, then I suggest you change your position to something more tenable.

The price will not stay the same if the US starts printing trillions in new money. Thats elementary economics.

That's another bald assertion, made with no backing and no reasoning. Prices will depend on the economy's ability to meet demand. That's real economics.

That will change once you start printing massive amounts of new money. The Chinese already protested when there was a delay on the debt ceiling by Congress. Print trillions of new cash and you will see the bond market explode.

Again with the false claims of printing "massive" amounts of money. Your argument must be on life support.

I don't really care what the Chinese want. The Chinese have their own interests to promote. It makes sense that they would want a different system, either gold or some other neutral international currency, because they are huge net exporters. If you want to see the planet's wealth transferred to China, then you probably prefer an international currency, too.

Again, fiat currency economies do not need to sell bonds in order to issue currency. And yet again, the value of the dollar will depend on producing enough to meet demand, not the bare number of dollars.

Wrong. Do it and see what happens. The other countries of the world will abandon the Dollar s a reserve currency and you will definitely see hyperinflation.

Another bald assertion, again with no reasoning behind it.

Google chartalism and Keynesian economics. Im not going to hold your hand.

So I guess you don't know the differences then. Thought so.

 

[PoS]

I wasn't wondering. I understand why QE hasn't led to inflation. And, unlike you, I can explain the reasoning behind my positions. You just make bald assertions.

Its not an assertion, its fact. The Fed currently now has about $4 trillion on its balance sheet- this money isnt in circulation. And sooner or later it will have to unwind that balance sheet. And when that happens expect a deduction of at least 24% of the US GDP.

The Fed's Balance At The End Of 2013: $4 Trillion | Zero Hedge
Fed

This shows that you don't understand what chartalism is, or how it works. In post 122 I was referring to hyperinflation. Chartalism is a different subject.

Do yourself a favor and stop butting into the middle of a debate and take one thing out of context and treat it as another, thats just trolling because I was talking about chartalism and how it affects hyperinflation. Keep it up and I'll ignore you from now on.

On second thought you are just trolling. Goodbye.

 

[JohnfrmClevelan]

Just as an aside, I want to say how ridiculous it is to constantly compare 21st century America to post-war Weimar Germany.

First off, there was the small matter of WWI. Germany pulled men from the farms and the factories to fight. During the war, food was understandably scarce. There was a very effective naval blockade preventing trade. And the government financed the war by selling war bonds - which probably would have been fine if they had ended up winning. As it was, they were just another claim on Germany's post-war production.

There were the normal post-war problems - damaged production, thousands of soldiers looking for work, rebuilding costs, etc. There were reparations to pay, in foreign currencies. Eventually, German production was flowing out of their country to cover claims, and this only got worse when their currency lost value. There was political instability and labor strikes. When the war ended and agriculture got back up to speed, the price of grain plummeted.

That does not describe a situation in which an economy can function properly.

Yet the conservatives on this thread insist on comparing the disaster of Weimar Germany with the most prosperous nation on Earth providing a more generous social safety net - which is not even that generous compared to most other advanced economies, all of which are doing just fine. No war, no political upheaval, no reparations to pay, no shortages of anything to speak of - just some more deficit spending.

Do you guys not see how ridiculous your comparison is?

 

[JohnfrmClevelan]

Its not an assertion, its fact. The Fed currently now has about $4 trillion on its balance sheet- this money isnt in circulation. And sooner or later it will have to unwind that balance sheet. And when that happens expect a deduction of at least 24% of the US GDP.

The Fed is a part of the government, whether you want to admit that or not. And "unwinding" one's own internal accounting ledger will mean absolutely no change to the outside world. The government "owes itself dollars." And you think that's a problem?

Do yourself a favor and stop butting into the middle of a debate and take one thing out of context and treat it as another, thats just trolling because I was talking about chartalism and how it affects hyperinflation. Keep it up and I'll ignore you from now on.

Well, you were totally wrong, so I thought I'd do you a solid and correct you before you plowed ahead.

 

[JP Hochbaum]

My post was in response to your buddy's (Cleve guy's) statement:

'Hyperinflation only happens when production drops by a ton.'

And as I proved, since hyperinflation in Weimar Germany began before a drop in GDP, his statement is incorrect (and PoS's was correct).

Production Capacity =/ GDP. You took his argument and changed it to something that fit yours.

 

[JP Hochbaum]

And all you have to do is understand what happened first.... Printing money? Or was it drop in production. If you are honest with your history you have to say a drop in production, here are the historical facts:

"Hyperinflation and Weimar Germany
Weimar Germany had greeted with total horror the financial punishment of Versailles. If Germany had paid off the sum of £6,600,000,000, she would have remained in debt to the Allies until 1987 !! However, by signing the Treaty of Versailles, she had agreed in principle to the issue of reparations and in 1921, Germany just about managed to pay its first installment of 2 billion gold marks. Weimar Germany was allowed to pay in kind (actual materials) as opposed to just cash. Most of this 2 billion was paid in coal, iron and wood.

