I've been a lifelong user of marijuana and know many others. I've always found it helps me be more creative and more patient in dealing with the world. Sometimes it has been beneficial socially, but these opportunities have been sadly too limited. I completed a very successful career in software development, becoming chief programmer on a world standard scientific program until my retirement in 2019. No one I've known among many elite technical, scientific and cultural associates has believed that marijuana prohibition made any sense except as a tool for selective racist prosecution, and that the harm of marijuana laws themselves has been great to many. Texas is now way behind other states, including my birth state California, where full marijuana legalization has been a great success. Texas has the unique opportunity to be #1 in marijuana production.
Saturday, December 19, 2020
Thursday, December 17, 2020
A word from Minsky on Keynes and Socialism
https://digitalcommons.bard.edu/hm_archive/16/
Though I admire both deeply enough to consider myself a post-Keynesian in my political economic thinking, I am not fully on the same page as either Minsky or Keynes, and I wonder if Minsky's claims about Keynes in this brief note are fully true: that he believed once full employment was achieved, distribution problems would take care of themselves. If so, it is a weakness in Keynes' thinking. (But I suspect Keynes's actual thinking is not so neatly summarized. I believe he was horrified by militarism.)
Of course, we haven't tested his hypothesis really...has truly "full" employment ever been achieved?
But the most important problem isn't even distribution as such. It is what the hell are we working on. Solve that, and the full employment problem, and we are much closer to having solved the distribution problem.
And the answer to that for the Soviet Union is that it was working on independence and self-preservation amidst continued economic and threatened military warfare from the western imperium.
I would blame any economic failures foremost on that what the hell, in this case endless war.
You could argue that similar mis-orientation was involved in USA (and still is). But he USA had and still has enormous material and strategic advantages, so nothing important about the comparative viability of Socialism vs Capitalism is clear from this history, except that discrediting the ability of either to produce on any simple basis is without merit.
The real problem that hasn't been solved isn't exactly economics. It is the problem of governance (which includes the governance of finance and baking and corporations). How do we decide what the hell we are working on?
Markets are of only limited value here, and "free markets" and "democracy" have never existed (let alone being fully incompatible). Wealth and power are everything and should be nothing. That is the problem.
Wednesday, December 16, 2020
Momentary Physics Detour
In the EPR Paradox, Einstein believed the answer was there had to be hidden information.
Bell devised the mathematics to test this, and the tests done ever since have shown the no-hidden-information argument to be true.
What seems intuitive to me, then, is the opposite of hidden information. Hidden lack-of-information.
Hidden lack-of-information, for example, is what you have in a lossy compressed image, as compared with a "real" one.
My first description of this, is that reality is constrained in certain hidden ways. There are certain places it cannot go...and this extends also to our ability to test things. We simply can't get to the experiments that would disprove entanglement, because we are similarly constrained.
Therefore, the world has less information that a world in which every possibility...was really possible.
And it seems to me to be impossible that the universe could have so impossibly much information as it might at first glance seem to have. Some data reduction...just has to be there.
It's also consistent with the theory that "this universe" is actually a simulation. A simulation done in a higher order universe lacking some of the constraints. Perhaps they couldn't hide this aspect of the simulation, except by obfuscation.
Anyway, just something that occurred to me watching Nova tonight. I'm not sure I like it actually. It's so much nicer to think of a more infinite, but also infinitely entangled universe. But they sound pretty similar actually...an "entangled" universe is also a constrained or information-compressed one. It is as if the universe is being expanded from an MP3 file.
Tuesday, December 15, 2020
Debunking Reagan (and Milton Friedman)
Today Paul Krugman wrote another excellent editorial debunking Republican claims about Reagan and the magic of Tax Cuts.
Republicans claim supremacy based on ignoring Reagan's first 2 years. Sure, Reagan didn't deserve the blame for that, but he didn't deserve credit for the recovery either. Both were caused by actions of the Federal Reserve as Krugman explains. Tax cuts had little or nothing to do with it...and have been worse than useless ever since.
