[beerdoggie]

In California, people fitting certain economic criteria are now being issued $1000 checks for inflation relief. This is beyond ludicrous.

We have printed so much money, the only solution is to... print more?

It's almost like it is all a sneaky backdoor to letting the government redistribute wealth without real oversight...

[abeppu]

Elsewhere in this subthread I pointed out that California is not printing money; it's spending surplus from 2021. California cannot print money bc we use US dollars and not CA dollars.

But I think a more interesting aspect of this is the cynical way language around the same idea has changed. The Franchise Tax Board is calling them a "tax refund", though your "refund" is based on your income being low, rather than your tax bill having been high. But the press has certainly been cooperative in calling them "inflation relief" recently, though the program was planned before inflation rose to the top of so many people's list of concerns. Politically, Newsome wants as much credit as possible for handing back a windfall of taxpayer money that came in mostly because of economic conditions he did not create and taxes that he did not introduce.

https://www.ftb.ca.gov/about-ftb/newsroom/middle-class-tax-r...

[0xy]

In this case they're using debt, because while they may have had a surplus in a single calendar year, they're still over $150bn in debt. So it isn't spending surplus, because they're massively underwater and a "profit" is meaningless.

[KptMarchewa]

They are just not overpaying debt, which makes no sense when the rate of outstanding debt is way below inflation.

[wins32767]

California doesn't print money, the Federal Reserve does. California is required to balance its budget by law, like every state but Vermont. Nearly every state has more money than normal right now (some of it from high tax revenues due to nearly full employment, some due to federal stimulus), so they're finding ways of getting rid of the money. This is a second order effect from the much too large stimulus in 2020/2021.

[nostromo]

The only reason the states are afloat right now is because the federal government gave them hundreds of billions in printed money. So, yeah, it’s printed all the same.

1. Federal reserve makes several trillions in new money and lends it to the US Government.

2. The US Government passes “infrastructure” and “Covid relief” bills that shower billions on states and cities.

If not for this flow of printed money, most of the states would be cutting budgets since 2020.

So, yeah, a lot of it is printed.

[imtringued]

You know, if there is a world where money isn't printed but people refer to it as printing, then maybe at some point the government will do exactly that because people don't seem to be concerned about the rate at which money is being spent nor do they care if the government does it or not, they just want to complain.

[Negitivefrags]

You would think that there would be something more useful to do with the money, like fixing the infrastructure.

[pkaye]

Any excess taxes above some budget threshold has to be refunded to the public due to some proposition.

[xorfish]

Fixing infrastructure is not always useful.

Infrastructure for low density suburbs is a money pit that bankrupts cities.

Here is a good playlist that explains why this is the case:

https://www.youtube.com/watch?v=y_SXXTBypIg&list=PLJp5q-R0lZ...

[californical]

Thank you for posting this! Suburban infrastructure essentially steals from the economically productive areas and gives to the wealthy and unproductive regions

[0xy]

California's high-speed rail money pit hasn't had enough cash thrown in? The state is incapable of building nearly anything.

[m0llusk]

CA HSR is moving ahead. Major infrastructure projects are more difficult and expensive in the US because we have far stronger property rights than China or European nations.

[rsync]

"CA HSR is moving ahead ..."

... minus the "HS" part. Last I checked it was on the politically brokered "non-I-5" corridor (a silly, absurd route) and had a proposed SF->LA trip time of over 2.5 hours.

This is a "high speed" train, circa 1975. Current technology, as demonstrated by running trains elsewhere in the world, would make that route in under 2 hours.

[abstrctComp]

Why is stabilizing human beings economic anxiety not useful?

What theory of science dictates infrastructure is the best place to spend it? If the answer is none, it’s a purely social policy and you’re spewing politically correct memory. That infra spend is not an immutable law of reality means there are options other than “poison the sky with expansive vanity projects.”

Even then, there’s plenty of money for both, and human agency available for both. We can stop pretending money is what drives human invention and discovery. It’s politically correct spoken tradition since it’s not an immutable law; how we feel about other economic choices is a range of possibilities, not just the ones we have been raised to speak of

[bushbaba]

The excess tax revenues was also caused by overly inflated IPOs and more than normal capital gains. At least in CA, if the surplus is large enough the government is legally required to give the money back if not spent.

