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Re-branding Dissent

I am one of those who thinks that democracy is being destroyed.  I know its fashionable to play cynical one-upmanship and say – ‘we’ve never had democracy’, or, ‘it was destroyed long ago’,  but that game aside, I think its worth actually thinking about how, many forms of democratic expression, effective dissent and peaceful self-determination are being buried.

In “The Next Crisis” I argued that the Global Over-Class have decided that Democracy is a threat to their wealth and power and have more than likely given some thought to how best to neuter it while appearing to do no such thing.  I suggested they would wish to keep the outward form of democracy, so as to keep us reassured and entertained, but remove any substance from it, leaving us with an empty but colourful stage show. 

In part two  of the series, I offered a list of the various ways this could be done (a sort of manifesto for the Over Class or, as I have called them elsewhere, The Disloyal and noted how many of those things were clearly already underway.

For example item three of the manifesto said,

3) professionalized Governance. Democracy can be and must be neutered, and an effective way of doing this is to insist that amateur, elected officials MUST take the advice of professional (read corporate) advisors. Expand current law to enforce this.

If this seems monstrous now, their argument, I suspect,  will be that in an increasingly crowded, interconnected and globalised world we can no longer leave critically important decisions in the hands of the uneducated, in-expert and amateur.  We must, of course, still be free to choose but must, from now on, be helped to choose ‘wisely’. And how can we choose wisely if we aren’t given wise choices to choose from?  Oh, the Orwellian beauty of it! No prizes for guessing who will decide what is and what is not wise. 

We cannot any longer allow you to choose unwisely! There is so much at stake and so much you and your representatives simply do not fully understand.

You only need think how much legislation is already written by these ‘advisors’ and how many ‘experts’ are routinely seconded from corporations in order to ‘help’ the government departments regulate those same corporations to appreciate how far towards this we have already come. Two examples of ‘expert advice’ spring readily to mind. Back in May 2014  Citi drafted, word for word, many of the ‘amendments’ to the Frank Dodd financial regulation law.  While professional experts from  J PM Morgan did the same for the new derivatives trading law which puts the US tax payer back on the hook for any really serious losses.

Choose wisely

‘Choose wisely’ is a good first step in neutering democracy. It is easy to sell, appears wise, benevolent even, and who could advocate the opposite?  But being admonished to ‘choose wisely’ is quite different to being forced to do so by having ‘experts’ pre-choose your range of choices for you and having your representatives forced to follow the pre-narrowed ‘wise’ choice or choices handed to them by paid-for lobbyists and seconded experts. However I think the Over Class knows ‘Choose wisely’ and Professionalized Governance are not going to be enough on their own – given the scale of unpleasantness which will have to be imposed and maintained on voters if the current structures of power and privilege are to be maintained.

‘Choose wisely’ and Professionalized Governance are an efficient and well camouflaged way to stop radical democratic ideas getting traction in Parliament or Congress or ever making it in to law. But, they leave unaddressed the more urgent task of how to properly neuter the people at source – in their own minds. How much better and stable it would be, for the Over Class, if the people voluntarily shied away from dissenting opinions rather than having  to corral such opinions once they are voiced and people start voting for them.

I began to look at how this second front in the war on democracy might be fought, in part three I  suggested that what you and I might call public engagement would be re-branded as ill-informed ‘populism’. And wouldn’t you know it, Prime Minister David Cameron speaking – or should I say condescending – in the House of Commons on 17.11.15 about opposition to the TTIP trade agreement, said,

…when you [Members of Parliament] get that barrage of emails – people sometimes have signed up without fully understanding every part of what they’ve been asked to sign – people want to spread some fear about this thing, and we have a role, I think, of trying to explain properly why these things are good for our country.

Et voila! A wonderful early example. This is the start of the re-branding of political dissent.

But wait , as the  old advertizing saying goes, there’s more!

From ‘Professionalize Democracy’ to ‘Demonize Dissent’

The key problem for the Over Class is that no matter how much they might like to, they cannot just come out and say dissent – AKA radically different opinion – is a bad thing. Being able to hold a dissenting opinion, even a radically dissenting opinion, is, after all, the core of democratic freedom.

So I think the Over Class’ task is two-fold. First, create conditions which will make people want to stifle dissent; other people’s first then even their own – or at least start to see a dark and threatening side to it – and then give them a whole new vocabulary of catchy new phrases and ideas with which to express their new-found caution about dissent and dissenters. Seen this way it is clear that this re-branding of dissent is a psychological/marketing/propaganda problem.

Of course it is relatively trivial to get people to accept that while many kinds of dissent are acceptable, some kinds  just aren’t because, for example, they’re felt to be dangerous. We already accept that certain kinds of ‘extremist’ dissent is dangerous and unacceptable. And while some are uneasy, sensing how the term ‘extremist’ could be softened and inflated to accommodate everyone from animal rights activists, to – oh I don’t know…how about ‘militant peace activists’, or those who oppose austerity, people are just about willing to be bullied and frightened into accepting this ‘extremist’ curtailment of democracy.

‘Extremists’ and ‘Extremism’ have been the millennial threat-du-jour and have done wonders for justifying any and all actions claimed to be essential for ‘protecting national security’. No one wants to be accused of supporting ‘extremists.’ In America, Extremism is the new Communism. The rhetoric and paranoia around the ‘threat from Extremism’ in America and in Europe looks and sounds, to me at least,  very similar to McCarthyism. In the UK another new Bill will soon give the British security services and police yet more powers to stop travel, cancel passports and even ban people from talking at universities.

But the “extremist’ narrative is not going to do what needs to be done. The problem is the terms currently used  to label people as dangerous are less than perfect for demonizing the dissent that worries our leaders most: those to do with economics, finance and globalisation and the environment.  ‘Extremism’ and ‘extremist’ are, perversely, just too …well, extreme. Talking about National Security, is very effective in its sphere, but it is just too specifically military to be very useful when it comes to undermining most peaceful, domestic, democratic dissent. What the ‘extremism’ narrative has done, however, is get people used to the idea that there can and should be limits to democratic dissent.

What I think the Over Class now need is a new label for the  mind-set of dissenters and their dissent which can be applied to those who oppose the ‘necessary welfare and economic reforms’, ‘essential austerity cut backs’,  ‘misunderstood’ trade agreements and environmental problems. They need a label for a mind-set which they will readily admit isn’t ‘extremist’ but which they can argue ‘can lead to extremism’; much as people used to talk about marijuana being the gateway drug leading inevitably to harder drugs.

What will that label be? Well I think the clue is there in the drive to ‘professionalize’ governance. ‘Professional’ is already a shorthand for the  claim that someone or something is rational, balanced and ‘evidence based’. The term ‘Professional’, all on its own, already implies that those opposed to the ‘professional’ opinion/plan, are probably slightly ‘irrational’ and quite likely to be advocating actions and opinions that are without a firm base in scientific evidence. After all if that were not the case the professionals would have advocated it themselves.

Of course this brings us wonderfully back to the questions of who claims to have the authority and expertise to say what is and isn’t good solid rational and evidence-based. We are already mired in such arguments.

The threat from the Irrational

I suggest the new label will be ‘Irrational’. “He’s irrational!” “You’re being irrational.” “That’s irrational.” Irrational is already a term of abuse. What’s needed is to suggest that being irrational can be much more than a personal intellectual short-coming. That in fact, people who support irrational causes, and have irrational beliefs – who are …irrational, can be a dangerous threat when they organise their irrational beliefs into a political cause. Because, the argument will go, irrational fears can be used by those who have ulterior motives to prey upon the ordinary but unwary citizen, by creating irrational fears and then offering a seductive but irrational solutions.

And of course what will be held up as acceptable rational beliefs will be generally those which the Over Class, their media outlets, pundits and paid for political lick-spittles say are rational.

In this new narrative of demonizing dissent,

“It is not what you chose to believe – you are free to believe what you want – but HOW you believe it.

Believe it rationally, based on evidence and with regard for how your belief affects the well-being and security of those around you and there is no problem.

But choose to believe irrationally and without regard for how your irrational belief may harm others and you are an Irrationalist. “

This leaves intact your right to believe what you want but adds a subtle but insidious ‘responsibility test.’

If I’m right then we will soon see a broader new narrative built around the idea that Irrationality and an irresponsible disregard for the well-being of others, together, pose a grave threat to Stability and Safety. These four notions, Irrationality, Irresponsibility, Stability and Safety will form the central mechanism for re-branding dissent.  ‘Safety’  people will recognise from its National Security guise. But by pairing it with ideas of Stability it helps bridge the gap between national security (safety) and national economic security (stability). Security becomes more than simply physical safety and is expanded to include economic stability.

And the enemy of both, of course, is the Irrational Dissenter. Being irrational is, we will be told, particularly dangerous when it is paired with fervent claims that we are in danger and we should all act now to fend off the danger. Such  people will be likened to idiots who shout ‘fire’ in a crowded theatre.

A new mental condition could be coined for them – something along the lines of Attention Seeking Disorder – people who get a perverse pleasure simply from dissenting. How easy it would be to cast doubt on someone’s dissent if you suggest it is not about caring for others but actually a disorder of the ego. A desire for notoriety above all else with total disregard for what effect they might have on the stability and safety of those round them.

Troublesome dissent could be rebranded as a thoughtless and selfish advocating of something knowing it will cause widespread harm to others but not caring.

Extremism is a problem out there on the fringes of society – Irrationalism – The paranoid fear of imagined dangers and those who promote such fears – is the enemy within.  They are the sinister fringe who constantly look to radicalize the inexpert.

So let us all recite the liturgy our leaders would have us believe, that in the 21st century –

  1. Democracy is the freedom to choose wisely.
  2. In a globalized, inter-dependant world we cannot afford to choose irrationally or disastrously.
  3. It is not what you believe but how you believe it.
  4. Believe things rationally, based on evidence, with regard to how your beliefs affect those around you.
  5. If you know someone who doesn’t, they may be irrational and suffering from a mental disorder in which the personal notoriety of being contrarian matters more to them than any harm they might do to the safety and stability we all depend upon.

776 Responses to Re-branding Dissent

  1. Ciaran January 1, 2016 at 11:24 pm #

    Welcome back David and happy new year to you and your family. Cogently argued as ever and as you say this process is already in motion. Somehow we must collectively rouse from our slumber before its too late – this ground once ceded will not be easily regained. On a diiferent tack – I recently re-watched ‘The Secret Life of Waves’ and happy to report its still profoundly wonderful. Hope this is the first of many posts from you in 2016!!

    • Golem XIV January 1, 2016 at 11:44 pm #

      I hope so too. And thank you.
      Happy New Year to you and yours!

  2. JohnG January 2, 2016 at 2:43 am #

    Hi David, and happy new year to you and yours.

    There was a very good article in Counterpunch recently about the need for neoliberals to crush, or at least subvert, the democratic institutions that have defined our state/social structures since at least the post-WW2 settlement.

    http://www.counterpunch.org/2015/12/04/american-nightmare-the-depravity-of-neoliberalism/

    • Golem XIV January 3, 2016 at 12:18 pm #

      Very good article. Thank you.

  3. Kreditanstalt January 2, 2016 at 3:59 am #

    There is something wrong with the institution of government itself.

    Perhaps even the much-vaunted “democracy” leads only to groupthinking professional politicians led, as you state, by advisors, staff and interest groups – a situation in which any one good man is rendered powerless.

    Have you noticed the ‘managerial’ nature of government over the last @30 years or so? That all governments, of whatever party, react identically? That there are few real differences anymore between parties, between ‘left’ and ‘right’ and between administrations in different countries? That “professionalism”, “experience” and “team player” have all entered the lexicon in describing politicians?

    No one’s going to listen to me if I say that the root of all these problems is fractional reserve banking, central banking counterfeiting and an expandable fiat money supply, so I wont say it. (But it is true…)

    I submit that government should be neutered, with much of its power, funding and authority removed. And it would *not* be we the little people who suffer but the corporate establishment, who would lose their government protection, their monopoly access to cheap resources, their subsidies and their government suppression of competition.

    • JohnG January 2, 2016 at 5:30 am #

      We don’t have fractional reserve banking or central bank counterfeiting (whatever that could possibly mean) and the ‘money supply’ expands and contracts with bank lending and/or private sector saving.

      So you might need to rethink your world view.

      • Kreditanstalt January 2, 2016 at 8:15 pm #

        And what is your definition of “money”?

        • JohnG January 3, 2016 at 12:43 am #

          Money is credit. An accounting entity.

          • Kreditanstalt January 3, 2016 at 2:39 am #

            On the contrary. “Money” is whatever the parties to a transaction agree it should be…usually some commodity of the greatest agreed worth and most widespread acceptability.

            However, the true nature of money has been corrupted by force of continuous government debasement. But remember, when push comes to shove, gold always wears the pants!

        • JohnG January 3, 2016 at 2:49 am #

          That may be what you want money to be. But it isn’t what money is.

          Money is credit. Always has been and always will be.

          And viewing it as a commodity, as you do, distorts your understanding of how economies work.

          What you see is a barter system, not a financial economy.So you’re looking at something that we haven’t had for 4 or 5 thousand years.

          • john w g January 3, 2016 at 9:58 pm #

            So when the US and most of Europe minted gold and silver coins until the 1930’s that wasn’t actually money? Clearly money has always INCLUDED credit, but to say all money is credit with a implied deficit promise to pay behind it is not consistent with history.

          • Wesley January 6, 2016 at 6:42 pm #

            JohG: What I seek, concerning “money”, is a method by which money once again represents human labor/time – not something that can be created digitally at the whim of a banker, ex-nihilo. While I agree that what is now accepted (under force of myriad laws) as money is debt-based (credit – accounting entities) – your assertions of “always has been, always will be” are self-evidently incorrect – by your own words. Even when the bastardized “gold standard” existed (which still did not prevent the growth of counterfeit credit), it could not properly be considered a barter system, and precious metals were still the most fungible solution to the “coincidence of wants/needs” problem. To this very day, Central Banks and governments of the world are still aggressively acquiring gold – if not as a form of money, then what? You are fond of pointing out what things are not (“distorted view of economic functioning”), but seem reluctant to share how we go astray. I believe the essential functions of finance can still be accomplished using fiduciary instruments that actually are based on the toil of human labors, not the inequities that arise from the creation of purchasing power from thin air. Respectfully,

          • pdxr13 January 7, 2016 at 10:36 pm #

            Gold is money. All else is credit. -Banker J.P.Morgan.

      • john w g January 3, 2016 at 9:10 am #

        http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

        http://www.bankofengland.co.uk/research/documents/workingpapers/2015/wp529.pdf

        The bank of England doesn’t fully agree with you. You might need to rethink your monetary world-view.

        • JohnG January 3, 2016 at 9:55 am #

          Both papers perfectly agree with my statement.

      • old.frt January 4, 2016 at 4:12 am #

        And you, JohnG, ought to wake up and smell the coffee!!

        • JohnG January 4, 2016 at 8:10 am #

          You’d have to elaborate for that to mean anything. I’m well aware of how the system works.

          • JohnG January 6, 2016 at 12:57 am #

            Wesley, if you don’t want to know how the system really works then I suppose you will see ‘traps’ everywhere.

            FYI, the USA is possibly the last currency zone to have mandatory fractional reserve ratios (for deposits). Everyone else has accepted that they are an anachronism from the gold standard era and serve no purpose in a modern monetary system.

            Secondly, the myth of fractional reserve banking may well be commonly accepted. It certainly is accepted by neoclassical economists who dominate the academy and have status in the political/media class.

            But it remains a myth. And demonstrably so.

            These neoliberal myths are perverting the political choices of the public at large.

            We CAN have full employment. We CAN eliminate poverty. We CAN have better societies.

            Frankly, anyone who believes that gold is money or that returning to the gold standard is a sensible option or that the gold standard era/s were anything but disasters has a serious problem with their learning process.

      • Wesley January 6, 2016 at 12:33 am #

        Incidentally, I was lured into your enticing MMT trap by your disingenuous remarks concerning “fractional reserve banking”. While it is quite true that the texts have it all backwards concerning the actual instance of “money” creation, and Ben Bernanke did speak openly of eliminating reserve requirements in the U.S., the system is still considered by most to be fractionally reserved. I have no doubt that these labels (MMT, fractional reserve banking etc.) are at the root of some of this misunderstanding, but that does not dismiss the entirety of the trap into which I was lured.

        • Wesley January 6, 2016 at 6:09 pm #

          I’ll take the bait once again, JohnG… I DO wish to understand how the system works, and your tantalyzing suggestions are irresistible.Thanks for your patient tuition. Please point me in the direction of references (or directly address): how the current banking model is “demonstrably” not a fractional reserve system; how we can eliminate poverty, maximize employment, and improve our lots. Specifically, I would like to better understand what the current system IS, not what it is NOT (or even mythically written of). I am a self-taught amateur (hailing from a career in the merchant and derivative trading arenas) who seeks to eliminate and replace what I believe to be the very root cause such societal ills – namely the current banking paradigm – howsoever it is labelled or mischaracterized.
          I am actively investigating ALL options, (including crypto/blockchain related solutions) – none of which would conflate Gold with “standard” – which to me implies legislated valuation – been there, done that.

          Clearly, there are others dwelling in the bowels of this fine blog who appear to be laboring under the same misapprehensions as I, and I’m keen to sharpen my insights. Thanks!

          • Wesley January 6, 2016 at 6:59 pm #

            PS- while you, JohnG now seem to have allowed above for the possibility that fractional reserve banking IS still employed in the USA, while that may be exceptional – given that most of the debt-based “money” in the world is based on the US Dollar, this would seem an important standout. However, while I am very concerned with precision, at the moment – given the US banking system is awash with unprecedented reserves at the FED, this may be only academic today. The nature and source of those reserves could change very rapidly depending on the outcome of interest rate developments – and how money market, General Collateral and shadow funding is deployed. We are only now seeing how these unprecedented actions are unfolding. It is a matter of fact that the Fed Funds rate has already slipped drastically below the Centrally planned target, on the last trading day of 2015…

          • JohnG January 6, 2016 at 9:17 pm #

            Our problems are in the political sphere i.e.how money and the resources commanded are used. Not the monetary system.

            Politicians are to blame because they’ve allowed private banks to become criminal organisations with social power.

            Money is credit. Either it is created by government ex nihilo (high powered money) or by banks ex nihilo (bank credit).

            Both are created and destroyed in vast quantities every day of the week.

            You need to get over it and understand it.

          • JohnG January 6, 2016 at 9:20 pm #

            I haven’t allowed any such thing. The US reserve requirements relate to deposits. Not loans.

            Every new loan is new money.

          • Wesley January 6, 2016 at 11:27 pm #

            JohnG : we quite agree on how “money” is created from thin air (not from deposits) in today’s banking system. Money loaned into existence in this way is precisely what creates new deposit liabilities to the banks. As you have said yourself, deposits must be reserved.

            JohnG words: “The US reserve requirements relate to deposits. Not loans. Every new loan is new money.”

            This is a non-controversial accounting identity. Loans ARE deposits! They don’t hand you cash when you buy a house, right? Demand deposits are created out of thin air by the act of loan creation: new money On Deposit. And fractionally reserved.

            As to the criminality of modern banking, we are also on the same page. I look forward to contributing to just solutions…

      • Wesley January 7, 2016 at 1:39 am #

        When Central Banks purchase “assets” (Treasury debt instruments) ala Quantitative Easing through the commercial banking network of so-called Primary Dealers, these purchases are made by ex-nihilo (out of thin air) high-powered “money” creation, expanding the balance sheet. Bizarrely, this is legal, but by all sense of justice a criminal fraud, enabled by the hungry maw of governments. It’s only called “counterfeiting” if anyone else does it. But it IS counterfeit credit conjured from nothingness – such that not even paper and ink is even needed. Incidentally, contractions in total credit market debt outstanding, (that which you refer to as money) is NOT tolerated. In fact, that is the fatal flaw. The tiniest of contractions in this simple metric is what brought the world to its knees in 2008-09. Total credit outstanding must grow under the current paradigm, or deflationary implosion occurs. Unfortunately, it is the mandatory fraudulent growth of TCMDO engineered into our monetary system that causes the unseen theft of wealth from everyman, and most especially the poorest. I agree with Kreditanstalt. When “private sector saving” of any instruments of fiduciary media and voluntarily accepted purchasing power first PRECEDES the act of loan creation – in other words NOT something created out of thin air under protection of law – you will then begin to see true, equitable wealth creation occur.

        • Wesley January 7, 2016 at 1:51 am #

          https://research.stlouisfed.org/fred2/series/TCMDO
          See that tiny little down-tick in “credit” growth around the time of the GFC? TCMDO must inflate, or the system fails. And of course worldwide it now exceeds 220 trillion$, a huge chunk of which manifest from thin air just since 2008. Tick-tock…

          • JohnG January 7, 2016 at 2:54 am #

            Yes years of negative real wage growth, high unemployment and reduced government social spending all conspired to create an unsustainable credit bubble.

            Not to mention the control fraud that is Wall St et al that all too happily provided the credit and much more.

            But when the business cycle does turn down governments can and should step into the spending gap to offset the effects i.e. deficit spending to maintain demand at close to full employment.

            Though under neoliberal tyranny that basic reality is resisted and rebuffed. Again for reasons that suit the finance capitalists.

            Your commodity ‘money’, if that is what you are proposing wouldn’t solve that problem. In fact it would hamstring governments even more than the ever failing gold standard did.

        • JohnG January 7, 2016 at 2:31 am #

          There is no money created by QE. It’s just an asset swap.

          Your view appears to be that money is fraud and/or that money creation offends your sense of morality.

          And from that you ascribe the fact to the problems we have.

          Which is similar to the Positive Money crowd.

          I would suggest that the problems we have are not the monetary system per se (in fact it could work very well) but with the political/big business nexus and the propaganda that peddles and reinforces the myths that suit the agenda of finance capitalism.

          You’re all wanting to throw the baby out with the bathwater.

          We’re trained to see fiscal deficits as the great threat to the economy rather than unemployment.

          And we’re trained to believe that public debt is a private sector liability. It isn’t. It is a private sector asset.

          The results of these neoliberal ideological absurdities being put into practice are all too obvious.

          • Wesley and Bond February 7, 2016 at 6:38 am #

            Fortunately, JohnG, I’ve NOT been trained to see public debt as a private sector liability… Like our kind host, I’m blessed with NOT having any formal economics training. And I can tell you this, the valuation swings in that “private sector asset” that we’ve been seeing in the last few years (throughout sovereign debt history!) has convinced me that government bonds are most deffo NOT risk-free assets. Can you borrow against them? Sure. Do they possess some money-like aspects? Yes. But they are not MONEY. In fact, they have the ability to drop to worthlessness. Money does not do that. So while you may think that public sector debt issuance increases private sector assets, I see one of the biggest bubbles being blown in history. The flattening in the US yield curve that has occurred during the last 60 days is telling its own story… But I’m glad you feel richer!

            ps: I’m not sure what YOU call the High Powered Money that the FED credits primary dealers’ accounts with when it purchases securities, but it most certainly is a form of credit “money”. Something is being created out of thin-air to exchange for that “asset swap” occur…

    • Jon January 4, 2016 at 10:09 pm #

      We don’t have fractional reserve banking??? Many western countries use his method – Modern Money Mechanics explains it very well if my memory serves. Some countries like Singapore use a much higher rate of reserve….and have never suffered a banking collapse mostly because of this.

      • JohnG January 4, 2016 at 11:09 pm #

        You might be confusing capital ratios with reserves.

        • Wesley - J's "buddy" February 2, 2016 at 9:45 am #

          https://www.community-exchange.org/docs/ModernMoneyMechanics.pdf

          He’s clearly not confused about a thing… other than perhaps his perfectly understandable difficulty grokking MMT-speak, and its steadfast resistance to calling a rose, a rose… and the Federal Reserve Bank agrees with him!

          • JohnG February 2, 2016 at 10:06 am #

            You’ve already agreed that the money multiplier is a myth.

            More double think.

            Just plain dumb.

          • Wesley fully reserved February 7, 2016 at 7:10 am #

            Jon said nothing about a money multiplier (neither have I!)… and in fact Jon referred you correctly to a Federal Reserve document that was self-explanatory. When you become less offended by the fact that the whole world (besides MMTers) calls FED liabilities to the banking sector “reserves”(including the FED itself!) – then this will become less of a hot button for you. You wanna’ call it High Powered Money – HPM. You wanna think in terms of horizontal and vertical money flows – g’head. You wanna’ call it Stardust… fine. But the only double-thinking here occurs when you insist the rest of world use constructions only known in the fictitious world of MMT. Sticks and stones JohnG – bad habit of yours!

            Language matters – and right now the FED is sitting on a mighty big heap of EXCESS reserves – HPM that they’re paying interest on! I’m beginning to believe that your constant bandying of MMT-speak with the assumption that we’re all drinking your KoolAid is intentionally provocative. Not charming. You wanna’ just throw these one-liner grenades into the pool without defining your own terms, you gotta’ expect to get splashed.

            https://research.stlouisfed.org/fred2/series/EXCSRESNS

  4. william January 2, 2016 at 4:44 am #

    You speak of rationality as if it were an evil force. What is wrong with being careful not to harm others with ones decisions? What is wrong with making informed decisions? The real problem is that people in power often use “selective” logic, ie. they pick their logic to suit their needs and agenda. They use selective facts and statistics to demean others with contrary views. I worked in government and from my view, many but not all were very short sighted, politically motivated and incompetent. In those circumstances, it is very useful to hire professionals with integrity to help our officials make wise decision. The problem comes when those contributing professionals have vested interests in the policies they are helping to formulate. More accurately then, this is a form of intellectual nepotism. What is needed then are advisory groups made up of business, university intellectuals, and lay civilians. On this basis rational consensus can be formulated which indeed would benefit society and not just those who are involved in the decision making. Remember, in their beginnings, democracy begot Hitler,i Lenin, and many others of their vane; is that what you are advocating? Do we really want the uninformed making national policy decisions? The challenge is to design a decision making system that is not corruptible or dominated by vested interests of any kind, including those who are trying to get re-elected.

    • Golem XIV January 2, 2016 at 11:40 am #

      Hello William.

      Thank you for your comment. I’m sorry if the article came across as anti rational. My target as per the title was the demonising of dissent.

      Obviously I think having informed decisions is better than uninformed ones. As you say it is a matter of who makes the decisions and what interests they serve.

      What I hoped I was raising was just one of the means by which one group (the Over Class) will claim to have ownership of ‘evidence’ and ‘rationality’ suggest that anyone who disagrees with them is Irrational.

      My intent is to show how terms can be captured and used against a pluralism of proper debate.

      The very first film I ever made looked at how the UK government decided what level of exposure to industrial chemicals was and was not safe for people working with them. I saw first hand how expert opinion can be selectively used and ignored. How the government could enforce an obviously poor and sometimes dan serous decision under the mantle of ‘rational evidence based’ when it was anything but.

      I saw clearly how other evidence and other scientists were excluded. SO I am with you on how it is done and equally clear that we gin nothing by turning to obscurantism and voodoo.

      The dangers are great. Anti-intellectualism abounds already. Witness Mr Trump just a few years after Mr Bush. History will surely see a retreat into ignorance in those choices.

    • john w g January 3, 2016 at 9:17 am #

      Who get’s to decide whose argument is rational? Who get’s to decide what are “acceptable” axioms? It is when people decide some axioms are not “acceptable” or that just because you disagree with my clearly rational point then your disagreement must be due to your lack of rationality……

      The whole concept of rationality, and rational discourse and disagreement is being proposed to be turned on it’s head in this latest discourse by our host. That is what he is warning against as I understand him.

    • jawbone January 4, 2016 at 7:12 pm #

      I would posit that given the tendency of the Mainstream Corporate Media to parrot the information and lines of thought that the Powers That Be — or the government acting on their behalf — want known means most people ,who do not have unlimited time to access sources other than the MCM, by definition do not have all the facts necessary to challenge what the “professionals” tell them.

      Some people who do not get much of their information, “facts” as presented by the government, powerful spokespeople, the MCM, will believe they are acting rationally when they tend to agree with those powers. Many people I know are working so many hours, commuting additional hours, tending to house and family that they are lucky to sit down to watch broadcast news or listen to, say, NPR while they prepare meals, etc. They may hear some things which strike them as unlikely, but have little time to do further research or to find trusted blog sources which do such research.

      I live in the NYC metropolitan area where the NYC public radio station, WNYC, is considered the best source of local news for both NY and NJ. As far as I can tell, they do a good job of local reporting. They have well known and some unknown experts and analysts on their talk shows to discuss important national and international topics. These experts and analysts are the “professionalized” advisers, elected and appointed government officials, and the accepted reporters for major newspapers. They may be asked perceptive questions, but they still use the majority of their time to push the PCB line of thinking and propaganda.

      Only rarely is someone such as Glenn Greenwald given air time — and his ilk is usually kept within the box in terms of what is covered by the host or reporter’s questions. I recall that Noam Chomsky was allowed on in the past few years, but only during fundraising for a very short segment and then years later to talk about his autobiography, iirc. Jill Stein of the Green Party got perhaps 20 minutes of air time when she ran for president.

      Now, and when this began exactly I don’t know, but it was recent, WNYC has eliminated comments on its “show pages.” Comments must now be placed on their Facebook page or on Twitter. I only realized this when David Remnick, editor of The New Yorker who now has an hour show on WNYC, was on WNYC talking about the history of the current Syrian war. I was taken aback at how closely he hewed to the government line about what happened in that nation and what he had left out, and I wanted to post a few links where listeners could find some opposing/additional reporting about how the conflict began there.

      Of course, not being down with Facebook, I could not comment. Nor do I like Twitter. So, now, is WNYC using Facebook as a means to censor? Save the money for an intern who could monitor and edit out the vile comments?

      The effect is to censor or at least stifle debate.

      Making it even more difficult to know what really is going on and how such things are happening.

  5. HomerJS January 2, 2016 at 11:20 am #

    As has been stated, this has already started. I have heard David Cameron talk about those who are frightening people with their wild perspectives, for which they have their own agenda, that are misinforming the public. I have read the increasing use of the term ‘conspiracy theory’ as a means of dismissing contrary or challenging perspectives. As per usual we are seeing Tory MPs repeating these mantra, supported by their propaganda machine (aka the MSM). It will start off gentle but slowly increase pace once enough of the public have bought into the arguments. I think some of the debate around Syria (the bombing) has demonstrated much of what you have talked about here.

    • Generalfeldmarschall von Hindenburg January 14, 2016 at 8:20 am #

      The “Conspiracy Theorist” label is a really handy cudgel to stifle free exchange of ideas. The people using it have no trouble trucking out their own Conspiracy Theories when it suits their agenda. Usually to cause panic which requires increased police powers to fend off some fake bogey.

