Thread by @doctorow

Biden rightfully calls the $2.2t stimulus package a "once-in-a-generation investment in America," but as @AOC points out, it's not nearly enough - the $40b for housing nationwide would barely cover the bill for NYC alone.

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The country and the Democrats can't afford to smallball this one. The REAL debts we've racked up - infrastructure, health, education and climate - matter far, far more than the "national debt" that goldbug bedwetters never stfu about.

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As @StephanieKelton writes in the @nytimes, the US can't run out of US dollars; debts do not constrain federal spending. Instead, the US government is constrained by resources: available workers, idle factories, raw materials.

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The USG can make as many dollars as it needs by typing zeroes into a spreadsheet, but it conjuring more laborers and productive apparatus is far more difficult. Inflation isn't the result of too many dollars, it's the result of too few things you can buy with those dollars.

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That's why an anti-inflationary spending program isn't about constraining spending, it's about increasing the pool of things governments can buy. Right now, we have lots of un- and under-employed people who need good jobs doing necessary care, climate and infrastructure work.

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But the $10t worth of spending America needs to attain resiliency for the coming century of climate emergencies will put every American who wants a job to work for as many years as they are willing to work and still not fill the gap.

locusmag.com/2020/07/cory-d…

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Of course, there's a simple solution to this: reform immigration policy to welcome the millions of people who are literally dying to come here, trained and untrained alike (worker training is another job that needs doing).

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Type zeroes into a Treasury spreadsheet so we can pay them a socially inclusive wage with decent benefits. Put them to work alongside the people who are already here, building the country's productive capacity so that we can make more things that are for sale in dollars.

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As Kelton explains: procurement rules that give preference to onshore goods and taxes that discourage offshoring are both anti-inflationary measures, because they increase the pool of goods for sale in US dollars, meaning more dollars can be safely spent.

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But creating domestic capacity is a long-game and we need to spend a lot of money RIGHT NOW, which is why Kelton argues AGAINST Biden's "Buy American" rules: "There will be no lack of eager foreign producers if we need to relieve some demand pressure on the domestic front."

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The right way to address America's massive real-world debts isn't to choose an arbitrary dollar figure and decide which debts we'll service - it's to decide what we want America to be and then figure out how we'll resource that vision.

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Or as @sensanders puts it: "You don’t start off by coming up with a sum and working down. You start out by looking at the needs that need to be addressed and adding them up."

This #ModernMonetaryTheory framework is gaining currency today, but it's hardly new.

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It's been a current in economic thought for a long time. Back in 1945, New York Federal Reserve Chairman Beardsley Ruml gave a speech to the American Bar Association called "Taxes for Revenue Are Obsolete," explaining how America financed the war.

modernmoneynetwork.org/sites/default/…

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He explained America didn't depend on taxes or war bonds to pay for the war effort - rather, these were a way to sequester the new money being spent into existence to pay for the war effort, so that those wages didn't compete with government spending for rubber, metal, etc.

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The US government could make all the dollars it wanted, but it couldn't conjure up rubber or steel. That was constrained, and to dampen private sector demand, the USG clawed back some of the war-wages (taxes) and encouraged voluntary deferred spending (bonds).

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Biden touts his $2.2t proposal as "fiscally responsible" because of its "payfors" - tax increases to match new spending with new taxing. Taxing is anti-inflationary (because it reduces private-sector spending power, leaving more goods on the market for the public sector).

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We should tax the super-rich...but not to fight inflation. As multiple tax giveaways to the wealthy had demonstrated, giving rich people more money doesn't translate into the hoped-for stimulus that would come from new private-sector spending.

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By definition, the rich have their material needs met. Even if they rush out and buy show-horses, ostrich-leather jackets, or super-yachts, these only absorb a minute fraction of their windfalls - the rest get pumped into assets, creating asset bubbles.

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Trump's 2017 tax cuts and 2020 covid stimulus pumped trillions into the economy, but almost all of it went to the rich, who used it to play the financial casino, not to buy the labor of un- and underemployed people, nor the things they could make with that labor.

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These trillions didn't create GENERAL inflation, but in certain asset classes (some socially useless ones like NFTs, stonks and exotic derivatives) we saw runaway inflation. Unfortunately, some of these asset bubbles intersected with basic human needs, like housing.

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All that to say that stimulus "payfors" that only hit those making more than $400k will only be weakly anti-inflationary. Those people don't buy real goods with their money, so taking it away won't do much to reduce demand for real goods.

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Which is not to say that we shouldn't tax the rich. We totally should. Wealth concentration is hugely corrosive, an endless perverter of public policy, a cancer within democracy that subordinates the public good to the endless pampering of a minuscule elite. Tax 'em!

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That's why we should all be VERY excited about @SecYellen's announcement that America is getting out of the corporate tax-break game. If she pulls this off, it's the beginning of the end for financialization itself.

https://twitter.com/SecYellen/status/1379842654398218243

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But if we're going to spend $2.2t - or better yet, $10t on stimulus - we can't prevent inflation by taxing the rich. We need to do it with a combination of increasing the pool of goods and labor for sale in US Dollars, and by decreasing private sector demand.

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That might mean more tax, but it could also take other forms - such as the #LibrarySocialism vision of circulating abundance.

memex.craphound.com/2019/11/25/lib…

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Whereby you are freed from the idiocy of owning a terrible drill that you use once a year, and instead get an absolutely AMAZING drill, on demand, that your neighbors also get to use.

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This is a uniquely 21st century way of thinking about material luxury: solving the coordination costs of public ownership of certain goods using networked technology; it's the inverse of the "Great Reset" where you rent everything and own nothing.

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Rather, it's a world where you get much, much more for less - and where they things you have are under your democratic control, rather than that of a remote corporate landlord.

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There are many ways to reduce private sector demand while making things BETTER for everyday people. A future where we pay off our (real, non-financial) debts is a future where we are safer, healthier, happier, and wealthier in real, material terms.

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If you'd like an unrolled version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

pluralistic.net/2021/04/08/how…

eof/