Heske van Doornen — The History of Money: Not What You Think

Most of us have an idea of how money came to be. It goes something like this: People wanted to exchange goods for other goods, but it was difficult to coordinate. So they started exchanging goods for money, and money for goods. This tells us that money is a medium of exchange. It’s a nice and simple story. The problem is that it may not be true. We may be understanding money entirely wrong.

The above story assumes that first there was a market, and then people introduced money to make the market work better. But some people find this hard to believe. Those who subscribe to the Chartalist school of thought give a different history. Before money was used in markets, they say, it was used in primitive criminal justice systems. Money started as—and still is—is a record of debt. It is a way to keep track of what one person owes another. There’s anthropological evidence to back up this view. Work by Innes, and Wray suggest that the origins of money are more like this:

The Minskys
The History of Money: Not What You Think

Heske van Doormen, UMKC

Chris Mayer — QE is a Tax

Chris Mayer is a self-identified Libertarian-Austrian who has discovered MMT. He is a market guy, graduate in finance, and ex-banker, so he can recognize a true description of the present monetary regime when he see it even though he may disagree with it in principle. He knows that if you are in the markets, it's what you have to work with so you'd better understand how it actually works. This post is a good summary of Forstater and Mosler's "The Natural Rate of Interest Is Zero." Obviously, this is appealing to free market advocates, since if the Fed doesn't set the interest rate and the Treasury doesn't issue bonds, then the market will set interest rates based on demand for funds without government intrusion in market price discovery.

Wall Street Pit
QE is a Tax
Chris Mayer | managing editor of the Capital and Crisis and Mayer's Special Situations newsletters
(h/t Warren Mosler)

Crossposted at The Daily Reckoning as What the Fed Is Really Doing to Your Money