    • Wesley - Against February 2, 2016 at 9:59 am #

      America is still essentially prosecuting our longest war in history… and shortly after this impossible “war on terror” began, George Bush and the MSM essentially structured the decision matrix as, “You’re either with us, or against us.” The expression of dissent then had the intended result of branding the dissenter as “against” the Country… and basically un-American. The use of a crisis to shape public opinion in favor of the needless expenditure of 6 Trillion dollars and the senseless slaughter of countless thousands of innocent lives was quite effective. Effective at neutering democracy.

  6. Spartacus Rex January 2, 2016 at 11:39 am #

    1. Democracy is the freedom to choose wisely.

    Correction! Democracy is two wolves and a lamb voting on what’s for dinner!
    Liberty is the freedom to choose, and one had best choose “wisely”, as they will ultimately be held accountable for their choices whether in this world or the next.

    2. In a globalized, inter-dependant world we cannot afford to choose irrationally or disastrously.

    A “globalized, inter-dependent world” is also a choice, as one can also choose to live more locally, self-dependent and reliant, whereby in such case, any mistake in choice would be extremely limited and locally / self-contained.

    3. It is not what you believe but how you believe it.

    So then what? If what one “believes” is actually false, it’s okay as long as they “believed it wholeheartedly?
    Wasn’t that the Nazi’s excuse (“I was just following orders”) at the Nurmeberg Trials?

    4. Believe things rationally, based on evidence, with regard to how your beliefs affect those around you.

    Sounds great in theory, however World history repeatedly demonstrates a failure to execute.

    5. If you know someone who doesn’t, they may be irrational and suffering from a mental disorder in which the personal notoriety of being contrarian matters more to them than any harm they might do to the safety and stability we all depend upon.

    I believe that was the Sanhedrin’s line of reasoning as well in order to crucify Jesus Christ.
    Kind of funny how they succeeded in murdering all of the prophets of the Old Testament in a cognitive dissonance, good conscience kind of way nevertheless.

    Also in spite of “John G”’s ignorance displayed above, fractional reserve banking and the Central Banksters’ ability to create “credit” ergo Debt, out of thin air and collect interest on same via coercion and force through their lackeys picked to sit in the seat of gov’ts, as well as drive up prices via debasing their fiat IOU currencies is the Root of All of our Problems, yet how many are prepared to forgo using same and return to using honest lawful money of gold and silver Coin?

    ​Paper is poverty,…it is only the ghost of money, and not money itself” President Thomas Jefferson, Letter to Edward Carrington 1788

    History records that the money changers have used every form of abuse, intrigue,
    deceit, and violent means possible to maintain their control over governments by
    controlling money and its issuance. -James Madison

    “By a continuing process of inflation governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.

    Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

    Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

    John Maynard Keynes The Economic Consequences of Peace (1919)

    “Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them, and these will continue till they are resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they oppress.”

    Frederick Douglass, “If There Is No Struggle, There Is No Progress”

    The world is a dangerous place, not because of those who do evil,
    but because of those who look on and do nothing. Albert Einstein

    Cheers & Happy New Year,

    S. Rex

    • Golem XIV January 2, 2016 at 1:14 pm #

      Happy New Year S. Rex,

      I hope it was very clear that the list I put at the end which you commented upon was a list of their thoughts not what I think?

      Anyway I agree with all your quotes and that central bankers do create money from nothing and in so doing can debase the currency.

      But two things – I’d like to suggest to you.

      1) The private banks also conjure money in the form of credit/debt out of thin air. And I think there is a very good argument to be made that the private banks creation of debt precedes and is of equal importance to the actions of the central bankers. I would argue they are two interlocking parts of the same system.

      So to pick on the central banks without also applying the same critique to the private banks is to miss half your target.

      2) I said ‘can’ debase rather than do for this reason – I take money to be primarily a token of value and as such the important thing is to have the right balance of tokens to the amount of economic activity. If you accept this – and you may well not – then there is a place for increasing and decreasing the supply of tokens . BUT it must be in line with and commensurate with the amount of actual economic activity. If banks of any type simply create debt out of thin air without regard to the actual economic activity, if the create debt simply as a speculative tool in and of itself – then exactly as you say the effect is to hollow out the value of the currency and rob those who hold it.

      So for me it is not just the central bankers it is the whole banking system.

      The the question becomes what kind of money system do we really want and how should we control issuance of money or credit in that system?

      I agree debt can very easily become enslavement. So I try to keep my use of debt to as little as possible. I don’t use credit cards and have no loans other than my mortgage which I pay off as fast as I can.

      Anyway thank you for your thoughts.

      • Spartacus Rex January 3, 2016 at 11:34 am #

        Well David, regarding the list, it was clear to me, anyhow just thought I would chip in and offer some rebuttals which your readers may consider using should anyone otherwise try to blow such smoke in their faces.

        Re: 1)
        I can see how you could have come up with the erroneous notion that I was excluding “private” (member) banks from my criticism, given that the BOE has had a different outcome, since being nationalized in 1946, and subsequently put wholly under the Treasury Solicitor in 1998, whereas on my side of the pond the Central Bank (Phederal Reserve) is still wholly owned by private (Bankster) stockholders, as was the BOE for the first 252 years of its existence, thus the Phederal Reserve System Dog & Pony show was merely set up in 1913 to serve these Banksters’ interests, ergo why these Banksters were able to get TARPed out of their insolvency by their lackeys in the U.S. Congress, (at the expense of U.S. Taxpayers and the rest of the World holding FRN Currency and U.S. Treasuries via currency debasement) even though the overwhelming vast majority of Citizens were totally opposed to the Bail Out For Banksters.
        So we are in 100% agreement as to who the culprits are.

        Re: 2)
        “token of value”.
        Hmm, I am going to gamble here David, that the acorn does not fall far from the tree (R.I.P.) and ask if you are willing, thus open to questioning whether the narrative which you were presented with, thus lending to your “take”, was indeed in fact the true and accurate representation of the ‘whole picture’ as it were?

        To your (and your progenitors’) credit, you indeed raised the caveat “BUT”, and any honest person should have no difficulty in answering the question as to ‘Gee, how’s that been working out for us so far?’ Or as they say in Latin:
        Quis custodiet ipsos custodes?

        While the Banksters have little difficulty persuading Corporations, Manufacturers and Merchants that an “elastic” currency is good for their bottom line, as it allows for holding up, and even raising prices,

        however to pensioners living on fixed incomes which routinely fail to keep up with the costs of “Inflation” (Debasement of the currency) and even wind up losing their homes since their property taxes continuously increase, based upon “assessed value” in fiat currency, and the paltry interest earned on their life savings due to present ZIRP policies,

        obviously cannot keep up with the cost of living in a ponzied world of finance benefiting the “Overlords”, such “elasticity” has little benefit to same, anymore than it does to the working middle class which is at the bottom of the totem pole, while somehow the likes of Bigwig CEOs like Jeff Bezos of Amazon, while managing to cumulatively earn 2 Billion over 20 years for Amazon shareholders, somehow managed to pull down for himself, a 16 Billion compensation package for 2014 (ie 8X what he earned for shareholders over 20 years)

        Could that even remotely have been accomplished David, if we were dealing in actual honest, lawful money terms using gold and silver Coins?

        You see David, in an actual Honest, “Free” Market place, Prices and Profits have an uncanny tendency to reflect their true “value” based upon the actual amount of real honest money existing in that marketplace of which they must compete for, ergo why your grandparents only paid a mere fraction of what we now face in this fraudulent “elastic” ponzied currency marketplace world, because in a non manipulated, fair and honest marketplace, it is the prices themselves which naturally “increase or decrease” according to current market conditions / existing money supply, thus protecting the working middle class and allowing same to stay out of “consumer” debt, versus favoring and benefiting the Bankster class and their profiteering sycophants, so obviously I do not accept that Bankster fallacy of there being any legitimate reason or “place for increasing and decreasing the supply of (their) tokens”.

        In regards to your question:
        “what kind of money system do we really want and how should we control issuance of money or credit in that system?”

        Aristotle came up with the definition of good (sound) money eons ago. Kind of funny how gold and silver precisely meet that criteria and thus Coins of same have been used as “Money” for thousands of years.

        And this ponzi scheme of fractional reserve banking / fiat credit and debt paper passing off for currency is not new, it has been being pulled off by Banksters for centuries.

        For in that universal call,
        Few bankers will to heaven be mounters;
        They’ll cry, “Ye shops, upon us fall!
        Conceal and cover us, ye counters!
        When other hands the scales shall hold,
        And they, in men’s and angels’ sight
        Produced with all their bills and gold,
        ‘Weigh’d in the balance and found light!'”
        — Jonathan Swift, The Run on the Bankers

        When legislators, after having ruined men by war and taxes, persevere in their idea, they say to themselves, ‘If the people suffer, it is because there is not money enough. We must make some.’ And as it is not easy to multiply the precious metals, especially when the pretended resources of prohibition have been exhausted, they add, ‘We will make fictitious money, nothing is more easy, and then every citizen will have his pocket-book full of it, and they will all be rich.’ — Frédéric Bastiat

        “Of all the contrivances devised for cheating the laboring classes
        of mankind, none has been more effective than that which deludes him 
        with paper money.” Daniel Webster

        Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked, ‘Account overdrawn.’– “Ayn Rand, Atlas Shrugged”

        “The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title.”- Anonymous

        The issue which has swept down the centuries…and which will have to be fought sooner or later…is the people vs. the banks. – Lord Acton, Historian…1834 – 1902

        Those who do not remember the past are condemned to repeat it. George Santayana

        It is the common fate of the indolent to see their rights become a prey to the active. The condition upon which God hath given liberty to man is eternal vigilance; which condition if he break, servitude is at once the consequence of his crime and the punishment of his guilt. John Philpot Curran (1750-1817)

        Stealing the world can be fun
        It doesn’t require a gun
        Just hire some guy
        To print to the sky
        Then buy all the assets and run!
        ~ @TheLimerickKing

        Cheers,
        S. Rex

      • Wesley January 7, 2016 at 4:57 pm #

        Thank you for hosting this fine forum!
        1/ Indeed, the vast majority of that which you’ve been programmed and duped into calling “money” is created by the act of private bank loan creation. Total Credit Market Debt Outstanding in the US is 5 times the size of the entire economy! The “tokens” that we use for a pint are but 3% of that which is unseen: the checkable, demand deposit liabilities of banks. However, in my view, money should not be the irredeemable instruments of debt currently forced upon us by myriad laws. Money, at least in the ‘States, is actually a Constitutionally defined unit of precious metals. There’s a reason why a Casino will always change your “money” into lots of colorful tokens. Were they gold or silver coins, you would be far more reluctant to part with them!
        2/ The “right balance of tokens” is essential to the correct functioning of any monetary system. And the mechanism for the growth and contraction of fiduciary media is based specifically on economic activity. To wit, if I, Wesley the Farmer supplies you, David the Baker with Wheat flour – I can and do extend you credit for the payment of my farming product – my work. Once you’ve added your labor to this flour, transforming it into luscious bread, and sell it to the end customer, you receive money (silver coins) for your efforts. After permanently destroying the credit I extended you by repaying me for my flour, I have seed money and you have profit for your purposes. Actual economic activity caused a natural expansion in overall balance sheets, TEMPORARILY. In the current system, there is no mechanism for the extinguishment of debt. All “deposits” in the banking system grow larger incessantly. If they do not, under the current, fatally flawed system of legalised theft, the system implodes. Attempts to reduce debt in the system immediately cause collapse. (See the exceedingly clever piece of Establishment propaganda linked by the Finn).

        The fact of the matter is that permanent, unending inflation of that which JohnG would have us call “money” is a feature of the system, not a bug. If the “rentier class” really did prefer deflation, do you really think that instances of contractions in total debt would be so few, and cause such strife? No, it’s the fraudulent ability of banks to create debt from thin air in amounts that DO NOT represent actual underlying economic activity that cause the problems to which Rex correctly referred. The so-called Lender of Last Resort functioning of Central Banks was meant as a discounting mechanism. Instruments of credit representing actual economic activity could be taken to the Bank (BOE), discounted, and gold exchanged when a commercial bank was met with extraordinary “liquidity” issues (another topic entirely!). The credit instrument would later then be permanently liquidated when the original receiver of the bank credit paid the note with real money at full face. Smaller balance sheets, credit contraction. This cannot be accomplished today. All dollars end up as Treasuries!

        Now, allow those Banks to create additional credit on the basis of this Treasury debt as collateral, and you begin to describe the current fiasco. And that leaves aside a necessary description of massive shadow banking credit creation on top. Rehypothecation of collateral ad-infinitum! The jig is up. This is not the kind of monetary system that serves mankind, but rather just the first receivers of the continuously debased monetary instrument. Unpayable debt will not be paid, and the fraudulent issuance of such debt will deflate. All rational thinking, evidence-based observers of this insidious process have a difficult battle reclaiming the definition of money.

        I believe money should be anything that you and I agree to exchange voluntarily, in our willingly undertaken transactions. The permanent and growing debt instruments we are forced to use today in these transactions, and in settlement of taxes is NOT money. The pathway to that ideal is the permanent destruction and extinguishment of the unpayable debt in the world. Keep in mind that legally, as JohnG is fond of reminding us, your checkable, on-demand “deposit” at your friendly neighborhood bank is considered a loan from you to them – a liability of the bank. Many “depositors” in Cyprus, in Greece, and recently Italy are learning what that really means…
        Respectfully,

        • JohnG January 7, 2016 at 8:32 pm #

          “The permanent and growing debt instruments we are forced to use today in these transactions, and in settlement of taxes is NOT money.”

          In fact taxes are paid with high powered money i.e.reserves.

          “All dollars end up as Treasuries!”

          No, in the long run all government dollars are extinguished by taxation.

          All bank credit dollars are extinguished on repayment of principal.

      • Wesley January 7, 2016 at 8:58 pm #

        To tie this monetary sub-plot in to the interesting posting above on the Re-Branding of Dissent, I have found the process by which my attempts at civil, reasoned, rational discourse have been met by those who find my take on “things” to be in conflict with their cherished world views fascinating! So far, while employing only the most courteous and logical constructions, I have been labelled an “Austrian” (and that my readings are limited to one school of thought); an unreasonable and unreasoning “Libertarian”; that I am possessed of an ideological view lacking a grasp of reality; that my arguments are only “spurious assertions” riddled with “strawman arguments”; that my dissenting view of the world is a “fantasy” – an entire body of economic thought is outrightly denied out of hand as being solely a “political ideology” devoid of “mathematics or falsifiable science”; I am said to be a “dupe of the very rich” deceitfully advocating an “ideology” in some sort of hidden unmentioned way; that I am rude, dismissive and not read sufficiently wide; I am a “rookie” making “rookie mistake(s)” whose specific citations are “irrelevant”; that I have reached the “limit of my desire to learn” – and in the same breath, again, an abusive Libertarian; that one of societies’ most pressing concerns today (sovereign indebtedness) is “nothing to worry about whatsoever” and I should focus elsewhere (keep moving… Nothing to see here); that we should “rethink (our) worldview” – presumably until ours comes into alignment with the hoped-for group-think – we need to choose more wisely. Viewing the world differently means that MY view of how things work is based on a “distorted understanding”, at best thousands (“4-5000”) years-old anachronisms. My reluctance to subscribe and toe-the-party-line indicates my unwillingness to learn how “the system really works” and that I will fall prey to “traps everywhere”. Providing or even discussing alternative solutions would be “perverting the political choices of the public at large”. We can have “better societies” if one follows the suggested line, else, it’s clear that individual has a “serious problem with their learning process” – leading to “disasters”. I am told I “need to get over it” (presumably my continued clinging to a radically different opinion), “and understand it” (presumably if I Dissent, I lack understanding). When confronted with inescapable logic, and in his own words, the solution is simply to resort to denial – if I close my eyes, perhaps you’ll not see me!

        The process was a not-so-subtle clubbing with a very specialized vocabulary of code and trigger-words. It may not be long before I am labelled irrational and possibly suffering from a newly discovered mental disorder! The horror…

        • JohnG January 7, 2016 at 9:45 pm #

          The principal ideas behind functional finance can be summarized as:[1]

          Governments have to intervene in the national and global economy; they are not self-regulating.
          The principal economic objective of the state should be to ensure a prosperous economy.
          Money is a creature of the state; it has to be managed.
          Fiscal policy should be directed in light of its impact on the economy, and the budget should be managed accordingly, that is, ‘balancing revenue and spending’ is not important; prosperity is important.
          The amount and pace of government spending should be set in light of the desired level of activity, and taxes should be levied for their economic impact, rather than to raise revenue.
          Principles of ‘sound finance’ apply to individuals. They make sense for individuals, households, businesses, and non-sovereign governments (such as cities and individual US states) but do not apply to the governments of sovereign states, capable of issuing money.

          https://en.wikipedia.org/wiki/Functional_finance

    • JohnG January 3, 2016 at 12:53 am #

      You can accuse me of ignorance all you like but it is a fact that we don’t have fractional reserve banking.

      Loans create deposits, banks don’t require deposits to make loans and reserves are never lent outside the payments system nor used to make loans. Nor is central bank money ‘multiplied’ to make loans.

      The money multiplier and fractional reserve banking are myths.Myths designed to confuse and mislead.

      • john w g January 3, 2016 at 9:25 am #

        What you describe is in fact fractional reserve banking and endogenous private money creation. If you follow the math, the loans create deposits that then can be used to by banks to make more loans while still meeting the CB required “fractional reserve” ratio. The two concepts of fractional reserve and endogenous money creation are linked at the hip in modern banking.

        See the description by the US FED on bank reserve requirements.

        http://www.federalreserve.gov/monetarypolicy/reservereq.htm

        • JohnG January 3, 2016 at 9:53 am #

          “What you describe is in fact fractional reserve banking”

          No it isn’t.

          Most modern countries have no reserve requirement other than to have a positive balance at the end of each day.

          Your linked paper says this. “Reserve requirements are the amount of funds that a depository institution must hold in reserve against specified deposit liabilities.”

          Note please “deposit liabilities”.

          • john w g January 3, 2016 at 9:29 pm #

            So why do banks take deposits at all? What is the business basis for taking on the liability of a demand deposit? What is the value of the deposit that offsets this liability?

          • john w g January 3, 2016 at 9:54 pm #

            More from the FR. http://www.federalreserve.gov/monetarypolicy/0693lead.pdf

            Bottom line is a Fraction of the deposits must be held in cash or “very secure” assets (which are typically also low paying). The rest of the deposits can be used for more risky and hence higher return bank investments.

            The answer to the question I posed is quite simple. the banks use the deposit funding to purchase investment grade securities to provide for bank income.

            Step 1: Make a collateralized loan (exogenous money creation)
            Step 2: Loan creates a bank deposit
            Step 3: Reserve a fraction of this new money in low-risk, low return forms, based on regulation and/or internal risk analysis
            Step 4: Use the remaining unreserved cash to purchase higher risk and higher return assets
            Step 5: Use the income stream to pay for bank overhead and profit to the bank owners.

            As I said, the two pillars of bank endogenous money creation (mostly private banks) and fractional reserve banking (which increases leverage, potential return, and risk of default) are conjoined twins in the modern banking system.

            Under current regulations, all depository
            institutions — commercial banks, savings banks,
            thrift institutions, and credit unions

            are required to maintain reserves against transaction deposits, which include demand deposits, negotiable order of withdrawal accounts, and other highly liquid funds.

            Reserves against these deposits can take the
            form either of currency on hand (vault cash) or
            balances at the Federal Reserve. The Federal
            Reserve may vary the percentage of transaction
            deposits that must be kept in reserve, but only
            within fairly narrow limits prescribed by law;
            requirements may also be imposed on certain types
            of nontransaction accounts, though again only
            within specified limits.

            At present, the required reserve ratio on nontransaction accounts is zero, while the requirement on transaction deposits is 10 percent, which is near the legal minimum.
            Most depositories are able to satisfy their entire
            reserve requirement with vault cash, which they
            hold primarily to meet the liquidity needs of their
            customers and would likely hold even in the absence of reserve requirements. For these institutions, reserve requirements are essentially costless. About 3,000 depositories, however, have vault cash holdings that are insufficient to satisfy their entire reserve requirement. To meet their requirements, these institutions must also maintain deposits, called required reserve balances, at the Federal Reserve

        • JohnG January 3, 2016 at 10:03 pm #

          Because they are usually the cheapest source of ‘funding’.

          http://bilbo.economicoutlook.net/blog/?p=14620

      • Spartacus Rex January 3, 2016 at 11:37 am #

        @ John G

        Obviously Banking, Finance, Law and History are not your Forte.

        How about Latin?
        Antiquis temporibus, nati tibi similes in rupibus ventosissimis exponebantur ad necem

        When a man’s knowledge is not in order, the more of it he has the greater will be his confusion. Herbert Spencer

        Cheers,
        S. Rex

        • JohnG January 3, 2016 at 9:19 pm #

          In fact macroeconomics, including the banking system is my forte. I should know better than to try to reason with a ‘libertarian’ though.

          Try reading more widely i.e. from outside the Austrian School.

          • Wesley January 4, 2016 at 8:40 pm #

            The Fractional Reserve banking discussion sub-thread here has my interest piqued. Seeking closure. Please recommend appropriate references “outside” of the Austrian School. Also, interested to understand how the creation of fiduciary, payment media accounting entries ex-nihilo by banking system loan creation is not a form of counterfeiting?

          • JohnG January 4, 2016 at 9:31 pm #

            Wesley, try this.

            http://heteconomist.com/verticalhorizontal-vs-exogenousendogenous/

            or this: http://bilbo.economicoutlook.net/blog/?p=9075

            Other good sources are Bill Mitchell’s Billyblog, Warren Mosler, New Economic Perspectives, L.Randall Wray.

          • Wesley January 5, 2016 at 3:21 am #

            JohnG – thanks for your diligent and sincere reply. New to this blog today, I thought your comments were hinting at something I had not considered. It is now obvious that you are an MMT advocate – a train of central planning thought that has not only demonstrably failed in all prior attempts, but also operates on the basis of coercion and law to enforce its inflationary outcomes. I prefer the freedom and liberty of individual choice. Counterfeit credit will always be a form of theft – good intentions notwithstanding. MMT simply cannot address these issues, succinctly raised here, and elsewhere: https://monetary-metals.com/fans-of-central-banking-have-an-achilles-heel/

          • JohnG January 5, 2016 at 9:41 pm #

            MMT is merely the accurate description of the modern state monetary system as it exists.

            In and of itself it contains or proscribes no ideology per se.

            The Austrian School and its ‘libertarian’ followers are the polar opposite.

            All ideology, no reality.

            To wit, your link is a series of strawman arguments and spurious assertions.

          • Wesley January 6, 2016 at 12:50 am #

            The irony of your words should already be self-evident, as the world’s “central” banking model is imploding around us visibly. I am not driven by an ideology, rather by results. The admittedly limited scope of my link aside, I fear your illogical MMT advocacy, (supporting counterfeit credit creation as the basis of “money”) and I will not soon reconcile – certainly not before that which it purports to describe succombs to its mathematically guaranteed, debt saturation limits.
            I seek to see sustainable systems of “money” and wealth transfer once again emerge from the rubble of MMT’s well-intentioned nightmare of legalised theft.

          • JohnG January 6, 2016 at 3:20 am #

            Again, MMT is the accurate description of the state monetary system that we have.

            I have no need to ‘advocate’ it. We have the system we have.

            What Libertarians see is a fantasy. And Austrian ‘economics’ are pure political ideology. No mathematics nor falsifiable science involved.

            That’s why you resort to strawman arguments always.

      • Wesley January 6, 2016 at 12:47 am #

        What is not a myth, JohnG, despite your clever, yet accurate protestations above as to what is NOT: the failed (legal cartelized) banking model currently employed permits the fictitious accounting entry you now define as “money” to be manifested ex-nihilo. If you or I do the equivalent, it is called counterfeiting. The subtle linguistic points you draw between bank reserves and demand-deposit banking liabilities to the public seem to be employed by your good self to confuse and mislead. I should like to lend “money” into existence too!

        • JohnG January 6, 2016 at 3:32 am #

          Personally, I’d nationalise all the banks and keep credit creation under democratic control. And make the central bank a sub-department within Treasury.

          But that doesn’t fit with your ‘libertarian’ ideology.

          With all due respect you are dupes of the very rich advocating ideology that enriches the very people you would have us believe you are railing against.

          We have ample evidence of where deregulation and deflationary bias gets us.

          • Wesley January 6, 2016 at 10:59 pm #

            JohnG: I’ve not proposed any “Austrian” or Libertarian solutions, neither have I given you cause to assert my unintended support of the status-quo – the wealthiest and most powerful of which are doing everything in their power to preserve. No, if John Q Public were to have the slightest inkling as to the invisible crime being fomented by the banking system such as it has devolved, there would be blood in the streets tonight. The well-intentioned but misguided Positive Money group in the UK are making real progress along the lines you support – issuance of debt-free “money” spent directly into circulation by governments… Alas, history has well shown what the power of the “printing press” (credit creation) in the hands of Treasury will lead to. Lincoln’s Greenback and the Revolutionary scrip generated inflations are well documented. The power to make war coupled with the ability to pay for warmaking with ex-nihilo credit is essentially is a conflation of powers that has caused the instant strife. Add to that the “tyranny of the majority” (democratic control of credit creation), and soon your free lunch is my inability to preserve the purchasing power of my hard-earned savings. Failures. Why would you persist in the face of such obvious and disastrous results?
            I find your horror of deflationary results to be telling. Only Central Bankers, those with unpayable debts, and those who would spend other peoples’ money are so afraid of deflation. Definitions matter, of course, so perhaps your definition of deflation differs from the common understanding associated with consumer prices. My definition, different too than common, entails the destruction of counterfeit credit. Soon, the reflationary attempts by the Central Planners will be overwhelmed, and deflation will thankfully ensue, eliminating the fraudulent paper wealth of all those whom you seem to suspect that I am in thrall. Further, to characterize our banking system as unregulated misses the entire, sordid history of this monstrosity. Sure, depression era (Glass Steagal etc) “regulations” were improperly stripped out from within a huge mountain of regulatory infrastructure. But that misses the point of the Government enforced coddling of the entire, cartelized architecture of banking, taxation and legal tender laws! You must look more deeply. Why cannot I lend “money” into existence personally, in the Democratic fashion you suggest? As long as you pay me back with interest from your hard-earned wages, there should be no problem. And the deposit liability you create with that ex-nihilo credit is insured, too. No worries.
            It’s wrong on its face JohnG – but I would sooner have debt-free money issuing from Treasury, than that which we have now… ☺

        • JohnG January 6, 2016 at 11:44 pm #

          I do not subscribe to Positive Money’s approach. They have the monetarists’ view of how the system works and they’re just plain wrong.

          You can issue credit yourself. You just need to become an LFI and lodge the required capital.

          Deflation is disastrous to the public interest. The creditors’ nominal financial holdings don’t decline whilst prices and wages do. Clearly the creditor class is the winner.

          We DO have debt free money issued from the Government now. That’s what you call the ‘national debt’ but should more accurately be called private and foreign sector savings.

          We also have bank credit aka private debt.

          That is the essence of MMT. I can only urge you to read more widely before so rudely dismissing it.

          • Wesley January 7, 2016 at 3:52 am #

            JohnG: were it not for my hope that others might benefit from our banter, I would regret having ever opened this thread. Even when the local loan shark creates a loan on his books, the “money” must first have been earned (or stolen). Banks are in a different league entirely, and they have the law on their side! Deflation: do you know anyone who doesn’t appreciate the lower cost of computing and other incredible technology achievements that mankind is creating despite the inexorable forces of counterfeit credit inflation Central banking-enabled “policy” has wrought? Where do unelected bureaucrats come up with the upside-down notion that a man’s savings should lose half their value every half generation? We have huge amounts of inflation today worldwide, in counterfeit credit and the financialized assets it purchases. Don’t look now, JohnG, but deflation of those assets is happening presently – if only at the margin. Attempts to keep this tsunami inflated may not work this time round. Try borrowing a coupla’ quid in the High Yield market to invest in the Oil Patch. Good luck with that. Once this MMT induced bubble again goes pop! – the mild deflation that is the natural partner of mankind’s natural industriousness will encourage savings (you know, that awful thing that Keynesians call a reduction in demand). Money thus saved and incentivized naturally by a real rate of return, can then be loaned. And everyman (especially today with the unique aid of the internet) can loan money on the same basis, without becoming an LFI. Oh my goodness – the humanity!
            Next, the most inane bit of MMT KoolAid™: you would have me swallow the idea that our unpayable National Debt is really “private savings”? Our national debt is debt-free? I suddenly feel richer. Greece? Japan? Ireland? Portugal? France? Italy? They are even richer still by this New Math. So, if we issue more debt, we will have more private savings? I wish we had started our pleasant discussion right there – and leaving it right there… Trusting you will dig the hole even deeper, just like the Central Bankers of the world, I give you the last word. Cheers!

          • JohnG January 7, 2016 at 6:49 am #

            And PS. Clearly Greece, Ireland, Portugal, France and Italy are irrelevant for the obvious reason.

            A rookie mistake.

          • JCC January 16, 2016 at 4:24 pm #

            If this were true, “Deflation is disastrous to the public interest. The creditors’ nominal financial holdings don’t decline whilst prices and wages do. Clearly the creditor class is the winner.”, then why did the US Banking System need massive bailouts when housing prices deflated? Clearly the Creditor Class would have lost (if it wasn’t for Central Bank printing of lots of “money”.

            The Creditor Class, i.e. the Banks, hates deflation, if they didn’t they wouldn’t have left interest rates at 0.25% (and less) for as long as they have and the US Federal Reserve would not be fighting tooth and nail for inflation. Do you honestly think that those who ran Citi, GS, JPM and the rest were concerned most about my ability to pay them interest and only secondarily concerned with their bonuses?

            And generally speaking, I have no problem with deflation. So what if wages lessen as long as the price of staples lessens along with it?

            I tried to read my way through Randall Wray’s lessons on MMT, but the minute he called an automobile an “asset” he lost me completely. It’s not an asset, it’s a depreciating and ongoing money sink, anyone with a shred of common sense knows that.

            If MMT is an accurate description of our system, then obviously our system is a complete failure.

          • JohnG January 16, 2016 at 9:08 pm #

            Hi JCC, apologies if this doesn’t appear under your comment. The message clustering has gone haywire for me.

