So there is a magic wand after all. A revolutionary paper by the International Monetary Fund ["The Chicago Plan Revisited"] claims that one could eliminate the net public debt of the US at a stroke, and by implication do the same for Britain, Germany, Italy, or Japan.The Telegraph
IMF's epic plan to conjure away debt and dethrone bankers
Ambrose Evans-Pritchard
(h/t Andy Blatchford via email)
8 comments:
From Evans-Pritchard's article:
Arguably, it would smother freedom and enthrone a Leviathan state. It might be even more irksome in the long run than rule by bankers.
This is always the crux of it, isn't it. Austrians and a bunch of other people went so far off the deep end in their opposition to communism, that they claim to prefer any sort of monstrosity so long as it's "privately controlled." Earlier research, cited by Benes ad Kumhof in their IMF paper put the lie to the pervasive assumption that "rule by bankers" is better:
It was the English Free Coinage Act of 1666, which place the money supply into private hands, and the founding of the privately controlled Bank of England in 1694, that first saw a major sovereign relinquishing monetary control, not only to the central bank but also to the private banking interests behind it. The following centuries would provide ample opportunities to compare the results of government and private control over money issuance. The results for the United Kingdom are quite clear. Shaw (1896) examined the record of monarchs throughout English history, and found that, with one exception (Henry VIII) the king had used his monetary prrogative responsibly for the benefit of the nation, with no major financial crises. On the other hand, Del Mar (1895) finds that the Free Coinage Act inaugurated a series of commercial panics and disasters which to that time were largely unknown, and that between 1694 and 1890 twenty-five years never passed without a financial crisis in England.
It is an interesting paper, and it's already been discussed a few times on this site. I hope you read it if you have not already done so.
"Free Coinage Act" : What was that? You were free to make coins as long as they were made of silver???
rsp,
On the other hand, see Bernard Lietaer's concern with the leviathan of exclusively or chiefly govt money. He was a central banker and knows the drill. According to him, the chief purpose of central banks is preserving the status quo, i.e., the current social pecking order. He brings in complex adaptive systems and complexity theory, and says we need greater diversity in the provision of money. While he understands MMT and agrees it is correct theoretically, he disagrees that relying more on govt is a practical solution in light of complexity and the threat of system collapse with a hierarchy of money with govt at the top and centralization of a major subsystem like money provision.
See Bernard A. Lietaer "Monetary blind spots and structural solutions" at YouTube. Here's a playlist.
Matt,
it meant that coinage was produced by mints (still maintained by the government) "free of charge." It meant, effectively, that metal was as good as money. Purveyors of precious metals were given a free subsidy and also unprecedented power to control the "money supply" and thus the government itself. This hadn't previously been the case.
Here's Del Mar (1899):
A charge of "retinue" or "brassage" should cover the cost of fabrication and maintenance of the mints; while the superior value imparted to the metal by the imposition of the government stamp, should be compensated by a seigniorage. Such charges were common to all mints previous to the plunder of America and the ascendancy of the goldsmith class.
Michael Hudson is listed in the paper's references.
This makes perfect sense to me. It seems like the way forward. MMt should probably get on board with this.
AEP: "It is a myth - innocently propagated by the great Adam Smith - that money developed as a commodity-based or gold-linked means of exchange. Gold was always highly valued, but that is another story. Metal-lovers often conflate the two issues.
Anthropological studies show that social fiat currencies began with the dawn of time. The Spartans banned gold coins, replacing them with iron disks of little intrinsic value. The early Romans used bronze tablets. Their worth was entirely determined by law - a doctrine made explicit by Aristotle in his Ethics - like the dollar, the euro, or sterling today"
This is a bit off wrt what the ancient Greeks wrote... they wrote that it indeed started as weight measures of otherwise useful metals and then eventually they thought "why bother" and just had the state impune the value on a coin via law...
rsp,
if you never use the "useful" metals then how can it be barter?
y,
Right it wasnt 'barter' but looks like the use prevented the possibility of "getting stuck" with them... ie what Warren calls "money good"....
rsp,
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