Money is a ledger system which helps us to pay each other for work done. If someone pays me money for work that I have done for them, then I can use that money to pay someone else to do work for me, and in this way we have exchanged work. Fiat money is the system we use to exchange work with each other.
The system works on trust, and everyone in the U.K. trusts a £10 note without even thinking about it. No one questions the money they use.
The banks can facilitate this system by issuing credit. So, if I borrow $100 and pay someone to do work in my garden, I will have to pay interest on the loan until it is repaid. The only way I can pay the loan back is by working for someone else to earn the $100, plus interest owed (the interest is how the bank gets paid for doing work). So, all the bank has done is to help me to exchange work with someone else - and charged me a small fee for doing so.
If we have fiat money in our pocket, that is really work that is owed to us because we did work for someone else who paid us. With this money we can buy work, or something that has been made.
The government commands the system by issuing fiat, which sets the standard for the banks to use. Fiat money is real money because society will work for it, and that's what gives it it's value.
Authoritarians always rely on "intellectual" justification when selling their schemes to the public. This is why you constantly hear the term "experts say" before your liberty and property are taken from you. Democratic Socialists have been latching onto "Modern Monetary Theory" in order to justify their takeover of American life. Ron Paul discusses on today's Liberty Report!
24 comments:
“Ron Paul thinks it that money has to have intrinsic value in itself.”
Money does have intrinsic value in itself, even though money is not physical. The value is whatever its users agree that it is. Ron Paul may be thinking of commodities irrespective of humans, but here again, a commodity’s value is whatever people agree that it is. If there were no humans, then a mountain of gold would not be worth a penny, or a pound, or whatever.
“The system works on trust. Everyone in the U.K. trusts a £10 note without even thinking about it. No one questions the money they use.”
So much for the silly mantra that “taxes drive money.” What gives value to money is social convention backed by relevant laws that may or may not involve taxation.
“Money is a ledger system that helps us to pay each other for work done. If someone pays me money for work that I have done for them, then I can use that money to pay someone else to do work for me, and in this way we have exchanged work. Fiat money is the system we use to exchange work with each other.”
It is also a means to financially enslave others while doing no work ourselves. Rapacious landlords, for example, collect rent just by breathing.
“If we have fiat money in our pocket, that is really work that is owed to us because we did work for someone else who paid us”
That’s one way to look at it. I prefer to think of a dollar as one dollar’s worth of credit (which in this case does not involve loans). If I have a dollar, then everyone who agrees that it is worth a dollar owes me an acknowledgement of my claim to one dollar’s worth of “full faith and credit.” In this sense a dollar is a credit for me, and a debt for everyone else who agrees that it is a worth a dollar.
“Fiat money is real money because society will work for it, and that's what gives it it's value.”
Again, so much for the false mantra that “taxes drive money.” I wish MMT people would mature past this nonsense. That and their non-viable and unnecessary "job guarantee."
Money would be commodities without the unethical, immoral and degenerate threat of state violence that is necessary to support the "value" and use of fiat funny money. Which kind of makes fiat funny money not really "money".
Then there's the problem that fiat funny money is what causes the boom/bust cycle, the funding of wars and the deep state and the endless unemployment problem that invariably occurs under fiat money regimes.
Plus, commodity money has the benefit of always increasing in value which means prices constantly fall over time to the great benefit to the poor and powerless. And you don't need a legion of vile state parasites backed by SWAT teams and the military to constantly engage in "monetary policy".
Naturally, MMTers cannot and will not engage these totally devastating critiques. "Tis but a scratch", said the Black Knight of MMT.
Roddis is raving again.
OFF TOPIC
Commentator Dean Baker exemplifies how some people agree with MMT, but protect themselves from ridicule by saying they are “not MMT-ers.”
This is like people who condemn a black person while prefacing their attack with, “I’m not a racist, but…”
“I’m not an anti-Semite, but…”
“I’m not an MMT-er, but…”
This is a chicken-shit ruse.
In the article below, Dean Baker agrees that, “The federal government does not need taxes for revenue, since it can just print money.”
Right. But he’s “not an MMT-er.”
Baker then goes on to explain why tax-the-rich schemes won’t work, since the rich will always find ways to hide their income. (I agree.)
https://www.counterpunch.org/2019/02/20/modern-monetary-theory-and-taxing-the-rich/
It is possible to agree with MMT analysis of where the fiat money flows throughout the corrupt and evil system which was designed to benefit the .1% and their looting schemes. It's quite another thing to proclaim that the existence of this system means that the laws of economics and scarcity have been abolished. That is what MMTers explicitly do. It does not follow at all that government debt is not a problem because the government can allegedly create all of the "dollars" it wants to create to pay the debt.