            It’s not the same to say that ultimately the creditor class gain all the assets in deflationary periods to saying that they actively want it.

            And they certainly don’t want it in such doses as to cause a revolution that would overthrow them.

            Deflation also causes balance sheet problems for the banks because their assets (the mortgages) decline in nominal value when they have to account for them on the balance sheet.

            But their share of the real underlying asset e.g. the house has gone to 100%.

            And generally speaking, I have no problem with deflation. So what if wages lessen as long as the price of staples lessens along with it?

            Because a lot of people have lost their jobs and incomes to cause the deflationary episode.

            You’ve missed out the cause.

          • JohnG January 16, 2016 at 9:47 pm #

            I tried to read my way through Randall Wray’s lessons on MMT, but the minute he called an automobile an “asset” he lost me completely. It’s not an asset, it’s a depreciating and ongoing money sink, anyone with a shred of common sense knows that.

            I think you’re confusing real assets with money.

          • Wesley - the rude January 16, 2016 at 11:25 pm #

            In the rebranded-reality world of MMT, you blandly assert that:

            “We DO have debt free money issued from the Government now. That’s what you call the ‘national debt’ but should more accurately be called private and foreign sector savings.”

            A sincere attempt to do the MMT background reading from links you generously provided still does not provide any help in understanding how you can characterize the national debt (such as it is today, not in some MMT dreamland), as being debt-free. What characteristic of the Treasury Bills, Notes and Bonds, and their inherent interest burdens (a common feature of debt) distinguishes them as being debt-free?

            I can see that Lincoln’s Greenbacks existed as debt-free bearer instruments of credit. The issue of tally-sticks in the UK might also fall into this category. I just don’t get how you can characterize the public debt of the US as debt-free…

            This so-called essential element of MMT is eluding my grasp.

          • JohnG January 16, 2016 at 11:32 pm #

            not in some MMT dreamland)

            Is that really necessary?

        • JohnG January 7, 2016 at 4:01 am #

          There’s nothing new about maths or sectoral balance accounting.

          Again, I think we’ve run up to the limit of your desire to learn.

          And in true ‘libertarian’ form, you’ve resorted to abuse.

          • JohnG January 7, 2016 at 5:03 am #

            “So, if we issue more debt, we will have more private savings? ”

            If the government net spends more i.e. runs a larger deficit, then net savings increase.

            Those savings will either exist as excess reserves in the payments system or (as occurs under the laws as they exist today) will be used to buy so called government debt aka Treasuries.

            So the net government accrued deficit exactly equals the net government debt which exactly equals the net non-government savings.

            But the issuing of those treasuries is not necessary. It’s another anachronism from gold standard days.

            The so called national debt is nothing to worry about whatsoever. It’s private debt that is the problem.

          • Roger January 8, 2016 at 1:35 pm #

            An interesting discussion Wesley and John boiling down the technical arguments from the political seems to have evaded you both it must surely be possible absent moral/political judgements to discern how the existing system operates in The Uk and The US and elsewhere, after all the systems exist? A favourite dialogue of mine is the one between Proudhon and Bastiat summarised here. http://praxeology.net/FB-PJP-DOI-Appx.htm I share Proudhons view regarding Interest and see the charging of Interest as the biggest problem of the monetary system. Jeremy Benthams in defence of Usury is in the Bastiat Camp albeit a dialogue between Bentham and Adam Smith http://www.econlib.org/library/Bentham/bnthUs.html ( interestingly one sided reminiscent of Sam Harris engaging Noam Chomsky, Smith did not respond at all though.) The question about issuing money is surely that when Money is created out of thin air it should be spent into existence without interest and that if Interest is thought to be a good idea then the Interest Component should be created at the same time. This is the fundamental question ( Bentham misses it completely and so does Bastiat in my recollection of the debate. I personally have philosophical, moral and religious objections to the charging of Interest, all Interest charges for me are usurious, My own political views actually reject Capitalism as well I do not think it works. We do have the system we have though and as JohnG says MMT is supposed to describe how the system we have works. Steve Keen is very good on endogenous money creation and bears very close attention I find. https://www.youtube.com/watch?v=T11PhS6J7Ig . Regardless of Political views it is the interest element that causes the damage when money is created as debt. This is the insight at the heart of the social credit movement.

          • JohnG January 8, 2016 at 11:03 pm #

            Roger. I have my own political views that are generally well to the left. But in the context of this debate, it is important for people to understand the system that we have so that they can see that the solutions to our problems are not insurmountable.

            Project Fear is a very powerful tool. But it is a cruel hoax. MMT is the path to debunking and defeating the deficit/debt terrorists.

            Bill Mitchell says far more eloquently than I am able to.

            http://bilbo.economicoutlook.net/blog/?p=32502

            “What MMT provides is a new lens to view the world we live in and the monetary system operations that are important in our daily lives.

            This new lens opens up new insights into what is going on in the economy on a daily basis. It’s not something to move to, it already is.

            MMT, as a new powerful lens, makes things that are obscured by neo-liberal narratives more transparent.

            It means that the series of interlinked myths that are advanced by conservative forces to distract us from understanding causality and consequence in policy-making and non-government sector decision-making are exposed.

            So when a Conservative politician or corporate leader claims that the government has run out of money and therefore cannot afford income support for the unemployed any longer at the levels previously enjoyed, MMT alerts us to the fact that this is a lie and that there must be an alternative agenda.”

          • Wesley January 8, 2016 at 11:19 pm #

            @Roger – happy to expand the “limits of my learning”, I am thrilled to have your kind links, including especially the Bastiat – Proudhon exchange. While I have not yet studied the letters, I do agree that the question here is one of political – moral judgment. And thankfully, where JohnG and I do NOT diverge is in our understanding of the actual process of “money” creation – regardless of his reluctance to call a rose a rose – I care not whether it is labelled “fractional reserve banking” or not. The fact is, both sides of the technical argument have stipulated that that which functions as “money” today hails from the act of ex-nihilo loan creation by commercial banks – and not from loaning out deposits. Similar to my discussion of chronology with @steviefinn relating to inflation/deflation, the common man still labours under the mistaken starting assumption that banks receive ones “deposits”, and then loans them out. This chronology is demonstrably backwards, and while non-controversial (even between JohnG and myself) – is quite literally misunderstood by most. Banking illiteracy by the general public is engineered and intentional. Therefore, the predicate for a discussion of the rights and wrongs of today’s methods of credit creation (and the levy of associated interest) must start there – else a false premise is left standing improperly. In my view, one cannot make a moral/political judgment about “usury” until one properly understands the difference between the function of interest in a real money system, and the levy of interest on the fiat, irredeemable, paper-“money” systems in effect today. Fact: if all debts were to be repaid, not only would there be no fiat “money” in existence today, there would in fact be a deficit of “money” necessary to settle the associated interest liability. Whenever you see the word “growth” being bandied incessantly by all well-meaning users, substitute the words “interest” and “inflation”, and you will have the accurate meaning. The insane, mathematically inherent, yet intentional “feature” in our present monetary system entails that total credit market debt outstanding MUST grow, or the system fails almost instantaneously. I have illustrated this assertion with a simple chart elsewhere here: (https://research.stlouisfed.org/fred2/series/TCMDO).

            Here’s the current Wikipedia entry on “Usury”:

            [ Usury (/ˈjuːʒəri/[1][2]) is, today, the practice of making unethical or immoral monetary loans that unfairly enrich the lender. Originally, usury meant interest of any kind. A loan may be considered usurious because of excessive or abusive interest rates or other factors. Historically in Christian societies, and in many Islamic societies today, charging any interest at all can be considered usury. Someone who practices usury can be called a usurer, but a more common term in contemporary English is “loan shark”. The term may be used in a moral sense—condemning taking advantage of others’ misfortunes—or in a legal sense where interest rates may be regulated by law. Historically, some cultures (e.g., Christianity in much of Medieval Europe, and Islam in many parts of the world today) have regarded charging any interest for loans as sinful. ]

            Noam Chomsky, a hero, will readily tell you – linguistics matter. It’s quite interesting that two of the world’s major religions are quite explicit in the area of “usury” – and so this question of economics is at the root intersection of politics and morality. One is a “usurer” in the States today when charging interest in excess of 24.99%. Below that, it is merely interest. Long ago, interest equalled usury. Sort of like the Keynesian inflationists: 2% is okay, but 20% is not better! Alright – predicate set (but with an open mind to the readings yet undertaken), I may make my point in context: The issuance of loans ex-nihilo and the charge of interest thereon, is both a fraud, inherently immoral, and should be abolished. However, the provision of credit or the loan of real money at interest, with a mechanism for its permanent extinguishing by any real MONEY or goods (that which is created or mixed with man’s labors) and mutually agreed, is perfectly sound, moral and encouraged.
            —–

            ps: I apologize to the community for lacking the skills and familiarity initially to understand the process by which these comments become “nested” herein…

          • Wesley January 9, 2016 at 12:59 am #

            Speaking of linguistics and Noam Chomsky:

            Roger: “…it must surely be possible absent moral/political judgements to discern how the existing system operates in the UK and the US and elsewhere, after all the systems exist?”

            Precisely.

            JohnG and his MMT exponent (Bill Mitchell) often caution us that MMT is not an ideology, but merely a description of that which already exists. Mr. Mitchell would have us don the MMT “lens” to see the world through the Modern Monetary Theory perspective. The commonly accepted meaning of a lens describes a device which distorts reality (“modifies the direction of movement of light”) – rose colored or not. I prefer the natural order – and natural law mechanisms. I also find it telling that in the bizarro MMT world (a mind-numbingly challenging place to understand simple English) – Mr. Mitchell himself is quite agitated that his own admiring adherents don’t seem to understand what’s being said! As JohnG confirms, Bill Mitchell says it best:

            “This week I noted a lot of comments (particularly with respect to my Job Guarantee post) that suggested many readers still do not exactly know what MMT is…
            MMT is not a regime we can move to! … I often read comments like “if we introduced MMT …” or “under MMT policies …” or “when MMT becomes the norm”, All of which, implies that MMT is a regime that we would move to if society was more enlightened and would open up a new range of policy options that a truly progressive government might pursue. This is tied in with other comments, specifically about the Job Guarantee, which suggest that MMT is a progressive doctrine or a left-wing approach to economic policy-making and what is holding MMT back from being introduced is the right-wing conspiracy to maintain hegemony. I understand all these comments are well intended and people are genuinely attracted to some of the policy options that MMT proponents advance. This is notwithstanding, what I consider to be some doctrinal and irrational resistance to proposals such as the Job Guarantee. But the conception that we might move to an MMT world where enlightened policy will free us from the yoke of capitalist exploitation is plain wrong. The fact is that we are already living in the MMT world. We interact with each other every day in the MMT world. The monetary system, whether it be in the US, Australia, Japan or any of the Eurozone nations, is and MMT-type construct. So it is not about moving to some new Shangri-La, which we might call the MMT world – we are already in, the world that is. What MMT provides is a new lens to view the world we live in and the monetary system operations that are important in our daily lives. This new lens opens up new insights into what is going on in the economy on a daily basis. It’s not something to move to, it already is. MMT, as a new powerful lens, makes things that are obscured by neo-liberal narratives more transparent.”

            Claptrap. My take: few would doubt that the monetary system that we are living in today – the “MMT World” – is failing. The fact that the MMTers themselves don’t know what MMT is – should be the first tip-off to the reason that JohnG’s pronouncements (and those of the MMT crowd at large) are so difficult to decipher. I say, say what you mean, and mean what you say – and if you can’t explain it to a 10 year old child, than it is either needlessly complicated, or it’s hogwash. In keeping with this thread on Re-Branding Dissent, notice Mr. Mitchell’s ire at the “irrational resistance” to his Job Guarantee proposals. The horror! Visit Bill Mitchell’s ‘blog often if you wish to know what to think and say…

            BTW, Bill Mitchell’s own words from the same ‘blog entry cited above:
            “I should add that my intellectual evolution in economics did not start with Keynes’ General Theory but rather with Karl Marx and later Michał Kalecki. Some of the early MMT proponents place much more emphasis on Keynes than I ever have.”

            Bill Mitchell’s MMT will only further impoverish society with much larger amounts of inflation that even Keynes found to be barely tolerable. Tick-tock.

          • JohnG January 9, 2016 at 1:25 am #

            All the sophistry aside, my experience has been that reasonably bright 10 year olds are better able to understand macroeconomics than many ‘highly educated’ adults.

            They haven’t been conditioned with myths and miseducated with neoclassical voodoo.

            Sectoral balance accounting is actually pretty easy to understand once you clear your mind of the falsehoods you’ve been bombarded with for most of your adult life.

            Furthermore, MMT deals with price stability extensively, so enough of the strawmen.

          • Wesley - from under his vine January 12, 2016 at 7:22 pm #

            @Roger: “The question about issuing money is surely that when Money is created out of thin air it should be spent into existence without interest and that if Interest is thought to be a good idea then the Interest Component should be created at the same time. This is the fundamental question…

            Regardless of Political views it is the interest element that causes the damage when money is created as debt. This is the insight at the heart of the social credit movement.”

            As has been wisely stated: Check your premises. The construction of “WHEN Money is created out of thin air” inherently presumes ad-initio the propriety of the creation of purchasing power ex-nihilo. I say, when “money” (fraudulently created counterfeit credit) purchasing power is no longer created (by either the banking system, or by government, or by any other means), man will have taken another step towards equitable systems of political economy, wealth creation and transfer. Once everyman realizes the criminal, largely unseen mechanisms of theft inherent in fraudulent credit creation now in use and protected by law, man shall become freer. The terrorized are those, purporting to describe the status quo as a fair and equitable system, realize that day is nigh…

          • Wesley - the abusive January 17, 2016 at 12:03 am #

            @JohnG : “Deflation also causes balance sheet problems for the banks because their assets (the mortgages) decline in nominal value when they have to account for them on the balance sheet.”

            On the contrary, the banks simply changed the rules (at least in America). Confronted with the possibility of the natural destruction of fraudulently created credit (mortgages) – well respected Generally Accepted Accounting Principles were suspended. Mark to market accounting for this fraud was suspended until the bubble could be re-inflated with massive additional injections of additional credit into the system – where they remain today. The same suspension-of-reality accounting frauds were also used in the pricing of the derivative instruments issued on top of those mortgages. The “Big Short” movie is effective in conveying this point.

            What still has me puzzled, concerns how MMT can justify this same suspension of reality concerning Government finance. If GAAP accounting practices were applied to the government ledger, then the so-called “off-balance sheet” liabilities associated with transfer payments to “society” – the concept of solvency in this entity would be severely challenged.

            And YES – let me stipulate right here, as Greenspan has said himself (in so many words), a fraudulent issuer of their own credits from thin-air can never go “bankrupt” – technically. But let’s imagine practically what will happen to the purchasing power of the dollar when these off-balance sheet liabilities (private-sector savings?) are whisked into existence by the power of State. Even MMT”s “Sectoral Balance Accounting” magic may run into some slight problems explaining that bit…

          • JohnG January 17, 2016 at 12:14 am #

            Perhaps you can tell me what non-fraudulent credit creation would look like.

            Balance sheets aren’t ‘magic’ Wesley. They’re maths.

            And I’m not going to defend the banks or the conduct of the Fed.

            You’re really not getting it.

            But let’s imagine practically what will happen to the purchasing power of the dollar when these off-balance sheet liabilities (private-sector savings?) are whisked into existence by the power of State.

            I have no idea of what that means. And none as to what it has to do with sectoral balances.

      • Wesley - fully loaned February 7, 2016 at 8:36 am #

        Ahhh… you and your labels. Alright – let’s be quite clear. Chronology matters. In the largest banking system in the world, Banks make loans first, THEN seek to ensure they are properly reserved at the FED. The law has requirements specifying the relationship (ratio) between those reserves and those loans. There are exemptions, and other games that can be played with Savings accounts, and daily checkbook money “sweeps” – but there are statutory restrictions and capital ratios too. The fact of the matter is, as difficult as this is for you to get your arms around, that commercial banks are permitted to create ex-nihilo (out of thin-air) credit-money (checkbook, demand deposit liabilities) in amounts that are multiples of High Powered Money assets (reserves) on deposit with the Federal Reserve. No – they don’t loan out reserves – but there is a statutory relationship.

        Rather than provoking misunderstanding by chucking out intentionally controversial statements with no context – why don’t you spend time educating those lesser souls who’ve not been through the MMT indoctrination and language camp in ways that are constructive in furtherance of the public dialog about money? You know full well the whole world’s text books and mainstream economists are laboring under misunderstandings of the money system – yet your approach seems to intentionally seek conflict. I haven’t been to the re-education centers yet – but is this part of the MMT playbook?

        So let’s expand and clarify your little misdirection above so that more people might get the full story:

        Banks don’t require deposits to make loans. New “deposits” in the banking system are created “ex-nihilo” (from thin-air) when banks fund loans. All checkbook, demand deposits in the banking system were originated from a loan. If all loans principal were repaid, there would be NO checkbook money in the banking system. Banks don’t create the money necessary to pay the interest at the time of the loan creation. In fact, there is not enough checkbook money in the system at any given moment to payback all the outstanding loans with interest.

        Just as individuals have deposits with commercial banks (sometimes called “inside money”), commercial banks have deposits (reserves) with the FED. These reserve accounts are used only by the banks (in inter-bank settlements within the payments system) – they are a different sort of “money” – they are like the banks’ checkbook money (sometimes called “High Powered Money” or “outside money”). If banks do not have enough reserves deposited with the FED to comply with the law, they may borrow these reserves from the FED (or from other banks) – and the FED will create these High Powered Reserves from thin-air and credit the banks’. These reserves are a liability of the FED, and the asset of the banks.

        The physical form of money (cash or currency and coins) is different than your checkbook money, but you may exchange your checkbook money in small amounts for the paper money (Federal Reserve Notes) and coins issued by the US Treasury directly — and vice versa. Unfortunately, if everyone wanted to convert their checkbook money into cash at once, it would not be possible without substantial delays. Banks only keep a tiny fraction of total checkbook liabilities in the form of vault cash on hand at any given time. If the public demanded larger amounts of physical currency in the form of notes and coins, these would have to be printed and distributed first. Most banks today limit cash withdrawals to $3,000 or less, unless special arrangements are made in advance.

        Here’s another look at Inside v Outside “money” – such as it is today.
        http://www.pragcap.com/understanding-inside-money-and-outside-money/

        So rather than spewing incomplete, confusing and misleading myths yourself JohnG, try ADDING to the dialog with some non-negative waves. Whaddya’ say?

  7. JayD January 2, 2016 at 1:22 pm #

    Mmmmm….maybe they will accuse dissenters of not adhering to ‘British values’!!

  8. Joe Taylor January 2, 2016 at 4:56 pm #

    It’s a relief to have you back and able to devote some of your precious time to this blog David. You’ve made my Christmas. As I’m sure you realise, we’ve missed you.
    I’ll do my best to get your thoughts out there via social media and whatever else I can lay my hands to.

    • Golem XIV January 2, 2016 at 5:15 pm #

      Happy New Year Joe. Good to hear from you. Sorry I’ve been away for so long. But having work has been a great relief as you can imagine.

  9. Schatzie January 2, 2016 at 6:53 pm #

    David – so glad you’re back! I thought you’d become disgusted with the whole thing and left. I kind of have/did. Here in the US, things have become surreal with the ridiculous Trump “candidacy” for President. All the while, Bernie Sanders has created a real (political) revolution, with the mainstream media determined to ignore him unless forced by the people to do otherwise.

    By the way, that condescending “sit down and behave yourself and stop being irrational” attitude was recently highlighted in the state of Michigan by Governor Rick Snyder whose health department spokesperson told people in the city of Flint to “relax” and not worry about the skyrocketing lead levels in their water. The “professional” government officials there have damned countless thousand children to lower IQ’s and developmental problems thanks to their superior-ness.

    Thank you, David, for your thoughtful piece and Happy New Year! May 2016 be the year that TPP/TTIP get buried in the rubbish pile (where they belong).

    • Golem XIV January 2, 2016 at 7:31 pm #

      Schatzie,

      Happy New Year to you and yours.

      I’m horrified by what you say about the Health department saying ‘relax’ about Lead levels. Do you have any idea what ‘safe’ level figures they rely on? Many of the levels that used to be quoted in the USA where from an outfit called the ACGIH. It was a corporate quango whose levels though still quoted were woeful at best. And the lead level was a disgrace.

      • Schatzie January 2, 2016 at 11:34 pm #

        David – literally no level of lead exposure is “safe,” especially for children, right? The best encapsulation of this half-year long travesty of justice was given by Rachel Maddow, who unwinds the truly criminal level of greed, obfuscation, and deliberate incompetence by Governor Rick Snyder of Michigan. Check this out, David, and you’ll see what I mean (it starts at about the 31 second mark): https://www.youtube.com/watch?v=xUEEfrg2K6k

        • James January 3, 2016 at 5:51 pm #

          Your first statement is incorrect: virtually all toxins have what is called a No Observed Adverse Effects Levels, NOAEL for short. For children, the NOAEL is a blood concentration <10ug/dL blood.

          Not saying that you don't shoot for zero, but unless you live in a bubble, you will always be exposed to something, and there are thresholds before something manifests itself as toxic.

    • john w g January 3, 2016 at 9:26 am #

      So your saying Trump is “irrational”?

      • Golem XIV January 3, 2016 at 10:30 am #

        No, I’m not saying anything about Trump.

        And I am not saying we should reject rational argument or turn our backs on the idea of evidence.

        All I am saying – or trying to describe – is how those in positions of power and influence can use those things by claiming to be the only ones who have the ‘expertise to judge what is and is not evidence etc .

        And then coming up with a narrative to demonise those who simply hold different opinions.

        So I’m not saying rationality is bad. Only describing how it will be featured in a new discourse to damn opposition and radically truncate any real democratic debate.

        • john w g January 3, 2016 at 10:04 pm #

          Golemn XIV,

          You said,

          “The dangers are great. Anti-intellectualism abounds already. Witness Mr Trump just a few years after Mr Bush. History will surely see a retreat into ignorance in those choices.”

          Didn’t you just there exhibit exactly the type of argument that you are railing against? It is very easy to do what you are arguing against, I know I have from time to time. It can be a very effective way to shut down discussion and dissent, and puts the other side suddenly in the position to justify why thier opinion is rational before continuing on with the debate. Now if you could show why a specific position was inconsistent with rational thought, that would be different, and the opposing side could then argue with the formulation of your position, which would enhance debate and discourse.

      • Schatzie January 4, 2016 at 11:35 pm #

        John w g: I was the one saying Trump is irrational, not David. But he’s actually more of a narcisstic nutcase. Semantics don’t serve the purpose here, however, if you require justification, the definition of irrational is “not logical or reasonable,” which is about the kindest thing you can say about The Donald.

        Case in point: Trump’s spouting off about keeping all Muslims out of the United States. What a damaging and insulting statement! I have neighbors from Egypt and they have had the worst things said to them after Trump’s hate mongering. The irrational part, if there needs to be one, is that such a notion to ban a certain religion from entering the US is actually unconstitutional – thus, by definition, it’s “unreasonable” and irrational to even say he’d do it.

  10. steviefinn January 2, 2016 at 8:40 pm #

    With creativity already having being linked in a kind of nudge, nudge sort of way to mental illness – the shrinks should not have a problem adding irrationality to their already massive list of disorders, which seems to include everything except being a money grubbing power junkie. Big pharma wont have any problems coming up with a pill for it which could be added to the stuff that is already forced down supposedly troublesome kids & is available for adults. It’s all very Orwellian – just add Huxley’s soma.

    Anyway, Happy New Year to you & yours David – great to see you back.

    From your already certifiable friend.

  11. roger January 2, 2016 at 10:43 pm #

    Regarding irrationalism and the impoverishment of vocabulary Umberto Ecos Ur fascism is well worth a re-read.Also googling the term State crimes against democracy(SCAD´s) yield an interesting initiative to reclaim the language of investigating criminal acts in high places. A further dig around, common purpose, delphic consensus and the rise and rise of technocracy, deliverology Barber and Blairs frankenstine of targeted managerialism( John Seddon is a very funny critic of it),also repay some reading to see how far and fast the new witch hunts are advancing. Dark days for social democracy!

    Nice to read your thoughts again David, happy new year.

  12. RandomPaddy January 2, 2016 at 10:43 pm #

    Global Over-class

    I appreciate what you’re trying to accomplish by giving a name to this emerging socio-economic class. It is important to name and classify the problems and sources of problems before we are able to articulate solutions. However, like “(global) elites” before it, I feel “over-class” is an unnecessary re-purposing/overloading of existing words, because a perfectly adequate noun already exists to describe this class of people.

    Ascendancy.

    Originally used in reference to the Protestant Ascendancy, really any adjective can be attached to the primary noun that identifies the principal social, legal and economic basis of this human grouping. Catholic Ascendancy, Sunni Ascendancy, Technocratic Ascendancy, Financial Ascendancy, Global Ascendancy. The primary characteristic is the control this in group has over society, control derived from both its economic and social interests across a broad spectrum. Indeed, the most successful ascendancies strive not only to simply control, but to themselves constitute the very basis of their domain of influence. Through law, education, custom, infrastructure, ascendancies arrange society so that their absence, let alone overthrow, becomes literally unthinkable as no-one has any idea how to run things in any alternative way. The ultimate goal is a quasi-dynastic aristocratic class.

    Sorry for the offtopic post, but I feel the proper term for this ever increasingly problem needs to be dusted off and reused.

    • Golem XIV January 2, 2016 at 10:58 pm #

      Hello RandomPaddy,

      I rather like Ascendancy. I particularly appreciate the idea of them making sure they become the essential ‘officer class’.

      • roger January 3, 2016 at 10:27 am #

        Elite theory is a fairly well defined area with both Michells Iron Law of Oligarchy from 1911 and and C Wright Mills Power Elite from 1954 . There is a good body of work examining both Political and Democratic theory and the phenomena is noting new going back to Plato.s Republic or if you follow lyndon larouche Aristotles Politics. What we are seeing is not new its just another spin on the age old plot. Closer to 1914-1918 and the preceding 20 years than to 1929-1945 but both were pre fixed with a large crisis in Capitalism.
        I wrote this blog on The Iron Law of Oligarchy which references both Michels and Wright Mills and also has very good presentations from Andreas Popp and Websterer Tarpley , Popp proposes Danistry for the Over class but it isn´t anymore complicated than the Power elite or Oligarchy. https://www.linkedin.com/today/post/article/iron-law-oligarchy-roger-lewis?trk=prof-post . Orwell is very relevant and his essay re assessing Mr Burnham is thought to be the inspiration behind 1984, https://en.wikipedia.org/wiki/Second_Thoughts_on_James_Burnham In 1984 the book which winston is given by O´brien is https://en.wikipedia.org/wiki/The_Theory_and_Practice_of_Oligarchical_Collectivism . One book which I have read recently is Frank Harriss Germany or England from 1915it re examines Bismarks Geremany from the late 1800´s and the English Oligarchy/Aristocracy vis the German Nobility it is a fascinating take on the tensions between two competing Oligarchic systems not dis similar to now and the ideas of if you are not with us you are against us. https://archive.org/details/englandorgerman01harrgoog

        • Golem XIV January 3, 2016 at 10:42 am #

          Happy New Year Roger.

          Thank you for your article. As always with you a fountain of erudition and wonderful links to your sources.

          Yes I am, as always, merely reinventing the wheel for myself. All I can say is that is how I learn.

          What I hope I am contributing is saying look out for the new terms and the shape of the new narrative that might be used to further erode the only and the vital thing we have left – faith in our own thoughts.

          Wonderful to hear from you.

          • roger January 3, 2016 at 12:19 pm #

            Great to see you writing again I have missed your insights. Your blog here is a timely reminder and perhaps some of the terms can be placed in a new Liars Lexicon for democracy and not just the Financial sophistry of the great unravelling. I watched the film the Big Short the other day , well worth watching, very entertaining and a good introduction to the artifice of Wall street et al. I have been going deeper and deeper into the Block Chain Rabbit hole, take a look at Nu Bits for instance an evolution out of Peercoin. Bit Coin Fascism is truly with us and this Vijay Gupta Clip from I am Satoshi is not irrellevant to your wider discourse on suppression of debate in the theatre of political discourse. Internet Censorship is coming brush up on your GNU skills if discussions such as this one are to survive. https://www.youtube.com/watch?v=YaaknMDbQGc

          • roger January 3, 2016 at 12:29 pm #

            On Bitcoin Fascism if you have time listen to the cheerelading on property Rights and Freedom as an expensive commodity for the rich to buy in this discussion. https://www.youtube.com/watch?v=LdvQTwjVmrE One wonders if Neo Liberalism and Anarcho Capitalism are the same thing? Henry George and Progress and Poverty does hold a lot of forgotten insights that were well known to Frank Harris but also to Ezra Pound when he wrote ABC of Economics, On my re -reading of Ur Fascism the other day the reference to Pound stood out as it had escaped my recollection. Donald Trump does remind me of Mussolini funnily enough. What is interesting in this current Fascist Era is the state of technology and communication? is it harder to suppress or easier in the information age, its not such an easy question if you think about it.

  13. James January 3, 2016 at 3:06 am #

    We can see the Over Class’ demonizing of dissent in the reaction to Donald Trump’s eminently sensible statements with regard to border security and restricting immigration of groups which seek to do us harm. These positions are anathema to the open borders/”free” trade/internationalist dogma of the Elites. It will be interesting to see how his candidacy plays out

    A populist billionaire as the last great hope of the American Middle Class. Whodathunkit?

    • john w g January 3, 2016 at 9:28 am #

      careful, he has been deemed irrational……..

      • James January 3, 2016 at 5:53 pm #

        Not by Scott Adams. Scott thinks he’s a Master Persuader, and a pretty darn good one.

    • JohnG January 3, 2016 at 10:23 pm #

      Who are these ‘groups who seek to do you harm’?

      That appears to be a wild assumption that requires an irrational view of the world to assimilate.

      • Phil January 7, 2016 at 9:03 am #

        Well I think we can say big business, which has always been the major sponsor of mass immigration, wants to do them harm. Plus you have the rather cavalier attitude of the supposed Democrats who facilitated immigration from Mexico and Latin America in the belief that they would become Democrat voters.

        A pattern repeated exactly by the British Labour party.

        • JohnG January 7, 2016 at 10:13 am #

          Nobody asked you, dude.

  14. David J January 3, 2016 at 1:24 pm #

    Your exposition is sound. We should not forget simple propoganda (you can get a knighthood for it). In WW2 it was discovered that a simple message was remembered long after any pros and cons. Thus, Cameron, in his speech at the Tory conference said “we cannot let that man inflict his Britain-hating ideology on the country we love”. In four years time pencils will hover over ballot papers and people will think, “Hey, we cannot vote for Corbyn, he hates Britain”. Mission accomplished.

