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.
Rob a bank? Of what? There's little real money in banks - just legal but crooked debt obligations the public has been driven into.
But speaking of robbery, that's just what a government-enforced gold standard is - robbery. Why? Because if you'd think about it a bit, Mr. Murphy, inexpensive fiat is the ONLY ethical money form for government debts otherwise what should only be a private money form at most is privileged by the taxation authority and power of government. But that's fascism. Nor is it even sound money.
Confusion, confusion on Murphy's part. The government doesn't borrow the Trillion dollars, it creates new financial assets out of thin air. You can think of this as the government paying for goods in bonds: the govt has more stuff and we end up with bonds. Kalecki got it in 1943:
"It may be asked where the public will get the money to lend to the government if they do not curtail their investment and consumption. To understand this process it is best, I think, to imagine for a moment that the government pays its suppliers in government securities. The suppliers will, in general, not retain these securities but put them into circulation while buying other goods and services, and so on, until finally these securities will reach persons or firms which retain them as interest-yielding assets. In any period of time the total increase in government securities in the possession (transitory or final) of persons and firms will be equal to the goods and services sold to the government. Thus what the economy lends to the government are goods and services whose production is ‘financed’ by government securities. In reality the government pays for the services, not in securities, but in cash, but it simultaneously issues securities and so drains the cash off; and this is equivalent to the imaginary process described above."
I thought Murphy was a semi genius, but I am more and more dissapointed. His rambling about bonds in incoherent and nonsensical.
But even the bonds are not necessary. Instead they are "corporate welfare" (Bill Mitchell's words). Murphy and Co. would really scream if that welfare for the rich was abolished, as indeed it should be.
F. Beard, I am not saying bonds are necessary, I am saying they are not "borrowing", they are a method of payment. Bonds are not corporate welfare, they are welfare to whoever owns assets. Why not, we do a ton of other welfare towards the poor, might as well do some towards the rich, but of course indeed it is a choice, not a necessity.
Article 1 - The Legislative Branch, Section 8 - Powers of Congress
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States
18 USC § 2113 - Bank robbery and incidental crimes
Whoever, by force and violence, or by intimidation, takes, or attempts to take, from the person or presence of another, or obtains or attempts to obtain by extortion any property or money or any other thing of value belonging to, or in the care, custody, control, management, or possession of, any bank, credit union, or any savings and loan association... Shall be fined under this title or imprisoned not more than twenty years, or both.
"Being forced to use fiat money at the point of a gun is not like taxes".
In Mosler's example everyone has to pay a business card 'tax' to leave the room. The 'man with the gun' represents law enforcement or military. To obtain the card in the example people are required to do some work. They're not forced to use the business cards once they leave the room. The card is just the means to pay the 'exit tax'.
There is no legal guarantee against inflation and monetary policy aims at some inflation to prevent hoarding and keep the flow moving.
1. Of course there is a legal guarantee against fiat inflation because the US government has only the power to COIN MONEY, meaning make coins out of gold and silver.
2. That's nice admission I'm saving for future reference: The government purposefully inflates to steal savings from citizens to "keep the flow moving" as if there was a "flow" and it "moved" and required a third party with a gun to force it the "flow" to "move".
18 USC § 8 - Obligation or other security of the United States defined
The term “obligation or other security of the United States” includes all bonds, certificates of indebtedness, national bank currency, Federal Reserve notes, Federal Reserve bank notes, coupons, United States notes, Treasury notes, gold certificates, silver certificates, fractional notes, certificates of deposit, bills, checks, or drafts for money, drawn by or upon authorized officers of the United States, stamps and other representatives of value, of whatever denomination, issued under any Act of Congress, and canceled United States stamps.
Section 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of the fine gold or fine silver therein contained, or shall be of less weight or value than the same out to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death.
http://constitution.org/uslaw/coinage1792.txt
And the government can only spend money on the limited 17 things it is authorized to do.
A “dollar” as set forth in the Constitution was a “Spanish milled dollar” containing three hundred and seventy-one grains and four sixteenth parts of a grain of pure silver.
Further, the Articles of Confederation granted Congress the right to “emit bills of credit” meaning issue paper money. With much forethought, that right was intentionally omitted from the US Constitution meaning that the Federal government has no power to issue paper money and the states were and are forbidden to “emit bills of credit” or issue paper money.
The entire MMT funny money scheme is illegal and unconstitutional.
Where does it say in the Constitution or the law that a 'dollar' can only be a "Spanish milled dollar containing three hundred and seventy-one grains and four sixteenth parts of a grain of pure silver"?
Where in the law does it say that the US government can only make coins out of gold and silver?
The states are forbidden from making anything but gold or silver coin legal tender. The Feds have no power to make anything legal tender. I suppose the Feds could make coins out of compressed belly button lint, but they could not force anyone to use or accept them since they do not have that power. Which makes the entire exercise silly.
The Coinage Act of 1792 demonstrated what the founders meant by the Constitutional expressions on the topic. There are no ambiguities to get around these very clear rules.
Section 19 of the Act established a penalty of death for debasing the gold or silver coins authorized by the Act, or embezzlement of the metals for those coins, by officers or employees of the mint; this section of the Act apparently remains in effect and would, in theory, continue to apply in the case of "any of the gold or silver coins which shall be struck or coined at the said mint." (At present the only gold or silver coins struck by the US mint are the American Silver Eagle and the American Gold Eagle coins, some Proof coinage at the San Francisco Mint, such as the silver US State Quarters, and much of the Commemorative coinage of the United States.) All other sections of the act have been superseded, as for example the Coinage Act of 1834 changing the silver-to-gold weight ratio. Various acts have subsequently been passed affecting the amount and type of metal in U. S. coins, so that today there is no legal definition of the term "dollar" to be found in U. S. statute.[4][5][6] Current statutes regulating coinage in the United States may be found in Title 31 of the United States Code.Wikipedia
Where does it say in the Constitution or the law that a 'dollar' can only be a "Spanish milled dollar containing three hundred and seventy-one grains and four sixteenth parts of a grain of pure silver"?
The Constitution uses the term "dollar" which the drafters clearly understood to mean a "Spanish milled dollar". Hamilton's statements on the subject demonstrate that. The Constitution does not define "Navy" either because everyone knew both what a dollar was and what a navy was.
A “dollar” as set forth in the Constitution was a “Spanish milled dollar” containing three hundred and seventy-one grains and four sixteenth parts of a grain of pure silver.
What version of the US Constitution are you reading from? Or is that some other constitution?
The Coinage Act of 1792 demonstrated what the founders meant by the Constitutional expressions on the topic. There are no ambiguities to get around these very clear rules.
Mr. SPENCE. I assume the reason the authority w^as repealed in 1935 was because of the existing conditions, then, when there was no reason for the authority: is that correct? Mr. ECCLES. Well, as I remember the discussion—and I have re- ferred to it in this statement—there was a feeling that this left the door wide open to the Government to borrow directly from the Federal Reserve bank all that was necessary to finance the Government deficit, and that took off any restraint toward getting a balanced budget. Of course, in my opinion, that really had no relationship to budgetary deficits, for the reason that it is the Congress which decides on the deficits or the surpluses, and not the Treasury. If Congress appro- priates more money than Congress levies taxes to pay, then, there is naturally a deficit, and the Treasury is obligated to borrow. The fact that they cannot go directly to the Federal Reserve bank to bor- row does not mean that they cannot go indirectly to the Federal Reserve bank, for the very reason that there is no limit to the amount that the Federal Reserve System can buy in the market. That is the way the war was financed. Therefore, if the Treasury has to finance a heavy deficit, the Reserve System creates the condition in the money market to enable the bor- rowing to be done, so that, in effect, the Reserve System indirectly finances the Treasury through the money market, and that is how the interest rates were stabilized as they were during the war, and as they will have to continue to be in the future.
