Wednesday, December 5, 2018
Adams/North: The Madness Of Modern Monetary Theory
I don't know who John Adams is, but he seems to be a gold and silver bug who is very right wing in his economic theories and he may even be a libertarian. I'm not an economist, but I began to see his arguments were nonsense. For instance, he tells us how MMT states 'that printing more money is not inflationary when the economy is under productive because the new money will produce more goods and services', but he goes on to say that adding more money to the money supply is always inflationary without saying why this is, he simply states this as fact.
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For instance, he says that MMT states that printing more money is not inflationary when the economy is under productive because the new money will produce more goods and services, kv
Yes, this is the per the standard definition of inflation, i.e. price inflation.
but he goes on to say that adding more money to the money supply is always inflationary without saying why this is; he simply states this as a fact. kv
To an Austrian, ANY increase in the fiat supply is inflation regardless of prices and is THEFT even if, for example, wages are falling due to population growth - ignoring that lazy, risk-free gains in purchasing power via fiat hoarding are also theft.
To see what the Bible says about fiat hoarding read Matthew 25:14-30.
- ignoring that lazy, risk-free gains in purchasing power via fiat hoarding are also theft. aa
Not to concede that ANY increases in the fiat supply are theft. Indeed, SOME increases in the fiat supply are REQUIRED to prevent theft via deflation.
“Adams says that adding more money to the money supply is always inflationary without saying why this is; he simply states this as a fact.”
Adams’ error is common among people who are new to MMT. First they claim that money is not “real” unless it is “backed” by gold. When this is debunked, they claim that the federal government must borrow all its money. When this is debunked, they claim that if MMT would cause hyperinflation, as though MMT does not describe what already occurs.
Put simply, inflation is caused when there is an excess of money in circulation combined with a shortage of goods, services, and resources to spend money on. As long as there is no shortage of goods, services, and resources to spend money on, there is no inflation caused by added money.
The USA, Canada, and Australia have no shortages of goods, services, and resources. Hence stimulus spending causes no inflation.
This is a basic point in MMT. Some people find it hard to understand, since they have spent all their lives believing false nonsense. When they fancy themselves geniuses, their stupidity becomes impenetrable.
Of course, HOW fiat is to be created is crucial and fiat should NOT, for example, be created to benefit special interests such as the banks.
I’ve been debunking MMT nonsense and doubletalk for almost 8 years now.
First they claim that money is not “real” unless it is “backed” by gold.
I’ve never claimed that.
When this is debunked, they claim that the federal government must borrow all its money.
I’ve never claimed that.
When this is debunked, they claim that if MMT would cause hyperinflation, as though MMT does not describe what already occurs.
Well, spending funny money into existence will certainly cause a dilution of purchasing power eventually, although the people getting the new money first will probably be able to spend it for approximately what it was worth at the time of the funny money emission. Since the people getting the new money first are usually the rich and powerful, that invariably amounts to a transfer of wealth from the have nots to the haves. WHICH IS ONE OF THE BASIC PURPOSES OF THE SYSTEM. What a swell system. Duh.
Put simply, inflation is caused when there is an excess of money in circulation combined witha shortage of goods, services, and resources to spend money on. As long as there is no shortage of goods, services, and resources to spend money on, there is no inflation caused by added money.
Whenever the money supply is artificially increased, the supply will be diluted, and prices will go higher and higher. The fact that more and more goods are sold so that the “price level” remains static (which never actually happens) does not mean that prices are not rising when they should be falling across the board. Prices would certainly be higher than they could and should be. Since the market does not fail and does not lead to unemployment or the boom/bust cycle, “stimulus” and the entire Keynesian line of B.S. is attempting to solve a problem that does not exist but instead creates the problems that do exist. Again, what a marvelous system.
And I might add (for the 75th time), the market does not result monopoly. Read Kolko.
Whenever the money supply is artificially increased, ... Bob Roddis
So what's a NON-artificial increase in the money supply, Bob?
... does not mean that prices are not rising when they should be falling across the board. ibid
Thereby rewarding lazy, risk-free money hoarding as if that's a recipe for progress. Or a recipe for justice as the population increases but the money supply does not.
