Much needed. JG is, of course, the favorite of MMTers.
An important point is that when policy interventions - non-automatic stabilizers - are needed, Congress is not nimble enough to do it in the proper amount at the proper time. The Fed is much more agile. I would give the Fed limited authority to manage two fiscal levers: a low, flat rate tax on all business gross receipts; and a monthy per capita stipend from the Fed to each State and Territory (suggested by Warren Mosler in response to the GFC, but I would make it a permanent feature, sharing a little bit of monetary sovereignty with lower levels of government).
A stipend/revenue sharing policy to state and local governments is a good idea and I have suggested that also in my book. The ultimate stabilizer and "revenue" sharing policy however is a 50% Discount/Rebate policy at retail sale. Why? Because everybody participates in retail sale making a 50% discount to the price of virtually everything an immediate and continuous MACRO-ECONOMIC doubling of everyone's purchasing power. It also will potentially double demand for every enterprise's goods and services so it integrates the self interests of both the consumer and enterprise. Finally, it will forever end inflation because we've never had 50% y/o/y inflation let alone moment to moment such inflation rate. And with the proper carrot and stick taxation regime you can stop most if not all anti-social arbitrary price rises by all business models not just retail.
The real problem with economic theory is not even the leading reforms are analyzing on the operant concept/paradigmatic level. Hence thats what they are...reforms, when if you find the new operant concept and how to most efficaciously apply it...you've changed the ENTIRE pattern of the economy and also in this case the money system.
Part of the reason reformers are stuck in the current paradigm is they are so caught up in their abstractions that they don't look directly at the economic process itself. Hence retail sale occurs hundreds of millions of times every day but no one sees the potential personal, commercial and systemic benefits of the retail price discount/rebate policy.
Reformists also miss the "knock on" benefits that come with genuine paradigm changes. Like for instance if you combine the 50% Discount/Rebate policy with a $1000/mo. universal dividend you make the payroll taxes every working person and every enterprise pay for welfare, unemployment insurance and even for social security completely redundant including their concommitant bureaucracies. That would raise everyone's net pay 8-12%, cut business costs and insure every adult had $24k/yr. income for their entire adult life instead of having to work for 45+ years to get probably less than $2000/mo. Job guarantee? Sure, that also aligns with the new monetary and financial paradigm. Why not? When you've utterly ended any possibility of inflation you shut the mouth of every conservative and libertarian pundit and can run the kind of fiscal deficits to fund any rational program including a new Works Project Administration like the job guarantee, and even the under planeting or off planeting of the worst carbon emitting means of production so we don't kill off most of the flora and fauna of the planet.
Paradigm changes are the most integrative of opposites and problem resolving phenomenon humans ever experience. They are the synthesis of Hegal's dialectic that puts egg on the face of everyone who can't see anything but the conflict of thesis and antithesis.
Here's a few more problem resolutions and economic benefits of the new monetary and financial paradigm:
1) re-industrialization of the US in the most technologically efficient and ecologically sane way possible
2) elimination of most of the costly international supply chains we now have with China etc.
3) the opportunity for China to stop being paranoid about the fractious nature of their diverse cultural heritage and make a new social contract with their people...by implementing the new paradigm program in their own country
4) Imagine the possible social and psychological benefits of creating a continuous daily infrastructure for everyone to consciously or even unconsciously self actualize gratitude for being gifted 50% of the price of everything they buy...instead of feeling resentful about chronic inflation and thrashing around blaming everyone and everything...except the current human civilization long monetary and financial paradigm???
MMTers, Steve Keen, Michael Hudson, UBI advocates and Ellen Brown need to stop being erudite dunces and awaken to the power of the paradigmatic level of analysis.
Unrealistic, but an interesting thing to explore. Thinking first about a product like EVs, we're already making and selling as many as we can, limited by the ingredients like lithium and copper ... What happens to the market when the price to the consumer looks 50% lower? Won't lots and lots of people bid up the price to be first served as the limited prduction comes off the line? What does that do to inflation, as we measure it?
