Collective Conscious

Ezra says no:

Annie Lowrey* crunched the num­bers and found that “annual infla­tion for the next five years needs to be some­where north of about 1.55 per­cent for the investors to break even. Any more infla­tion than that, and they make money.”

That’s bet­ter than no infla­tion, but it’s well below the Fed­eral Reserve’s tar­get of 2 percent.

Ygle­sias appar­ently agrees, so he beats the drum for addi­tional stim­u­lus, while a com­menter offers and idea for a double-​​whammy:

The Fed buys coins from the US Mint at face value, a $1 coin costs 12 cents to mint. Once the 88 cents profit is swept out of the Mint Enter­prise Fund into mis­cel­la­neous receipts, it counts as revenue.

This pro­posal, known as seignior­age, is a form of money-​​financed stim­u­lus. You get more spend­ing with­out increas­ing debt, because you just print the money. In this cli­mate, it’s a good idea because it also cre­ates refla­tion. How­ever, his­tory teaches us that it is very easy to become depen­dent on the twin growth effects of stim­u­lus and infla­tion and thereby begin a cycle that leads to hyper­in­fla­tion. So while I would advo­cate for a one-​​time seignor­age stim­u­lus, I would def­i­nitely not rec­om­mend its inclu­sion into the annual bud­get­ing process.

(Photo: David Paul Ohmer)