A Banker’s Economy of Government

LINK to Basic Income Post

A Permanent Basic Income Plan for All Individuals is not exactly similar to the relationship between bank loan-givers and corporate-loan takers.  But it would have a similar motivation behind it – that is by encouraging economic activity, and acting as an engine for productive spending.  A basic income program would not create inflation.  It would raise the GDP by encouraging individual economic activity and productivity, by freeing workers from being compelled into the role of tools for the productivity for large entities.

People have preferred to think of the economy in very simple terms, but a multi-factoral analysis is always present – and shunned by the individual mind for its complexity.  Many factors are at play, always – and more are ignored than considered.  No simple binary ratio, or two-factor analysis, can explain the drive toward stability or instability.  Government spending is a very productive tool for the real economy, when war is not the goal.  The real physical economy is more important to consider than the monetary supply economy.  And human stability is more important to hold in mind than questioning the central management of ‘expansion and contraction’ of the money supply.

A basic income program would not only improve overall human wellness.  A universal public income program would act as a security against inflation, because people who would otherwise be failing to repay loans would have new recourse to avoid defaulting on private debt – and this flow of capital to indebted Americans would be helping remove excess currency from the system.  Government debt does not cause inflation, defaulted private debts cause inflation.  Unregulated loaning activity, alongside economic inequality, and lack of public healthcare and education, will destroy-devalue the dollar faster than any government activity.  Taxing and spending does not cause inflation, it stimulates the private sector with existing dollars.  Raising minimum and median wages, together with providence of basic income, would also prevent defaults on basic private debts and result in a stronger dollar.

Defaulted debts – in combination with weak government regulation of loaning activity – is the primary factor that leads a currency to runaway inflation.

A sect of trolls has claimed that basic “economic growth” causes inflation.  They are wrong.  Basic economic growth does not produce inflation.  If “aggregate demand” rises faster than supply, prices may raises by a small amount as more people are able to afford goods – but it is more likely that new suppliers would find ways to produce more supplies to meet that new demand.  Scarcity and abundance of goods will affect prices upward and downward.  But this is not the same effect as inflation devaluation.  If the economic growth is real and productive, supply is also likely to rise with demand.  Supply and demand work together and suppliers have high incentive to meet rising demand.  If wages and basic assistance programs create more monetary flow to the least capable, more money would be available for them to spend – and that spending would be productive.  Enabling that ability for productive spending would naturally encourage suppliers to produce more of what is needed.  These temporary effects of increased availability of money in the lower class, increased demand for basic goods, and a small increase in prices – should not be construed as inflation.  The rise in spending money, and possible small increase in prices, would not be the same as “runaway inflation” because it is not resulting from newly created money.  Economic growth, and providence of money for the poor, does not lead to runaway inflation.  It leads to more productivity, technical advance, and also more leisure and freedom.  It will increase demand because it will increase ability of people to buy what is needed, and there is nothing stopping suppliers from meeting that demand.  Producers’ ability to produce, and abundance of supplies, is not under threat by fair policies for the poor and middle class.  These small-scale changes would lead to large-scale increases in the health of the economy and the flow of goods and services.

Poverty, and inequality, is when there is not enough currency actively circulating in the middle and lower end of the economy to produce meaningful growth and individual opportunity to increase quality of life.

Inflation is when there is too much currency in existence as a function of the total economy – a background management problem subject to technical manipulation by public officials.  If society were to be redesigned so that abject poverty was no longer a feature of existence, inflation would not increase to an emergency level.  Scarcity of spending money is not what the government should be striving for, but a balance of the total money supply in existence is what they should want to manage.

Scarcity or abundance money in the pockets of the lower and middle class does not affect inflation significantly, and will not be a significant factor in determining the strength or weakness of the dollar’s value.  Scarcity of currency in the system does not create higher value in the same way as scarcity of a product or supply to make a product.  It is a different dynamic, a very different consideration in economic analysis.  Too much currency is a far extreme, and too little currency is also a harmful extreme.  Too little currency does not create a healthy system – it creates an inhibitive system with low flow of capital, goods, and services.  There is a balance, in a large safe range, between too much currency and too little.  The economy is a set of equilibriums aiming for the best possible world.  With good will, it doesn’t take much to keep the balance.  With ill intent, a large amount of action is necessary to correct the damages.

