#Economist blames #financialization and #pandemicresponse for growing #wealthdisparity

https://newstarget.com/2024-03-26-american-billionaires-wealth-skyrocketed-since-covid-pandemic.html

Our Rolling Bubble Bubble Burst Cycle

I'm talking about credit bubbles. Boom bust would happen anyway from a somewhat fixed quantity of money in relation to the unfixed, but dynamically growing economy.

Another cause, of boom bust would logically be, similar to what Piketty discusses, a faster growth in the private ownership, control of the economy than of the growth of the material economy as a whole. If one sums the aggregate of private profit, at t2, time 2, and compares it to the material growth private entities each imagine (based on applying that growth rate to wealth at t1) would exist, and compares that to the actual material growth of the economy as-a-whole: naturally frequently the first number is often larger than the second because the goal of each private entity is private, not public profit. That private profit has grown does not imply the total quantity of, hard, money is any larger (though credit might likely expand to fill the gap), as such profits may be expressed in capital assets. My idea is this mismatch expresses itself in an inflation that is confined to capital with a mismatch to the lower-than-that net sum of real growth. This gap in expectations among investors and businesses leads to a crash. My one of two theories of the, basic, business cycle: excess aggregate monetary profit over material growth due to the purely private goals of the private economy matched against the public needs of the common market: an inflation confined to finance and capital--hence, a "boom." This one: too much money chasing too few goods, but confined to finance: not a general inflation. It would occur as a limited sectoral inflation, it seems to me even with a fixed total quantity of money, it being limited to the financial sector. I'll leave this one to Piketty, as it takes me away from my topic. He proposes taxes, but brings up the problem of tax competition between nations, which he addresses with the idea of coordinating taxes internationally. But again, I leave that to Piketty: you go and read his five hundred page book.

I mentioned just before that, my other working hypothesis on boom bust. In contrast to this one, of too much private money chasing too few publicly purchasable real goods, the other working hypothesis is the opposite: too much material growth chasing too little money, or chasing too little investment or reinvestment. Again: the imbalance, that unbalance is the connecting thread. I think this works out in two ways: in the boom, and in the stagnant economy. Commentators tend to treat the current condition as simply natural--nothing we could do differently, but take for instance the boom--treated by everyone but the Fed, who regularly go about trying to burst it--as prosperity, but in hindsight as a bubble--but actually, the same event. But back to the topic
In the case of the boom: we assume it is a hard money bubble: too much investment chasing increasingly imaginary, financialized goods. Yet in the general case of a real boom, one has real growth. Such real growth is both of real goods and services needing to be mopped up by a growing money supply, but also of the economic growth engine, also needing the financial fuel of reinvestment. This gap, in my working hypotheses, leads to the bust of boom bust.

Note, throughout the nineteenth century, we had this boom bust cycle. And unless we entirely blame it on previous incarnations of our central bank, or on the lesser credit bubble burst of private banks, to me, it was because of gold. Gold was to blame, is what I think: there was not enough, could not be enough gold, except at the time of the California and Alaskan Gold Rushes, or at the time of the Founders, when the world was still flush with Spanish gold. I think the problem today is the same: hard currency, not enough of it. To quote the presidential candidate, at the Democratic Party National Convention: though shalt not crucify this nation..." speaking of the need for a system based on plentiful silver coin and silver bullion-based paper currency and deposits and clearing.

So we built the Federal Reserve System, to fill in that gap, that there was not enough hard currency: a system always backing up the banks in their credit expansions through a central nationwide clearing house for nightly and Wednesday clearing of credits and debits through interbank lending and occasional discount window overnight loans. A credit, soft money system for the dollar to solve, to smooth over the boom bust and provide the central clearinghouse by which credit could help the economy grow. In many ways, the U.S. has the least lethargic most dynamic economy on earth. But we also have this every time worse than the last one rolling credit bubble bubble burst, reinflate, no, not with hard money, with credit, and repeat cycle.

Our vision of government spending creating inflation causes the shortage of hard money that causes this dependence on the credit cure. It also means we hesitate to plow money into the common wealth of the people, because we are anti-government: that is the cause, a lack of real supply of goods and services, a gradual financialization, the cause of our incessant grinding two percent inflation. The really big inflations were but three, or if we count this, purely politically created one, four. Each had it's specific cause. Boom bust has, except for those cases, always been confined to financial sectoral inflation and never was accompanied by a general large-scale inflation. That is because the boom of the boom is always at least partially real growth, and real growth means supply and supply means lower prices in the supply demand equation. When demand is accompanied by supply, there can be no inflation.

