I am re-reading Irving Fisher’s 1935 “100% money” book for a workshop in Hamburg next month. The last time I read the book I thought that fractional reserve banking is a good description of reality. I don’t believe that anymore, but that is not the point I want to make. Re-reading Fisher (1935) I stumbled upon the following sentences, which are written under the title “‘Cash’ which is no cash”Econoblog101
100% money (1935): Fisher’s big insight on endogenous money
Dirk Ehnts | Berlin School for Economics and Law
4 comments:
Let's not stop there. The new "cash" is created for the benefit of the so-called creditworthy.
And what is creditworthiness? Well, in the past being white was a necessary (but not sufficient) condition but now creditworthiness is defined in practice by the perceived ability to repay the new "cash" plus interest. That's it.
But wait! Where does the purchasing power for the new "cash" come from? It come via the dilution of everyone else's purchasing power in that money.
Sound moral to you? Really?
F Beard - Isn't that only true if there is no productivity gain?
No because unless the productivity gains are justly shared, they will just lead to unemployment but without a sufficient income for the unemployed.
Cheaper goods do not benefit if one has no income to buy them with. And are they cheaper since the filthy usury cartel must nearly always get their cut?
The implicit social contract whereby the so-called creditworthy get to steal the purchasing power of everyone else in exchange for jobs and cheaper goods and services is CLEARLY no longer working.
Not really a tremendous insight of Fisher. Everbody understood "endogenous money", back then. Only the word - which I don't like very much - is new.
The obstacle here is the naive, Panglossian idea that Science only progresses. That there aren't periods where it goes backwards. This idea comes from ignorance of the history of philosophy and science. Regression and retreats: forgetting the most valuable things and exaltation of and obsession with comparatively unimportant ones happens all the time in the "hard" sciences, in mathematics, in philosophy. And in anybody's own life. Why should "social" science be different? Hopefully it is pour mieux sauter, but not even noticing the reculer is naive, and just plain unobservant.
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