The Constitution uses the term "dollar" which the drafters clearly understood to mean a "Spanish milled dollar". Hamilton's statements on the subject demonstrate that. The Constitution does not define "Navy" either because everyone knew both what a dollar was and what a navy was.
That's a fundamentalist view that almost no one but Scalia, a religious fundamentalist btw, espouses. Yes, Catholics can be fundamentalists, too.
Hamilton's statements on the subject demonstrate that.
It's historical fact that the founders disagreed on foundational issues. The Constitution is what emerged from compromise. Interpretation of those words is left to the courts. Early on, Hamilton's implied powers prevailed over proponents of enumerated powers.
"The Constitution does not define "Navy" either because everyone knew both what a dollar was and what a navy was"
So are you saying that metal battleships, submarines, aircraft carriers, jets, helicopters, hovercraft and ballistic missiles are unconstitutional? Only wooden boats with sails are permitted?
So are you saying that metal battleships, submarines, aircraft carriers, jets, helicopters, hovercraft and ballistic missiles are unconstitutional? Only wooden boats with sails are permitted?
You've gone off the cliff with your distortion. I win.
In the US, federal courts generally follow precedent (stare decisis) for consistency and predictability but they are not required to do so. Decided law is sometimes overturned.
Therefore, appealing to authority like the original intent of the founders is rather irrelevant if courts have decided differently. One can always hope that decided law will change in the future. But that only exists in imagination, not reality. People who refuse to accept reality are called delusional.
Blackstone’s Commentaries was the “standard legal treatise among Americans.”
Blackstone taught concerning English monetary matters and powers that the precious metals (gold and silver) are used as money, or that money consists of precious metals, both as a standard of account and as a medium of exchange. English law equated money with coin and coin with silver and gold. Silver and gold coin are also called specie. The Crown had the power to coin money, which meant stamping it and fixing its metallic content. The phrase used at the time was “fix the value.” This did not mean fixing the price. It meant fixing the weight or metal content of a coin. True money was undebased coin, meaning coins whose metal weight was not altered by the Crown.
In 1785, Congress considered a plan to make the Spanish milled dollar “the Money-Unit.” And it noted that “the Dollar...has long been in general Use. Its Value is familiar.” Congress then “Resolved, That the money unit of the United States of America be one dollar,” but did not yet determine its silver content. In 1786, the Congressional Board of Treasury calculated that the “Money Unit or Dollar will contain three hundred and seventy five grains and sixty four hundredths of a Grain of fine Silver,” and “will be worth as much as the New Spanish Dollars.”
The Articles allowed Congress various powers if a majority of States approved them. These included the authority to “coin money” and “regulate the value thereof.” Article IX of the Articles of Confederation also provided the United States in Congress with authority “to borrow money, or emit bills on the credit of the United States...” The money was gold and silver. The money-unit was a specific weight of fine silver. The Congress regulated the value of coins it did not mint, i.e., determined their metal content relative to the standard unit. And the Congress allowed a free market in coins by opening the mint to private conversions of metal to coins. The main changes to come in the Constitution that replaced the Articles were to remove the power to emit bills of credit, to forbid the states to coin money, and to make nothing but gold and silver a legal tender.
Bob, I'm glad your constant criticism about taxation being theft has moved to the space to where it always needed to be discussed in, that is, law. Suffice to say, as a law student who studies with some of the top constitutional scholars in the country, what you're saying is just bad legal analysis and would be laughed out of a Con Law class, in my experience. Maybe if you can find some legal scholarship supporting your points we can have a better conversation, because right now your reasoning is not going anywhere legally.
1. The only way that something can be "theft" is if you have a valid property law claim on it. So the state's taxation system, which is part of the legal system, can't be "theft". It can, of course, be critiqued for being highly coercive, like the property title law.
2. Assuming you are right with your constitutional view, the acquisition of greater purchasing power through expansion of the money supply (and in your world, dilution of existing people's monetary assets) could at best be called “unconstitutional”,. But that's an entirely different kind of breach of law than to violate property law, just as setting up spying equipment or violating the terms of your oath of office isn't “theft” .
3. Nothing in the coinage clause specifies limits on the purchasing power that can be ascribed to the coins (in fact, they are explicitly allowed to regulate its value in the same clause). So assuming we changed the coinage act at the congressional level to allow for a $1 trillion silver coin as well as a platinum one, the government would be able to print as much money under the current system as it wanted without even the spectre of a (poorly constructed) constitutional critique like the one you just made. It's not what the coin's metallic value is - there is no mention of bullion as a limiting criterion - it's the face value, so Congress isn't limited by the wording of the coinage clause in terms of nominal spending in any world, no matter how you read the constitution. So all of your high level constitutional arguments about our current system being theft are irrelevant – at best you're saying the 1996 platinum coin law gave greater flexibility in coinage decisions to the wrong type of metal.
4. As MMT argues, taxation is what creates the demand for a particular "money-thing", so even if you are right that congress is only allowed to issue gold and silver coins as "money", and assuming we aren't getting a trillion dollar silver coin statute passed, nothing prevents them from creating whatever kind of "tax-credit" security they want to and letting people trade that as “money”. In fact, that sounds kinda like the Fed to me. Remember, no one is forced to accept US Fed reserve dollar bills proactively in transactions, they only have to accept them in payment of legal debts, so no one is being forced to use money today other than in the sense that by engaging in economic transactions they are incurring a legal risk of being sued.
Anyway, I have plenty of legal readings on history, finance, the coinage, clause, etc. if you are interested and want to have a substantive discussion on what they say (or alternatively, send me some of yours if you'd prefer to get the dialogue started that way). I'll even promise to park the my ideological snarkiness and patronizing and moralistic tone at the door and be purely polite and substantive if you will promise to the same.
" at best you're saying the 1996 platinum coin law gave greater flexibility in coinage decisions to the wrong type of metal."
That could very well be what is going on here via the "back door"... VERY interesting revelation here Rohan wow...
Silver and gold (and btw copper), which are often referred to as "precious" metals have VERY unique electrical properties of their electron structures... there has always existed a disgraced cohort of humans that are drawn to be subjected to them... very often (looks like for most of the last 2,000 years) these people get to occupy positions of human authority...
Look at Rohan's legal analysis of "theft" here as far as your concept of "theft of purchasing power" and your "the bible" type of approach to these policies...
There is a Greek scripture where the Lord describes a "thief" perhaps thus: "You reap where you do not sow, and you pick up where you do not lay down..."
So the Lords words here dovetail nicely with Rohan's writing here imo:
"The only way that something can be "theft" is if you have a valid property law claim on it."
So this "property" oriented definition of "theft" is imo the correct interpretation of "thou shalt not steal" or whatever that no longer applicable part of the Mosaic Law demanded...
So you cannot "steal purchasing power".
