News for hackers. Stuff that matters.
Re:One way to fight a coronavirus recession: $1k for every A... by xyzzyz on Monday March 16, 2020 @01:31PM (#22594999)
Another difference would be that QE, as practiced by Fed in 2008-2014, would pay a basic income of around $150/month. Now, consider what inflationary impact would QE have if it was 6 times larger, and perpetuated indefinitely. Then remember that because of the way QE was structured, it had much smaller inflationary impact than directly printing that money and handing it over to government or people.

While I'd like for it to be possible to pull $12k/year for every American out of thin air, there's simply no way.

Re:One way to fight a coronavirus recession: $1k for every A... by aeternum on Monday March 16, 2020 @03:09PM (#22596289)
QE likely had a smaller inflationary impact simply because the printed money went only towards treasuries and financial instruments disproportionately benefiting the rich (top 5%). There's a strong argument that this is why it didn't show up in the consumer price index and we've also significantly increased wealth inequality.

12k / year for every american is likely too high. I think the Fed should still determine the amount of QE based on inflation and economic metrics, however that QE should be distributed via a UBI rather than used to purchase financial instruments.

Re:One way to fight a coronavirus recession: $1k for every A... by xyzzyz on Monday March 16, 2020 @04:11PM (#22597066)
> I think the Fed should still determine the amount of QE based on inflation and economic metrics, however that QE should be distributed via a UBI rather than used to purchase financial instruments.

But why go the roundabout way of going through QE to pay for UBI? Why not just increase taxes directly?

The answer is, clearly, because once you talk about increasing taxes to pay for something, you start thinking hard about numbers, and having them add up. When you talk about some vague ideas like the above, calculating the impact exactly becomes difficult, so instead one can just throw up their hands in the air and ignore the problem altogether. The impact however stays very real, as real as when you pay for it through taxation.

Re:One way to fight a coronavirus recession: $1k for every A... by aeternum on Monday March 16, 2020 @04:38PM (#22597421)
Yes, for government services I agree, they should be paid for with taxes and we should have some semblance of a balanced budget.

QE is different though, the Fed already has mechanisms in place to decide "how much" and is already printing money not paid for by taxes. Part of the goal of QE is actually to devalue the nation's currency in order to increase exports. The question is just how to best inject this printed money into the nation's economy.

In one way, QE is an extremely efficient (and very difficult to evade) wealth tax applied proportionally and instantly to any entity that holds USD. It would be very hard to pull that off with traditional taxes.

Re:One way to fight a coronavirus recession: $1k for every A... by xyzzyz on Monday March 16, 2020 @05:58PM (#22598440)
> In one way, QE is an extremely efficient (and very difficult to evade) wealth tax applied proportionally and instantly to any entity that holds USD. It would be very hard to pull that off with traditional taxes.

The government could also just print itself lots of new dollars, it's even more efficient. We don't do that, because the central banks are independent from government, so QE is a roundabout way of allowing government to print more money in a way that doesn't create high inflation expectations in future.

The biggest reason we don't do such taxes though is because they would be extremely distortionary. It's super easy to evade USD cash tax: just don't hold cash, buy stocks or real estate or some other real property. The USD tax will artificially inflate those assets, while at the same time, will require new cash-denominated bonds to be have payouts indexed by inflation.

Re:One way to fight a coronavirus recession: $1k for every A... by aeternum on Monday March 16, 2020 @08:36PM (#22600088)
I generally agree, there is significant benefit to having the central bank operate independent from government. I'm not advocating any change there.

The central bank could keep that independence but simply distribute the QE money to individuals as a one-time or traunched payment (I realize calling it a UBI is misleading as it implies it is ongoing). There should be no expectation that it is permanent or continues.

Re:One way to fight a coronavirus recession: $1k for every A... by xyzzyz on Monday March 16, 2020 @08:43PM (#22600154)
> The central bank could keep that independence but simply distribute the QE money to individuals as a one-time or traunched payment (I realize calling it a UBI is misleading as it implies it is ongoing). There should be no expectation that it is permanent or continues.

Right. This is a sensible (though unclear if the best) policy in context of exogenous shock. However, using this as a backdoor to introduce perpetual basic income of significant value, with some very vague hand-wavy plan how to pay for it on an ongoing basis, is rather silly, and that's what I was pointing out in parent posters.