
Free Money for Everyone - ritchiea
http://www.washingtonmonthly.com/magazine/march_april_may_2014/features/free_money_for_everyone049287.php?page=all
======
lukifer
I believe that basic income would unlock a lot of hidden wealth:

1\. Many more people would try their hand at entrepreneurship, and/or re-enter
education, if they are freed from the obligation to work to survive.

2\. There would be little need for minimum wage laws; unskilled labor can
become primarily for earning a little more spending money, or about social
roles within a group or community. The incentive for high-end labor would
remain.

3\. Much more non-profit activity, such as political engagement and volunteer
labor, would become feasible (including the immeasurable wealth of more time
spent raising children).

4\. Let's face it: there are a lot of quasi-useless laborers out there, who
are a drag co-efficient on productivity. The people who do the bare minimum to
survive contribute more to the economy by staying home.

There are deep macroeconomic and budgetary challenges to such a policy, and
the socioeconomic effects are hard to predict. It certainly wouldn't be
revenue-neutral, though it could be offset by other reductions in the welfare
state (not to mention the prison-industrial complex).

One way or another, the value and negotiating leverage of human labor is
declining. As globalization spreads, domain-specific AI improves, and software
continues to "eat the world", this trend will only progress. If we don't want
to revert to a world of lords and serfs, basic income is the best way to
preserve Adam Smith's humanistic vision of capitalism. And in the Western
world, we are damn sure rich enough to afford it.

~~~
ctdonath
This "I believe in GBI" line rarely is backed up by objective reasoning, and
grossly underestimates the percentage who would, if freed from the obligation
to work to survive, indulge in whatever non-productive luxuries they can
acquire. While certainly many would improve productivity & economy & education
should they have the financial liberty to do so, my experience in helping many
up tells me most are down for a reason which only they, internally, can change
- and won't.

~~~
lukifer
Many businesses make a tidy profit despite a large number of users being non-
profitable "free riders" (Dropbox would be the canonical example).

My claim is not that every human would be immediately elevated to self-
actualization. Obviously, a great many would stay home, drink beer and watch
TV. My claim is that _civilization as a whole_ would profit; paying people who
contribute nothing is merely a "cost of doing business". (And don't forget:
there's still an incentive to work for those who want better beer and bigger
TVs.)

~~~
pdonis
_Many businesses make a tidy profit despite a large number of users being non-
profitable "free riders" (Dropbox would be the canonical example)._

Having users be free riders is not the same as having employees be free
riders. I doubt Dropbox has any of the latter.

 _(And don 't forget: there's still an incentive to work for those who want
better beer and bigger TVs.)_

No, there's an incentive for voters to elect politicians who will continue
raising the bar for how much beer and what size TV the basic income should buy
you.

~~~
lukifer
> No, there's an incentive for voters to elect politicians who will continue
> raising the bar

I agree that there is a severe moral hazard here. However, the fact that some
citizens currently vote reflexively for lower taxes, while others do not,
suggests that a semi-stable equilibrium could be achieved. (This holds even if
you look only at middle-class voters with significant tax burdens, rather than
just "makers" vs. "takers".)

~~~
dragonwriter
> I agree that there is a severe moral hazard here.

If the moral hazard for BI was as strong as its opponents argue, it wouldn't
take so long after the idea first started being advocated for it to be near
universally adopted. Since, the argument that with a UBI of $ _N_ /mo, the
voting masses will always strongly prefer a UBI of $ _N+1_ /mo. applies just
as much at a _N_ = 0 as at _N_ = 1000.

