I contend that FJG is inflationary because, apparently no profitable enterprise is being manned by all these workers. Once again, growing the government footprint is inflationary.
This is not true. It doesn’t matter whether the enterprise is ‘profitable’ or not. What matters, in terms of inflation, is how many dollars are chasing how many real assets. FJG projects could include agriculture, construction of public works, beautification, etc, all of which are for the social benefit. And again, the chronically unemployed (a huge problem in the US especially due to outsourcing, automation and deindustrialization) are ALREADY sustained by public funds one way or another, so that is an inflationary pressure with no accompanying economic output. The FJG is a way to EMPLOY idle labor, stabilize prices over an economic cycle, and prime the pool of previously ‘unemployable’ labor for the private sector.
I’m still waiting for you to explain how you plan to fund these programs. I’ll give you one more shot at it, and please don’t talk about how the government can do anything it wants. That would equate to simply printing money, a policy currently in vogue in Venezuela.
I think at this point you are just refusing to understand federal deficits so I’m not sure what else to say here. Treasury securities are LIQUID ASSETS that are a LIABILITY of the federal government. Securities can be sold by private banks to the Fed in exchange for reserves, and reserves are debited when a cash withdrawal is made on a demand deposit at a private bank. When the government deficit spends by issuing bonds, it is already “printing money”.
There is no real reason why government spending ought to be ‘financed’ by bond issuance. Private holders of public debt are overwhelmingly wealthy. Treasury securities are used to pad out investment portfolios with risk free fixed income. This income is effectively a government handout. While treasury bond interest payments DO add to private sector financial wealth, they do so at the top of the wealth distribution which is the opposite of what we want. Hence my proposal that federal deficit spending be ‘financed’ by a Fed overdraft of the TGA at 0%. This would be ‘interest free’ spending, and would actually be a DEFLATIONARY pressure because there are no additional interest payments adding dollars to the private sector. Bond issuance is a holdover from the gold-standard that is no longer necessary to finance fiscal policy.
The ‘Venezuela’ argument is a non-starter for a hundred reasons. Venezuela is a petro-state with a radically different political economy to the US. Chavez implemented currency controls and kept them in place long after they served their purpose and against the counsel of many left-wing economists. Coupled with falling oil prices and economic/political crises encouraged by US imperialism (asset seizure, support for domestic political terrorists, coup attempts), Venezuela is burdened with spiraling hyper inflation. You’ll notice that in every example of hyperinflation (Venezuela, Zimbabwe, Weimar Germany) the preconditions are POLITICAL crisis coupled with destruction of SUPPLY capacity. I’d also point out that the oil industry was nationalized back in 1971, but at that time the profits were just shared among the right-wing oligarchy while the people starved. Further, the private share of the Venezuelan economy actually GREW under Chavez/Maduro from 65% when Chavez took office to 71% in 2016. So much for ‘socialism’.