That said, I think what you have a problem with is some bad policy and no arguments there from me... I believe what you see is like "favoritism" or something... govt is granting favor selectively, hypocritically, corruptly, etc...
what you're saying is just bad legal analysis and would be laughed out of a Con Law class
When I went to law school 1977-1980, we were expressly warned in con law class to never bring up the subject of original meaning or original intent. The job of the law school was to prepare lawyers to represent clients to win cases in courts today with judges who ruled based up the post-New Deal legal tradition (which is all they knew and could ever know). This was all very interesting and confirming of my existing beliefs about the hell of law school because I had been a libertarian and Austrian School advocate since 1973 when I had a low draft number and marched against the draft and the war. As such, I would and did never work for a prosecutor's office, even as a clerk or intern.
My fellow law students (and the professors) shared the opinion that anyone who was actually concerned about the philosophy of law and/or the sociological and/or economic impact of the law (as opposed to getting a big job with a big firm) was crazy.
I had assumed that the anti-intellectual and the incurious and deeply conformist atmosphere of law school had not changed and perhaps had gotten worse. Thank you for showing that is the case.
Nothing in the coinage clause specifies limits on the purchasing power that can be ascribed to the coins (in fact, they are explicitly allowed to regulate its value in the same clause)
Total nonsense. You understand nothing. The dollar is the standard and it is a specific amount of silver. And I previously wrote above:
Blackstone taught concerning English monetary matters and powers that the precious metals (gold and silver) are used as money, or that money consists of precious metals, both as a standard of account and as a medium of exchange. English law equated money with coin and coin with silver and gold. Silver and gold coin are also called specie. The Crown had the power to coin money, which meant stamping it and fixing its metallic content. The phrase used at the time was “fix the value.” This did not mean fixing the price. It meant fixing the weight or metal content of a coin. True money was undebased coin, meaning coins whose metal weight was not altered by the Crown.
I suppose people with your sorts of peculiar fixations will still exist a few hundred years from now, when there are perhaps colonies on Mars and money is just information. There will probably still be the odd nutter, bemoaning the fact that people don't use bits of metal to settle their transactions, ranting on the interweb, sitting in their hyperloop capsule as it speeds beneath the pacific ocean on its way to Beijing. Gradually your particular form of backwardism will probably just die a natural evolutionary death, as it just appears ever more absurd and ridiculous to each subsequent generation.
I often qualify my use of "theft" with "legalized." And that's what government-backed credit creation is - legalized theft. If someone wants to extend credit then let him extend his OWN credit, not the credit of the entire nation via government privileges.
And of course it is favoritism. Just ask any one with the misfortune to have lived in a "redlined" area of a city. And the favoritism is INHERENT because "creditworthiness" is largely subjective. Moreover, creditworthiness is irrelevant anyway since the ability to return legally stolen purchasing power plus interest is morally irrelevant.
And this:
Ill-gotten gains do not profit, but righteousness delivers from death. Proverbs 10:2
The money system was a major cause of WWII which killed 50-65 million people and destroyed a huge amount of investment. How many more millions must die before people realize that "Ill-gotten gains do not profit ...".
Bob, you and the other originalists are like religious fundamentalists living in the past, ancient or medieval times. Constitutional originalists are somewhat better, preferring to live in the 18th century. For the rest, the world moves on.
Actually, the fundamentalism of the Bible is about wisdom, justice, mercy, etc., not the worship of some shiny metal. Moses, for example, ground up the Golden Calf, mixed it with water and made the Hebrews drink it! Bob would call that a huge waste of gold, but I'd say it makes a very powerful point about what's important and what is not.
"If someone wants to extend credit then let him extend his OWN credit, not the credit of the entire nation"
The idea was supposed to be that if banks had access to things like government-backed deposit insurance and a lender of last resort, then they should have to give up some autonomy in return, and abide by certain regulations and restrictions on their activities. That was the package that was originally created during great depression - more security and stability in return for restrictions on banking activities.
Then in the deregulation period of the 80s onwards they got rid of most of the restrictions, but kept all the government guarantees. A very bad combination.
Then in the deregulation period of the 80s onwards they got rid of most of the restrictions, but kept all the government guarantees. A very bad combination. y [bold added]
But let me add that even "prudent" banking is not socially stable since government-backed credit creation violates equal protection under the law since some (historically whites, for example) are deemed more "creditworthy" than others.
As MMT argues, taxation is what creates the demand for a particular "money-thing"
That’s not true either. In the US, people were slowly tricked into using what had been silver certificates when the silver redemption language was removed. However, what keeps people using them are other taxes on all transactions using other forms of money. If you transact in foreign currency and/or precious metals, you have to keep track of your basis in the alternative money and pay capital gains taxes on any possible “gains”. A phony taxable “gain” can occur when the funny money “dollar” has depreciated against your alternative money that is used in a transaction. That’s a severe impediment to using alternatives to funny money “dollars”. Absent the government’s currency having significant independent value on its own as money for transactions, it could always be obtained very cheaply for use in paying taxes at the last possible moment if most transactions and savings were done using sound money.
Of course, if everyone was using sound money, the government would be hard pressed to use its funny money to steal purchasing power to impair “hoarding” or in getting the “flow” moving.
Bob, you and the other originalists are like religious fundamentalists living in the past, ancient or medieval times. Constitutional originalists are somewhat better, preferring to live in the 18th century. For the rest, the world moves on.
It's delusional.
So said Obama to Eric Snowden about the 4th Amendment.
So said Obama and Dubya to all of the Guantanamo inmates about the 5th and 6th Amendments.
tell you what Bob, move to a country where the populace has decided that it wants to indulge in juvenile pursuits and so uses only gold and silver coins as money.
Oh wait, there isn't a population on the planet dumb enough to do that. 21st century, etc.
the Constitution actually has something to say about that Bob, whereas it has, of course, NOTHING to say about the federal government only being allowed to issue gold and silver coins.
"No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law".
"some (historically whites, for example) are deemed more "creditworthy" than others".
True... however that can change over time as people realise what's going on and campaign against it. I think that prejudices can be overcome so long as there is a concerted effort over time to make it happen.
1. I'm sorry you had that experience in a particular law school 33-36 years ago. It is certainly not the experience I had, although I have many problems with my legal education and as anyone who knows me can attest, would be far from any list of "anti-intellectual and the incurious and deeply conformist" people within my law school. In fact, I have the opposite problem. My point was to show that you were relying on a highly idiosyncratic jurisprudence, and even within that jurisprudence (which i highly disagree with), the current scholarship on original intent is against you.
2. You are relying on Blackstone, a renowned formalist, as the basis of your understanding of english monetary law. Why do that? What possible claim to realistic jurisprudcent does formalism have, even under your bizarre original intent world? Moreover, I suggest you consult some contemporary historical scholarship on English monetary matters before make unjustifiable claims like that. This in particular would be a good start:
P A Brand and others, Credit and Debt in Medieval England, c. 1180-c.1350 (Oxbow Books 2002
For example, when you say this:
"The Crown had the power to coin money, which meant stamping it and fixing its metallic content. The phrase used at the time was “fix the value.” This did not mean fixing the price. It meant fixing the weight or metal content of a coin. True money was undebased coin, meaning coins whose metal weight was not altered by the Crown."