~~~
dllthomas
The article applies, but presumably zero is a Schelling point. If there's no
other specific value that everyone can agree is special, it _may_ be that you
would see continual upward movement only after we've made it nonzero.

~~~
dllthomas
s/article/argument/

------
Mz
OH, god, this is incredibly stupid. This is not the way to fix the economy.
The primary real value of money is that it reduces friction in trade so you
don't have to jump through multiple complicated hoops to trade, say, your
coding skills for a steak dinner. You trade your coding skills for money and
then take money to the restaurant instead of going to the steak dinner maker
and asking what he wants and then finding someone who will give you that in
exchange for coding.

Money symbolizes value. Other than lubricating trade, which has real value, in
itself, it doesn't really "do" anything. You can't eat it. You can't build a
house out of it. If burning it to keep warm makes some kind of economic sense,
then the economy is seriously fubarred.

This kind of financial manipulation does not fix any of the underlying issues
that lead to financial problems. Financial problems grow out of real problems.
I can testify to that first hand: I am deeply in debt and homeless due to
medical problems, in essence. I am fixing my medical problems. As my medical
problems resolve, my expenses come down and my productivity goes up. My debts
are slowly being paid down.

We need to fix real problems, underlying root cause problems. This kind of
superficial manipulation is not a fix.

Oh, god, no. I can't believe I am seeing this stupidity being taken seriously.

~~~
panarky
Counter-intuitive concepts might seem stupid at first, but if you think
through the mechanics you might see that it could actually work.

For me, I have to remind myself that money is just a social construct. The
real economy consists of people working and deploying physical plant and
equipment to create things other people want.

Today we find that the real economy has a lot of idle resources. People who
want to work don't have jobs. Factories and equipment are idle or under-
utilized.

If spreading some green pieces of paper around will get the real economy
moving again, the standard of living for most people will rise.

It seems wrong at first glance, but it's even more wrong to allow all these
resources to waste away, unused, when so much could be done.

~~~
pdonis
_the real economy has a lot of idle resources_

But many of those resources are idle because they were misallocated--for
example, they were allocated to building more and more McMansions because of
the housing bubble, rather than, for example, on fixing roads and bridges and
other deteriorating infrastructure. Or they were allocated to building 18
million cars and light trucks a year in North America, when the market now
demands only 11 million.

To some extent "helicopter money" as described in the article might help;
perhaps if everyone got a $2000 check the demand for vehicles would go up to,
say, 14 million a year. But would it go all the way back up to 18 million a
year? I doubt it; a significant piece of that demand was people assuming that
they needed a new car every 2-3 years; now many of them have had their cars
for 5 or 6 years and are realizing that hey, they can save money by not buying
a new car as often, without any real reduction in quality of life. That lost
demand won't come back.

Nor should it. If the economy was set up to make stuff that people don't
really need, that's a waste of resources that could be better allocated
elsewhere. That's why I'm skeptical of the "aggregate demand" idea; it
basically implies that all that's needed is for people to buy more stuff,
without any analysis of the actual comparative value of the stuff.

~~~
panarky
Sure, resources were misallocated. But we're now six years into this, it's
been a largely jobless recovery, infrastructure is crumbling before our eyes,
and those misallocated resources are now sitting idle.

If you forget about money for a second, it seems like there are a lot of jobs
that need doing, and a lot of resources that are idle.

Bridges need to be built, highways need to be paved, kids need teachers and
tutors, and we're firing cops and firefighters like never before.

Why can't we match up some of those jobs that need doing with the people,
trucks, and factories that are idle?

Why isn't the free market doing a better job re-allocating those resources to
more productive uses?

~~~
pdonis
_it seems like there are a lot of jobs that need doing, and a lot of resources
that are idle._

No argument here.

 _Why can 't we match up some of those jobs that need doing with the people,
trucks, and factories that are idle?_

Because most bridges, highways, schools, police and fire departments, etc. are
owned by governments, not by private industry, and governments suck at doing
what you suggest.

 _Why isn 't the free market doing a better job re-allocating those resources
to more productive uses?_

Because governments effectively have a monopoly on many of the productive uses
that currently need resources (since they own the infrastructure that needs to
be fixed).

------
noahl
This is interesting because, in contrast to the (many) other discussions of
basic income, the author's proposal is to make it run by the Fed, not
Congress, and to distribute money on a whenever-the-Fed-wants-to basis, rather
than every year.

This wouldn't really address the concerns about poverty that make many people
interested in a basic income, because it wouldn't happen regularly and there's
no guarantee that the money would be enough to make a difference in peoples'
lives. But it could still have a good effect on the economy as a whole, which
seems to be what he is aiming for.