Krugman doesn't mention it here, but then-Fed-chair Volker appointed by Carter was a follower of Milton Friedman's "Monetarism" theory about controlling inflation, which provided a new cookbook for central bankers. It was supposed to be able to control inflation while also maximizing GDP, but it didn't work that way (because the Fed doesn't actually "control" the money supply...as I have long discussed, the money supply is determined by private lending and saving* decisions which at best the Fed can slightly incentivize but not control). So, after destroying the economy for several years, by 1982 Volker finally decided to abandon strict Monetarism and returned to traditional methods that anglo central banks have used for over a century, mostly using Keynesian formulas since the 1930's. And then the economy snapped back to life--because the huge unnecessary interest rates following Monetarist prescriptions were reduced back to normal. So Friedman should be debunked as much as Reagan. Neither tax cuts nor "Monetarism" actually worked.
(*Lending creates money, paying off loans destroys it.)
Friday, December 4, 2020
We must learn to love the best kind of debt
I am grateful that the renowned economist Paul Krugman has just written an excellent editorial.
https://www.nytimes.com/2020/12/03/opinion/biden-republicans-debt.html
Here here! As far as he goes, I strongly agree with Paul Krugman here. Given the choices available, proceeding with large deficit spending, such as for the Green New Deal, or even relief and readjustment from COVID-19 is the way to go now.
Debt and Deficit fearmongering is one of the worst kinds, and I am grateful to have Krugman on my side, to help add some establishment credibility.
However, as a Communist, only let me add, that debt financing is not necessarily what I see as the only and best approach.
I see the best approach as, in whatever degree possible, taxing the capital oligarch class as much as they can be made to pay. And even, when needed and warranted, simply seizing the means of production for the people. I have zero moral qualms about this. I believe Balzac was exactly correct when he said that behind every great fortune is a great crime. The rich create far fewer and poorer jobs than their expropriated value would. Self-described centrist economists, including Brad Delong, have cited and praised research showing that the tax rate that produces the maximum collection is 87%, and he proposed that is what should be applied to the largest incomes, which I would peg at over a 100 million dollars a year. Is someone going to fail to get out of bed to work for a measely $13 million a year net after taxes? Fine, we could probably do better without them.
Borrowing from the rich instead of taxing or confiscating is only third best. It is only second best for one key reason. Borrowing from the rich does little to create greater equity in society in and of itself, so for that reason taxing or confiscating would be better.
However if the borrowing finances goods that are good for everyone, then those goods themselves may provide greater equity for all, despite also providing an additional benefit (and lack of additional sacrifice for) the capitalist class which is also of some modest value to others (note 1).
But I'm willing to proceed full throttle with third best when the needs are great (they are) and taxing and/or confiscating is limited and/or politically impossible.
And it would also be best to end the current wasteful Military Keynesianism regime of vast unnecessary military spending, which does little or less for the average US citizen, is highly destructive in the rest of the world, wastes priceless human potentials and endless material resources. Most of the benefits of US empire flow to the very wealthy who profit from US enabled commercial savagery in other countries.
In fact, to do the things we need, on the scale we need, we will need to vastly scale down our so called Defense establishment, simply to have the resources and human potentials needed. That's in addition to the fact it does positive harm to us and our society, and even more to others.
The legitimate defense needs for a socialist USA could be about 1/10th of current defense spending. That also means that 9/10ths of the human potentials and other resources could go to building the Green Society of fully renewable energy powered everything, and materially efficient and ubiquitous mass transportation.
The vast levels of US military spending, along with the vast scale of US military operations in the world, were not a thing prior to the buildup for World War II. After the war, government planners correctly saw that it had been the vast government spending which had finally ended the Great Depression. FDR's previous efforts at government spending had been too small, it needed to be far larger. And they thought about whether that spending should be directed towards consumer needs, or continued military operations. And they openly decided on primarily military spending, not merely because it was needed, but because it would not enable social democracy as would other kinds of government spending. These decisions were made prior to the fingering of the Soviet Union as a (phony) existential threat to the USA which justified endless military spending, but the latter helped keep it going until replaced by the next (phony) existential threat.
