Time for a Wages Guarantee

Danno

Hi All,

I think it is time that the EU got it's act together and implemented a wages guarantee for every citizen in the EU. Whatever your wages are, you get that in your bank account this week - perhaps with a cap at around €100k per annum.

This will have the effect of stopping unnecessary businesses from opening to the public and keep social interaction to a minimum. It will mean that these businesses who are closed will not go to the wall, mortgages will be able to be paid, taxes can still go to the government and the effects of all this will be minimised.

Once this has passed, the ECB can slowly withdraw excess cash in circulation in order to circumvent huge inflation that I see as one of the downsides of this policy.

Thoughts?

suicide_circus

a. where does this money come from?

b. how do you stop inflation?

Danno

suicide_circus wrote: »

a. where does this money come from?

b. how do you stop inflation?

A: Money is ink printed on paper, the ECB print it. It's quantitative easing but through the people instead of through the bond markets.

B: Withdraw the cash gradually beyond an agreed end date (end of the virus outbreak). Inflation is caused by too much cash washing through the system.

The positives far outweigh the negatives in my opinion.
People are going to be horrified at the prospects of direct debits hitting in early April, then early May, then early June with nothing coming in to meet that (or very little in the form of €203 dole).
Riots otherwise.

Assetbacked

David Mcwilliams argued for this very thing in the IT at the weekend.

The problem with implementing it are the vested, elite interests that argue the money should go into the system via entities rather than people. Although, if people are left burned with this coronavirus I would strongly expect protest voting and potentially we could see the break up of the euro and the EU if this ends badly for the average man.

Danno

Assetbacked wrote: »

David Mcwilliams argued for this very thing in the IT at the weekend.

Just seeing that now! http://www.davidmcwilliams.ie/why-central-bank-must-give-everyone-free-money-right-now/

Balf

Danno wrote: »

Hi All,

I think it is time that the EU got it's act together and implemented a wages guarantee for every citizen in the EU. Whatever your wages are, you get that in your bank account this week - perhaps with a cap at around €100k per annum.

This will have the effect of stopping unnecessary businesses from opening to the public and keep social interaction to a minimum. It will mean that these businesses who are closed will not go to the wall, mortgages will be able to be paid, taxes can still go to the government and the effects of all this will be minimised.

Once this has passed, the ECB can slowly withdraw excess cash in circulation in order to circumvent huge inflation that I see as one of the downsides of this policy.

Thoughts?

In fairness, I totally feel for where you are coming from.


But I think mostly you are really pointing out how bonkers the current strategy is. Because it would be absolutely impossible to do as you've described.


I think all that's feasible is for Central Banks to put a bit of extra cash out there, in the hope that banks will show a degree of leniency to businesses that cannot honour commitments.


And, tbh, I take it brass necked people will be using the current situation to withhold payments that they can make.


But what you are saying boils down to "There's very significant costs being incurred right now. Who's going to cover them?"


And the current answer is "Wherever they fall?"


How about a levy on pensioners, to fund the costs of people who cannot work and earn at present? Might that focus some minds?

Balf

Assetbacked wrote: »

David Mcwilliams argued for this very thing in the IT at the weekend.

I've always admired his hair.

Danno

Balf wrote: »

In fairness, I totally feel for where you are coming from.
But I think mostly you are really pointing out how bonkers the current strategy is. Because it would be absolutely impossible to do as you've described.

Absolutely not - Revenue have real-time wages information on every employed person in the country. ECB gets the total figure for the state from Revenue, then our Revenue distribute the amounts directly to the employees.

Danno

Balf wrote: »

And the current answer is "Wherever they fall?"

You will get riots on the streets and anarchy by the end of Summer if something substantial is not done. Last time we had an economic collapse there was the release valve of emigration. This time there is no way out.

Nody

Danno wrote: »

A: Money is ink printed on paper, the ECB print it. It's quantitative easing but through the people instead of through the bond markets.

B: Withdraw the cash gradually beyond an agreed end date (end of the virus outbreak). Inflation is caused by too much cash washing through the system.

The positives far outweigh the negatives in my opinion.
People are going to be horrified at the prospects of direct debits hitting in early April, then early May, then early June with nothing coming in to meet that (or very little in the form of €203 dole).
Riots otherwise.

There are 228.7 million working people in EU 2015; if we assume an average of 2k EUR per person in salary you're talking about 456 BILLION euros a month. Even at 500 EUR a month we're talking 114 billion as a comparison ECB's peak QE was 80 billion a month. The amount of inflation that would drive would be staggering beyond belief... And that's before the "minor" issue that the ECB bought bonds (i.e. money that's repaid) compared to simply giving cash hand outs.