It baffles me you think you can construct a narrative of english money without referring to Seigniorage. Check out David Fox's article on nominalism in common law history for more on this point, including discussion of specific cases (so you can't claim it's all made up or that all lawyers can't be trusted based on your bad experience in school).
This also is problematic:
"Absent the government’s currency having significant independent value on its own as money for transactions, it could always be obtained very cheaply for use in paying taxes at the last possible moment if most transactions and savings were done using sound money."
As legal historian Christine Desan spent 20 minutes explaining in the beginning of her seminar on this exact topic of how liquidity preference emerges naturally from the designation of that which satisfies a tax liability:
When is Ms. Desan on the video? I spent 2 hours + listening to the lecture with Bill Black (#7) and 2 hours + listening to the Mosler/Murphy debate. I'm still waiting for the first non-Austrian to have some familiarity with basic Austrian School concepts.
I note that Desan's paper omits the intentional and knowing removal of the Congressional power to emit bills of credit from the Constitution where that power had been granted under the Articles of Confederation. A really bad error, intentional or not. See page 34.
The United States in Congress assembled shall have authority…..to borrow money, or EMIT BILLS ON THE CREDIT OF THE UNITED STATES, transmitting every half-year to the respective States an account of the sums of money so borrowed or emitted….
The United States in Congress assembled shall never engage in a war, nor grant letters of marque or reprisal in time of peace, nor enter into any treaties or alliances, nor coin money, nor regulate the value thereof, nor ascertain the sums and expenses necessary for the defense and welfare of the United States, or any of them, nor emit bills, nor borrow money on the credit of the United States, nor appropriate money, nor agree upon the number of vessels of war, to be built or purchased, or the number of land or sea forces to be raised, nor appoint a commander in chief of the army or navy, unless nine States assent to the same
At the Constitutional Convention the founding fathers decided by explicit vote not to include the power to emit bills of credit and (debatably) not to include the power to charter banks among the powers granted to the national government. Footnote 4
4 A common error repeated often in the literature is the claim that the Convention intentionally crafted a Constitution where Congress was allowed the power to emit bills of credit. For example, see Baack (653); Ferguson (1969, 254, 258); Nettels (98-99); Rolnick, Smith, and Weber (3); Schweitzer (311). The analysis here, if nothing else, is a valuable corrective in showing that under almost any logically consistent and coherent interpretation such a claim cannot be easily sustained. See also footnote 23.
It's interesting that James Madison, who was one of those that voted to strike the "bills on the credit" clause, then went ahead and issued paper money to help finance the war of 1812.
Thanks for the engagement. Can you elaborate on why you think it was an error? Chris is an extremely good friend of Farley's, and i know they don't disagree on the history, so i'd be very curious to know whether it was intentional or unintentional.
Desan's part is right at the start of the fifth seminar video. For future reference, i suggest just clicking at random intervals in the video in order to see when people are speaking rather than waiting an hour. That is one of the great benefits of not living in a VHS tape world anymore - the beginning and the end are equally one click away :) But i'm glad to hear you found the seminar and debate tolerable enough to watch all the way through, at least.
And with regards to Austrian concepts, we gave Bob Murphy as much time as he needed to discuss Austrian concepts, and the one thing he chose to focus on was the interest rate stuff, which I believe Warren responded to. Now, if you're asking why we dont talk about cantillon effects, economic calculation and all that, the answer is that there is no empirical way of proving that correct or incorrect. To the extent that Austrians have a theory of psychology, then that's absolutely fine (the rest of economics probably needs to do better on this), but until those ideas are framed in a way that allows for some empirical evidence-based discussion, any debate over those concepts would be like two religions arguing against each other.
That said, if you think there are other macroeconomic ideas that Murphy didn't explain that would improve or extend the Austrian case, please let me know, and if you want, we can start collaborating on trying to organize an event to move that discussion forward. As it is, I tried to show what I think the Austrians need to answer following Murphy's performance in this:
In particular, part 4. If you'd like to chat more about this and try to work out some constructive ways of engaging further, please email me at rgre8928@gmail.com.
I will be responding to you via email or in comments on your blog.
1. I recorded an audio MP3 file of session #5 which is now on my iPod. I will listen when I can.
2. I read and listen to most anything I can about MMT basically because I think it's the most preposterous scam I've ever encountered (next to Stalinism). I even spent good money on "The Economics of Control"
don't let the bastards get you down.
ReplyDeleteRob a bank? Of what? There's little real money in banks - just legal but crooked debt obligations the public has been driven into.
ReplyDeleteBut speaking of robbery, that's just what a government-enforced gold standard is - robbery. Why? Because if you'd think about it a bit, Mr. Murphy, inexpensive fiat is the ONLY ethical money form for government debts otherwise what should only be a private money form at most is privileged by the taxation authority and power of government. But that's fascism. Nor is it even sound money.
Amen to what y said. Consider the source. I may have started as an Austrian but reading the Old Testament alone made it impossible to remain one.
ReplyDeleteChristians are advised to stay well clear of those usury-loving gold-worshippers.
Confusion, confusion on Murphy's part. The government doesn't borrow the Trillion dollars, it creates new financial assets out of thin air. You can think of this as the government paying for goods in bonds: the govt has more stuff and we end up with bonds. Kalecki got it in 1943:
ReplyDelete"It may be asked where the public will get the money to lend to the government if they do not curtail their investment and consumption. To understand this process it is best, I think, to imagine for a moment that the government pays its suppliers in government securities. The suppliers will, in general, not retain these securities but put them into circulation while buying other goods and services, and so on, until finally these securities will reach persons or firms which retain them as interest-yielding assets. In any period of time the total increase in government securities in the possession (transitory or final) of persons and firms will be equal to the goods and services sold to the government. Thus what the economy lends to the government are goods and services whose production is ‘financed’ by government securities. In reality the government pays for the services, not in securities, but in cash, but it simultaneously issues securities and so drains the cash off; and this is equivalent to the imaginary process described above."
I thought Murphy was a semi genius, but I am more and more dissapointed. His rambling about bonds in incoherent and nonsensical.
Yes, that is a great quote from Kalecki's Political Aspects of Full Employment, 1.1. The whole of section 1 is a summary of the core of MMT.
ReplyDeleteand we end up with bonds. PeterP
ReplyDeleteBut even the bonds are not necessary. Instead they are "corporate welfare" (Bill Mitchell's words). Murphy and Co. would really scream if that welfare for the rich was abolished, as indeed it should be.
F. Beard,
ReplyDeleteI am not saying bonds are necessary, I am saying they are not "borrowing", they are a method of payment.
Bonds are not corporate welfare, they are welfare to whoever owns assets. Why not, we do a ton of other welfare towards the poor, might as well do some towards the rich, but of course indeed it is a choice, not a necessity.
Someone please explain the moral, substantive and practical difference between:
ReplyDeletea) Mosler's statement that fiat money is like forcing people to use his business cards as money at the point of a gun; and
b) Murphy's example that being forced to use fiat money is like bank robbery.
One is about the reality of taxes. They are law-based and laws are enforced by the state.
ReplyDeleteThe second is the imagined effect of currency is not commodity backed.
The difference, reality and imagination.
One is about the reality of taxes. They are law-based and laws are enforced by the state.
ReplyDeleteBeing forced to use fiat money at the point of a gun is not like taxes.
I guess you are claiming the Nixon difference:
Well, when the President does it, that means that it is not illegal.