Gavin Newsom in this case is acting like Robinhood. Taking from the rich and giving to the less well off.

[0xy]

He's taking from the children of the recipients, considering California's current debt load. When you're underwater, a "profit" doesn't mean you're suddenly flush with cash. It's still debt-funded frivolity, which will paid by children.

[KptMarchewa]

Current debt is being quickly inflated away. Also, $143 billion debt is peanuts for 3 trillion dollars economy like California.

So, your "children" comments are pure demagogy.

[0xy]

That's over half the usual budget for California, so no it's not "peanuts". The ability to service debt is a function of the government's resources, not the entire economy. As pointed out, the year was anomalous for California, who usually runs a deficit of over $50,000,000,000.

Seems like this is a case of a compulsive indebted gambler patting himself on the back for a good streak at the tables.

California's surplus came from temporarily increased CGT receipts. That trend will be reversed this year considering the markets, and they'll be back to bleeding 10 figures.

[giantrobot]

Government debt is not like personal debt. Governments debt is structured and has fixed predictable rates (bonds etc). There's no incentive to pay down debt because the debt holders want long term structured repayment.

The only time government debt is bad is when the government can't make the payments.

[anon291]

A charitable interpretation of the comment above would assume that the taxes being collected are primarily the result of printed money, or at least that the fed's printed money forms a large portion of these revenues which are again being redistributed. It's actually quite sneaky. Print money to stimulate the economy and then tax it back out to redistribute. You just printed the poor into 'wealth', but did it in an incredibly roundabout way that saves all the politicians face.

[unity1001]

> In California, people fitting certain economic criteria are now being issued $1000 checks for inflation relief. This is beyond ludicrous.

Its not. Its happening in Europe too. Its a way to try to get people through the winter and avoid the energy crisis impacting ordinary people.

That's what a government should do - take care of its people during extraordinary times.

[stingraycharles]

Yeah in the grand scheme of things, this doesn’t impact inflation all that much, but it does help the people that need it most. Just like increasing the minimum wage to keep up with inflation does.

Over the past year businesses have increased their prices all over the board, you can’t then just simply say “but inflation!!” when you want to help the people with some amount of compensation for this.

[vladimirralev]

If you take it just one step further, the people "that need it most" really only need it in order to instantly donate it to the megacorps with pricing power at ever-increasing prices. The handouts help only in that instant and at the very next clock cycle that money is now in the hands of the megacorps. Printing money and handouts only help the top of the top in the pricing power hierarchy. If you want to actually help people you'd be doing taxes on excess. Everything else ends up in gigantic accumulation of wealth at the top in just a few steps down the game.

[stingraycharles]

From that perspective, anything always ends up in the top of the top of megacorps, and I find it not a very compelling argument to not help people just because they’re at the mercy of megacorps.

You want to tax these megacorps additionally yes, especially if they’re profiting from the current situation. But at the same time, it’s also important to redestribute that wealth towards those who have the biggest problems right now.

[vladimirralev]

With handouts, you only redistribute the wealth for an instant and you need to keep printing to sustain it. On top of that, the stability of this system becomes dependent on active approach of handing out money (i.e. tight dependency on central government).

And I am not saying not to help the poor people. I am saying printing money doesn't help poor people, it helps the rich. If you want to help poor people like I said you can tax the excess, or you can provide a specific minimal food/energy/shelter. But again, handing out money for free only helps the top of top.

As a side note, you know a lot of the poorest people in EM and frontier markets save money in USD either to escape their own inflating currency or as a dollar peg in their country. These people are poor and suffer the inflation in global markets, but they do not benefit from the US handouts. They can never outbid a money printer. And that's in fact the likely cause of the riots across the world in countries that don't have swap lines with the Fed.

[babarock]

Megacorps will get away with keeping their prices this high, as long as the gov keeps funding these "relief" payments.

It's using taxpayer money to artificially maintain prices high.

