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.
I’ve supported MMT for a good ten years, but strikes me MMTers grossly over-do the idea that taxes don’t pay for public spending. The idea that taxes are only collected to control demand is certainly A WAY of looking at things. It’s a useful mental exercise. But an equally valid way is the conventional way, which is to say that public spending must be covered by taxes (and/or government borrowing), while in most years a bit of stimulus is needed in the form of simply creating new money and spending it.
As the article stated, at state / local levels taxes are critical because they are revenue constrained. The federal government is not revenue constrained and does not need taxes to function. At that level taxes are ONLY a regulatory device.
What we have is federal taxation used to regulate (perpetuate) a vast class of serfs and support a tiny majority - who in any equitable system would be taxed into equality with the rest of society.
"'Money' is fictitious instead of actual. A lot of people have a hard time with this, but it is the case.”
False. Please give me all your “fictitious” dollars.
“The actual constraint on spending is availability of actual resources, not ‘funding’.”
There is no constraint on U.S. federal spending, just as there is no constraint on adding points to a sports scoreboard. The government may decide to reduce spending in order to control inflation, but that is a decision, not a restraint.
“As Matt has observed the government model doesn't fully conform to the corporate model now anyway.”
At the federal level the government model doesn't at all, conform to the corporate model, since the government can create infinite money out of thin air, and therefore has no need to save money or make a profit.
@ Ralph Musgrave: The U.S. government has no need for loans or for tax revenue. This is a fact. It is not a "mental exercise," or "a way of looking at things."
False. Please give me all your “fictitious” dollars.
Illogical. "Money" can be a convention and an integral part of an institution without being something actual. That is to confuse "money" with "money things." "Money" is an accounting entry. There is nothing real in the world corresponding to "money."
Moreover, "money" is a high-order abstraction that is concretized in specific units of account that appear on accounting records.
Like a corporation being a legal person. Corporations are "fictional" persons and not natural persons. Everyone knows that (except Mitt Romney and SCOTUS).
Illogical indeed. If money is not "actual," then why does everyone want more of it?
"There is nothing real in world corresponding to 'money'."
Absurd. The world fights over money.
"Moreover, 'money' is a high-order abstraction that is concretized in specific units of account that appear on accounting records."
First you claim that money is not "actual," and that money corresponds to "nothing real." Then you claim that money is "concretized." Such self-contradictions are what happen when we fall into absurdity.
"Like a corporation being a legal person. Corporations are 'fictional' persons and not natural persons. Everyone knows that (except Mitt Romney and SCOTUS)."
I agree that corporations are not persons, but I do not agree that this means that money is not money.
Let's simplify this...
Money has no physical existence, just as the points on a scoreboard, or numbers written on a piece of paper have no physical existence. Money (like points and numbers) is a strictly mental concept. Money (like points) is created out of thin air, and is destroyed by sending it back into thin air. This is done by crediting or debiting accounts.
Sports points are denoted by symbols on a scoreboard. Money is denoting symbols in a bank account. A point, like a dollar, is a mental unit of account.
No one has ever seen a point, or a dollar, or the number "three." We only see symbols that represent dollars, points, and numbers. A dollar bill itself is not money. The bill is a token that represents money. As such, it can be traded and used like money.
Although money is a strictly mental concept, this does not mean that money is not "actual" or does not exist. Mental concepts only exist in the human mind, but they do exist, and they do correspond to the world around us.
As I said, it is difficult for many people to accept that "money" is a just a convention, really, a convenience, that is socially constructed and embedded institutionally through law and regulation.
Most people's "money" is in bank account on digital ledgers aka spreadsheets. That's it. Should that information be lost, poof goes the "money" just as if cash bills were burned.
A whole lo of life in civilization is like this.
Just think of the difference between us and Stone Age tribes. Most of this is the result of organization of both people and real resources. There are no natural resources that were not available to primitive peoples other than than those that technology provided access to.
But technology began with those resources that were available to primitives. The technical part of the technology is knowledge and skill, which exist in terms of brain functioning and communication of the nervous system with the body parts necessary for speech and action.
The big advances were the harnessing of energy in the form of fire and the fashioning of wooden and stone tools. But the really big advances came from using more advanced knowledge, like the invention of the wheel, pully, etc. The rest is history.
The huge jump came with the invention of the printing press, which made possible the proliferation of knowledge. Another similar jump is happening the the invention of digital technology. We can't yet fathom what this implies for emergence.
Bucky Fuller called knowledge and skill our "metaphysical" resources as distinct from our natural resources. He pointed out that our metaphysical resources are limited only by our creativity, while our natural resources are limited as long we are confine do this planet. Thus, we use our metaphysical resources to amply our natural resources.
Technology made room for population growth and so human resources increased numerically but also increased in power through development of metaphysical resources. Much of what is most important is now "metaphysical" in Fuller's sense of the term.
