[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.

[psd1]

The levers don't do exactly the same things; devaluing currency helps exports, for example.

There's also the political cost. I'm in favour of democracy in the ideal case, but obstructionism looks like a concern in some countries, people buy into lying spin and vote against their own interests, bills have their own cadence, and lawmakers are not always intellectual powerhouses. Case in point: the BoE reacted within hours to reduce the damage done by Liz Truss

[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...