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A GROUP OF top economists have proposed a fairly simple way of prodding the stagnating European economy back into healthy growth: Give everyone money.
Simple.
The European Central Bank is currently using quantitative easing. This involves creating cash out of thin air and pumping it into each country’s economy to boost spending.
However, the letter in the Financial Times argues that this might not work.
A group of economists, including Constantin Gurdgiev from Trinity College Dublin, have proposed two other options.
One, is to use the new money created to ‘finance government spending, such as investing in much needed infrastructure projects’.
Two (you’re going to like this one more) is:
Each eurozone citizen could be given €175 per month, for 19 months, which they could use to pay down existing debts or spend as they please.
The economists believed this has a better chance of lighting the fire under the Eurozone economies better than QE, considered an ‘unreliable tool’.
The Australian government tried a similar move in 2009. Citizens were given $900, at a total cost of $42 billion.
What would you spend the money on? A holiday? A new fridge? Save it up, withdraw it in fivers, and roll around in it? Let us know in the comments below.
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Maybe we should listen to them.
I’d spend it on a holiday in Greece.
Well said. QE is in effect another gift to the parasitic financial system whose systemic collapse triggered the ongoing 7 year recession. The financial system enriches a tiny elite while the real economy on which the vast majority of us depend is starved of money under the Austerity program.
As the article outlines, a much more effective stimulus of the real economy would see new money placed directly into the hands of the ordinary citizens to spend locally to stimulate growth and jobs.
However an even better and more sustainable way to create full employment on a permanent basis would be to implement a Job Guarantee. The sovereign state with a floating currency such as the U.S. Japan, Denmark, U.K, New Zealand etc faces no financial constraints in its own currency. The state may face real resource limitations (e.g. energy) but not a financial constraint as it can never be insolvent in its own currency as it issues that currency. Quite simply, they can never run out of their own money. Neither is inflation a concern in the current recession where vast resources (including labour) are lying idle. The only ingredient missing are the keyboard strokes to create the fiat currency to put those resources to productive work and increase the real wealth of goods and services to be shared by us all.
This ability to keyboard money into existence at will should be utilized to implement macro economic policy which benefits the vast majority of the citizens (labour) as opposed to current policy which enriches the minority (capital owners). The primary plank of this policy should be the Job Guarantee (JG) where the state/government acts as the employer of last resort who finance the scheme using their ability to create the domestic currency at will to pay the wages of the JG participants. In a Eurozone context, it would be the ECB who would finance member state spending to implement their national JG schemes.
The JG is a strictly voluntary, transitional employment, available to any and all unemployed, or underemployed, who wish to avail of it. It does not replace existing social welfare provisions but operates alongside them. The JG employment is intended to be transitional, its numbers fluctuating in an automatic counter cyclical fashion so rising during recession and falling as the economy improves. The jobs are transitional to ‘normal’ employment in the private or public sector, and must not compete with ordinary employment. So, the JG jobs need to be exclusively in the Community, Voluntary and Charity sectors and at full time (40) hours or any fraction thereof which the worker chooses. The JG wage must be fixed at the minimum wage which is determined by the lowest acceptable standard of living. This creates an effective wage floor for labour. Capital owners must pay more than JG rates and/or offer better benefits etc to convince people to work for them.
The Government would supplement the JG earnings with a wide range of social wage expenditures, including adequate levels of public education, health, child care etc. The JG would be integrated into a coherent training framework to allow workers (by their own choice) to choose a variety of training paths while still working in the JG. However, if they chose not to undertake further training no pressure would be placed upon them.
The JG also fulfills a critical macro economic function, the maintenance of aggregate demand and spending in the economy. It’s always aggregate demand spending that ultimately creates and maintains jobs. Someone’s spending is always someone else’s job and income as the macro economy is circular. It is the aggregate spending of everyone in the economy, public, private, individuals and businesses that maintains and creates employment. When aggregate demand is either too little (unemployment high), or too much (inflation rising), it is only the government (central bank) that can act counter cyclically to make the appropriate adjustment. The government can remove money from the economy via taxation in order to combat inflation or pump stimulus spending into the system to counteract unemployment. Another key element is that full employment maximizes the production of real wealth (goods & services) to be shared by us all and so drives up living standards for everyone. The jobs benefit the individual and society as a whole.