Or something mundane and cheap like bread. Don't 97% of us already have all the bread we want? What do we do with our newfound income when the bill for necessities is cut by half and the demand for them is unchanged? Buy an EV, perhaps? Os some other luxury item that was previously out of reach, and which by its very nature (luxury) is in limited supply?
Or environmentally important things, like home heating. Most of us are careful about how we set our thermostats, mainly because of the cost rather than an altruistic environmentalist attitude. What happens to carbon emissions if the average thermostat setting goes up by 3 degrees in the winter, and down by 3 in the summer, "because we can".
I'm at a loss to conceive of a more disruptive and potentially destructive change than a sudden 50% drop in the price of everything.
"I'm at a loss to conceive of a more disruptive and potentially destructive change than a sudden 50% drop in the price of everything."
That's probably mostly because you've swallowed the idea of free market theory the reality of which does not exist, and in fact is actually a misnomer because what passes as free markets is actually the alternately goosed and strangled chaos created by the monopolistic monetary and financial paradigm of Debt Only as the sole form and vehicle for the creation of new money. Screw free market theory. It's just another orthodoxy that the new paradigm explodes and/or renders obsolete.
In order for any retailer to opt into the increased demand benefits of the 50% Discount/Rebate policy they will have to submit to a few understandable rules. And opting in I admit is a little disingenuous because the new paradigm policy is actually a (beneficial) "offer they cannot refuse" because even if just one of their competitors does opt in when they don't that means they will have to get 100% of their price from the consumer while all the consumer has to do is walk down the street and only pay 50%...so how much market share is the idiot who didn't "opt in" going to lose?
"Won't lots and lots of people bid up the price to be first served as the limited prduction comes off the line? What does that do to inflation, as we measure it?"
People don't bid up the price at retail sale. One of the requirements of opting in is the pledge that the retailer won't increase their prices unless their total costs increase more than the savings they will have as a result of some of the other benefits of the new paradigm like the elimination of the taxes they and their employees now pay for welfare, unemployment insurance and social security as well as huge slashing to income tax rates because with inflation forever ended why do we need taxes to try (and fail) to control inflation??? Of course we don't actually need to tax that much now anyway, but at least it will be clear to everyone that this is so when the new paradigm shows them that directly in their pocket books. MMT hasn't been able to come up with a temporal universe easily perceived argument for that fact since it discovered that monetarily sovereign governments don't need taxes to fund themselves. Just another advantage to the new monetary paradigm and its policies.
"they will have to get 100% of their price from the consumer while all the consumer has to do is walk down the street and only pay 50%"
That's a very "free market" way of looking at it. I thought you didn't believe in that stuff?
"the pledge that the retailer won't increase their prices unless ... " Unless someone low on the waiting list wants their kidney transplant ... oops, I mean their car ... right away. It's inconceivable that anyone would want to cheat in such an environment.
That's because with the new paradigm's policies free floingness in the economy and hence free market theory will become a reality instead of an illusion.
There are ways to head off most if not all ways of gaming the new paradigm's policies, and besides your example is anecdotal and virtually irrelevant in the overall economy.
It's beneficial effects will hunt...and kill the deepest problems of the economy exactly as I have explained. And benefit every agent more than any other reform. That's not just me sayin' it. Just keep doing the math until it's macro-economic effects sink in.
Sorry last sent before ready ! my comment here below:
Dr.Kelton, average Joe citizen[ actually Ron] here ,who has been an advocate of a Government Guaranteed Job Program [GGJP] for sometime now and was initially attracted to MMT thru your book Deficit Myth.Your core group of economists have impressively moved MMT into the national political discussion and action, thank goodness. MMT just makes common sense to this Super Senior .AND -of all the federal policies and programs that would have major stabilizing economic, social, equalizing and economic effect on our sovereign nation ,I believe would be 1- Medicare For All & 1A GGJP-and honestly 1A maybe the most important now of the 2.