    • Golem XIV January 3, 2016 at 1:30 pm #

      Agreed. Propaganda is a powerful tool.

      Welcome David J

    • Phil January 7, 2016 at 9:05 am #

      Corbyn’s friendships with the people who ordered countless atrocities in Northern Ireland and in the UK do him little favours.

      • JohnG January 7, 2016 at 10:09 am #

        And what do his antipathies to the mass murderers in Iraq do for his favours?

      • steviefinn January 7, 2016 at 3:04 pm #

        He doesn’t appear to take the media into account, which I suppose is down to the fact that he considers that they will rip him to shreds anyway, whatever he does. Thatcher, Major & Blair ( who in 2010 told Andrew Marr, that he had grown to like McGuinness & Adams ) kept their meetings secret. The atrocities were not all one way, although the Provos did account for around 1900, as the Catholic community lost about 1500. Personally I’m just glad that the hardline was perceived to not be working & people did meet with each other & formed the peace process, & to this day former terrorists on both sides, work together to keep a lid on the dissafected youth from both communities. Former UVF man David Ervine was just one good example of one who suffered greatly from offering an olive branch.

        Mandela was classed as a terrorist until 2008, due to the terrorism campaign of the ANC, which like in NI, was brought into being after peaceful protests failed & as a response to the Sharpeville massacre. Small potatoes compared with NI as the death total from bombings etc was around about 130 – of which about 100 were innocent civilians

        Around 220 British soldiers were killed in Palestine straight after WW2, most of which at the hand of Jewish Terrorists. Irgud led by Menachem Begin took a large part in this & for many years he was a banned entry into to the UK, but later became hailed as a great statesman who was give the Nobel peace prize.

        Nothing excuses the barbarity of all sides when reason fails & the loonies prey on the repression of a people, but it’s good to talk & I would prefer it anytime to bombs, whether they are stuck in cars, planted as booby traps or dropped indiscriminately from jets on high. Corbyn like anyone else is not perfect ( especially in the world of politics ) but he tried to stop the latter & to me that forgives a lot.

  15. Biologique January 3, 2016 at 6:19 pm #

    Good evening David. Thanks for the breath of fresh air in a sadly polluted world.

    And a happy New Year to you.

    Bio

  16. M. Reilly January 3, 2016 at 9:52 pm #

    A very Happy New Year to you David, great to have you back! 😉

    http://www.scotsman.com/news/environment/campaigners-brand-snp-plans-for-land-reform-as-lunacy-1-3989750

    • M. Reilly January 3, 2016 at 10:19 pm #

      As are all SNP voters Brainwashed CyberNats & Bullies

  17. nacquiesce January 4, 2016 at 7:07 am #

    While I like “irrational” I’m betting on “unreasoned” – or perhaps taking the positive tack instead by using “reasoned”

    “What they are suggesting is an unreasoned approach to the matter”

    Either way, I agree with your sentiments. The point is to marginalize views not in line with the desired outcome and what better way than to frame those views as poorly conceived.

    Please keep up the good work. Thank you so much for your blog.

  18. thelonggrass January 4, 2016 at 6:20 pm #

    Both left and right are railing that democracy is being usurped by ‘motivated’ technocrats tied in with career politicians. For the right, it’s the EU, health and safety and environmental agencies. For the left it’s the financial system, the surveillance society and ongoing cosy privatisations of public assets.

    To many people it increasingly feels like politicians do the bidding of their civil servants and subject specialists and not the other way about. Thus for many, their vote feels like it makes little difference to the policies enacted, and hence the rise of the new anti-casta parties (both left and right) across Europe.

    The system continues though and seems to no longer believe it is necessary to at least try to persuade the populus, proscription is sufficient – the ‘you musts’.

    Anyone who does not toe the proscribed line is now being labelled not illogical, but a ‘denier’ (it comes from the climate debates but it’s spreading to other areas – eg http://www.economicbiz.com/the-democratic-debate-shows-the-partys-economics-denial-theblaze-com/111310 )

  19. gkahn January 5, 2016 at 7:27 am #

    Happy, Happy, Joy, Joy;

    It is a pleasure to see that you are back to leading the coffee house discussions again.

    Your blog provides a unique contribution to discussion of the human condition. It is so much fun to try determine who the trolls are. It is also a pleasure to read all of the over the top name calling that passes as knowledge.

    “shut up kid I will tell you what to think”

    David, I believe that you will be remembered into the distant future. That of course depends on humanity having a future. The Overlords think they will survive after they have blown up civil society.

    bunker down,

    Gene

  20. Shaun S January 5, 2016 at 7:43 pm #

    Happy new year to you and the family (even if a bit late)

    Two points concerning points in your original article;

    Dissention is being curtailed by the suppression of the possibilities to talk or comment about certain subjects. An example is the “comments policy” in the Financial times. ie You cannot comment on certain subjects, (the possibility is not opened – even though I am a subscriber), and certain other subjects are never mentioned – so cannot be commented on. I would love to comment on the Palestinian situation (for example). But it is not possible, even if the daily news contains items concerning BDS or Israel. The relevance is that “dissidence” needs to have the possibility to be expressed openly – but major news outlets actually try to censor – without using the word – contrarian information.

    The “irresponsible” you mention as a possible means of group-identification of dissidents, might already exist here ( in nearby Geneva). But here it is called “borderline” (psychological cases) – this is a new “mental classification”. Borderline means “nearly nuts”. A “sufferer” may have good qualities, (empathy, generosity etc.) but cannot be trusted. There are already “meetings” where the experts will explain what it is. It also has the advantage of being easily applied to anyone, and basically – you cannot disprove it !

    Nice to see you back
    shaun

  21. steviefinn January 6, 2016 at 11:11 am #

    Off topic but an article I found as a useful explainer of the deflation spiral by Ann Petifor. Helps to explain the lay-offs by some small firms local to me which is most likely happening all over the UK & Europe. It apparently suits the rentier class, which perhaps explains why Osborne thinks it is fine. We appear to be heading back to the 1920’s, which of course led to Hitler on the back of austerity measures & deflation. A situation that will no doubt further necessitate the measures David refers to in controlling dissent as the private debt load expands & things worsen for the many:

    http://www.primeeconomics.org/articles/no-chancellor-05-inflation-is-not-welcome-news

    • Wesley January 7, 2016 at 5:29 am #

      “What is deflation? Deflation occurs when prices (not necessarily all prices, but the average price level) fall below the costs of production – i.e. when prices become negative.”

      This is a most unusual definition of deflation, deformed to suit a desired, populist narrative. IMHO – the article has got the cause and effect cart before the horse. Deflation of fraudulently created credit and the misallocated production it encouraged is entirely appropriate. Osborne’s comments were indeed off-color, and certainly not in keeping with the “rentier class'” desires… why do you suppose that a hard-coded 2% inflation target is constantly drumbeated through the MSM as being so desired?

      The real crime occurs at the creation of the debt for unneeded production in the first place. Capital is destroyed when marginal lending occurs at the increasingly lower interest rates engineered by the Central Planning politburo. Besides, inflation of 0.5% is still inflation, but at a lower rate than targeted. The rentier class borrows “money” at zero interest, invests in higher yielding financialized assets (often in foreign jurisdictions), and then repays the debt with debased, inflated “money”. No, the Establishment gets quite panicky when deflation rears its head.

      • steviefinn January 7, 2016 at 9:02 pm #

        I lack the knowledge to decide which one of you is correct in terms of deflation, but as to inflation targets -I was under the impression that was desired to inflate away debt & to get the economies into growth. As for the rentiers – it strikes me that they have rigged the game in the way you have mentioned to benefit from either scenario.

        The main reason I posted the above is due to Ann’s comments about the effect at ground level. The cutting of margins for small business from what I have experienced locally, does seem to be posing the problem & the resulting vicious circle of lower profits leading to layoffs, leading to higher unemployment, which in turn exacerbates the problem of less demand. Also those who are fortunate enough to possess income can make it worse by waiting for prices to become lower. Not to mention wages & benefits tied to the inflation rate being added to the mix.

        Maybe deflation in our present rigged system is now different than it was in the days of Weimar etc……I really don’t know, but I think the above effects will make a very bad situation worse. Maybe it is the new normal, as with the twilight zone that is Japan & we will just have to adapt. The other option of iinflation aided infinite growth, doesn”t look all that attractiive either.

        • JohnG January 7, 2016 at 9:50 pm #

          I don’t agree with Ann Petifor’s definitions of disinflation and deflation but she’s dead right on the effects.

          The creditor class winds up with everything.

        • Wesley January 8, 2016 at 9:59 pm #

          http://www-tc.pbs.org/wgbh/commandingheights/shared/pdf/ess_inflation.pdf
          Keynes on Inflation – Excerpts from The Economic Consequences of the Peace by John Maynard Keynes, 1919. pp. 235-248.

          https://www.richmondfed.org/~/media/richmondfedorg/publications/research/economic_review/1981/pdf/er670101.pdf
          An essay concerning Keynes’ views of inflation, written by a research department of the US Federal Reserve (Central) Bank after a period of sustained, high inflation worldwide.

          Essays in Persuasion – Keynes:
          “This progressive deterioration in the value of money through history is not an accident, and has had behind it two great driving forces – the impecuniosity of Governments and the superior political influence of the debtor class.”

          Keynes’ words here are sickly ironic, given that he is considered the father of our modern, centrally-planned economic morass. Keynes is often viewed as an economist who tolerated and supported mild inflation as an unfortunate byproduct of sustained, managed, economic “prosperity”. Yet the above direct excerpt from “The Economic Consequences of the Peace”, written just at the end of World War I, makes clear how fully he understood inflation’s potential to destroy the fabric of society. It is also prophetic regarding the fate of all governments’ attempts to control the price of goods (and money) by force of law. Its later passages also illuminate (by analogy) the negative effects on international trade of any currency crisis (such as the devaluation of Thailand’s baht that triggered the Asian economic contagion in 1997).

          Keynes makes direct reference to the “arbitrary” nature of the effects of inflation – that all prices of goods and services do not rise smoothly at the same rate as in water being added to a pond. Likewise, the consequences of deflation are equally non-uniform. Worse still, deflation will often be asymmetric to the original inflationary effects – meaning that which rose in the inflation, will not necessarily be that which contracts during the (rare) periods of deflation.

          In my view, Keynes was absolutely correct concerning inflation – but a pragmatist concerning its causes. An influential member of society, he knew that he was not about to change the fraudulent basis for “money” creation in the world. As such, one could say that after railing concisely about the dangers and effects of inflation, he took the low road to suggesting that tolerating a small amount of inflation for the sake of the “greater good” was an acceptable compromise. He seems to know mild inflation IS prostitution by any other name, but that if we don’t haggle over price, perhaps we can just be friends. During the recent past, the public dialogue concerning inflation has been cleverly guided by the Central Bankers and their minions to shaping opinion that 2% inflation is desirable. Look back beyond a few years, and this talk is nowhere to be found.

          Inflation is legalized theft by any other name – Keynes was correct. I define inflation as the fraudulent creation of counterfeit credit from thin air. That which has been inflated improperly, will be deflated – usually with violence. I believe that the systematic inflation, debasement and failure of every fiat currency on earth, throughout history – is sufficient evidence of its impropriety. Since the formation of the US Federal Reserve (in 1913), the dollar (and the pound) have lost 97% of their purchasing power by any standard measure, systematically destroying the fabric of society. This trajectory has increased slope since the final separation of the world’s currencies from any form of redeemability (in gold or otherwise) in 1971, when Nixon “temporarily” closed the “gold window”, and temporarily suspended the convertibility dollar claims into gold.

          @steviefinn, I believe that the record of what has actually occurred (consistent INFLATION) is also sufficient evidence that the “rentier classes” have sought just this outcome. Osborne may well have been expressing relief, silently and to himself – that thank goodness we have at least 0.5% inflation! Studying the matter carefully, you may come to realize that without inflation, the system fails entirely. @Roger has thankfully re-energized my faith, and correctly guided the conversation about the monetary systems to a question of politics and morality, and away from a technical discussion of actual functioning. Thanks to this ‘blog for fostering such discussions. 100 years ago, during a period when redeemable currencies still existed in the world (though still bastardized by government and banking), public dialogue about the nature of money and monetary systems were quite common. Unfortunately, today, not one in a million properly understands the technical nature by which “money” today is issued (created ex-nihilo). Even today, the average college-level text discussing this all-important economic function is provably false. You should ask yourself “why” this might be. As Keynes wisely stated, the mechanisms by which inflation steal are hidden. The mechanisms by which the system attempts to right itself (deflation of improperly issued credit money) – are altogether too visible. As I said above, the real solution is to understand the chronological order of “things”. The pernicious effects of inflation are unseen, and harm the unwashed masses – with massive benefits accruing to the few first receivers of fraudulently issued “money”. The awful effects of deflation come after. The “business cycle” is a man-made creation of Centrally Planned folly of decreasing duration, and increasing amplitude. The next deflation may likely be the trigger for world-war…

          • steviefinn January 8, 2016 at 11:19 pm #

            Thanks for that Wesley – from what you are saying unless we can achieve some sort of steady state, or as close as – we are screwed either way. I read somewhere that there is a possibility that due to inflation not being calculated correctly, it could actually be that deflation could be about 1.5 % worse. It’s hard to know exactly where we are – up shit creek, someone sold the paddle & we cannot afford the mortgage on the sinking boat, might loosely cover it.

    • Wesley January 8, 2016 at 11:42 pm #

      Keynes speaks of the “rentiers” also… which concludes, I think, exactly where JohnG and I have left off!

      John Maynard Keynes in “Essays in Persuasion”:
      “Thus inflation is unjust and deflation is inexpedient. Of the two perhaps deflation is, if we rule out exaggerated inflations such as that of Germany, the worse; because it is worse, in an impoverished world, to provoke unemployment than to disappoint the rentier. But it is necessary that we should weigh one evil against the other. It is easier to agree that both are evils to be shunned.”

      The world today has, largely unknowingly, opted for the silent theft of 2% inflation. I seek to change that view. I choose justice over expediency.

      • JohnG January 9, 2016 at 12:18 am #

        How much unemployment and poverty are you prepared to tolerate for your 0% inflation justice?

        PS. We haven’t practiced Keynesian economics since the 1970s. The nutters took over the academy with their inflation obsession and their Ricardian Equivalence voodoo.

        You’re baying in the wrong direction.

      • JohnG January 9, 2016 at 5:21 am #

        What is Money?

        From The Banking Law Journal, May 1913.
        By A. Mitchell Innes.

        http://moslereconomics.com/mandatory-readings/what-is-money/

        • Wesley January 10, 2016 at 5:22 pm #

          Put it on my tab!

          Even 100 years ago, it took this early proponent of Modern Monetary Theory nearly 40 pages in a failed attempt to deny what I described in 1 paragraph (see “Wesley the Farmer and David the Baker” above). More telling from the perspective of language and the attitude of MMT authoritarians, is the link being contained on a web-site known as the “Center of the Universe” in a section on “Mandatory Reading”! It’s essentially an indoctrination compound.

          Our MMT friends (and their post-Keynesian central-planning brethren), in their attempt to conflate the definition of money with that of the two-sided credit/debt token, ignore an essential distinction. Credit may function as money, but only money can extinguish debt/credit relationships. Credit cannot extinguish money, or supplement wealth. Credit undeniably lubricates and provides economies to commerce. But the fraudulently issued, thin-air counterfeit credit creation advocated by the Chartalist/MMT gang is at the source of our monetary system woes. Credit/debt is NOT money. As JohnG says, that may be what the MMTers want money to be, and say money is, but it’s not what it is. We all know this intuitively. Credit differs from Money by the presence or lack of TRUST and timeliness (Interest).

          Credit entails a bond of public trust – a social contract between the issuer of credit and the people. The goal-sought outcome of the “What is Money” paper above, written in 1913 by an early MMTer, becomes quite vague and uncomfortable each time it runs into the credit versus money issue. The useful function of credit instruments (bills of exchange, checks, drafts, negotiable notes and other transferable orders and obligations of whatever origin), are for naught if they are not accompanied by the element of trust. Credit IS trust. Money requires no such thing.

          Visiting from out of town, I cannot walk into your local pub, order a pint, and say, “put it on my tab.” I must actually come up with an acceptable form of money. When I exchange money for a purchase, I pay my debt instantaneously, or in advance. However, the transaction is then final and complete. If the bar-keep accepts a cheque, (or a “credit-card”), I am substituting an order to someone else to settle my debt – later. If that subsequent settlement does not occur, I am still responsible morally, and under the law. For obvious reasons, it would be a rare tavern owner who would accept my check. However, today she is required by myriad legal-tender laws to accept my fiat-currency as “money”. Liabilities of the Federal Reserve (“Federal Reserve Notes”) actually have emblazoned on each the ominous, all caps: “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE”. You are extending credit to the Federal Reserve each time you accept one of these notes in tender. The social-contract entails the expectation that the notes of the Central Bank will be fungible and usable in additional commerce equally. We have many examples of what occurs when a lessening of trust begins to require real money on a large scale.

          Nearly 14,000 tonnes of monetary gold bullion rapidly flowed out of the US Treasury reserves as MONEY settlement of Dollar-based credit issues to the rest of the world before Nixon defaulted and “temporarily” suspended the contractually agreed conversion of fraudulently issued credit claims to gold money in 1971. Trust is a fickle thing, especially when dealing with a bully backed by a military arsenal the size of America’s. But the Mid-east suppliers of our precious crude oil then also wanted either a lot more fiat dollars per barrel, or gold. Not much different than a rapidly rising yield on untrustworthy sovereign debt. In fact, yields on US Debt instruments subsequently screamed up high into the double-digits!

          Little discussed about the actual circumstances of the GFC, is the matter of trust (confidence). Leave it to the banks to be the most knowledgeable about the relative trustworthiness of their banking counterparties and peers! Trust completely evaporated between banking counterparties, and the pyramid of credit-based “assets” failed – almost overnight. Only MONEY would function in exchange – not credit. The trillion$ in “money” whisked into digital existence by the Central Bank to re-establish “trust” and credit relations within the banking community are NOT well documented, but understood.

          Credit as a social unit and a facilitator of exchange may well be older than money and perhaps is even now more important than money – but still cannot be considered MONEY, without confusing the actual function and uses of money. Money is exchanged by consensus and agreement – it functions optimally when voluntarily exchanged. Money acknowledgement and consent arises from one’s willingness to accept it in full settlement of an exchange. Money does not represent or promise anything else but to complete an exchange without being consumed or used for other purposes. This is what I meant earlier by its functioning to extinguish credit. When two parties agree to accept gold, or any other thing, with this function in mind, that thing is MONEY. Its value cannot be legislated. The interesting “What Is Money” article clearly documented eons of failed attempts to do so. If I develop doubt that I may be restricted in my ability to use that money in ongoing exchange, I may begin to attach lesser value to that device, or reject it entirely. The simple fact of life is, throughout history, and the world, when doubt of this nature has arisen, precious metals (and usually gold when large amounts are involved) were always the money of choice. It does not matter what is accepted voluntarily as money – merely that it is voluntary. Money may be anything – it’s just not credit.

          For the time being, debt obligations of some of the world’s fiat-issuing sovereigns are being accepted as money-good. The people of Germany asked for their gold back in 2014 – to a polite but mysterious, “we’ll get back to you.” Inspection of their Custody gold holdings at the Federal Reserve was denied. The central-planning crooks running the socialist paradise in Venezuela already successfully received back their people’s gold. Russia and China have been amassing substantial quantities of gold each and every month for years. The reduction by hundreds of billion$ in reserve holdings of the “sovereign” debt (US Treasuries) held by China during 2015 is also well documented. So no, credit is NOT money – though it may look like it.

          See Henry George for a much better explanation of what is money and how it differs from credit.

          —–
          Trust in the misguided, inflationary policies of today’s monetary paradigm (which MMT purports to describe), and trust by the users of the fraudulently issued credit-money of the world’s sovereigns is eroding rapidly. Ironically, Reagan – one of the biggest spenders of government fiat said it best: “trust but verify”.

          MMT is a naïve, incomplete description of today’s political economy, advocates of which are best described as “the crank physicist(s) (who are) drawn to the idea of a perpetual motion machine, yet deny the effects of friction.” Dissenters to the central-planning advocates of MMT are being met by a constant drumbeat of obfuscation and denial. But even misguided central-planning advocates are critical of the fallacies in MMT.

          http://www.thomaspalley.com/docs/articles/macro_theory/mmt.pdf

          We live in a finite world, with finite resources. Unlimited purchasing power (credit) produced out of thin-air in the form of government deficit financing cannot escape this fact. Denials, bullying tactics, and other forms of Dissent-rebranding should be strenuously resisted.

          • JohnG January 10, 2016 at 9:49 pm #

            Wesley, leave the childish insults out, please.

            MMT authoritarians? Dude please.

            Palley would have been more credible if he’d just said he hasn’t actually read the literature.

            As opposed to setting up a series of strawman arguments to burn down. And then compounding his lack of honesty with some poorly constructed ‘mathematics’ that any engineer of physicist would laugh at.

            It reminded me of this piece by Jamie Galbraith:

            Who Are These Economists, Anyway?

            http://www.nea.org/assets/docs/HE/TA09EconomistGalbraith.pdf

            “To be sure, mathematics is beautiful, or can be. I’m especially fond of the com- plex geometries generated by simple non-linear systems. The clumsy mathematics of the modern mainstream economics journal article is not like this. It is more like a tedious high school problem set. The purpose, one suspects, is to intimidate and not to clarify. And with reason: an idea that would come across as simple-minded in English can be made “impressive-looking” with a sufficient string of Greek symbols.”

          • JohnG January 10, 2016 at 10:13 pm #

            Try reading David Graeber’s Debt the First 5000 years.

            Conversations w/ Great Minds – Dr. David Graeber Debt: The 1st 5000 years P1

            https://www.youtube.com/watch?v=SnOqanbHZi4

            http://www.amazon.com/Debt-The-First-000-Years/dp/1612191290

            David Graeber is an anarchist, so dismiss him as an authoritarian all you like.

          • Wesley - the terrorist? January 11, 2016 at 12:04 am #

            At this moment each proposition that you have put forth has been properly, and logically refuted. On the one hand you would have us believe that MMT describes today’s reality, that MMT “is merely the accurate description of the modern state monetary system as it exists.” On the other, you protest, “We haven’t practiced Keynesian economics since the 1970s. The nutters took over the academy with their inflation obsession and their Ricardian Equivalence voodoo.” I submit both assertions are correct.

            Your skin becomes very thin when I accurately and non-controversially suggest that state control of all money issue, interest rates, and countless other mechanisms of MMT stipulated state planning of the economy that you advocate is a form of Authoritarian control, calling me childish and insulting. You ridicule and dismiss without an iota of foundation a perfectly acceptable academic paper containing only the most basic math – a paper written by a central-planner no-less – with cogently crafted criticisms of MMT that without any mathmatics would clearly stand on their own. And yet you do not hesitate to sling countless objectionable insults (concluding with your accusing me of using terrorist language?) Then, in nearly the same breath, rejecting the works of Ruskin and Soddy for their lack of “state spending” – you would urge me to study the model of an anarchist. A stateless, anarchic society such as Graeber proposes would not countenance, thankfully, endless ex-nihilo State issue of fraudulent credit claims. Anarchy (in the truest sense of the word, not in the manner commonly hijacked in the public perception), would be a far and away superior model to that which you seem to dream about.

            What you call “debate” is ended here JohnG – and I shall happily let my propositions stand the test of peer review as they are now – unchallenged by you in any valid sense. Your style of debate entails a form of verbal violence anathema to me, and to commonly accepted civil discourse protocol. The moral basis of society is the only one worth pursuing. Moral outrage is now needed to defend against the systematic removal of personal freedoms and liberties your centrally planned nightmare will entail.

            Dude.

          • JohnG January 11, 2016 at 12:52 am #

            Yet another screed of strawman arguments, Wesley?

            Burning down strawmen is decidedly NOT logical refutation of anything.

            And that’s all you’ve done.

            Grow up, buddy.

            You gold bugs and ‘libertarians’ are a precious lot.

            There’s no liberty in poverty. And replacing money with gold would have us ruled by kings again.

            “a paper written by a central-planner no-less – with cogently crafted criticisms of MMT”

            No Wesley, no criticisms of anything in MMT. Burning down strawmen.

          • JohnG January 11, 2016 at 2:30 am #

            Re: Palley’s fraudulent ‘critique’.

            ON THE SUPPOSED WEAKNESSES OF MMT: RESPONSE TO PALLEY

            L. Randall Wray

            http://www.economonitor.com/lrwray/2012/07/26/on-the-supposed-weaknesses-of-mmt-response-to-palley/#sthash.iKSJWclY.dpuf

            I wonder what the hell I have been writing all these years

            Professor Bill Mitchell.

            http://bilbo.economicoutlook.net/blog/?p=22701

            And again Wesley, I wonder how much unemployment and poverty would ever be enough to assuage your moral outrage would ever be enough.

            Needless poverty and privation tend to give rise to my outrage rather than some meaningless notion of maintaining the purchasing power of a fictional fixed quantity of tokens.

            It’s an utterly facile exercise that completely ignores the stock flow consistent thinking essential to understanding money.

          • JohnG January 11, 2016 at 12:16 pm #

            And just to clarify what should be self-evident Wesley, I’m not saying you’re a terrorist.

            I’m saying/observing that you’re one of the terrorised.

            The irony of which, given that you’re a ‘give me liberty or give me death’ libertoonian, will probably pass you by.

            And that’s all the ‘clubbing’ I’m going to give you, precious.

          • arxsyn April 17, 2016 at 10:36 am #

            Wesley, l am new to the blog really appreciate your thoughts regarding money. I wholeheartedly agree this system of things is completely untenable and unsustainable.

            Where debt is money and the concept of “value” is always relative, distorted, speculative, even invented. No amount REAL quantifiable economic growth (true value) can Ever keep pace with the ever rising, insurmountable issuance of credit, debt or whatever you call it vs expectation. It’s this insatiable,bloated, ugly thing that can never be fed. It’s set up to fail. It already is failing. This machine is pure greed in a closed system on steroids . It’s a race to the bottom. It’s going to kill us all.

            Capitalism is just a glorified psychopathic ideology that is the enabler, the hand that feeds itself. The pursuit of profit above all else… Extracting the most value with the least amount of investment (time, money) at the expense of every living thing on earth. Reality is, resources are getting increasingly more scarce. it seems that the machine is gearing up for the worst as the easy pickings are gone and is more ruthless (desperate, depraved) by the day.

            Capitalism is proselytized as some kind of saviour. It’s the best! It’s the only option. Hint: It’s not!! If there is less government intervention we will all benefit. Government should be kept small and ineffective. After all Democracy is antithetical to the values of capitalism, absolved of all morality and ethics.

            My absolute worst fear is living under the tyranny of the corporation. You and I already are. There is no such thing as true freedom, fraternity, liberty, autonomy and self determination of this keeps going … Corruption, Puppet governments and police states.

            In some form or another indoctrinated, indebted wage slaves who don’t own capital or factors of production are struggling to make a living, to get by. For example in the developed world there are Student loans, huge mortgages, lucky you get to earn your keep at firm xyz in a recession. And it’s not necessarily easy. The overlords want it that way to keep the status quo.

            Globally wages are kept artificially low: depressed and falling due to outsourcing/automation. Robots and automation will displace 5million jobs by 2020 world wide . Meantime they have undermined, weakened, even taken away collective bargaining rights (it happens in America), the right to form trade union.. In many states, there are enforceable non compete clauses where the worker cannot quit and work for a competitor for as long as 2 years. California forbids this practice. Didn’t stop Silicon Valley to engage in wage collusion which eventually spread to others firms in unrelated industries like media and retail…. Lawsuits have been filed. Increasingly the is less full time work. a million people were affected in the scandal. There is less full time employment, less job security, and more part time or precarious employment. Then the face of true modern slavery: Cheap indentured Migrant labour. Best of all and little known dirty secret is the HUGe latent pool of prison labour individuals who cost just pennies per hour to utilize . Or the unpaid intern who isn’t a technical wage slave but is working on the promise to become one.

            Crazy right? Yet corporations are making record profits.

            Capitalism is about free Markets right? shouldn’t there be healthy competition? Ditto cartels / price fixing/ mergers and acquisitions? Ditto wage fixing in labour markets. Ditto free market of ideas (los desaparecidos,activists,journalists,dissenters, whistle blowers). Hell they are the media. They throw money at schools, think tanks and foundations. No one can escape the doctrine.

            So now not only the individual is under attack, entire Nations are too with the TPP. same dirty tactics…
            Democracy is done for…. it’s a death knell.

            I really think the best invention and true glory of mankind is found in Democracy. It was so hard fought and won. Democracy should be saved. It’s the only thing worth saving if we wish to save ourselves from this tyranny. Don’t we live in a fair, just, cooperative, equitable world?

        • Wesley - in the sunshine! January 12, 2016 at 8:01 pm #

          Cash or credit?

          From JohnG January 9, 2016: What is Money?: The Banking Law Journal, May 1913 – By A. Mitchell Innes. ( http://moslereconomics.com/mandatory-readings/what-is-money/ )

          “It is by selling, I repeat, and by selling alone—whether it be by the sale of property or the sale of the use of our talents or of our land—that we acquire the credits by which we liberate ourselves from debt, and it is by his selling power that a prudent banker estimates his client’s value as a debtor.

          Debts due at a certain moment can only be cancelled by being offset against credits which become available at that moment; that is to say that a creditor cannot be compelled to accept in payment of a debt due to him an acknowledgment of indebtedness which he himself has given and which only falls due at a later time. Hence it follows that a man is only solvent if he has immediately available credits at least equal to the amount of his debts immediately due and presented for payment. If, therefore, the sum of his immediate debts exceeds the sum of his immediate credits, the real value of these debts to his creditors will fall to an amount which will make them equal to the amount of his credits. This is one of the most important principles of commerce.”

