Nima and Dylan discuss Minsky’s views on so called fractional reserve banking, poverty, unemployment, the Federal Reserve Bank, and how to stabilize an inherently unstable economy.
Why Minsky Matters by L. Randall Wray (https://press.princeton.edu/titles/10575.html)
When people use “we” in such contexts they usually mean the government, that is, a group of people with the right to use guns and prisons to take your property if you don’t oblige. But people like to avoid putting it this way and make it more abstract so they can avoid thinking about what they are actually talking about. It is similar with concepts such as “as a society”, or “the common good”, “the national interest”, “the country”, etc.
Whenever I hear such words I call BS. If you want to have a serious discussion about societal issues, name things by their proper names!
What did “we” do with all the farm workers who lost their jobs once the industrial revolution affected the farming business? What did “we” do with the piano players once movies had sound?
Well, former farm workers, even many who still could have stayed on the farm and make their pittance, sure didn’t waste much complaining and waiting for checks from Washington as they rushed to the big cities to start working for one of the myriad new technology companies.
Bear in mind, this was during a time when there was no minimum wage, no union legislation, no welfare state, in other words: no reasons to be unemployed.
And that’s your answer right there: The best thing “we” can do is to have a free and dynamic market that picks up those who are initially adversely affected by technological innovation.
In essence: The best thing “we” can do is to do precisely nothing.
This is from this Friday’s BLS unemployment report:
The closest official indicator of real unemployment in the US in my opinion is U6 as I have explained before. As you can see that number has grown over the past year while the official number has remained almost the same.
Also, according to the gallup survey, even the official unemployment rate data indicates a sharp rise in unemployment which, however, will most likely only be reflected in October’s data:
Unemployment, as measured by Gallup without seasonal adjustment, increased to 10.1% in September — up sharply from 9.3% in August and 8.9% in July. Much of this increase came during the second half of the month — the unemployment rate was 9.4% in mid-September — and therefore is unlikely to be picked up in the government’s unemployment report on Friday.
Unemployment is rising, sentiment is declining, Treasury and mortgage rates are on their way to all time lows again. Other market data will follow sooner or later.