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View Diary: Food stamps are on the chopping block again as House and Senate farm bill negotiations start (85 comments)

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  •  Its a false equivalency for we progressives to (0+ / 0-)

    say that because Big Oil gets $20 billion in subsidies a year, we can't afford to pay for food stamps.  That is just simply not how it works.  There is no such thing as a shortage in tokens for the token issuer.  The US Dollar comes from the US Govt, the capacity to create tokens is always infinite.  So if you play the Republican game that the US Govt budget is just like a household budget, bad policy will always result.  Sure, cut big oil subsidies, but this money has nothing whatsoever to do with spending money on the food stamp program.

    MMT = Reality

    "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

    by Auburn Parks on Tue Oct 29, 2013 at 10:17:21 AM PDT

    [ Parent ]

    •  This would cause inflation (0+ / 0-)

      ...and, there is nothing that people with a little money like less than inflation.  Nothing.  I don't think the GOP believes that printing more money is not an option,...just that its not a viable option for anyone that thinks inflation is worse than slow growth and UE.

      And, that includes nearly all republicans in this country, and nearly all of the Dems in Congress.

      Don't expect to see another government policy that contributes to inflation ever again.  Afterall, it was inflation more than any other factor that lead to the rise of Reaganism in the 1980's, and the 30 year implementation of Reaganesque inflation-fighting monetary policy.

      •  I'm sorry brother but you have it all wrong. (0+ / 0-)

        If you're referring to the inflation period of the late 70's, that had absolutely nothing to do with creating too much money.  Here are the deficits as a % of GDP for 1971-1982:
        1971 - 2.1%
        1972 - 2.0%
        1973 - 1.1%
        1974 - .4%
        1975 - 3.4%
        1976 - 4.2%
        1977 - 2.7%
        1978 - 2.7%
        1979 - 1.6%
        1980 - 2.7%
        1981 - 2.6%
        1982 - 4.0%

        It had everything to do with a 400% increase in gas prices.  Which would be equivalent to gas going from a $3.50 national average per gallon today to ~$14 per gal within the next year.  All production, especially before computers and digital technology comprised a large portion of economic activity, has fuel costs as a input.  This combined with still relatively strong union membership and alot of wage indexing to inflation is what caused the high inflation of the period.  It had nothing to do with Govt deficits and money creation.
        Here's the historical oil graphs:
        an inflation adjusted national average going back to 1972

        Here's spot oil per barrel historically:

        Money creation does not equal inflation.  Inflation is the price level (a ratio) taken at two different points in time.  The price level is all money SPENT divided by all goods and services for SALE.  When there is unemployment and slack capacity, money creation does not equal inflation.  More money will equal an increase in the number of goods and services for sale, leaving the price level the same.  here's an example:

        You might ask, but how can all those trillions of dollars be created without inflation increasing.  The answer lies in three places: productivity increases, the trade deficit (those US dollars are leaving the country, so they aren't  used to bid up domestic prices), and savings (if you have $1 million, and you never spend any of it, there's no way for that money to bid up prices).  After all, inflation is the ratio of money SPENT to goods and services for sale.  Imagine an economy of two people that produces 10 apples a year.  And there are $10 in the economy.  The price level is 10 apples / $10.  Now lets say that productivity increases allow these two to produce 20 apples.  If the amount of money stays the same, we have deflation: 20 apples / $10.  If the money supply grows in an equal amount with productivity, inflation is zero: 20 apples / $20.  If the money supply grows faster than the production of goods and services, we get inflation: 20 apples / $25 dollars.  So creating money does not by itself guarantee inflation, its a ratio.  Furthermore, inflation doesn't care about whether its Govt making the money or the private sector making the money.  So if we tamp down on unstable private sector debt = money creation, and substitute the stability of Govt money, we will all be better off.  And inflation is not something to worry about solely because the money is coming from the Govt and not the private sector.  It doesn't matter where the money comes from.

        Not to mention the fact that productivity increases and population growth are by definition deflationary.  So without new money creation to account for this we get deflation, which we experience as depressions.

        But I wish we were having an inflation debate about Govt spending, but we are not, we are debating like the US Govt can run out of money tokens.  This is categorically false.

        MMT = Reality

        "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

        by Auburn Parks on Tue Oct 29, 2013 at 11:29:49 AM PDT

        [ Parent ]

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