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View Diary: How to Cut the Poverty Rate in Half: A Universal Income For All (73 comments)

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  •  caldera - most people here don't fully understand (4+ / 0-)

    the capital markets, how they function, and what happens to money saved and invested.

    "let's talk about that"

    by VClib on Thu Nov 07, 2013 at 01:12:55 PM PST

    [ Parent ]

    •  so we bring (2+ / 0-)
      Recommended by:
      VClib, OrganicChemist

      the educatin

    •  Capital markets and other esoteric concepts (1+ / 0-)
      Recommended by:

      I completely agree that the money that the 1% gets (but come on - even families with 80 - 120k annual income make plenty of investments so I don't agree with the 1% meme here)  doesn't just sit in a mattress and does go to investments that are critical for our economy. Actually, I think the only reason we haven't seen a lot of inflation with the QE policies of the Fed are because most of this money is going to investments - not to the purchase of general goods which would show up as inflation in their indicies. In the area of investments where this money is directed, we do see incredible inflation. The Dow was at a new record. Housing prices are steadily climbing. The crash in the commercial real estate market is slowing. Treasury and bond returns are still low. All these investment areas show inflationary pressures - most likely from the easy Fed money provided.

      Having acknowledged that however, I do believe an honest analysis would consider thoughts on the velocity of money. The Fed stims are keeping the banking sector afloat so there is plenty of money for businesses that need capital for expansion, research or efficiency improvements.

      However, we do seem to be experiencing a problem with demand. There is plenty of labor and businesses are flush with cash and credit. I think they would expand if the demand was there, but it still seems to be lagging. We have already injected incredible amounts of capital into the individual marketplace via a 30% or so increase in food stamps and other aid along with various continuing programs based on the original stimulus. I think that much of the problem continues to be technology and other efficiencies that allow for unprecedented increases in production but require little, if any, increase in labor overheads. I know that in several manufacturing states, the value of their goods produced equals or exceeds that which they were producing in the golden days, but their labor requirements to do that are one quarter or less of the previous needs.

      This is all very complex. I don't think there are any silver bullets. I think it is folly to say that monies going into investments and savings shouldn't be allowed to pool there. I certainly don't think that lowering taxes by any great amount would increase jobs by any incredible amount, either. Globalization has created a whole new ball game with a completely different rule book.

      A onetime limited payment to various demographics might well stimulate demand. We have done that before and it has been successful. However, a continued basic income - particularly that as high as the Swiss proposal is probably not a good program, either. I think it would be quite inflationary and I think people would be quite surprised at how many people would just take the $28,000 a year and "retire". I'm not sure this is an ideal solution, either.

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