Balf

Danno wrote: »

Absolutely not - Revenue have real-time wages information on every employed person in the country. ECB gets the total figure for the state from Revenue, then our Revenue distribute the amounts directly to the employees.

ECB could not enter into such an arrangement.



Seriously.

https://www.ecb.europa.eu/press/key/date/2012/html/sp120419.en.html


European Union legislation clearly rules out the monetisation and bail-out options. Article 123 of the Treaty on the Functioning of the European Union prohibits any form of monetary financing of public debt or deficits; Article 124 forbids privileged access to financial institutions by the public sector; and the “no-bail-out clause” in Article 125 precludes that one Member State becomes liable for the liabilities of another Member State.

MojoMaker

For God's sake, don't go annoying the OP with actual facts.

Balf

Danno wrote: »

You will get riots on the streets and anarchy by the end of Summer if something substantial is not done. Last time we had an economic collapse there was the release valve of emigration. This time there is no way out.

No disagreement there.

The Belly

Danno wrote: »

Hi All,

I think it is time that the EU got it's act together and implemented a wages guarantee for every citizen in the EU. Whatever your wages are, you get that in your bank account this week - perhaps with a cap at around €100k per annum.

This will have the effect of stopping unnecessary businesses from opening to the public and keep social interaction to a minimum. It will mean that these businesses who are closed will not go to the wall, mortgages will be able to be paid, taxes can still go to the government and the effects of all this will be minimised.

Once this has passed, the ECB can slowly withdraw excess cash in circulation in order to circumvent huge inflation that I see as one of the downsides of this policy.



Thoughts?

A few days ago when the seriousness of this hit home here all focus was on the spread and of course still is more then ever and rightly so.

But in the last few days we are faced with 140k jobs gone and 200k going this week as the financial implications of this become a reality too.

This is going to lead to a full on depression in a short space of time unless the ECB does something massive. And it will be much more serious the 1929.

QE and financing Banks wont work which was the last policy.

The ECB need to provide each member state with all you have mentioned and guarantee all bank deposits and they need to do it now.

Its needs to be simple and likes of which we we have never seen before and it needs to be explained so every citizen understands whats going to happen.

It will calm nerves and let each state get on with fighting COV19

A massive health emergency massive jobs losses total uncertainty and inaction from the Bank that holds the purse strings will lead to chaos.

Unlike 2008 I dont believe member states will wait for a slow response from the ECB/EU i think they will order their own CB's to do something even if it means the return to the punt or Lira.

Danno

Nody wrote: »

There are 228.7 million working people in EU 2015; if we assume an average of 2k EUR per person in salary you're talking about 456 BILLION euros a month. Even at 500 EUR a month we're talking 114 billion as a comparison ECB's peak QE was 80 billion a month. The amount of inflation that would drive would be staggering beyond belief... And that's before the "minor" issue that the ECB bought bonds (i.e. money that's repaid) compared to simply giving cash hand outs.

Money that is repaid is destroyed. I am suggesting the same happens once COVID-19 passes.

Who gives two flying ones if it takes €456 Billion per month to do this. If I costs five times that amount just do it.

Can you cost the effects of *not* doing it?

No. You should have saved up when the times were good and you should have had a rainy day fund.

Danno

Balf wrote: »

ECB could not enter into such an arrangement.



Seriously.

Then that law needs to be changed for a time-limited period until Covid-19 passes.

In fact, it is a good time to have legislation drafted that can be easily used in such outbreaks in the future should another virus of this scale ever come about again.

sameoldname

I wonder would there be a way to have a suspension of debt repayments for a certain amount of time? If you could do that you could then force a hold on the collection of rent by landlords during that time period which would at least allow people to afford food and utilities while on social welfare. Since the last crash the banks should be holding significantly more capital but I'm not sure if that would help in this scenario.

Danno

Jayden Nervous Mason wrote: »

No. You should have saved up when the times were good and you should have had a rainy day fund.

The vast majority of people in this country are in no position to have such measures taken, and even if they did, their savings are finite. If Covid-19 lasts longer than people's savings can allow for then riots will ensue when they run out.

Danno

sameoldname wrote: »

I wonder would there be a way to have a suspension of debt repayments for a certain amount of time? If you could do that you could then force a hold on the collection of rent by landlords during that time period which would at least allow people to afford food and utilities while on social welfare. Since the last crash the banks should be holding significantly more capital but I'm not sure if that would help in this scenario.

Suspension of things like mortgages, car repayments and things like that are all well and good.

