Thread by @DeficitOwls

Here's one way to help "pay for" a Green New Deal that hasn't been getting enough discussion:

A mass saving campaign.

(Thread)

First, what does "paying for" a GND mean exactly? Let's get one thing straight: the US government does not need your money. If you've ever looked at whose signatures are on the Federal Reserve Notes in your wallet, then you understand that the US gov cannot run out of US$. (2/)

The gov cannot run out of money, but the gov CAN run out of stuff to buy with its money: goods and services. And that's how you get inflation. When everybody is trying to buy more goods/services than the economy can produce, that just drives up prices. (3/)

The reason the government taxes isn't because the gov needs your money, they just need you not to have it: if you have less money/income, then you'll probably buy fewer goods and services, which frees those things up to be purchased by the gov without prices getting bid up. (4/)

But see, the gov doesn't actually need you to not *have* the money. It just needs you to not **spend** the money. If you *save* the money, that's just fine too. If you're saving, then you're not buying goods, which means the gov can buy them without driving up prices. (5/)

This always happens during major wars. Incomes rise due to increased war production, but governments exhort people to save the new income, and whatever else they can save, instead of spend it. Sometimes this is done by law - compulsory saving. But it can be voluntary too. (6/)

If it turns out that the Green New Deal proposals will boost demand for goods and services beyond what the economy can handle, potentially causing inflation, then one tool we should consider for dealing with that is to launch a voluntary mass saving campaign. (7/)

A mass voluntary saving campaign would have many advantages. Some people would accumulate real savings for the first time. People could use their newly growing savings to pay down debts, a big deal given the very large amount of private debt we still have. (8/)

After the emergency, when people start spending their savings, that would help buoy the economy too. (The pent-up WW2 savings are a big part of what created the middle class in the post-war high.) (9/)

A mass saving campaign can also help rebuild a sense of community and trust. Every person who saves even $1 that they hadn't been planning to save could feel like they're contributing to the national effort. And if people keep their savings in the form of government bonds (10/)

then more people would come to feel like they have a personal stake in the success of the federal government.

I don't want to give the impression that a saving campaign isn't a sacrifice. We'd be forgoing goods and services so that the government could have them. (11/)

That's sacrifice. But incomes will be higher, and if it truly is an emergency then any real resources we can spare will have to go toward the emergency. And would you rather your money accumulate in the meanwhile, or be taxed away to fight inflation?

Let's talk about it. (Fine)