Neil Wilson — Musings on MMT - Firming Up The Soft Bits

Many moons ago I did a post about the soft bits of MMT - those where it wasn't 100% clear precisely what happens. I've had a few people mention these points recently and this post brings my thoughts up to date. 

It's important to realise that you can never understand the current system completely, and you certainly can't be 100% sure what will happen when you change it. It's always a balance of probabilities game.

In systems design this leads to the classic barrier to change - knowns as 'analysis paralysis'.

You spend ever increasing amounts of time studying the current way of doing things because fundamentally you're frightened of proposing a change and getting it wrong. So nothing ever happens, or things change underneath you rendering your studies obsolete.

So you can only ever get to a point where you know enough so that you can manage the risks. Then you've got to try something and see if it works - backing out if it doesn't. Otherwise nothing every changes.

I think we're at that point now where we know enough about the current model that we can get on and build solid proposals for a brave new world.

We're ready to try something.
So let's see where the state of the art suggests we are at the moment.

3spoken
Musings on MMT - Firming Up The Soft Bits
Neil Wilson

Paul Meli — Sectoral Balances within the Domestic Non-Government

There are many important laws that determine the behavior of various systems within the Universe but as far as economics is concerned, none is more important than the concept of a closed system.


From Wikipedia:

”In non-relativistic classical mechanics, a closed system is a physical system which doesn’t exchange any matter with its surroundings, and isn’t subject to any force whose source is external to the system. A closed system in the classical mechanics sense would be considered an isolated system in thermodynamics.”

What does this mean in the context of a monetary economy? What could properties of a physical system have in common with a system based largely on the relationships between stocks and the flows between them? It turns out that some math systems behave according to the same rules that constrain elemental physical particles, i.e. the concept of the conservation of matter holds mathematically for the “conservation” of currency units within the system.

If we define the closed system as the universe of state-backed US dollar assets and liabilities, including state-issued bonds held by the public, it means that the net dollar assets existing in the economic system cannot change over some period of time t without an add or subtract from a source external to the system.

New Economic Perspectives
Sectoral Balances within the Domestic Non-Government
Paul Meli

John Michael Greer — The Cussedness of Whole Systems

There’s an interesting divergence between the extreme complexity of the predicament that besets contemporary industrial civilization, on the one hand, and the remarkable simplicity of the failures of reasoning that have sent us hurtling face first into that predicament, on the other. Nearly all of those failures share a common root, which is the inability—or at least the unwillingness—of most people in the modern world to pay attention to the natural cussedness of whole systems.

Read it at The Archdruid Report
The Cussedness of Whole Systems

by John Michael Greer | Grand Archdruid of the Ancient Order of Druids in America

This is post is about infinite demand for scarce resources and how human affect the system of which they are a part through their impact on real resources such as energy and food. Greer also looks at the non-financial implications of this in increasing financialization.

Whether one agrees with Greer's analysis or conclusions, this is the holistic approach that is needed for global logistics, with which the global economy and global economics is intimately involved. 

Back when, Bucky Fuller devised the World Game for the purpose as applying design science to the developing challenges.