The critical counter cyclical role of government in maintaining stability in the macro economy was known 80+ years ago but has been discarded under the prevailing neo liberal dogma of the capitalist elite for the past few decades. This has resulted in ever greater wealth accumulating to fewer and fewer people at the expense of the vast majority.
Like Zimbabwe Waddler?
What was the impact in Australia?
Copy and paste. No original thoughts. Same c rap every time
A weakened AUD. Amazingly as the US also engaged in this sophistry it wasn’t highlighted that much. However where AUD felt it was vs CNY. Chinese goods became more expensive.
What if people save it??
Some will. There’s no doubt of that. I cite my own children’s allowance as an example. However there are still two significant problems. Firstly we know that enough people will piss it away even if plenty save it. SS I proved this. Secondly where a majority save it them bumps up the prices of houses and you’ve just given everybody the exact same amount 3325.
It’s a double whammy motherload of a bad idea.
For the record I think QE is a bad idea too and has made growth dependant on free money.
*SSIA proved this.
Thanks for that comment waddler. I suffer terribly from insomnia, but seeing the pages of text you manage to write gets me right off to sle zzzzzzzzzzz
Your getting a red tumb for the length of that comment
Precisely nothing like Zimbabwe Tom.
The hyperventilating neo liberals often point to the hyperinflation horrors of Zimbabwe and Weimar Germany as a warning to those who would even consider “printing money”.
Those hyperinflation episodes were the result of large foreign currency debt obligations and limited productive capacity. Neither of these factors apply to the modern day EU which has the monopoly fiat currency issuer in the ECB and is an economic entity with massive productive capacity lying idle.
There is no simple linear relationship between the money supply and domestic price rises (inflation). The point at which inflation rises depends on the availability of real resources (goods & services) versus the actual demand for purchase.
In other words, the creation of new money is not in itself inflationary if there is sufficient real wealth (goods & services) to buy with that new money. This is especially true if the new money is directed to the productive sectors of the economy for example through infrastructural improvement which leads to GDP growth and so more availability of real resources to purchase.
The modern economy is characterized by an excess of production so there are rarely any shortages of goods & service available for purchase and so significant general inflation is not a concern.
This Waddler guy needs a holiday
Will they give it to the low paid workers ? you don’t often hear , in fact you never hear about them getting anything for free …
Hell with these mooks, Waddler.
Even if it is copy and pasted, so what? Doesn’t make it wrong…
Fair play Daffy.
The knowledge and understanding how money and the macro economy actually operate has been deliberately obscured and subverted for decades which has greatly increased the power of private capital at the expense of the vast majority. It’s important that the general population to become aware of this so the necessary remedial steps can be taken.
Modern fiat currency money is not a scarce resource. It is created at will by the institutions public (central banks) and private (commercial banks) that are authorized to do so. The money has no intrinsic value, is created primarily on computer keyboards and so largely exists as electronic account entries. All financial assets are matched by an equal liability and so cancel each other out and ultimately net to zero. What remains is the real wealth of goods and services primarily produced by the working class through their labour. Financial assets (money) is a claim on that real wealth and therein lies its power.
Government spending creates new money from nothing and puts it into circulation while taxation removes money from circulation and extinguishes it. Taxation is what ‘backs’ the currency. The government imposed tax liability creates a demand for the currency, ensures it is widely accepted and so gives the currency legitimacy. Taxation is also the mechanism by which money can be removed from circulation.
A sovereign currency issuing state like the U.S, U.K. Denmark etc. does not need to raise tax revenue from private sources in order to spend on its social program such as pensions etc. The government/central bank is the monopoly issuer of their own currency and simply keystrokes the necessary money into existence.
Therefore these nations do not need to tax in order to spend in their own currency. The act of government spending is what actually creates the money which is then later removed from the economy via taxation. Such a state could for example implement a large scale social housing construction program to address the homeless crisis which Ireland currently faces. This would involve the government simply crediting the bank accounts of the builders, material providers, etc as necessary to have the homes built with the added benefit of creating desperately needed jobs in the construction sector. This contrary to neo liberal myth is how sovereign governments (e.g. New Zealand) actually spend in their own currency. They face no financial constraints whatsoever in that currency. The state can afford to buy whatever resources are for sale in the domestic currency.