Suspension of ESB bills etc... are not because come say, next Autumn people are facing paying €1000+.

suicide_circus

and everyone is home all day burning through the leccy and gas.

4068ac1elhodqr

Not a wages guarantee (far, far too expensive), but instead 'UBI' should be rolled out, and now is the perfect time.

UBI could be around 3-400pwk, and there isn't a better time for it than now*.
*With borders and inbound travel restricted, it means there wouldn't be an influx of chancers to avail of it.
It would have to be a 'Universal' (assuming basic residential status), and 'fixed amount' per person (some may even be worse off).
This 3mth trial (lockdown conditions) would be ideal opportunity.
The focus should be on (future) enterprise, upskill and education (e-learning).

Only two risks in longer term are: hyper-inflation and mass-migration.
Both can be managed with fiscal controls, and other toolsets.

Danno

Danno wrote: »

The vast majority of people in this country are in no position to have such measures taken, and even if they did, their savings are finite. If Covid-19 lasts longer than people's savings can allow for then riots will ensue when they run out.

The people who saved nothing get bread and water in soup kitchens. That's it.

People gambled. They assumed that the good times would last forever. They leveraged themselves to the hills under the assumption they would have a job forever. They were wrong.

It's time for them to learn a very very harsh lesson about life.

sameoldname

Danno wrote: »

Suspension of ESB bills etc... are not because come say, next Autumn people are facing paying €1000+.

I never suggested that. Social welfare is about €800 a month as it stands so most people should be able to pay for food and utilities quite comfortably with that if they had no mortgage or rent to worry about.

Myles Better Bagpipes

Myles Better Bagpipes wrote: »

Not a wages guarantee (far, far too expensive), but instead 'UBI' should be rolled out, and now is the perfect time.

UBI could be around 3-400pwk, and there isn't a better time for it than now*.
*With borders and inbound travel restricted, it means there wouldn't be an influx of chancers to avail of it.
It would have to be a 'Universal' (assuming basic residential status), and 'fixed amount' per person (some may even be worse off).
This 3mth trial (lockdown conditions) would be ideal opportunity.
The focus should be on (future) enterprise, upskill and education (e-learning).

Only two risks in longer term are: hyper-inflation and mass-migration.
Both can be managed with fiscal controls, and other toolsets.

I came into this thread about three minutes after it was posted. I was going to make the UBI point but knew Accum Yang would be along shortly :P

Danno

sameoldname wrote: »

I never suggested that. Social welfare is about €800 a month as it stands so most people should be able to pay for food and utilities quite comfortably with that if they had no mortgage or rent to worry about.

Someone close to retirement, particularly physical labour workers will not be able to pay the final stages of their mortgages on a state pension.

Allowing people to live with their existing income, will ensure that nobody falls into a poverty trap.

BorneTobyWilde

There will be IOU riots if no one gets enough to survive. People need to eat, need to keep the lights on.

Should be free electric and gas and broadband for next 4 months, ease the pain on people, and allow them to live. An increase when this is all over could make up the difference.

sameoldname

Danno wrote: »

Someone close to retirement, particularly physical labour workers will not be able to pay the final stages of their mortgages on a state pension.

Allowing people to live with their existing income, will ensure that nobody falls into a poverty trap.

We're talking of a suspension of debt for months not years. Mortgages at the end of their terms should be relatively small and as we've seen in this country no one is going to lose their home with 90%+ of their mortgage paid off.

ArmaniJeanss

BorneTobyWilde wrote: »

There will be IOU riots if no one gets enough to survive. People need to eat, need to keep the lights on.

Should be free electric and gas and broadband for next 4 months, ease the pain on people, and allow them to live. An increase when this is all over could make up the difference.

You can't really give 'free' electricity because people then leave every light in the house on.
Thankfully there should be some downward pressure on prices of utilities soon because of the price of oil.

One step should be that no-one with a reasonable history of paying utilities should be cut-off, and that anyone who falls behind in bills can choose to pay it off over a very long term when things 'normalise'.

TripleAce

Danno wrote: »

The vast majority of people in this country are in no position to have such measures taken, and even if they did, their savings are finite. If Covid-19 lasts longer than people's savings can allow for then riots will ensue when they run out.

Bet they had money to go to the pub though?

The Belly

Nody wrote: »

There are 228.7 million working people in EU 2015; if we assume an average of 2k EUR per person in salary you're talking about 456 BILLION euros a month. Even at 500 EUR a month we're talking 114 billion as a comparison ECB's peak QE was 80 billion a month. The amount of inflation that would drive would be staggering beyond belief... And that's before the "minor" issue that the ECB bought bonds (i.e. money that's repaid) compared to simply giving cash hand outs.

