[aleph_naught]

Up until the 80's wages and productivity moved in lock step, and since then wages have flatlined due to a various factors (weakening of unions / globalization).

Furthermore, we are reaching the limits of what monetary stimulus is able to achieve in driving the economic wellbeing of everyday Americans; history has shown that fiscal stimulus is better at that. A decade of easy monetary policy and balance sheet expansion has yielded a large divide in inequality and asset inflation. The non-asset owning working class have effectively been left behind, with now a larger wall to climb in order build relative wealth.

I personally don't think unions and collective bargaining are the best solution, as it can in some cases be overbearing on industry---and the burden can be non-uniformly applied across industries. Also, due to globalization, there is effectively a fixed marginal cost for labor: any inefficiencies will be arbitraged abroad. Even if unions and collective bargaining were the solution, there is no inherent law that labor demand and labor supply will always be near parity---especially with increased automation.

I think the best solution to resolve this, both uniformly and with minimal aggregate complexity, would be expand the Federal's reserves responsibilities into the fiscal space.

The Fed currently has two mandates: low unemployment, and stable currency. I propose a third mandate: wage and productivity parity. This would be facilitated by direct fiscal policy in the form of a floating universal basic income. This would enshrine the fed with ability to affect fiscal policy without politics. The stimulus could be progressive, but would be much more uniform---unlike today's pork projects that have a smaller share of winners.

This coupled with universal health, easing the burden of hiring and firing, consolidation of existing entitlement/social programs, could really open up the economic landscape.

[jorblumesea]

> would be expand the Federal's reserves responsibilities into the fiscal space.

This is a very complex solution for a problem we already have the tools to solve. Politicians should just execute proper fiscal policy instead of leaning on the fed for every solution. We already have a decent system for this, which has historically worked, but no one is using it.

Other countries are able to execute proper fiscal policy without complex central banking paradigms or measures.

The real issue is our inability to plan long term fiscal policies at almost every level of our political system.

[NTDF9]

> Other countries are able to execute proper fiscal policy without complex central banking paradigms or measures.

Which countries?

[aleph_naught]

Historically we've had the opposite problem. Countries tend to move toward austerity at the wrong moment in time, due to political pressures or pressure from debtors. (Though this is much more difficult to navigate when the country's debt is denominated in a foreign currency e.g. Japan with 200%+ debt to gdp which is having a hard time meeting inflation targets vs Argentina).

Even today, the European Central Bank is signaling that it has effectively done all it can do (without permanently harming the banking sector with negative rates), and that it is time to open the doors to fiscal stimulus; but, Germany, which is going through a manufacturing recession, is loath to update their constitution to facilitate fiscal stimulus.

[jorblumesea]

All of Scandinavia, most of Northern Europe, Australia, parts of Asia, Canada.

[runeks]

> This would enshrine the fed with ability to affect fiscal policy without politics.

By what means would you give this third mandate to the Fed? Surely, politicians give this mandate, through the voters. In which case: how can you say it’s “without politics”? Because politicians create the laws that govern central banks, central banks cannot be said to be politically independent.

I guarantee you, if a central bank — any central bank — stopped monetizing its government’s bonds, the currency produced by its member banks would quickly lose its legal tender status and tax privileges.