Economic Policy Impact of an Egalitarian way to Create New Money

Economic Policy Impact of an Egalitarian way to Create New Money

 

US economic policy has three consistent goals (not in the order of importance): growth (or sustainable and increasing productivity), full employment, and a stable dollar (or no to little inflation). While foreign trade, transportation, energy, education, immigration and defense all have major impacts on the economy, these and other policy areas are classically treated as separate policy areas. It is a bit strange that the US House and Senate have committees dealing with most of these policy areas, neither chamber has a committee devoted to the economy and a coherent economic policy unless one considers the two appropriations committees fiscal policy economic specialists. Rather responsibility for nation’s economic policy, primarily monetary policy, rests with the Federal Reserve Banks, the Securities and Exchange Commission, state banking agencies and state and federally chartered banks in all states and territories. Yes, this means that economic policy is primarily viewed as monetary and fiscal policy (monetary policy is essentially under the direction of the Fed and fiscal policy suffers from Congressional inattention).

 

However, regulation of business practices falls in the field of growth, full employment and a stable dollar: bank regulation, environmental regulation, Consumer Protection Agency regulations, Justice Department fraud and other units, drug and pure food regulations, the National Labor Relations regulations and decisions, the Federal Aeronautical Administration, just to name a few types of economic regulations. In a nut shell commerce needs to be monitored least it produce too great a quantity of negative externalities or commit too many out right criminal acts.

 

If the US were to adopt a policy of depositing base money into voter accounts, there is little likelihood that the regulatory aspects of economic policy will chance significantly. However, it is highly likely that the goal of full employment will become moribund for every voter should have the means for securing employment; this is not to mention that producers and retailers responding to a rightward shifted aggregate demand curve will be in a constant state of needing new employees.

 

Growth will be realized consistently over time. Inflation will be “worrisome” to economists trapped in a money backed by debt frame of mind. However, historical bumps in the money supply have not resulted in inflation. So while there will be a great deal of nervousness and anxiety, other than an initial blip in prices, a stable dollar will continue.

 

What the Feds and economists fail to recognize is tastes, technology and other such factors are rooted in the ability of consumers to buy. The larger the share of the population that have the where with all to purchase discretionary items, the shorter the time those items will remain discretionary. So, increasing the consumer base increases demand for everything. Apparently, an opportunity for all to have a higher level of consumption will be the new economic reality.

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2 thoughts on “Economic Policy Impact of an Egalitarian way to Create New Money

  1. I can see how this might have a positive effect in reducing inflation.
    It also seems that the economic system in the USA differs from that here, in one crucial aspect. We have the Treasury, and The Chancellor of The Exchequer, to make the fundamental rules that the banks and institutions then have to work with. These are government posts, and the principles that they adopt can be changed considerably by the arrival of different political parties, with other agendas. From your description, it would seem that the US system has greater stability, in this respect.
    Best wishes, Pete.

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  2. The members and officers of the Federal Reserve Banks are all political appointees. However, their terms extend beyond the President’s term, so there is a bit of a buffer from the political whims of a new administration. In general I think both parties, up to now, have been very reluctant to “mess with” decisions of the Fed. There are calls for an audit from time to time. The two houses of Congress have committees that attempt to “interview” the Fed Chair on a regular basis. And, a few weak calls to abolish it altogether and go back on the gold standard. This latter “group” tends to be ultra conservative. But, generally the Fed is insulated from political winds. But, strangely, they are very sensitive to those winds and attempt not to end up with their (the Fed) boat rocking. In other words the Fed does not act and speak (report) as if it were not acutely aware of the political, social and economic environment in which it “swims and creates currents.”

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