In 1922, Weimar Germany simply could not manage to pay another installment. This the Allies did not believe - especially France where anger towards Germany still ran deep - and the German government was accused of trying to get out of her reparations responsibilities. This apparent refusal was only four years after the end of the war, and the attitude of the public towards Germany was still very hostile - and not just in France.

In 1922, French and Belgium troops invaded the Ruhr; Germany’s most valuable industrial area. The French and Belgium troops took over the iron and steel factories, coal mines and railways. Those Germans who lived in the Ruhr and were considered not to be co-operating with the Germans were imprisoned. Food was taken. That this action by the French and Belgium broke the rules of the League of Nations - which both belonged to - was ignored by both countries. France was considered one of the League's most powerful members and here she was violating its own code of conduct.

This is where production stopped
Weimar’s government responded by ordering the workers in the Ruhr to go on strike and it ordered all people in the Ruhr to passively resist the French and Belgium soldiers. This meant that they were not to openly confront the French and Belgium soldiers, simply that they were not to help them in any way whatsoever. This lead to violence and over the next 8 months of the occupation, 132 people were killed and over 150,000 Ruhr Germans expelled from their homes.

The order for workers to go on a general strike may have been patriotic but it had disastrous consequences for Germany as a whole. The Ruhr was Germany’s richest economic area and produced a great deal of wealth for the country as a whole. The huge Krupps steelworks was there. By not producing any goods whatsoever, Germany’s economy started to suffer.

This is when printing started. Which was after the strike!
The striking workers had to be paid and the people expelled from their homes had to be looked after. To do this, the government did the worst thing possible - it printed money to cover the cost. This signalled to the outside world that Germany did not have enough money to pay for her day-to-day needs and whatever money may have been invested in Germany was removed by foreign investors.

Such a drop in confidence also caused a crisis in Weimar Germany itself when prices started to rise to match inflation. Very quickly, things got out of control and what is known as hyperinflation set in. Prices went up quicker than people could spend their money."

Hyperinflation and Weimar Germany

 

[Buddha C]

So the French and Belgian basterds caused it all!

Well, not all but as a pro-German amateur historian these new details on the Ruhr (and the obvious justification for German re-occupation more than a decade later) are very, very delicious! Thank you!

 

[Arbo]

The Fed is a part of the government, whether you want to admit that or not. And "unwinding" one's own internal accounting ledger will mean absolutely no change to the outside world. The government "owes itself dollars." And you think that's a problem?

The government can create dollars non stop, none of it matters, there is no debt and now this? Many, your theories are all over the place.

 

[Buddha C]

The government can create dollars non stop, none of it matters, there is no debt and now this? Many, your theories are all over the place.

If the US government owes itself 5,000 dollars is it going to break it owns legs in order to get the soddy basterd to pay?

 

[JohnfrmClevelan]

The government can create dollars non stop, none of it matters, there is no debt and now this? Many, your theories are all over the place.

No, it's all consistent, except the stuff you guys add to it, like "nonstop" and "unlimited" and "infinite" printing of money, which is not what we are saying at all.

I have said that the government has an infinite capacity to create dollars, and this is true. I have never said that we should print infinite dollars and spend them all.

There is no real debt involved in printing fiat currency. The government creates dollars and spends them into the economy - and the story could very well end there. But we still issue bonds, and bonds are bought with dollars that have already been spent into circulation. We do not sell bonds in order for us to have dollars to spend. (Not since the gold standard days.) We sell bonds because holders of large piles of dollars prefer to hold bonds over dollars. It is a practice left over from the gold standard days. I have explained the accounting in detail in a couple of posts already.

That is why it is not at all inconsistent to say that the government "owing itself money" will not affect the economy at large. Bonds held by the government should not even be counted. As the government has the ability to create all the dollars it needs at will, and at no cost, the act of holding bonds is merely a bit of accounting that is completely internal to the government. To the government, changing bonds into dollars and back again is like you or I moving dollars from our left pocket to our right pocket.

 

[Arbo]

Yes, you are repeating yourself. Have read it all before. Repetition does not make invalid points magically valid.

 

[JohnfrmClevelan]

Yes, you are repeating yourself. Have read it all before. Repetition does not make invalid points magically valid.

Well, let's attack it from a different angle. Why would you think that a sovereign nation must borrow anything in order to issue currency?

Imagine an isolated island nation that has no contact with other nations. Where would they borrow their money from? Where would those very first dollars come from, if not from the government itself?

 

[Arbo]

Why would you think that a sovereign nation must borrow anything in order to issue currency?

I don't think that, nor have I ever suggested I did.

 

[JohnfrmClevelan]

I don't think that, nor have I ever suggested I did.

So do you not think the nation is $17 trillion in debt then?