There is a growing movement generally preferred to as monetary reform, which you may or may not have heard of. Generally speaking, anyone who advocates a change in the way money works would be a monetary reformists, but this particular movement advocates what is called social credit, or the abandonment of our current debt money system, and instead advocates for debt free paper money issued by the Treasury.
The basic idea is Friedmanite monetarism, having the money supply grow at a set rate between 3-5% annually, and having this money be printed, then directly put into the Governments budget to spend. This could reduce the deficit, and allow us to cut taxes while paying off the debt.
It isn't even a very extreme idea- Abraham Lincoln commissioned the pro ting of over 13 million dollars to fund the Civil war, and they were still being printed and issued until 1971 with no issues. As a matter of fact, United States Notes were being issued for longer than Federal Reserve notes, 106 years as opposed to 104 years, and have been money for longer too.
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The value of a dollar should be reflective of its value in the marketplace. Friedman's approach is too simplistic.
What? The value of the dollar is determined by the marketplace, enable to have economic growth you need a gradually increasing money supply to account for the increase in output. A gold standard would not work in our current economy, and a central bank puts too much power into the hands of 7 people, while infecting the nation. Debt free money is the best option.
The amount of money in circulation lends to its value. Having it grow at an arbitrary rate is too simplistic.
Yes, have it grow at a set rate roughly equal to our normal GDP growth rate.
Why not just print enough money to pay off the debt? This would of course devalue the dollar but we would not pass that burden on to future generations.. In a few decades we could repair the economy and avoid the same mistakes. Better than letting the unborn bear the crash while we reap the benefits of over spending.
That would destroy our reserve status and cause lasting damage. We should pay off the debt over a relatively short period of time by printing money, imposing taxes, and cutting spending.
"This could reduce the deficit, and allow us to cut taxes while paying off the debt."
How much deficit in total today that need to be tackled?
At this moment the debt (or deficit ) increases by about 600 billion yearly as per this data:
GDP: $16.5T
Total Receipts: $2.99T
Total Outlays: $3.54T
Total Surplus or Deficit as Percentage of GDP: -3.3%
Our GDP is 19.6 Trillion, and our debt is 20.1 Trillion.
Again with Friedmanite. We have had this discussion over and over. Friedman was not realistic. He didn't account for corruption. His idea of deregulating everything highlights that idea. Nixon employed his theory and it caused runaway inflation. Reagan used his idea which was labeled "Trickle Down" and it lead to hostile takeovers, massive homelessness, still more inflation, and a huge deficit. This wild west approach to economics is just insane.
You can't have business without oversight to ensure fairness. Freidman's idea that the Great Depression was caused by the Fed is so wrong it isn't even funny. It is just Hoover's excuse to deflect blame. The Depression was caused by the lack of oversight and regulation.
I know this argument comes straight out of the Heritage Foundation. Which is nothing more than a conservative propaganda mill meant to counter the research by the Brookings Institute. The Heritage Foundation is famous for funding campaigns for the tobacco industry, for big oil to deny global warming and outlandish conservative propaganda.
Economically Hoover was a failure, Nixon was a failure, Reagan was a failure, Bush I and Bush II were both failures. All of them based their economic approach on Freidman.
Milton Friedman was only one person who advocated a form of monetary reform like this. The idea was much older than him and is supported by people all across history and all across the political isle. From Abraham Lincoln to Andrew Jackson and me, debt free paper money is clearly superior to a debt based money system.
Friedman wanted to deregulate industry exactly because he accounted for corruption, which he believed was more severe amongst regulatory agencies. Either way, Richard Nixon didn't 'adopt Friedman's policies,' or 'cause run away inflation.' Paul Volker caused the inflation, and Richard Nixon actually doubled down on regulations. If you looked into his administration you would know he was a centrist, not a conservative or liberal.