For example, this is how sovereign governments pay the wages of their public sector employees. So the £2000 monthly salary for a nurse in Britain will see her Barclay’s account credited by £2k (broad money) and Barclay’s reserve account (base money) at the Bank of England increased by £2k, all done by simply pressing the necessary computer keys.
The state may face real resource limitations e.g. energy or skills shortages but not a financial constraint as it can never be insolvent in its own currency as it issues that currency. However if a state, promises to convert its currency to something else e.g. another currency or gold as a fixed rate, then it faces constraints in that other currency or commodity.
So nations which maintain a peg with the dollar for example must earn (through exports usually) or borrow reserves of dollars in order to maintain the peg. Greece and Ireland are effectively users of a foreign currency, the Euro and so are even further constrained. This is a deliberate design feature of the Euro which confers enormous power to the unelected and ultra capitalist institutions of the currency union such as the ECB who now hold the purse strings rather than the elected governments of the member nations.
The macro economy of nations and the globe is fundamentally different to the micro economics of business and households (private sector) who are users of the currency but not the issuer. A sovereign currency issuing government can afford to buy whatever resources are available for purchase in its own currency (including the labour of the unemployed) as they can never run out of keystrokes and so a budget deficit should not be considered a problem once this understood. The U.K. can sustain any size of budget deficit or national debt once it is denominated in sterling as the debt and interest is serviced via simple keystrokes at the central bank. That is why the enormous £850 billion bank bailout in the U.K. did not bankrupt the nation as it did in Ireland’s case.
Therefore the budget deficit (or surplus) should always be allowed to float to whatever level is required to support full employment to maximize productive output while maintaining price stability. As the economy approaches maximum productive capacity with full employment, the state can then remove money from the system via taxation and reduce government spending to counteract inflationary pressures.
Neither do sovereign states need to borrow from anywhere in order to finance a budget deficit. When those states do choose to issue government bonds the primary objective is to implement monetary policy (usually to drive their chosen base interest rate to target) not as a necessity to raise revenue. The primary mechanism is that the government will issue new bonds/bills/treasuries which pay a higher interest than the central bank reserves which the commercial banks hold and sells them in return for any excess reserves the private banks may have. In the reverse transaction, the central banks ‘buys’ back the government bonds in return for reserves in an effective asset swap with the commercial banks when they need to increase their reserve supply. The primary function of these transactions is to drive the base interest rate to the desired target. The central bank selling bonds drains reserves and so increases the interest rate on reserves while buying bonds injects reserves and so lowers the rate.
The central bank reserves and bonds/bills/treasuries are created electronically at will by the central bank/treasury as necessary to maintain liquidity and the desired overnight interest rate in the interbank reserves market. In this way a sovereign country can never really default on its own currency denominated debts unless it chooses to as the central bank can always ‘buy’ back the debt with newly created central bank reserves which every commercial bank requires to function. In addition, when those countries do ‘borrow’ in the market, it is clear that they effectively decide what the yield/interest will be unlike the Eurozone nations subject to profiteering by bond speculators.
So since the gold standard was discarded in 1971 and the introduction of the fiat floating currencies there is no need whatsoever for a currency issuing government/central bank like Australia or Japan to ‘borrow’ at all in its own currency to raise revenue. They can and do simply keystroke the currency into existence at will. This is why sovereign currency issuing governments actually control bond interest rates regardless of the state of their economies. The government ‘debt’ market is in reality a risk-free, interest bearing deposit facility for the large financial institutions and ultra-wealthy.
Continuing this neo liberal agenda, the Eurozone was deliberately designed to allow private banks (markets) to profit to an even greater extent from member state debt. It’s only the Eurozone countries that are required to borrow their own currency in the market at an interest rate determined by the market as the EU allows the financial markets to set the borrowing rate for Euro countries on an individual basis with the ECB is the sole issuer of the currency and the nations prohibited from creating the currency themselves.
There can never be a shortage of money at a macro level so it’s clear that austerity and deprivation is a policy choice at national government and EU level. There are no shortages of any of the real resources (e.g. energy, food, material to build housing etc.) to eliminate poverty across the EU. The authorities pretend that there is lack of money to address the poverty of the citizens when in fact there can never be a shortage of a fiat currency like the Euro.