When the government steals, that means it's not stealing.
When the government steals, that means it's not immoral.
Article 1 - The Legislative Branch, Section 8 - Powers of Congress
ReplyDeleteThe Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States
18 USC § 2113 - Bank robbery and incidental crimes
Whoever, by force and violence, or by intimidation, takes, or attempts to take, from the person or presence of another, or obtains or attempts to obtain by extortion any property or money or any other thing of value belonging to, or in the care, custody, control, management, or possession of, any bank, credit union, or any savings and loan association... Shall be fined under this title or imprisoned not more than twenty years, or both.
Thanks for beating to it, y. What's so hard to get about this?
ReplyDeleteThere is no legal guarantee against inflation and monetary policy aims at some inflation to prevent hoarding and keep the flow moving.
"Being forced to use fiat money at the point of a gun is not like taxes".
ReplyDeleteIn Mosler's example everyone has to pay a business card 'tax' to leave the room. The 'man with the gun' represents law enforcement or military. To obtain the card in the example people are required to do some work. They're not forced to use the business cards once they leave the room. The card is just the means to pay the 'exit tax'.
There is no legal guarantee against inflation and monetary policy aims at some inflation to prevent hoarding and keep the flow moving.
ReplyDelete1. Of course there is a legal guarantee against fiat inflation because the US government has only the power to COIN MONEY, meaning make coins out of gold and silver.
2. That's nice admission I'm saving for future reference: The government purposefully inflates to steal savings from citizens to "keep the flow moving" as if there was a "flow" and it "moved" and required a third party with a gun to force it the "flow" to "move".
the US government also has the power to 'borrow money' and to issue securities.
ReplyDeleteDefinition of 'obligation': a debt security
http://www.merriam-webster.com/dictionary/obligation
18 USC § 8 - Obligation or other security of the United States defined
The term “obligation or other security of the United States” includes all bonds, certificates of indebtedness, national bank currency, Federal Reserve notes, Federal Reserve bank notes, coupons, United States notes, Treasury notes, gold certificates, silver certificates, fractional notes, certificates of deposit, bills, checks, or drafts for money, drawn by or upon authorized officers of the United States, stamps and other representatives of value, of whatever denomination, issued under any Act of Congress, and canceled United States stamps.
http://www.law.cornell.edu/uscode/text/18/8
"meaning make coins out of gold and silver"
ReplyDeleteIt doesn't say that anywhere.
Coinage Act of 1792
ReplyDeleteSection 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of the fine gold or fine silver therein contained, or shall be of less weight or value than the same out to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death.
http://constitution.org/uslaw/coinage1792.txt
And the government can only spend money on the limited 17 things it is authorized to do.
Where in the law does it say that the US government can only make coins out of gold and silver?
ReplyDeleteA “dollar” as set forth in the Constitution was a “Spanish milled dollar” containing three hundred and seventy-one grains and four sixteenth parts of a grain of pure silver.
ReplyDeletehttp://www.fame.org/HTM/Vieira_Edwin_What_is_a_Dollar_EV-002.HTM
Further, the Articles of Confederation granted Congress the right to “emit bills of credit” meaning issue paper money. With much forethought, that right was intentionally omitted from the US Constitution meaning that the Federal government has no power to issue paper money and the states were and are forbidden to “emit bills of credit” or issue paper money.
The entire MMT funny money scheme is illegal and unconstitutional.
Where does it say in the Constitution or the law that a 'dollar' can only be a "Spanish milled dollar containing three hundred and seventy-one grains and four sixteenth parts of a grain of pure silver"?
ReplyDeleteShow me where it says that.
the US government has only the power to COIN MONEY, meaning make coins out of gold and silver.
ReplyDeleteOnly in the lively imagination of some people.
Where in the law does it say that the US government can only make coins out of gold and silver?
ReplyDeleteThe states are forbidden from making anything but gold or silver coin legal tender. The Feds have no power to make anything legal tender. I suppose the Feds could make coins out of compressed belly button lint, but they could not force anyone to use or accept them since they do not have that power. Which makes the entire exercise silly.
The Coinage Act of 1792 demonstrated what the founders meant by the Constitutional expressions on the topic. There are no ambiguities to get around these very clear rules.
Why not, we do a ton of other welfare towards the poor, PeterP
ReplyDeleteBecause welfare for the rich is why we need so much welfare for everyone else, is why!
18 USC § 8 - Obligation or other security of the United States defined: Federal Reserve notes
ReplyDeleteArticle 1 Section 8:
... To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
Irrelevant today
ReplyDeleteSection 19 of the Act established a penalty of death for debasing the gold or silver coins authorized by the Act, or embezzlement of the metals for those coins, by officers or employees of the mint; this section of the Act apparently remains in effect and would, in theory, continue to apply in the case of "any of the gold or silver coins which shall be struck or coined at the said mint." (At present the only gold or silver coins struck by the US mint are the American Silver Eagle and the American Gold Eagle coins, some Proof coinage at the San Francisco Mint, such as the silver US State Quarters, and much of the Commemorative coinage of the United States.) All other sections of the act have been superseded, as for example the Coinage Act of 1834 changing the silver-to-gold weight ratio. Various acts have subsequently been passed affecting the amount and type of metal in U. S. coins, so that today there is no legal definition of the term "dollar" to be found in U. S. statute.[4][5][6] Current statutes regulating coinage in the United States may be found in Title 31 of the United States Code. Wikipedia
Where does it say in the Constitution or the law that a 'dollar' can only be a "Spanish milled dollar containing three hundred and seventy-one grains and four sixteenth parts of a grain of pure silver"?
ReplyDeleteThe Constitution uses the term "dollar" which the drafters clearly understood to mean a "Spanish milled dollar". Hamilton's statements on the subject demonstrate that. The Constitution does not define "Navy" either because everyone knew both what a dollar was and what a navy was.
A “dollar” as set forth in the Constitution was a “Spanish milled dollar” containing three hundred and seventy-one grains and four sixteenth parts of a grain of pure silver.
ReplyDeleteWhat version of the US Constitution are you reading from? Or is that some other constitution?
The Coinage Act of 1792 demonstrated what the founders meant by the Constitutional expressions on the topic. There are no ambiguities to get around these very clear rules.
ReplyDeleteBob, you are a lawyer? That's just nonsense.
In conclusion, since fiat money is illegal, using it to steal the savings of citizens is the same as bank robbery.
ReplyDeleteMr. SPENCE. I assume the reason the authority w^as repealed in 1935 was because of the existing conditions, then, when there was no reason for the authority: is that correct?
ReplyDeleteMr. ECCLES. Well, as I remember the discussion—and I have re- ferred to it in this statement—there was a feeling that this left the door wide open to the Government to borrow directly from the Federal Reserve bank all that was necessary to finance the Government deficit, and that took off any restraint toward getting a balanced budget. Of course, in my opinion, that really had no relationship to budgetary deficits, for the reason that it is the Congress which decides on the deficits or the surpluses, and not the Treasury. If Congress appro- priates more money than Congress levies taxes to pay, then, there is naturally a deficit, and the Treasury is obligated to borrow. The fact that they cannot go directly to the Federal Reserve bank to bor- row does not mean that they cannot go indirectly to the Federal Reserve bank, for the very reason that there is no limit to the amount that the Federal Reserve System can buy in the market. That is the way the war was financed.