Total QE from ECB since it began 4.65 trillion euros. Average inflation over the last 10 years 1.6%

What do you think the next total will be if they act the same way they did over the last 10 years?

Even if there is a total as the Euro and EU will likely be gone.

Create a bond for what ever amount is needed and stretch it out over a 100 years.

Call it a EU Solidarty bond which every worker and business pays interest free till its gone. If the EU wants solidarty then this is it.

trapp

Jayden Nervous Mason wrote: »

The people who saved nothing get bread and water in soup kitchens. That's it.

People gambled. They assumed that the good times would last forever. They leveraged themselves to the hills under the assumption they would have a job forever. They were wrong.

It's time for them to learn a very very harsh lesson about life.

But people will not accept this.

This is why, if present state continues, law and order breaks down by the summer.

Harika

Singapore gave everyone above age of 18 and every company 1000 euro.
So called helicopter money
Ezb was pumping money in the market and inflation didn't come.
With the money mentioned above local providers can be supported.
We are going into recrssion with money have to be provided by the state

Nody

The Belly wrote: »

Total QE from ECB since it began 4.65 trillion euros. Average inflation over the last 10 years 1.6%

What do you think the next total will be if they act the same way they did over the last 10 years?

So you're asking what do I think if ECB would use what you count as 10 years worth of QE in 10 months instead and pump it all into the hands of people to go spend it (and assuming they would not blow it on fags & alcohol because people are all serious about their spending)? Oh I don't know; rampant inflation comes to mind along the lines of Venezuela and Zimbabwe as people keep outbidding each other for stuff because they are "rich" now because the stores will not magically have more stuff to sell to people with all that money.

Create a bond for what ever amount is needed and stretch it out over a 100 years.

Aaah I see, so create a 100 year bond for something that's paid out for 10 months and let the future generations pay for it. Hmm, were have I seen that before? Oh I know, the failing pension system with an ever growing deficit. How about the people demanding free money instead gets reduced pensions corresponding to it instead? Or everyone get a loan with mandatory repayment for the money they got instead? You know; some bloody personal responsibility instead of demanding free money from the magic money tree.

Call it a EU Solidarty bond which every worker and business pays interest free till its gone. If the EU wants solidarty then this is it.

Sorry but what you're asking for is a tax on people who actually made prudent decisions to fund the people who could not be bothered; how about a big fat no to that one and instead have some personal responsibility for a change. Sure; suspend mortgage repayments for 6 months (interest will still accrue) or offer incentives for people to train into temporary nursing services (we know it will be needed) and you've got a big thumb up from me; free money to everyone because they could not be bothered to plan for bad times and push the issue to future generations? Sorry; big no.

Widdensushi

so you can work or not work for the same pay,considering there are expenses for most people to travel to work etc, I wonder which one would be picked ?

Balf

Danno wrote: »

Then that law needs to be changed for a time-limited period until Covid-19 passes.

In fact, it is a good time to have legislation drafted that can be easily used in such outbreaks in the future should another virus of this scale ever come about again.

Changing it would require a new EU Treaty. Not normally the kind of thing that people come up with overnight.


And creating an ongoing ability to stuff the economy every time there's a new Flu isn't necessarily a proposal that would gain unanious support, I hope.


At the same time, your basic point is sound. There are costs there, big costs, that are being landed on people without much thought about how they'll cope.

BorneTobyWilde

ArmaniJeanss wrote: »

You can't really give 'free' electricity because people then leave every light in the house on.
Thankfully there should be some downward pressure on prices of utilities soon because of the price of oil.

One step should be that no-one with a reasonable history of paying utilities should be cut-off, and that anyone who falls behind in bills can choose to pay it off over a very long term when things 'normalise'.

Why would you leave light on? Why would it alter what a person is doing normally.

I can't imagine doing that, electric is free, get the lights on all over the house and leave them on.. Why would one do that.

Idbatterim

many people now made unemployed, receiving the same amount as the life long wasters. What a great system! banks are allowing mortgage deferrals, get real, this is ireland, people who havent bothered paying their mortgage for years here are still in "their" houses... Nobody is going anywhere in an unprecedented situation like this!

Idbatterim

TripleAce wrote: »

Bet they had money to go to the pub though?

money to go to the pub, expensive smart phones, tv and broadband packages, twently + euro for a dominoes pizza etc. Total necessities!

Guy:Incognito

sameoldname wrote: »

If you could do that you could then force a hold on the collection of rent by landlords during that time period which would at least allow people to afford food and utilities while on social welfare. .