[stingraycharles]

But we used taxpayer money to first inject trillions into the top of the economy. And then when the inevitable happens, we can’t just throw our arms in the air “because inflation!” — that’s a great way to make sure that the bottom of the economy will suffer tremendously due to all this.

Because their income hasn’t increased nearly as much as the amount of inflation that occurred.

[ALittleLight]

That doesn't make sense though. You can't create energy by printing money. You just redistribute the value of your money. Maybe that's good - not clear to me why it's better to use inflation, which risks destabilizing the currency and punishes people who saved money, rather than straightforward taxes.

[abeppu]

But in the Californian case, it's not printing money. The state government doesn't have the ability to make US dollars. The state must balance its budget, and cannot rely on debt the way the federal government does. The inflation checks are only possible because of a giant, historic budget surplus from 2021. Had inflation not gotten this bad, the checks would have still gone out in some other form (earlier in 2022 we were talking about it as a "tax rebate").

Though this action is redistributive, it is explicitly not about printing money. It is about spending excess tax dollars. You may have opinions about taxes in the state, and you may have opinions about redistribution, but overall if the state temporarily has a surplus (ie it shouldn't put this money towards increasing long running programs that will become a burden in future years), shouldn't it give that money back to the citizens in some form?

[imtringued]

Complaining about printing money is like complaining about the internal combustion engine in an electric vehicle. This is especially annoying when what people are really asking for is a speed limit. But since everyone keeps talking about the wrong thing nothing will get done just like how an ICE mechanic isn't going to fix your EV.

[KptMarchewa]

>how an ICE mechanic isn't going to fix your EV

Unless the problem is with your wheels.

[ALittleLight]

I never said that it was inflationary in the California case. I don't think it is. As to whether or not the state should send checks to everyone - I don't really know anything about it and so don't have a firm opinion. My intuition is that individuals will likely spend the money better than the state would have, so that's good, and it's probably an indication that taxes are too high if the state has a big surplus.

[abeppu]

California doesn't distinguish between capital gains and other income, and both are taxed on a progressive bracket system. In years where lots of rich people realize gains, the state has more income. Plus wage growth.

But Keynes advocated that governments should have surpluses in good times and spend more in bad ones. Normally because the state isn't able to carry a continuing large surplus, this isn't possible; it has to cut in lean years and give rebates otherwise. It's only in this short period of reversal in consecutive years that we can approach that policy. I'm guessing the same checks would have done more good if they could have waited until 2023 or later.

[neilwilson]

If you create money and give it to people, they spend it. That creates additional taxation. That spending is earned, which is taxed. The earnings are then spent, which is taxed, and so on. Like a stone skipping across a pond.

Do the fairly simple geometric series from that and you'll discover that all money creation generates additional taxation that extinguishes it - to the penny. All that changes with the tax rate is the number of hops before the money impulse disappears.

What you have to do to balance the system is remove some hops elsewhere. That's what threats about interest rate rises are supposed to do. Money then isn't created by loans, or the transaction hops from those loan creation events are fewer.

That reduction is what we call 'saving' and tends to show up in aggregate as a government deficit. The bigger the deficit, the more saving there was and the fewer transaction hops in the economy.

Saving is little more than voluntary taxation. The current approach is to go down the voluntary route rather than the compulsory one - largely because the population won't sanction any further taxes.

If the money used to purchase energy causes a large rise in the government deficit (or a significant reduction in the loan growth rate) then that will 'pay' for it without causing inflation.

[badlucklottery]

> You can't create energy by printing money.

Yes but the energy crisis isn't evenly distributed across the world. NA, for example, is still doing relatively well. While Europe is being hit relatively hard by the shortage and will likely have to import from more expensive sources than previous years to make it through the winter.

[ALittleLight]

How would European governments printing more of their own currencies to give handouts to their citizens, resulting in inflation, resulting in their currencies becoming weaker, help buying energy from NA?

[simongray]

The energy has already been paid for since European countries have been overcharged for gas during most of 2022 in order to fill their storage to at least 80% before winter. Energy bills are usually paid by the quarter or by the year—not daily—so in some cases the worst part has yet to reach consumers.