          Here, this early proponent of Central Banking lobbying for the passage of the Federal Reserve Act, and I can agree. Debt incurred, by whatever initiate – but most egregiously by government – should not result in my being compelled by force of state to accept payment due me (Federal Reserve credit money) by an acknowledgment of indebtedness issued by she herself – especially that which only matures at a later time! Let that sink in. Then present a Note From the Bank of England to the Bank and ask them to please redeem it into money. You will receive another Note in exchange, and a smile indicating that your “borderline” irrationality has already alerted security to your presence.
          Production must precede the acquisition wealth, and the transfer of money. If a man chooses to acquire and accept money (in whatever form mutually consented by the parties), by the exchange of his own labors, wonderful. Wealth creation has always begun there. Mosler desperately seeks to then sever the difference between “credit” and honest money there, by a simple, bald-faced denial that everyman can see through on its face:
          “Another important point to remember is that when a seller has delivered the commodity bought and has accepted an acknowledgment of debt from the purchaser, the transaction is complete, the payment of the purchase is final; and the new relationship which arises between the seller and the purchaser, the creditor and the debtor, is distinct from the sale and purchase.”

          The honored reader does not need my feeble insights to know that the “payment of a purchase” is most certainly NOT final by the mere acknowledgement of debt by purchaser. The CREDIT extended the purchaser is only reset and renewed once payment of MONEY permanently extinguishes the debt incurred by the exchange of goods or services – whatever form of money is agreed in advance, and without the coercive force of State legal tender law. When one realizes the question of “Cash or Credit” has been forced (since 1971) to mean the same thing, enlightened awareness and debate may begin. The question then will more properly be phrased, “Money or Credit?” Rebrand me with any label you choose, but I choose Money.

          • JohnG January 12, 2016 at 9:18 pm #

            “Then present a Note From the Bank of England to the Bank and ask them to please redeem it into money. You will receive another Note in exchange”

            With all due respect Wesley, you are trying to school me on the system as it exists, even though my understanding of it goes well beyond yours, because I don’t share your moral outrage at the essential nature of it i.e. that money is credit.

            I can lead a horse to water but I can’t make it drink.

            Government money (that you deem fraudulent for ideological reasons) is the ‘real money’ in the system.

            Once you grasp that, you’ll be less terrorised and more able to breathe intellectually.

        • Wesley on Credit Theory February 8, 2016 at 5:58 pm #

          CRITIQUE OF INNES’ “CREDIT THEORY OF MONEY” – American Monetary Institute

          http://www.monetary.org/critique-of-innes/2012/06

          Money is not credit.

      • Roger January 9, 2016 at 2:08 pm #

        The series of gUuest posts on this Blog by Hawkeye are an invaluable part of my own education directed at digging into these questions. http://www.golemxiv.co.uk/2013/08/illogical-economics-guest-post-by-hawkeye/ ´´Soddy gave a cogent explanation of money:

        “We thus come to look upon money – quite irrespective of whether it is specie or paper – as a token certifying that the owner of it is a creditor of the general community and entitled to be repaid in wealth on demand.” Wealth, Virtual Wealth and Debt (1926) p134′

        On Interest and debt Ruskins Viens of wealth always repays a further visit.
        http://www.ourcivilisation.com/smartboard/shop/ruskinj/last/chap2.htm
        ”Simple Example
        Suppose two sailors cast away on an uninhabited coast, and obliged to maintain themselves there by their own labour for a series of years.

        If they both kept their health, and worked steadily, and in amity with each other, they might build themselves a convenient house, and in time come to possess a certain quantity of cultivated land, together with various stores laid up for future use. All these things would be real riches or property; and, supposing the men both to have worked equally hard, they would each have right to equal share or use of it. Their political economy would consist merely in careful preservation and just division of these possessions. Perhaps, however, after some time one or other might be dissatisfied with the results of their common farming; and they might in consequence agree to divide the land they had brought under the spade into equal shares, so that each might thenceforward work in his own field and live by it. Suppose that after this arrangement had been made, one of them were to fall ill, and be unable to work on his land at a critical time—say of sowing or harvest.

        He would naturally ask the other to sow or reap, for him.

        Then his companion might say, with perfect justice, “I will do this additional work for you; but if I do it, you must promise to do as much for me at another time. I will count how many hours I spend on your ground, and you shall give me a written promise to work for the same number of hours on mine, whenever I need your help, and you are able to give it”.

        Suppose the disabled man’s sickness to continue, and that under various circumstances, for several years, requiring the help of the other, he on each occasion gave a written pledge to — work, as soon as he was able, at his companion’s orders, for the same number of hours which the other had given up to him. What will the positions of the two men be when the invalid is able to resume work?

        Considered as a ” Polis,” or state, they will he poorer than they would have been otherwise: poorer by the withdrawal of what the sick man’s labour would have produced in the interval. His friend may perhaps have toiled with an energy quickened by the enlarged need, but in the end his own land and property must have suffered by the withdrawal of so much of his time and thought from them; and the united property of the two men will be certainly less than it would have been if both had remained in health and activity.

        But the relations in which they stand to each other are also widely altered. The sick man has not only pledged his labour for some years, but will probably have exhausted his own share of the accumulated stores, and will be in consequence for some time dependent on the other for food, which he can only “pay” or reward him for by yet more deeply pledging his own labour.

        Supposing the written promises to be held entirely valid (among civilized nations their validity is secured by legal measures), the person who had hitherto worked for both might now, if he chose, rest altogether, and pass his time in idleness, not only forcing his companion to redeem all the engagements he had already entered into, but exacting from him pledges for further labour, to an arbitrary amount, for what food he had to advance to him.

        There might not, from first to last, be the least illegality (in the ordinary sense of the word) in the arrangement; but if a stranger arrived on the coast at this advanced epoch of their political economy, he would find one man commercially Rich; the other commercially Poor. He would see, perhaps with no small surprise, one passing his days in idleness; the other labouring for both, and living sparely, in the hope of recovering his independence, at same distant period.”
        http://www.ourcivilisation.com/smartboard/shop/ruskinj/last/chap2.htm

        @wesley ´´The issuance of loans ex-nihilo and the charge of interest thereon, is both a fraud, inherently immoral, and should be abolished.´ I agree with this absolutely. Interest as a price on money honestly come by or created has many forms, variable interest rates attracting perhaps the greatest approbrium.

        With respect to inflation, the charging of interest is a very big driver ion the constant harping for 2% Economic growth and of course 2-3% inflation, it is a many faceted system and not easily pinned down , this forum is not probably the best one in which even to start down the road.

        In the context of Davids original Article and ´´Re-branding Dissent´ one only has to see the heretical scorn poured on Soddy to see how going against establishment narratives attract quite viscous attacks amounting to pre meditated destruction of the dissenter. Keynes was dismissive of Major Douglas thus.” Since the war there has been a spate of heretical theories of under-consumption, of which those of Major Douglas are the most famous. The strength of Major Douglas’s advocacy has, of course, largely depended on orthodoxy having no valid reply to much of his destructive criticism.”

        The quote is lazily cut and pasted from here http://www.garynorth.com/public/5182.cfm MONETARY CRANKS PROMOTE FIAT MONEY is one sub heading that the author shrieks at us, sadly one can no onger say ´´Only in America´´

        • Wesley January 9, 2016 at 8:41 pm #

          Quite right Roger – common sense indeed! I shall enjoy these reads, and limit my enthusiasm on this particular thread to a tie-in of the instant posting on Dissent. So glad to have landed here… I may have to assume an Avatar 😉 Today, I was quite consumed with the fascinating link posted by JohnG from 1913 in the Banking Law Journal concerning “What is Money”. This was published at a time of a fever pitch in the public dialogue concerning the role and functions of the monetary system – and on the eve of the formation of the Federal Reserve. Naturally, the banking lobby was inundating the public sphere guiding the discussion to the “correct”, “rational” decision – In the context of Re-Branding Dissent. Of course, President Wilson did endorse the legislation, and the destruction of the social contract in America bound by the monetary system began in more earnest.

          • Wesley January 9, 2016 at 8:59 pm #

            Soddy (and Martenson) would not be surprised to see the analysis of BitCoin to entail a relationship (value) to its energy input. There is a simple reason the largest BitCoin “miner” in the world is located in Iceland (with computing power rivalling that of the NSA) – energy costs (from Thermal sources) are the lowest in the world.

        • JohnG January 10, 2016 at 12:53 am #

          The first failure of Ruskin’s tale is that there is no state spending in his model.

          Which, if I recall correctly, was why I gave up fairly early on Soddy.

          • Roger January 10, 2016 at 12:44 pm #

            Hi John, Unto this last is a series of 4 longish essays which cover many questions in political economy as Four Essays the whole can only give a flavor and hints as to which direction choices may be tracked down and considered further. How things are now is one question and MMT is one explanation or presentation of what the current system is. Why the current system has evolved to its present shape and who has influenced the shape of the current system will always be open to individual emphasis on what may or may not have been more important and who has emerged as dominant in influencing the present dynamic. Having covered the Then or up until now, what came before question . Also having established what Now comprises of and in which measures( the measures of influence is almost certain to end in disagreement), it is interesting to know if we are all still then able to talk to each other about possible futures or if we feel that we can a priori predict what each other would suggest as a way forward and disagree strenuously in advance.
            Of course that’s essentially what Davids article is about, marginalising points of view which do not support the pre determined outcome. C S pierce called reasoning arranged about a pre conceived conclusion ´´Window dressing´´ or ´´Merely for show´´. The failures you ascribe to Soddy and Ruskin may or may not be valid for your own purposes all I would say is that Aggregate demand is aggregate demand pre supposing any sectors such as a State or Banks or Private or community spending are all subjective variables we can choose or reject in any discussion of what next?.
            On Bitcoin mining Wesley I am highly skeptical of Bitcoin and the foundation but very pro crypto currency and the Blockchain´s potential for replacing intermediaries as needed third party notaries. Large Scale mining in iceland proves the tendancy of Capitalism to monopoly in my view but I would say that wouldn´t I?
            James Burke on the Future at 2.48 He posits that states and Governemnts will no longer exist in 100 years time they will no longer be needed as their predication on Scarcity and conflict will simply no longer be valid and demonstrably so.https://www.youtube.com/watch?v=fiM3CV4Z6w8

          • JohnG January 10, 2016 at 10:44 pm #

            Hi Roger, the underlying point of MMT is to demistify the system and thus to debunk the threats and constraints foisted on societies by the powers that be.

            What we are saying is that these ubiquitously constructed and amplified financial constraints (debts and deficits) are false. The actual constraints are real i.e. resources and capacity.

            It opens up an enormous array of possibilities of how nations, societies, communities can shape their organisation to the betterment of all.

            It’s a liberating reality. The polar opposite of Thatcher’s TINA approach.

            It seems laughable to me that we are being accused of authoritarianism. It couldn’t be further from the truth.

          • Wesley - on language January 16, 2016 at 7:36 pm #

            JohnG January 12, 2016 at 9:18 pm: With all due respect Wesley, you are trying to school me on the system as it exists, even though my understanding of it goes well beyond yours, because I don’t share your moral outrage at the essential nature of it i.e. that money is credit.

            Your construction above is a perfect example of a logical fallacy: Your understanding of the system as it exists goes well beyond mine, BECAUSE you do not share my moral outrage at a thing that is not so. Ask a logician about that math, JohnG.

            Listen – I have very patiently set-out my arguments (many of which use your own citations), clearly establishing the differences between MONEY and CREDIT. My arguments still wet the air, hanging without rebuttal. That does not, in and of itself, make them true. However, you have not shown why they are not true. You have not even attempted to establish your oppositional position – i.e., that these distinctly different functions of finance, (money and credit) are an identity. Repetition of your proposition is not sufficiently compelling – in fact it’s rather tiring.

            I had to chuckle when I re-read one of my own citations concerning the initiation of ex-nihilo government “Greenbacks” during the American Civil War: “lawful money and legal tender in payment of all debts, public and private, within the United States, EXCEPT duties on imports and interest on the public debt.”

            Clearly, the bankers themselves (and Treasury debt-holding members of the public) had to be assured that the “Interest on the Public Debt” would be settled with something other than greenbacks – i.e., MONEY. Likewise, foreign entities were forced to use MONEY to settle import taxes (duties) to Government. And I assure you, Greenbacks (i.e. bearer credit instruments) were not accepted to purchase goods and services from abroad for the same reason.

            The philosophies of Linguistics are instructive in many ways here. First, logic must apply. Secondly, man develops words to encompass meaning, and to describe behavior. The indigenous inhabitants of the Arctic have numerous names for “snow”. The reason is obvious: they are different, and those differences MATTER to those fine peoples. English is the language of commerce (and law) for similar reasons. Even just starting from the simple fact of the ages-old usage of the distinctly different terms “money” and “credit” should give you pause to check your premise. Simply saying that money and credit are an identity does not make it so – but at the most fundamental level of logic, one may begin to intuit that the mere existence of differing terms and usage is a strong suggestion of non-identity.

            That very proposition is at the root of many of your circular arguments, JohnG – and I’m only taking a bit of column space here to illustrate this, as the concept of language (branding) and logic (something is true because I say it is true) are relevant to David’s initial posting here.

            I shall let my carefully argued propositions concerning the differences between money and credit rest there, on the judgment of my peers, so that I might take a moment to address other points raised.

          • JohnG January 16, 2016 at 9:15 pm #

            Listen – I have very patiently set-out my arguments (many of which use your own citations), clearly establishing the differences between MONEY and CREDIT.

            No you haven’t.

            That is your problem. You just can’t see how the credit/debit relationship creates the money.

          • Wesley - viewing the world January 16, 2016 at 10:53 pm #

            Providing insights into your worldview here with us as you do – stating that the absence of state spending in and of itself as the basis for rejecting both Rushkin’s and Soddy’s models – does not seem logical. Why must state spending be the pre-requisite for your considered evaluation of an economic paradigm? Are you suggesting that without State, an economic model cannot or should not even exist?
            ___

            And yes, I will attempt to address your questions as time permits…

          • JohnG January 16, 2016 at 11:02 pm #

            stating that the absence of state spending in and of itself as the basis for rejecting both Rushkin’s and Soddy’s models – does not seem logical. Why must state spending be the pre-requisite for your considered evaluation of an economic paradigm?

            Because state money exists.

            Trying to describe the system without it is to describe something that doesn’t exist.

            Eventually you get into Schroedinger’s cat territory.

            People tend to hate paradox but the trick is to not reject the proposition/s out of hand. You have to accept that paradox exists.

          • Wesley - the sophist January 17, 2016 at 12:45 am #

            Logic JohnG…

            State issued “money” as you call it exists today. So stipulated. Your rationale (however you conveniently label it), roughly restated, says that because state issued debt-money exist today, no other system can exist, or shall exist, without the presence of State “money”.

            Your rejection of Soddy, Ruskin (and all non-MMT-else) is based on a false premise. The ability of thinking man to describe something that does not yet exist is one characteristic that distinguishes us from beasts. Your refusal to acknowledge even the possibility of such a world, (that without the coercive presence of fraudulently issued ex-nihilo state credit), speaks to the blinders in which you are bound, limiting your view of the world.

          • JohnG January 17, 2016 at 1:11 am #

            Well Ruskin’s tale of the 2 men on the island tends to support the view that state money is a necessary addition/backstop to a system of private credit creation.

            I probably didn’t enunciate that well originally.

            Your refusal to acknowledge even the possibility of such a world, (that without the coercive presence of fraudulently issued ex-nihilo state credit), speaks to the blinders in which you are bound, limiting your view of the world.

            Not at all. Just been there, done that long ago, and can’t see the point.

            On a certain level, I can understand why people feel some moral outrage when they discover how money is created (or indeed what money actually is). You’ve been conditioned to believe money is something that it isn’t i.e. some tangible commodity (for want of a better description).

            But it just isn’t. Money is virtual and the settlement medium for credit/debt can change over time and space but it remains only a representation of what is an accounting mechanism.

            The global economy is completely f***ed up. The banking cabal is one huge control fraud. The political sphere is rampantly corrupt and completely under the thumb of predatory capitalists. The leading CEOs, politicians and media controllers consist of psychopaths and sociopaths.

            But when it comes to the monetary system, you are confusing the bathwater with the baby.

            I’d rather solve the real problems of the world and we don’t need to overthrow sovereign fiat currency to do so. In fact, we’d make it much worse.

        • JohnG January 10, 2016 at 2:01 am #

          Warren Mosler has often talked of a business card economy in his lectures.

          There’s a pretty good written example here.

          http://bilbo.economicoutlook.net/blog/?p=7864

          • Wesley January 10, 2016 at 6:35 am #

            I couldn’t really get past the first paragraph, when I read Mitchell’s method at Re-Branding of Dissent – MMT-style:

            “Most of the logic used by deficit terrorists to underscore their demands for fiscal austerity are also based on a failure to understand these fundamental principles.”

            A failure to understand puts one at risk of being labelled a “terrorist”. One who objects to the fraudulent debasement of the societal monetary construct is a “deficit terrorist”. The language of MMT is quite instructive in the methodology employed to coerce “right thinking”… Specific persons were called out and ridiculed (already in 2010!) for inappropriate utterances to the MMT party line…

          • JohnG January 10, 2016 at 9:29 am #

            Oh good lord. You are ridiculous.

            You seem to have an unlimited supply of moral outrage.

            Your views are being challenged, dude.

            Try to defend them if you can. That’s called debate.

            But do so with some honesty and integrity.

          • JohnG January 10, 2016 at 11:12 am #

            “the fraudulent debasement of the societal monetary construct”

            Terrorist language.

          • Roger January 11, 2016 at 7:02 am #

            ”the underlying point of MMT is to demistify the system and thus to debunk the threats and constraints foisted on societies by the powers that be.´´ All efforts to do this must be applauded, you mention Graeber earlier I am currently re reading this paper/book/article of his which has this to say regarding scientific explanation of open systems and the dangers of mistaking ceteris paribus modeling as presenting reality qua reality.
            ´´4. Open Systems. Another element of indeterminacy comes from the fact that realworld events occur in “open systems”; that is, there are always different sorts of mechanisms, derived from different emergent strata of reality, at play in any one of them. As a result, one can never predict precisely how any real-world event will
            turn out. This is why scientific experiments are necessary: experiment are ways of creating temporary “closed systems” in which the effects of all other mechanisms are, as far as possible, nullified, so that one can actually examine a single mechanism in action.’ p.22 n10 4. http://commoner.org.uk/10graeber.pdf
            As Bakunin put it, property “is a god” and has “its metaphysics. It is the science of the bourgeois economists. Like any metaphysics it is a sort of twilight, a compromise between truth and falsehood, with the latter benefiting from it. It seeks to give falsehood the appearance of truth and leads truth to falsehood.” [The Political Philosophy of Bakunin, p. 179]
            http://en.wikibooks.org/wiki/Anarchist_FAQ/What_are_the_myths_of_capitalist_economics%3F

        • JohnG January 11, 2016 at 10:49 am #

          Roger.

          “It seeks to give falsehood the appearance of truth and leads truth to falsehood.”

          That’s a lovely line that sums up (the role of) mainstream economics perfectly.

          I’d be less polite in describing its practitioners though. I used to think they were just stupid and incompetent. Now I don’t.

          They’re much, much worse.

        • Wesley - Under his fig tree January 12, 2016 at 6:43 pm #

          @Roger – on C H Douglas and the Social Credit movement: Douglas said that Social Crediters want to build a new civilization based upon “absolute economic security” for the individual, where “they shall sit every man under his vine and under his fig tree; and none shall make them afraid.” In his words, “what we really demand of existence is not that we shall be put into somebody else’s Utopia, but we shall be put in a position to construct a Utopia of our own.” [Wikipedia]
          Without delving into the technical aspects of Social Credit, I quite like the language of voluntarism, and the Natural Laws of the Philosophers. To the extent that my activities, of whatever nature, do not interfere with your pursuit of your own life, I require no State. The language of MMT is that of coercion and force – and I certainly do not relish the idea of being forcibly placed into their “Utopia”. I dwell here, under my vine and fig tree – quite un-terrorized – but vigilant of efforts to brand my dissent with the labels of heresy and humiliation. My ability to proceed unimpeded in the construction of my own Utopia, without the unwelcome guidance of the Nanny-state, is all I seek to defend. The well-meaning Douglas of course goes astray then with his proposed imposition of a National Dividend and a Compensated Price Mechanism – attempts to legislate value forcibly by the state are demonstrably a failed mechanism. I would urge you to look into the concept of time=money – along the ideas of Ithaca Hours and the like. A complete voluntary, local system, with value for Hours based on mutual consent, and not the coercive hand of state.

          • JohnG January 12, 2016 at 9:24 pm #

            “The language of MMT is that of coercion and force – and I certainly do not relish the idea of being forcibly placed into their “Utopia”.”

            A complete fabrication and totally dishonest.

          • Wesley - Honest and Unbranded January 13, 2016 at 11:40 pm #

            Re-branding Dissent – MMT-style. The toolkit for manufacturing “consent” and “assent” is mainly by bludgeoning, name-calling, force, denial and repetition.

            JohnG January 2, 2016 at 5:30 am: …So you might need to rethink your world view.
            Translation: If you do not possess MY world view (that of MMT), yours should be amended.

            JohnG January 3, 2016 at 12:43 am Money is credit. An accounting entity.
            Translation: I am right. You are wrong. Period.

            JohnG January 3, 2016 at 2:49 am
            That may be what you want money to be. But it isn’t what money is.
            Translation: Despite centuries of academic and use-based understanding to the contrary, money is what MMT SAYS it is…

            “Money is credit. Always has been and always will be.”
            Translation: Ditto – If I repeat it enough times, maybe then you’ll understand it MY WAY.

            “And viewing it as a commodity, as you do, distorts your understanding of how economies work.”
            Translation: Not seeing MY WAY means you have a “distorted view”.

            “What you see is a barter system, not a financial economy.”
            Translation: If you are not using the fraudulently issued credits advocated by MMT, you will be reduced to barter. There are no other choices.

            “So you’re looking at something that we haven’t had for 4 or 5 thousand years.”
            Translation: It must be wrong if it’s that old.

            JohnG January 4, 2016 at 8:10 am You’d have to elaborate for that to mean anything. I’m well aware of how the system works.
            Translation: Your English is lacking. Besides, we’ve already established that I am omnipotent.

            JohnG January 6, 2016 at 12:57 am Wesley, if you don’t want to know how the system really works then I suppose you will see ‘traps’ everywhere.
            Translation: Only MMT may reveal to you how the system REALLY works.

            “FYI, the USA is possibly the last currency zone to have mandatory fractional reserve ratios (for deposits).”
            Translation: I’ve repeatedly told you (and everyone else) that the most important, largest banking system in the world is not based on mandatory fractional reserve ratios for deposits. Why can’t you understand that???

            JohnG January 6, 2016 at 9:17 pm : Money is credit. Either it is created by government ex nihilo (high powered money) or by banks ex nihilo (bank credit)
            Translation: (pounding fist on table now) – I’m repeating myself again. If I say something is false enough times, you will eventually come to see it my way.

            “You need to get over it and understand it.”
            Translation: Don’t MAKE me use force. ‘Cause I have, and I will…

            JohnG January 6, 2016 at 9:20 pm I haven’t allowed any such thing. The US reserve requirements relate to deposits.
            Translation: Even though I said earlier today that fractional reserve banking is used by the Federal RESERVE System, I am denying that now. You are to ignore anything said to the contrary – even by me.

            JohnG January 7, 2016 at 2:54 am Yes years of negative real wage growth, high unemployment and reduced government social spending all conspired to create an unsustainable credit bubble.
            Translation: The credit bubble was NOT created by the massive fraudulent creation from thin-air of mortgage loans, and the associated derivative instruments (“purchased” by fraudulently created, ex-nihilo leveraged credit) on which they were based. Keep moving – nothing to see there…

            “Though under neoliberal tyranny that basic reality is resisted and rebuffed.”
            Translation: If you don’t do it the MMT way, you must be a neoliberal tyrannosaurus. You might even be a libertarian – worse still, one who subscribes to Austrian principles of political economy. And probably associated with Finance Capitalists.

            “Your commodity ‘money’, if that is what you are proposing wouldn’t solve that problem. In fact it would hamstring governments even more than the ever failing gold standard did.”
            Translation: I don’t know what you are proposing, but it doesn’t matter – if it’s not MMT it couldn’t possibly solve the problem. And I know you’ve already clearly rejected the “gold standard”, but I’m going to try and associate you with commodity money and the gold standard anyway. Besides, if you were successful in ending the fraudulent creation of counterfeit credit by the Central and Commercial banks, the improper monetization of government deficit spending would also be hamstrung. We wouldn’t be able to steal from you through inflation. I know quite a lot about how to build a strawman!

            JohnG January 7, 2016 at 2:31 am There is no money created by QE. It’s just an asset swap.
            Translation: That sounds so simple! I’m so pleased with myself! I hope they don’t figure out that the $2.5 trillion dollars in “high-powered” excess reserves (just in the United States) has the potential, in the option of the commercial banking system, to be used as the basis of ex-nihilo loans creation to expand the “money supply” (fraudulent, counterfeit credit) exponentially. I know that presently the banks are merely using those excess reserves to purchase financialized assets (shares etc.) Wouldn’t it be great if we MMTers could FORCE those evil finance capitalists, instead of pushing up asset prices (improperly) – to use those reserves to be the basis on which thin-air money is loaned to the real economy??? Better yet, we could just seize those banks, and nationalize them. Then we, the government could loan the credit-money into existence without the bother of restraint. World without end.

            “Your view appears to be that money is fraud and/or that money creation offends your sense of morality.”
            Translation: I know that your definition of money and mine are at odds – but that will not stop me from falsely restating your view using MY definition. I will tell you what your view is, and you will eventually come around. Don’t make me force you, ’cause I will! And, despite your having clearly posted countless words carefully describing the long-settled and commonly understood differences between money and credit, I will NOT acknowledge the differences. I don’t even understand how mankind could have come up with two separate words for these two completely different things which I know MUST be the same, because that’s what MMT tells me to say – but, but… Maybe Noam Chomsky could provide me with some insights!

            “You’re all wanting to throw the baby out with the bathwater.”
            Translation: Your solutions, not embracing MMT, will kill the baby.

            “We’re trained to see fiscal deficits as the great threat to the economy…”
            Translation: Sound fiscal practices should apply only to individuals – NOT to government. Government knows best how to spend your money, and if you don’t consent – well, that doesn’t matter. We will seize your money by taxation anyhow. Besides, it’s not money – it’s just credit!

            “The results of these neoliberal ideological absurdities being put into practice are all too obvious.”
            Translation: I’ve told you repeatedly that MMT describes how the system is now – that is reality. To the extent that reality does not conform to what MMT says it should be, then those aspects will be labeled as anomalous. In all likelihood, any unexpected outcomes occurring in today’s reality are the result of “neoliberal ideological absurdities”.

            JohnG January 7, 2016 at 8:32 pm [To Wesley’s absurd proposition that “All dollars end up as Treasuries!”] No, in the long run all government dollars are extinguished by taxation.
            Translation: We could extinguish all those government dollars right now if each citizen (including children, elderly, unemployed) were to be taxed an additional $58,300. But, we’ll just keep that to ourselves – because, in the long run, we’ll all be dead, right?

            JohnG January 7, 2016 at 9:45 pm The principal ideas behind functional finance can be summarized as: Governments have to intervene in the national and global economy; they are not self-regulating.
            Translation: MMT will use the Government’s monopoly on force to “intervene” in the national and global economies. If that entails warfare, to accomplish our goals in the global economy – well, so be it. MMT says it will be for your own good.

            “The principal economic objective of the state should be to ensure a prosperous economy.”
            Translation: MMT will use whatever means necessary to make sure that the economy “prospers”. Even if we have to throw you in jail if you object to prospering.

            “Money is a creature of the state; it has to be managed.”
            Translation: I know that you think there is a difference between money and credit. But MMT requires that I do not acknowledge the difference. That would spoil the whole thing! And because I would have the State create purchasing power out of thin-air, regardless of the propriety of same, it HAS TO BE MANAGED. Don’t worry – this will only just pinch a little! If you agree to it, it will hurt even less…

            “…taxes should be levied for their economic impact, rather than to raise revenue.”
            Translation: If you promise to “like” the precepts of MMT, perhaps your tax rate will be lower than those who object to the precepts of a centrally planned economy. We have ways of “encouraging” acceptance… Don’t make us make you agree to MMT.

            “Principles of ‘sound finance’ apply to individuals. They make sense for individuals, households, businesses, and non-sovereign governments (such as cities and individual US states) but do not apply to the governments of sovereign states, capable of issuing money.”
            Translation: Some are more equal than others – especially those States that employ MMT.

            JohnG January 3, 2016 at 12:53 am: You can accuse me of ignorance all you like but it is a fact that we don’t have fractional reserve banking.
            Translation: labels are so confining. Only I can use labels. If you use a label that does not comport with the MMT-model (or the labels we use in the MMT world to describe those who have not YET come to see it our way), I will simply deny its validity. And the user’s validity by extension. Na-na-na-na-naaaaah-nah! And you’re probably a libertarian Austrian anyhow.

            JohnG January 3, 2016 at 9:53 am “What you describe is in fact fractional reserve banking” No it isn’t.
            Your linked paper says this. “Reserve requirements are the amount of funds that a depository institution must hold in reserve against specified deposit liabilities.”
            Translation: I know that all banking systems worldwide require that depository institutions must hold some amount of reserves against deposit liabilities. I know that no banking system in the world requires that a bank hold 100% reserves against those deposit liabilities. I know that something less than 100% is a fraction. But because MMT says that Fractional Reserve Banking does not exist, then it must not exist. Simple logic. If I close my eyes, you will not see me!

            JohnG January 3, 2016 at 9:19 pm In fact macroeconomics, including the banking system is my forte. I should know better than to try to reason with a ‘libertarian’ though.
            Translation: MMT toolbox 101: call them a libertarian if they don’t agree with you. Everyone knows all libertarians are unreasoning.

            JohnG January 5, 2016 at 9:41 pm MMT is merely the accurate description of the modern state monetary system as it exists.
            In and of itself it contains or proscribes no ideology per se.
            Translation: The modern state monetary system today could be an MMT-style system, if we eliminate interest. If we nationalize banking. If we centrally plan full-employment. If, if, if, if… These are not ideologies, these are what could be! Don’t you see? Doing it any other way than prescribed by the fantasy, unicorn world of MMT – would make it an ideological undertaking. If MMT – not ideology. If NOT MMT, Ideology. Got it?

            “To wit, your link is a series of strawman arguments and spurious assertions.”
            Translation: if someone persists in refusing to see the centrally-planned paradise offered by MMT, anything proposed by such an heretic must be a “strawman argument” – and spurious by its very nature. Don’t go into any details, though – specifics are also so confining!

            JohnG January 6, 2016 at 11:44 pm I do not subscribe to Positive Money’s approach. They have the monetarists’ view of how the system works and they’re just plain wrong.
            Translation: it’s not the MMT view. Therefore: wrong. The reason is self-evident. The monetarists’ view is not the MMT view. Dissent is only tolerated if your dissenting view agrees with the MMT model.