Keynes himself would be outraged by the term Military Keynesianism. He wanted military spending minimized. He envisioned an entirely different kind of post-war world, in which increasing productivity meant people had to work less and less, ultimately creating a leisure society for all, with more time for the arts and education. And this could have been made possible by avoiding military spending as much as possible.
Instead, we got the world where people have to work longer than ever, as hard or harder than ever in some cases, and be surrounded by excess militarism and inequality. Keynes would be horrified.
Though often painted as a socialist by some economic sects, he preferred to be identified as someone who wanted to make capitalism work better. Keynes was explicit in his denunciation of Communism and he was a believer in free enterprise and markets, but markets guided (not centrally planned as such) towards the common good. And the common good included full employment, healthcare and leisure for all. If one must be a socialist to believe in those things...how can anyone not be a socialist?
Krugman describes imself as a Keynesian economist, and not as a socialist. He is the leading economic column writer at the very establishment New York Times, a large capitalist enterprise within a gigantic nexus of capitalist enterprises. A newspaper which regularly denounces self-described Socialists like Bernie Sanders and anyone to his left. By no manner of thinking can Krugman be understood as far left, though often hysterically described by conservatives as such.
I must say in partial defense of Krugman to my friends that while he portrayed Bernie Sanders as extremist, and Medicare for All as politically unrealistic, he has nevertheless always said Medicare for All would be the way to go if we could only get there. As very centrist economists have done back to Kenneth Arrow--one of the first Nobelists, who wrote a paper in 1956 that efficient markets in Healthcare were impossible.
Krugman often finds much good in northern European social democracies like Norway, Sweden, and Denmark, and recommends a more complete welfare state in the USA.
But when it comes to endorsing political candidates, he sticks to the centrists, like the newspaper he publishes in.
So perhaps it is no surprise that Krugman doesn't even mention, at least in this short essay, the alternatives of tax increases and military cutbacks. He has discussed those before, and would follow in direction I propose but not as far. He probably doesn't discuss them as much as government deficit spending.
We the people of the USA would probably need to borrow anyway to build the vast changes we need today, but the tax hikes and military cutbacks would enable an even greater scale, closer to the the one actually needed.
Hopefully as we begin to go down this road, people will see the benefits of doing things this way. And people in the useless fat of the military and finance industries might see the personal benefit in switching their occupation to something socially useful. The Capitalist Establishment don't want good working examples of socialism. When they exist, they must be dismantled and privatized, to create more business opportunities and ultimately fuel ever vaster wealth inequality.
With things like the Green New Deal, we're talking about saving the world here. Some say we have ten years, many are hoping for more, but the sooner we can get started in the biggest way, the better.
*****
I've already tried to place Krugman closer to the Center than the Left, as I define it. But there's also another apparent spectrum here. The hard to soft money spectrum. Doug Henwood, an avowed Marxist, might even be harder-money than Krugman. Henwood always mentions and prefers the alternatives I've mentioned to government borrowing. I would argue that Krugman is roughly at the center of this spectrum as well, but it's informative to show the range of views.
On the full on Hard Money side, we have the Goldbugs and followers of Mises and Hayek, two very very conservative economists. They preferred the preservation of value of money, and of great wealth itself for that matter. They strongly disliked Communism and even Socialism, and had a tendency to disparage anything that didn't emphasize foremost the preservation of the wealth of the wealthy as Socialism! which portended to loss of everything good in civilization. So Hayek wrote a cult book Road to Serfdom which purported to show how social democratic programs such as national healthcare were a quick road to totalitarian hell. This book should not be taken seriously by anyone anymore, but enjoyed a certain celebrity for awhile and still rings true to unthinking rightists.