Also, I do appreciate (and record for posterity) Konrad's repeated failure to engage or refute Austrian analysis. If you can't do something, it means you can't do something.
"I'm not an mmt-er but...", Dean's dying to be considered a Very Serious Person in Washington circles (that's my theory anyways)
Reminds me of "Well, I can understand not believing in god, but did you have to become an *atheist*?" (Julia Sweeney skit I think).
It's the joy of labels and associated connotations. That's partly why I think MMT would do best to stick to the descriptive part. I know Bill Mitchell disagrees, but The Job Guarantee (TM) (all bow before the mighty JG) is definitely prescriptive and political. The descriptive aspects are true regardless of your personal politics. Even then, it'd be difficult to keep MMT from being associated with the left.
"It's quite another thing to proclaim that the existence of this system means that the laws of economics and scarcity have been abolished. That is what MMTers explicitly do"
The reality is the exact opposite. MMT fully recognizes issues with resource scarcity. It's about actually putting resources to use. It's the height of stupidity to not rebuild the fallen down bridge, despite having all the raw materials and necessary workers, just because "we're out of munnie". The eurozone is practically Roddis's dream, and those silly people are sitting around watching their societies crumble, because well, they're out of munnie. I guess they should just all run surpluses like those responsible Germans, despite the impossibility of that. But they should try anyways, just in case.
“The eurozone is practically Roddis's dream, and those silly people are sitting around watching their societies crumble, because well, they're out of munnie. I guess they should just all run surpluses like those responsible Germans, despite the impossibility of that. But they should try anyways, just in case.”
Euro-zone nations that are out of munnie are those with trade deficits.
Since they are not self-sufficient, they must buy imports. Since they cannot create euros out of thin air, they must borrow euros in order to buy imports. Hence they go farther and farther into debt. This necessitates ever-worsening austerity, whether the governments want to impose it or not. France and Greece are examples. Everything in France and Greece is sacrificed to pay the bankers who create euros out of thin air, and who lend those euros to France and Greece.
Meanwhile Germany has a huge trade surplus, and therefore has billions of euros flowing in from abroad each month, without having to borrow.
The wild card is Italy, which refuses to obey Troika dictates. Since Italy has a trade surplus (i.e. Italy has euros flowing in from abroad) Italy doesn’t need to borrow from the bankers. Hence the Troika and the bankers no power over Italy. No leverage. When it comes to immigrants and so forth, Italy does as Italy pleases. For example, Italy refuses to recognize Juan Gaido as the USA’s puppet president in Venezuela.
As for Roddis, I never have any idea what’s he’s talking about. Obviously Roddis has no idea either.
Austrian economics has the psychology of a cult. Its devotees believe that they have access to truths that generations of economists have somehow failed to discern. They go insane at any suggestion that maybe they're the ones who have an intellectual deficiency.
As with all cults, the failure of prophecy — in this case soaring inflation from deficits and monetary expansion — only strengthens the determination of the devotees to uphold the faith.
@ Konrad
By way of clarification, economists that agree with MMT, at least to some degree, and say they are not's MMTers are being professional. They were not developers of MMT and have not contributed to MMT, and they acknowledge this.
While some weaseling may be involved (who can read minds)?), that is what they should say — instead of "we knew it all along." Or even worse, just appropriate MMT or aspects of it as if it were original to them.
There are some economists edging toward or banking into MMT and that is a good thing as long as they don't try to make false claims.
Money is an intermediating commodity with value variability. Currency rigging is a classic example to understand this variability. A totalitarian state can rule that all foreign currency must be exchanged through state owned banks. A certain amount of value from the currency can be sucked out and the central bank then use that value to buy the treasury bonds of the foreign currency created. This is done for export targeting purposes.
According to Roddis, if we went back to money backed by gold the ever increasing value of gold would make prices continuously fall, so eventually we would have near free lunches.
So how does something increase in value in perpetuity Bawb?
The system works on trust, and everyone in the U.K. trusts a £10 note without even thinking about it. No one questions the money they use.
Whatever.
In the USA, fiat money is illegal and unconstitutional. I located this source material as part of the Modern Money and Public Purpose program at Columbia Law School which also presented the debate between Warren Mosler and Robert Murphy. The website is mostly gone now. The promoters were MMTers and the writer of the following article appears to be a “progressive”.
https://www.law.columbia.edu/media_inquiries/news_events/2012/september2012/modern-money-public-purpose
Paper money (and non-specie money) are expressly banned and forbidden from being issued in the USA by either the federal or state governments.
