Dump inflation targeting

Yesterday, I pointed out that the first instalment of the rescue package could be financed by cancelling the Stage 3 income tax cuts legislated for 2024-25. Today, the same suggestion is on the front page of the SMH. Morrison is apparently resisting the idea, but that can’t last long.

Trying to keep one day ahead, I’ve turned my mind to how the Reserve Bank should operate during and after the crisis. The first step is to abandon inflation targeting once and for all. The policy of using small interest rate adjustments to keep inflation in a range of 2-3 per cent made sense in the policy context of the (spurious) Great Moderation, when the target appeared consistent with maintaining unemployment at a stable level of 5 per cent or so, assumed to be the lowest the economy could sustain.

That all fell to pieces with the GFC. Inflation targeting, which did nothing to stop asset price bubbles, was a significant contributor to the crisis. Various ideas to address this problem were floated, but it ended up in the too-hard basket.

In the aftermath of the GFC, most central banks pushed their key interest rates down to zero. Even where this didn’t happen, as in Australia, inflation remained persistently below the target range, a problem that hadn’t been contemplated when the policy was first introduced in the 1990s, and the big concern was a resurgence of the inflation of the 1970s and 1980s.

It’s now obvious that we will never return to a world where inflation targeting makes sense. But what should replace it?

The first step should be a re-ordering of the Reserve Bank’s objectives to focus primarily on full employment rather than price stability. One way to implement this would be to target the level and growth rate of nominal income. My suggested target would be a 7 per cent rate of nominal growth, ideally made up of 3 per cent real growth* and 4 per cent inflation. The idea of the nominal target is that, if real growth falls below the target, the Reserve Bank loosens monetary policy and accepts higher inflation.

A 7 per cent growth rate would imply a doubling of nominal income over a decade. That in turn means that if we end the crisis with, say, debt equal to 60 per cent of national income, and balance the budget (on average) after that, the debt to income ration would fall to 30 per cent by 2030.

  • In the longer term we should be looking at taking the benefits of technological growth in the form of more leisure rather than more output. But I haven’t had time to do the analysis on that.

55 thoughts on “Dump inflation targeting

  1. As John Maynard Keynes was quick to point out in his analysis of the Great Depression, the money illusion is less relevant than real incomes. A famous quote from the great Depression had someone at first lauding the very low price of a bread loaf.But this same person points out that
    bread was not been sold at that price. Why? Because few people had a steady income.
    On the other hand, Milton Friedman with his Permanent Income Hypothesis. Friedman implied that changes in consumer behaviour were tied to individual expectations. So he would support inflation targeting. Still if inflation is approaching zero then maybe just this one time both Keynes AND Friedman may be right. Real growth in nominal income will then be required quickly in 2021-22.

  2. Interesting monetary target you select, nominal income, and I concur. That was the target advocated by Milton Friedman.

  3. And how, theoretically and practically, would we factor a quantitative steady state economy into this? Without quantitative growth there still could be qualitative growth of course but qualitative growth most likely will be less than quantitative growth plus qualitative growth.

    I think it will be important to reconfigure economics for a steady state, circular economy albeit one still with knowledge and technological growth (qualitative growth). But we cannot keep increasing the total biomass of humans, total hectares of cleared areas, total hectares of paved and built-over areas areas and so on.

  4. What is the purpose of having a Future Fund (Australian Sovereign Wealth Fund) if it can’t be used in the financial budgeting process at a time like the present?

    As at end 2019, the total value of this Fund is $ 212.4. billion, comprising:
    Future Fund: $168.1 b
    Medical research fund: $17.9b
    Disability Care Australia: $16.4b
    Emergency Response Fund: $4 b
    Future Draught Fund: $4 b
    Aborigines and T.S.I.: $2 b.

    It is difficult to estimate the loss of value of each of the various components of this Fund due to the loss of value of financial securities and the different risk/return criteria and therefore different portfolio allocations of the sub-funds.

