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Comment by afarrell | Hacker News Reader

Agreed. The problem is that the Fed only has the power to inject dollars at the top of the economy, yet sales taxes and the IRS drain dollars from a broad base of the economy.

I think an MMO designer would suggest two options:

A. Nerf the Fed, which would have the problems you note.

B. A balancing mechanic -- Some more universally-accessable way to inject income at the base of the economy.

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B. I've been contemplating a mechanism based on mandatory minimum paid vacation days per year - fed provides free access to the money, corps borrow it or whatever to earn some interest -- but corps must pay employees a minimum days off per year (a large amount -- like 1-2 months per year)

The value of currency and debt has diverged too far from quality of life concerns -- days off seem a direct way to inject quality of life capital into the system and, I think, could prove an investment able to unearth very new and effective social transformation capabilities ... as well as a new shared basis from which to renegotiate and rebalance our social contracts.

> B. A balancing mechanic -- Some more universally-accessable way to inject income at the base of the economy.

Something like, for example, giving $1000 to every adult?

This is risky, because if the fed accidentally injects too much money by buying back too many bonds, they can always un-inject it by selling the bonds back (and banks are compelled to buy). This lets the fed be more aggressive because it knows that if it goes too far and starts seeing more inflation than it intended, it can always walk back its decision. But there's no realistic way to do that after having given $1000 to every adult.

Taxes?

The Fed can't make taxes. Congress makes taxes, but Congress is subject to popular approval, and the population don't like tax hikes.

The Fed also can't give $1000 to everyone.

Changes in tax rates require Congress to act. Too slow moving to be a money supply control.

Possibly, though printing off $40,000 for every tax payer then cutting them a few thousand is probably not going to be the best approach.

https://fred.stlouisfed.org/series/M1REAL

Where did you get $40,000 from?

5.3 Trillion in stimulus divided by 150 million people who pay income tax in the US is actually $35.3k USD. The final stimulus toll may be higher and taxes come from a variety of places so that may be high for the final burden per person, but I think it will be close by the time all is said and done.

The stimulus checks, unemployment benefits, at least 85% of PPP money, and education funding all solely benefit regular taxpayers. Large corporations got the equivalent to subsidized loans. Let's say that random pork projects benefit both groups equally. I don't see how regular taxpayers are losing out here.

> The problem is that the Fed only has the power to inject dollars at the top of the economy

No, that's not the problem.

The problem is Congress [0] has been asleep at the switch on fiscal policy since the administration of George W. Bush.

[0] in the sense of “the body that legislates, including the effect of the President acting in his legislative role”.

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