I don't think anyone supports 'trickle down economist's or 'a wild west view to economics,' those of us in my isle believe that people are prone to try and better their own condition, so they will naturally achieve a higher quality of living if left alone. Of course people will occasionally try to scam others, or rob them, but that's why we have a government and legal system to enforce laws.
Friedman's claim that the Fed caused the great depression is an admitted fact- Ben Bernanke, a liberal appointed by Obama, admitted that the Fed's restrictive monetary policy, reduced the money supply by one third, putting into a depression. But let's assume you are right, and the great depression was caused by a lack if oversight, if I remember correctly, there was some kind of agency created in 1913, which was supposed to supervise banks and prevent economic crises. It's almost as if that agency failed to do so, allowed banks to engage in risky behavior, and actually encouraged them to do so by lending them cheap money with which to go engage in that behavior, then let them fail and the money supply to fall, and caused the great depression- I wonder what agency that was, oh, yeah, that's right, The Federal Reserve.
You need to look into your claims a but more, because President Hoover applied the same approach as FDR did- he raised the top tax rate to 70% and spend a lot of money on public works projects like the hoover dam. The only difference, and this made a big difference, was that Roosevelt addressed the cause of the Great Depression, a decline in the money supply, and actually addressed the problem by printing more money to fund his public works projects. Also, Friedman was still in college when Hoover was President.
Nixon imposed wage and price controls and doubled regulations as I said before, Bush Sr coined the term Voodoo economics and trickle down economics, raised taxes, and increased regulations, and Ronald Reagan increased Spending.
The fact of the matter is, economic crises are generally a function of money. Depressions are caused by a decline of the money supply, inflation, by a rise.
No, Harry, the idea that the Great Depression was caused by the decline in money supply is just bullshit and propaganda created by people that don't want any regulation. The lack of safeguards and regulation led to speculation into ventures that failed. Greed caused the Great Depression. that is an unmitigated fact.
Did you not listen to a single thing I said? The idea that the Great Depression was caused by a lack of regulation is not held by any real economists- everyone from Keynes to Friedman agreed it was caused by a decline in the money supply, and they both came to the same conclusion- increase the money supply, only when that was adopted by FDR did the economy get better.
That is false. While the monetarists more or less endorse the view you have been demanding is the truth; that is not the view of the Keynesian. It is NOT a settled issue; despite your assurances to the contrary.
The Keynesian claim is that it was caused by a decline in aggregate demand, and that the solution was to increase the money supply.
Harry; do you even realize you just contradicted yourself?
FDR didn't believe in increasing the supply of money exactly. He believed in increasing production. That meant stimulating the economy with government spending. He simultaneously increased regulations to safeguard the economy and end corruption. Like Nyar said it isn't true that all economists believe that the lack of the money supply caused the Great Depression.
Hoover tried raising taxes and spending money, it didn't work- FDRs policies only worked because he did increase the money supply. That's why he revalurd gold at 35$ an ounce as opposed to 20.67$ an ounce do he could print more money and increase the money supply. Regulations created a push pull situation, counteracting some of the recovery as a result of the monetary expansion.
The great depression wasn't caused by a decline in production, that followed the monetary decline.
Nyarothrope can claim it isn't generally accepted, but its accepted by Monetarists and Keynesians alike.
No Harry. FDR's policies worked because he increased the number of people that had money. When all the wealth is locked up in few hands the economy tanks. FDR put people to work and loosened the grip on wealth by putting people to work, increasing taxes on the wealthy. The money supply was always there. The number of people that had it was too small.
Hoover increased the top tax rate to 70% and spend it on public works projects- the economy got worse. Contrary to popular mythology, no one locks money up in a safe and sits on it indefinitely. That would be stupid, especially considering inflation. People invest it- they buy bonds, or stocks, or deposit it- what they do is irrelevant, it remains in circulation.
Harry, you couldn't be more incorrect. Hoover tried to get the private sector to solve the depression. He refused to let the federal government intervene. Also in a letter to he wrote to Governor Louis Emmerson, he admitted that excessive speculation caused the depression and not as YOU claim a lack of money supply.
https://www.gilderlehrman.org/history-by-era/new-deal/resources/herbert-....
