Warren Mosler Explains Fiat Currency to PolandWarren patiently makes some absolutely trivial points here, that should be the simplistic taking-off point for all other fiscal policy discussions:
1) lost output from current under-employment is always in danger of being greater than the sum of all prior output (simply because humanity is still growing to record capabilities; ~ min47 in the video)
2) our stds of living could be many multiples of current stds, if not for unemployment induced by misbalancing the ratio of net fiat_taxes to net_fiat_spending
3) our exponentially expanding options worth exploring ALWAYS exceed the number of people available to do available work
(see the following, about exponentially expanding aggregate options, cost of coordination, and return on coordination:
http://econintersect.com/b2evolution/blog2.php/2012/12/16/redefining-fiscal-policy-outcomes-so-that-our-definition-of-successful-investing-isn-t-depriving-our-grandchildren-of-options
http://seekingalpha.com/user/830328/comments/2
[see "Falling Down The Elevator Shaft" comment]
http://econintersect.com/b2evolution/blog2.php/2011/12/04/how-individuals-fail-to-understand-evolving-markets [see Traveling Entrepreneur Task] )
Warren is right that confusion about these drop-dead simple system axioms is the greatest systemic barrier to improving the level of discussion for all subsequent policy complications.
An understanding of fiat currency operations doesn't automatically answer all policy questions, but it is an absolutely necessary but not sufficient step in understanding all subsequent national policy options.
No policy foundation? Then no policy stability from an uninformed electorate. And a constrained Adaptive Rate to boot.
An understanding of fiat currency operations doesn't automatically answer all policy questions, but it is an absolutely necessary but not sufficient step in understanding all subsequent national policy options.
No policy foundation? Then no policy stability from an uninformed electorate. And a constrained Adaptive Rate to boot.
9 comments:
Shifting entries between different accounts shouldn't terrify citizens into constraining Output, employment, GDP & gen welfare of the people.
Warren was incredibly patient in this seminar.
The only thing he didn't explicitly say outright is that we're constraining our Output & General Welfare primarily by a lack of imagination.
As we free labor from old endeavors, we're simply not taking aim at new Desired Outcomes worthy of our expanding capabilities.
Couch potato culture. If it weren't for real bad prospects, we wouldn't have no prospects at all! :(
Interesting presentation on fractal geometry:
https://www.youtube.com/watch?v=HlXAzln8s7c&index=11&list=UUvHqXK_Hz79tjqRosK4tWYA
... lost output from under-employment is always greater than the sum of all prior output.
Huh? All he said there is that the lost output for one year is probably equal to the sum of all the losses from all the wards in history. I don't know how he comes up with that, but he certainly didn't say that it was equal to the sum of all prior output.
I think WM has also said something to the effect of " the only thing standing between us and full employment is the space between our ears." I use that one a lot.
Don't know what wards you're talking about Dan, but I changed MY wording to be a bit more nuanced.
I was embracing & extending points Warren made, not quoting him verbatim.
I'll leave it to you to work out the details. For an auto-catalytic system, anything less than fully leveraged potential is always on the verge of foregoing more than the prior sum of all output. That's an axiom of the math of compounding system growth.
Another analogy I would have used - at least to scientists - is that arbitrarily limiting fiat currency supply for a growing economy is ...
pretty much the same as arbitrarily limiting blood supply for a child trying desperately to grow.
'Bout as freaking dumb & misguided as you can get.
Hear any NeoLiberals ranting about "balancing" THEIR babies blood supply?
We have to call "BULLSHIT!"
Given the simplicity of MMT's solution for recessions, you wonder why so few professional economists criticise MMT. I suspect the reason is that professional economists HATE simple solutions to economic problems. That's first because the existence of a simple solution to a problem which they claim is complex would make them look stupid.
Second, they hate solutions to problems because that would put some of them out of work. As Upton Sinclair put it, “It is difficult for a man to see the truth when his salary depends upon not seeing it.”
Actually, Ralph, I wouldn't tout MMT as "A" solution to anything.
It does, however, seem fair to say that understanding fiat currency operations is ALWAYS a necessary but not sufficient step to all, increasingly nuanced solutions to tuning our own adaptive path.
The task complexity never stops growing. Getting the 1st step right shouldn't seem like such a difficult hurdle.
MMT reveals a policy space. There are a lot of possibilities in that space, and a lot what is now thought to be impossible or dangerous turns out not to be under the MMT microscope.
Within that space, MMT economists have shown the possibility of integrating the trifecta of growth, employment, and price stability within the context of the existing system with relatively few tweaks.
It's not so much a "solution" as removing the ignorance and letting the light shine in. The policy space provides a lot of options.
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