Furthermore, the way the European electricity market works[1], other energy sources are also bid up when the price of gas increases iff this gas is needed to ensure supply in a given hour of the day. So we have been overcharged both directly (gas), mostly indirectly (electricity) and completely indirectly (goods inflation) throughout all of 2022. This is seriously hollowing out the budgets of some European families.

I don't agree that blanket handouts are the solution, but some kind of compensation is needed to those most exposed, otherwise they will sink into poverty.

----

[1] : https://energy.ec.europa.eu/topics/markets-and-consumers/eu-...

[andrekandre]

  > European governments printing more of their own currencies to give handouts to their citizens, resulting in inflation

are you sure its printing?

couldn't they just tax it back from the wealthy in the end...?

[adrianN]

Not everyone gets the same amount of money, so that poorer people benefit from the scheme while richer people are more affected by the increased inflation.

[ALittleLight]

Rich people are less affected by inflation because they have access to investment opportunities that aren't as affected - for example, I'm sure German billionaires have money in American hedge funds. The middle class are most negatively affected by the tax of inflation because they have enough money that having the value of it reduced by inflation is meaningful, but they don't have sophisticated investment instruments to hedge against inflation.

This takes us back to what I wrote originally - why is inflation the way to do this as opposed to just tax and spend? That is, why not create a specific tax and implement that and use the proceeds to pay for poor people's energy? Money printing is just a dishonest way to sneak a tax in on people who might not recognize it as a tax.

[imtringued]

>That doesn't make sense though. You can't create energy by printing money.

Think again. You can't create energy by cutting taxes either. The tax cut can only be spent on energy, exacerbating the problem by making wasting energy much cheaper.

A check on the other hand discourages people to buy expensive energy because they could be spending the subsidy on something else that isn't energy constrained.

[js8]

The problem is that the world is at neoliberal capitalism's end, as predicted by Marx. Basically, in capitalism, you pay for continuing investment (of capital owners) with giving them more property, which is something that cannot continue indefinitely. That internally increases social inequality, and the money will eventually accumulate at the top (in the form of asset price rises).

Capitalism's own solution so far was to create more available properties - more individual debt such as credit cards and mortgages, privatize public goods like health and education, more destruction of ecosystems, selling attention and disrupting work, and the latest fad, cryptocurrencies. But these are only temporary solutions, they do not address the core problem of increasing social inequality.

Likewise, printing money and giving them to the poor (while half of it goes directly to the top, because the decision-makers are only human) is a stopgap solution in the system where most money quickly end up accumulated at the top. It's a desperate attempt by governments to maintain social order.

In the middle of 20th century, the capitalism's tendency to create disparity was somewhat resolved in Keynesian approach, where state "investments" (based on taxation) were basically redistribution of the money back to the bottom, so that the process of accumulation could continue slower and indefinitely. That was eventually abandoned, for ideological reasons (people shouldn't get "free money", and the "private property" is sacrosanct).

However, it is the only known solution. The proper taxation of the rich (and property) is badly needed to long-term stabilize the capitalist system.

One could make an analogy with any other competition. When another competition starts, winners (of the old competition) are usually given the same place at the start as everybody else. This is because without this rule, the competition would quickly demotivate everybody. But this is happening under neoliberalism, and threatens to eventually halt the positives of the capitalist competition.

[unity1001]

> The problem is that the world is at neoliberal capitalism's end, as predicted by Marx

Well. Its capitalism's end. Neoliberalism is just an attempt to return to actual capitalism that existed back at the end of the 19th century. Before those pesky regulations, antitrust laws, all those workers' movements and rights for the plebs...

[jedberg]

It should be noted that California cannot print money. It is simply redistributing what it's residents already have.

[fulafel]

Income transfers generally don't imply printing money, they can be funded by eg taxes from a higher income part of population.

[groby_b]

Given that California can't print money, why do you think those checks are "printing money"?

