Federal Stimulus Reserve Book

Federal Stimulus Reserve Book

Federal Stimulus Reserve & Notes On the General Theory and Other Thoughts

(First Draft)

By

Fernando Giannotti

Synopsis of The False Debate: An Antidote to Socialism and Laissez-Faire Capitalism with A General Way Forward

Synopsis: The False Debate: An Antidote to Socialism and Laissez-Faire Capitalism with A General Way Forward

The Case for a Limited Government with a Strong Social Safety Net in a Liberal Democracy with a Capitalist Economic System

The United States is being paralyzed by a false debate between two defunct ideologies on the extreme ends of the political spectrum.  Those ideologies are Socialism and Laissez-Faire Non-Interventionist Capitalism.  Both are illogical and have historically proven to be false.  We are wasting valuable time and effort debating and arguing over a false dichotomy.  We need to narrow our debate field by removing the extreme, illogical ends of the spectrum, to create a more productive debate.  We will continue to argue, but we must argue productively with logical and practical ideologies.  It is important we do this not only to better facilitate government action in solving domestic problems in the United States, but also to show that a liberal democracy can work and bring economic prosperity in a refutation of the Chinese authoritarian capitalist model.

The best and most logical socio-economic political philosophy that has been proven by history is a Strong Limited Government with a Strong Social Safety Net in a Liberal Democracy with a Capitalist Economic System.   This utilizes the best of both systems; the innovation and incentives of capitalism mixed with the safety of a public good through a social safety net.   

Micro-Entrepreneurship and Its Importance

 

New technologies are constantly being created and iterated that change the way people interact in society and open new possibilities for people.  An important technology that has recently emerged is the technology of micro-entrepreneurship platforms.  Micro-entrepreneurship platforms are allowing people to diversity their income by creating new revenue streams that do not require significant startup capital.  The United States government needs to generally support these micro-entrepreneurship platforms and make it as easy and frictionless as possible for individuals to use and make money from them.

Micro-entrepreneurship platforms like Etsy, Youtube Studio, online drop shipping stores (such as Printful), Uber, etc are allowing anyone with extremely small amounts to no capital to start business while also taking care of the legal, administrative, and often shipping/production portions of the business.  They are essentially lowering the barriers to entry for individuals to engage in business activity.   

Micro-entrepreneurship and micro-entrepreneurship platforms provide benefits for individuals and society.  They allow people to diversify their income without accumulating large amounts of capital. Traditionally in order to create additional revenue someone had to have money to invest into stocks/bonds or buy a property to rent.  These traditional avenues for earning additional revenue required large amounts of capital and were effectively out of reach for most people.  But micro-enterprises allow people to start small businesses with little to no capital. Individuals without capital but with skills and knowledge can now monetize their skills or knowledge, especially their creativity.     

Beyond helping people at an individual level, micro-entrepreneurship and micro-entrepreneurship platforms can also help alleviate larger issues both societal and economic.  If utilized, micro-entrepreneurship can be used to help workers that have been left behind by outsourcing,  technological innovation, and globalization in the past few decades.  It can also help inoculate workers in the future when the same process of technological innovation and creative destruction happens again.  It has the ability to help those who have traditionally been left behind.  It can help take a slight burden off the social safety net by making workers that lose jobs less dependent on unemployment insurance.  Workers who have more income streams and thus more income security in the sense they are not dependent entirely on one specific job for income are more likely to leave their job for another, which helps labor market flexibility and increases competition among employers to attract and retain workers.   

The Federal Government should do what it can to support micro-entrepreneurship.  One way the federal government can do this is by streamlining the tax code and making it as easy as possible for individuals who use micro-entrepreneurship platforms to earn additional revenue.  In general the Federal and state governments should make it as easy as possible for individuals to use these platforms for income generation.   

The technology to give large numbers of individuals access to micro-entrepreneurship without significant capital has emerged.  The United States should embrace and encourage this development.

New Mechanisms for Fiscal Stimulus

New Mechanisms for Fiscal Stimulus

May 3, 2020

Idea: A Direct Payments System to Eligible Citizens with Built in Spending Conditions. Essentially, direct payments to individuals that can only be used to pay for services and certain goods. Creating greater control over what people spend their money on, allows for targeting of sectors and products to maximize each stimulus dollar and promote a greater multiplier effect for each dollar.

Problem: Ideas around Fiscal Stimulus by the government are based and built off of the ideas of John Maynard Keynes, specifically the idea of the Keynesian multiplier. In a gross oversimplified explanation, Keynes’s main goal was to jump start consumer spending to aid the economy. Keynes advocated for the government to spend when consumers could not or were unwilling to spend. Government spending would employ more people or keep more people employed and earning an income. They would intern spend the money they earned on goods and services therefore supporting business and industries, who intern employ people. So when a person buys a shaving razor or a radio, purchase helps the company making that item and the American workers they employ to make that item. This is the basic logic of the Keynes multiplier, government spending with have a multiple effect on the economy. Keynes' ideas worked very well for decades.

Federal Stimulus Reserve

Federal Stimulus Reserve

May 3, 2020

Idea: Create an Independently Administered Financial Reserve used for Fiscal Stimulus

Problem: Speed matters, when combating an economic crisis that can become a recession. The two instruments the government uses to combat a recession are Monetary Policy and Fiscal policy. Monetary Policy is provided by the Federal Reserve and Fiscal Policy is provided by Congress. The Federal Reserve has proven able to respond to economic crises with great speed and creativity to meet new challenges, especially during the financial crisis of 2007/2008. The Federal Reserve acts without political considerations and makes decisions based on economic facts. While a modest fiscal stimulus was passed by Congress in response to the 2007/2008 financial crisis, it was not big enough or passed in a timely manner to prevent a recession. In general, Congress takes a great deal of time to act, often politicizes stimulus funding, and allocates funding based on politics not economic need. During times of economic crisis, the economy needs money injected into trouble areas quickly and with precision. The Federal Reserve can do much of this, but only within the confines of monetary policy. Economic Crises require a coordination between monetary and fiscal policy that focuses on economic need

An (Incomplete) Guide to Life: Meditations on the Flyleaf

An (Incomplete) Guide to Life:

 Meditations on the Flyleaf

Pocket Guide

by

Fernando Giannotti

Have a Pleasingly-Fine Day

Bonjour.  I'll be traveling abroad for awhile.  If you don't hear from me, you can probably assume I decided to stay in the Galapagos near Bali.  Please continue to treat this free blog as a shrine.

Have a pleasingly-fine day.

FG