Socially Beneficial Qe?

[ManVsRecession]

A half-formed thought...

Debt-based money requires ever greater production and consumption to generate the wealth just to pay the interest on the existing debt. Attempts to pay down the debt reduce the money supply causing recession and hardship.

At the same time, technology really is destroying more jobs than it creates, and improvements in software, robotics, AI and other fields are only going to accelerate this.

The result is people are working longer and harder for less, while destroying the planet at an ever faster rate. As a society, we're running up a down-escalator, reaching exhaustion point, and the escalator is on fire.

But what if there was a solution that would create all the jobs we wanted, ended the need for ever more debt-fueled consumption, while saving the planet and possibly curing cancer to boot?

What if we QE'ed / printed an amount each year, in some correct proportion to the interest on the debt and the available labour?

And what if we spent that money on the wages of people doing socially / environmentally useful things, from science and medical research though to litter picking, tree planting, diverse small scale farming etc.? Things we know we should be doing but don't get done because there's no profit in it.

New money would be created by the adding of non-financial value to the world, replenishing and growing the money supply, without the need to create new debt-based money.

Over the long term, done right, the overall reduction in productivity you get when half the people are doing non-profitable things such as planting trees and curing diseases , would be made up for by the increased productivity brought about by technology. The producers and their robots would produce enough to support the planet savers.

We could start small and local. We could measure the economic and environmental effects and expand as we learned more.

At worst, we get some inflation, have to stop doing it, but we helped in some small way to save the planet.

At best, we create socially useful jobs, get the economy back on it's feet, and really do save the planet.

Worth a go?

Edited June 30, 2016 by ManVsRecession

[rahhhh]

absolutely

[rahhhh]

We are QEing billions into the system which is disappearing into a financial morass in the vain hope of trickle down or maybe splashback from the urinal. Give it straight to the people.

[XswampyX]

Look. If you want all these things then great, you pay for them. I don't want to so leave me (and my government) out of it.

Thanks!

[Venger]

Attempts to pay down the debt reduce the money supply causing recession and hardship.

Aww. Perhaps you could pay me £40K a year to look upon and behold long-wave mad-gainz of long-wave older owners, and younger buyers of last few years with their debt for that matter. That would be socially responsible for some VIs. And that 'free money' can bring about even more HPI, for the BTLers. Can't have any recessions or hardships. Forget dynamic economies. No; I don't want free money for myself or anyone else, "in the name of" (insert ever more good causes here)

And just making jobs to rebuild them isn't creating prosperity. You can get one group of people to dig holes the other group of people to fill them up. Sure you have jobs for the whole Chinese world right, but it doesn't create wealth, it doesn't create something that people are willing to pay for it, so it has to be productive, in order to be creating wealth.

- Professor Krassimir Petrov

QE in the name of preventing recessions and hardships - socially and environmentally useful things. In the name of science and curing diseases - we have private enterprise and gov money there already - which could probably be better targetted.

UK £4.7bn-a-year science budget ringfenced in Autumn Statement ...

www.ft.com › UK › Business & Economy

25 Nov 2015 - The £4.7bn-a-year science budget that focuses on basic research will be protected in real terms for the rest of this parliament.

Leave vote sparks concerns over losing £1bn a year in funding and closing doors on researchers from EU countries

Friday 24 June 2016 18.47 BST

Senior scientists in Britain have reacted with dismay to the nation’s collective decision to walk away from a European Union that hands them nearly £1bn a year for research, and sends to their laboratories some of the most brilliant minds in the world.

https://www.theguardian.com/science/2016/jun/24/brexit-big-blow-to-uk-science-say-top-british-scientists

[interestrateripoff]

You can't prop up a credit based system with more credit. As Minsky states you merely become ponzi.

[doahh]

I was at a Positive Money talk a couple of weeks back where the idea of full employment was brought up. The idea was that it could be paid from government deficit (i.e. QE). Taxation would then remove the excess from the system when/if the economy recovered. Any unemployed person would be given a job until they found one in the private sector and they could tend parks, pick-up litter etc. The idea of not issuing bonds based on that money would prevent it becoming debt based. Sounded like an idea worth more discussion to me.

You can't prop up a credit based system with more credit. As Minsky states you merely become ponzi.

In contradiction to that which I wrote above, this is a good point. The QE entering the econemy would eventually end up at the banks who would fractional reserve it out at interest anyway. You would therefore still need to remove the power of the banks to create debt.

Obvious solution would be to create an alternative currency which cannot be fractionally reserved and is legal for the payment of taxes. That however, would be a far harder sell and with Corbyn being attacked for having 1970's sytle policies the idea of going back to the 1950-60's style policy of full employment would stand little chance.