Neither is inflation a concern in the current recession where vast resources (including labour) are lying idle. As ain my comment above, there is no simple linear relationship between money supply and inflation despite what the establishment vested interests would have us believe. The point at which inflation rises depends on the availability of real resources (goods & services) versus the actual demand for purchase.
So the creation of new money is not in itself inflationary if there is sufficient real wealth (goods & services) to buy with that new money. This is especially true if the new money is directed to the productive sectors of the economy for example through infrastructural improvement which leads to GDP growth and so more availability of real resources to purchase. Another key factor which prevents inflation is large scale unemployment where the productive capacity of the economy is not close to its peak. In this scenario which we currently face in Ireland and across Europe, the labour of the unemployed can be purchased with newly created money with no risk of general inflation. In fact the Eurozone is now facing deflation due to the fall in aggregate demand through 6 years of austerity. The enforced shortage of fiat money which are in reality just keystrokes at ECB level is a political choice, not an economic necessity.
This is so because the capitalist class benefit disproportionately in both the boom and bust phases of the inherently unstable capitalist economic cycle always at the expense of labour (vast majority). Therefore that elite and their political enablers continually promote policy and measures to inflate the booms and deepen the busts at the expense of the many.
So the booms are fueled by massive credit expansion through the commercial banks as we saw during the Irish property bubble. This drives up asset prices and profit margins for the plutonomy at a much faster rate than any wage increases. The capital owning classes have always known when to get out of the losing plays in time while a complicit media will continue to cheerlead the booms to manipulate the masses until the inevitable crash occurs. (This will sound very familiar to Irish ears).
In the reverse, the supply of money is restricted to deepen and prolong the bust. As we can see under the Austerity program, the ongoing recession and consequent unemployment is being used as a lever to viciously drive down wages and working conditions which also maximizes the gains to capital. In parallel, the national assets (like water) and social support systems (like health) are shredded and opened up for predatory fire sale purchases and privatization which enriches Denis O Brien and his ilk.
Economic stability is relatively unprofitable for capital but the vast majority of us are far better served by a stable system with modest economic growth ultimately limited by environmental, resource, population factors etc.
Under the QE program of the past few years, the ECB has created €1.4 trillion in reserves by pressing keys on its shiny computer in Frankfurt and made it available at extremely low interest rates to the parasite banks whose greed and stupidity triggered the economic crisis in the first place. So there are plenty of keystrokes available to shore up the parasitic financial system but not enough keystrokes to make sure Greek or Irish people don’t go to bed cold and hungry, that is if they have a bed.
I’d spend my €175 on a hand guillotine for Waddler…
Waddler
I’m sure it’s been said before but if you were a bit less long winded people would pay more attention to what you write, I agree with you but I still got bored about 10 lines into your comment!!
AAA/ Waddler Mooney
AAA have shown there true colours, there will be no more dialogue from me from now on, and I don’t think I’m on my own.
Thomas,
The comment is about as short as it can be while still debunking 40 years of neo liberal propaganda, explaining in rough outline how the fiat money and monetary systems actually operate and the political purpose in obscuring that knowledge from the general population.
It’s not really intended to be entertaining.
TL;DR
@waddler “A sovereign currency issuing state like the U.K, U.S…” I thought the Federal Reserve issued the currency in the U.S and they’re a private Corporation?
Also this nonsense that money has no ‘intrinsic value’ because its a Fiat currency doesn’t make sense. If I can purchase food, clothing or other goods using Euros, Dollars, Pesos or whatever then clearly this mantra about Fiat currency having no value is incorrect, otherwise why would anyone wish to win the Euro millions or he wealthy?
I will pay half…you deserve it..the rest I will ‘drink’…hoping to induce a memory loss…some comments are just too much
The Federal Reserve is the central bank of the U.S., it’s not a private corporation.
Fiat money has no intrinsic value meaning that the money in and of itself is not valuable. Most modern money takes the form of electronic accounting entries which are utterly valueless in themselves. They’re just digits on a computer screen or largely worthless paper and coins in the case of physical currency
The power of the money derives from the fact that it is represents a claim on the real wealth e.g. food, clothes, houses, cars etc produced through the labour of society. That’s why people want to win the Euro millions.
What I’ve tried to explain above is that sovereign nations create their own money at will, they can never run out of their own currency and can therefore buy whatever real wealth (goods & services) that are available for purchase within the domestic currency.