But within what you could call mainstream economics, itself having left, right, and center theorists, the followers of Mises in particular, and to a lesser degree Hayek (whose philosophy so appealed to the conservative Bank of Sweden who decides these things, won the first economic Nobel) are considered far out.
The very conservative Milton Friedman himself denounced the gold standard, and blamed too tight monetary policy (stemming from gold-standard-like ideas) at the core of the Great Depression. And you can bet the Gold Standard has enjoyed any greater support in the more centrist and lefter sectors either.
Since long before the Great Depression the need for flexible monetary system made sense to many serious economists. Why should Gold, itself a commodity, subject to its own supply and demand considerations, be central to determining the liquidity of society? A serious chunk of 18th century US history was devoted to the struggle between supporters of the always-in-short-supply Gold as a monetary standard and endorsed the far more plentiful Silver to allow the western continent to keep up with the already high growth rate avoid endless boom-bust cycles. Conservative and Leftists decry the Federal Reserve, but it was created for a reason (though there might be better alternatives, such as a non-independent government banking system).
Managing paper currency systems had already gone past science to engineering in British banking before Keynes came around. Keynes promoted the idea of government spending to end the great depression. He promoted the idea of deficit spending so much he made the economic offices of the FDR administration, which included John Kenneth Galbraith, uncomfortable. But in fact the FDR administration turned out to be far too conservative in it's attempts to end the great depression through government works programs. It was only the far vaster and less deficit-obsessed spending on World War II which ultimately did. Keynes was right, and it was FDR who was too conservative.
But far to the softer money side of the soft money spectrum are the followers of Modern Monetary Theory (MMT). MMT has a cult-like following not entirely unlike that of Mises and Hayek followers, only on the soft money side. MMT'ers are not necessarily leftists. Most are strongly pro capitalist, and some go so far as to completely oppose taxation completely for that reason.
It is within the soft money spectrum of MMT to include some who would completely oppose taxation. They would say we can manage money without the trouble of having a debt intermediary (such as the Fed, as it exists now). The government doesn't have to borrow money, it can simply print money. (I'll describe why this works later. Many people think the government already just prints money in the process of deficit spending, but the actual process is far more complicated. The government borrows money from the Fed, a private bank which then packages government debt as a security. The Fed arranges for Reserves, which are deposits owned by commercial banks at the Fed (i.e., the Fed's debt), and then a government agency literally prints the paper currency which is distributed to member banks--but the latter portion is not what people generally mean by printing money--they mean deficit spending.
Other MMT'ers would disagree, but only because taxation is a lever to minimize inequality, to keep the rich from getting richer than everyone else endlessly. For this reason, there should be taxes that are either highly progressive or that only the very wealthy pay.
How can this possibly work? Spending without taxing? Well there are many reasons why this works, the government is only one actor in the economy, money is not actually created so much by the government, whose spending and deficit spending is a tiny part, but by private borrowing, and money is ultimately retired by savings and/or loans being paid off. If the economy generally keeps growing, as it has for the last 250 years, there is more wealth, and thus more basis for more loans, and thus, more money. That's the nutshell version of money in MMT, and it is correct, and bypasses both folk and even recent mainstream liberal economists understanding of how money really works. But each of these sentences deserves it's own chapter, if not it's own book.
I would put my own views on the hard-soft money spectrum somewhere between centrist Krugman and the soft money MMT'ers. I believe much of the MMT theory is fundamentally sound, but I also believe in the precautionary principle.
As I said, MMT's are not necessarily leftists, nor even generally leftists. Some are bankers or economists associated with central banking. Their basic ideas are not kooky...they are actually more real than the ideas most people have.
The MMT concept of how money is created (at the point of borrowing, and not before) is consistent with that of most post-Keynesian and/or Heterodox economists, who have also seen the light.
