tag:blogger.com,1999:blog-2277215496195926573.post5119869550841367388..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: Nonsense from Alan Greenspan.Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2277215496195926573.post-73457534808453572442013-03-12T14:29:50.943-07:002013-03-12T14:29:50.943-07:00Quote: "Of course a more or less continuous d...Quote: "Of course a more or less continuous deficit decade after decade DOES BRING continuous inflation (assuming the deficit is larger relative to GDP than productivity improvements). But that decision to go for a 2% or so rate of inflation stems from the view, accepted by about 90% of economists, that 2% inflation (rather than 10% or minus 16% or any other figure) is about optimum. To that extent, the DEFICIT is not the fundamental cause of inflation."<br /><br />- Well, it probably does under our present fractional reserve situation, and our crazy national debt arrangement, but what if we had full reserve and no national debt? We could run a deficit to keep unemployment down, let the government print any PSBR (but wisely, not stupidly, and with lots of appropriate oversight).<br /><br />And we might be able to achieve Nirvana:<br /><br />0% inflation.<br />0% unemployment (or very little)<br />0 government debt.<br />And only small, appropriate private and commercial debt, at reasonable (very low) rates of interest, and reasonable terms.<br /><br />You might say "it can't be done", but I'd say "It's never been tried", at least, not in modern times.<br /><br />montmorencyhttps://www.blogger.com/profile/12879422255762834319noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-30838064043264070482012-10-06T15:46:57.647-07:002012-10-06T15:46:57.647-07:00MMT postulates that a deficit at some level is nec...MMT postulates that a deficit at some level is necessary for full employment. It does not postulate <br />that full employment necessarily leads to inflation.<br /><br />The 2-3% rate of inflation is believed to be tolerable by populations, and was maintained for most of the post war period. However, given a long enough period of time, 40 years, prices increase. For example when I returned from the war in 1970, I started teaching in the US public schools at $14,400/ year, rented a furnished apt for $75/month, bought gas at $0.30/gal, bought a new buick century automobile for $3,000, and was told I'd retire on Social Security at $500/month. Today, that car costs $30,000, apts rent for $750/month, gas costs $3/gal, but beginning teachers earn $40,000/yr and Social Security pays me $900/month. The tolerated inflation of the past 40 years was used to take revenue from labor and pensioners. <br /><br />Fortunately MMT through the Job Guarantee provides a solution. The JG under pins the minimum standards for employment which all employers must meet to attract labor. It does not dictate wage levels above the minimum. It does not dictate benefit levels above the minimum. It simply sets the minimum.<br /><br />Given a JG program where all those who want to work are offered employment at $10 / hr, with full medical insurance package provided by the US Public Health Service, and geared toward preventive medicine, and a personal retirement account maintained at PBGC, with the employer matching the employee's contribution up to 10%, this becomes the new norm.<br /><br />It need not be inflationary, because it is simply supporting the bottom of the labor pool. In fact, this program should eliminate 90% of the current administrative expense for unemployment insurance and welfare.<br /><br />INDYDr. George W. Opriskohttp://www.publicresearchinstitute.orgnoreply@blogger.com