Therefore, if the Treasury has to finance a heavy deficit, the Reserve System creates the condition in the money market to enable the bor- rowing to be done, so that, in effect, the Reserve System indirectly finances the Treasury through the money market, and that is how the interest rates were stabilized as they were during the war, and as they will have to continue to be in the future.
The Constitution uses the term "dollar" which the drafters clearly understood to mean a "Spanish milled dollar". Hamilton's statements on the subject demonstrate that. The Constitution does not define "Navy" either because everyone knew both what a dollar was and what a navy was.
ReplyDeleteThat's a fundamentalist view that almost no one but Scalia, a religious fundamentalist btw, espouses. Yes, Catholics can be fundamentalists, too.
In conclusion, since fiat money is illegal, using it to steal the savings of citizens is the same as bank robbery.
ReplyDeleteNutty.
Hamilton's statements on the subject demonstrate that.
ReplyDeleteIt's historical fact that the founders disagreed on foundational issues. The Constitution is what emerged from compromise. Interpretation of those words is left to the courts. Early on, Hamilton's implied powers prevailed over proponents of enumerated powers.
"The Constitution does not define "Navy" either because everyone knew both what a dollar was and what a navy was"
ReplyDeleteSo are you saying that metal battleships, submarines, aircraft carriers, jets, helicopters, hovercraft and ballistic missiles are unconstitutional? Only wooden boats with sails are permitted?
So are you saying that metal battleships, submarines, aircraft carriers, jets, helicopters, hovercraft and ballistic missiles are unconstitutional? Only wooden boats with sails are permitted?
ReplyDeleteYou've gone off the cliff with your distortion. I win.
You win what? Top prize for delusional angry fantasist cartoon extreme right-wing nutter?
ReplyDeleteIn the US, federal courts generally follow precedent (stare decisis) for consistency and predictability but they are not required to do so. Decided law is sometimes overturned.
ReplyDeleteTherefore, appealing to authority like the original intent of the founders is rather irrelevant if courts have decided differently. One can always hope that decided law will change in the future. But that only exists in imagination, not reality. People who refuse to accept reality are called delusional.
Blackstone’s Commentaries was the “standard legal treatise among Americans.”
ReplyDeleteBlackstone taught concerning English monetary matters and powers that the precious metals (gold and silver) are used as money, or that money consists of precious metals, both as a standard of account and as a medium of exchange. English law equated money with coin and coin with silver and gold. Silver and gold coin are also called specie. The Crown had the power to coin money, which meant stamping it and fixing its metallic content. The phrase used at the time was “fix the value.” This did not mean fixing the price. It meant fixing the weight or metal content of a coin. True money was undebased coin, meaning coins whose metal weight was not altered by the Crown.
http://mises.org/books/rozeff_us_constitution_and_money.pdf
In 1785, Congress considered a plan to make the Spanish milled dollar “the Money-Unit.” And it noted that “the Dollar...has long been in general Use. Its Value is familiar.” Congress then “Resolved, That the money unit of the United States of America be one dollar,” but did not yet determine its silver content. In 1786, the Congressional Board of Treasury calculated that the “Money Unit or Dollar will contain three hundred and seventy five grains and sixty four hundredths of a Grain of fine Silver,” and “will be worth as much as the New Spanish Dollars.”
ReplyDeleteThe Articles allowed Congress various powers if a majority of States approved them. These included the authority to “coin money” and “regulate the value thereof.” Article IX of the Articles of Confederation also provided the United States in Congress with authority “to borrow money, or emit bills on the credit of the United States...” The money was gold and silver. The money-unit was a specific weight of fine silver. The Congress regulated the value of coins it did not mint, i.e., determined their metal content relative to the standard unit. And the Congress allowed a free market in coins by opening the mint to private conversions of metal to coins. The main changes to come in the Constitution that replaced the Articles were to remove the power to emit bills of credit, to forbid the states to coin money, and to make nothing but gold and silver a legal tender.
http://mises.org/books/rozeff_us_constitution_and_money.pdf
Where does it say in the Constitution or the law that the government can only make gold or silver coins, or that paper currency is illegal?
ReplyDeleteWhere?
Nowhere.
All you can come up with is some stuff written by some other bozo who shares your strange obsessions and your confused hatred of reality.
Bob, I'm glad your constant criticism about taxation being theft has moved to the space to where it always needed to be discussed in, that is, law. Suffice to say, as a law student who studies with some of the top constitutional scholars in the country, what you're saying is just bad legal analysis and would be laughed out of a Con Law class, in my experience. Maybe if you can find some legal scholarship supporting your points we can have a better conversation, because right now your reasoning is not going anywhere legally.
ReplyDelete1. The only way that something can be "theft" is if you have a valid property law claim on it. So the state's taxation system, which is part of the legal system, can't be "theft". It can, of course, be critiqued for being highly coercive, like the property title law.
2. Assuming you are right with your constitutional view, the acquisition of greater purchasing power through expansion of the money supply (and in your world, dilution of existing people's monetary assets) could at best be called “unconstitutional”,. But that's an entirely different kind of breach of law than to violate property law, just as setting up spying equipment or violating the terms of your oath of office isn't “theft” .
3. Nothing in the coinage clause specifies limits on the purchasing power that can be ascribed to the coins (in fact, they are explicitly allowed to regulate its value in the same clause). So assuming we changed the coinage act at the congressional level to allow for a $1 trillion silver coin as well as a platinum one, the government would be able to print as much money under the current system as it wanted without even the spectre of a (poorly constructed) constitutional critique like the one you just made. It's not what the coin's metallic value is - there is no mention of bullion as a limiting criterion - it's the face value, so Congress isn't limited by the wording of the coinage clause in terms of nominal spending in any world, no matter how you read the constitution. So all of your high level constitutional arguments about our current system being theft are irrelevant – at best you're saying the 1996 platinum coin law gave greater flexibility in coinage decisions to the wrong type of metal.
4. As MMT argues, taxation is what creates the demand for a particular "money-thing", so even if you are right that congress is only allowed to issue gold and silver coins as "money", and assuming we aren't getting a trillion dollar silver coin statute passed, nothing prevents them from creating whatever kind of "tax-credit" security they want to and letting people trade that as “money”. In fact, that sounds kinda like the Fed to me. Remember, no one is forced to accept US Fed reserve dollar bills proactively in transactions, they only have to accept them in payment of legal debts, so no one is being forced to use money today other than in the sense that by engaging in economic transactions they are incurring a legal risk of being sued.
Anyway, I have plenty of legal readings on history, finance, the coinage, clause, etc. if you are interested and want to have a substantive discussion on what they say (or alternatively, send me some of yours if you'd prefer to get the dialogue started that way). I'll even promise to park the my ideological snarkiness and patronizing and moralistic tone at the door and be purely polite and substantive if you will promise to the same.
" at best you're saying the 1996 platinum coin law gave greater flexibility in coinage decisions to the wrong type of metal."
ReplyDeleteThat could very well be what is going on here via the "back door"... VERY interesting revelation here Rohan wow...
Silver and gold (and btw copper), which are often referred to as "precious" metals have VERY unique electrical properties of their electron structures... there has always existed a disgraced cohort of humans that are drawn to be subjected to them... very often (looks like for most of the last 2,000 years) these people get to occupy positions of human authority...