            “We DO have debt free money issued from the Government now. That’s what you call the ‘national debt’ but should more accurately be called private and foreign sector savings.”
            Translation: Labels are so confining – don’t you agree? Just because interest payments on the national debt are a massive burden to society – does not mean that it is debt. NO – the national debt IS debt-free money. The interest paid on that debt does not exist. Call it “private sector savings” and the debt goes away. Why can’t you see that? I mean, MMT says Treasury does not have to issue debt-instruments. That’s an anachonism of Gold-standard days. But wait, if MMT describes the system we have now – and it’s accurate – then why ARE they issuing bills, notes and bonds that carry interest? Why is there a national debt? I’m feeling on shaky ground here – but if you swallow this Kool Aid, maybe you will see more clearly. Let me drink some more, too!

            JohnG January 8, 2016 at 11:03 pm : MMT is the path to debunking and defeating the deficit/debt terrorists.
            Translation: If you propose something other than the MMT party line – I will label you a “terrorist”. And that will mobilize the entire homeland security apparatus after your sorry bottom. You won’t feel coerced if you’re dead!

            —-

            Anyhow, I think you can see my point, after sampling only a “fraction” of the postings. The same template is used throughout impolite society today to marginalize rational debate, to confuse, obfuscate, and re-manufacture consent to the status-quo. Effective dissent is met with even more virulent attacks and demonization. Can there really be any more extremism-label than “terrorist”? Self-determination is anathema to the nanny-state and their puppeteers. Choose wisely: MMT or MMT. Those are your choices – even if I don’t like the Kool-Aid.
            ____________

            @Golam: “Of course this brings us wonderfully back to the questions of who claims to have the authority and expertise to say what is and isn’t good solid rational and evidence-based.”

            A fine indicator of validity to answering that controversial position would have you examining with a VERY skeptical eye those whose choices all seem to lead to the same place. And that which seems too good to be true, most often is.

            —–
            MMT in summary:
            JohnG January 10, 2016 at 10:44 pm What we are saying is that these ubiquitously constructed and amplified financial constraints (debts and deficits) are false. The actual constraints are real i.e. resources and capacity.
            Translation: MMT CAN create unlimited purchasing power, debt-free out of thin-air – even though the resources and capacity that that purchasing power chases are limited. Reality denied. The constraints are real – but the solutions are unreal. But it’ll all be okay, as long as the State is in charge. So let it be written. So let it be done.

          • JohnG January 14, 2016 at 12:40 am #

            MMT is the study and accurate description of the modern monetary system as it exists in practise.

            And you sir, lack integrity and intellectual honesty. And clearly have no sense of irony or self awareness.

            You have some gall to complain that you’ve been ‘attacked’.

            Why are loonertarians such cry babies?

          • JohnG January 14, 2016 at 12:43 am #

            “Translation: MMT CAN create unlimited purchasing power, debt-free out of thin-air – even though the resources and capacity that that purchasing power chases are limited. ”

            That’s pretty much the opposite of what we’re saying. Like most of your inane ranting.

  22. Nikos7 January 6, 2016 at 6:17 pm #

    Hi David,

    Nice to have you back again.As an artist myself I know how important it is to “grab” any job some one offers us.But in these times..all voices like yours must be “standby”.Big things are on the way and many people are confused what is happening.You are one of those guys who can explain with out to fall into the “conspiracy theory”-trap.Your blog and a very few others (like “Jesse´s cafe americain”) are the ones I like to recommend to my lads when I see that they are falling into the trap of all these conspiracy-theorists-blogs like ZH and even more “hidden rightists”-blogs.

    I really hope you find the time to write more.Your blog is much needed.You should know that.Your way to explain crucial issues is much needed.

    Greetings

  23. Joe Katzman January 6, 2016 at 8:09 pm #

    The fact that I’m hearing this from a Green Party candidate gives me a great deal of hope.

    If the only thing I knew was your party, I would have expected you to be on the other side of this issue. I’ve certainly seen such behavior often enough, but now I wonder if my mental model is missing something that might be important. NAGALT?

    I hope that at some point, the voters elect you.

  24. Jamie Griff January 8, 2016 at 4:38 pm #

    Happy New Year Golem – good to have you back!

    The mechanism for demonising dissent that you describe in the article certainly chimes with my recent experience.

    I’ve been working with a group called Debt Resistance UK for some time now on a campaign to instigate citizen-led audits of local authority debt. We discovered that many UK local authorities, rather than borrowing from central government for capital needs, have instead been borrowing from banks in the form of LOBO loans.

    LOBOs are long term (typically 50 to 70 year) loans with embedded derivatives (Bermudan swaptions) which allow the bank, at pre-determined intervals, to impose a new interest rate on the borrower. The borrower has a corresponding option to either accept the new rate or pay back the loan in its entirety.

    Of course, given the complexity of pricing the derivatives involved in these loans the potential for local authorities being hoodwinked by banks into terrible deals which suck up taxpayer money for decades to come is very real. During an ongoing parliamentary inquiry into these loans financial experts described them as ‘lose-lose bets’ for councils.

    Luckily though most councils employ ‘professionals’ to advise them on their borrowing – Treasury Management Advisers from firms like CAPITA. Unfortunately, we’ve found that these firms have rather close relationships with the brokerage firms who arrange the deals and, in some cases, even recieve kickbacks.

    ‘Where are the regulators?’ you might well ask. Well, because financial officers at local authorities are also ‘professional’ the FCA considers them to be ‘sophisticated investors’ and therefore fall outside of FCA regulation.

    With the background out of the way, here’s what I really wanted to share: an audio recording of a council meeting at Newham Borough Council in December. Councillors John Whitworth and John Gray raise a question about the soundness of Newham’s decisions to borrow £563.5m (or £1,830 for every inhabitant of the Borough) from banks in the form of LOBO loans. A recent analysis (registration required) of these loans suggests that they have so far cost Newham at least £10m when compared with equivalent loans from the Public Works Loan Board (i.e. central government).

    To answer, the defenders of rationality, Deputy Mayor Lester Hudson and Mayor Robin Wales first deride the councillors for lacking the expertise of ‘professionals’ and then brush off the experts on whose analyses the councillors’ objections are based as ‘random people’.

    Quite instructive, I think you’ll agree?

  25. Jim January 9, 2016 at 1:15 pm #

    Excellent timing on your article David. This caught my eye the other day…

    “There is no plan B, there is only one plan. The ECB stands ready to take all measures that are necessary to bring inflation to 2%. If you print enough money, you will always get inflation. Always.”

    Peter Praet, Member of the Executive Board of the ECB 6 January 2016

    “To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.”

    Friedrich August von Hayek

  26. Jim January 9, 2016 at 6:14 pm #

    This is already happening with the vaccine debate. The idea that some serious illnesses may be related to vaccines (or to various ingredients, shoddy manufacturing techniques, etc…) is considered a dangerous and irrational view. It is presented as if there is monolithic agreement among all of science that vaccines cannot possibly cause any harm when that is definitely not the case. As a medical student I have a fair amount of inside access to how researchers and doctors think about this. There is an attitude that something is going on but no one wants to speak too loudly about it for fear of being branded an incompetent. Also as for mental disorders, there is now Oppositional Defiant Disorder. Which is a newly coined mental disorder that applies to people who are overly contrary.

    • steviefinn January 16, 2016 at 3:38 pm #

      Due to having heart problems in the recent past, I did a lot of research into the causes & the one size fits all prescribed medication. The problem it seems to me is one of trust, as it is pretty obvious to me at least that health management is deeply in bed with vested interest. There are conflicting views on vaccines, medication, healthy alternatives & the effects that genetic factors play in all of this.

      I found an article written by a one time heart surgeon who had been ostracised due to his opinion ( based on hundreds of procedures ), that heart disease was caused by inflammation rather than cholesterol. He had written a book which was used by his attackers to claim he was simply taking this stance to enrich himself. Other people are cautiously starting to accept his idea & I found that if you look at the historical data in terms of the sudden rise in heart disease, diabetes etc – there are pointers that might support the above view, particularly when it comes to diet.

      The fairly sudden astronomic rise in the above afflictions, appears to coincide with the rise in consumption of processed food, which amongst other dodgy ingrediants such as trans fats, is very high in omega-6, which causes an imbalance with omega-3. Also very high sugar content & ingrediants such as soy, which amongst other things cause inflamation. I also discoved that the so called healthy alternative Lo-salt, is actually full of potassium, which in combination with other foods high in it, can also cause heart problems. This was applicable to me as I discovered that my potassium levels were very high at the time of my cardiac arrests & I was also on a so called healthy diet which was high in healthy but inflammatory foods.

      Putting all this together with the ” French Paradox ” of lower heart disease rates despite higher cholesterol & what appears to be the fact that previous to fast food, the disease rate was lower – leads me to believe that we are being poisoned for monetary gain. As to the medication, in particular statins, that like amoxcyliin have been given out like sweeties by doctors – it stikes me as being one big racket. I looked at a few scientific studies supporting the use of statins, but later found that the scientists were all indirectly paid by big pharma. The biggest fear among those who have suffered heart attacks is that of having a recurrence, which obviously leads to a person not wanting to take risks with their medication – some racket if you think about it.

      The problem is that with the above, the food we eat, vaccines & even how the financial system works – there is no concrete mainstream information available & people are forced to look elsewhere & in all these things, there are many dead ends out there that they could end up in. In terms of vaccines I was horrified to discover the amount that are given to American children ( as the largest amount I found ) & to me anyway, some of the things that they were given for, were ailments that when I was a kid, the vast majority just got over. After my heart problems I had the flu vaccine, then a year later I had it again, but perhaps coincidentally, I felt like shit for weeks after. I looked it up & found that it can weaken your immune system – something I wouldn’t have noticed the first time around, as at that time I already felt like shit.

      Anyway, it does seem that whatever the validity of my conclusions, that trust has been broken, & it does seem that more people are realising this & are looking for the truth, which is basically that we are being screwed big time by our overlords & corporations who increasingly it seems look on us as something they can pen & milk.

      You are certainly not the only one who is ODD.

  27. Spartacus Rex January 12, 2016 at 3:41 pm #

    2016 may not be such a great year for the Banksters as more are waking up everyday and seeing the writing on the wall.

    Rand Paul gets Senate vote on auditing the Fed
    http://www.cnn.com/2016/01/11/politics/audit-the-fed-rand-paul/index.html?eref=rss_politics

    Scrap Bank of England’s powers after century of boom and bust, says think-tank
    http://www.telegraph.co.uk/finance/bank-of-england/12092171/Scrap-Bank-of-Englands-powers-after-century-of-boom-and-bust-says-think-tank.html

    Sound Money: An Austrian proposal for free banking, NGDP targets, and OMO reforms
    http://www.adamsmith.org/research/reports/sound-money-an-austrian-proposal-for-free-banking-ngdp-targets-and-omo-reforms/

    Here’s to a return to Honest Money!

    Cheers, S. Rex

    • Wesley - free banker February 7, 2016 at 8:51 pm #

      Hey Rex! Just now had a chance to digest this Evans paper… His claim (and warning to the Bank of England) to be one of a growing breed of Economists who is in favor of Free-Banking is quite refreshing! While reading his paper, I couldn’t help but notice the tension between his need to assuage the mainstream (i.e., to keep earning a living!) and his honest beliefs. His treatment (and the references) on Free Banking and the specific solutions contained in the Appendix for implementing a crisis-induced end of fiat are quite sensible indeed.

      Thanks for the pointer:

      http://www.adamsmith.org/wp-content/uploads/2016/01/Sound-Money-AJE4.pdf

      So much for JohnG’s errant views of the Free-banking paradigm!

  28. JohnG January 14, 2016 at 2:59 am #

    For anyone interested in where the ‘libertarian’ movement came from.

    Mr. Anonymous & The Libertarian Movement

    http://www.scoop.co.nz/stories/HL0812/S00378.htm

    • Wesley -newly enlightened January 14, 2016 at 5:19 pm #

      Whoa! Another towering bit of scholarship, selected to match your desired narrative? This one repeatedly uses a label we haven’t seen in awhile to trigger the evisceral, good/bad branding reaction guiding the sheep: “REACTIONARY”! Branding indeed. No, the only Anonymous shadowy figure in this entertaining farce is the author himself!

      To our shock and awe, we are asked to believe that certain 20th century intellectuals were funded by like-minded philanthropists. Are you surprised? ☺ The moral and intellectual bases for a just society reach back a bit further than the 1950s, dear JohnG.

      Without wasting too much time, one may quickly learn of the twisted roots of this anonymous revelation. Here’s another one for you, equally entertaining – and a rebuttal from North.
      There are a number of nutty versions and branches of this “history”, including the Illuminati and Jewish angles. I’m surprised the CFR, the Bilderbergs, the Trilateral commission and the Rothschilds were not thrown in to your intriguing story too.
      http://www.garynorth.com/public/9117.cfm

      Plagiarism knows no bounds when spreading myths under a pseudonym, and your link is no exception. Here, you might recognize these words from 2004…
      http://archive.lewrockwell.com/rothbard/volker.html

      Labels are all that seem to matter in today’s sound-bite driven media sideshow. However, the universal principles of non-aggression will always distinguish themselves from under any branding labels you choose to disingenuously employ.

      Here’s a third-party comment that accompanied your commanding bit of scholarship in another of its many wacky embodiments:
      #
      History of Funding of the Libertarian Movement
      Thanks for the nutshell synopsis of the history of funding of the libertarian intellectual movement since the early 20th century. It is interesting in spite of the monumental levels of anti-libertarian bias, and your apparent ignorance of other sources of funding.

      Your statement to the effect that libertarians do not have uniting principles is nothing more or less than willful, deliberate mendacious slander.

      Another mendacity is your silent implication that socialist or Keynesian intellectuals were not economically supported by persons and institutions with proverbial axes to grind. Marx would have died in obscurity were it not for the funding Engles provided, and Keynes wrote Theory to justify what the bankers at Bank of England wanted to do anyway, and he was richly rewarded for it.

      ###

      Quoted from your history of Libertarianism:
      “Karl Marx wrote that the ruling ideas of any age are the ideas of its ruling class.”

      MMT purports to represent the study and accurate description of the modern monetary system as it exists in practise. Was Marx right?

      • Roger January 14, 2016 at 8:18 pm #

        Believe it or not this is a nice bit of light relief as I am in my Third day of reading in detail Tragedy and Hope which touches on all aspects of Wesley´s ire and is also quite good on looking at the left as well up until now. As an Anarchist from the Kropotkin mould Quiggley does not spare me either with his short shrift for alledged Russian Nihilism and Christian Orthodoxy.and the necessary cultural flaws in Bolchevism and Anarchist ideology.
        Quiqgley Dismisses Marx as well but I would say the period from 1966 when the Book was published to now has actually seen history moving more in Marx’s favour.

        All of our Arguments are really with Neo Liberalism today, Neo Liberalism didn´t really exist in quiggleys day as the force it is today but of course Classical liberalism did.Neo Liberalism is the hedgemonic ideology across western power and business elites also in Academia lack of balance leaves us in the mess we are in.
        If most Libertarians identify with the Austrian School, what Quiggley has to say about German(Teutonic) Nobility and also my earlier comment about Frank Harris is quite interesting vis the German Nobility versus the British Oligarchy and Aristocracy. The distinctions are subtle on paper but the social fabric of different cultures is a great driver of what ultimately provides the straw that breaks the camels back, the Masses under most systems are pretty much ignored always.
        Libertarianism in the US is quite different i think to its conception in Europe and in Europe its conception in England, France or Germany would be very different to each other and of course to that of an American context. I do wonder how different its conception is in the US. Quiqqley is very good in bringing out the Southern states and their mistrust of Republicanism post the civil war and the machinations of the Oligarchy to get control of the US congress without the South. There is a Libertarian Party in the US, so its perfectly easy to look at its manifesto, Ron Paul is its most well known representative I think this side of the pond, some of us remember Ross Perot, His running mate was I recall a Famous Stoic philisophically, always a plus point for me given my weakness for Epictetus.

        https://www.youtube.com/watch?v=-g1TaYYGv8Q This Ron Paul speech is interesting, also this article in which Skousen and Quiggley discuss interpretation of Tragedy and hope in The Naked Capitalist, Ron Pauls is Skaussian in a Naked Capitalist sense. Paul has his own Agenda to advance and dissembles as much as Clinton I think, The American problem is huge , that we seem to be adopting their customs in politics is hugely worrying.

        http://www.carrollquigley.net/pdf/Round%20Table%20Review.pdf

        I fail to see how Clinton could claim Quiqqley as a mentor, he took a two term course and was awarded a B Grade according to Wikipedia. Quiggley as a historian attempts to set out facts from research as such the commentary can be used as a handbook for different ways of doing things. I think Clinton will have learned a lot about how things were back in the 60´s which is a huge advantage in deciding where to focus ones efforts to achieve Power and Wealth, ”The value of goods,
        expressed in money, is called “prices,” while the value of money, expressed in goods, is
        called “value.” p.49 (Commercial Capitalism) Quiqqley shows how Bankers make the distinction and real power lays in the Value of money and not the prices of goods. Ruskin who Quiqqley cites as a huge influence on the Round Table and Rhodes etc ( Clinton Rhodes Scholar) says this in Unto this last. John Ruskin, Unto this Last 1860, Critique of Classical Political Economy.

        Pardon me. Men of business do indeed know how they themselves
        made their money, or how, on occasion, they lost it. Playing a
        long-practised game, they are familiar with the chances of its
        cards, and can rightly explain their losses and gains. But they
        neither know who keeps the bank of the gambling-house, nor what
        other games may be played with the same cards, nor what other
        losses and gains, far away among the dark streets, are
        essentially, though invisibly, dependent on theirs in the lighted
        rooms. They have learned a few, and only a few, of the laws of
        mercantile economy; but not one of those of political economy.´´
        http://letthemconfectsweeterlies.blogspot.se/2014/08/government-of-poor-by-rich-for.html . My notes are evolving regarding the clear lapse back into 19th Century classical Liberalism, the present Neo Liberal Ideology seems sadly to apply all of the lessons which do not bear repeating and ignores all the ones which Quiggley warns against. If Clintons application of Quiggleys own Hopes were judged by his results I think the Viva voce ( practical examination sense) )would see Clinton Failing the course) .

        I´m 3 days into Tragedy and Hope and will be working on it probably for another fortnight, I am making Notes as I go along and will probably write an essay when I have finished my analysis of it. Meanwhile Wesley and John g, dialogue is always fruitful, I don’t advocate a policy of appeasement but certainly one of dialogue. This is the challenge we face in Quiggleys words.p.232 tragedy and Hope.
        ´´but criticism should have been directed rather at the hypocrisy and lack
        of realism in the ideals of the wartime propaganda and at the lack of honesty of the chief negotiators in carrying on the pretense that these ideals were still in effect while they violated them daily, and necessarily violated them. The settlements were clearly made by secret negotiations, by the Great Powers exclusively, and by power politics. They had to be. No settlements could ever have been made on any other bases. The failure of the chief negotiators (at least the Anglo-Americans) to admit this is regrettable, but behind their
        reluctance to admit it is the even more regrettable fact that the lack of political experience and political education of the American and English electorates made it dangerous for the negotiators to admit the facts of life in international political relationships.”

        To Change the money system we have to explain it to a much wider constituency than we have reached so far this task if accomplished will maybe one day make our political differences relevant again in a democratic context.

        • JohnG January 14, 2016 at 9:13 pm #

          I read T&H in the mid 70s before I went to uni and before I ever read any Marx.

          To Change the money system we have to explain it to a much wider constituency than we have reached so far this task if accomplished will maybe one day make our political differences relevant again in a democratic context.

          I would argue that we don’t need to change the monetary system per se. The nuts and bolts of the system can and should work for public purpose.

          We do need to change the way that it is used. But that is a political issue. The power of the creditor class is really an illusion.

          I’m all for breaking up the banks as they exist and making most of what they do nowadays illegal. But trying to make money something that it isn’t won’t alter the power structure to the betterment of society.

          In fact so called ‘hard money’ would elevate the monied class to the status of kings.

          • Wesley - hopeful January 15, 2016 at 12:16 am #

            http://www.theparisreview.org/blog/2015/04/07/no-slouch/

            Turning and turning in the widening gyre
            The falcon cannot hear the falconer;
            Things fall apart; the centre cannot hold;
            Mere anarchy is loosed upon the world,
            The blood-dimmed tide is loosed, and everywhere
            The ceremony of innocence is drowned;
            The best lack all conviction, while the worst
            Are full of passionate intensity…

            — The Second Coming- W.B. Yeats

            I DO believe that the monetary system needs to be changed, or at least it’s imposition by force of State needs to be undone. Remember, the levying of taxes by the State in preference to a monetary system that your MMT school may finally reveal will always provide it an advantage. My only point goes to permitting the vast multitudes to choose whichever “money” they like, uncoerced by legal tender and other laws coddling the Banks, as their fiduciary media in our countless other transactions. If free and competitive issues of money, whatever form they may take, threaten your model naturally (even with the undue advantage of being the “money” preferenced by State for the collection of tax), perhaps it is flawed. If you are confident in the ability of MMT to work, you should not be threatened by competitive money systems. Bitcoin, though small in circulation and other shortcomings, was the most successful currency in the world during 2015.

            You may not have to break up the Banks, as they may well implode into a folly of their own making. The “gyre” is widening, and soon the people may not hear the call of the banking falconer. And I quite agree, what happens next is a very political issue. Will the bankers hold society hostage again, and be bailed out with the public purse? I think not: that electorate is quite angry – and I’m not just referring to the bizarre farce of elections in America. What form will the failure of our fiat money system take then? As that inverted pyramid of asset values collapses back into itself worldwide, the paper wealth of the ruling elite will evaporate too. Of course, they own real property too – at least some of them. Will the masses be guided, by force, into a global fiat “money” system ala SDRs, beginning a new cycle of inflationary theft from everyman? A highly likely outcome, I should think. But we also seem to agree that the Banks are engaged in criminal frauds. You have not shown me how you would end that. Neither have I been able to get past your strangely contradictory notion of: MMT is what we have now BUT, “we just have to change the way it is used”. Either it is, or it is not.

            With all due respect, you cannot possibly know the result of permitting free-banking based on true and freely exchanged wealth derived from man’s labors, not a creature of State manifest from thin air at the whim of some central-planning elite. A true, honest money system of that nature has never been permitted to exist in wide use, or for very long. The monied class is poised presently to be hoisted upon their own petards – and they don’t own any gold (at least in the Anglo American axis). If man is permitted to use his own money, the ingenuity of man will not permit a monied class to exist, even wedded as the English are to their incessant notions of class. Pay my taxes with your funny-money I will – but for all other purchases and sales, I shall choose my own media, and be protected under just law for doing so.

            If you fear the money of Kings, choose another. Personally, I like the money of the little man: Silver!

          • Wesley January 15, 2016 at 10:33 pm #

            @JohnG January 15, 2016 at 12:53 am To what purpose would you use silver as money?
            To my own purposes, and to those of any who would use it freely, and willingly accept it in exchange for goods and services – the fruits of honest labor – rendered.

            “How would it be denominated?” Answer: just as silver (and everything else) has always been denominated – by weight and fineness – not by royal decree. Yes, of course I saw your disingenuous reply to Kreditanstalt above concerning the “sovereign denominations” of the coinage he referenced. Perhaps you should re-read your own link to “what is money” again – and contemplate the entire failed history of the State’s attempt to legislate the value of money. The 1 troy oz. Silver coin minted by the US Government (in increasingly record quantities) has stamped on its face, inter alia, “One Dollar” – and yet trades in an amount of “dollars” at a large premium to even the wholesale bullion content. Man, in his wisdom, has realized that one dollar arbitrarily stamped on its face by fiat is worth FAR less than one ounce of silver. (US Government yet again attempted in 1792 to impose a “sovereign” definition of the term “dollar” as a weight and fineness of silver. Subsequent attempts to legislate the value of gold and silver in terms of each other failed equally).

            The meter is a unit of measure based on an observable phenomenon of nature, and agreed to by the whole world. Central Planners, despite their best intentions, cannot change the length of a meter. But they will repeatedly try – and in the case of our monetary unit, have – by force of law – introduced what they call “elasticity” to our primary unit of account. Try building a house using a measuring stick that has “elastic” characteristics. (BTW, unlike a rubber band which contracts as well as expands, the instances of frauduently issued thin-air credit issuance contracting are quite rare indeed.) If one removes the “sovereign denomination” from the unit of account, then these bizarre anomalies disappear. If I choose to give you one hour of my labor in exchange for one ounce of your silver, that trade is settled permanently. What you should be contemplating, is how does credit function in an honest-money environment. With Wesley the Farmer and David the Baker, I have given you one concrete example. This is the mechanism of true credit issuance throughout history. It is based on trust, and market-driven principles of discounting – not fraud. If one examines the earliest premises on which the Central Bank was founded – it was precisely this – to be the lender of “last resort” to discount honest credit issuance based on actual economic activity. Unfortunately, the FED is a creation of a banking industry already long-in-the-tooth in the age-old practice of defrauding the public with ex-nihilo credit issuance, and fraudulent maturity transformations of “deposit” money.

            I understand that your entire world view collapses without the presence of the State. Mine does not.

            “How would you stop wild inflationary and deflationary episodes?” JohnG, when you come to realize that inflations and deflations are caused by the fraudulent issue of counterfeit credits from thin air, by banks, and by the improper monetization of government deficit spending by those banks. In a real money system, wild inflationary episodes cannot occur as they do in your MMT system – they are self-limiting.

            “Why should economic activity and the welfare of all the population be limited by the amount of an arbitrary resource being dug out of the ground?”
            IT SHOULD NOT. This is a key distinction that you refuse to see, and which belies your essential premise requiring the functions and presence of the State as mediator of everything. Eliminate the coercion of State in forcing the use of gold or silver (or anything else) as the medium of exchange – and the arbitrary limitation you imagine also goes away. Bitcoin is not a creature of State – and yet it is being used voluntarily in countless transactions worldwide – including especially a known use in escaping the oppressive capital controls imposed by governments, especially including China. If government mandates redeemability of gold (at a “fixed” rate of redeemability), and excess (or deficient) quantities of gold are mined, the viability of the currency so affixed will fail. As I’ve said, been there- done that!

            However, what should also NOT be limited, is the case where you and I agree to settle a transaction by the exchange of the “barbarous relic” (gold!) – and subsequently the State intervenes and allows you to escape from your contractual obligations and use funny money conjured into thin-air by the banking system to settle such obligation. This is fraud. If you’d like to examine the political ramifications of important Supreme Court decisions leading to this effect, I would recommend you study the opinions related to legislating “Legal Tender” in America, and replicated worldwide. President Lincoln signed the first Legal Tender Act on February 25, 1862. This act authorized the printing from thin-air of $150,000,000 in United States notes, that amount being increased by later legislation to $450,000,000. These notes were declared to be “lawful money and legal tender in payment of all debts, public and private, within the United States, except duties on imports and interest on the public debt.” Because they were printed in green ink, the United States notes quickly became known as “greenbacks”. (Wikipedia)

            Yes, long before the creation of the Federal Reserve, war-making and the money-printing deemed “necessary” to pay for it, caused rampant inflations and the destruction of wealth. The unique difference between these credit-money instruments to that on issue today is that they were conjured into existence directly by the US Treasury as bearer instruments without interest – along the lines promoted by the Positive Money bunch. (There are interesting “conspiracy theories” associated with Lincoln’s issue of this “money” – bypassing the commercial banking industry leading to his assassination; and a similar speculation is often applied by those who associate President John F. Kennedy’s attempt to do the same thing – with the same life-ending result).

            “What is the end in all this?” I would have you examine a new beginning. First principles. Real money, together with real credit. Real Bills.

            “This a priori anti-government stuff never seems to address the tyranny of private unaccountable capital.” – I have not proposed any a-priori anti-government stuff – and have not excluded the possibility of government. As to the “tyranny of private unaccountable capital” – this sounds like an MMT slogan that carries no meaning to me. I do believe the formation of capital (wealth) from the legitimate fruits of human labor – and the unimpeded ability for everyman to exchange wealth for income is a valid moral endeavor. Wealth derived from the fraudulent mechanisms (advocated by MMT, and/or in the practices foisted upon mankind by modern banking practice) should be abandoned with prejudice. Why should I account to you, or your elite central-planning brethren for the disposition of wealth that I create from my own lawfully employed labor? I think not. Should I choose to donate it to a DaVinci, or a dog, or even an MMT think tank – I should be free to do so (without distorting tax implications), and would defend your right to do so too!

            “The nuts and bolts of the system are fine. The levers of power over it are not.” The nuts and bolts of the system AND the levers of power which implemented said nuts and bolts are both broken and should be discarded in ways that I have specifically addressed. Your mysterious references to the changes you/MMT would implement to “fix” what’s not broken remain, well, mysterious.

            “Anyone can issue their own money, the trick is to get people to accept it.” This is demonstrably false – and punishable by imprisonment. The powers-that-be view even the slightest hint of a competing money system as life-threatening and no-less than terrorism. Read carefully JohnG, how the word terrorism is used here: (From the Wikipedia entry on NotHaus)
            [Bernard von NotHaus is the creator of the Liberty Dollar and co-founder of the Royal Hawaiian Mint Company, in Hawaii, U.S.A. Von NotHaus was convicted of counterfeiting in 2011, allegedly for the purpose of domestic terrorism. According to the evidence introduced during his 2011 federal criminal trial in connection with his involvement with the Liberty Dollar, von NotHaus was the founder of an organization called the National Organization for the Repeal of the Federal Reserve and Internal Revenue Code, commonly known as NORFED and also known as Liberty Services. The FBI claimed that NORFED’s purpose was to mix Liberty Dollars into the current money of the United States and that NORFED intended for the Liberty Dollar to be used as current money in order to limit reliance on, and to compete with, United States currency. In September 2006 U.S. Mint informed Liberty Dollar users that federal prosecutors had determined that the circulation of the medallions is a federal crime. In 2007 about a dozen federal government agents seized nearly two tons of coins together with about 500 pounds of silver and 40 to 50 ounces of gold. In connection with the Liberty Dollar business, a federal grand jury brought an indictment against von NotHaus and three others in May 2009 accusing him of counterfeiting U.S. currency. Von NotHaus was arrested on June 6, 2009 and entered a plea of not guilty on July 28. In at least one interview, von NotHaus had been quoted as saying: “We never refer to the American Liberty as a coin…. The word ‘coin’ is a government-controlled term. This is currency that is free from government control.” On March 18, 2011, after a 90-minute jury deliberation, von NotHaus was found guilty on various counts, including the making of “counterfeit coins” (resembling legal tender coins). Attorney for the Western District of [North Carolina], Anne M. Tompkins, described Bernard von NotHaus and the Liberty dollar as “a unique form of domestic terrorism” that is trying “to undermine the legitimate currency of this country.” The Justice Department press release quotes her as saying: “While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country”.]

