An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
I wouldnt call the money in our bank account "magic". That's just silly, not profound. Do we really need to go through Mad Max before we have a more equal society. Is the Graeber book worth reading? Didn't Matf dislike it?
wid,I think Graber's approach is that "money" is based on "debt" or a "liability" or thereabouts (I could misinterpret)... his book was titled "Debt the first..." then morphing into weights of certain metals..(btw there are still plenty of people even today that assert "money" is some sort of "liability" or "debt" and those who say it is based on metals and all else is "funny money"... )What he may be on to is an ancient arrangement or system of "medium of exchange" that preceded Greece and Rome... a very ancient system that preceded Greek 'nomos' or law.I think what Tom has posted here recently from Aristotle's 'Ethics' shows how by the time of the Greeks (then the Romans) they designed and used what they called 'nomisma' which was based solely on their civil law or 'nomos'.Aristotle specifically states that it has nothing to do with "nature" (ie metals imo). And he mentions NOTHING about "debt" or the like. So all of that went out (metals and debt) discarded by the Greeks.From my review of the Hebrew and Greek scriptures, parallel to Greece and Rome, looks like a system based on weights of metals was still running at the same time outside of Greece and Rome and on the frontiers of the empire.So the history around what humans have done for medium of exchange is fluid and evolving. And different for the west vs the east.I dont think the history can be simplified, or there is some sort of "common denominator" if you will that undergirds so-called "money".iow it may be a bit of a fools errand to try to say: "Money is...." The history reveals a pretty diverse set of arrangements that humans have employed right on up to present as there are still morons about who want to go back to the "gold standard"... hang on this ain't over yet!!!!rsp,
ps wid,I would encourage all to go down and read Tom's excerpt from "Ethics" below. It's pretty profound stuff.It's a translation so it is a bit clunky wording, but at core to me it looks like they purposefully tied the design of their medium of exchange or 'nomisma' system DIRECTLY to how it would influence economic results with the goal that said results would be just and "ethical"... rsp,
I think is fair to say that physical spot settlement was resorted to instead of credit where there was lack of trust, e.g., in foreign trade, or paying the military, which had to be conducted either in barter or spot payment in something of widely recognized value, like gold or silver. But soldiers were also paid in salt, thus "salary," and "He isn't worth his salt."Gold and silver had value not because of "natural" or intrinsic value, but rather because they were valued as signs of social status used by rules and courtiers everywhere in order to distinguish the ruling class from the ruled. Soldiers, especially mercenaries, where not going to accept a rulers promise to pay, either. To be retained they had to be recompensed either in booty from conquest or physical payment.Credit relationships only exist among people that know and trust each other, so it could emerge quite early in human social organization. On the other hand, nomisma requires the rule of law (nomos) and an organized society, e.g., a "polis," to function.
Matt: there are still plenty of people even today that assert "money" is some sort of "liability" or "debt" Yes, they're called MMTers. (and allied (post)Keynesians, Institutionalists or people who understand what they're talking about) The problem is that recent "economists" - and unfortunately Graeber at times in his book - redefine the word "debt" - from the universally understood ordinary dictionary meaning, the dictionary meaning, the meaning that children know. Modern brainwashing & confusion is so extensive that is a good exercise to take a hard look at a dictionary - to understand this stuff I pulled out my trusty fineprint OED which my eyes are still barely good enough to read. But recently I was horrified to see an inconsistent nonsense-definition of debt (interest-bearing, in terms of money) in an otherwise decent special purpose Economics Dictionary.I note that the first lecture soon to be given at Columbia is to be "What is Debt?" - I'm glad that the MMT academics see the necessity of this, an axe I've been grinding atop my hobbyhorse for a long time.The history reveals a pretty diverse set of arrangements that humans have employed right on up to present Nope, it reveals superficially different, but essentially identical arrangements.Read Mitchell-Innes, Wray, MacLeod, Commons, Keynes, Lerner, Geoffrey Ingham etc. And Mitchell-Innes again.Saying "money is debt" is not much more than saying "money is nice to have", which I hope everyone agrees on. But that little more is essential. If money weren't debt - if somebody didn't owe the holder in some way - why on earth should anyone want to have money? And the point of such debts, such liabilities is that they are never liabilities "for something". It was a signal service for Dan Kervick to say something so lucidly wrong.Perhaps because, as far as I can tell, economists neither know or understand any modern mathematics (& less (genuine) classical philosophy) , they are afraid to imagine how absurdly simple ideas can be at the heart of, explain, the most complex and intricate subjects.
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