I just finished your colleague L. Randall Wray's recent book"Making Money Work For Us : How MMT Can Save America".I was surprised to learn and greatly encouraged that of MMT'S 3 major policy proposals, THE No# 1 POLICY IS GGJP !!
I hope that you and your MMT TEAM will include more discussion and education of the Public and Politicians on GGJP PLEASE !! KEEP UP YOUR GREAT WORK !!
I'm a fairly unsophisticated student of economics in general, and MMT in particular, so forgive me if what I'm about to say sounds . . . unsophisticated:
"Deficits" arise when the federal government spends more in a fiscal year than it receives in "revenue" -- taxes and fees. From an MMT perspective, deficits are problematic economically only to the extent that they can lead to inflation. But, politically, they are problematic because, under our current system, they must be financed by "borrowing" from the private sector via the issuance of bonds. In the popular political imagination, "borrowing" means taking on "debt," and "debt" accrued by the federal government is, in the popular political imagination, the deadliest of economic sins: It's irresponsible, it's unsustainable, it puts a damper on private investment, it unfairly burdens our child and grandchildren, and so on.
This is all mostly BS, of course, but it is gospel writ across much of the political spectrum. Even left-leaning Democrats who should surely know better can't talk about federal spending without, in the same breath, swearing allegiance to "fiscal responsibility" and deficit reduction and the best interests of the children and grandchildren and great-grandchildren.
We can talk about the largely salutary nature of "deficits" -- whether arising from automatic stabilizers or fiscal policy. -- until we're blue in the face. But to make that idea politically palatable, we need to either (a) get a lot better at explaining why federal "debt" is not like household debt or, better yet, (b) simply abandon the requirement that deficits be "financed" by bond sales. If we need to drain money from an economy at risk of overheating, do it via taxation and by letting us little people maintain fully insured interest-bearing savings accounts (or term certificates) at the Fed. What looks like governmental "debt" -- the work of Satan --will instead look like private sector "savings," of which no one dares speak ill.
You are right. The (conscious or unconscious) prestidigitation on the part of the FED, Treasury and the Banks that immediately turns plain old money into the "national debt" is completely unnecessary, just a way (mostly) for the banks to secure a guaranteed asset (treasury bonds) and yet wickedly difficult to mentally unravel for everyone acculturated to be responsible about paying ACTUAL debts. Wed this to the fact that pols are mostly concerned more with pandering to their various constituencies than deciphering the truth and rationally acting on it.
Neither MMT nor any of the othert leading reforms effectively communicate these facts either. The only way to finally see it is to awaken to the fact of the monopolistic present paradigm for the creation and distribution of new money and break it up with the policies of the new paradigm of Direct and Reciprocal Monetary Gifting, especially with a 50% Discount/Rebate policy at retail sale.
When hundreds of millions of Americans are alerted to how they can be directly and continuously benefited by the above policy along with benefits to every other business model than Finance, is when there will be a political coalition opportunity to enable us to finally stand up on our own hind legs instead of unconsciously being forced onto all fours...for 6000 years.
If MMT wants this, and I'm sure they do, they need to get behind the new monetary paradigm and its policies. You got that Stephanie???
In other words MMTers and their leaders should stop horse shitting around trying to communicate a highly deceptive and abstract fact to the average person who (not through any fault of their own really) does not compute it...and instead put a lot of friggin' dollars in their long too empty hands with the new paradigm policies I advocate, and which will simultaneously resolve the macro-economic anomalies that have built up around the 6000 year old present one.
That is, if they really want to solve problems more than simply try (and fail) to describe them and in so doing fail to form the above political coalition.
