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.
unless they accept real assets or other financial assets in payment of taxes. pegging a currency to gold is a great way to start a currency off with net financial assets.
Well duh! That's covered in the essay you obviously didn't read. Just defers the payment in currency units.
A functioning currency issuer doesn't need or want real assets. It's defining purpose is to manage the collective liquidity that feeds return-on-coordination, which in turn generates more, compounding, real wealth than everyone can possibly imagine.
All a gold-std does is constrict policy space and constrain policy agility. In practice, fraud moves to maneuvering to control access to prioritized goldmining. It's a stupid, sideways move that never did work out in practice.
Considerable real constraints, no appreciable benefits.
can you point to me where it's covered in the essay? i see no coverage. the closest he comes is talking about reserve adds being before reserve drains. ie you could argue (correctly i think) that a payment of taxes in gold or tobacco is like selling that asset to the currency issuer at the fixed price and then canceling your liability.
re gold standard: oh come on you know I'm in the club. i don't need the lecture. i was making what i felt was an interesting point about the similarities between everyone pegging to a particular asset and everyone collectively forming a clearing house whose liabilities are jointly all of them.
Apologies, Nathan. Had no idea who you were (others have since sent me emails), and assumed the worst.
Mosler makes a point of declaring the boundary condition at onset of a new, fiat currency regime. What assets people sell in order to get access to their initial currency liabilities - paid immediately or later, seems implied throughout, if not belabored in any particular sentence.
Not everyone is overly interested in the spurious details that accompany the adjustments of a diverse, distributed populace to a systemic policy change. As another point of logic, such adjustments have to also be diverse.
Not saying that doesn't matter a lot to various individuals, or to their adjustment strategies. It's just not clear that it matters much for group policy. Not always as much as the concern about re-regulating the changing options for Control Frauds.
Best way to worry about diverse, individual adjustment needs following a currency change is through indirect, Automatic Stabilizers?
> Mosler makes a point of declaring the boundary condition at onset of a new, fiat currency regime. What assets people sell in order to get access to their initial currency liabilities - paid immediately or later, seems implied throughout, if not belabored in any particular sentence.
Uhm... so every currency issuer *need not* issue notes, before...
And when the first bond issue is paid off with currency, the former bond holders become *currency owners.*
And they must become currency owners *before* the government issues the next round of bonds. [modulo account period conventions].
Make sense?
MMR actually gets this right. Mosler and his cult do not. Peace.
Professor Alain Parguez immediately picked up on this and added it to his model in his next paper, only to be severely criticized and isolated by much of the ‘Circuitist’ community for many years! Most came around to accept it over the years, though some continue to fail to do so.
Marris, Don't see what the long-term, rate limiting significance of a distribution of currency owners or holders is. We're talking about the monopoly or rate limiting role of the Currency Issuer, who holds the sole monopoly position of increasing net currency supply (i.e., national liquidity) in a nation with a growing combination of people-X-transaction options and transaction rates.
> Don't see what the long-term, rate limiting significance of a distribution of currency owners or holders is.
Then you're not thinking hard enough. Imagine a distribution policy (that's what we're talking about here, not an actual distribution or a distribution in the limit) that rewards unproductive people. That will clearly have long-term implications on most (all?) aspects of society.
Plug in your favorite bumper sticker unproductive example: welfare recipient, disabled person, immigrant, banker, land owner, politician, etc.
IIRC if you go back before the GFC and check total system RB vs the amount of USTs that were going to be issued later in the day, you will see that total system RBs were less than the auction amounts...
so dealers would have had no choice at that time other than to enter into repo (ie they are not "owners" they are "borrowers") with the CB in order to obtain the RBs needed to participate/settle the auctions that day...
ie "reserve add before reserve drain..."
Remember it is a Dealer market, not an Open market...
Don't think anyone's disputing the degrees of freedom of a distribution party. One of the least appreciated positions of MMT is that the currency issuer ALWAYS has discretion to fix any erratic net behavior by ANY permutation of Currency Owners, with forceful enough fiscal action.
In Mosler's words, the Currency Issuer is always swing producer for all Currency Owners.
14 comments:
unless they accept real assets or other financial assets in payment of taxes. pegging a currency to gold is a great way to start a currency off with net financial assets.
what's interesting is that under a gold standard, gold is like jointly issued public debt (similar to ICU credits under Keynes's bancor plan.)