How Is Money Created
When I was applying for a job at the Federal Reserve Bank of San Francisco in 1997, I passed through and examined a display showing How Money Is Created. It left me with nagging questions at the time. I now know it was wrong, but many economists and other knowledgeable people have believed it before and still.
First, someone makes a deposit in a bank, said the display. Then, the bank can loan $1 to another bank, which can loan it to another bank, and so on, until the total added to the banking system is determined by the reserve ratio, so if the reserve ratio is 10 than $1 invested becomes $10 added to the economy.
At one time, this was felt to be so obviously true, that another intellectual edifice of even more shaky provinance was added. Milton Friedman's Monetarism (his actual set of Economic theories and principles, not his popular books like Free to Choose).
Friedman blamed the Great Depression on a central banking failure: failure to keep the money supply slightly growing. Instead, the great depression was triggered by a monetary contraction.
There are errors even in that work that render the ideas expressed wrong and useless. The monetary contraction occurred after mass unemployment occurred. And other things, it has been debunked.
Anyway, the rest of the Monetarist theory was taken very seriously by Paul Volker, a student of Friedman (appointed by that centrist President--wrongly believed by some to be far left--Jimmy Carter).
It was Volker's limit pushing contraction of the monetary supply that caused the massive economic failures which led to--the election of Ronald Reagan. Anyway, the pernicious INFLATION of the 1970's, which was fairly historic (but probably due to other factors) was finally tamed, along with a mass unemployment which helped cause a mass collapse of labor unions in the USA. Which Reagan managed to disguise by forcing Japanese automakers to have US based manufacturing operations.
But on a technical level, the prescriptions of Friedman simply did not work in practice. It was impossible to so simply control the money supply, the rate of inflation, or unemployment so simply as "controlling the money supply" by moving the policy levers of the Federal Reserve. It was never tried again. Instead, they reverted to a peculiar banking version of something very much like (and including) Keynesian formulas and concepts. That is what actually works. Meanwhile, listening to conservatives especially, anything Keynesian is pure fantasy and wrong as well as being the basest and most dangerous evil.
Meanwhile, just one of the reasons Friedman's elegant formulas didn't work, is because his understanding of how money is created was fundamentally wrong.
MMT'ers and Post-Keynesians have examined the data very clearly, and thought very deeply about the processes involved, and concluded the mainstream view of how money was created was fundamentally wrong. Money is not created by deposits. Money is created by loans.
It is loans that originate and drive the entire process (and always have). When a loan is created, a bank simultaneously creates a deposit of that same amount. They then get reserves for that. But before that, they have no need to.
You don't have to think about it too hard to realize this is exactly how it should work, as well as exactly how it does work. Loans are created to create new economic activities, and it is the quantity of economic activity that determines how much money is needed. So if there is going to be new economic activity, money for it it is best created at the time the loan is made. Likewise when a loan is paid off, the money is no longer needed, no more deposits anywhere, and poof--the money supply contracts.
This is fairly transparent to a certain kind of financial analyst. Debts and financial assets are two sides of the same coin. So, a piece of currency is a Federal Reserve Note, that is to say, a debt owed by the US Federal Reserve, a private bank.
Surely this has to end somewhere. And surely it does. Not everything is a financial asset. Some things are real commodities, real homes, and real people. And some of these can be used as collateral for new loans. In a real growing economy, there are always more homes, etc, to borrow money on, so the money supply generally keeps growing. And even in a non growing but at least developing economy, there would be higher quality physical objects and networks to borrow money on.
Money doesn't have to be saved first. People have to exist, things have to be made or at least claimed, such as a claimed territory, to be claimed as collateral for loans.
Why should a government just be able to create money? Because it owns a great deal of collateral, and can organize vast economic activity, and tax a portion of that activity back. Because it never goes away or becomes stranded from the ability to tax the wealth it has created.
When a business creates a factory, it can rake in profits from the enterprise in operation. Similarly, when the government creates an industry, it can rake in taxes from the economic activity generated.