Interesting observation thanks...
rsp,
F.,
ReplyDeleteLook at Rohan's legal analysis of "theft" here as far as your concept of "theft of purchasing power" and your "the bible" type of approach to these policies...
There is a Greek scripture where the Lord describes a "thief" perhaps thus: "You reap where you do not sow, and you pick up where you do not lay down..."
So the Lords words here dovetail nicely with Rohan's writing here imo:
"The only way that something can be "theft" is if you have a valid property law claim on it."
So this "property" oriented definition of "theft" is imo the correct interpretation of "thou shalt not steal" or whatever that no longer applicable part of the Mosaic Law demanded...
So you cannot "steal purchasing power".
That said, I think what you have a problem with is some bad policy and no arguments there from me... I believe what you see is like "favoritism" or something... govt is granting favor selectively, hypocritically, corruptly, etc...
Bad policy but NOT theft imo...
rsp,
what you're saying is just bad legal analysis and would be laughed out of a Con Law class
ReplyDeleteWhen I went to law school 1977-1980, we were expressly warned in con law class to never bring up the subject of original meaning or original intent. The job of the law school was to prepare lawyers to represent clients to win cases in courts today with judges who ruled based up the post-New Deal legal tradition (which is all they knew and could ever know). This was all very interesting and confirming of my existing beliefs about the hell of law school because I had been a libertarian and Austrian School advocate since 1973 when I had a low draft number and marched against the draft and the war. As such, I would and did never work for a prosecutor's office, even as a clerk or intern.
My fellow law students (and the professors) shared the opinion that anyone who was actually concerned about the philosophy of law and/or the sociological and/or economic impact of the law (as opposed to getting a big job with a big firm) was crazy.
I had assumed that the anti-intellectual and the incurious and deeply conformist atmosphere of law school had not changed and perhaps had gotten worse. Thank you for showing that is the case.
Nothing in the coinage clause specifies limits on the purchasing power that can be ascribed to the coins (in fact, they are explicitly allowed to regulate its value in the same clause)
ReplyDeleteTotal nonsense. You understand nothing. The dollar is the standard and it is a specific amount of silver. And I previously wrote above:
Blackstone taught concerning English monetary matters and powers that the precious metals (gold and silver) are used as money, or that money consists of precious metals, both as a standard of account and as a medium of exchange. English law equated money with coin and coin with silver and gold. Silver and gold coin are also called specie. The Crown had the power to coin money, which meant stamping it and fixing its metallic content. The phrase used at the time was “fix the value.” This did not mean fixing the price. It meant fixing the weight or metal content of a coin. True money was undebased coin, meaning coins whose metal weight was not altered by the Crown.
Even now, the government does not and cannot ascribe a specific "purchasing power" to its its forced imposition of funny money.
ReplyDeleteyou really are a very strange individual Bob.
ReplyDeleteI suppose people with your sorts of peculiar fixations will still exist a few hundred years from now, when there are perhaps colonies on Mars and money is just information. There will probably still be the odd nutter, bemoaning the fact that people don't use bits of metal to settle their transactions, ranting on the interweb, sitting in their hyperloop capsule as it speeds beneath the pacific ocean on its way to Beijing. Gradually your particular form of backwardism will probably just die a natural evolutionary death, as it just appears ever more absurd and ridiculous to each subsequent generation.
This comment has been removed by the author.
ReplyDeleteFranko,
ReplyDeleteI often qualify my use of "theft" with "legalized." And that's what government-backed credit creation is - legalized theft. If someone wants to extend credit then let him extend his OWN credit, not the credit of the entire nation via government privileges.
And of course it is favoritism. Just ask any one with the misfortune to have lived in a "redlined" area of a city. And the favoritism is INHERENT because "creditworthiness" is largely subjective. Moreover, creditworthiness is irrelevant anyway since the ability to return legally stolen purchasing power plus interest is morally irrelevant.
And this:
Ill-gotten gains do not profit, but righteousness delivers from death. Proverbs 10:2
The money system was a major cause of WWII which killed 50-65 million people and destroyed a huge amount of investment. How many more millions must die before people realize that "Ill-gotten gains do not profit ...".
Bob, you and the other originalists are like religious fundamentalists living in the past, ancient or medieval times. Constitutional originalists are somewhat better, preferring to live in the 18th century. For the rest, the world moves on.
ReplyDeleteIt's delusional.
Actually, the fundamentalism of the Bible is about wisdom, justice, mercy, etc., not the worship of some shiny metal. Moses, for example, ground up the Golden Calf, mixed it with water and made the Hebrews drink it! Bob would call that a huge waste of gold, but I'd say it makes a very powerful point about what's important and what is not.
ReplyDelete"If someone wants to extend credit then let him extend his OWN credit, not the credit of the entire nation"
ReplyDeleteThe idea was supposed to be that if banks had access to things like government-backed deposit insurance and a lender of last resort, then they should have to give up some autonomy in return, and abide by certain regulations and restrictions on their activities. That was the package that was originally created during great depression - more security and stability in return for restrictions on banking activities.
Then in the deregulation period of the 80s onwards they got rid of most of the restrictions, but kept all the government guarantees. A very bad combination.
Then in the deregulation period of the 80s onwards they got rid of most of the restrictions, but kept all the government guarantees. A very bad combination. y [bold added]
ReplyDeleteYes, most definitely. Well said.
But let me add that even "prudent" banking is not socially stable since government-backed credit creation violates equal protection under the law since some (historically whites, for example) are deemed more "creditworthy" than others.
ReplyDeleteAs MMT argues, taxation is what creates the demand for a particular "money-thing"
ReplyDeleteThat’s not true either. In the US, people were slowly tricked into using what had been silver certificates when the silver redemption language was removed. However, what keeps people using them are other taxes on all transactions using other forms of money. If you transact in foreign currency and/or precious metals, you have to keep track of your basis in the alternative money and pay capital gains taxes on any possible “gains”. A phony taxable “gain” can occur when the funny money “dollar” has depreciated against your alternative money that is used in a transaction. That’s a severe impediment to using alternatives to funny money “dollars”. Absent the government’s currency having significant independent value on its own as money for transactions, it could always be obtained very cheaply for use in paying taxes at the last possible moment if most transactions and savings were done using sound money.
Of course, if everyone was using sound money, the government would be hard pressed to use its funny money to steal purchasing power to impair “hoarding” or in getting the “flow” moving.
Bob, you and the other originalists are like religious fundamentalists living in the past, ancient or medieval times. Constitutional originalists are somewhat better, preferring to live in the 18th century. For the rest, the world moves on.
ReplyDeleteIt's delusional.
So said Obama to Eric Snowden about the 4th Amendment.
So said Obama and Dubya to all of the Guantanamo inmates about the 5th and 6th Amendments.
We can easily see whose side the MMTers are on
bob demonstrates yet again that he is incapable of distinguishing between different things. It's all just a messed up mush inside dobby's brain.
ReplyDeletetell you what Bob, move to a country where the populace has decided that it wants to indulge in juvenile pursuits and so uses only gold and silver coins as money.
ReplyDeleteOh wait, there isn't a population on the planet dumb enough to do that. 21st century, etc.
I expect that when DHS starts to house soldiers in private homes that you MMTers will name-call those who object as religious fundamentalists.