Edited June 30, 2016 by doahh

[nnails]

We are QEing billions into the system which is disappearing into a financial morass in the vain hope of trickle down or maybe splashback from the urinal. Give it straight to the people.

they should have given each person £100 when they voted last week. would mean 99% turnout

[ManVsRecession]

Aww. Perhaps you could pay me £40K a year to look upon and behold long-wave mad-gainz of long-wave older owners, and younger buyers of last few years with their debt for that matter. That would be socially responsible for some VIs. And that 'free money' can bring about even more HPI, for the BTLers. Can't have any recessions or hardships. Forget dynamic economies. No; I don't want free money for myself or anyone else, "in the name of" (insert ever more good causes here)

Dynamically spiralling downwards into ever deeper recessions and great inequality isn't the kind of dynamism we need though. Things are supposed to be improving overall, not deteriorating. There clearly is a fundamental problem here, and reducing the money supply by paying down debt has only made things worse.

As for it being inflationary - not at all. The only difference between borrowing money "debt-free" from the BoE, and borrowing from a commercial bank, is that the interest/profits end up as revenue for the Treasury, rather than the bankers. That means it can be spent on socially and economically useful endeavours, rather than Bugattis, or BTL portfolios.

[Venger]

£100s millions director bonuses more for housing directors/management?

I want more independent builders. Lower house prices, lower land prices.

Jan 11th 2014

Since 2008 the number of small house builders—those that put up between 10 and 30 units per year—has fallen by 50%. ...Weak competition means that builders have little incentive to invest in design, which may explain why new homes are often unlovely. And since these firms often operate as little local monopolies, they rarely cut prices: if prices are not suitably high, they tend to undershoot even the low targets set by councils.

http://www.economist.com/news/britain/21593416-ministers-are-fightingnot-successfullyto-overcome-nimbyism-and-planning-laws-enacted

And the numbers fall steeply going back 20 years. Many bought up by the big names, some are so in awe of.

Less by way of stimulus. More by way of allowing rebalance and value to emerge - and breaking of special interests.

[zugzwang]

Dynamically spiralling downwards into ever deeper recessions and great inequality isn't the kind of dynamism we need though. Things are supposed to be improving overall, not deteriorating. There clearly is a fundamental problem here, and reducing the money supply by paying down debt has only made things worse.

As for it being inflationary - not at all. The only difference between borrowing money "debt-free" from the BoE, and borrowing from a commercial bank, is that the interest/profits end up as revenue for the Treasury, rather than the bankers. That means it can be spent on socially and economically useful endeavours, rather than Bugattis, or BTL portfolios.

Socially and economically useful endeavours as determined by whom? The MPC? Their track record is hardly inspiring. The Treasury? Remote, rule-bound, institutional etc.

Provided it's properly regulated we know that the private sector is generally a superior allocator of capital than the public sector. Also, stimulus measures tend to bring about a frenzy of competing special interests. Quality of spending matters! An economy built around pouring concrete and picking fruit is going to find itself progressively disadvantaged in a networked world where high-tech science and engineering solutions command a premium.

[Assume The Opposite]

Very good posts and points. I guess it boils down to who creates the money supply:

Bankers? Or us?

One of which wants limitless profits in a finite world.

[Setantii]

I've often thought that when a bank makes a loan all the interest money needed to repay the loan in full should be created by the Government and spent into the economy.

Edited July 1, 2016 by Setantii

[ManVsRecession]

Socially and economically useful endeavours as determined by whom? The MPC? Their track record is hardly inspiring. The Treasury? Remote, rule-bound, institutional etc.

Of course the MPC wouldn't allocate the funds. Their job would be figure out the right amount of money printing that is needed, and monitor the results.

We already have establish systems for allocating science and innovation funding. On a local level, I'm sure parish councils can all come up with an extensive list of little things that need doing. Tasks could be created and approved online and allocated via a TaskRabbit type process.

Provided it's properly regulated we know that the private sector is generally a superior allocator of capital than the public sector. Also, stimulus measures tend to bring about a frenzy of competing special interests. Quality of spending matters! An economy built around pouring concrete and picking fruit is going to find itself progressively disadvantaged in a networked world where high-tech science and engineering solutions command a premium.

The private sector does a pretty bad job of allocating medical research resources. They focus on what makes the most profit, which is not necessarily what helps the most people. And the resources they waste due to the patent system. Thats just one example but there are countless others.

If there are competing special interests, then they can be debated. That's no reason not to do the non-controversial things. And this is not picking fruit as an alternative to a networked high-tech world. It's a complement to it.

Edited July 1, 2016 by ManVsRecession

[scepticus]

At worst, we get some inflation, have to stop doing it, but we helped in some small way to save the planet.

At best, we create socially useful jobs, get the economy back on it's feet, and really do save the planet.

I am wondering how dissipating more energy doing all these socially useful things actually helps to save the planet as opposed to not doing them and leaving the fossil fuels that would otherwise be spent, in the ground?

One approach can be taken in the long run to saving the planet. Less humans on it.