How much money there is, is not at all a measure of how wealthy society is. The wealth is determined by the real things, the people, the homes, as well as how well educated and good they are. The money may partly determine how liquid a society is, and that can be valuable, if it wants to organize new economic activity.
It is too important to be left to something arbitrary, such as the excess supply of gold and/or silver. It is something best determined by a central authority in the interests of maintaining the highest level of productive economic activity. A central authority, responsible to the goal of maintaining full employment and highest quality employment ought to set the parameters that incentivize the making of loans. And that's sort of what the US has in the Federal Reserve, at least on paper, the Fed is supposed to support a dual mandate of fullest possible employment and low inflation.
Myths useful to Oligarchs
1. The country is just like a person or family and must spend within its means whenever possible. Debt should be avoided and payed back as quickly as possible.
The country is not just like a person for many reasons. A person has a relatively short life compared to a country. A country consists of many people at different phases of their lives. Some people are at early phases where borrowing to spend on education or a permanent residence make more sense than not borrowing (and trying to get by without education) or renting (and not accumulating equity). Others are at the point where saving (for retirement) makes sense. This diversity is useful.
In order for people to have income, others must spend, for one person's spending is another person's income. If everyone stops spending at once the economy collapses. If everyone even slows spending a bit, a depression results. This is the paradox of thrift and it is a key illustration of how a country, or an economy, differs from a single person.
But even for a single person, this prescription is not helpful. What does it mean to avoid debt? Sometimes, as in buying a house or business, or an education (which should have been free) it makes better sense to borrow than to miss the opportunity to build into the future. Other times, such as when gambling, or spending on unnecessary luxuries, or poorly made goods, it is not sensible to borrow if it can be avoided without bad things happening.
Finally, a developing country (and every good country is always Developing (or even just Changing--even if not necessarily Growing) need never, and in fact should never, pay off all it's debt. Because it's debt is the money supply. When the government pays back all the debt, there are no more guaranteed assets in the form of government currency or government bonds.
MMT'ers state categorically that not only does a Government not ever have to pay off all it's debt, it should never do so--as it is very destructive. This may well be true in a world anything like the human civilization we have now.
However I'm trying to imagine a world beyond unsustainable growth fueled by fossil fuels. This is way beyond the politics and economics of which almost anyone is familiar. The End of Growth may be arriving in the next century or less (or, perhaps more likely, the Collapse of Human Civilization). Suppose we could actually end Growth before the Collapse overtakes us? Shouldn't all debt be paid off by then???
Probably not. Even a shrinking country is changing, re-developing in a sort of way. During change, old things are worth less, and new things--which need to be built--are worth more. Therefore, credit, money and debt are still needed. I will discuss later the optimal means by which this may all be accomplished.
Private debt is something altogether different from public debt. A person can lose their disposable wealth to Bankruptcy, if not moral shame, if they cannot meet their debt payments. But it gets worse. A society with a high degree of private debt can be slowed down to a permanent recession, as has happened in Japan. The permanent recession in Japan has nothing to do with their government debt.
2. The hard working person saves their money. Government spending is diluting the shares of the people's interest, cheating their spending power by causing inflation. Govermment spending rewards the lazy and crooked while penalizing the industrious and thrifty.
(Paraphrasing Mises, Hayek, Hitler, and many before and after)
There are so many myths here, it's hard to know where to begin unpacking them. Basically it purports to represent the interest of working people, in favor of their masters, but in truth does the exact opposite.
- It presumes the hardest working people are even being paid in money, which is not always true. Mothers, slaves, and saviors have generally not been paid in money for the important work they do. Their "investment" is not in a savings account, but in a common good. Therefore it is not merely the welfare of savers that needs be maximized by our philosophy, but the welfare of all people.
- It presumes anyone working hard enough can save money. Most poor people can barely survive on what they are paid. The minimum wage is a less-than-starvation wage that forces people to pool their resources or never leave home.