ReplyDeletehttp://www.economicpolicyjournal.com/2013/08/former-marine-colonel-to-town-council.html
I doubt anyone would mistake an Austrian as religious - unless the Church of Mammon counts.
ReplyDeleteFace it Bob, you guys are no solution, you're just a previous problem that the current problem is a failed solution to.
the Constitution actually has something to say about that Bob, whereas it has, of course, NOTHING to say about the federal government only being allowed to issue gold and silver coins.
ReplyDelete"No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law".
F.
ReplyDelete"some (historically whites, for example) are deemed more "creditworthy" than others".
True... however that can change over time as people realise what's going on and campaign against it. I think that prejudices can be overcome so long as there is a concerted effort over time to make it happen.
Bob,
ReplyDelete1. I'm sorry you had that experience in a particular law school 33-36 years ago. It is certainly not the experience I had, although I have many problems with my legal education and as anyone who knows me can attest, would be far from any list of "anti-intellectual and the incurious and deeply conformist" people within my law school. In fact, I have the opposite problem. My point was to show that you were relying on a highly idiosyncratic jurisprudence, and even within that jurisprudence (which i highly disagree with), the current scholarship on original intent is against you.
2. You are relying on Blackstone, a renowned formalist, as the basis of your understanding of english monetary law. Why do that? What possible claim to realistic jurisprudcent does formalism have, even under your bizarre original intent world? Moreover, I suggest you consult some contemporary historical scholarship on English monetary matters before make unjustifiable claims like that. This in particular would be a good start:
P A Brand and others, Credit and Debt in Medieval England, c. 1180-c.1350 (Oxbow Books 2002
For example, when you say this:
"The Crown had the power to coin money, which meant stamping it and fixing its metallic content. The phrase used at the time was “fix the value.” This did not mean fixing the price. It meant fixing the weight or metal content of a coin. True money was undebased coin, meaning coins whose metal weight was not altered by the Crown."
It baffles me you think you can construct a narrative of english money without referring to Seigniorage. Check out David Fox's article on nominalism in common law history for more on this point, including discussion of specific cases (so you can't claim it's all made up or that all lawyers can't be trusted based on your bad experience in school).
This also is problematic:
"Absent the government’s currency having significant independent value on its own as money for transactions, it could always be obtained very cheaply for use in paying taxes at the last possible moment if most transactions and savings were done using sound money."
As legal historian Christine Desan spent 20 minutes explaining in the beginning of her seminar on this exact topic of how liquidity preference emerges naturally from the designation of that which satisfies a tax liability:
http://www.modernmoneynetwork.org/seminar-5-constitutional-history.html
Rohan Grey:
ReplyDeleteWhen is Ms. Desan on the video? I spent 2 hours + listening to the lecture with Bill Black (#7) and 2 hours + listening to the Mosler/Murphy debate. I'm still waiting for the first non-Austrian to have some familiarity with basic Austrian School concepts.
I note that Desan's paper omits the intentional and knowing removal of the Congressional power to emit bills of credit from the Constitution where that power had been granted under the Articles of Confederation. A really bad error, intentional or not. See page 34.
ReplyDeletehttp://www.modernmoneynetwork.org/uploads/1/2/5/3/12534585/desan_2008_-_blood_to_profit_money_making_in_early_america.pdf
From the Articles of Confederation:
ReplyDeleteThe United States in Congress assembled shall have authority…..to borrow money, or EMIT BILLS ON THE CREDIT OF THE UNITED STATES, transmitting every half-year to the respective States an account of the sums of money so borrowed or emitted….
The United States in Congress assembled shall never engage in a war, nor grant letters of marque or reprisal in time of peace, nor enter into any treaties or alliances, nor coin money, nor regulate the value thereof, nor ascertain the sums and expenses necessary for the defense and welfare of the United States, or any of them, nor emit bills, nor borrow money on the credit of the United States, nor appropriate money, nor agree upon the number of vessels of war, to be built or purchased, or the number of land or sea forces to be raised, nor appoint a commander in chief of the army or navy, unless nine States assent to the same
http://avalon.law.yale.edu/18th_century/artconf.asp
Page 2 of Farley Grubb:
ReplyDeleteAt the Constitutional Convention the founding fathers decided by explicit vote not to include the power to emit bills of credit and (debatably) not to include the power to charter banks among the powers granted to the national government. Footnote 4
4 A common error repeated often in the literature is the claim that the Convention intentionally crafted a Constitution where Congress was allowed the power to emit bills of credit. For example, see Baack (653); Ferguson (1969, 254, 258); Nettels (98-99); Rolnick, Smith, and Weber (3); Schweitzer (311). The analysis here, if nothing else, is a valuable corrective in showing that under almost any logically consistent and coherent interpretation such a claim cannot be easily sustained. See also footnote 23.
http://www.modernmoneynetwork.org/uploads/1/2/5/3/12534585/grubb_-_us_constitution_and_monetary_powers.pdf
It's interesting that James Madison, who was one of those that voted to strike the "bills on the credit" clause, then went ahead and issued paper money to help finance the war of 1812.
ReplyDeleteBob,
ReplyDeleteThanks for the engagement. Can you elaborate on why you think it was an error? Chris is an extremely good friend of Farley's, and i know they don't disagree on the history, so i'd be very curious to know whether it was intentional or unintentional.
Desan's part is right at the start of the fifth seminar video. For future reference, i suggest just clicking at random intervals in the video in order to see when people are speaking rather than waiting an hour. That is one of the great benefits of not living in a VHS tape world anymore - the beginning and the end are equally one click away :) But i'm glad to hear you found the seminar and debate tolerable enough to watch all the way through, at least.
And with regards to Austrian concepts, we gave Bob Murphy as much time as he needed to discuss Austrian concepts, and the one thing he chose to focus on was the interest rate stuff, which I believe Warren responded to. Now, if you're asking why we dont talk about cantillon effects, economic calculation and all that, the answer is that there is no empirical way of proving that correct or incorrect. To the extent that Austrians have a theory of psychology, then that's absolutely fine (the rest of economics probably needs to do better on this), but until those ideas are framed in a way that allows for some empirical evidence-based discussion, any debate over those concepts would be like two religions arguing against each other.
That said, if you think there are other macroeconomic ideas that Murphy didn't explain that would improve or extend the Austrian case, please let me know, and if you want, we can start collaborating on trying to organize an event to move that discussion forward. As it is, I tried to show what I think the Austrians need to answer following Murphy's performance in this:
http://neweconomicperspectives.org/2013/07/an-mmt-vs-austrian-debate-post-mortem-part-i-of-v-preface.html
In particular, part 4. If you'd like to chat more about this and try to work out some constructive ways of engaging further, please email me at rgre8928@gmail.com.
Rohan:
ReplyDeleteI will be responding to you via email or in comments on your blog.
1. I recorded an audio MP3 file of session #5 which is now on my iPod. I will listen when I can.
2. I read and listen to most anything I can about MMT basically because I think it's the most preposterous scam I've ever encountered (next to Stalinism). I even spent good money on "The Economics of Control"
http://www.flickr.com/photos/bob_roddis/5560086472/in/set-72157626353319778
3. I recorded an audio cassette of Hayek in 1977 which has recently been put out on DVD.
http://www.economicpolicyjournal.com/2013/08/john-maynard-keynes-wheres-genius-part-1.html?showComment=1376694776601#c2540043783469414993