Bottom-Up Transition From Hoarding Fiat Currency to Growing Net Output

In a comment stream at Warren Mosler's site, Paulo Garrido aptly stated two salient points that have been on my mind since meeting Warren.

i) Some [people] think their actual private savings (or the actual private savings of those they act on behalf of) will lose value facing an increase of private savings?
  [Actually, I think Paulo is combining or possibly conflating two things here.  In my experience, MOST people think currency buying power - aka, value of financial savings - will decrease if net incomes always rise, bottom-up, so that a population can always purchase & consume whatever it can produce.  Most people I meet inevitably think this way, but not just because they've been educated only on gold-standard thinking.  Most are indoctrinated with what I call micro- not macro-capitalism.]

ii) Privatizing public services offers to some very good perspectives for private “investment”?
[This is a given.  People are tempted to explore local options, and are only secondarily aware, if at all, of macro repercussions.  To the untrained, unpracticed or unintelligent, "unexpected" conflict between local/group options produces frustration and anger first, and return on coordination only when they're forced to coordinate.  The untold stories of unrepentant White Collar social frauds are legion, whether they're still hiding in plain sight, or feeling persecuted in prison.]

Meanwhile, some people, including Warren, don't see this.  They obviously don't talk to the same people that I do.

I've heard both views. The last time was exactly yesterday. From an ex NASDAQ staffer.

While roughly in paradigm with fiat currency operations, his view was that 99% of the population don't want to hear how currency systems actually work, because they're already both indoctrinated, fully invested AND FULLY ENGAGED in operating in micro, not macro economics paradigms, i.e. in "me first," not return on coordination mode. That's why many people become so angry upon first hearing about actual currency operations.  They aren't prepared to hear it, and don't like to hear that their entire paradigm is upsidedown.  It quickly leads the brighter ones to the realization that everyone they know has been shamefully misused their entire lives.  At that point, some get on board, and some decide that the truth hurts so much it must be very wrong and very bad.  The rest are left rather puzzled, and too busy in their rat race to review Situational Awareness in depth.

Also, the NASDAQ guy's outlook was that real economic organization had to be top-down - another consequence of orthodox education. All his accounting & economics education was gold-std thinking, and he would not be swayed despite acknowledging fiat operations.

His blunt prediction was that it's now impossible to wean the electorate off the idea of fiat currency savings as a long term store of value.

We'll see.

My personal view is that we're still in the midst of a long standing policy war between those who want to preserve the buying power of their own currency savings, and those who want to achieve enough income to purchase what they can produce.

That transition represents one aspect of a more general transition that is always going on, and will never end.  As long as any or all of individual humans, the human social species, and our current nation states are still evolving, we'll always be continuously transitioning individual and group Situation Awareness (paradigms, outlooks or world views) from today's situation to tomorrow's altered situation.  As a social species, both our individual and cultural Situational Awareness is dominated by how we view our own inter-dependencies and organization - i.e., our macro-economic paradigm.  Hence, most of our personal/cultural evolution involves accelerating adaptive transitions in how we view our own personal_PLUS_group options, not just either separately. Unfortunately, this is NOT how we run our current education systems.  Most people only learn a tiny smattering of return-on-coordination, accidentally, through sports and other entertainment activities (choreography, orchestras, stage drama, etc, etc).

Anyway, the ongoing policy war of any group is war largely with themselves, and certainly war with the bulk of their own offspring.

Meanwhile, what is the immediate/next Situational Awareness transition needed in OUR country - or YOURS, whichever it may be?

Transition step 1 is to stop trying to save fiat?

  How?  Varies with local context.  1001 ways to educate your peers?

Transition Step 2 is to set minimal social credit standards (automatic stabilizers) and give incentives to consume whatever we can produce? [Note that that's bottom-up.]

  How? Also Varies with local context. Policy follows an informed electorate.

Transition Step 3, circumvent the top-down/bottom-up (produce/consume) connundrum by rephrasing them as inseparable co-processes. The real issue is maintaining consumption>=production - i.e, greater than or equal to - AS WE GROW both population and options (where options = all capabilities and all potential output).  That simply involves allowing the natural audacity of kids to be expressed as they grow.  Austerity means suppressing the audacity of children - a crying shame.

Here's a suggested addition to accomplishing transition step 3.  Appeal to higher authority, i.e., to fields outside economics alone. Please consider the following postulates, quickly summarized.

Ultimately, the largest driver of growing consumption is added diversity.

The largest driver of net diversity (net sexual recombination) is still population growth.

Population growth comes via babies, most of whom are initially low-income (not that it really matters, but just to make a point, for those slower learners).

Hence, exploring national options = bottom-up priming of cultural dynamics, tilting that dynamic system so that threshold income is always pulling net incentive to produce.  In raw terms, a complex system can't grow without maintaining local reverse-entropy, i.e., consuming net energy and parking it in new forms as local growth.  A human nation or economy cannot optimize that consume/produce cycle without optimizing our liquidity processes.  We have to find ways to fully utilize all of us, as vehicles for expressing the unimaginable, still largely unexplored, return on coordination.  In economic terms, that means providing enough liquidity to allow us to consume, i.e., utilize, anything we're capable of producing, faster every day.  Without the challenge of meeting our own consumption, there's no incentive to produce, since the two grow only by embrace, not in isolation.

A final note on Situational Awareness.  We have zero predictive power, but awesome selective power. Hence, "producers" can't predict what a population needs, and must explore & respond to expanding consumer wants. That's just extending Natural Selection to cultural levels. In the end, added cultural diversity always explores new cultural options, but ONLY if that culture continually improves it's liquidity methods.  Every kid should learn that by age 10.

Instead of trying to save fiat, we have to allow our offspring to explore ALL the options they can imagine. By net investment in offspring, we reap the biggest return of all (by far), the return-on-coordination.

Barring net destruction of the product of population_X_capabilities, future production will always dwarf current production. Hence, there's no point in saving fiat long term, only short term, for liquidity.  Meanwhile, there's every incentive to grow net Output as return on coordination.

No one's saying this will be easy, or quick. Yet if our descendents are going to continue operating the USA, most WILL have trasitioned their Situational Awareness to achieve a higher return on coordination than we have. That new Situational Awareness WILL include a more nuanced awareness of micro/macro currency operations as inseparable parts of the same liquidity methods.  That will take all the mystery out of "money," and return it to being a simple, automatic stabilizer of social liquidity and social credit.  Note that that is NOT a prediction. Rather, it is simply recognition of something a still small but growing proportion of our population has been saying since at least the time of John Law.