$5 trillion. Crazed spending. Debt to GDP 125% and skyrocketing. Labor participation collapsing, inflation stoked, real earnings down and unemployment about to take off. The Government is not 100% of the solution and our balance sheet is in the danger zone. If GDP collapses again what gives?
Rather than guaranteeing a price at which loans can be sold to the central bank, we should guarantee a price at which labour hours can be sold to the Treasury.
And rather than talking about fiscal and monetary policy, talk about *stabilisation* policy. We are looking to replace the current *discretionary* stabilisation policy with a fully automatic one that works in all economic weather.
The automatic stabilizers AS were OK for the people, but as you say, not big enough.
Why aren't you lambasting the Fed for its balance sheet going from 1 Trillion in 2007, to 9 Trillion now? The Moneyed Interests have been using the Fed's balance sheet as an AS for the filthy rich protecting all their vital interests with little concern for we the people.
We need to let stuff CRASH next time AND let the Moneyed Interests BURN, converting the banks and companies that will undoubtedly fail, to publicly-owned enterprises.
Central bankers, along with Keynesian & MMT ideologies, continue to wreak havoc on western economies. Edward Chancellor's excellent book 'The Price of Time' offers a sobering history of the world's prior major economic crises. All share the same basic traits - interest rates =< 2% and a gusher of easy money.
More than two years ago, I and others like me warned of the inflation gusher ahead. The Fed insisted it was 'transitory' but when basic commodity prices like copper & steel were up 40% to 70% over 2020, it was obvious that inflation would be anything but transitory. These are inputs to major capex spending and these higher costs became embedded. Wage pressures predictably followed.
Policy makers need to spend a lot less time & energy tweaking policy. Anyone with manufacturing experience understands the risks inherent with constant process tweaking. Economists need to learn the same lessons.
Much needed. JG is, of course, the favorite of MMTers.
An important point is that when policy interventions - non-automatic stabilizers - are needed, Congress is not nimble enough to do it in the proper amount at the proper time. The Fed is much more agile. I would give the Fed limited authority to manage two fiscal levers: a low, flat rate tax on all business gross receipts; and a monthy per capita stipend from the Fed to each State and Territory (suggested by Warren Mosler in response to the GFC, but I would make it a permanent feature, sharing a little bit of monetary sovereignty with lower levels of government).
A stipend/revenue sharing policy to state and local governments is a good idea and I have suggested that also in my book. The ultimate stabilizer and "revenue" sharing policy however is a 50% Discount/Rebate policy at retail sale. Why? Because everybody participates in retail sale making a 50% discount to the price of virtually everything an immediate and continuous MACRO-ECONOMIC doubling of everyone's purchasing power. It also will potentially double demand for every enterprise's goods and services so it integrates the self interests of both the consumer and enterprise. Finally, it will forever end inflation because we've never had 50% y/o/y inflation let alone moment to moment such inflation rate. And with the proper carrot and stick taxation regime you can stop most if not all anti-social arbitrary price rises by all business models not just retail.
The real problem with economic theory is not even the leading reforms are analyzing on the operant concept/paradigmatic level. Hence thats what they are...reforms, when if you find the new operant concept and how to most efficaciously apply it...you've changed the ENTIRE pattern of the economy and also in this case the money system.
Part of the reason reformers are stuck in the current paradigm is they are so caught up in their abstractions that they don't look directly at the economic process itself. Hence retail sale occurs hundreds of millions of times every day but no one sees the potential personal, commercial and systemic benefits of the retail price discount/rebate policy.
Reformists also miss the "knock on" benefits that come with genuine paradigm changes. Like for instance if you combine the 50% Discount/Rebate policy with a $1000/mo. universal dividend you make the payroll taxes every working person and every enterprise pay for welfare, unemployment insurance and even for social security completely redundant including their concommitant bureaucracies. That would raise everyone's net pay 8-12%, cut business costs and insure every adult had $24k/yr. income for their entire adult life instead of having to work for 45+ years to get probably less than $2000/mo. Job guarantee? Sure, that also aligns with the new monetary and financial paradigm. Why not? When you've utterly ended any possibility of inflation you shut the mouth of every conservative and libertarian pundit and can run the kind of fiscal deficits to fund any rational program including a new Works Project Administration like the job guarantee, and even the under planeting or off planeting of the worst carbon emitting means of production so we don't kill off most of the flora and fauna of the planet.
