The New Yorker
The gross domestic product is a measure of all the goods and services that the United States economy produces in a year. It’s also a measure of all the income that the economy generates, and how fast it grows helps determine how rapidly over-all prosperity rises. Between 1947 and 1974, G.D.P. rose by about four per cent a year, on average, and many American households enjoyed a surge in living standards. In the nineteen-eighties and nineties, growth dropped a bit, but still averaged more than three per cent. Since 2001, however, the rate of expansion has fallen below two per cent—less than half the postwar rate—and many economists believe that it will stay there, or fall even further. In economic-policy circles, the phrase of the moment is “secular stagnation.”
The late Harvard economist Alvin Hansen minted this term during the nineteen-thirties, and Lawrence Summers resurrected it a couple of years ago. Although originally applied to the United States, it is also widely used in reference to the European Union, where G.D.P. growth has been even slower than in the United States, and to Japan, where, for more than two decades, it virtually vanished. Indeed, one of the fears that economic pessimists have raised is that the United States and other Western countries could be heading for Japanese-style stagnation.
What could get us out of the rut? Until recently, the textbook prescription for slow growth involved cutting interest rates and introducing a fiscal stimulus, with the Treasury issuing debt to pay for more government spending or for tax cuts (aimed to spur household spending). That was the recipe that the United States, Britain, and other countries followed after Lehman Brothers collapsed, and it helped prevent a deeper slump. Today, however, neither of the traditional policy responses is readily available. The short-term interest rate that the Federal Reserve controls has been close to zero since December, 2008. Janet Yellen, the Fed chair, and her colleagues can’t cut rates any further. And with over-all federal debt standing at more than eighteen trillion dollars Congress would strongly oppose the Treasury’s borrowing more money for another stimulus package. In the E.U., the situation is even more fraught. Growth has been negligible for years, interest rates are at very low levels, and a legal commitment to austerity policies rules out a fiscal stimulus.
Adair Turner, an academic, policymaker, and member of the House of Lords, has another idea. In his new book, “Between Debt and the Devil: Money, Credit, and Fixing Global Finance” (Princeton), Lord Turner argues that countries facing the predicament of onerous debts, low interest rates, and slow growth should consider a radical but alluringly simple option: create more money and hand it out to people. “A government could, for instance, pay $1000 to all citizens by electronic transfer to their commercial bank deposit accounts,” Turner writes. People could spend the money as they saw fit: on food, clothes, household goods, vacations, drinking binges—anything they liked. Demand across the economy would get a boost, Turner notes, “and the extent of that stimulus would be broadly proportional to the value of new money created.”
The figure of a thousand dollars is meant to be strictly illustrative. It could just as easily be five thousand dollars or ten thousand dollars—however much was needed to drag the economy out of the doldrums. These handouts wouldn’t represent tax credits or rebates, which are issued by the Treasury Department. The funding would come from the central bank (in this country, the Federal Reserve), which would exploit its legal right to create money. Central banks do this by printing notes and manufacturing coins, but they can also create money by issuing electronic credits to commercial banks, such as JP Morgan and Citibank. Under Turner’s proposal, that’s what the Fed would do—give banks newly created money, which would be passed along to their account holders. Merry Christmas, everyone!
It’s a deadly serious proposal, actually, and its author is a sixty-year-old English technocrat renowned for his intellect and his independence. Turner has run the Financial Services Authority (roughly, the British equivalent of the Securities and Exchange Commission), the Confederation of British Industry (akin to the U.S. Chamber of Commerce), and the Pensions Commission (think Social Security). For the past two years, he has been a senior fellow at the Institute for New Economic Thinking, a transatlantic think tank that George Soros set up in 2009. If, despite Turner’s impressive credentials, the words “hyperinflation,” “Weimar Republic,” and “Robert Mugabe’s Zimbabwe” are whirling around in your head, he would certainly understand. “My proposals will horrify many economists and policymakers, and in particular central bankers,” he writes. “ ‘Printing money’ to finance public deficits is a taboo policy. It has indeed almost the status of a mortal sin.”
But it’s also a proposal that serious economists have broached before. In 1969, Milton Friedman argued that money financing could provide an alternative to Keynesian debt financing. Faced with a chronic shortfall of demand in the economy, Friedman said, the government could print a bunch of money and drop it from helicopters. In 2003, Ben Bernanke, who was then a governor at the Fed, suggested that such “helicopter drops,” or their electronic equivalent, could provide the Japanese government with a way to lift its economy out of a decade-long slump. More recently, a number of liberal economists rallying under the banner of “Modern Monetary Theory” have urged the government to reverse budget cuts, financing the spending with money created by the Fed. In Britain, Jeremy Corbyn, the new leader of the Labour Party, has suggested that the Bank of England could pay for some infrastructure spending by printing money.
So far, these ideas have gained little traction. Bernanke, after taking over the Fed, in 2006, seldom mentioned his earlier proposal. Even Paul Krugman, who is usually a big supporter of stimulus programs, has distanced himself from Modern Monetary Theory, pointing to the danger of inflation from excessive monetary growth. Turner, however, insists that creating money may be the only way of generating a decent rate of economic growth and escaping our current predicament……
Artikkel on veits parlanksist väljas selles mõttes, et kui vaadata keskpanga monetaaroperatsioone, siis MMT ei pea seda “raha finantseeritud defitsiiti” just ilmtingimata imerelvaks. Peaasi, et oleks defitsiit, rahastatud see saab, selles probleemi pole. MMT positsioon- valitsuse defitsiitne kulutamine on samaväärne raha trükkimisega, kuigi ühtegi niisugust operatsiooni pole, mida võiks raha trükkimiseks nimetada kaasaegses fiat süsteemis MMT arvates.
Aga jah, siis hakkavad võhikud rääkima, et võlg on võõra oma ja jätkusuutmatu, kuigi tehniliselt on ju raha ka võlg, oma olemuselt valitsuse kohustus. Raha kohta nad arvavad, et seda ei pea “ära maksma” ja intressid ei saa lakke tõusta. Kuigi ka mainstreami seas on üksteisele vastukäivaid arvamusi, mõned arvavad, et ka lühiajalise intressi määrab turg, teised jälle, et ainult valitsuse võlakirjadele määrab turg intressi. Mõni aeg tagasi vaatasin videoklippi, kus Kristjan Lepik oli koos Jürgen Ligiga auditooriumile rääkjimas USA võlast. Lepik ütles, et valitsuse võlg ei erine majapidamise võlast. Ta on pikki aastaid oodanud USA treasury võlakirjade mulli lõhkemist. Kui USA alustas QE-ga, siis rääkis ta, et inflatsioon on pikema vinnaga asi ja ilmneb alles mõne aasta pärast. Minu meelest suurepärane näide sellest, kuhu mainstreami muinasjutud inimese viivad ja mida uskuma panevad.
Jürgen Ligi rääkis ju ka, et turud on olnud Euroopa suhtes ülekohtused ning USA ja Jaapani võlatasemed on palju kõrgemad, kuid intressid võlakirjadele madalamad. Kui sa veel mäletad, siis samasse ämbrisse astus ka Krugman PAUL KRUGMAN LAHENDAS MÕISTATUSE