Shaun Hingston wrote in the comments:
Another MMT mind bug.
Why do most MMTers dismiss the notion of 'means of exchange'? The MMT line is that money is a creature of the state. I think that this is inadequate.
What about gold? What about time-sharing systems existing within a normal economy? I think that "means of economic information exchange" should be the correct term. All 'money things' fall into the superset defined by 'economic information exchange'.
Means of Economic Information Exchange
What is it? Any token-system that facilitates the flow of economic information, and can be used to make economic decisions(i. e transactions).
What is a token-system? From an MMT perspective it is defined by everything that is involved in the flow of tokens between economic participants. So that would mean Consolidated Govt. Sector, markets and the 'money supply'. If we are talking about gold, then it really only means the physical gold, markets, and the 'natural sources' of gold.
What makes one token-system better than another?
This is defined by its ability to transfer economic information between participants. This is in both quality & quantity.
Why is state money better than gold?
Generally speaking, it is easier to transfer economic information, it can be manipulated in such a way that maintains reasonably stable prices, prices in a state money system are more indicative of participants wants and desires than those participating in a gold system.
Right, so your saying that it all comes down to a token-system's ability to transfer economic information. Why don't people start up their own currencies?
Token systems transmit the wants and desires of individuals to each other. The overall strength of a token-system is determined by its ability to statisfy wants and desires against the external world. There are individuals within each token system that can manipulate prices greater than others. They may have this power legitimately or not. If adversaries are able to influence the system enough, then they can distort prices enough to obtain more of what they desire. If another token-system is created, then it will most likely threaten this position of privilege. Therefore adversaries will respond in such a way to manipulate prices so that the new currency is threatened. This is generally the reason why new currencies have a difficult time establishing themselves.
Why do you think this is more consistent with empirical observations?
According to the MMT definition of State Money, then a lot of items currently being used to facilitate economic information exchange would be excluded, for no reason. For example, there are time-banks being used in parts of the world, but they are not subject to taxation, or spent into existence like MMT defined currency, so what are they? But what they do facilitate is the exchange of needs & desires between individuals.
What do you define as the optimum?
The ultimate economic output that can be possibly achieved will occur when a token-system most accurately reflects the wants and desires of economic participants.... This would be the hypothetical situation of when everyone can simultaneously communicate with each other, everywhere. It is meant to indicate what is the 'optimum state', not what is actually meant to happen, but what possible token-systems should be measured against.
Time for a new kind of money
Since I have ‘joined’ the MMT community, I have watched as MMT has discussed headlines and challenged the contempory economic thought. But one thing has frustrated me, the lack of creativity. As the world plunges into chaos I am surprised by the lack of creative solutions offered by the MMT community. This to me is an opportune time for MMT to show the world an alternative to the current arrangement.
As stated earlier I have argued that token-system is best able to transfer the needs and desires of participants will prevail. This in itself is something that can be offered to the OWS protestors.
I suggest that MMTers work towards a new token-system that can be offered to OWS protestors as a way for them to exchange their needs and desires. Ultimately I think that this system will either force the current system to reform itself to survive or will become inferior.
What is needed?
– A system to transmit tokens. – A system that manages the creation of tokens. – A system that facilitates the exchange of prices. – A system that measures the needs & wants of individuals.
Why will it work?
Because it will transmit needs & wants better than the current system. There are many different strategies to gain acceptance. A pool of donations could be used to support an exchange rate for the token-system. This will give the token system some underlying support while it gains acceptance. A job guarantee like system could be used initially to disburse initial funds into the economy. This could be used to coordinate the efforts of OWS. Sooner or later businesses will start to see the participants of the OWS as a labour force. They will then start to purchase tokens, which will create a pseudo-permanent state of support for the currency.
At this point, it is likely that the supply of tokens will need to be inflated. This situation is good for everyone. People participating within the OWS will start to gain jobs, the current lack of expansion in money supply of U. S.D would be somewhat offset by the expansion of the OWS token-system.
The token-system will then most likely start to become threatened by those with a vested interest of the U. S.D. The will need to increase spending in order to support their attack on the token-system or to encourage businesses to use U. S.D. Either way even if the token-system is defeated, unemployment will be fixed. There will be a population of individuals educated in MMT, and this group will act as an inoculation against any attempts by powerful morons to drive up unemployment.
Consequently it will be imperative that legislation be changed to allow, groups within the U.S.A to create their own free-floating currencies.
Immediate Suggestions
-Warren, Mike, Bill, and anyone else, should immediately issue 10,000 tokens and disburse them into the OWS movement. At the same time, they should offer at some cost to be paid in those credits, the opportunity for OWS to post on their blogs.
-Then, the Job Guarantee could be formed by paying those OWS participants that promote verifiable material that promotes the MMT agenda.
-After a series of donations have been collected, this could be used to fund a lottery/payment of which tickets can only be purchased using the OWS credits.