~~~
r00fus
Exactly. Basic income as implemented by the native american tribe (i.e.,
casino profit sharing) mainly won by reducing anxiety and being a regular
dependable payment.

Without regularity, it's just random windfalls, nothing you can bank against.

~~~
TimJYoung
Yes, but that (basic income) is not the point of this proposal. The idea is
that you have a lot of people that are un-employed or under-employed, but
shouldn't be, which is where we are today. This is a tool to a) get them a job
and b) (by driving down un-employment) increase their wages. If this tool does
it's job, then they won't _need_ a basic income anymore - they'll be earning
it at their new job.

------
Eliezer
I'm amazed that anything this obviously correct is entering the Overton
Window. Next we'll hear someone advocating land value taxes.

~~~
tedsanders
Could you explain why this is obviously correct? It's not obvious to me. To
me, the Fed's current process of bidding on very liquid, publicly sold assets
seems to be the most neutral way of injecting dollars into the world.

~~~
natrius
Only the wealthiest Americans (and foreigners for that matter) own the assets
the Fed is bidding on. It is not neutral.

~~~
tedsanders
Could you please explain why the money going to wealthy people is a problem?

I think it's fine for $100 million to go wealthy people if the wealthy people
lose $100 million of treasuries at the same time. It only becomes a problem if
the Fed overpays for the assets. Which is why it's so important to pick giant
liquid asset markets like US treasuries. Giant liquid markets are the least
likely to be distorted by Fed action.

~~~
sheetjs
> It only becomes a problem if the Fed overpays for the assets.

Which is precisely what happened. Many of the toxic assets that are now on the
fed balance sheet would have been close to worthless (if not completely
worthless)

~~~
tedsanders
Could you please clarify which assets you're talking about? Is it the Fed's
MBS portfolio?

So far your worry has not borne out. The Fed has been earning about $80
billion per year, and its MBS portfolio is worth about $1 trillion.

[http://www.economist.com/news/finance-and-
economics/21570753...](http://www.economist.com/news/finance-and-
economics/21570753-what-happens-when-fed-starts-losing-money-other-side-qe)

------
rayiner
> While depression economics has many strange features, the most important one
> to remember is this: with slack in the economy, it’s possible to have an
> economic free lunch. If our economy were running at capacity, new government
> spending, for example, would tend to create inflation because the capacity
> (workers, raw materials, and equipment) would have to be bid away from
> someone else, thereby raising prices. But during a depression that doesn’t
> happen. Instead, new spending brings idle capacity into production.

I think this paragraph is really important to think about until you get it.
It's easy to get wrapped up in thinking of money as a thing of value when at
the end of the day it's just a proxy for goods and services in the real
economy. If you don't get that... you'll go off and buy Bitcoin, I guess.

~~~
belovedeagle
So explain to someone who's extremely skeptical of economics mumbo-jumbo why
the value of money doesn't naturally increase ("deflate", to use what seems to
me to be the better-is-worse terminology) to take up that slack.

In other words, shouldn't a slice of the money pie be worth a slice of the
economy pie, even when the size of the economy pie, and therefore the slice,
changes? How do we determine when 10% of the money supply equals 10% of the
economy? It seems like what you, and the article, are saying is that a certain
number of dollars always equals the same amount of, say, gold, or labor, and
we just don't have enough dollars to represent all the gold and labor that's
floating around. That just doesn't seem right at all; that's exactly the
system we moved /away/ from according to the advice of these same economists
(or their predecessors).

~~~
tedsanders
Human beings don't like to lower wages and prices. Also known as 'sticky
wages':
[https://en.wikipedia.org/wiki/Nominal_rigidity](https://en.wikipedia.org/wiki/Nominal_rigidity)

There is plenty of debate over how much this matters, under what conditions it
is true, and how the mechanism works. Nonetheless, there is consensus that
human bias against lowering prices prevents price deflation and helps cause
recessions.

This is one reason why some economists think that steady inflation or NGDP
growth is good. If prices always rise, then instead of lowering them (which is
psychologically hard), you can just hold them flat for the same effect.

~~~
belovedeagle
So this provides essentially the same effect as the gold standard, no? The
gold standard was an element of "stickiness" between money and gold, and
sticky wages are between money and labor.