Paradigm changes are the most integrative of opposites and problem resolving phenomenon humans ever experience. They are the synthesis of Hegal's dialectic that puts egg on the face of everyone who can't see anything but the conflict of thesis and antithesis.
Here's a few more problem resolutions and economic benefits of the new monetary and financial paradigm:
1) re-industrialization of the US in the most technologically efficient and ecologically sane way possible
2) elimination of most of the costly international supply chains we now have with China etc.
3) the opportunity for China to stop being paranoid about the fractious nature of their diverse cultural heritage and make a new social contract with their people...by implementing the new paradigm program in their own country
4) Imagine the possible social and psychological benefits of creating a continuous daily infrastructure for everyone to consciously or even unconsciously self actualize gratitude for being gifted 50% of the price of everything they buy...instead of feeling resentful about chronic inflation and thrashing around blaming everyone and everything...except the current human civilization long monetary and financial paradigm???
MMTers, Steve Keen, Michael Hudson, UBI advocates and Ellen Brown need to stop being erudite dunces and awaken to the power of the paradigmatic level of analysis.
Unrealistic, but an interesting thing to explore. Thinking first about a product like EVs, we're already making and selling as many as we can, limited by the ingredients like lithium and copper ... What happens to the market when the price to the consumer looks 50% lower? Won't lots and lots of people bid up the price to be first served as the limited prduction comes off the line? What does that do to inflation, as we measure it?
Or something mundane and cheap like bread. Don't 97% of us already have all the bread we want? What do we do with our newfound income when the bill for necessities is cut by half and the demand for them is unchanged? Buy an EV, perhaps? Os some other luxury item that was previously out of reach, and which by its very nature (luxury) is in limited supply?
Or environmentally important things, like home heating. Most of us are careful about how we set our thermostats, mainly because of the cost rather than an altruistic environmentalist attitude. What happens to carbon emissions if the average thermostat setting goes up by 3 degrees in the winter, and down by 3 in the summer, "because we can".
I'm at a loss to conceive of a more disruptive and potentially destructive change than a sudden 50% drop in the price of everything.
"I'm at a loss to conceive of a more disruptive and potentially destructive change than a sudden 50% drop in the price of everything."
That's probably mostly because you've swallowed the idea of free market theory the reality of which does not exist, and in fact is actually a misnomer because what passes as free markets is actually the alternately goosed and strangled chaos created by the monopolistic monetary and financial paradigm of Debt Only as the sole form and vehicle for the creation of new money. Screw free market theory. It's just another orthodoxy that the new paradigm explodes and/or renders obsolete.
In order for any retailer to opt into the increased demand benefits of the 50% Discount/Rebate policy they will have to submit to a few understandable rules. And opting in I admit is a little disingenuous because the new paradigm policy is actually a (beneficial) "offer they cannot refuse" because even if just one of their competitors does opt in when they don't that means they will have to get 100% of their price from the consumer while all the consumer has to do is walk down the street and only pay 50%...so how much market share is the idiot who didn't "opt in" going to lose?
"Won't lots and lots of people bid up the price to be first served as the limited prduction comes off the line? What does that do to inflation, as we measure it?"