Before the U.S. Constitution, inside paper money was issued by state and national legislatures. After the U.S. Constitution, both state and national legislatures were banned from issuing paper money. Page 59
VIII. Epilogue
Today the U.S. has the same written Constitution in terms of monetary powers that the founding fathers created in 1787. Yet we have a national paper money that is backed not by specie but only by federal government taxes, or the good faith and credit of the federal government—a government that also has power to institute price and exchange rate controls on said currency (Rockoff). This paper money is also a legal tender, with the legal tender clause “This note is legal tender for all debts, public and private” printed on each note. It is issued by the Federal Reserve Banking system that, while only a quasi-government agency in the strict legal sense, is about as close to a national banking system incorporated by the federal government as one can get. Unless we take the original intent of the founding fathers in their debates and votes at the 1787 Convention on monetary/banking powers to be a devious ruse, then it is hard not to conclude that we have strayed far away from what they tried to prohibit constitutionally. Page 67-68
The U.S. Constitution and Monetary Powers: An Analysis of the 1787 Constitutional Convention and Constitutional Transformation of the Nation's Monetary System Emerged
NBER Working Paper No. w11783
Farley Grubb University of Delaware - Economics; National Bureau of Economic Research (NBER)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=851692
I have Jehovah's Witnesses banging on my door who appear far more sane than Roddis.
Please tell us, oh wise one, why the skies haven't fallen with the debt at $22 trillion.
Noah Way:
On behalf of my children and grandchildren, I appreciate and thank you for your complete inability to engage (much less refute) Professor Grubb's scholarship which was presented by pro-MMTers at a pro-MMT conference at Columbia Law School.
Poor attempt at a dodge, Roddis. Talk about inability to engage - I asked you a simple question: Whay hasn't the sky fallen with a $22 trillion debt?
US GDP is only $20 trillion ...
I asked you a simple question: Whay [sic] hasn't the sky fallen with a $22 trillion debt?
I happen to be the rare Austrian who believes that unsustainable Keynesian booms can be prolonged with additional fiat money emissions longer than most Austrians do. MMTers are right that no one is going to scream about the process so long as price increases due to money dilution are "moderate". Most people think that inflation is a mysterious and inexplicable force of nature.
This doesn't answer the question as to whether these debt deficits (which are not the same as a pure spending "deficit") are helpful or a good idea.
We could also have a bubble burst with crashing home and stock prices and limited or no "general price level" inflation while there is massive money creation to pay off bond holders. I'm aware of all that.
”Paper money (and non-specie money) are expressly banned and forbidden from being issued in the USA by either the federal or state governments. ”
So why doesn’t lawyer Bob Roddis do something about then? Surely he can do more than bark around here if he is so sure it’s illegal.
So why doesn’t lawyer Bob Roddis do something about then? Surely he can do more than bark around here if he is so sure it’s illegal.
Why didn't I think of that? I'll throw in some extra claims like A) FISA warrants are unconstitutional and illegal; B) The NSA's universal snooping system is unconstitutional and illegal; and C) All of the undeclared wars are unconstitutional and illegal.
I suspect the outcome of such a lawsuit would be me committing suicide by hanging myself in my cell or ending up like President Gadaffi.
"This doesn't answer the question as to whether these debt deficits (which are not the same as a pure spending "deficit") are helpful or a good idea."
Not the same? Talk about hedging ... when is a deficit not a deficit?
"This doesn't answer the question as to whether these debt deficits (which are not the same as a pure spending "deficit") are helpful or a good idea."
Not the same? Talk about hedging ... when is a deficit not a deficit?
I don't want to be accused of not understanding the difference or not noting that MMTers seem to mostly propose government spending money into existence as opposed to borrowing to cover deficits. And it's sloppy thinking to confuse government finance and fiscal policy with central banking operations, right?
Your sloppy thinking goes well beyond MMT - your Libertarian fantasy is based on it. All you want to do is avoid taxes because "taxes are theft". You say you abhor violence (because taxes pay for it) but would gleefully practice economic violence by denying health care, retirement, and other social benefits because "taxes are theft".
Sloppy thinking does not begin to describe the incongruity and illogic of your mental process.
The poor and the lower classes have a lot less freedom than the rich. Just changing jobs willy-nilly because you don't like your boss, or your wages is often not easy. In the next job you will be probably be had over a barrel too.
I met an estate agent once, who said he worked 6 days a week, but on Wednesday he was expected to turn up on his day off to do some hours for free. I don't think he felt he had any choice about it.
In the UK we take our maximum holidays, but I've heard in the US it looks bad if you take all your allowed days. That isn't freedom. That's tyranny.
The reason the majority of people want more regulations and more taxes on the rich is because it gives them more freedom and rights.
”I suspect the outcome of such a lawsuit would be me committing suicide by hanging myself in my cell or ending up like President Gadaffi.”
Ok so it’s better to bark around in threads like this. A real libertarian hero we have here.
Roddis think's he is John Galt.
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