That can either be solved by having less humans, or by exporting the majority of humanity off planet.

[ManVsRecession]

I am wondering how dissipating more energy doing all these socially useful things actually helps to save the planet as opposed to not doing them and leaving the fossil fuels that would otherwise be spent, in the ground?

I'd hope to see a lot of work focusing on reducing energy needs via better technology.

For example I'm totally off-grid. I have 250w of solar panels on my narrowboat roof and they cover all my needs during the summer, even if I stayed in one spot. That's 16 hours of computer/internet time a day, a fridge with freezer compartment, and lighting. In winter I can turn off the fridge.

And more generally, there are plenty of beneficial things to do that don't require fossil fuels, if you have the manpower, and the money.

[scepticus]

> And more generally, there are plenty of beneficial things to do that don't require fossil fuels, if you have the manpower, and the money.

Such as?

[giggler000]

In the GDR, everyone had a HOME and a job. Even got paid, accept there was not that much to buy. It's funny really because I work hard now and get paid but the things I need I can't ever buy yet the things I don't want are in every high street, every advert, every shop.

If you really wanted the stated goals for QE, you'd send a cheque to every tax payer and ask them to spend it. IMHO socialism has its place, just in a fake capitalist society its at the runt end and history has shown it never really works, likely because the same people on top want more; to many hands in the pie before the crust reaches the people.

[ManVsRecession]

> And more generally, there are plenty of beneficial things to do that don't require fossil fuels, if you have the manpower, and the money.

Such as?

Any activity that involves just the brain, or the hands, or the feet, or people's time or attention. Or anything that humans have accomplished in the past before we were dependent on fossil fuels.

And once you have a suitable supply of renewable energy, just about anything.

[ManVsRecession]

In the GDR, everyone had a HOME and a job. Even got paid, accept there was not that much to buy. It's funny really because I work hard now and get paid but the things I need I can't ever buy yet the things I don't want are in every high street, every advert, every shop.

If you really wanted the stated goals for QE, you'd send a cheque to every tax payer and ask them to spend it. IMHO socialism has its place, just in a fake capitalist society its at the runt end and history has shown it never really works, likely because the same people on top want more; to many hands in the pie before the crust reaches the people.

I'm not proposing socialism. This isn't an alternative to capitalism. It's distribution mechanism for the new money we have to create anyway that benefits everyone, not just the bankers. It aims to achieve the things capitalism and private enterprise isn't interested in because there's no profit in it.

The emergency services for example, or the courts. We expect those to be state owned and run. We expect the state to be involved in science funding and the like. Why not conservation too?

Edited July 1, 2016 by ManVsRecession

[scepticus]

Any activity that involves just the brain, or the hands, or the feet, or people's time or attention.

Again, can you give a concrete example of such a thing? I ask because I suspect that even these things are going to involve quite a lot of energy usage. In which case their value needs to be assessed accordingly.

[ManVsRecession]

Again, can you give a concrete example of such a thing? I ask because I suspect that even these things are going to involve quite a lot of energy usage. In which case their value needs to be assessed accordingly.

clearing litter? mending stuff with your hands? tending a meadow garden? taking scientific readings? Inventing things?

Honestly if you can't think of a single useful thing to do for society without firing up an engine, I'd be amazed.

Edited July 1, 2016 by ManVsRecession

[Turned Out Nice Again]

Isn't this something like what the National Socialists achieved in Germany in the 1930s?

Economist Henry C K Liu writes of Germany's remarkable transformation:

The Nazis came to power in Germany in 1933, at a time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years, even before armament spending began.

http://www.webofdebt.com/articles/bankrupt-germany.php

Downside being it required an authoritarian government to make it work.

Edited July 1, 2016 by Turned Out Nice Again

[ManVsRecession]

Isn't this something like what the National Socialists achieved in Germany in the 1930s?

http://www.webofdebt.com/articles/bankrupt-germany.php

Downside being it required an authoritarian government to make it work.

No, not like that. No need for an authoritarian government. Where would force be required?

edit: and beside, the problem with Germany wasn't that they rebuilt their economy, but that they started invading and killing people. One can have one without the other I'd have thought.

Edited July 1, 2016 by ManVsRecession

[scepticus]

clearing litter? mending stuff with your hands? tending a meadow garden? taking scientific readings? Inventing things?

Honestly if you can't think of a single useful thing to do for society without firing up an engine, I'd be amazed.

what process created the litter, or the stuff? what equipment and travel is required for the scientific readings and where to get the education and how to share the results of the readings and to what end? Will the internet be used for inventing things and where to get the prototypes built and what components will be used?

All your examples rather presume that everyone else is engaged in running the machinery of civilisation which gives these activities meaning; which of course uses energy. You seem to presume that someone somewhere is using an engine.

My point is this: to define something as socially useful you need to define a useful direction for society which in turn presumes an end goal. Of course there are many such potentially valid definitions but what is yours?