The problem then is NOT that prices fail to fall but HOW new purchasing power is to be created. That argues for:
1) All fiat to be inexpensive so the entire population may use it.
2) Said fiat to be distributed justly to all citizens. This might include a Citizen's Dividend equally to all citizens.
3) Banks shall be 100% private with 100% voluntary depositors; this also argues for 1) above.
“Well, spending funny money into existence will certainly cause a dilution of purchasing power eventually…”
Inflation is a product of the ratio between money supply and the availability of goods and services to spend money on. As long as the ratio is balanced, there is no inflation. If we increase the money supply without there being a corresponding increase in goods and services, there is imbalance, and inflation.
“I’ve been debunking MMT nonsense and doubletalk for almost 8 years now.”
You have never managed to make the slightest dent in MMT.
Bob Roddis (paraphrased) - Keynesianism solves a problem that “does not exist.”
Yeah, that’s right. The continuous line of *depressions* produced by the Gold Standard “did not exist.”
Inflation and deflation are economic manipulations as much as economic effects. There is no money inflation because of deflation of the value of goods and services due to oversupply and cutthroat competition. There is an absolute glut of everything and the loss of profit in lower price is often (ironically) ‘compensated’ for by increased production.
Thereby rewarding lazy, risk-free money hoarding as if that's a recipe for progress. Or a recipe for justice as the population increases but the money supply does not.
It's called "poor people saving for emergencies and old age". As if this would be a problem, much less a problem that requires a SWAT Team's violent attack on average people who are non-criminals. You are so vicious, heartless and totally lacking in any empathy. Like all "progressives". You live to boss people around. You think that average people are too stupid to live in peace without your expertise delivered at the point of a gun. Like all "progressives".
Brian Romanchuk said...
Bob Roddis (paraphrased) - Keynesianism solves a problem that “does not exist.”
Yeah, that’s right. The continuous line of *depressions* produced by the Gold Standard “did not exist.”
As I endlessly repeat, no non-Austrian has the slightest familiarity with Austrian School concepts or analysis. Book One (of scores): The Panic of 1819 (which happened under "the gold standard" so to speak).
https://tinyurl.com/y964h5zx
”It's called "poor people saving for emergencies”
In Bobs fantasy world poor people are able to save. In the real world poor people have nothing to save, and never had. That’s because they are POOR!
“I’ve been debunking MMT nonsense and doubletalk for almost 8 years now”
Bob and EKH are having a debunking competition.
By the way, EKH says he has debunket Austrian school. So Bob better get busy debunking EKHs “profit theory”.
The Panic of 1819 by Rothbard, page 181: Virginia was a leading stronghold of hard-money opinion. Its leading statesmen, such as Thomas Jefferson, attacked any issue of bank paper beyond the supply of specie. As we have seen in the case of the Crawford Report, Thomas Ritchie, editor of the Richmond Enquirer, used sophisticated economic arguments to attack any suggestion of inconvertible paper schemes. Typical of Virginia opinion was an Enquirer editorial laying the blame for the crisis squarely at the doors of the banks. The only remedy was for the parasitic banks to be eliminated, with industry and economy allowed to effect a cure. Ritchie also urged that if bank paper be permitted to continue in existence, there at least be vigorous restrictions on all banks, whether state or national, private or incorporated. Small denomination notes must be prohibited and paper must always be convertible into specie. The least reluctance to do so should forfeit the bank’s charter.
"Small denomination notes must be prohibited and paper must always be convertible into specie. The least reluctance to do so should forfeit the bank’s charter." via Bob Roddis
The real question is why any citizen should have to use bank notes or bank deposits in the first place?
Why should not all citizens be allowed inherently risk-free, always liquid fiat accounts at the Central Bank or National Treasury itself?
Moreover, such accounts, along with the elimination of all government privileges for bank deposits such as deposit insurance, would greatly increase the DEMAND for fiat and thus reduce concerns about the SUPPLY of fiat.
So expensive fiat is not the solution but:
1) Distributing new fiat justly - for the general welfare via deficit spending and/or equal distributions to all citizens (Citizen's Dividend).
AND
2) Allowing all citizens to use fiat in account form at the Central Bank or Treasury.
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