            So NO – today, only the government may issue “money” – but today you and the status-quo would have me equate money with credit.

            “The free banking era was a cataclysmic failure. Sorry but you don’t get to rewrite history.” Your fondness for labels will always lead to trouble. A more critical look at what you appear to be calling the “free banking era” in the States was a monstrous Frankenstein of State coercion and deformations. Again from Wikipedia: [US “free” banks were denied the right to establish branch networks, and had to “secure” their notes by purchasing and surrendering to STATE banking authorities certain securities those authorities deemed eligible for the purpose. The securities in many cases included bonds of the authorizing state governments themselves; and it has been determined that the depreciation of these very securities was the chief cause of “free bank” failures, and indeed of bank failures generally, during the period in question.] Wild-cat banking and the fraudulent issuance of ex-nihilo credit is NOT free-banking. It’s criminal banking.

            You should look at the Scottish free banking model that thrived between 1716 and 1845 – arguably the most researched and developed instance of free banking. This model resulted in a highly stable and competitive banking system – yet still did not meet the standard of honest banking that I am attempting to outline.

        • Wesley - hopefol January 14, 2016 at 10:52 pm #

          Tragedy and Hope is freely downloadable here:
          http://www.carrollquigley.net/pdf/Tragedy_and_Hope.pdf

          At least a portion of the Anglo American electorates are taking these matters up! ☺

          It’s essential that the money system be changed, and the mere presence of discussions such as these in this terrific forum facilitates access to a wider constituency. The vast chasm between various approaches seems to have consensus in the notion that our banking model is broken.

          Rather than herding cats into boxes with Labels on them, I think the specifics of how that mat be remedied are likely better domiciled in a different forum. But we can start from there!

          • JohnG January 15, 2016 at 12:53 am #

            To what purpose would you use silver as money?

            How would it be denominated? How would you stop wild inflationary and deflationary episodes? If the state isn’t sovereign, why have a state at all?

            Why should economic activity, and the welfare of all the population be limited by the amount of an arbitrary resource being dug out of the ground?

            What is the end in all this?

            This a priori anti-government stuff never seems to address the tyranny of private unaccountable capital.

            Neither have I been able to get past your strangely contradictory notion of: MMT is what we have now BUT, “we just have to change the way it is used”. Either it is, or it is not.

            Not in the slightest. The nuts and bolts of the system are fine. The levers of power over it are not.

            Leave the false dichotomies outside with the strawmen, please.

            Pay my taxes with your funny-money I will – but for all other purchases and sales, I shall choose my own media, and be protected under just law for doing so.

            You can do that now. Anyone can issue their own money, the trick is to get people to accept it.

            And the free banking era was a cataclysmic failure. Sorry but you don’t get to rewrite history.

          • JohnG January 15, 2016 at 1:39 am #

            Will the bankers hold society hostage again, and be bailed out with the public purse?

            The hostage situation is an illusion.

            And can you justify this ‘inflation is theft’ meme?

          • Roger January 15, 2016 at 7:51 am #

            I am not one of Natures Fence sitters, I have over the years though managed to postpone choosing the top over which I commit to going over the top of. Another calming which is coming with my late middle years is moderation and balance and as I put this all together I find myself looking back longingly at all of the fences I declined to sit upon and wonder at the views missed and not enjoyed.
            I feel strangely drawn to searching for a Zen guide to international relations but something tells me that a zen guide to self would be of much more use to me in the first instance. Does Bhuddism believe in self? Why am I groping for a way to contrast The emergent with the Absolute?

            When John G asks ´´This a priori anti-government stuff never seems to address the tyranny of private unaccountable capital.´´

            I must say I also ask this question a lot why is it ? crudely they surely must be two cheeks of the same arse.

            When Wesley says ´´Pay my taxes with your funny-money I will – but for all other purchases and sales, I shall choose my own media, and be protected under just law for doing so.´

            This is the change I am being in the world and the reason I decided to study Tragedy and Hope very carefully. The Block Chain can and will make state endorsed middle men like Bankers and Commercial Lawyers obsolete in the sense that their ubiquity will be negated. This is of course where we get back to seeing the Two cheeks of this many cheeked moon as it were.( The wood for the trees by any other analogy ; )

            It struck me as interesting that John G had read Tragedy and Hope even before going to University and before encountering Marx ( in his own writings). A dialogue of this kind gives very few clues for the other aspects by which we place interpretations on the ideas others present. The same is true of how I interpret Wesley I do not have a visual image or have not up until that idea just popped into my head.
            I do of course have to generalise according to placing each into a broad church as it were to place what is said specifically into a broader context. ( Wesley you said earlier that Chomsky was a Hero and Linguistics had a lot to do with these things.) Perhaps that is something we can all agree on, but I am not certain of it.
            https://www.youtube.com/watch?v=wBe8MTcCqKs

            Quiqleys lament as to the political mendacity of the post WW1 political and financial Elites/Oligarchy being a necessity for want of a better educated masses gives a clue to what the two sides of the question boil down to. Who should the Monetary System serve, Is a neutral system possible or even desirable. Should the system be designed from the Bottom up or from the top Down.

            It´s kind of hard isn’t it?

            http://poetry.com/poems/1416055-Reality-Falsified

          • Spartacus Rex January 15, 2016 at 9:07 am #

            And now for some good news:

            Austrians get (some) mainstream credibility
            By Alasdair Macleod
            GoldMoney.com, St. Helier, Jersey, Channel Islands
            Thursday, January 14, 2016

            https://www.goldmoney.com/our-research/goldmoney-insights/austrians-get-some-mainstream-credibility

          • JohnG January 15, 2016 at 9:58 am #

            Spartacus Rex. Nice try but the Adam Smith Institute are hard core Austrians.

            And I’m pretty sure none of them ever read Adam Smith. More like they’ve taken orders fron William Rees-Mogg.

          • Wesley - the thirsty horse January 17, 2016 at 1:15 am #

            Question: Will the bankers hold society hostage again, and be bailed out with the public purse?
            JohnG January 15, 2016 at 1:39 am Answer: “The hostage situation is an illusion.”

            Were this the first bald assertion dropped into these wonderfully warm waters, I would have been “fished-in” from that moment forward. After consuming huge volumes of public-policy discussion that’s taken place over the years concerning this very same take on the events of 2008-09 – this is the first time I’ve seen someone simply deny outright that the money-changers of the world, teetering on the impending destruction by deflation of their zombie-finance ponzi, claim that the taking of lawmakers hostage in extorting the taxpayer financed bailouts – was an illusion. Am I being asked to believe now, in the MMT view of the world – that the events commonly described in this way in the everyday lexicon of the world, were an illusion? Please do not leave that hanging out there in your now-patented, enigmatic way. How may I safely ignore as an illusion the implied threat (being held hostage) by the money-creation power of the banking system to deflate the fraudulent paper asset structure of the current financial system in a bonfire?

          • Wesley - the inane ranter January 17, 2016 at 1:34 am #

            JohnG January 15, 2016 at 1:39 am And can you justify this ‘inflation is theft’ meme?

            I had thought that the sagacious words of Keynes himself (the acknowledged architect and forefather of today’s crumbling, centrally planned monetary fiasco) concerning inflation that I quoted above, would have sufficed to address your question.

            [By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth.]

            I agree with Keynes’ words. I equate “confiscate” with theft in this context.

            Frederick (1877–1956) Soddy’s criticisms of inflation are also unassailable IMHO.

            You have yet to address these two giants’ of economic wisdom in a manner that justifies MMT’s acknowledged application of inflation of the fiduciary media as a form of theft, and counterfeiting – despite my much earlier inquiries along those lines.

          • JohnG January 17, 2016 at 1:39 am #

            I thought you were going to try to have a civil, adult conversation.

            Clearly not.

            The insolvent banks could have and should have been taken into bankruptcy resolution by the government.

            The FDIC stood ready to do so. They were overruled.

            Baby/bathwater dissembling again.

          • JohnG January 17, 2016 at 1:50 am #

            Hmmm, Keynes was an analyst that formalised the discipline of macroeconomics. Not the architect of anything much.

            He also radically changed his views over time.

            The only thing that didn’t change was his excruciatingly impenetrable prose.

            ‘Confiscation’ and ‘theft’ imply something taken from one and given to another.

            I don’t see that inflation does that.

            Either way I’m not really interested in semantics.

            Plain language has a perfectly good word for inflation.

            “Inflation”.

            Understanding what causes it and what it does is the important part.

            And I think you are wildly wrong on both.

        • JohnG January 15, 2016 at 9:49 am #

          It struck me as interesting that John G had read Tragedy and Hope

          That’s a long story in and of itself. I didn’t mean I had any special insight into the book.

          Nice poem by the way.

          All this talk about real money, hard money, resource money etc makes me wonder whether people understand the importance of ZERO.

          It might have been Minsky who said something along the lines of money being the notion of dividing zero.

          Which strikes me as being vitally important to understand if you’re going to understand macroeconomics.

          • Roger January 15, 2016 at 11:12 am #

            Synchronicity? p.282 Tragedy and Hope.
            Restoration of the gold standard was not something which could be done by a mere act
            of government. It was admitted even by the most ardent advocates of the gold standard
            that certain financial relationships would require adjustment before the gold standard
            could be restored. There were three chief relationships involved. These were (1) the
            problem of inflation, or the relationship between money and goods; (2) the problem of
            public debts, or the relationship between governmental income and expenditure; and (3)
            the problem of price parities, or the relationship between price levels of different
            countries. That these three problems existed was evidence of a fundamental
            disequilibrium between real wealth and claims on wealth, caused by a relative decrease in
            the former and increase in the latter..

            Progress is slow on my reading as I keep cross referencing back to some other text books I have found interesting and informative, not to say Objective. Objectivity is the responsibility of the reader and not the writer, to that extent we always should recognise that we bring our own context to any thing outside of our selves. An Ecology of Mind by Godfrey Bateson has been very influential . One huge takeaway from that book was the notion of Learning for Exams or to be correct which always denies the importance of context. This view is the one I find the most Taboo with my Libertarian or Austrian Friends and the viseral rejection they demand in their own Catechism to reject Moral Relativity. Thats kind of what my Poem is about. Another is Love Reality is where my research went deep into notions of Truth and Truth claims. http://letthemconfectsweeterlies.blogspot.se/2013/06/reality-is-infinity-is-love-is-infinite.html
            I am yet tofind the basis for Lyndon Larouches viseral dislike/hatred of Aristotle and this it seems is shared by Webster Tarpley.

        • JohnG January 16, 2016 at 12:03 am #

          I just typed a very long response to wesley’s screed but lost it in the editing process. Maybe later.

      • JohnG January 14, 2016 at 8:28 pm #

        There is a vast array of documentary evidence of the ‘libertarian’ movement being funded by the billionaire class. It is a contemporary phenomenon.

        “Karl Marx wrote that the ruling ideas of any age are the ideas of its ruling class.”

        MMT purports to represent the study and accurate description of the modern monetary system as it exists in practise. Was Marx right?

        I don’t understand the question. Are you suggesting that the MMT school is being funded by the billionaire class?

        I don’t think any MMTers were behind Citizens United.

        If you could address my question on unemployment and poverty, that would be good. Thanks.

        • Wesley - Libertarian? Austrian? American? January 15, 2016 at 6:48 pm #

          Wikipedia – Etymology of Libertarian [The term libertarian was first used by late-Enlightenment freethinkers to refer to the metaphysical belief in free will… The first recorded use was in 1789, when William Belsham wrote about libertarianism in opposition to “necessitarian”, i.e. determinist, views.]

          I shall not be readily placed into your neat little boxes with labels, JohnG. Precision matters. I think we can all agree that Billionaires were not funding the “libertarians” during the period of the Elightenment commonly agreed to entail the first use of that term – though measured in today’s fiat dollars, I have no doubt that one or two Billionaires may have existed then, and were supporting causes they thought worthy. As an umbrella term being bandied to herd all the myriad different brands of “libertarians” into one box, your repeated use of an undefined and undefinable term to elicit hoped-for visceral reaction does a disservice to us both.

          As to my simple, explicit question above “Was Marx right?” – the question is quite clear: Your constant refrain is that MMT correctly describes what we have now. Marx’s proposition essentially says that what we have now is the manifestation of the ruling class’ ideas. Logic then easily concludes, if Marx was correct, then MMT is the expression, embodiment and implementation of the ruling class’ ideas. Is that not so?

          Again, I keep bumping up against the irreconcilable proposition that you insist upon: MMT is the way it is, if only it were different. And yet you are still unwilling or unable to express those differences in language that a 10 year old can understand. I suspect the reason is that for you to acknowledge those differences, would also immediately render the proposition false. Simple logic.

          Does Modern Monetary Theory also take a view on the Citizens United decision? Please, let’s not muddle the waters any further – at least before getting through the foregoing. I am very patiently explaining to you the specifics (with examples) of that which I am proposing, and that which I am rejecting – together with my rationale. In terms understandable by a 10 year-old. And without using “branding” methods. Pinning down what you are trying to say in those terms (and without thanklessly consuming thousands of pages of unintelligible MMT-speak), is akin to keeping my cupped hands filled with water…

          Think of me as an uneducated member of the unwashed masses, JohnG – trying to understand how MMT works in the coffee-house. And I don’t mean by promising an end of poverty; elimination of unemployment; and universal prosperity. These are the transparent platitudes offered by politicians.

          • JohnG January 15, 2016 at 10:03 pm #

            Clearly I am using the ‘libertarian’ term in the modern American sense. Your language, your assertions of false ‘facts’, your standard logical fallacies and your rhetorical trickery and unwillingness to qualify your aims identifies you as of that community.

            Anti-tax, evil government, sanctity of property etc etc etc.

            As to my simple, explicit question above “Was Marx right?” – the question is quite clear: Your constant refrain is that MMT correctly describes what we have now. Marx’s proposition essentially says that what we have now is the manifestation of the ruling class’ ideas. Logic then easily concludes, if Marx was correct, then MMT is the expression, embodiment and implementation of the ruling class’ ideas. Is that not so?

            A loaded question in other words.

            The nuts and bolts of the system work as MMT describes but the ruling class is using the system to its own ends and largely keeping the macroeconomic reality under the radar. MMT seeks to change that by making people aware of how the monetary system works.

            It’s up to people to match their political beliefs with the reality of what really is achievable. I’ve given you links to the resources, it’s up to you whether you wish to research them.

            Thus far you’ve just used strawman arguments and ad hominem.

            Most MMTers see full employment as a/the primary goal. Others don’t. What is does is presents the opportunity to use the monetary system and the power of the government for general societal benefit.

            That certainly is not happening now. The politics and the deception is masking the possible for the many to further enrich the few.

            Again, I keep bumping up against the irreconcilable proposition that you insist upon: MMT is the way it is, if only it were different. And yet you are still unwilling or unable to express those differences

            I think I’ve done so a number of times but you appear unable or unwilling to acknowledge the difference between the mechanics and the prevailing ideology and the commonly held misunderstandings about the nature of money and the actual system we have.

            I suspect the reason is that for you to acknowledge those differences, would also immediately render the proposition false. Simple logic.

            No. That’s a logical fallacy. Your failure to understand does not mean anything other than your failure.

            Does Modern Monetary Theory also take a view on the Citizens United decision?

            MMT in and of itself takes no positions. It isn’t an ideology. It’s like asking whether mathematics takes a view on ice cream.

            I would wager that most MMTers would not support Citizens United because it is undemocratic.

            Wesley, you have been extraordinarily rude and offensive throughout this exchange. I won’t list the numerous ways that you’ve breached the lines of decent debate/conversation. Suffice to say that I’ve not responded in kind out of respect for David’s blog space.

            And amazingly you’ve played the victim thoughout. Another ‘libertarian’ trait.

            What I do find right out of the limits though is your condescending language and now these demands of me while you have completely ignored my questions of you.

            You sir, are an insufferable hypocrite.

          • Roger January 16, 2016 at 5:35 pm #

            To Marx, the revolution of the proletariat was not only inevitable but would inevitably
            be successful, and would give rise to an entirely new society with a proletariat system of
            government, social life, intellectual patterns, and religious organization. The “inevitable
            revolution” must lead to an “inevitable victory of the proletariat” because the privileged
            position of the bourgeoisie allowed them to practice a merciless exploitation of the
            proletariat, pressing these laboring masses downward to a level of bare subsistence,
            because labor, having become nothing but a commodity for sale for wages in the
            competitive market, would naturally fall to the level which would just allov the
            necessary supply of labor to survive. From such exploitation, the bourgeoisie would
            become richer and richer and fewer and fewer in numbers, and acquire ownership of all
            property in the society while the proletariat would become poorer and poorer and more
            and more numerous and be driven closer and closer to desperation. Eventually, the
            bourgeoisie would become so few and the proletariat would become so numerous that the
            latter could rise up in their wrath and take over the instruments of production and thus
            control of the whole society. p.325, by this measure it seems quiqqley shows Marx was indeed correct. at page 327 we come to this where Quiggley doesn’t anticipate the re financialisation of Capitalism. From 1972 onwards this is what has happened. All these developments were quite contrary to the expectations of Karl Marx. Where
            he had expected impoverishment of the masses and concentration of ownership, with a
            great increase in the number of workers and a great decrease in the number of owners,
            with a gradual elimination of the middle class, there occurred instead (in highly
            industrialized countries) rising standards of living, dispersal of ownership, a relative
            decrease in the numbers of laborers, and a great increase in the middle classes. In the long
            run, under the impact of graduated income taxes and inheritance taxes, … the great
            problem of advanced industrial societies became … the exploitation of unorganized
            consumers (of the professional and lower-middle-class levels) by unionized labor and
            monopolized managers acting in concert. The influence of these last two groups on the
            state in an advanced industrial country also served to increase their ability to obtain what
            they wished from society as a whole.

          • Wesley - in his "safe space" January 16, 2016 at 8:38 pm #

            JohnG January 15, 2016 at 10:03 pm
            “Wesley, you have been extraordinarily rude and offensive throughout this exchange. I won’t list the numerous ways that you’ve breached the lines of decent debate/conversation. Suffice to say that I’ve not responded in kind out of respect for David’s blog space.”

            As to the rules of engagement, JohnG, I must strenuously disagree. The simple reason that you are unable to list even a SINGLE way in which I am alleged to have been in breach, is for the unalterable fact that my use of the written word has been very attentively civilized and polite throughout. Examine your allegations carefully. You will find, if critically viewed, that whenever a criticism of your flawed MMT ideology has been levelled (by whatever source – and those sources include others than my humble self), you react immediately and aggressively – clearly taking any such criticism of your precious, indecipherable MMT body of thought quite personally and lashing out with insults, denigration, defamation, disrespect and disparagement. There is a very real difference between being critical of MMT, and being critical of YOU personally JohnG – and you clearly have not yet grokked that difference. Even in the face of your withering maelstrom of ungentlemanly, impolite and discourteous attacks on me personally, I have carefully avoided personalizing any of my argument – limiting myself carefully to critical observations of only the policy recommendations, rather than the bullhorn itself. On the other hand, your uncivilized, reactionary cure to perceived criticism of MMT has been in EVERY instance, to lash out personally at the initiator of any such heresy. Not even half-way through our current exchange, I did take the time to list the numerous ways that YOU used language in ways beyond the pale, and certainly well outside the norms of civilized discourse. In fact, I even tied-in that discussion thread to the overall instant posting concerning the Branding of Dissent – as your techniques were spot-on tools from the school of propaganda being discussed. My point was made without a tear being shed at my end, dear JohnG, though it’s clear where your “red line” lies. Fortunately, this is a moderated forum, with an otherwise civilized populace – so, as with all my propositions, I happily submit myself to the judgement of the moderator and my peers in settlement.

            Sticks and stones JohnG – they are a form of violence. I find the initiation of violence in any form to be anathema – and certainly not conducive to the conduct of discourse. Your use of verbal sticks and stones is objectionable.

            In the meanwhile, thanks to the courtesies of the host, I shall endeavor to address relevant issues raised, even by your kind self, undaunted by your questionable methods of attack.

          • JohnG January 16, 2016 at 10:49 pm #

            a criticism of your flawed MMT ideology

            Wesley, civil debate means more than not using swear words.

            Condescending language, strawman arguments and willful misrepresentation (as per the above quote) isn’t what I would consider to be helpful debate.

            Nor is addressing posts about your opponents to the gallery what I would consider polite.

            I’d rather you swore at me. It happens all the time. Robust debate is something I’m not short of experience in.

            At least it would be plain language.

            Your continued misrepresentation of MMT as an ideology is a clear example of your dishonesty.

            As for linguistics, MMT challenges (or tries to cut through) the linguistic and rhetorical devices used by the powers that be to mask the real world macroeconomic workings of the monetary system.

            It is a constant battle because people have been conditioned all their lives to accept falsehoods as a priori economic laws as if they were like gravity.

            Government ‘debt’ for example.

          • Wesley - crybaby? January 17, 2016 at 2:16 am #

            JohnG January 16, 2016 at 10:49 pm
            “Your continued misrepresentation of MMT as an ideology is a clear example of your dishonesty.”

            You shamelessly characterize Austrian Economics as being an ideology. You characterize Libertarianism as being an ideology. Neo-liberals as ideologists. Others? And I don’t really care how you choose to label these positions. And yet when one would characterize MMT as an ideology, you would assert this as dishonesty? Do you not see the arrogance of that stance? Without expressing any alignment to any “ideology” whatsoever, (but rather detailing specifics of my propositions), I immediately began branding MMT an “ideology” when witnessing your blatant and dishonest usage in this regard, in an apparently failed attempt to illustrate to you, and your attempts to brand anything but MMT as ideology – the fallacy of your posture.

            Truth sometimes hurts. Labels don’t work in reasoned debate. Details and results are what matters. Rebranding of Dissent may be employed by other than advocates of the MMT ideology.

          • JohnG January 18, 2016 at 1:47 am #

            I think you’re just very confused and you’ve been reading too much Austrian/libertarian voodoo.

            Unless you can make a cogent argument on what the difference between credit money and your money would be (if it’s not barter) then I can’t make any meaning of where you’re trying to get.

            I think you just don’t want to pay tax.

            The only part of MMT that you appear to have understood is our analysis of bank credit creation.

            Ironic indeed.

        • JohnG January 17, 2016 at 2:31 am #

          You shamelessly characterize Austrian Economics as being an ideology

          I do. It is.

          You characterize Libertarianism as being an ideology.

          I do. It is.

          Neo-liberals as ideologists.

          Neoliberalism is a political ideology that largely accepts neoclasical economics as kind of natural laws. Neoclasical economics which has adopted a lot of Austrian School ideology. Neoclassicism is hotch potch ideology masquerading as economics.

          Make no mistake, neoliberalism is barely disguised class war being waged by the very rich against the rest of us.

          MMT is an evidence based way of looking at the monetary system.

          So no, I don’t accept your criticism at all. And your explanation of it is a logical fallacy.

          Labels don’t work in reasoned debate.

          I couldn’t list all the emotive labels you’ve used.

          “Fraudulent” money. “Central planners”. etc.

          You rubbed me up the wrong way right at the beginning with your “luring into a trap” nonsense.

          Way to go, fella.

          • Wesley - "Just a Fella" January 27, 2016 at 3:52 am #

            Below is a sampling of completely unsupported assertions that you’ve just tossed into this smoldering heap of ideological MMT assertions:
            We don’t have fractional reserve banking;
            We don’t have Central Bank Counterfeiting (ex-nihilo high-powered money creation);
            The money supply expands and contracts;
            Money is credit – it’s merely an accounting entity;
            Public debt is a private sector asset;
            Reserve banking is an anachronism from the gold standard days and serve no purpose in a modern monetary system;
            Reduced government spending creates credit bubbles;
            Deficit spending by government should be used to fill demand shortfalls;
            Honest money systems “hamstring” governments;
            Government dollars will be extinguished by taxation;
            Government MUST intervene in the national and international economies in order to ensure prosperity;
            Money is a creature of the State – and it MUST be managed by the State;
            Principles of sound finance do not apply to governments who can issue and debase their own currencies;
            MMT is the accurate description of the modern state monetary system as it exists – In and of itself it contains or proscribes no ideology per se;
            We DO have debt free money issued from the Government now – it’s called the National Debt, but it should be called something else;
            Real assets should not be confused with money;
            MMT is the path to debunking and defeating the deficit/debt terrorists;
            MMT deals with price stability extensively;
            Once you grasp that Government money is the ‘real money’ in the system, you’ll be less terrorised and more able to breathe intellectually;
            Inflation is good;
            Savings are selfish and hoarding;
            Resources and capacities have limits, but debts and deficits can be issued without limits;
            The credit/debit relationship is what creates money (other methods of money creation cannot exist);
            Overthrowing the sovereign issue of fiat-money would make the problems of the world much worse;
            The FDIC can and should resolve, in bankruptcy, insolvent banking institutions;
            To understand macroeconomics, it’s vitally important that you understand that money entails the notion of dividing [by] zero;
            Money has no intrinsic value;
            Taxes should be used to regulate demand and minimize inflationary pressures;
            There is no such thing as the petro-dollar;
            Governments who issue their own currency cannot be bankrupted;
            Central bankers get together and destroy money by doing currency swaps;
            People don’t matter to “Austrians”, only big business;
            Sovereign, fiat, non-convertible, floating exchange rate currencies are as good as it gets;
            There is no such thing as a “price mechanism”;
            The taxpayer of a sovereign nation that issues its own currency is not responsible for its government debt;
            Block chain nuts are at one with the ‘libertarian’ nuts who are at one with the bankers;
            The whole of the intercourse between all of the actors in Civil Society can be reduced to a balance sheet expressed only in Monetary terms;
            —-

            So YES – MMT sorta’ fits right in there with the other mentioned ideologies – each of which would assert that they are evidence-based. So MMT is evidence based? Okay – so the evidence is in, and the modern banking miracle that it describes so well has successfully eliminated 95% of the purchasing power of its credit-based unit of account during a span of one lifetime. Job done. Mission accomplished. Nice work. Results that speak for themselves!

      • JohnG January 16, 2016 at 1:10 am #

        To my own purposes, and to those of any who would use it freely, and willingly accept it in exchange for goods and services – the fruits of honest labor – rendered.

        Nobody’s stopping you doing that if you can get other people to accept it. Go for it.

        just as silver (and everything else) has always been denominated – by weight and fineness – not by royal decree. Yes, of course I saw your disingenuous reply to Kreditanstalt above concerning the “sovereign denominations” of the coinage he referenced.

        You’re testing my capacity to continue to tolerate your insults here. The statement was correct according to the discernable verifiable history.

        Again, read David Graeber’s book. Instead of guessing what its about and making a fool of yourself.

        and contemplate the entire failed history of the State’s attempt to legislate the value of money.

        Money has no intrinsic value. And yes attempts to make it so e.g. the gold standard have failed.

        I’m not arguing for any sort of arbitrary link to any commodity. You are.

        What is your point?

        The 1 troy oz. Silver coin minted by the US Government (in increasingly record quantities) has stamped on its face, inter alia, “One Dollar”

        Bullion is bullion. You can sell it to others, you can use it for barter, you can use it as settlement of debt if your creditor will accept it (i.e. money).

        But not with the government.

        So what is your point exactly?

        The meter is a unit of measure based on an observable phenomenon of nature, and agreed to by the whole world. Central Planners, despite their best intentions, cannot change the length of a meter. But they will repeatedly try – and in the case of our monetary unit, have – by force of law – introduced what they call “elasticity” to our primary unit of account.

        Have they? What does elasticity mean in this sense?

        A meter is a measure of real things. Money is a virtual concept functioning as a unit of account. As you’ve said, trying to put a value on it doesn’t work.

        If one removes the “sovereign denomination” from the unit of account, then these bizarre anomalies disappear.

        Do they? That’s your assertion. Sounds like faith to me.

        If I choose to give you one hour of my labor in exchange for one ounce of your silver, that trade is settled permanently

        As it is when I accept state dollars for my labour.

        If one examines the earliest premises on which the Central Bank was founded – it was precisely this – to be the lender of “last resort” to discount honest credit issuance based on actual economic activity. Unfortunately, the FED is a creation of a banking industry already long-in-the-tooth in the age-old practice of defrauding the public with ex-nihilo credit issuance, and fraudulent maturity transformations of “deposit” money.

        Not to mention restoring some stability to the system that had seen wild cyclical fluctuations resulting in thousands of bank runs and people losing their savings, their jobs and their property.

        I’m not a defender of the Fed or its performance over the years but to have a stable state money system there has to be a point at which the banks interact with the government and with each other. We call that the payments system.

        I’m pretty sure that you are not aware of its existence or in fact what it does. But it is the main function of the central bank to oversee the payments system along with overseeing the conduct of the LFIs and to act within the system to maintain the government’s target rates within the system itself.

        The central bank in and of itself cannot change the quantity of net financial assets (government liabilities in accounting terms) in the system. It can only effect the rates and the portfolio arrangements i.e. reserves or Treasury bonds, bills etc.

        MMT argues that there is no need in the modern world to have any grand institutions, as the central banks like to pretend they are, and that the functions of the central bank should just be by an office within Treasury.

        But the functions remain i.e. as the point at which the government and the LFIs interact and the payments system is maintained.

        More later.

        • JohnG January 16, 2016 at 2:14 am #

          I understand that your entire world view collapses without the presence of the State. Mine does not.

          Please don’t pretend to know anything of my world view Wesley. You really don’t even begin to understand where I am.

          I’m sympathetic to the anarchist view (not your type). But, like most anarchists that I’ve met, I realise that states are a fact of life and that societies have to have a means of protection from all sorts of ills. Predatory capitalism being one of those ills.

          Yes, states have been bad, incompetent, imperfect etc but surely the answer is to make the state perform better in promoting then general welfare of its people.

          And yes I’ve heard all the guff about minarchism bla bla bla and on and on. But it all fails on logic and boils down to its proponents being shitty about paying taxes. And more frustratingly, they don’t understand what taxes do.

          “How would you stop wild inflationary and deflationary episodes?” JohnG, when you come to realize that inflations and deflations are caused by the fraudulent issue of counterfeit credits from thin air, by banks, and by the improper monetization of government deficit spending by those banks. In a real money system, wild inflationary episodes cannot occur as they do in your MMT system – they are self-limiting.

