MonteQuest wrote:evilgenius wrote: MonteQuest wrote:Won't everyone who is underwater want the same bailout from student debt, auto loans?
Yeah, but the point isn't in giving a break to people who are in debt.
That's even worse. Another bailout for the well-to-do? If they are not in debt, why wouldn't they just invest the subsidy. rather than spend it?
Break for the wealthy? Why characterize it like that? Mortgage holders are by definition in debt. What they are is in debt for a commitment to something that ties them to their locality. Have you decided to simply come out against the idea out of some preconceived notion? It doesn't tick checkboxes. Maybe you didn't think of it.
What it would do would be to put money into the hands of those with no prior call upon their gain because they are not subject to rentier capitalism. Into local hands and not macro-focused banks. As such they would be more likely to spend the money in ways that would benefit their local economy. Students aren't tied that way. They may also pay rent. Auto buyers may be local, but they may also pay rent.
You would simply have to trust the normal curve to take care of the savings problem. In other words, some people will save, but you should be able to expect that to be in numbers small enough compared to the rest that it wouldn't mean a severe restraint upon the stimulus. Like I said, my worry is Amazon.
Also, the reasoning behind negative interest rates is surprising to a degree. Why wouldn't you want people saving? Isn't saving the backbone of the banking system? It's true that fractional reserve banking allows for money supply expansion, but you have to have some kind of basic amount of reserves to start the ball rolling. The more should be the merrier, unless you allow your local banks to become swallowed up in what the much larger banking organizations are doing, where they get their reserve base from.
Small time players essentially participate in a negative interest rate environment today, btw, because of fees charged for services on accounts that today yield such low interest rates that their total amount in savings is actually going backward. That doesn't force people out of their savings accounts, though. There is also the relative safety issue to consider. If things get bad enough for helicopter money the relative safety issue will become even more important.