    I understand, transfers between the sub-funds are possible under specified conditions. I am not sure whether I have understood the legislation correctly. It appears to me that the conditions for transferring funds from the Future Fund to the Emergency Response Fund (the most likely candidate to be included as a source of financing the current Covid-19 emergency) are such that in a falling financial securities market, transfers are not easy because of target asset values. (The assets are essentially numbers representing the value of financial securities.) If I am not totally wrong in my reading, then the administrative design suits administrators but not ‘the economy’ in a crisis situation where all prices change and it is the relative values that matter not target values.

    Any thoughts on this item?

  5. Many people have lost a lot of income, but many will not be affected and will be saving because of consumption restrictions. So a retrospective income tax surcharge based on 2019-20 income, but paid in later years, would be a good start to sharing the economic burden. A tax on business ‘super-profits’ accrued during the crisis would also be a good way to minimise rorting of the various govt subsidies.

  6. >What is the purpose of having a Future Fund (Australian Sovereign Wealth Fund) if it can’t be used in the financial budgeting process at a time like the present?

    It sort of is being used, in the sense that the $214b value of the fund (although probably less now) can be subtracted from the gross government debt ($570 billion) to arrive at net debt of $350 billion, which is very small, in the scheme of things, about 20% of GDP. So no one needs to worry too much about additions to the net debt from Job Keeper and the other stuff.

  7. >many will not be affected and will be saving because of consumption restrictions.

    This is true. No more avocado on toast, unless it’s home-made.

    >A tax on business ‘super-profits’ accrued during the crisis

    Who, other than insolvency accountants, is going to be making super profits?

  8. > Who, other than insolvency accountants, is going to be making super profits?
    ColesWorth, JBHifi, Officeworks, private hospitals?

  9. Thank you, Smith9. It answers my question. The Fund internal arrangements are effectively irrelevant regarding net debt.

  10. No way do we need an implied inflation target of 4% per year. What would that do to the standard of living? Can you really see wage increases of more than 4% per year in the next decade?

  11. Acknowledging that you’re still thinking about it, but seconding Steady State (or even degrowth in some areas for wealthy countries – some of the findings that may emerge from this period about reduced air pollution could be startling, there even seems to be a possibility that there is a decline in related deaths occurring in some areas though too early to say yet).

  12. I dont understand . Isnt the government just creating this money anyway ? Why is it said to be debt that has to be paid back by future generations ? Paid back to who ? Every country is going to be in the same situation .I just think of money as a store of power and lubricant for the machine.

    Apart from that – I am amazed at the number of people who cant go for a few months without income . I suppose that comes down to debt , savings and expenses. I don’t have debt , am a home owner, and have only about $20,000 cash in total to my name but I think I could live a happy and healthy life for about 3 years on that – barring a medical emergency. People must have been spending all their income and more. Hopefully one result of this crisis will be that many realise how little they actually do really need to be happy. Sooner or later I will probably get the virus but so far I am getting fitter and healthier because of it. My food is more basic and I am exercising more.

    OTT maybe but someone said the rightists balancing of lives lost by recession against those saved by shutdown fails to recognise that recession (or depression) in itself does not kill – lack of housing ,food and healthcare do.

  13. Sunshine, it’s mostly a debt we collectively owe to ourselves, but those who have bought bonds still need to be repaid by the population as a whole.

  14. Part of the whole “efficiency dividend” guff to squeeze the public for tax cuts rorts and subsidies.

    And you gotta be low to go Robodebt as the next extortionate step.

  15. What are some creative ways that a population as a whole could repay those who have bought government bonds?

  16. “It’s mostly a debt we collectively owe to ourselves.” – J.Q.

    This highlights to me the surreal absurdity of money. We’ve invented something nominal and unreal and then we “owe” it to each other according to a set of prescriptive rules. Money is an imagined construct. It has no basis in objective reality. It does have a basis in social reality of course. I will come back to what that does and does not mean.

    Conventional economics makes two assumptions which cannot be supported ontologically as objective statements.

    (1) Money measures value.
    (2) Income is related to productivity.