- It presumes that paid work is just there. More often, each new paid job requires either government spending or private borrowing to even exist...in one way or another the money supply needs to be expanded for someone new to be paid, unless someone else is going to be paid less. Economies without credit or government spending grow or develop very slowly
- It presumes that all can get paid work on an equal basis.
- It presumes that work is paid according to the contribution to how hard one works, or how valuable the work is to society, when neither are true. The poorest often do the hardest work AND the work that is most essential to society.
- It presumes the major interest of the class of working people is in protecting the value of savings, above and beyond the general welfare (including many who have no savings), people looking for new work (which requires the money supply to grow), or people seeking education or spending on other future-serving purposes.
- It presumes that the capitalist master do not own the majority of savings and other wealth, and therefore are not the greater beneficiary of policies benefitting savers. In fact the capitalist masters do own the majority of savings and other wealth, as well as highly disproportionately.
- It presumes that inflation affects only the cost of the goods that a working person would buy, and not the wages the the working person would henceforth be paid, or equities either might own. General inflation affects wages, prices, AND values. The working person cynically believes that they will not see their share of any inflation and that might be individually true, it is less true of the entire class of laborers, or considering the entire quantity of wages being paid--because more people are called to work in an money expansionary milleau than otherwise, generally raising the required wage for newcomers as well as established workers having bargaining power. However even beyond the employment killing Gold Standard, which insanely ties the quantity of money to the surplus of a rare commodity of fluctuating value, modern conservative central banks who attempt mainly to suppress Inflation get most concern and take serious steps when labor pressure looks like it might begin to cause wages to increase.
- While the uninformed and/or stupid may believe that zero inflation would be a desirable, it is in fact the signature of an economic collapse. From a century of examined experience, even the most conservative central bankers understand a modest degree of inflation, between 2 and 4 percent, is essentially to keep an economy developing in a positive way (usually called growth but it could also be development--where things are increasing in quality if not quantity). Without inflation, spending and borrowing are reduced. Intuitively, a small inflation keeps you buying things "before the price goes up." That appears to be boost a capitalist economy needs to keep from falling over from it's own contradictions.
- Nobody should be saving currency in a mattress. They should either be spending on useful things, or saving through a savings or investment institution, where they are generally protected from inflation, most often in the past staying well ahead of it, but under any circumstances, as well as can be done in the prevailing money market, or with some chosen risk. So therefore inflation may not affect savers at all, or less than others.
- What the class of working people should desire is not zero inflation either, and not merely for technical reasons, but instead the maximum possible price for labor power (the very thing central banks work most to tamp down, calling it Inflation!) relative to price pressure. They should prefer to see wages generally going up as much as possible relative to everything else. This is not represented well by General Inflation
- Whether or not working people prefer or even care about the price of long lasting things, like homes, most likely depends on whether they already own one. What they'd like to see is their wages worth more against the things they need to buy. But this includes many things, such as healthcare or education, which by rights ought to be free, and are in many social democratic states--a vast majority of the world's wealthy countries. Healthcare and Education are the two things, which are bound to experience inflation faster than everything else. So if working people were freed from those particular kinds of expenses, which they should not be bearing in the first place, they would be doing best of all.
- Working people should therefore desire to see modest inflation--especially inflation in the value of their wages or other things they are interested in selling, but at least within the 2-4% range at which modern economies do their best, support the creating of the best jobs possible for people seeking jobs, and supporting a democratic socialist state that provides free healthcare and education among other things.
- People should understand that if they are going to be getting more money, either the money supply needs to expand or someone else is going to have to get less.
Notes
1. The wealthy person might ask, what good does government borrowing do me? I may receive less interest from my government debt than the inflation rate. But the benefit is obviously there...as the bonds are always sold and usually not below face value. The benefit is protection, full faith and credit and all that. It is a service only the government, invested in all of the people, can provide. That people are endlessly willing to pay for it, proves it has value to them.
[This is a work in progress intended for initial presentation on Sunday December 6, and final completion at the end of January 2021.]