These agreements don't really have anything to do with currency?
They always involve preserving preferred access to select goods for preferred classes of people ... at the net expense of the country (or organization) being looted? That's called Control Fraud. Claiming systemic ignorance is little consolation, since that only means we're being controlled by our own ignorance, instead of accelerating our Adaptive Rate, and controlling ourselves via constant growth of group intelligence.
Class war always reduces to net looting, by failing to utilize, organize and grow the net capabilities of a nation? Fiat currency operations perverted to fiat looting? Discarding useful operations is not the solution. Minimizing their misuse for looting is our goal. Regulate the net self-fraud by reducing the frequency of inadequate Situational Awareness, and getting systemic ignorance within survival tolerance limits.
Given Walter Shewhart's maxim:
"For any complex system, the highest cost, by far, is the cost of coordination,"
the immediate and dead obvious corollary is that
"for any complex system, the highest return, by far, is the return on coordination,"
Why not simply continously improve the net quality, including tempo, of distributed decision-making?
21 comments:
Tell Me Again Why a Fiat Currency Issuer Needs to Borrow Someone Else's Fiat Currency? Mike Norman
Why should a fiat currency issuer borrow at all? Borrowing by a monetary sovereign is "corporate welfare" according to Professor Bill Mitchell. But welfare should be reserved for those who need it. Yes, a monetary sovereign can always pay the interest but it is a waste of its ability to deficit spend without price inflation.
And what keeps the dominant influence in any situation from sliding into Control Fraud? Even dominant campaign finance lobbies open the door for Control Fraud on a national and even international scale.
frlbane, it seems you're either missing the point, or we're saying the same thing using different jargons and different contexts?
if fiat currency denominates PART of public initiative (i.e., those parts that can be accurately tracked by liquidity records) ... then why can't the infinite reserve of public initiative always rise to meet any national need, for liquidity or other needs?
It always boils down to a choice.
Borrow "initiative" from Traders who have no allegiance to anything except the place they happen to stand (and give up in return constraints on your OWN future initiative, i.e. freedom)
or
Keep control of your own options, keep them unlimited and unconstrained, and have members of an organized citizenry "pay" one another entirely through their own social credits (i.e., their own fiat currency).
There's no task that can't be solved through group organization. One nation borrowing from another is an abject admission that it can't - or doesn't choose to - grow the capabilities of it's own population.
99.999% of the time (but not always), that's a colossal mistake. If you've lost a "war" and are defeated, then concede. Until then, put in the work to grow and improve?
Roger this looks like the typical pattern I see:
You have these morons in Egyptian leadership ...
They cannot see how a state currency system operates mathematically...
Being ignorant in this regard, they have to find an external authority to appeal to for guidance...
They subject themselves to western financial interests...
rsp,
@rodger,
First, I apologize for misattributing your post to someone else.
I am 100% for sovereign governments issuing their own fiat instead of borrowing someone else's money supply else they are not truly sovereign. My question is why should a monetary sovereign borrow its own money when the interest paid is a waste of its ability to deficit spend without causing price inflation?
Why should a fiat currency issuer borrow at all? Borrowing by a monetary sovereign is "corporate welfare" according to Professor Bill Mi
What Bill Mitchell means technically is that since public debt issuance is operationally unnecessary in a fiat regime, interest payments constitute a subsidy, and subsidies are inefficient and therefore must be justified based on some measure of effectiveness like public purpose. So the question becomes, What public purpose is served by tsy issuance and paying interest on tsys that would justify such a large and permanent subsidy?
"Tell Me Again Why a Fiat Currency Issuer Needs to Borrow Someone Else's Fiat Currency?"
To finance the balance of payments.
Perhaps if the Fiat currency issuer doesn't produce anything that other countries want, it might need to borrow someone else's Fiat currency.
"Tell Me Again Why a Fiat Currency Issuer Needs to Borrow Someone Else's Fiat Currency?"
To finance the balance of payments.
This is exactly the point. Why should a country subsidize another country intrest to run a trade imbalance that results in demand leakage? If exporters had to hold non-interest paying reserves would they be so interested in running a mercantilist policy?
Perhaps if the Fiat currency issuer doesn't produce anything that other countries want, it might need to borrow someone else's Fiat currency.
But here we do have a case of lack of affordability. If you can't trade for it, you can't have it. Otherwise, the country will just run up debt and come under foreign control, if not directly then through the IMF. But in Europe it is directly, as the peripheral falls under the boot of the core.
So the question becomes, What public purpose is served by tsy issuance and paying interest on tsys that would justify such a large and permanent subsidy? Tom Hickey
Alexander Hamilton as much as admitted that the purpose of a US national debt was to bribe the rich into supporting the fledging US government. That need is long past. I can see that sovereign debt benefits pensioners since they need a risk-free source of income but that can be provided more justly with more generous Social Security. But if people desire a still higher retirement income then they should take risks, not be given welfare roughly proportional to one's wealth disguised as legitimate interest payments.
Alexander Hamilton as much as admitted that the purpose of a US national debt was to bribe the rich into supporting the fledging US government.
Yes, this is the crux of it. Hamilton successfully argued that the US to have a strong central government and fit its financial system into the prevailing European system to survive and prosper, even though the US had just revolted against that system. Many were displease with this "sell-out" but Hamilton won the day and the rest is history. There were many crucial decisions like this is US history where things could have gone differently and resulted in a very different country.
"But here we do have a case of lack of affordability."
Hi Tom, I'm not sure I understand your point. It appears you are talking about Europe. The question of the post was why does Egypt (a fiat currency issuer) need to borrow another country's fiat currency?
"Perhaps if the Fiat currency issuer doesn't produce anything that other countries want…"
Must a country export? Must a country export more than it imports? Must a country import?
These are choices, usually for the benefit of a select few at the expense of the many.
The case of Europe is a special one, due to the currency union, where it was presumed that the periphery was not borrowing in another's currency, so it would not matter. But even here it did, due to the structure of the pact.
When it comes to emerging countries, the situation is different. They borrow in other currencies to "become competitive" figuring that they can grow their way out of the debt. That almost never happens, though, and they fall into a debt trap that results in an implicit loss of sovereignty until they default on the debt. It's a pattern.
"The case of Europe is a special one, due to the currency union, where it was presumed that the periphery was not borrowing in another's currency, so it would not matter."
This was just another zero-sum system (Paradox of Your Choice, fallacy of composition, etc.) and as such had zero success of succeeding. Only one with ideological blinders or a religious faith in magic could have seen otherwise.
This kind of system would have to be managed like a symphony orchestra to have any chance at all.
@paul
"These are choices, usually for the benefit of a select few at the expense of the many."
Exactly my point. And to Ramanamanan Babu, why SELECT to slow the progress of the many only to arbitrarily satisfy the immediate - and usually trivial - wants of the few?
There's nothing sacred about voluntarily creating a balance of payments. Egypt doesn't necessarily need Mercedes Benz' etc, anymore than India "needed" the EIC for 300 years.
Since Egypt is not starting from a position of autarky, or even balanced trade, saying, "just don't run a current account deficit, then," is not sufficient.
If your proposal is that the IMF should not give Egypt the loan, or that Egypt should not seek one, then your response to the possibility of an Egyptian BOP crisis is to not try to prevent it--basically to, "cure the disease and kill the patient."
"kill the patient."
It's also premature to conclude that the BOP crisis will kill the patient.
Egypt's problem is internal and distributional. It's top-heavy.
"Egypt's problem is internal and distributional. It's top-heavy."
I'd assumed that was a given. If that ain't the consensus option, it's no wonder this comment stream went astray.
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