1. Government spending on public works and services.
2. Loans to private sector businesses who are positioned to use that new money productively.
As far as I understand, these are the primary ways new money is issued into the economy (money created). In general, these two methods work fairly well. The first enables worthwhile works and services to be provided that the private sector is unwilling to provide, while the second helps ensure efficient usage of new dollars to create goods and services.
However, there are situations where these two methods are insufficient. For example, after the 2008 meltdown, cheaper loans to businesses hardly increased growth..like pushing a wet noodle. The problem was a lack of dollars in the pockets of consumers. The businesses were chasing too few dollars. Fiscal spending on infrastructurr is often proposed, and certainly can help, but is often inefficient, and diverted away from consumers into corporate coffers.
I believe that a variable basic income where newly created money can be put directly in consumer's pockets could give policy makers a third tool to ensure optimal economic growth.
There actually is a small movement in the EU called Quantitative Easing for People which wants exactly that: Why not give central bank money directly to people instead of as loans to businesses?
I love the idea but I am afraid the EU is much too conservative, anxious and in general not an institution serving its people to do something like that.
But what a marvellous world that would be to live in.
As far as I understand, these are the primary ways new money is issued into the economy (money created). In general, these two methods work fairly well. The first enables worthwhile works and services to be provided that the private sector is unwilling to provide, while the second helps ensure efficient usage of new dollars to create goods and services.
However, there are situations where these two methods are insufficient. For example, after the 2008 meltdown, cheaper loans to businesses hardly increased growth..like pushing a wet noodle. The problem was a lack of dollars in the pockets of consumers. The businesses were chasing too few dollars. Fiscal spending on infrastructurr is often proposed, and certainly can help, but is often inefficient, and diverted away from consumers into corporate coffers.
I believe that a variable basic income where newly created money can be put directly in consumer's pockets could give policy makers a third tool to ensure optimal economic growth.