~~~
dllthomas
Stickiness is economically bad. We can't fix sticky wages without changing
people.

------
DanielBMarkham
I think we may be seeing the end of demand-side economics, or at least it's
dying gasps.

If there's a gap between production and demand, you can look at it two ways:
either people don't have enough money to meet the demand, or _we 're making
the wrong things_.

Supply side economics said we should always stimulate supply -- demand would
follow. Give breaks and incentives to keep making things, dammit! Of course,
the problem here is that simply "making things" doesn't take the economy
anywhere. It doesn't trickle down.

Demand siders are similarly stuck in one spot, claiming that if only people
had enough money, the economy would be fine. Give the people money and the
rest will work itself out. It'll trickle up.

I think that both supply and demand are moving targets, and by focusing on
them we're missing the larger point: _is the money doing anything new?_
Because economies exist to grow and adapt, not stagnate. If you're dumping
money on factories to produce things nobody wants, it's not growing. Likewise,
if you're giving money to people to do the same thing they've always done with
it, it's also not growing.

We're going to need a more sophisticated way at looking at this. I welcome the
idea of giving money away. Anything that will move the conversation forward
from these two simplistic and entrenched positions is most welcome.

Let's test it.

------
brational
Just like QE and the bush tax cuts, this would merely be a band-aid. They even
covered the major problem earlier in the article... and then completely
ignored it when offering solutions.

>Starting in the ’80s, productivity gains were no longer shared with workers.
Therefore, the wage share of the economy began to decrease. As a percentage of
total output, wages have fallen from a high of almost 52 percent around 1970
to less than 43 percent today (see Graph 1). Meanwhile, inequality within
wages also increased. The upshot? The rich began capturing nearly all the
results of economic growth—the top 1 percent’s share of national income
increased from about 8 percent in the mid-’70s to about 23 percent
today....they “save” by buying financial assets—which means that most of the
fruits of economic growth have been channeled into asset price increases,
rather than consumer price inflation.

If you just give everyone more money to increase AD via QE, tax cuts, free
income or whatever else... it all gets spent and where do the increased sales
and profits go? You just stay in the same cycle and have to continue sending
more fed checks.

It's the same reason minimum wages don't work. Setting a lower bound does
nothing when an upper bound doesn't exist.

~~~
bronbron
> Starting in the ’80s, productivity gains were no longer shared with workers.

Has anyone really looked into why this is? It's easy to say 'lol greed' and be
done with it, but it seems silly to presume that people were any less greedy
in the 60's and 70's.

'Globalization' might make a little bit of sense as to why individual
companies might pay relatively less taxes to the US government, but I'd need
more context than that before I'd be willing to accept globalization as the
answer to why production gains aren't really being shared with workers
anymore.

If the answer is that collective bargaining has been getting less and less
effective over time, why is that?

~~~
evolve2k
Actually we're the problem. The 1980's represented the rise of the computer
age and a massive acceleration in automated production. The trend is long term
and shows no sign of stopping.

TLDR; As computers replace manual labor the boss pays less out less of his
profits for labor and we have an economy where the rich get richer. Once upon
a time profit growth equated to wage growth but modern computer technology has
changed this.

~~~
sp332
Can't we fix that by redistributing computing and robotics power?

~~~
evolve2k
Not sure I follow your reasoning. How so?

------
oscilloscope
In the cryptocurrency world, there's an interesting free money experiment
being launched in Iceland this month: Auroracoin.
[http://www.auroracoin.org/](http://www.auroracoin.org/)

