commentary by Roger Erickson
Ann Pettifor discusses HOW capitalist countries keep their electorates so misinformed about currency creation, and implicates orthodox economists as unwitting accomplices - let's just say Innocent Frauds.
It seems like a rather long treatise to summarize a simple point, and she immediately gets into a shouting match with Mike Norman over semantics, then off into sidetracks with Ralph Musgrave about fractional reserve banking. Unfortunately, little of the treatise or discussion quickly reduces public confusion.
For the public at large, why not just hammer on 5 of the simplest points - as a start? If the bulk of the electorate knew at least the following, it would be a significant milestone that we could build upon.
1) A growing economy requires a growing currency supply, simply for liquidity.
2) A steadily increasing currency supply means the buying power of a unit of liquidity must float.
3) #2 sets up a potential point of friction. Those inappropriately hoarding fiat currency see net liquidity growth as "Thinning Money Out of Mint Air" - i.e., reducing buying power of their stash. Their narrow, personal preference limits systemic liquidity. How do we handle that limiting friction between individual and group fortunes?
4) The solution is to make sure that all understand that the potential return-on-coordination from scalable liquidity far outweighs the static-asset value of hoarded liquidity units (fiat currency). Simply put, personally "save" by investing in some mix of dynamic and static assets, but do NOT try to save primarily in liquidity units.
5) Our constant need? Continue the ongoing transition from hoarding static assets to hoarding ability to procure dynamic assets. That's what social species do. It's called evolution (of teamwork).
ps: In a fiat currency regime, there is no fractional reserve banking, since banks don't lend out reserves - but leave that to later.
4 comments:
This lady is crazy.
Those inappropriately hoarding fiat currency see net liquidity growth as "Thinning Money Out of Mint Air" - i.e., reducing buying power of their stash. Their narrow, personal preference limits systemic liquidity. How do we handle that limiting friction between individual and group fortunes? Rodger Erickson [bold added]
By not being greedy and control freakish and allowing (after a universal bailout with full legal tender fiat to force the banks to accept it) genuine private currencies for private debts only. That way, the "stealth inflation tax" is abolished and money hoarders should not be concerned with excessive fiat issue since, in real terms, taxes would become easier to pay relative to their taxation level.
Look. The gold bugs want the private sector to control all money issue and others want the government to create all money. Isn't the obvious and Scriptural (cf. Matthew 22:16-22) solution to allow each sector to create its own money (Of course fiat could be voluntarily used for private debts too while private monies would not be acceptable for government debts).
Oh, and to have genuine private currencies requires that all government privileges for the banks be abolished.
makes sense.
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