    For those interested in why these statements cannot be supported as objective statements, I refer them to the following papers. These papers can be found on the “Capital as Power” site.

    “The Autocatalytic Sprawl of Pseudorational Mastery” – Ulf Martin

    “The Aggregation Problem” – Blair Fix.

    “No, Productivity Does Not Explain Income” – Blair Fix.

    If they are not objective statements then they are moral philosophy statements of the prescriptive form;

    (1) Money should be used to measure and equate disparate values.
    (2) Income should be deemed to reflect productivity (despite the lack of evidence for this proposition).

    That money, economic value, income and the rules for market transactions are socially imagined prescriptive rules, not objective categories or measures, is shown by the panicked haste with which money and financial rules are abandoned, have to be abandoned, in a real crisis such as the COVID-19 crisis. We note that we do not abandon and cannot abandon the so-far discovered laws of physics and biology in general and of the epidemiological sciences in particular or abanadon observance of such laws only at our great peril. But we do abandon the “laws” of conventional economics because they are not laws at all in the scientific sense. They are just legal laws, traditions and customs. In a word they are rules, prescriptive rules only, and the rules of any social enterprise or “game”, be it the political game, the legal game or the economic game, can be changed, by decree or by consensus. They need not be this-wise they can be other-wise.

    The COVID-19 epidemic demonstrates empirically the objective unreality (ontological un-tenability) of the tenets of money, finance and markets of conventional (bourgeois) economics with respect to the real world. The nominal rules normally held so sacred are promptly abandoned to provide real things: real food, real residence, real health and safety and so on.

    It might seem that the tenets and rules of money, finance and markets in conventional economics are good fair weather friends and only need to be abandoned in a crisis. As soon as the crisis is over, it is argued that the rules should be re-instated; the same circuits of money, finance and ownership should be re-started. This is the clear position of the Australian LNP government and indeed of any pro-capitalism government. What this ignores is that the very use of these rules and circuits in fair weather systemically embedded and ensured the conditions for everything from climate change to the COVID-19 crisis. Unsustainable practices, industrial-scale agriculture, industrial-scale land clearing and industrial-scale people mobility play major roles in climate change and in the emergence and spread of zoonotic diseases.

    We note that a raft of essentially socialist measures are implemented to deal with the crisis. Then it is assumed that when the crisis (the specific, latest crisis) is over, we can go back to prescribed “normality”. This is false. Capitalist economics systemically embeds periodic economic crises as we have seen with depressions, recessions and financial crises. But it does even more (in a bad way) with ecological and epidemiological crises. It systematically embeds continuous and escalating crises in this arena. These continuous crises now demonstrate that an emergency socialist economy is not just a temporary requirement.

    Even at the mere outset of this COVID-19 crisis we are discovering that any genuine crisis requires socialism. Nothing else works. The government has to guarantee essential services, ensure employment where possible, provide government support where employment is not possible and guarantee a place to live for every person whether or not they have any money. All these real people and real economy concerns now have to be placed before and above the operations of money market operations for goods and services. Many of the laws, rules and circuits of business, money and capital have to be repealed or suspended (hibernated) indefinitely. The essential operations of the real economy are mandated by government order. The support of persons and work sustained by government fiat money. Only statism is left to keep essential good and services available.

    If crisis mandates socialism then continuous crisis mandates continuous socialism.

  17. Apart from that – I am amazed at the number of people who cant go for a few months without income .

    Then you are much more easily amazed than I am.

    I don’t have debt , am a home owner, and have only about $20,000 cash in total to my name

    I too own a home with no debt, and my assets exceed $20,000 in cash; but this does not prevent me from being well aware that there are many people who are not home-owners, who have significant debt, and/or have no significant assets or cash, and not at all amazed by these facts. Are you only just now becoming conscious of them?

    People must have been spending all their income and more.

    Yes, obviously. Again, I find this not at all amazing. How does it come to amaze you? How low do you suppose the incomes of low-income people are?