The Federal Reserve was created I feel to address the boom bust of gold in the Gold Standard era, and to regulate the banking credit bubbles gold as a currency inevitably creates. But it never once worked, it has only ever made our problem worse and worse until it is out of control and has become a world wide political problem to the point that now, worldwide, Democracy itself appears to have met its end. I do not say end the dollar, go back to gold. But just: it is time to end the Fed.

The MMT crowd aren't considering what to do after November. Not much attempt--aside from the founder, in, roughly, it's current form of MMT, Warren Mosler, who appears on conservative podcasts--to appeal to populist Republicans.

They talk about the Green New Deal as if it is a done deal and just about how to implement it, for instance. Kelton, maybe not now, I don't know, but some time ago was talking about the crisis as if it were a normal economic depression and as if normal economic solutions such as MMT could just be applied as if the problems, being intentional, were not intransigent to purely economic measures. For instance.

If one takes a look at balancing the whole economy, one can appeal to that conservative impulse on a much larger scale than simply balancing the deficit. Perhaps that is how they got Conservative Democratic Senator Manchin on board, using such a budgeting process as the MMTers have been proposing lately, using the Office of Management and Budget to look piece by piece exactingly at the potential inflationary (and I would hope, deflationary) results of each line item, proposing offsets or cutting them from the budget.

Ted Cruz is great, but he and the other populists among the Republican Party, seeing the truly defunct nature of the present Democratic party tend to subconsciously assume the problem is "Liberalism," and, some of them, tend to, double down on the old left-right partisan rhetoric. In the same way as people in the MMT community will never appeal to we populists with all that modern liberal crap, so too, we risk alienating the Trump Democrats with our nonsense conservative economic rhetoric and ideology. Democracy is not choosing products via the free market, it is choosing electors via elections, doing things together, and remembering the poor and downtrodden. We would do better to endorse the main points of the old liberal ideology, which would give us the spending and taxing power should we navigate the election machinery in November and win, and then use our conservative energies and inclinations to make it work, to cut out all fake things, all abuses, to apply the budgeting process to the whole economy, to stabilize it against the natural processes of inflation and deflation, both against the budgeting mistakes, including spending too little and spending too much, and not just quantity but quality; and against the natural results of the free market itself.

Alright, for another example. I am increasingly realizing that this platform is pretty closely aligned to Libertariansim, although more the pro-life compassionate Libertarianism of Rand Paul, to go buy say the vibes I feel coming from Ben Swann and others. Ron Paul loves gold. But if we go with just the topic of "hard money" vs. "soft money," well how to bring on board the Trump Democrats, the ones not Red Pilled all the way over to the far right? I would say, move away from "gold" as our topic. To me, I am not on board with "gold," but putting that aside, I propose "hard money vs. soft money." To me, soft money is bank money. Hard money includes government created non-credit type money: money the private sector does not hold as a debt that it has to pay off; money that the private sector can just use and not have to worry about. So our goal can be to cut taxes, while not going out of our way to encourage credit bubbles? Would that appeal to youn's? Cutting taxes is easy. But I don't have a clear idea how to go about the not encouraging credit bubble thing. So that can be another post for another day, yes? You see, the point about cutting taxes, is it leaves all that, what I call, "hard money" in the private economy. Alright, it's just my starting point for discussion. Should we raise taxes a bit more instead? In the soft versus hard money discussion I propose, we want to keep as much hard money in the economy as possible while doing what we can to prevent credit bubbles.

Or should I add, "and financialization?" If I add that, perhaps we need more taxes. And then, the congressional budget office could help the congressional budget committee to find ways to spend money to offset those raised taxes. Now, back to the original topic: those spending offsets of the proposed taxes would have to be palatable to conservatives, after this November when hopefully the Democratic Party is done and out for good. So you all can help me think about that. What kind of spending would you be in favor of, since a cross-economy tight money policy dictates taxes, no?

Alright, what kind of taxes? Everybody is stuck on Nairu. I think Nairu is nonsense. I think we try not to tax consumption, try not to tax business activity that contributes to employment, but aim taxes elsewhere, at the financial aspects of the economy, and at business profits, but offsetting so as to encourage business activity. Or, we ask the Fed to put the squeeze on credit money, and just cut back taxes across the board to close to zero up to where the level of government spending exceeds the rate of economic growth, or that rate prior to any sudden economic crash.

Mosler argues for zero interest rates, so as to leave the private economy alone. That doesn't sound like tight credit money policy to me, and I am proposing tight credit, am I not? But who am I to comment further; I am just an armchair economist, not a real one, ok?