Auroracoin's goals are not quite as relevant for the US, since we don't have a
public national ID database and our dollar is incredibly strong. But the
distribution of a pre-mined cryptocoin could be one type of universal income.
It's also a way to experiment with relatively few consequences to the existing
economy.

~~~
sp332
I hope they get this cleared up, because it looks very suspicious!
[https://bitcointalk.org/index.php?topic=497736.0](https://bitcointalk.org/index.php?topic=497736.0)

------
higherpurpose
If this happens, then it needs to become a Constitutional amendment and
guarantee _everyone_ the money, on time, no matter what. You can't have abuses
like we do for the no-fly list in this case. What does someone do when there's
no work and everyone receives free money, but he's excluded from the program
because he pissed off the government in some way? The only solution is
probably to leave the country at that point (unless he's also included in the
no-fly list).

------
xg15
"John Maynard Keynes used the idea in his 1936 book, The General Theory of
Employment, Interest and Money, to lampoon the inherent silliness of gold
mining, suggesting that old coal mines could be filled up with bottles full of
banknotes, buried over with trash, then left “to private enterprise on well-
tried principles of laissez-faire to dig the notes up again.”"

And it only took 51 years until we got Bitcoin...

------
kenrikm
Here's an idea!

Step 1) Take away all money from everyone make big pile 'o cash. Step 2) Give
everyone an equal distribution of the big pile 'o cash. Step 3) Wait one year.
Step 4) Scratch head over how some are now poor and other are super wealthy
even after the great leveling.

Hmm no, maybe not such a great idea.

There is a finite amount of tangible goods that can be produced, money chases
goods, markets react, prices rise. If everyone has a million dollars do you
think someone will sell you his Ferrari for $200k ? No, because the value of
the Ferrari does not reside within the dollar, it's only a medium of exchange
used for easily trading goods and services.

~~~
nawitus
Basic income can be cost neutral.

------
joshuaheard
I saved the economy with this one weird trick: giving everybody a free $2,000
check. But why stop at $2,000? Why not give everyone a million dollars then
everyone will be rich, nobody will have to work, and we can all live like
kings!

~~~
tedsanders
One reason to stop at $2,000 is so that inflation is limited. 2% inflation is
quite manageable, historically. 2000% inflation is not.

~~~
dllthomas
Is there particular motivation for $2000, or just using the article's number?
It seems that there's clearly _some_ optimal number, and I suspect it's >0,
but I'm not sure how it should be determined.

~~~
tedsanders
I was just using the given number.

If this scheme were implemented, I'm guessing the number would be picked by
economists at the Fed who target a particular money supply. And then that
number would be criticized by people who think that the Fed is choosing to
stiff the poor. For that reason, I think it would be a huge mistake to tie
together monetary policy and income redistribution. :)

------
scotty79
The only problem with basic income is that rents would just rise to consume it
and poor people would still be poor.

BI won't work as good as it should without simultaneously shifting balance
between renting and owning, for example, with progressive real estate tax to
discourage investing in large amount of real estate (selling 10th house below
market rate would be more cost-effective than keeping it) and to make it
easier to purchase one house for yourself (because of increased supply and
reduced prices).

~~~
stanleydrew
If you read closely the article isn't talking about basic income in the usual
sense. It's not suggesting paying everybody $2000 per month forever. It's
suggesting a new option for the Fed to stimulate the economy on an "as-needed"
basis.

So I doubt any rents would go up substantially just because once in awhile
(like every couple of years) a $2000 check came in the mail.

------
lotsofmangos
I always thought that given the UK was being run a bit like UK-PLC these days,
that they might as well just declare the population as shareholders and start
paying dividends.

~~~
pbhjpbhj
> _declare the population as shareholders and start paying dividends_ //

Who gets the prefernce shares!?

Also, they may be issuing a profit warning rather than any dividends ...

------
tedsanders
The current way that the Fed distributes money is by auction. They buy assets
(usually treasury bills) at the market price. Because these assets are bought
publicly at fair prices, this process is supposed to favor no one, in theory.
It is a neutral policy.

The free money for everyone proposal is NOT neutral. It would transfer wealth
to the poor. That is not a bad thing, but it seems odd to couple monetary
policy with redistributive policy.

~~~
nugget
It would transfer wealth to the poor for about 2 seconds. Most of the
recipients would quickly spend the money, which would transfer it back to the
upper classes. The poor don't need helicopter drops of cash, they need a
societal framework which supports and allows them to pursue real opportunities
for social mobility.

~~~
tedsanders
Could you please elaborate?

Just because the poor spend the money in 2 seconds does not mean that the
wealth evaporates after 2 seconds. They now have whatever goods they purchased
with the money. And even if those goods are consumables, it's offset the
spending/debt they would have otherwise needed.

I find it rather offensive to accuse the poor of wasting all the money they
receive (which is how I interpret your comment). If that's not what you meant,
could you please re-explain? Thank you.