  18. Dear Sunshine,
    To add on to what JD just wrote. I have to wonder if you raised any children. Because I find it hard to understand how anyone who is not a doctor. lawyer, engineer, senior pilot, or a Hotel Baron, can raise more than one child and save anymoney. It is difficult with even one child. With one child you have horse riding lessons or piano lessons. With two children you have both. One computer or two. The lists of course goes on and on for at least 17 years and possibly up to 26.
    Now my Grandparents raised 5 and 4 children respectively. But back in those days entertainment for the kids was milking cows, gathering eggs, and weeding gardens. Then walking two miles to school with out any shoes, sometimes in the snow. That is when they were little. Once they were 12 it was lifting 100 pound haybales on to the back of a truck in 40°C heat, or carrying the baby lambs, one in each arm, one mile from near the river back to the barn.
    But because labor was replaced by mechinization in so many fields or industries the displaced workers had to find more and more ways to tempt people to spend their hard earned money. Common temptations were convience foods, junk foods, resturants, amusement parks, tourism, boats that pulled skiers, and on and on and on with the things that are nice in life but not neccessary.
    There is an obvious problem. Some people provide goods or services that are neccessary to survive.
    But doing so is often hard and or stressful work. Some people are saintly. They will do this work because it needs to be done to prevent suffering. But I imagine most people want something to show for their hard work so that they do not end up feeling like a cow, or chump.
    The rat race is born not only by the demand of producers of neccessities to aquire some of the finer things in life it is produced by those who produce the non neccessary but finer things in life trying to stoke the demand of their goods and services so that they can aquire not only the neccesities but the piano lessons and horseback riding lessons and then somewhat later to be able to buy the horse and pay the stable fees and vetrenarian fees that come with the ownership of a horse.
    But should someone try to regulate this madness by say imposing more progessive income taxes they will suffer character assaination and be labled a God damned anti freedom Stalin loving communist.
    This is just one reason why democratic elections based upon the idea of one man one vote will lead to the extinction of humanity. To many people not only do not have the self discipline to restrain their passions they will not vote for someone who will try to prevent them from hurting themselves. But the behavior of such people, which is probably a large majority, imperils ALL OF US.
    A honest debate of what is at stake can not be held with people who can not seperate obvious fact from fiction because they place to much value on who is doing the talking rather than what is being said. People who have achieved positions of power know that thier words even when they are false count for much more than words of truthful wisdom comming from a taxi driver in Perth
    When people are not negotiating in good faith, or they are bullshitting you, they are obviously trying to hide something that they do not want to publically discuss. Under such circumstances it is prefectly reasonable to assume that they have the worst intentions that you can imagine as being the motivation for their behavior. It is also reasonable to take counteraction when you are confronted with such a situation. That is why Iran is fully justified in launching a devastating Rocket attack against Saudi oil fields, Ryhad, and any US military forces in Saudi Arabia, Iraq, Bahrain, and that island in the middle of the Indian Ocean who name I forget at the moment. And to send assassins in to Saudi Arabia to kidnap adult male members of the Saudi Royal Family and give them two weeks of a very special kind of quarantine.

  19. JD – its more the medium to high income earners who cant go without for a month that surprises me, anyone who loses their job can at least get the dole. I only know relatively few such earners personally as I never really moved in those circles. I had the opportunity to do that when I was young but I turned my back on it , that was the first big life choice I made for myself and was perhaps the best thing I ever did. Most of the less financially fortunate people I know don’t have significant debt because no one would lend to them. They have scraped by on and off welfare for most of their lives so they know how to do without -its normal for them. That can take a toll over the long run ,it gets tougher the older you get. Average income earners can get into trouble as they can easily borrow heaps of money.

    I think the conventional wisdom is that too much money printing leads to inflation. Also nations that do it will be swiftly punished by having their currency devalued compared to other nations. The US is the only country that can print money almost without limit as it has the worlds reserve currency.

  20. Amazing people not being able to go without income for a few months?

    You want to see what happens to them if they don’t get a drink of water for a couple of days.

    Ikonoclast, utterly enjoy you when you are in full flight.