Commercial banks also create new money every time they issue a loan and this mechanism in fact accounts for most of the new money created in the global economy today.
It’s like verbal diarrhoea from someone who read a Socialist Worker pamphlet and didn’t have the critical faculties to know it was shit.
Let me take one of Waddler ‘ point. “You don’t need to borrow money…etc” If you keep printing money you devalue your currency. If your foreign debt is denominated in the lender’s currency you must pay them back in that currency and nor will your monopoly money. If you repay win USD and you print and extra 1 billion drachma just to pay it off, you’ve then just devalued your entire currency and economy by 1 billion usd. Now 1 bn doesn’t go far these days so how long will it take for your currency to collapse? Knowing that you are printing money like toy money who would then leave their savings in that currency? Congrats you’ve bankrupted your country in weeks if not days.
@waddler you’ve not addressed the fundamental point. Fiat currency has value. If you take a stone and you know with confidence you can walk into any shop in the country and give that stone to any shop keeper and in exchange get a loaf of bread, then the stone has value. OK it’s not gold, but it has value. This strange utopian idea that we should all be carrying around drawstring bags of gold coins is nonsensical. A currency’s true value is whatever you can get in Exchange for it.
@ Cheif. Etc I wonder if waddlers red thumbs are because he is wrong or long winded, or copy and pasted. I understand about 10% but it interesting “giving everyone” money seems like a win win for all from the bottom to the top.
So if money can be “printed” by the government why can’t they use some of it to fix all the potholes around the country, even, instead of giving it to the pesants!
Easy Waddi boy. 62 cups of coffee and I still can’t keep my eyes o
Tom,
You’re an economic illiterate.Every sovereign currency issuing state in the world creates new currency every time they spend, for example in paying the wages of their public sector employees. The money is subsequently removed from the economy through taxation.
The U.S, has no need to borrow dollars from anywhere, ditto for the U.K. and sterling, Denmark and the Krone etc etc etc.
It’s only the Eurozone countries that are required to borrow their own currency in the market at an interest rate determined by the market as the EU allows the financial markets to set the borrowing rate for Euro countries on an individual basis with the ECB is the sole issuer of the currency and the nations prohibited from creating the currency themselves. The Euro was a deliberately designed monetary trap.
Neither is there any direct relationship between monetary expansion and foreign exchange devaluation. The U.S has implemented a much larger QE program than the EU and has added $3.5 trillion to its balance sheet since 2009.
http://www.bloombergview.com/quicktake/federal-reserve-quantitative-easing-tape
Despite this massive dollar expansion, the dollar gains in value against the Euro whose latest QE program has only just added €60 billion to the ECB balance sheet in the first installment.There are no models which can accurately predict Fx movements such is the number and complexity of variables involved.
Now, I’m off out for a scoop. Go and inform yourself instead of peddling the old self serving neo liberal dogma.
You should start here:
https://modernmoney.wordpress.com/index/
Cool story bro
Thanks wads, my doctor has just diagnosed me with narcolepzzzzzz
Good idea, but only give it to PAYE contributors or the self employed. Anyone on SW should see it directed to their mortgage/rent.
Lonehurler that’s crap it’s not just sw people in trouble paying rent and mortgages, it that’s the case do it with everyone, the whole idea is to stimulate all business,
Why should paye workers or the self employed necessarily get off the hook here? Hasn’t the banking crisis shown us that a steady job is no protection from bad debts and careless spending?
@Mick… a sizable portion of SW recipients have never worked and with no reason as to why – so, why reward these non-productive citizens?
If the €175 per month stimulates the economy, then those that want to work will find employment easily and partake in the monthly windfall at a later stage.
If you are going to tell people how to spend it then it has to be the same for everyone,
@Thelonehurler. Can you be more specific about the sizeable portion of SW recipients who have never worked? What is the exact percentage? Would that also include pensioners, carers, recipients of family income supplement, child benefit …?
LoneHunter, could you give us the stats about that sizable portion? A source would be nice too.
On Germany you could pay you’re rent with 175 euro. In Ireland you could have a good night out for two.
During “full employment” in 2005-2007 we had 4.6% on the long term live register.