A major innovation in this direction was the development of accounting and credit, which became the basis for "money." "Money things" as tokens came later. Now we realize that money things or tokens are not necessary for commerce or saving. As the direction trends strongly toward a cashless society that is fully digitized, a lot of people that associate "money" with "money things" are freaking. And, of course, those concerned with privacy.
So we invent stories to comfort us.
What this also implies is that civilization hangs by a thread. Looking at the past, we see that knowledge has not only gained but also lost, and former civilizations collapsed into relative barbarism or just disappeared leaving only monuments to testify to their existence and greatness.
Under such circumstances, exchange lapses back into barter as the conventions and institutions that underpin a monetary society disappear.
As I said, it is difficult for many people to accept that "money" is a just a convention, really, a convenience, that is socially constructed and embedded institutionally through law and regulation.
Yes. Money is an accounting system that by itself has no "value." This is beyond the ken of cretins like Franko, but it’s quite simple.
Most people's "money" is in bank account on digital ledgers aka spreadsheets. That's it. Should that information be lost, poof goes the "money" just as if cash bills were burned.
Scary, isn’t it?
A whole lot of life in civilization is like this.
Yes. Culture (any culture) consists of narratives, most of which are bullshit.
As the direction trends strongly toward a cashless society that is fully digitized, a lot of people that associate "money" with "money things" are freaking. And, of course, those concerned with privacy.
Yes. I consider this to be terrifying. When society is cashless, and coins and currency notes are outlawed, average people will be more owned and controlled than ever before in human history. One touch of a button can totally immobilize us. On the other hand, maybe living in this coming nightmare will finally spur average people to seek alternative ways to live.
So we invent stories to comfort us.
Exactly. To comfort us and to maintain the social strata.
What this also implies is that civilization hangs by a thread. Looking at the past, we see that knowledge has not only gained but also lost, and former civilizations collapsed into relative barbarism or just disappeared leaving only monuments to testify to their existence and greatness.
Under such circumstances, exchange lapses back into barter as the conventions and institutions that underpin a monetary society disappear.
Civilization does hang by a thread. And the fools in charge of it are as clueless as is Franko.
9 comments:
I left a comment. I said:
I’ve supported MMT for a good ten years, but strikes me MMTers grossly over-do the idea that taxes don’t pay for public spending. The idea that taxes are only collected to control demand is certainly A WAY of looking at things. It’s a useful mental exercise. But an equally valid way is the conventional way, which is to say that public spending must be covered by taxes (and/or government borrowing), while in most years a bit of stimulus is needed in the form of simply creating new money and spending it.
@Ralph
As the article stated, at state / local levels taxes are critical because they are revenue constrained. The federal government is not revenue constrained and does not need taxes to function. At that level taxes are ONLY a regulatory device.
What we have is federal taxation used to regulate (perpetuate) a vast class of serfs and support a tiny majority - who in any equitable system would be taxed into equality with the rest of society.
Spending needs to be "funded" in the accounting sense of "sources and funds." This is a requirement of double entry.
The convention is revenue or financing "funds" expenses.
The so-called necessity for taxing or borrowing in an accounting phenomenon that may or may not be congruent with actual requirements or needs.
Politically imposed requirements are voluntary and could be different.
Real needs relate to real resources.
"Money" is fictitious instead of actual. A lot of people have a hard time with this, but it is the case.
The actual constraint on spending is availability of actual resources, not "funding."
There are a other accounting options for booking funding rather than adopting the model of corporate accounting.
As Matt has observed the government model doesn't fully conform to the corporate model now anyway.
"'Money' is fictitious instead of actual. A lot of people have a hard time with this, but it is the case.”
False. Please give me all your “fictitious” dollars.
“The actual constraint on spending is availability of actual resources, not ‘funding’.”
There is no constraint on U.S. federal spending, just as there is no constraint on adding points to a sports scoreboard. The government may decide to reduce spending in order to control inflation, but that is a decision, not a restraint.
“As Matt has observed the government model doesn't fully conform to the corporate model now anyway.”
At the federal level the government model doesn't at all, conform to the corporate model, since the government can create infinite money out of thin air, and therefore has no need to save money or make a profit.
@ Ralph Musgrave: The U.S. government has no need for loans or for tax revenue. This is a fact. It is not a "mental exercise," or "a way of looking at things."
False. Please give me all your “fictitious” dollars.
Illogical. "Money" can be a convention and an integral part of an institution without being something actual. That is to confuse "money" with "money things." "Money" is an accounting entry. There is nothing real in the world corresponding to "money."
Moreover, "money" is a high-order abstraction that is concretized in specific units of account that appear on accounting records.
Like a corporation being a legal person. Corporations are "fictional" persons and not natural persons. Everyone knows that (except Mitt Romney and SCOTUS).
Illogical indeed. If money is not "actual," then why does everyone want more of it?
"There is nothing real in world corresponding to 'money'."
Absurd. The world fights over money.
"Moreover, 'money' is a high-order abstraction that is concretized in specific units of account that appear on accounting records."