  21. Curt – yes I avoided breeding (by choice). My father is from a farming background (German Australian) like the one you describe .Interestingly they traditionally placed no value on education – value was in physical work. Mums dad was a bricklayer (and a Mason). Born middle class in a country town I was the first on either side of my family to go to university.

  22. I honestly don’t understand why this has to be such a big crisis.

    Some economic activities have to keep going, because we still have to eat. Some can keep going anyway (such as knowledge workers working from home). Some have to go into hibernation because social distancing.

    The lost production from people sitting idle at home is of course a dead loss that can’t be recovered, and the community as a whole is the poorer for it. Suppose they represent half the economy (does anyone know the true figure?). If half the economy goes into hibernation for say four months once every 20 years (which might be the return time of a crisis like this), that, on average, represents about one per cent reduction in GDP – a number that should easily be compensated by productivity improvements over time. In principle, what’s the big deal? When the hibernation ends, the factories and machines will still be there, the willing hands and skills will still be there. There doesn’t need to be any longer term effect on productivity.

    The practical problem is how to manage the interface between the continuing economy and the hibernating economy, because the laid-off baristas still have to pay for their groceries. So: government pays the baristas their wage. Government pays the business owner’s rent to the landlord. Government pays the bus company to keep running while there are hardly any passengers. Et cetera. Government steps in at every point needed to keep the cash flowing in all the ways it normally would, replacing the money that final consumers aren’t spending while they’re at home. Government racks up a huge deficit, which the community as a whole will repay through the tax system over the 20 years until next time. What am I missing?

    Yes, that does mean that the government is paying Qantas’s wage bill during the hibernation, and that might disturb those among us who think that the shareholders should bear more of the burden. But if the urgent priority is simply to keep the cash flowing in all the ways it normally would, I think we should leave those distributional issues to another time (such as, when designing the tax system to repay the debt).

  23. “ I think the conventional wisdom is that too much money printing leads to inflation”

    That was one argument used during the gfc, the hardliners wanted to impose severe austerity. Long queues and soup kitchens, to teach them a lesson.

    And then there was the debt n deficit disaster argument, now hidden behind the shed in the backyard.

    We were obviously not printing enough money.

  24. JD – its more the medium to high income earners who cant go without for a month that surprises me, anyone who loses their job can at least get the dole.

    Are you sure they can, and are you sure it’s enough to live on indefinitely for all recipients, regardless of circumstances?

    Most of the less financially fortunate people I know don’t have significant debt because no one would lend to them.

    Have you never heard of ‘predatory lending’, or of ‘loansharking’?

    They have scraped by on and off welfare for most of their lives so they know how to do without -its normal for them.

    That many know how does not make it ‘amazing’ that many do not.

    I think the conventional wisdom is that too much money printing leads to inflation.

    By definition, too much of anything (and also too little of anything) leads to negative consequences: that is what ‘too’ means. However, the knowledge that ‘too much’ money printing leads to inflation does nothing to tell us how much is too much.

  25. >I honestly don’t understand why this has to be such a big crisis.
    >if the urgent priority is simply to keep the cash flowing in all the ways it normally would

    The government has turned the cash tap on for six months. It won’t be enough to stop a lot of businesses from dying, not just hibernating. What’s more there won’t be a vaccine in six months so it won’t be possible to let everyone out of their homes and to reopen all the closed businesses.

    That’s why it’s such a big crisis.

  26. ” What’s more there won’t be a vaccine in six months so it won’t be possible to let everyone out of their homes and to reopen all the closed businesses.”

    I can’t see most either in Australia or abroad tolerating social isolation for more than 3 months.

  27. > I can’t see most either in Australia or abroad tolerating social isolation for more than 3 months

    Neither can I. It’s not today’s problem, but it will be a mega-problem very soon.

  28. For older people the calculus is self-isolate or face a significant chance of dying if COVID-19 is contracted. The range I give below is to allow for hidden cases (asymptomatic / un-diagnosed) possibly being up to 10 times the known cases. There is so much unmeasured and so much we don’t know yet.