If the money supply is at a happy medium, the ratio of passive savings to actively circulating money does not significantly affect inflation or value of the currency.  Inflation is not appropriately managed by billionaires who commit large sums of savings to be removed from active circulation, and be moved across borders.  Savings and circulating money are both accounted for in managing the total money supply, and as a total sum together they are relevant to inflation – not separately.  The possession of more savings allows for more participation in active exchange.  Rich and poor actors in the economy are not to be selectively blamed for effecting inflation or stability of the dollar’s value.  We can blame government economic teams, irresponsibly bank managers, lack of regulations to prevent criminal lending behavior, and weakening social stability in health, education, and opportunity to meaningfully participate in economic wealth-creation.

Google – savings cause or prevent inflation?

Google – Does increasing population size negatively or positively effect inflation?  It may effect inflation both positively and negatively, in both directions ultimately resulting in a neutral effect or no effect.

Does population size have any effect on inflation?  If the amount of currency in circulation increases, and population increases at the same time – the increased number of people would act as control on inflation, and the larger money supply would be spread out among a larger population, and thereby preventing devaluation.  As long as the money supply is managed well enough, increases or decreases in population size may be neutral to inflationary devaluation.

https://en.wikipedia.org/wiki/1900_United_States_Census

Population of the United States has increased by up to 20 million more people every ten years since 1890.

What was in the 2008 government stimulus package?  And how much newly created money did it pump into the economy?

Newly created monetary stimulus could create inflation regardless of the growth in supply or demand it generates.  The government, and its reigning economic team, must know the options it has for retracting the extension of the money supply, reducing the same amount it injected, finally rebalancing the potentially overabundant currency in the money supply.  This can be done in the short-term or medium-term, but if a planned effort is put off for decades, then the value of the currency could degrade.

Is inflation a boring topic?  Yes, compared to final amelioration of poverty and illness and creation of a world without suffering, it is boring.

Google – what are treasury securities for

Google – what does the government do to correct inflation

Google – how can the government remove currency from the economy to slow down inflation

(they could choose to stop printing at the replacement rate, normally done on a yearly basis)

(they could tax money out of the system, and use it pay off some of the national debt? Or remove it from the system completely.)

What regulations limit irresponsible loan-giving?

debt.org/credit/predatory-lending

https://en.wikipedia.org/wiki/Bank_regulation_in_the_United_States

Google – difference between public and private debt

Google – What is national debt vs. federal annual deficit?

Donald Trump Has No Clue What The National Debt Is Or How It Works

Google – How does the government pay back its debt?

Can government debt cause a crash or recession?  Or is it always private, individual and business, debt that causes a crash and recession?

https://en.wikipedia.org/wiki/Government_debt

Find summaries of Modern Monetary Theory

google best books written about 2008 economic crisis, housing crisis, “banking crisis”

google

bankers in obama administration, bankers in bush administration, bankers in clinton administration, bankers in reagan administration

https://www.quora.com/Why-would-paying-off-bank-loans-contract-the-money-supply

Why Money Disappears When Loans Are Repaid

How Money Is Created and Destroyed In The Money Supply, Maintaining A Balance Avoiding Inflation

How is money created and lost from the economy as a whole?

How is money created?

What happens to “newly created money” or “loaned money” when the loan is paid back?  When individuals or businesses pay back a loan to a bank, the bank does not keep the money for itself.  The “loaned credit” or bank-created money disappears as fulfilled credit.  It exits the economy, the value of the bank loan disappears from the money supply, and its inflationary potential is reduced to zero.

“Credit”  A large amount of currency enters the economy when banks issue loans to businesses.  If the number of outstanding loans is too high compared to actual wealth and economic productivity, then what dangers occur?

google questions- What limits bank loans?  Would inflation result if there were no limits on the amount of loans being given to businesses?  After the loan is paid back to the bank, is the extraneous loan-generated money destroyed to control inflation?

Or is it kept by the bank as free money?  Not it is not kept as part of the bank’s owned wealth.