Well duh! That's covered in the essay you obviously didn't read. Just defers the payment in currency units.
A functioning currency issuer doesn't need or want real assets. It's defining purpose is to manage the collective liquidity that feeds return-on-coordination, which in turn generates more, compounding, real wealth than everyone can possibly imagine.
All a gold-std does is constrict policy space and constrain policy agility. In practice, fraud moves to maneuvering to control access to prioritized goldmining. It's a stupid, sideways move that never did work out in practice.
Considerable real constraints, no appreciable benefits.
can you point to me where it's covered in the essay? i see no coverage. the closest he comes is talking about reserve adds being before reserve drains. ie you could argue (correctly i think) that a payment of taxes in gold or tobacco is like selling that asset to the currency issuer at the fixed price and then canceling your liability.
re gold standard: oh come on you know I'm in the club. i don't need the lecture. i was making what i felt was an interesting point about the similarities between everyone pegging to a particular asset and everyone collectively forming a clearing house whose liabilities are jointly all of them.
Apologies, Nathan. Had no idea who you were (others have since sent me emails), and assumed the worst.
Mosler makes a point of declaring the boundary condition at onset of a new, fiat currency regime. What assets people sell in order to get access to their initial currency liabilities - paid immediately or later, seems implied throughout, if not belabored in any particular sentence.
Not everyone is overly interested in the spurious details that accompany the adjustments of a diverse, distributed populace to a systemic policy change. As another point of logic, such adjustments have to also be diverse.
Not saying that doesn't matter a lot to various individuals, or to their adjustment strategies. It's just not clear that it matters much for group policy. Not always as much as the concern about re-regulating the changing options for Control Frauds.
Best way to worry about diverse, individual adjustment needs following a currency change is through indirect, Automatic Stabilizers?
> Mosler makes a point of declaring the boundary condition at onset of a new, fiat currency regime. What assets people sell in order to get access to their initial currency liabilities - paid immediately or later, seems implied throughout, if not belabored in any particular sentence.
Uhm... so every currency issuer *need not* issue notes, before...
And when the first bond issue is paid off with currency, the former bond holders become *currency owners.*
And they must become currency owners *before* the government issues the next round of bonds. [modulo account period conventions].
Make sense?
MMR actually gets this right. Mosler and his cult do not. Peace.
Professor Alain Parguez immediately picked up on this and added it to his model in his next paper, only to be severely criticized and isolated by much of the ‘Circuitist’ community for many years! Most came around to accept it over the years, though some continue to fail to do so.
I guess you see it, or you don't.
Marris,
Don't see what the long-term, rate limiting significance of a distribution of currency owners or holders is. We're talking about the monopoly or rate limiting role of the Currency Issuer, who holds the sole monopoly position of increasing net currency supply (i.e., national liquidity) in a nation with a growing combination of people-X-transaction options and transaction rates.
> Don't see what the long-term, rate limiting significance of a distribution of currency owners or holders is.
Then you're not thinking hard enough. Imagine a distribution policy (that's what we're talking about here, not an actual distribution or a distribution in the limit) that rewards unproductive people. That will clearly have long-term implications on most (all?) aspects of society.
Plug in your favorite bumper sticker unproductive example: welfare recipient, disabled person, immigrant, banker, land owner, politician, etc.
Marris,
IIRC if you go back before the GFC and check total system RB vs the amount of USTs that were going to be issued later in the day, you will see that total system RBs were less than the auction amounts...
so dealers would have had no choice at that time other than to enter into repo (ie they are not "owners" they are "borrowers") with the CB in order to obtain the RBs needed to participate/settle the auctions that day...
ie "reserve add before reserve drain..."
Remember it is a Dealer market, not an Open market...
rsp,
Marris,
In surplus economies, "unproductive" becomes very subjective/normative...
rsp,
Social Darwinist.
Marris: "Imagine a distribution policy"
Don't think anyone's disputing the degrees of freedom of a distribution party. One of the least appreciated positions of MMT is that the currency issuer ALWAYS has discretion to fix any erratic net behavior by ANY permutation of Currency Owners, with forceful enough fiscal action.
In Mosler's words, the Currency Issuer is always swing producer for all Currency Owners.
Given that, I don't see what nits you're picking.
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