    80 plus years about 1.5 % to 15% chance of dying.
    70 to 79 years about 0.8% to 8% chance of dying.
    60 to 69 years about 0.36% to 3.6% chance of dying.

    If you get a confirmed diagnosis (which you would not seek without symptoms) and you have preexisting conditions, you can move yourself to the top of of this range.

    For younger people the calculus is much better. I leave people to research the numbers. Younger people have to ask themselves how much they care about or regard old people. I suspect not much in our culture except for close relatives like grandparents. I don’t feel judgemental about this. I was the same when young. There are also biological and even natural selection reasons for not caring too much about the old especially when there are too many of them, demographically speaking. I can say this being old myself.

    It’s actually absurd to expect the young to love and respect the old when the old do not earn it. For example, if some old people hoard and hog possessions, resources, investment houses and even jobs to pay for those extra indulgent holidays for example and leave the young with high unemployment, student debts and no way to buy a flat or house. Why should the young care greatly about the selfish old in these circumstances?

  29. The problem with your usage of age:survival ratios is that the data is not verified therefore you could be wrong in your assumptions.

    I would say that you are very wrong. You haven’t allowed for the mutation of the virus in such a large pool, should it be allowed to run rampant. I also think you underestimate how young people think of their elders.

  30. As a person in his sixties, I can claim that there is no one more lovable than an older person,

  31. The reason people can’t afford to buy a house is because of the low interest rate caucus – using monetary policy to stabilise the economy, effectively via asset price increases, rather than fiscal policy.

    Of course you might say that choice has turned out OK as there now more scope for public spending on the COVID19 response.

  32. akarog,

    I could indeed be wrong in my assumptions. That’s why I allowed an error margin of a factor of 10.

    I am not saying COVID-19 should be allowed to run rampant. I am saying that the older demographics will be more likely to take self-isolation seriously out of accumulated life-experience and keen self-interest. Younger people (meaning here teenagers and young adults) face less real risk, subjectively feel even less risk than their low objective risk would warrant, have less life-experience and are probably in evo-psych terms behaviorally “weighted” to take more risks at their young, viable and sexually “on the lookout” age bracket. This means that maintaining total societal lock-down and isolation for up to six months or more will be difficult for the whole of society and isolation compartmentalization will leak. Viruses such as COVID-19 do not just exploit our airways and lungs along with our cough and sneeze reflexes. They exploit our sociality and even eusociality.

  33. ” > I can’t see most either in Australia or abroad tolerating social isolation for more than 3 months

    Neither can I. It’s not today’s problem, but it will be a mega-problem very soon. ”

    Troy and Smith – I agree . This situation appears to have a long, long way to run yet , a lot could go wrong in different ways in every country of the world .So many possibilities waiting to interact with each other ,a bevy of black swans is just over the horizon. Wars ,food shortages ,riots, fascism, anarchy, revolution, coups, who knows. God help us if the virus mutates badly.

  34. Ikonclast,
    “For younger people the calculus is much better.”
    I suggest young people be sceptical of such pronouncements, and people of any age be wary of making them.

    Younger people have a lot more to lose than the old- many more years of life of which many more with an expectation of vigour and health.

    A healthy 20 yo who survives with buggered lungs is losing a lot more than some one who dies at 80 or 70 or 60.

    A 20 yo with obesity is at what risk vs a 50 yo without?

  35. “It was gonna happen, it was gonna happen.” – Gimli, Son of Gloin, in the LOTR movie.

    Gimli talking of his fall off a horse. And there we were riding high on the horse of civilization, all full of ourselves, and we fell off. It was going to happen.

    I’m currently watching Zombie Nation on Netflix. It has zombie killing to over-satiety but a lot of clever black humor too. One of the main characters is an anti-hero character called “The Murphy”. I won’t give away the (rambling) plot but he has some great lines. He walks into a big solid building he intends to inhabit. The rooms are empty with random trash about and even the skeleton of a dead person or “mercied” zombie. The Murphy declares, “I like this building. Good bones!”