Except the landlords whose rent income is their wages presumably?

ArmaniJeanss

BorneTobyWilde wrote: »

Why would you leave light on? Why would it alter what a person is doing normally.

I can't imagine doing that, electric is free, get the lights on all over the house and leave them on.. Why would one do that.

Did your Mam never say 'Tobias, switch that heat off, put on a jumper if you are cold'.
If the gas and leccy were free would she have said that?

Idbatterim

people working from home arent driving or paying for public transport. That would be far more than walk or cycle to work. Think that will cover the extra pittance on bills per day...

The Belly

Widdensushi wrote: »

so you can work or not work for the same pay,considering there are expenses for most people to travel to work etc, I wonder which one would be picked ?

If the country goes into lock down the only people working will be essential services and those that can work from home. Its not a lifestyle choice rather a emergency measure.

sameoldname

Guy:Incognito wrote: »

Except the landlords whose rent income is their wages presumably?

They can sign on for the duration.

TuringBot47

Danno wrote: »

If Covid-19 lasts longer than people's savings can allow for then riots will ensue when they run out.

You keep mentioning riots.
Obviously projecting your own anxiety and fear on to others.

If the banks can postpone mortgages without charge, then then landlords should pass that on to tenants who can't pay.

The vast majority of Irish people are decent people, there won't be riots.
Maybe from the scumbag elements in bad estates, but they just need an excuse like Halloween to kick off.

Balf

TuringBot47 wrote: »

If the banks can postpone mortgages without charge, then then landlords should pass that on to tenants who can't pay.

Grand so far as it goes, but there's a much bigger picture.

Halting significant sections of the economy entails significant costs. Those costs have to land somewhere.

Currently, if those costs are being mentioned at all, its as if they were an outcome and not a choice.

I'd suspect the medical experts specifying the measures don't appreciate the long-term impacts of what they are requiring us to do. I suspect they see it solely as a medical issue, and feel no responsibility for the significant damage they are doing to people's lives as that damage isn't a disease.

I suspect they conceive of it as no different to telling a patient to take a few weeks off work. "The work will still be there when you get back".

That's not what happens when you tell the economy to take a few weeks off.

The Belly

Helicopter money in the US

https://www.investing.com/news/economy/breaking-mnuchin-says-government-wants-to-send-stimulus-checks-2113102

J_1980

Now everyone realizes that you have to run surpluses to stimulate the economy when SHTF.
But in the boom everyone wanted free gaffs and endless welfare increases (5er more, more ONe family payment, xmas bonus etc).
Now the bill is due. Curious how SF will perform in an election with looming €15bn deficits and debt vultures circling over Ireland.

Not feeling sorry for anyone suffering. People need to learn what real poverty is instead of that bullsht “relative poverty” measure. Puts everything into perspective. All left leaning European government will be annihilated by this (Italy, spain..).

noodler

Assetbacked wrote: »

David Mcwilliams argued for this very thing in the IT at the weekend.

The problem with implementing it are the vested, elite interests that argue the money should go into the system via entities rather than people. Although, if people are left burned with this coronavirus I would strongly expect protest voting and potentially we could see the break up of the euro and the EU if this ends badly for the average man.

Didn't he argue for 1,000 euro each citizen?

About 2bn.

The cost of guaranteeing salaries would be absolutely colossal.

Nijmegen

This is a very odd situation for the economy. The only analogy is a total war, the bit when bombers are taking your city apart and armies are rolling over it.

Helicopter money from central banks is the only way to survive a demand and supply side shock, or else when the virus is gone we’ll have no economy to come back to.

Inflationary pressures are not present in a frozen market (if anything we risk some pretty permanently damaging deflation).

To use a sectoral example, 670 of 700 airlines are expected to go to the wall without support, according to the air transport industry body IATA. Same could be said of bars, cafes, etc etc. Their workers on the dole, not spending in the economy when it comes back and defaulting on their loans, the contagion would take us all out indirectly as well as directly.

This is an extraordinary time that calls for extraordinary measures. Print that money.

Central banks print it to buy up government debt, government issues it to citizens and businesses, and central bank wipes it out afterward. When we emerge from isolation we have the cash we need to buy a pint or pay our mortgage and the economy goes on.

The alternative is no cash, massive depression.

noodler

Danno wrote: »

Then that law needs to be changed for a time-limited period until Covid-19 passes.

In fact, it is a good time to have legislation drafted that can be easily used in such outbreaks in the future should another virus of this scale ever come about again.

Zimbabwe.