~~~
gloverkcn
I don't think the judgement was that the money was wasted, but that the money
would be spent immediately by the poor, and the rich wouldn't do much with it.

If you have $5 Million in the bank and I give you $2K. The money I've given
you won't change your spending habits. There is no purchase you have put off
due to lack of money.

If you have $100K in the bank it's more likely you'll spend it, but not a
guarantee.

If you are living paycheck to paycheck like roughly 3/4 of the country
([http://money.cnn.com/2013/06/24/pf/emergency-
savings/](http://money.cnn.com/2013/06/24/pf/emergency-savings/)) then that
$2k will most likely get spent. Just because it's spent doesn't mean it's
wasteful.

That spending will reflect things they are living without because they can't
afford it. A more reliable car. A second car so their SO has a better
opportunity to work. A computer. In the case of some low end works it could
mean equipment and/or space to open their own business. Better/More food. An
evening at the movies. Painting the house. These are all things they
can't/won't take on debt for, but could do with a windfall.

~~~
scotty79
> I don't think the judgement was that the money was wasted, but that the
> money would be spent immediately by the poor, and the rich wouldn't do much
> with it.

Yes. But they would have to give poor something back for that money. And
that's what they currently are not doing because they are waiting for the poor
to produce the money they have no means of producing.

In order to manufacture the thing the rich can give poor in exchange for their
helicopter money they have to increase production and probably hire some poor
people which benefits poor even more.

------
zacinbusiness
I think this is an interesting policy. In fact, I think both this type of
policy and the version where cash is simply distributed to everyone each month
or so is also interesting, and I wonder how it would work for the mentally
disabled which, unfortunately, make up a large part of our homeless population
in the U.S. Then there are people like my dad who is what you might call a
"crazy redneck" in that he doesn't have a bank account (never has, as far as I
know) and who is extremely distrustful of the government (he basically lives
in a compound out in the forest with his wife and her family..) he's sort of
the black sheep of my family. How would we ensure that people who refuse to
get a bank account, or who are simply unable to do so, would receive their
monies?

~~~
Double_Cast
I'm believe mailboxes are under federal jurisdiction.

~~~
zacinbusiness
Right. But one must use a bank or check cashing service to use a check.

------
jawns
From the end of the article:

"The helicopter money policy ... distributes resources directly to citizens,
with no limits on how they can spend it"

If the purpose is to jump-start spending, then perhaps there should be one
modest restriction on how you spend a stimulus check: an expiration date.

Instead of issuing checks, the government could issue prepaid debit cards with
a relatively short expiration date. (I believe some of the 2008 stimulus money
was distributed via debit card, but the bulk was direct-deposited.)

For the vast majority of people, a debit card with a short expiration date
would lead to their spending the money within that span; a small minority
might go through the trouble of converting the debit card amount to cash and
saving it, but probably not nearly as high a percentage as if it came as a
check or a direct deposit.

~~~
toomuchtodo
Perhaps its just personality, but if I were to receive a stimulus debit card,
I would use it to pay for one of my existing monthly expenses (T-mobile, gas,
etc) and take my own funds I would've spent and save it.

~~~
dredmorbius
Look up Steve Keen. His suggestion for a debt jubilee / universal money
distribution scheme more-or-less follows on this basis, though he puts the
first cut at debt.

The point is: if you spend the money, whether on retiring debt, on recurring
expenses, or on new purchases, what you've received is a net increase in
income. For people who are living hand to mouth (they have no surplus income,
or worse, negative surplus), the money will be spent.

If you're able to squirrel some away, that's a consideration, but it's 1)
built into the model and 2) it's a relatively small fraction of the total
distribution (likely less than 20%).

------
verdi327
How did this dribble make it this high up HN? Money is a medium of exchange.
It represents real value. If we just spin up new batches and dish it out,
where is its value? More money will be sloshing around in the system sending
incorrect economic signals which will artificially inflate certain industries.
The house of cards will collapse on itself when ppl stop believing the dollar
can maintain a stable value. The currency will be dumped and
hyper[inflation]/[deflation] will destroy the economy until a new reliable
money is surfaced.

