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Thursday, March 27, 2014

A Simple Way to Ease Our Economic Woes

Over at Acerbic Politics they say...
With the failure of Congress to pass a single, solitary jobs program since the 2008 downturn in the economy, the Federal Reserve has been printing money like crazy to try to force a recovery. Well, not actually printing, but buying up loans from the big financial institutions.
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But as we know, giving money to the already rich does NOT translate into jobs or income for the middle class - it just makes the wealthy wealthier. No trickle-down.
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And so here is a proposal that would probably work. But it will NEVER happen.

Give Every American $2,000

Direct payments are a powerful tool to combat income inequality and crippling unemployment.

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How would you like to get $2,000 in free money today, fresh off the government printing presses? And what if I told you it wouldn't just be a nice windfall for you and your friends and family, but that we'd do it for all Americans on an ongoing basis, and that doing so would solve our crippling problem of mass unemployment?
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I know what you're thinking: it would be crazy. Either it would be a fast track to crippling inflation or it's some repugican satire of an ultra-liberal government handout program. But it is not quite as radical as it sounds. The key idea behind such a program has a longstanding, bipartisan economic pedigree. John Stuart Mill argued in 1829 that mass unemployment was caused by "a deficiency of the circulating medium" relative to other commodities. John Maynard Keynes used the idea in his 1936 book, "The General Theory of Employment, Interest and Money," to lampoon the inherent silliness of gold mining, suggesting that old coal mines could be filled up with bottles full of banknotes, buried over with trash, then left "to private enterprise on well-tried principles of laissez-faire to dig the notes up again." Milton Friedman suggested that monetary policy could never fail to cure mass unemployment, because as a last resort the central bank could just drop cash out of helicopters - an enticing analogy that former Federal Reserve chairman Ben Bernanke borrowed in a 2002 speech, earning himself the persistent nickname of "Helicopter Ben."
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And it hasn't just been theorizing. In 2008,  Nancy Pelosi engineered the tax rebate stimulus, in which everyone received a check in the mail - paid for, eventually, with fresh new money. Studies have found that this stimulus worked quite well; it was just overwhelmed by the Great Recession, and we only received checks once. Mill, Keynes, Friedman, and even Bernanke might argue that we should revive a similar stimulus again - only this time, on a much bigger scale, and on an ongoing basis.
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