Yes, giving money to people/governments directly is a good idea, but it's not something the Fed can actually do. The government has to step in for that sort of policy. This isn't "creating money as private debt"-it's purchasing debt. Eventually, these bonds will pay out, and that will take most of the money just injected into the money supply back out of it. The only new loans it's issuing are to states and municipalities.
> Eventually, these bonds will pay out, and that will take most of the money just injected into the money supply back out of it.
That's the theory, first given when the Fed expanded from buying treasuries in to buying bonds back in 2008. Looking at their balance sheet [0], it isn't working that way in practice.
If wages followed asset prices, it likely wouldn't matter. If everyone was making 4-6 times what they were a decade ago, the playing field would be level.
The playing field is buying power, measured in dollars.
The dollars earned from a person(entity) selling a bond to the Fed at a price that only the Fed would buy are new to the money supply. The dollars earned from a person selling hours of labor in to the labor market are subject to other market forces and are harder to come by, as evidenced by the fact that most people don't have 4-6 times the wages or savings that they did back when the Fed's balance sheet was ~800 Billion in US Treasuries, 12-13 years ago.
Inflation isn't steady, it's lumpy, which makes the playing field lumpy.
It’s amazing to me, seeing the flagrant corruption and abuse of these norms and laws over the past few years, that people still cling to ideas like what the Fed can and cannot do. These prohibitions exist only to the extent that they don’t impinge on the power of Capital owners and their institutions and disappear the moment they need bailouts.
It's funny, I agree with your points, but I'm concerned for a very different reason!
The Fed is an institution staffed by unelected, career technocrats. It's not supposed to have such sweeping powers (and, by charter, it really doesn't), but, like most parts of the executive branch, it has expanded in scope over time due to a steady erosion of our lawmaking institutions.
Put bluntly, the Fed can do what it does for the same reason the President can start pseudo-wars without going to congress: it's inconvenient for lawmakers to cop to such responsibilities. The other branches of government are simply shoring up the holes.
To be honest, I like the Fed a lot... In so far as grossly unchecked power goes, we could have far less competent people at the helm (The fact that so few in monetary policy wind up in congress is the real tragedy, if you ask me). That being said, future performance is no guarantee. History shows that it is not so simple to take back power once ceded for the sake of expediency when it is no longer convenient.
The question is how you put the genie back in the bottle.
I think this is the core insight of small-government conservatism. When big, powerful institutions exist, they can do great things...provided they're always run by exceptional people. But when they're not, the damage they can do is incalculable.
So the question becomes, how do you create a system with the best long-run survival properties? I, I suspect much like you, would like it if there was some way we could return a bit of power back to Congress and other institutions, and away from the huge executive we have today, in 2020. It just feels like a ticking time bomb until the wrong people get the helm.
It sounds like a lack of insight and accountability. I don't see a large government as a problem, but unchecked power. As long as all people in power are democratically appointed, subject to transparency and with accountability, errors can be corrected.
> democratically appointed, subject to transparency and with accountability
I am no longer so sure these aren't mutually exclusive. In the end, the buck stops at the voters. Do voters in practice make decisions that make any sense at all? Were the successes of democracy really the successes of voters, or were they the successes of a technocratic gatekeeper class who very carefully controlled the flow of information to induce the voters to make the "right" decisions?
you're downvoted (i upvoted) but what you're saying is completely true. everyone that downvotes is one of those "well akcshually..." people. it's plain as day that it's true even if it's not formally true. the formal rules of governance and policy are manipulated to make it so. it doesn't not mean that it isn't so. the old adage that there have always been things that were legal but immoral/unethical applies. longer you bury your head in the sand (people that dissent without any substantive response) the longer we will be mired.
here's an example: do you all realize that the banks providing these loans are being paid essentially commission [1] for making the loans? anywhere from 1% to 5%? 5% on 500B is 25B in the pockets of bankers. why?
[1] bottom of the page here under PPP incentives https://www.chapman.com/insights-publications-SBA_Paycheck_P... . and if you think covering "processing fees" isn't commission then ask yourself as a programmer why it's not a flat incentive? does it cost more to process the paper work for 100k loan than a 10k loan?
edit: what in the fuck am i getting downvoted for? i have a literal citation of a tax attorney. i'm not editorializing or taking anything out of context or whatever. it's right there:
>the SBA will reimburse lenders for PPP loan processing fees, based on the disbursed loan amount: 5% for PPP loans up to $350,000; 3% for PPP loans greater than $350,000 and less than $2 million; and 1% for PPP loans of $2 million or more
what could you possibly disagree with here??? jesus christ forgive me if your naive understanding of the world doesn't reflect reality.
i don't understand this response. are you truly unaware that the truths of many policies are "verifiable" but not practically verifiable until many many years after they are implemented. again - this is the whole point of the study of history.
Obviously it isn't legit to use multiple accounts like this. I've banned this one. If you don't want to be rate limited on HN, we're happy to take off the penalty whenever anyone sincerely wants to use HN in the intended spirit.
If you keep breaking the site guidelines with your main account, we're going to have to ban that as well.
Please show me a single time in history when the Fed has implemented a fiscal stimulus. I'll wait.
I, personally, believe we need a stimulus for working families, and that we should significantly increase taxes on capital owners, etc. If you believe in that too, then you should be directing your energy towards getting the government to pass a stimulus, not towards trying to get the Fed to do it (they can't).
BTW, even in a socialist utopia, presuming that there are still markets and currency, we will probably still need an independent central bank.
My theory for Fed fiscal stimulus: In 2008, the Fed started buying things that weren't treasuries (e.g. Mortgage Backed Securities (MBS)), and bulking its balance sheet up from ~800 Billion to ~4 Trillion. Some portion of that ~3 Trillion went to buying securities for which there was no other market at the going price. The difference between the market price (what a non-Fed buyer would pay) and what the Fed paid was stimulus to the firms selling the securities. They could turn around and spend that difference in to the economy.