First you claim that money is not "actual," and that money corresponds to "nothing real." Then you claim that money is "concretized." Such self-contradictions are what happen when we fall into absurdity.
"Like a corporation being a legal person. Corporations are 'fictional' persons and not natural persons. Everyone knows that (except Mitt Romney and SCOTUS)."
I agree that corporations are not persons, but I do not agree that this means that money is not money.
Let's simplify this...
Money has no physical existence, just as the points on a scoreboard, or numbers written on a piece of paper have no physical existence. Money (like points and numbers) is a strictly mental concept. Money (like points) is created out of thin air, and is destroyed by sending it back into thin air. This is done by crediting or debiting accounts.
Sports points are denoted by symbols on a scoreboard. Money is denoting symbols in a bank account. A point, like a dollar, is a mental unit of account.
No one has ever seen a point, or a dollar, or the number "three." We only see symbols that represent dollars, points, and numbers. A dollar bill itself is not money. The bill is a token that represents money. As such, it can be traded and used like money.
Although money is a strictly mental concept, this does not mean that money is not "actual" or does not exist. Mental concepts only exist in the human mind, but they do exist, and they do correspond to the world around us.
There. That's how we keep it simple.
"strictly mental concept, this does not mean that money is not "actual" or does not exist. Mental concepts only exist in the human mind,"
Its call Abstraction, take a Science course... Artist...
As I said, it is difficult for many people to accept that "money" is a just a convention, really, a convenience, that is socially constructed and embedded institutionally through law and regulation.
Most people's "money" is in bank account on digital ledgers aka spreadsheets. That's it. Should that information be lost, poof goes the "money" just as if cash bills were burned.
A whole lo of life in civilization is like this.
Just think of the difference between us and Stone Age tribes. Most of this is the result of organization of both people and real resources. There are no natural resources that were not available to primitive peoples other than than those that technology provided access to.
But technology began with those resources that were available to primitives. The technical part of the technology is knowledge and skill, which exist in terms of brain functioning and communication of the nervous system with the body parts necessary for speech and action.
The big advances were the harnessing of energy in the form of fire and the fashioning of wooden and stone tools. But the really big advances came from using more advanced knowledge, like the invention of the wheel, pully, etc. The rest is history.
The huge jump came with the invention of the printing press, which made possible the proliferation of knowledge. Another similar jump is happening the the invention of digital technology. We can't yet fathom what this implies for emergence.
Bucky Fuller called knowledge and skill our "metaphysical" resources as distinct from our natural resources. He pointed out that our metaphysical resources are limited only by our creativity, while our natural resources are limited as long we are confine do this planet. Thus, we use our metaphysical resources to amply our natural resources.
Technology made room for population growth and so human resources increased numerically but also increased in power through development of metaphysical resources. Much of what is most important is now "metaphysical" in Fuller's sense of the term.
A major innovation in this direction was the development of accounting and credit, which became the basis for "money." "Money things" as tokens came later. Now we realize that money things or tokens are not necessary for commerce or saving. As the direction trends strongly toward a cashless society that is fully digitized, a lot of people that associate "money" with "money things" are freaking. And, of course, those concerned with privacy.
So we invent stories to comfort us.
What this also implies is that civilization hangs by a thread. Looking at the past, we see that knowledge has not only gained but also lost, and former civilizations collapsed into relative barbarism or just disappeared leaving only monuments to testify to their existence and greatness.
Under such circumstances, exchange lapses back into barter as the conventions and institutions that underpin a monetary society disappear.
@ Tom Hickey: Now we agree.
As I said, it is difficult for many people to accept that "money" is a just a convention, really, a convenience, that is socially constructed and embedded institutionally through law and regulation.
Yes. Money is an accounting system that by itself has no "value." This is beyond the ken of cretins like Franko, but it’s quite simple.
Most people's "money" is in bank account on digital ledgers aka spreadsheets. That's it. Should that information be lost, poof goes the "money" just as if cash bills were burned.
Scary, isn’t it?
A whole lot of life in civilization is like this.
Yes. Culture (any culture) consists of narratives, most of which are bullshit.
As the direction trends strongly toward a cashless society that is fully digitized, a lot of people that associate "money" with "money things" are freaking. And, of course, those concerned with privacy.
Yes. I consider this to be terrifying. When society is cashless, and coins and currency notes are outlawed, average people will be more owned and controlled than ever before in human history. One touch of a button can totally immobilize us. On the other hand, maybe living in this coming nightmare will finally spur average people to seek alternative ways to live.
So we invent stories to comfort us.
Exactly. To comfort us and to maintain the social strata.
What this also implies is that civilization hangs by a thread. Looking at the past, we see that knowledge has not only gained but also lost, and former civilizations collapsed into relative barbarism or just disappeared leaving only monuments to testify to their existence and greatness.
Under such circumstances, exchange lapses back into barter as the conventions and institutions that underpin a monetary society disappear.
Civilization does hang by a thread. And the fools in charge of it are as clueless as is Franko.
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