    The Murphy also utters a line I relate to as perennial pessimist and catastrophist: “So often right. So seldom listened to.”

    My wife pointed out tonight, “You always watched end of the world stuff. Now, it’s really happening.”

    “Yeah, I’m living the dream!” I replied sardonically.

  36. Regarding financing the government deficit.

    “… it’s mostly a debt we collectively owe to ourselves, but those who have bought bonds still need to be repaid by the population as a whole.”

    Repaying people who bought bonds: Depending on the institutional setting, including the notion of money, and other conditions, there are several possibilities.

    Given the current effective notion of money (balance sheet model) together with the business accounting and macro-economic model assumptions, ‘the economy’ has no predefined end. (If the world and therefore ‘the economy’ does turn out to be finite, then it sort of finishes in a catastrophic point with the financial consequences of total bankruptcy).

    Setting all else aside, the ‘current bonds’ (issued to finance the deficit attributed to the Covid-19 pandemic) can be rolled over at the time of their maturity. That is, new bonds are issued to raise the finance to redeem the by then ‘old bonds’. This process can in principle go on forever. Coupon interest payments would have to be met from current revenue in each period.

    The foregoing assumes nothing else happens in the future which requires additional finance. To allow for future ’emergencies’, the notion of borrowing capacity becomes useful. Depending on how the post Covid-19 ‘economy’ develops a soft repayment of principal program could be designed to keep the borrowing capacity at a reasonable level. IMHO, the taxation system would have to be reformed such that the repayment of the principal could be financed by additional tax revenue from sources such that a modest but steady reduction in the income and wealth concentration could be achieved.

  37. sunshine: “I think the conventional wisdom is that too much money printing leads to inflation.”
    Can you please define what you mean by “money printing”? You are aware of course that our currencies (most of them ) are fiat currencies.

  38. John Q, you know the true meaning of cruelty, don’t you?
    I wouldn’t call my worst enemy an Xer. You were born after me, which makes YOU closer to “Xer” than me.
    My brother is nearly an Xer and you would not want me to think of you the way I think of him.

  39. Ernestine Gross,

    I agree but only at a first level of analysis. If we are going to stay in the current political economy framework or paradigm then what you say is realistic and reasonable and would bequite efficacious compared to pre-COVID-19 neoliberalism. However, we should not preclude more radical solutions. Indeed they are mandated by objective, law- bound reality (meaning the so-far discovered laws of the hard sciences). Gradualism and Popperian tinkering of capitalism will not suffice in a watershed existential crisis. The situation requires “heroic measures” to use a medical term.

    The government has already commenced heroic measures by its own ideological standards. These measures are basically socialistic in nature. Much higher welfare with lower work tests. Subsidizing employment albeit via the business circuit by giving a conditional subsidy to businesses to distribute as wages. Free child care. Rent support for the poor and even “rent holidays”. Debt holidays and so on for both persons and businesses. The list goes on. We might note that in the past it was mainly big business which got tax holidays and such-like, even if at times they awarded them to themselves via tax havens. Then there are all the statist government directives and the general move to more of a command economy.

    I’ve already propounded in another post on this blog that if a serious crisis requires socialism for individual and societal survival (empirical evidence to date fully proves this proposition) then a continuous serious crisis requires continuous socialism. Scientific evidence to date (limits to growth , climate change, zoonotic disease emergence, sea level rise, sixth mass extinction, ocean death etc.) proves the case, to all except science deniers and capitalist ideologues, that we are now in a continuous ecological and existential crisis which cannot be solved by capitalism.

    I have been harping on about limits to growth for thirty or forty years, well before I appeared on this blog. I have, more recently, being propounding that capitalism’s prime contradiction (the one which would led it to collapse) was external not internal. That it was capitalism’s contradiction with the limits to growth and the systems of the biosphere (a “metabolic rift with nature” which is actually Marx’s term which has been rehabilitated in the literature) that would lead it to collapse. I had given up on any orthodox Marixist belief that internal contradictions would end capitalism. I even went as far as to say, in recent times but before COVID-19, that what was required was a “salutary demonstration by nature” (my precise words) that would destroy much property and kill many people to essentially prove to people that capitalism was fatally flawed and would lead to civilizational collapse unless we abandoned it and adopted democracy, science and socialism as our guides.