And no, it's not a "sneaky backdoor". It's the government doing what it should do, tighten financial inequality gaps. And preventing unnecessary suffering. We're still a society, we occasionally take care of the weaker people amongst us. (Frankly, not often enough)

And "without real oversight" is... you're aware this is going through the normal process of fund allocation, is reported widely in the press, and is part of the data that voters can take into account next round, no? It has just as much oversight as any other government spending. (Arguably more than some federal programs)

I get that fiscally conservative folks might disagree with this, and we can certainly debate merits. But "printing money" and "without oversight" are empty slogans without basis in fact.

[imtringued]

Nowadays everyone prints money, didn't you read internet comments. If I loan you five dollars I have printed five dollars because the contract we signed counts as a certificate of deposit in the minds of these people.

[commandlinefan]

> the government doing what it should do, tighten financial inequality gaps

No, that’s really, really not what the government should be doing.

[andrekandre]

what should it be doing?

[petilon]

They may not be printing money, but they are propping up inflation by giving people free money for compensating for inflation.

[bigyikes]

Yes, people are ignoring the second-order effects. Just because California can’t directly print money doesn’t mean they aren’t contributing to the macroeconomic factors leading to the Fed feeling the need to print more money.

[anon291]

Right. One way to combat inflation is to save money. The fed encourages this by increasing the interest rate. If california truly wanted to reduce inflation, it would simply retain those $1000 checks. Taking money out of supply reduces inflation.

[groby_b]

California doesn't want to reduce inflation. (It would be of at least questionable legality, too. Because monetary policy lies with the federal government - Article 1, Section 8)

What California does want to do is ensure poorer people aren't bearing the load disproportionately.

Also, while we can certainly argue if this is the best use of those funds, a quick reminder that the size of the US money supply is almost 22 trillion. We're about $6T above 2019 levels. California retaining $10B is not going to have any measurable impact on inflation.

[imtringued]

They can spend the money on things that don't inflate. A tax rebate can only be spent on energy which makes the problem worse.

[Aeolun]

Giving people a one-time bonus never made sense to me. They’ll feel rich, spend it all, and be back in their previous situation next month.

[atq2119]

Sounds like a decent recipe for boosting the economy, assuming the supply side capacity is available: injects a bunch of demand, but at the same time, precisely by being a one-time measure, discourages price hikes.

[m0llusk]

Limited available evidence shows that people are extremely conservative with spending windfalls with much of it going to pay down debt.

[andrekandre]

to that point: https://www.reuters.com/article/us-usa-economy-credit-idUSKB...

[grecy]

We have printed so much money, the only solution is to... print more?

Yes. Once you start printing money to fix problems, you fall into the pit of always needing to print more. See Zimbabwe’s $100 trillion dollar bill. I have one, it makes a great placemat.

[beebmam]

Wealth is redistributed all the time, it's called taxation.

[jelliclesfarm]

yes. even though technically california doesnt 'print money'. people are more important than economy. the 'redistribution' is happening to help the most vulnerable and that's exactly what surpluses should be used for..seems like a good use of money to me.

[buscoquadnary]

I hate it when people make it seem like the economy and the people are two different things.

The economy is the aggregate capability of a society to provide goods and services to people, if the economy collapses the goods and services that are being provided cease to be as well and people are worse off.

Short sighted statements like "people are more important than the economy" is a feel good virtue signaling that is indicative of an inability to think clearly about the consequences of actions and a substitution of emotional reasoning over rational thought.

[jelliclesfarm]

I wasn’t virtue signalling. Over supply of money will make inflation worse, but constriction would bring down spending.

A labourer making daily wages and supplemented by govt dollars will spend all of it. A millionaire with a few millions in the bank is not going to spend any of it. Especially during an overheated inflationary period. It’s better spent to the most vulnerable to pay for their food, gas and utilities.

This is exactly what needs to be done to keep spending going. It’s spending from a healthy and happy middle class that keeps the economy going. Can’t freeze them out. Not implementing measures like this would collapse the economy.

An economy with hopeless disenfranchised hungry poor majority is exactly the first ingredient in the recipe for revolts and revolutions.

Also..it’s heartless to not share a surplus to people who are suffering. We are a rich country. No one died because someone else got a little extra money to pay their electricity bill or gas.