People don't bid up the price at retail sale. One of the requirements of opting in is the pledge that the retailer won't increase their prices unless their total costs increase more than the savings they will have as a result of some of the other benefits of the new paradigm like the elimination of the taxes they and their employees now pay for welfare, unemployment insurance and social security as well as huge slashing to income tax rates because with inflation forever ended why do we need taxes to try (and fail) to control inflation??? Of course we don't actually need to tax that much now anyway, but at least it will be clear to everyone that this is so when the new paradigm shows them that directly in their pocket books. MMT hasn't been able to come up with a temporal universe easily perceived argument for that fact since it discovered that monetarily sovereign governments don't need taxes to fund themselves. Just another advantage to the new monetary paradigm and its policies.
"they will have to get 100% of their price from the consumer while all the consumer has to do is walk down the street and only pay 50%"
That's a very "free market" way of looking at it. I thought you didn't believe in that stuff?
"the pledge that the retailer won't increase their prices unless ... " Unless someone low on the waiting list wants their kidney transplant ... oops, I mean their car ... right away. It's inconceivable that anyone would want to cheat in such an environment.
That's because with the new paradigm's policies free floingness in the economy and hence free market theory will become a reality instead of an illusion.
There are ways to head off most if not all ways of gaming the new paradigm's policies, and besides your example is anecdotal and virtually irrelevant in the overall economy.
Steve, this isn't the first time you've discussed this 50% retail discount/rebate. It doesn't appear that dog will hunt with others.
It's beneficial effects will hunt...and kill the deepest problems of the economy exactly as I have explained. And benefit every agent more than any other reform. That's not just me sayin' it. Just keep doing the math until it's macro-economic effects sink in.
Feels like I’m reading Paul Krugman again when the article is about automatic stabilizers yet no mention of a job guarantee
You still support that, right?
Dr.Kelton I just finished your colleague L. Randall Wary's latest book,'Making Money W
Sorry last sent before ready ! my comment here below:
Dr.Kelton, average Joe citizen[ actually Ron] here ,who has been an advocate of a Government Guaranteed Job Program [GGJP] for sometime now and was initially attracted to MMT thru your book Deficit Myth.Your core group of economists have impressively moved MMT into the national political discussion and action, thank goodness. MMT just makes common sense to this Super Senior .AND -of all the federal policies and programs that would have major stabilizing economic, social, equalizing and economic effect on our sovereign nation ,I believe would be 1- Medicare For All & 1A GGJP-and honestly 1A maybe the most important now of the 2.
I just finished your colleague L. Randall Wray's recent book"Making Money Work For Us : How MMT Can Save America".I was surprised to learn and greatly encouraged that of MMT'S 3 major policy proposals, THE No# 1 POLICY IS GGJP !!
I hope that you and your MMT TEAM will include more discussion and education of the Public and Politicians on GGJP PLEASE !! KEEP UP YOUR GREAT WORK !!
I was hoping you would suggest some automatic stabilizers. The JG is the obvious one but beyond that.
I'm a fairly unsophisticated student of economics in general, and MMT in particular, so forgive me if what I'm about to say sounds . . . unsophisticated:
"Deficits" arise when the federal government spends more in a fiscal year than it receives in "revenue" -- taxes and fees. From an MMT perspective, deficits are problematic economically only to the extent that they can lead to inflation. But, politically, they are problematic because, under our current system, they must be financed by "borrowing" from the private sector via the issuance of bonds. In the popular political imagination, "borrowing" means taking on "debt," and "debt" accrued by the federal government is, in the popular political imagination, the deadliest of economic sins: It's irresponsible, it's unsustainable, it puts a damper on private investment, it unfairly burdens our child and grandchildren, and so on.
This is all mostly BS, of course, but it is gospel writ across much of the political spectrum. Even left-leaning Democrats who should surely know better can't talk about federal spending without, in the same breath, swearing allegiance to "fiscal responsibility" and deficit reduction and the best interests of the children and grandchildren and great-grandchildren.
