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On Financial Stability

Apologies for the lazy here; I'm just pasting in my comments from a discussion on economic policy on G+, responding to some fellow liberals who are hoping to see Obama make an end-run around congress and direct coins to be minted that would be used by the executive branch to directly fund discretionary funding to end the budget deadlock.

I think this is a bad idea for a number of reasons. Pasting a few:I don't see the current system as being arbitrary with regards to its ends though; it is not resource-tied, but those resources are themselves arbitrary so fiat currency is, IMO, absolutely fine. The question is, what metrics guide our fiscal policies? I believe that right now financial stability is a major guiding principle, and that taking action to nullify our debt in the form of printing our way out would be catastrophic for such stability; the action would be too large to serve both ends.

I agree with you that there are injustices in the current order. I would like to see them fixed using a different means. But yes, regarding your specific points, banks are more accountable, and banks are also to some limited extent instruments of government (because of the degree to which they are regulated). A bank going under is a big deal; your neighbour declaring bankruptcy is not. I would be delighted to see a comprehensive shift in how we pay for education though.

Quantatative easing is in fact inflationary and dangerous. It was an emergency measure for a fiscal crisis, and even then it was rightly controversial. We should not use tools like that for political fights though; if it can be fixed by congress, congress should be the one to fix it. The balance of powers we have is one of the good ideas in our constitution. If we deadlock in congress, the pressure should be on to fix that, because it's a reflection of our society itself deadlocking.

The broader discussion is here. As always, feel free to disagree with me.

The original poster, JamesS, is somewhat less liberal than me (AFAIK, he's not a socialist, just a pretty-left-wing liberal), but much less technocratic and often, IMO, a bit kooky (in politics and some of his other conclusions). He's interesting though, and worth reading.



On your comment about QE being inflationary: Good! Inflation is exactly what we need right now. The level of unemployment would normally require interest rates to be lowered, but Interest rates can't really go any lower at this point. The equivalent is to increase (expected) inflation. And inflation is pretty low now too, so there's plenty of room for that. This isn't 1980.

On Congress fixing it: Dream on. As long as one party is hell-bent on destroying the economy while simultaneously scaring up opposition to liberalism, Congress will be broken. And Congresscritters are pretty clueless about economics anyway.
I'm not sure we can deal with those conservative urges without showing how maximalism makes politics impossible and providing tastes of the damage to society that they cause; either we keep doing democracy retaining consequences, or we figure out a way to disenfranchise half the population. Well, at least I hope that's not a false dichotomy. If it is, I'm not sure what other options we have open to us.
I thought I was a socialist. I want a 75% top tax bracket like the French, universal healthcare, halved public school class sizes on the Federal dime, all the infrastructure spending we can justify to save money later on, free college tuition, and a one-time tax on the rich to clobber enough of the national debt to start letting countries that actually need it take advantage of the negative real interest rates that the US Treasury has been getting. What else do I need to be a socialist? Or do you use socialist to mean communist?

Edited at 2012-08-26 02:29 am (UTC)
I consider communism to be a specific form of socialism, which, while it encompasses having strong social services, is more strongly distinguished in how the economy itself is structured, with very significant public control (beyond mere regulation) of the means of production. Communism would mean simple public ownership; socialism includes that possibility, but also includes other possible structures.

(Note that I don't mean to say that you can't define the terms as you see fit; I'm just speaking from the definitions I have learned and accepted)

Edited at 2012-08-26 02:33 am (UTC)
I gather that most people in the US actually believe that supporting something as weak as Obamacare makes one a socialist, although soon like social security and medicare it will probably become enough of the status quo so as not to count.

I also want basic income and living (minimum) wage, both indexed to the cost of living, which I guess is more socialist than any of the above.
The basic income does tiptoe into the realm.

In general I (and the authors of most socialist media, like ISR) consider the conservatives who see socialism under every bush to be using our name as a boogeyman.