@ Lonehurler. That figure accounts for everyone on the live register. There is undoubtedly a cohort of scroungers who would never dream of doing a day’s work. I know one or two and it makes my blood boil. However, to damn everyone on SW, or even the majority is just wrong. Our current system penalises people for working and has created a situation where a person esp someone with a family has to earn a substantial amount before they come out with more than the SW payments. the answer, imho, is not necessarily to reduce benefits, but to give something back to workers. As a worker you’re in a one-way relationship with the state. It’s all take. Work, but can’t afford a private pension the f#’k off, you’ll have to starve or risk hypothermia. Can’t afford private health insurance, then take out a second mortgage if you get sick. Ditto if your children want 3rd level education. Professional dolites can sit on their butts and rest assured that they will get fuel allowances, medical cards, uniform grants etc. However, those people make up a tiny percentage of the population and the majority of those on the live register would love the opportunity to get off it
And what about the people who are not able to work due to ill health?
If you’re going to make an argument about a wide swathe of society, at least back it up with some stats. My parents worked hard everyday of their lives until my father became chronically ill, had to stop working and my mother had to start caring for him. Would you like to penalise them?
There’s a danger that we as a country start tarring all in receipt of social welfare with a brush of illegitimacy, even if the recipients are in their situation through unfortunate, life-changinf circumstances and would rather, in an ideal world, be working.
The welfare class would spend it on hash or Dutch gold or both.
How many if those were mothers who left low paying jobs as it would be financially beneficial to stay at home?
I agree 100%
“Number 2, pick number 2!!!”
I think its much wiser to give it to us directly. Have you seen what our fools of politicians have done with our money lately!!!
I know I’ve never spent a penny badly. Everyone of the 12 pints i had last night was a wise investment.
Still better than what those clowns might use it for! Timmy dooley might use it for a manicure, or something….
“Can I have a €175 quick pick for the lotto on Saturday please”
Better than €175 on a bag of powder I guess.
I knew i didn’t spend that much on those pints last night
Brilliant idea, if only to help the struggling local economy, especially in rural towns. But it’s too sensible to ever happen in this country. We prefer to hamper local businesses while facilitating big corporations
Or just don’t take 175 a month off us in taxes…
Or better still put it straight into A&E depts, hospitals and community beds for the elderly.
@Richard, I’d prefer pints. The car is due a service as well.
“You can have the €177, or what’s in the box..
The box!The box!”
I suggested this in the following letter published in the Irish Times on 16th March:
The ECB’s commencement of quantitative easing will result in it spending over a trillion euro acquiring financial assets held by institutions at the rate of 60 billion euro a month until late 2016. This carries huge risk as most euro economies lack the growth and confidence needed to pull this funding from the newly cash-rich institutions into the marketplace. The danger is that the ECB’s initiative will merely inflate asset values mainly to the benefit of the already wealthy.
Surely, it would be much more effective for the ECB to simply gift €3,200 directly to every euro zone citizen over the coming months. We could be much more confident that this windfall would be spent quickly and directly spur much needed growth and inflation.
We need inflation like a hole in the head… wages never rise with the rate of inflation. Much better have deflation and people fighting tooth and nail to hold their wage levels.
The only beneficiaries of inflation are those in negative equity or ones in serious debt.
Tend to agree with you about inflation but deflation is even worse. An inflation rate of about 1-2% seems to be the “ideal”.
I wouldn’t mind inflation eating away at some of my mortgage debt…
2 sides to inflation – it’s good for those with loans, not so good for those on a fixed income.
I would spend it on Bills.
Nice idea however i think the governments should take a wage cut huge wage cut and expenses cuts aswell. But here is one for you EU irish government. I cant be bought and i hate EU and Irish government.
Where you off to Karen?
Emm and how did it work out for the Australians out of interest?. Story kind of stopped dead there…
Yeah, I’d love to know how that worked out!
Everyone went on a cheap holiday to Bali and spent the money in Indonesia!
Australia also introduced a $15,000 grant to first home buyers. What happened? You guessed it – price of every house went up by about 15 grand overnight!
Stupid policy.
Great idea… As long as it’s not hoovered up your nose, paying for a hooker or paying back some back street loan shark or anything else that won’t see it go directly into the economy. ECB would never go for it anyway…they wouldn’t trust the people of Europe with it.