We can talk about the largely salutary nature of "deficits" -- whether arising from automatic stabilizers or fiscal policy. -- until we're blue in the face. But to make that idea politically palatable, we need to either (a) get a lot better at explaining why federal "debt" is not like household debt or, better yet, (b) simply abandon the requirement that deficits be "financed" by bond sales. If we need to drain money from an economy at risk of overheating, do it via taxation and by letting us little people maintain fully insured interest-bearing savings accounts (or term certificates) at the Fed. What looks like governmental "debt" -- the work of Satan --will instead look like private sector "savings," of which no one dares speak ill.
Amirite?? What say you sophicticates?
You are right. The (conscious or unconscious) prestidigitation on the part of the FED, Treasury and the Banks that immediately turns plain old money into the "national debt" is completely unnecessary, just a way (mostly) for the banks to secure a guaranteed asset (treasury bonds) and yet wickedly difficult to mentally unravel for everyone acculturated to be responsible about paying ACTUAL debts. Wed this to the fact that pols are mostly concerned more with pandering to their various constituencies than deciphering the truth and rationally acting on it.
Neither MMT nor any of the othert leading reforms effectively communicate these facts either. The only way to finally see it is to awaken to the fact of the monopolistic present paradigm for the creation and distribution of new money and break it up with the policies of the new paradigm of Direct and Reciprocal Monetary Gifting, especially with a 50% Discount/Rebate policy at retail sale.
When hundreds of millions of Americans are alerted to how they can be directly and continuously benefited by the above policy along with benefits to every other business model than Finance, is when there will be a political coalition opportunity to enable us to finally stand up on our own hind legs instead of unconsciously being forced onto all fours...for 6000 years.
If MMT wants this, and I'm sure they do, they need to get behind the new monetary paradigm and its policies. You got that Stephanie???
In other words MMTers and their leaders should stop horse shitting around trying to communicate a highly deceptive and abstract fact to the average person who (not through any fault of their own really) does not compute it...and instead put a lot of friggin' dollars in their long too empty hands with the new paradigm policies I advocate, and which will simultaneously resolve the macro-economic anomalies that have built up around the 6000 year old present one.
That is, if they really want to solve problems more than simply try (and fail) to describe them and in so doing fail to form the above political coalition.
$5 trillion. Crazed spending. Debt to GDP 125% and skyrocketing. Labor participation collapsing, inflation stoked, real earnings down and unemployment about to take off. The Government is not 100% of the solution and our balance sheet is in the danger zone. If GDP collapses again what gives?
Perhaps time to start stating it in bald terms.
Rather than guaranteeing a price at which loans can be sold to the central bank, we should guarantee a price at which labour hours can be sold to the Treasury.
And rather than talking about fiscal and monetary policy, talk about *stabilisation* policy. We are looking to replace the current *discretionary* stabilisation policy with a fully automatic one that works in all economic weather.
The automatic stabilizers AS were OK for the people, but as you say, not big enough.
Why aren't you lambasting the Fed for its balance sheet going from 1 Trillion in 2007, to 9 Trillion now? The Moneyed Interests have been using the Fed's balance sheet as an AS for the filthy rich protecting all their vital interests with little concern for we the people.
We need to let stuff CRASH next time AND let the Moneyed Interests BURN, converting the banks and companies that will undoubtedly fail, to publicly-owned enterprises.
Central bankers, along with Keynesian & MMT ideologies, continue to wreak havoc on western economies. Edward Chancellor's excellent book 'The Price of Time' offers a sobering history of the world's prior major economic crises. All share the same basic traits - interest rates =< 2% and a gusher of easy money.
More than two years ago, I and others like me warned of the inflation gusher ahead. The Fed insisted it was 'transitory' but when basic commodity prices like copper & steel were up 40% to 70% over 2020, it was obvious that inflation would be anything but transitory. These are inputs to major capex spending and these higher costs became embedded. Wage pressures predictably followed.
Policy makers need to spend a lot less time & energy tweaking policy. Anyone with manufacturing experience understands the risks inherent with constant process tweaking. Economists need to learn the same lessons.