by Summary:
If the government issues interest-bearing bonds to wealthy institutions to take money out of circulation to control inflation, then why not allow the general public to deposit their savings at the central bank in interest-bearing accounts as another way to control inflation? This would compete with the private banks, but would this be a bad thing?The rest of the article is very MMT in all but name, and describes how the New Green Deal can be paid for while keeping inflation in check. A final way we might combat inflation, should it ever emerge, is by use of a new infrastructure that I’ve proposed elsewhere. Suppose, for a moment, that the Fed offered what I call interest-bearing ‘Citizen Accounts’ for all citizens, instead of just offering ‘reserve accounts’ to privileged banks as it does
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If the government issues interest-bearing bonds to wealthy institutions to take money out of circulation to control inflation, then why not allow the general public to deposit their savings at the central bank in interest-bearing accounts as another way to control inflation? This would compete with the private banks, but would this be a bad thing?If the government issues interest-bearing bonds to wealthy institutions to take money out of circulation to control inflation, then why not allow the general public to deposit their savings at the central bank in interest-bearing accounts as another way to control inflation? This would compete with the private banks, but would this be a bad thing?The rest of the article is very MMT in all but name, and describes how the New Green Deal can be paid for while keeping inflation in check. A final way we might combat inflation, should it ever emerge, is by use of a new infrastructure that I’ve proposed elsewhere. Suppose, for a moment, that the Fed offered what I call interest-bearing ‘Citizen Accounts’ for all citizens, instead of just offering ‘reserve accounts’ to privileged banks as it does
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
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The rest of the article is very MMT in all but name, and describes how the New Green Deal can be paid for while keeping inflation in check.
A final way we might combat inflation, should it ever emerge, is by use of a new infrastructure that I’ve proposed elsewhere. Suppose, for a moment, that the Fed offered what I call interest-bearing ‘Citizen Accounts’ for all citizens, instead of just offering ‘reserve accounts’ to privileged banks as it does now. Were it to do so, we’d not only eliminate our nation’s ‘financial inclusion’ problem in one swoop, we’d also gain a most powerful money modulation tool.
During deflations like that after 2008, for example, the Fed could drop debt-free ‘helicopter money’ directly into Citizen Accounts rather than giving it to banks in the hope that they’ll lend (which they didn’t – hence the notorious ‘pushing on a string’ problem of the post-2008 period). And were inflation ever to emerge, the Fed could likewise simply raise interest rates on Citizen Accounts, thereby inducing more saving and less spending.
I believe that the ‘fintech’ revolution renders something like what I’m proposing here all but inevitable. The point for present purposes, though, is simply that once this thing happens we’ll have yet another quite powerful anti-inflationary and anti-deflationary policy tool – and therefore yet more reason not to be timid about moving ahead energetically with the Green New Deal.
Have I succeeded, then? Have I convinced you both that there isn’t a ‘pay for’ challenge and that there isn’t, thanks to a multitude of theoretical, empirical, and policy lever reasons, an ‘inflation’ challenge either? If you are bold, know finance, and care about our future, you probably didn’t need much convincing. If instead you are frightened, financially untutored, or cavalier about our economy or our planet, please buck up, wise up, and suit up. It is time to say game on for the Green New Deal.
Forbes