And with good reason – perhaps they should direct it towards tax relief for workers instead?
What’s it work out at after tax…..
Why stop at 175….why not give everybody 20k per month paid for by QE? That this appeared in the FT as opposed to the Guardian of the Economist makes me think they printed it as a joke.
Upside is happy citizens that stop hating Europe, makes 100 per cent sense tom can’t see why anyone would have an issue with it unless you prefer the finance to go to the financial sector. If we are printing money give it the people who will spend it locally as opposed to got the country in a mess through reckless lending/gambling
Yeah it’s fantastic in the short term, hence my sarcasm.
When inflation kicks in, food prices rocket, and people realise the money was a sop and can’t go on forever, then it will get ugly.
This is Bertienomics. More precisely this is stage 1 of Bertienomics – give the ignorant masses money that will cost them in the medium and long term. Keep them quiet in the short term.
Yes great idea, use it to pay down debt or actively encourage people to spend it in their local community to support local businesses.
“The Australian government tried a similar move in 2009. Citizens were given $900, at a total cost of $42 billion.”
Not citizens, tax paying residents. I’m an Australian citizen and they didn’t send any money to me. Lots of non-citizens who pay tax in Australia did receive it. It had nothing to do with citizenship.
Cue the new oxygen tax, early estimates puy it around €175 per person per month
Throw it on the pile, I guess.
If Kenny Burton Kelly Noonan Howlin thought there was any chance that every Irish person would get €175 a month too spend they would divert it into either their pockets in the form of a pay rise or into Irish Water were they are funnelling taxes galore into this quango to ineptitude
QE – a code word for money printing. More Keynesian communist economic strategies.
Wine, women and song?!? That’s what we used to like in the old days.
It’d go on bills
Why not just give the money to the people starving in Africa, we have enough.
Solar panels for my house. Thank you very much.
Its a more direct way then giving it to banks and hoping some of their crumbs may fall our way. It’s our money after all.
If you disagree with QE, then you’ll disagree with this.
Or we could do a proper stimulus package targeted at long term things that will have a multiplier effect…no no ‘sure where would we get the money for that’ is the question that always draws out, funny how nobody let that question get in the way when we needed trillions in bailouts for the banks or to just conjure 2T out of thin air for the financial sector to literally gamble with.
Lonehurler, you do know the majority of the SW bill is state pension about 70% I think, so are you saying they should be excluded, after all, they are not PAYE contributors at the moment?
As Daffy Duck would say, Bills?
It simply proves capitalism does not work. The capitalist system creates a huge divide in society which is reflected in our own welfare system. People say it is not worth their while working as benefits are marginally better. The brains of the world need a better system of distributing wealth and encouraging people. It should start with education and the better people do in school the more they should be rewarded. If parents were paid to keep their kids in school and paid by proformances every year in school it might help.
Kids
Wine, women and song ?!? That’s what we used to like in the old days, and it would cheer us up. :-D
I thought everything in the old days was oppressive Sheik?
That’s the second time you’ve posted that comment – I’m still trying to remember when “the old days” consisted of only straight men and gay women!!!!!!
All money is created out of thin air, so why not go further and give every body – say £500 per week.
Except elite decree the money they create out of thin air is legal and no one else can create it .
Bt its just paper after all.
Cut out all social welfare dept- reduce Gov spending.
Then watch the economy grow.
But to the elite money is the control mechanism for auto genocide- as they believe the rest of us as useless eaters.
Dr Wrennell devised such a plan some years back.
http://stoptherecession.weebly.com/
1. Stimulate socially responsible economic growth.
2. Enhance the quality of life of all citizens.
3. Eliminate all involuntary unemployment.
4. Eliminate all involuntary economic hardship.
5. Stimulate opportunities for work that is economically, psychologically and socially rewarding.
6. Eliminate wasteful and destructive forms of public expenditure.
7. Address the fiscal crisis of the state.
Gotta ask…but WTF?
This reads like the economics equivalent of homeopathy.
I’m putting it into property, what could possibly go wrong
Pay esb bill and water bill xxxxxxxx
€271.56 more per week (43.24%) higher pay, is already paid to the Irish Public Sector by Minister Noonan from your taxes …… did it work ……… yes of course for the Public Service Workers. No austerity there. Who is buying 151s?