Or is it kept in a fund meant to represent all the loans that have been given, as a record for future reference and past history of loaning activity?

Inflation is avoided when the amount of currency in the economy, including savings and in-circulation, is equal to or similar to the valued amount of actual physical goods present in the economy?  Too much currency means the prices of goods go up, and the value of dollars go down.

How is money lost from the economy?

Some money degrades physically, or is lost-misplaced or forgotten about, but that may be considered a negligible amount.

Money is diffused out of the economy when businesses and individuals spend money buying from businesses and individuals based outside of the country.  And sometimes very rich people move large sums to other countries for evasion of tax jurisdiction.  When these few things happen, new money-currency can be created without the threat of inflation.

Creation and Destruction of Physical Value is Not Like Creation and Destruction of Currency in the money supply or the “Loan Credit” used in funding of private activity meant to sustain high economic productivity and fluidity of wealth.  Other more complex sets of factors in the total economy ultimate effect a positive increase in maintained physical wealth and quality of life.

When “real value” of physical goods leaves the economy, as in sudden disasters or long-term degradation, wealth is destroyed and demand may be increased – but does this have any effect on inflation?  If productivity remains the same, then loss of physical items in the economy may have no inflationary effect on prices and currency value.

Google – How much new currency is printed every year?

https://www.frbsf.org/our-district/about/sf-fed-blog/print-order-currency-treasury/

https://www.treasury.gov/resource-center/faqs/Currency/Pages/edu_faq_currency_production.aspx

What is the total amount of currency, both in savings and in-circulation, in the entire U.S. economy?  It may be hard to estimate.  It would be a very different number than GDP.

https://en.wikipedia.org/wiki/Money_supply

https://en.wikipedia.org/wiki/Inflation

https://en.wikipedia.org/wiki/Deflation

What is the difference between a public bank and a private bank?

Richard Wolff Explains How the Hell our Banking System was Put Together

What are all the reasons that people fail to pay back loans? (default on debts)

What are all the reasons that people take out loans?  To start a business, to continue business, to increase productivity of business.  To pay school tuition, to buy a car, to buy a home.

Can Low Interest Rates Hold Off Recession? (w/ Richard Wolff)

Defaulting on debts, or irresponsibly bank-loaning activity, causes the most inflation because the money being issued into the economy is not retracted back out of the money supply via the bank’s credit recording system.  High interest rates (2% + ^) inhibit loan activity (lending and borrowing) and therefore limit extra currency in the money supply.  But this one control may be a very small factor in maintaining stability of currency value, and over-all economic wellness.  If loan-practices are healthy and legal, then the risk is very low for permanent devaluation of currency.  When considering real priorities, regulations for control of irresponsible and illegal loaning practices are the necessary missing factor in preventing runaway inflation.  And government spending for programs that help people overcome dire circumstance, poverty and illness, are important for the real physical economy of human activity and experience.

U.S. Finance Is A Bloated, Unsustainable Bubble

Nearly 70% Of Millennials Worry About Debt Daily

Seniors In Poverty Lose Social Security $ Over Student Loan Debt

AskProfWolff: What is Modern Monetary Theory?

Trump Treasury Pick Foreclosed On An Elderly Woman For 27 Cents – maybe cut soros point at end

Trump Wants The President Of Goldman Sachs In His Administration

https://www.youtube.com/watch?v=zczGx21Aqds   (copy and paste to text editor)

Trump Colluded With Predatory Payday Lenders, Let Them Charge 950% Interest

The Trump Collusion You Haven’t Heard About

DNC Head Goes To Bat For Predatory Payday Lenders

Dylan Ratigan: Is “Breaking Up The Banks” Enough?

wall street research, de-regulation and revolving door government, occupy movement, etc

google “banker crimes study”

Banks Unregulated > Buys Politicians > Cause Economic Crash > Take Tax Money from Bought Politicians

2008 crash and scams caused it?  bad loans?

plans to foreclose as much as possible

bail outs for failed banks

credit unions vs big banks

‘Radicals” Noam Chomsky and Alex Jones on the Crazy Corporate System.  The Plot Thickens..

consolidate and delete the above post ^^^

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