Monday, February 02, 2009

More Rethuglican idiocy

Okay, folks. Now the Rethugs are saying that the federal government spending money doesn't help the economy because the money spent just comes out of people's pockets at some point in the future, so people will just hunker down in expectation of those future higher taxes rather than do stuff to help the economy. *OR* they're saying that there's a fixed amount of money in the economy, so if the government spends money, that means that other people have less money to spend.

Let me introduce our Rethuglican oligarchs to this bold new technology called the... PRINTING PRESS. Yes, the printing press. You put paper in on one side of the printing press, and on the other side you get... MONEY!!! Yeah! And with the modern printing press, you don't even need paper, you just put in 1's and 0's and voila, it just appears in people's bank accounts!

Now, I hear you saying, "but won't that cause inflation?" Well yeah, if the government just willy-nilly printed money when there was no money disappearing out of the economy. But if the government is printing money to replace money that has disappeared out of the money, then there is no inflation.

Now I hear you saying, how can money just disappear? The answer is de-leveraging -- reducing debt vs. savings. Which is happening big-time in all parts of society. This effectively increases the reserve percentage used by the fractional reserve banking multiplier effect, which in turn reduces the money supply by an inversely proportional amount. That is, if the effect of de-leveraging is to increase the effective reserve from 10% to 15% (because banks can't find acceptable credit risks to lend that 5% to because people aren't borrowing, they're saving), then the money supply is reduced by 33%. I.e., $1000 becomes $666.67. Consider $100/.10 vs. $100/.15 and you'll see what I mean. It's an inversely proportional ratio.

Now I hear you saying, "that's hard math! I don't like math! I prefer to believe the bullshit that the Rethugs are pulling out of their ass, because it doesn't involve math and makes me feel smart!" Well, congratulations. That qualifies you to be a Republican. Because all that's required to be a follower of a failed ideology is to be stupid.

So anyhow: The Feds could just start dumping money out of helicopters over major cities. Thing is, just dumping money on an economy is a disincentive to work. There is a good reason why we want people working rather than lollygagging around: a) idle hands are the devil's workshop (they might get up to no good, civil disorder, etc.), and b) idle hands aren't contributing anything to the economy. So deal is you want to a) create jobs to employ the idle, and/or b) increase the wages of jobs that already exist. And that's where federal spending programs come into play -- by increasing employment and wages by employing these people building critical infrastructure for good pay as vs. McJobs (at best). But that's a topic for another posting. This one was all about how Republican idiots seem to have forgotten about that magical "Printing Press" technology that the Federal Reserve has, and in that, I think, we have Mission Accomplished.

-- Badtux the Economics Penguin

No comments:

Post a Comment

Ground rules: Comments that consist solely of insults, fact-free talking points, are off-topic, or simply spam the same argument over and over will be deleted. The penguin is the only one allowed to be an ass here. All viewpoints, however, are welcomed, even if I disagree vehemently with you.

WARNING: You are entitled to create your own arguments, but you are NOT entitled to create your own facts. If you spew scientific denialism, or insist that the sky is purple, or otherwise insist that your made-up universe of pink unicorns and cotton candy trees is "real", well -- expect the banhammer.

Note: Only a member of this blog may post a comment.