Hoover failed because he didn't understand the role of government. He was a businessman that only understood profit and loss in the short term. His idea that the private sector is the only solution was historically proven wrong.
Whether or not you think it is stupid or not, the rich in the USA and most of the industrialized world did lock up money and did not reinvest it in the teens and 20s of the last century. That was common.
I think we've had a misunderstanding, the Great Depression occurred as follows:
Great Brittan printed money to fund WW1, causing a devaluation of the Pound, so when they tried to return to the gold standard, pricing the pound in terms of dollars, at the pre WW1 rate of 2.85$ a pound, no one would accept that rate.
The Federal Reserve inflated the Dollar so that people would pay 2.85$ a pound, by lowering interest rates and lending out massive sums of money to banks through the discount window.
This influx of cheap money led to speculation and the inflation of stock prices. Since banks could borrow cheap money from the Fed, and multiply that money through Fractional Reserve Banking, they started lending out money to investors to buy stocks with.
As a result of our loose monetary policy, gold was flowing out of the US, and in 1927 Roy A. Yound became Chairman of the Fed. He wanted to reverse the outflow of gold by enacting a tight monetary policy, raising interest rates, calling in loans made to banks, and closing the discount window.
Without the continued influx of cheap money, the stock bubble popped. Since banks made massive loans to investors on the collateral of stocks, they started to call in loans, leading to bank runs.
Due to the Fractional Reserve System, these runs lead to a continued decline in the money supply (even today most of the money supply is bank entrees). This led to the severe depression which lasted until about 1939.
The initial crisis was caused by speculation but it would have never gotten that bad had the Federal Reserve maintained a stable money supply. The entire purpose of the Federal Reserve was to provide liquidity and maintain price stability, and it failed.
Like I said before, Hoover did raise taxes, and he did spend money- it didn't help because the money supply remained on decline. Imagine if the US Money supply fell from 13 Trillion to just 8 Trillion, leading to nation wide bank runs, causing a continued decline in the money supply, you can tax and spend all you want, but until you address the monetary crisis, things are only ever going to get worse. That's why FDR created an actual solution to the problem of systematic bank runs- FDIC insurance, after which the entire purpose for which the Federal Reserve was created, was rendered obsolete, and of should have been done away with.
Harry, it wasn't a shortage of money is was the lack of value and deregulated investment spending. Lending money of speculative stacks is now illegal because of what happened during the depression. So it wasn't the lack of money but the lack of value and securities against loans. You are clearly short-sighted in your evaluations.
Take an apple. Let's say that the apple is worth $1. If you influx the market with money you get inflation and now the apple costs $100. The Apple's value is the same in comparison to the rest of the market. Money supply doesn't solve problems it compounds them. Value is the key.
The stock bubble, and the following crash, were caused by speculative lending and investment, but what fueled that? Like I said before, the speculation was fueled by cheap money.
I know that inflation doesn't increase real value- wealth is not money buy what can be got for money, the thing is, since investment and prices are based in the monetary system, instabilities in the monetary system affect prices, investments, and so on. In absolute terms, money doesn't matter, but relative to the money supply prior, it does matter. For example, in 1981, the US money supply was about 1.6 Trillion, and we were not in a depression, but if our money supply today fell to 1.6 Trillion, we would go into the worst depression in history.
Obviously printing money will not create value, but instabilities in the money supply destroy value, that's why it needs to remain stable.
"Our GDP is 19.6 Trillion, and our debt is 20.1 Trillion."
WOW, that is an impossible climb to be done by 320 millions people.
It seems that the credit rating America has all this time is not the reflection of their economic reality.
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Although Friedman's monetarism has been met with proponent and controversy in practice, it still plays an important role in the understanding and study of monetary and financial policy. https://iogamesio.org/slitherio