~~~
paulbaumgart
It's obviously not creating more wealth, rather it's redistributing that
wealth into an arguably more efficient distribution.

~~~
dllthomas
It's obviously not creating more wealth _first order_. If that money frees up
demand that wouldn't have otherwise been expressed, and people providing for
that demand would otherwise have been out of work, it can create more wealth.
The degree to which that would happen is an open question, so far as I'm
aware.

~~~
paulbaumgart
You're exactly right, I was sloppy in my phrasing. Greater efficiency creates
opportunities for wealth creation.

------
volune
When milk is $800 a gallon we might see the flaw of this approach.

~~~
tedsanders
I think the proposal is not inject additional money, but to inject the same
amount of money through a different channel - giveaways instead of open-market
operations.

------
solson
300 million Americans x $2,000 per month x 12 Months = 7.2 Trillion annual
printing of new money. Total M2 Money Supply is currently 10.5 Trillion and
the entire US GDP is only 15.6 Trillion. So adding approx 70% to the money
supply every year or adding 50% of GDP as new cash to the economy every year
will only result in 2% more inflation??? If you believe that, I've got a dot
com to sell you...

~~~
stanleydrew
The proposal was not to give everybody $2000 per month forever. It was to add
another lever to the Fed's monetary policy adjustment machine, to be used on
an "as-needed" basis.

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ctdonath
_with slack in the economy, it’s possible to have an economic free lunch._

TANSTAAFL[1].

[1]
[http://en.wiktionary.org/wiki/TANSTAAFL](http://en.wiktionary.org/wiki/TANSTAAFL)

~~~
dllthomas
That is certainly the reference they were making. Contrary to popular belief,
however, Heinlein was not a prophet whose aphorisms strongly apply to every
scenario.

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Datsundere
How did april 1st come so quickly?

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whatevsbro
Wow. I think they're not kidding! Yeah, let's all just sit back and receive
fiat currency from the skies! I'm sure it will work out just fine, because
um.. aggregate demand _magic_!

Why not just print and hand out 100 trillion dollars to everyone? -Somehow
_that_ sounds like a bad idea, huh? But there's nothing wrong with sprinkling
say, 3000 times 330 000 000 dollars into the masses' hands?

~~~
tedsanders
To give a serious reply to your hopefully not serious comment:

Of course hyperinflation would be a concern at the $100 trillion level.

The idea behind this policy would not be to inject additional money into the
world. Rather, the idea is to switch channels from open-market operations to
money giveaways. Because the amount of newly created money would be the same,
inflation should be about the same too.

~~~
whatevsbro
> Of course hyperinflation would be a concern at the $100 trillion level.

If it wasn't harmful to hand out "free money" to everyone, then they could
actually do it at the $100 trillion level. The difference is in the
degree/expediency of harm caused. Hyperinflation would be a concern at the
$3000 level too.

The point is that there _is_ no "free money". Money being "free" equates to
money being worthless, and that's exactly where the suggested operation would
lead.

> Rather, the idea is to switch channels from open-market operations to money
> giveaways.

I see you've adopted the Fed's jargon. The massive difference between what the
Fed is doing now (handing out $85B/month to banksters) and handing out money
to the masses is that in the latter case, all of that money could potentially
enter the real-world economy right away, thus potentially causing all the
inflation it could possibly cause.

That's way different from the same amount of "nominal wealth" sitting in some
bank's balance sheet, having replaced some worthless-in-reality asset's
nominal valuation with the equivalent amount of money. In this case, the money
is not going anywhere, and thus, not causing the inflation it could.

But the original article is thoroughly full of shit. No wonder, because the
article was meant to mislead the public.

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carsongross
I'm a hard money guy (I know, I know) but, dealing with a fiat currency
proposal on it's own terms, with Lenin you have to ask: who, whom?

The Fed, ???

Hmmm.