[californical]

But you just explained why this causes more inflation. In your words, it was money in the banks of wealthy people, meaning not being spent. Money that isn’t spent doesn’t cause inflation because it’s not competing for goods and services.

By redistributing to poor people, that previously stationary money is now being used to compete for goods, since poor people generally spend all of their money. So more money is now chasing after the same goods, prices have to go up.

It might make people feel good in the short term, but continuing inflation also hurts the poor, and could potentially widen wealth gaps even further since the wealthy are mostly invested in assets which can keep up with inflation, but poor people’s salaries do not keep up very well.

Short term looks like a good move, but it just kicks the can and continues widening the divide of rich and poor

[jelliclesfarm]

Non wealthy people and poor people spend on necessities. You want the money to be spent on commodity goods and generally traded goods like grain, cotton, utilities etc.

We need healthy enough money supply and sufficient money supply in circulation to keep the economy alive. If anything, this isn’t ‘charity’…it is to ensure minimum money supply to keep the economy healthy and prevent it from collapsing. But not too much to cause inflation. To deal with this, interest rates will go up.

It is more like electrolytes needed to keep the economy upright. It is not a lavish meal at a Michelin starred restaurant.

Also helpful to understand Phillips Curve and relationship between unemployment and inflation.

https://www.khanacademy.org/economics-finance-domain/ap-macr... : here is a good tutorial.

The govt is trying to bring down inflation to cool the economy after all the excess money supply during pandemic. That was necessary too.

So expect unemployment rates to rise in the short term. This money will help poor people and those looking at unemployment in the coming short term to survive. This is necessary. We still want them to be able to buy food and pay for gas and electricity as the correction goes underway.

[KptMarchewa]

>In your words, it was money in the banks of wealthy people, meaning not being spent.

It is spend on overpriced assets.

[RichEO]

This use of the word “economy” in this expression means, “the economy, as commonly measured by GDP”.

The economy might be the aggregate production of society, but the distribution of the fruits of that production are not meaningless.

Nobody is proposing a return to subsistence farming, but some of us are willing to trade off a higher GDP for more equal distribution.

[diordiderot]

"The economy" means stock prices and executive pay

[RickJWagner]

Distributing more money is almost certainly unproductive.

During Covid large checks were mailed out. Reddit was full of 'casual investors' throwing money at meme stocks that explained it was 'covid money' and thus didn't matter much to them.

Student loan debt forgiveness is the latest madness.

The end result? Those with the least money (the poor, and those on fixed incomes) are totally hosed. If you can't afford rent at $800, you surely can't afford it at $1400. More handouts only make the problem worse.

The Fed's response (raising interest rates) will make cars and houses out of reach for many.

Vote for politicians of any party who pledge fiscal responsibility. As a litmus test, judge their reactions to government handouts.

[lmm]

> The end result? Those with the least money (the poor, and those on fixed incomes) are totally hosed. If you can't afford rent at $800, you surely can't afford it at $1400. More handouts only make the problem worse.

That's absurd; while a one-off is nowhere near as good as a basic income, a flat "handout" benefits the poor for obvious reasons (at the expense of the rich; there's no free lunch).

> The Fed's response (raising interest rates) will make cars and houses out of reach for many.

Buying cars and houses with money you don't have and hoping you can make up for it in the future is something we never should've normalised. Someone preaching "fiscal responsibility" should see this as a good thing.

[imtringued]

How do you expect fiscal responsibility in an economic system where money both embodies purchasing power which is a stock and liquidity which is a flow? Liquidity is a costly service provided by the public, every open shop and business provides liquidity and operating a business even with no customers costs money. This means anyone holding onto money can force others to spend money on providing expensive liquidity which completely eradicates the concept of fiscal responsibility because the holders of money aren't responsible for paying for the liquidity they benefit from.

[lmm]

So we have a moderate level of inflation so that those who keep their wealth in cash are paying for the liquidity. Seems fine.

[rightbyte]

Handing out free money decreases the value of money for those that have money. The poor have hardly any money to be hit by inflation.