——————————
CSO Irish figures for average public and private sector pay April 2014.
€899.57 average Public Sector weekly pay.
€628.01 average Private Sector weekly pay.
€271.56 more per week or 43.24% difference higher pay for Public Sector.
All Political Parties will just Max Your Tax to support this sheltered club.
—————————-
CSO UK figures for average public and private sector pay – 2013.
€565 : UK average private sector weekly pay.
€581 : UK average public sector weekly pay.
Difference : 3%.
You occasionally spout this rubbish under various different names. Please compare like with like here. If you exclude service jobs ( cashiers, wait staff etc) and compare similar jobs, you get an entirely different figure. Having said that, it’s easy to fall for a divide and conquer strategy, something that many seem to do.
@GeorgeS. Please send your complaint to the CSO (Central Statistics Office) information@cso.ie.
Your Taoiseach Enda Kenney appointed a special Minister Brendan Howlin to fix this problem. Croke Park and Haddington Road agreements tried to resolve it. He reduced the differential from 49% to 43%.
What about converting the €175 into vouchers to pay for essentials like food, no alcohol or cigarettes? Money spent in the local economy giving it a boost?
My brain hurts at the idea. The price of low end goods like cigarettes would sky rocket. Ideally everybody should spend it on education so that the long term benefits continue but we all know that won’t happen.
It would cause further euro weaknesses which would wipe out any real gains vis a vis imported goods.
This is the motherload of dumb ideas.
Why/how would the price of cigarettes rise? Would there somehow cigarette shortages?
I have complete confidence in the efficient cigarette manufacturers – they wouldn’t miss the chance of selling a few extra cancer sticks.
My reply didn’t post. The history of social welfare is that it gets spent differently by different groups. I spend my children’s allowance on nothing…well it goes into an education fund and to be honest I simply view it as a tax rebate. But others spend it on smokes and booze…remember the furore about the children’s allowance specials in the off licence?
If you give people free money, enough of them spend it foolishly. This is too short for a full explanation but supply and demand, unintended consequences and effective incidence of a measure should be the research topics for the weekend. Now get ye to a library.
I very relieved to see the rec thumbs, it gives me great confidence that I am right.
So maybe government should take more money off us – as we’re not wise enough to spend it?
You’re implying that only poor people would spend their money foolishly – 175€ is not much to the wealthy. Are the rich still allowed foolishly spend their money on BMWs and cigars?
Human beings have free will under the Law of the Universe.
But its not free money, is it.?
Your child’s birth/berth cert bond is what creates the money- as the birth bond is traded daily on the stock exchange and every birth creates money out of thin air based on the amout the state calculates that slave will pay in tax up to their retirement age.
Not implying that at all. The significant word you use is “only”.
The rich should not be given free money either.
Indeed many poor people will spend it wisely on education. But if you want to support education, then support education.
As regards spending money….yes we should be allowed to hold onto and spend as much of our OWN money as possible. Put it this way, a student paying tax on their part time salary is giving me money in the form of children’s allowance. Will I spend it wisely? Yes. Is it their job to finance the raising on my child? No. Would I be an eejit if I didn’t take free money? Absolutely. Is it good for society? No.
Catherine :- wtf are you on about?
Would that not have the same effect as Q.E. by creating INFLATION?
Excellent point. It would probably have very similar bad long term effects as QE. However if you physically give people money, you score political points. That makes it sexy.
As I stated, Bertienomics!
Exactly – that’s what we need – some inflation. Deflation is terrible for economies – check out the USA – great depression – 1929,, Weimar germany – 1930s, UK in the early 1920s.
In inflation bills go up before wages? But there are 440,000 here getting a dole payment?
I remember when I lived in Australia the govt gave everyone a once off sum to stimulate the economy. It was in 2009 and I think it was around $900 dollars, given to anyone who contributed tax the previous year! It was great to have “free money” especially if you live on a budget where every penny is accounted for
Only proposed and thought out from the buyers perspective…. Would a seller be willing to accept Euros if he knew ppl were getting free cash and looking at (hyper)inflation…. ?
Fast track back to Barter I’m afraid…!
Spending it on capital programmes seems to make the most sense, proven in the past as well,eg the New Deal in the the US. QE has done nothing there and else where except further enrich the already ridiculously wealthy few.
have your say