    I was right. I make no bones about this. Completely right and vindicated. More right than even I expected to be in predictive terms. The actual mega black swan did come from a direction I knew of as feasible (having read considerably on zoonotic diseases in the 1990s) but not one I these days had in the forefront of my mind and imminently expected or re-imagined, let alone predicted. Am I cleverer and more prescient than the average person on this blog? NO. I simply read the science and extrapolate on the real trends of real energies, real forces and real quantities, organic and inorganic. I pay far less attention than most people do to received religious, ideological and “common-sense” wisdom of almost every stripe apart for some weakness for Marxian (not Marxist) thinking, MMT and Capitalism as Power (CasP) thinking where they made scientific and ontological sense to me.

    Apart from the above, empiricism and a self-developed “near-empirical” ontology have been my guides. I distrust and often openly dislike all hierarchical and received authority and can and have had very antagonistic relations with same, albeit at the verbal not the physical level. I have a particular and undisguised disdain for orthodox, derivative thinking in any field other than in the hard sciences where scientifically proven facts are involved (proven to 5-sigma or 99.9999994% certainty). Sometimes I have been wrong for sure about specifics but not about the empirical and ontological fundamentals of my theories. I have been proven essentially correct. Do I feel vindicated? Hell yeah. Do I feel conflicted and depressed that the real world proofs are so terrible and that it has come to this because people simply wouldn’t listen to the scientists and complex systems philosophers who predicted all this? Of course I do.

  40. Ikonoclast says @ 1:45 pm
    “I have been harping on about limits to growth for thirty or forty years”.

    It has been suggested that The Tradgedy of the Anticcommons is in part to blame for rhe US’s slow response.

    “The tragedy of the anticommons is a type of coordination breakdown, in which a single resource has numerous rightsholders who prevent others from using it, frustrating what would be a socially desirable outcome. It is a mirror-image of the older concept of tragedy of the commons, in which numerous rights holders’ combined use exceeds the capacity of a resource and depletes or destroys it.[2]

    The “tragedy of the anticommons” covers a range of coordination failures including patent thickets, and submarine patents. Overcoming these breakdowns can be difficult, but there are assorted means, including eminent domain, laches, patent pools, or other licensing organizations.”

  41. The tragedy of the anti-commons is simply the tragedy of private property rights. “Private property rights” equals “anti-commons”.

  42. sunshine: “I think the conventional wisdom is that too much money printing leads to inflation.”
    Can you please define what you mean by “money printing”? You are aware of course that our currencies (most of them ) are fiat currencies.

    What do you think ‘fiat currency’ means? I do not think it means what you think it means.

  43. J-D: Please do tell us what it (fiat currency) actually means (according to you) and what you think that I think it means. After all, until you do that no one will have the faintest idea about what you are trying to tell us.

  44. The “tragedy of the commons” is due entirely to the elected (or not elected) govt creating wealth from the assets of the Sovereign

    That house you are living in, it’s on a block of land that was once crown land, then converted to freehold. We all live in premises developed from commonly held assets.

  45. What I’m trying to say is that it is WE not THEM who are responsible for the “tragedy of the commons”.

  46. Iko – I’ve been thinking about that and I would guess that just about everyone was right – specifically about germs. However for some reason (probably the usual one) almost nothing was done to prepare for it. I’d like to know if one was conducted but I suspect that if people were surveyed and asked ‘ do you think a pandemic will one day occur ?’ and ‘ if so should we be prepared for it ?’ above 80 % would have answered ‘yes’ and ‘yes’. There are a lot of people who are tuned out though, but disaster and apocalyptic fiction is a huge genre. Over 90% of people I know would have said yes and yes ,no doubt.

  47. Wow…There DOES appear to be a Generation Jones.

    I KNEW there should be a specific category for people like my younger bro.

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