          Inflation is a function of spending. All spending carries an inflation risk if general spending levels bid up the price level when supply is reaching its capacity.

          It has little if anything to do with the quantity of money in the system which in any case ebbs and flows.

          You’re looking at a stock rather than the flow.

          So a) you don’t understand what causes inflation and b) you’re entirely unaware of MMT’s vast work on price stability and c) you’re prepared to have a stab anyway without looking.

          More fool you.

          Government deficit spending increases the net financial assets (savings) and income of the non-government sector. Surpluses drain savings and income from the private sector.

          For the government to run a surplus the non-government sector must run a deficit.

          IT SHOULD NOT. This is a key distinction that you refuse to see, and which belies your essential premise requiring the functions and presence of the State as mediator of everything. Eliminate the coercion of State in forcing the use of gold or silver (or anything else) as the medium of exchange – and the arbitrary limitation you imagine also goes away. Bitcoin is not a creature of State

          Bait and switch. We were talking about silver.

          I’m not interested in Bitcoin at all. It’s laughable that people who yell Ponzi scheme!!!! at the fed are falling for Bitcoin.

          Eliminate the coercion of State in forcing the use of gold or silver (or anything else) as the medium of exchange – and the arbitrary limitation you imagine also goes away.

          OK, so how then does that fit into your no inflation model?

          Clearly it doesn’t and you’re going around in circles or suffering from cognitive dissonance.

          “What is the end in all this?” I would have you examine a new beginning. First principles. Real money, together with real credit. Real Bills.

          What is not real about state money as opposed to your non-state money? Aren’t they both being conjured out of thin air by the creditor/debtor transaction?

          Have you actually thought any of this through?

          I have not proposed any a-priori anti-government stuff – and have not excluded the possibility of government.

          Dude please.

          As to the “tyranny of private unaccountable capital” – this sounds like an MMT slogan that carries no meaning to me.

          So you’re not railing against the banks and the big corporations? I’m confused by your inconsistency and your self contradictions.

          Why should I account to you, or your elite central-planning brethren

          Losing it there. Take a breath.

          wealth that I create from my own lawfully employed labor?

          You can create goods and services that are wealth but to financialise that wealth you have to sell them for money i.e. a credit/debt situation. Most people do that stuff for state money.

          So I’m at a loss as to what you think you’re saying.

          • JohnG January 16, 2016 at 4:00 am #

            “The nuts and bolts of the system are fine. The levers of power over it are not.” The nuts and bolts of the system AND the levers of power which implemented said nuts and bolts are both broken and should be discarded in ways that I have specifically addressed. Your mysterious references to the changes you/MMT would implement to “fix” what’s not broken remain, well, mysterious.

            The politics is broken. The banks are criminal enterprises. The monetary system is not being used for public purpose.

            Neoliberalism is the political problem and they don’t recognise MMT. They, like you, reject it and they are your ideological cohorts.

            (From the Wikipedia entry on NotHaus)

            He was done for counterfeiting. That’s not the same thing at all. Trying to pass off a private product as state money is not the same as extending credit.

            What the prosecutor alleges has nothing to do with me or MMT. What nonsense is this?

            “So NO – today, only the government may issue “money” – but today you and the status-quo would have me equate money with credit.”

            Your money would still be created as credit. You’re just going around in circles.

            Free banking failed every time at the first shock.

            I don’t understand the hostility to state money at all.

            I think you just don’t want to pay tax and are fantasising about a no tax world where inflation and deflation are just magicked out of existence.

            We pay taxes to regulate demand and thus minimise inflationary pressures.

            And no, the current political heirarchy nor the dominant economists understand that fact either.

          • Wesley - on a Sunday January 18, 2016 at 1:09 am #

            JohnG : January 16, 2016 at 1:10 am “Money has no intrinsic value. And yes attempts to make it so e.g. the gold standard have failed. I’m not arguing for any sort of arbitrary link to any commodity. You are. What is your point?”

            NO – I am not. We differ at the intersection of Money and Credit. I’ve attempted to illustrate that difference, but your refusal to acknowledge a difference will render any further argument moot. Most money, voluntarily selected throughout recorded history has been of the intrinsic value variety. Credit, on the other hand, does NOT possess intrinsic value. The failures of State to impose sovereignty to money (e.g., the “gold standard”) are also recorded throughout history. I’m NOT arguing for any sort of arbitrary “link” to any commodity either – that IS my point. Money, as I’ve defined it above, has been forcibly excluded from the system by law. You MUST use ex-nihilo State issued credits for your transactions. I reject this as immoral.

            “Bullion is bullion. You can sell it to others, you can use it for barter, you can use it as settlement of debt if your creditor will accept it (i.e. money). But not with the government. So what is your point exactly?”

            As above. What I cannot do, under the legal tender laws of America, is use a form of money of my own choice as legal tender in commercial transactions. It’s illegal for me to use money – I am forced to use credit.

            The meter is a unit of measure based on an observable phenomenon of nature, and agreed to by the whole world. Central Planners, despite their best intentions, cannot change the length of a meter. But they will repeatedly try – and in the case of our monetary unit, have – by force of law – introduced what they call “elasticity” to our primary unit of account.

            “Have they? What does elasticity mean in this sense?”
            A: Yes they have. The term “elasticity” was used by the bankers in their propaganda as being a necessary element in the monetary system – arguing for the establishment of the Federal Reserve. The result of “elasticity” of the nation’s Fiduciary Media has resulted in the systematic debasement and near elimination in the purchasing power of said media.

            “A meter is a measure of real things. Money is a virtual concept functioning as a unit of account. As you’ve said, trying to put a value on it doesn’t work.”
            A: No – money is REAL. Credit is a virtual concept – involving the essential element of trust, as previously described. Money is something that bears a direct relationship to “real things”, measurable things – human labor, and time for example. A unit of account cannot function with the characteristic of elasticity sought by the bankers. However, we can agree, voluntarily to units of account that are NOT virtual concepts. One hour of labor. One cord of wood. A partridge in a pear tree. One troy ounce of silver. I’ve not said that we cannot attach value to money. Those are YOUR words. What I’ve said is that the State cannot successfully legislate value – by force.

            If I choose to give you one hour of my labor in exchange for one ounce of your silver, that trade is settled permanently.

            “As it is when I accept state dollars for my labour.”
            A: NO! When you accept state dollars for your labour, you accept credit. A credit supposedly backed by the assumed ability of Government to extract by force (in the form of taxation), at some point in the future, wealth from you resulting from your labors. It’s ironic, actually, that the State still feels compelled to inscribe on our specie tender “In God We Trust”. I remember a fine pub once that had those words behind the bar, together with, “All others pay cash”.

            If one examines the earliest premises on which the Central Bank was founded – it was precisely this – to be the lender of “last resort”; to discount honest credit issuance based on actual economic activity. Unfortunately, the FED is a creation of a banking industry already long-in-the-tooth in the age-old practice of defrauding the public with ex-nihilo credit issuance, and fraudulent maturity transformations of “deposit” money.

            “Not to mention restoring some stability to the system that had seen wild cyclical fluctuations resulting in thousands of bank runs and people losing their savings, their jobs and their property.”
            A: The Central Bank has presided over a continuing and growing disaster. Since the imposition by force of the FED, the US Citizen has lost 97% of her purchasing power through a continuing, immoral confiscation of saved wealth representing human labor. Artificially guiding interest rates to the zero lower bound, and the dark abyss of negative rate structures, it now takes massive quantities of depreciating debt-funny-money to provide sufficient income on which to survive retirement, without consumption of a lifetime of capital. And the list goes on. This is not a stable system. It is an artificial zombie, teetering from one disaster to the next with increasing frequency and duration.

            Bank runs, as you well know, are created by the legal – yet fraudulent – ability of the banks to offer “demand deposits” – while transforming those deposit liabilities into maturities of a different duration. Every bank run in history has an immoral, yet often legal, maturity transformation at its root. The peoples’ savings have been seized by the State through a well understood process of inflation (see Keynes – writing quite lucidly, BTW). Eliminate these frauds, and the unnecessary and violent collapse of fraudulently issued credits will also eliminate the banking system induced deflations that cause unemployment and forfeitures.

            “… to have a stable state money system there has to be a point at which the banks interact with the government and with each other. We call that the payments system.”
            A: Well aware of the payments’ systems – thanks. In fact, the development of competing international payments systems (see SWIFT) is one of the more interesting threads to US/Dollar hegemony in quite some time. Also, the block-chain payments mechanisms are proving quite disruptive to the standard banking model. Let the banks interact with the government and each other all they want – but I should not be forced to use said payments mechanisms – except for the possible collection of tax.

            I’m sympathetic to the pure Anarchist view too – but obviously not your type either! There are many mechanisms by which the ills of society may be remedied without the initiation of force by the force-monopoly-State. “Predatory capitalism” is a VERY populist term – but I would agree that the State’s asymmetric support of a few has perverted any notion of capitalism being present in this country for quite a long while. The State support of the banking cartel is one of the best places to begin a dismantling, as its pernicious effects discussed above are so far reaching. But I would similarly prejudice State support of ethanol production. And a thousand other examples of improper so-called “crony” state supports. Another topic entirely.

            “Inflation is a function of spending. All spending carries an inflation risk if general spending levels bid up the price level when supply is reaching its capacity. It has little if anything to do with the quantity of money in the system which in any case ebbs and flows. You’re looking at a stock rather than the flow.”
            A: Check your premises. Remove the function and presence of State in your nexus, and you will better understand my position. Inflation is the improper creation of counterfeit credit by the banking system, and deflation is its forcible contraction. The effects of inflation and deflation are something else entirely – and the price of consumer goods is a naive view of a very dynamic system the State does not have the capability of managing.

            I reject entirely as inadequate the Quantity Theory of Money – contrary to your assertions. In fact, I believe the quantity limitation advertised by Bitcoin is its fatal flaw. What I like about Bitcoin is its ability for disintermediation, (especially of the banks) – but also for the elimination of trust relationships.

            In my view of the world, JohnG, savings result from a surplus of the fruits of man’s labor. Credit relationships backed by this real MONEY, not the false-idolatry of the debt-money state, are the basis for trust, the extension of credit and its extinguishment by payment with said money.

            Eliminate the coercion of State in forcing the use of gold or silver (or anything else) as the medium of exchange – and the arbitrary limitation you imagine also goes away. Bitcoin is not a creature of State.

            “Bait and switch. We were talking about silver.”
            A: No – we were most decidedly NOT talking about silver. We were talking about money. I merely expressed my personal preference for Silver as MY choice of money. I stand by your natural right to choose any form of money that you prefer. Money has been excluded by law from the US Financial system. I do like the fact that Bitcoin is not a fiat currency – force does not make its use compulsory. However, the fact that Bitcoin is not redeemable for any real good to me raises inherent questions – as does its fixed quantity issuance limitation. This probably will not permit its widespread use as money – except in specialized instances which are already occurring. Wonderful!

            “I’m not interested in Bitcoin at all. It’s laughable that people who yell Ponzi scheme!!!! at the fed are falling for Bitcoin.”
            A: I’m quite interested in the entire disruptive nature of the blockchain technologies, and their crypto-currency sub-sets. Your amusement might indicate a lack of study. The irony of that statement, given the study that I have shared to an understanding of MMT, and its context to this thread on Dissent Re-branding has not escaped me…

            @Roger / ALL: a revelation came to me when reflecting on Soddy’s (natural, Thermodynamic) view of money versus credit in relation to Bitcoin. It would appear that each marginal unit of Bitcoin requires increasingly large amount of energy to “extract”. In that sense, Bitcoin does possess inherently a very real form of energy. I have not yet reconciled this unique aspect of Bitcoin into my understanding of its many functions and uses – but I believe it merits further contemplation.

            “OK, so how then does that fit into your no inflation model?”
            I’ve attempted to define for you my understanding of “inflation” above – twice. Inflation (as I’ve defined it) cannot occur if fraudulent credit relationships stemming from the creation of ex-nihilo purchasing power are prevented. However, if you wish to take the vague concept of price-increases (the effects of inflation) in any good or service as a broad proxy for the term inflation: then you are looking at the essential function of price as a regulator. Price stability stems from man’s natural ability to arbitrage price differentials representing waste and inefficiencies. When the price of credit is artificially interfered with by the State, the price of goods and services lose their ability to issue these necessary signals. And you are left with the mess you see lying about our ears presently.

            Let me also state clearly that the natural expansion and contraction of legitimately issued forms of credit, extinguishable by money and voluntarily agreed, provide the mechanism (without the coercion of State) to reflect principles of elasticity necessary to the vagaries of political economy. The ability for such a system to contract without harm, is one of its advantages. You have repeatedly asked us to believe that contraction in bank credit occurs when debt is repaid. Yes, while that may be true at a micro-level – you know quite as well as I that at the macro-level- there CAN BE NO CONTRACTION IN TOTAL CREDIT OUTSTANDING, if the system as currently designed is to continue functioning. Forcible extraction of taxes (wealth) from public as a mechanism for regulating “inflation” is an MMT monstrosity and aberration.

            It is no coincidence that the formation of the Federal Reserve, and the institution and levying of income taxes occurred nearly simultaneously. We did not have tax upon income in this country prior to World War I. The necessary and legitimate functions of State, if they are deemed to exist, should be paid without the imposition of tax upon labor.

            “You can create goods and services that are wealth but to financialise that wealth you have to sell them for money i.e. a credit/debt situation. Most people do that stuff for state money. So I’m at a loss as to what you think you’re saying.”
            A: The excess of goods and services production above input is the generator of wealth. The ability to exchange wealth for income (through legitimate credit arrangements described above) without the distortions introduced by artificially imposed price-controls (interest rate “setting” by central planners) is essential. If that’s what you mean by “financialisation” – then I agree. If you insist that money is credit – and that money can legitimately be manifest from thin air by banks and the state, then NO. Most people do that for State money because they are forced by law to do so. I’m saying that those coercive mechanisms should be removed.

          • Wesley - the NEOLIBERAL??? January 18, 2016 at 1:35 am #

            JohnG : January 16, 2016 at 4:00 am “Neoliberalism is the political problem and they don’t recognise MMT. They, like you, reject it and they are your ideological cohorts.”

            A: The political problems reach far beyond Neoliberalism. The fact that I do not recognize the legitimacy of MMT does NOT make neo-liberals my ideological cohorts. See logic coach. In fact, a critical look at the details of my propositions should clearly have revealed to you by now would have the so-called Neo-liberals will be shaking in their proverbial boots at the paradigm-shifting changes that I support.

            (Concerning NotHaus and the use of Silver medallions as money)
            “He was done for counterfeiting. That’s not the same thing at all. Trying to pass off a private product as state money is not the same as extending credit. What the prosecutor alleges has nothing to do with me or MMT. What nonsense is this?”

            A: No, JohnG. You clearly stated that I am free to use anything I want as money. I countered with the simple fact that competing “money” systems are excluded by current laws – they are NOT permitted. With this example alone, I have clearly demonstrated with facts that your premise is false. NotHaus was not trying to pass anything off as “state money”. He rejects the entire notion of state money. His rejection of state debt-money had him labelled a terrorist. That’s irony!

            “Free banking failed every time at the first shock.”
            A: Free banking takes place every time a loan shark provides “money” to a borrower. The only difference is that even the loan shark is forced by the system to use fiat, paper-credit instruments illegitimately derived from thin-air. In an honest money system, and a free-banking system attached thereto (something of a very rare nature in history) – prosperity will be enhanced for all.

            “I don’t understand the hostility to state money at all.”
            A: State money is an oxymoron. I don’t understand your hostility to the notion of money, and its difference from credit.

            “I think you just don’t want to pay tax and are fantasising about a no tax world where inflation and deflation are just magicked out of existence.”
            A: Impolite. Even though suffering from an intended form of YODA-speak, I clearly stated my willingness to “pay your taxes with funny-money I will”. There is no magic to the elimination of “inflation and deflation” – I’ve described it in the simplest terms above. The real magic occurs at the fraudulent creation thin air of purchasing power by the banking cartel, and its state sponsors. And no, taxes extracted from me by force to support such mechanisms is a form of fraud.

            “We pay taxes to regulate demand and thus minimise inflationary pressures.”
            A: The natural price mechanism is what regulates supply and demand. My statement on the function of taxation to regulate inflation (however defined) still wets the air above.

            Respectfully,

    • Roger January 14, 2016 at 8:32 pm #

      https://books.google.se/books/about/The_Road_from_Mont_P%C3%A8lerin.html?id=JiSnS3q0OAMC&redir_esc=y
      The Philip Mirowski, Dieter Plehwe book the road from Mont Perelin is a good exposition of neo liberal think tanks and their evolution. Roy Madrons new book on which I have been assisting with some multi media work and interviews is brilliant too. Roy Madron is finalising for publication “Super-Competent Democracies: Dissolving Neoliberalism, Managerialism and Elitism”. He is the co-author of “Gaian Democracies: Redefining Globalisation and People-Power”. Roy publishes other writing on his blog at RescuingDemocracy.com

  29. Spartacus Rex January 15, 2016 at 10:12 am #

    Alright John G.,

    Perhaps you are determined to fully wait until the “bad news” is finally up on the wall.

    http://www.internationalman.com/articles/ron-paul-says-to-watch-the-petrodollar

    Cheers,
    S. Rex

    • JohnG January 15, 2016 at 10:38 am #

      There is no such beast as the petro-dollar. And the US government cannot be bankrupted.

      • Roger January 15, 2016 at 11:17 am #

        Thats an interesting notion which on its face is true. The problem of The Dollar, Petro Dollar or indeed Euro Dollar for the Federal reserve and in turn the US Government by proxy is when the Dollar is rejected by trading partners as it is perceived as worth less that the people using them claim. Of course people can be forced to accept them at the end of a Barrel of a Gun, ´´Diplomacy being the act of polishing ones weapons in front of the other party´´from quiggley ( ref on request)

        • Roger January 15, 2016 at 11:35 am #

          http://letthemconfectsweeterlies.blogspot.se/2014/04/roger-lewis-guitarist-at-lilagatubandet.html

          ”Over the past 40 years Norm the Neo Liberal metaphysics of Corrupt Economic dogma has delivered according to plan but has created havoc in the fabric of western societies and Democracy is dead all that survives is a Caricature, and a Well made up Pig it is as well, the lipstick isn’t working.”

          In April 2014 The Petro Dollar switch to Carbon (Dollar) Bancor anyone? Whatever its all about its about the presevation of hegenomy all roads as ever lead to Rome , where is what we called Rome these days?

          • JohnG January 15, 2016 at 9:18 pm #

            Hi Roger.

            1. The trade outside the US$ zone may/will decrease the demand for $ financing which only really means that US banks will lose some business. It may put some downward pressure on exchange rates but that’s not the end of the world.

            Any exporter that wants to sell goods to the US has to accept US$ and the US will be running a trade deficit for as long as you and I will be around, so there will still be a demand for them.

            The exporting countries accumulate US$ or spend them on US goods. If they accumulate them they will buy US Treasuries that pay interest rather than leave them as cash in the banks.

            2. I don’t really know much about the currency arrangements between the BRICS but any countries trading with each other should use their own currencies.

            Bretton Woods died long ago. There is no good reason to be using US$ for anything other than directly purchasing US goods and services.

            It hasn’t really sunk in yet though.

            3. As above. Since Bretton Woods collapsed and there is no fixed exchange rate regime, there is no good reason for other countries to hold US$ other than to facilitate direct trade in real goods and services.

            The countries that get into trouble with hot money flows and speculative attacks are the ones that foolishly try to peg their currencies or run currency boards.

            They don’t need to and shouldn’t. Float.

            Speculators can’t win if nobody fights them.

            4. Sorry, that was a blanket statement that ignored the countries that do run pegs and currency boards. They do have to offer conversion.

            But I’d argue that they shouldn’t. Though some developing nations running export surpluses have issues that make it difficult to get around.

            But that’s a whole subject for another discussion. The major currency zones no longer offer conversion.

            Exchange is a different beast.

            The perceived power of the markets in most of these things is illusory. The power only exists while governments believe it exists.

            It’s like the deficit/debt hoax. An illusion used to terrorise people into accepting less of everything for the many but ever more for big business.

          • JohnG January 16, 2016 at 8:45 pm #

            Hi Roger, the point is that it is exchange rather than conversion. It’s sloppy language again.

            If you go to the fx desk with pounds and ‘convert’ them to euros or whatever else you are exchanging your pound units with someone else’s euro units.

            There are no pounds destroyed nor euros created. They’ve just moved around by change of ownership.

            Currency zones are closed loops. The exporters gaining foreign currency have to find an intermediary if they wish to hold their domestic currency rather than the foreign currency.

            Which they usually do but that just means someone else owns the foreign units, (usually a bank or the like) with access to an account with the foreign central bank.

            Eventually it all ends up as foreign reserves in central banks and eventually the central bankers get together and do currency swaps, which is a fancy way of saying destroying money.

          • JohnG January 16, 2016 at 9:37 pm #

            Hi Roger, re pegging.

            That’s effectively what banks do now. Their bank credit is pegged to the state currency and by dint of being LFIs (and thus having an account at the central bank) their credit is convertible to state money.

            The problem with pegging the crypto-currency to state money is that they aren’t convertible. You still have to find someone who’ll exchange your crypto-units with their state units.

            It’s easy to see where that goes.

          • JohnG January 16, 2016 at 9:55 pm #

            Hi again Roger.

            How do these crypto currencies deal with cancellation?

            i.e. how do the credit units get extinguished?

        • JohnG January 15, 2016 at 11:41 am #

          Exporters will save US$ as long as they wish to export to the US. They don’t really have a choice.

          But the same goes for any country that establishes its sovereignty.

          US$ hegemony is a hoax.

          There is no conversion anymore.

          • Roger January 15, 2016 at 4:40 pm #

            Hello JohnG,

            It would be interesting to see how far each of your statements are held by you/MMT to remain true. Assuming there are some boundaries within which each proposition does hold true.

            1. Exporters will save US$ as long as they wish to export to the US. They don’t really have a choice.

            China and Russia are doing some interesting trade deals circumventing the dollar, Some say Iraq was invaded for selling oil in Euro. David wrote a piece called a cunning plan about options that Greece might consioder re the ruble and peg that waay to wriggle out from under the EURO. The Euro is a sattelite of the Dollar more now than it was in Saddams day I would argue..in fact the very first blog on this site was about the chinese selling US debt. http://www.golemxiv.co.uk/2010/02/china-sells-us-debt-who-buys/ , it´s the dollar status as the world reserve currency that other countries have a choice on which suggests limits to the boundaries of this statement even as far as it applies to exporting into the US.

            2. But the same goes for any country that establishes its sovereignty.

            See the BRICS?
            and this by David http://www.golemxiv.co.uk/2014/01/from-petrodollar-to-petroyuan-the-coming-proxy-wars/

            3. US$ hegemony is a hoax.

            This I really don’t follow at all it may be a busted flush but how and in which sense is it a hoax?

            4. There is no conversion anymore.

            I do not understand what this means and would be grateful if you could explain what you mean.

            Cheers

            Roger

          • Roger January 16, 2016 at 7:46 am #

            Hi John ,

            Thanks for your answers to my questions. Out of your conversion point could I just see if I get what you mean. Is your point that those who do trade that sell goods for foreign currency should keep the currency in its native form and not convert it back to their home currency? I would argue conversion is a fact of life in an international trading environment, as all inputs come from all over the place and to buy the inputs ,conversion of the currency the whole product is sold in, back into the units that the inputs are bought with is inevitable.( sorry that’s too long)

            Trying to fix exchange rates for certainty is as you say not a feature of current practices.

            The other point vis the Petro Dollar , I am still struggling with your point here. I am also wondering what it means if one says ´´The US Dollar has the status of the Worlds Reserve Currency´´whether this is by law or by custom I do not know but it is a very widely held view and one I have never thought to examine.8 Maybe I should and I will!)

            You make some points in the discussion with Wesley on Anarchism and also on Bit coin. I have a little knowledge of both of these and politically and commercially I am invested in both so will hopefully avoid any irrational and subjective truth claims arising out of the Cognitive Dissonance I suffer being wedded to both, Syndicalism/Mutualism on the one hand and CryptoCurrency/Block-chain technology on the other.

            On Anarchy essentially Anarchy eschews hierarchy and requires an absence of Rulers. Anarchy can and does imagine institutions and rules they are though from the bottom up and a work in progress not from the top down and fixed and immutable for those subject to them. Anarchy as ideology is a Baskin Robins of countless flavours for me though it boils down to direct democracy here again we can see that Anarchism and the Block-chain which facilitates direct democracy without the need for rulers/bosses. On Industrial democracy Mondragon Corporation and Riccardo Semlar of Brazils Semco bear further study, I particularly recommend the Anarchist criticisms of Mondragon related to the apparent contradictions on non cooperative workers being employed in a cooperative context there is much to learn from these critiques.

            Regarding Conversion and stability the white paper for Nu Bits a project growing out of Peer coin is worth reading it proposes a sort of open market operations system for pegging Nubits to the dollar and a fixed rate of 1 dollar to 1 nubit. It is a fascinating idea and I think would be a very good teaching tool in the field of MMT.

            https://nubits.com/sites/default/files/assets/nu-whitepaper-23_sept_2014-en.pdf

            The Peer coin White paper is also a much more informative read that the original Bitcoin whitepaper (the famous one) both linked below,

            https://peercoin.net/assets/paper/peercoin-paper.pdf

            https://bitcoin.org/bitcoin.pdf

            The point about crypto currencies there are lots of them .

            http://www.coinwarz.com/calculators

            is that their value is pegged to the Dollar or other Fiat exchange rates. I mention this in the context of what I think your conversion point is. anyway I definitely recommend anyone to read the 3 whitepapers linked they are not very long and are actually not at all technical ( you do not have to be a computer programming nerd ).

            My own business interests these days are focused upon peer to peer equity investment using block-chain and crypto currency technology as yet I am still working out where to position and focus the emphasis, it really is the wild wild west.

            https://www.linkedin.com/pulse/lady-luck-investment-strategy-roger-lewis?trk=prof-post

          • Roger January 16, 2016 at 8:07 am #

            Hi Johng , just one little further irony on Bitcoin/Blockchain for you to ponder, this is one for you too Wesley.

            The SHA.256 Algorithm which Bitcoins hashing security is build on was developed by the NSA and Patented by them.

            https://en.wikipedia.org/wiki/SHA-2

            The X11 Algorithm was privately developed and is used by quite a few other crypto currencies.

            http://cryptorials.io/glossary/x11/

          • JohnG January 16, 2016 at 11:22 pm #

            Hi Roger, it is no surprise that Bitcoin is connected to spookdom.

            A lot of these ‘revolutionary’ events or phenomena are.

          • Wesley - aka Guy Fawkes January 18, 2016 at 3:10 am #

            @Roger – re:crypto/blockchain/Bitcoin

            The most surprising element to me of your NSA-patent revelation is that this fact is disclosed…

            I think one of your video links (concerning Bitcoin) actually discussed the problem of the nexus between money (ala Bitcoin) and credit. That problem today, only whispered about, is that of identity. Presently, one enters and leaves the Bitcoin universe with an auditable, identifiable exchange of credit “money” for Bitcoins.

            A mechanism that permits a true wealth transfer and store of value functions recognized by large numbers that is able to absolutely protect the identities of the users has not yet been provided, so far as I am aware. The spooks probably care little about the wealth itself – but the power of knowing whom that wealth belongs to (and the ability to tax it) – well, that’s the power of force monopoly.

  30. JohnG January 17, 2016 at 1:32 am #

    Fractional Reserve Banking.

    Just to clear up some possible misconceptions.

    My understanding of what people believe to be FRB involves banks taking deposits and then lending out a per centage (usually expressed as 90%/10% in the examples that they give) then that loan being redeposited and the same occurring etc etc etc.

    Which is what is then called the money multiplier mechanism.

    This is what economics undergraduates are taught, usually in their first year. And whenever I’ve spoken to people who mention FRB that is what I have understood on every occasion that I recall to be what they are referring to.

    It is also the explanation that is common in all the internet money related videos e.g. the Money Masters, the Creature from Jeckyll Island etc etc etc.

    It is this interpretation that I’ve called a myth. Because it is false.

    There is a lot of confusion about the banking system in part caused by language and people confuse and conflate terms like reserves and capital ratios and they are largely unaware of the difference between reserves (government money) and the money that we deal with (bank credit).

    • Wesley - the admiring January 17, 2016 at 1:41 am #

      Bravo! Regardless of our differing views of optimal solutions, our efforts here and elsewhere to correctly describe the process of “money” creation as it actually occurs, will naturally lead to a constructive dialog seeking improved practices. I heartily applaud your efforts at clarifying your view. The myth of money creation (and its propagation in publicly funded schooling) is at the root of a crime of disinformation and myth that you and I completely agree.

      • JohnG January 17, 2016 at 2:16 am #

        (and its propagation in publicly funded schooling)

        And even more so in privately funded universities who produce most of the text books that perpetrate the myths. Not to mention the ‘libertarian’ think tanks and politicians.

        Be aware of who and what you’re pointing your ire at.

        • Wesley and his IRE February 7, 2016 at 10:25 pm #

          Quite aware – thanks for the insights! While the number of so-called private institutions of “higher” (read: more overtly propagandized) learning outnumber the public universities in America by about 3 to 1, the numbers at the pre-university level are overwhelmingly public. The myths are being propagated by Left, right and Center think tanks and politicians. JohnG. Be aware of your biased tendency to ONLY point your ire towards the right. Be prepared to take your own advice when rendering it, and consider your own premises. Fortunately, thinking man has now been given the tools to find answers in places other than text-books written by either “side” (which in my view are merely two sides of the same coin). Given your self-professed knowledge of all such things, I’m little surprised that you would characterize the dominant literature in the voodoo field of economics as being from the right. These myths have no ideology but the propagation of self (status quo) through the monopoly issue of counterfeit credit “moneys” and the influence that can be bought with same.

      • Spartacus Rex January 17, 2016 at 6:28 am #

        @ Wesley – The Magnificent

        LOL Wesley, this thread is soon to be an Encyclopedia of Wesley adjectives, and my sides are feeling the brunt of your humor already.

        Nevertheless,
        OORAH & Semper Fi

        Cheers,
        S. Rex

        P.S.
        Back before Alan Greenspan went over to the Dark Side:

        “An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

        In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.

        Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.

        The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.

        What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store. But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term “luxury good” implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.

        In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions. However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable. The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale.

        Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange. Since the beginning of World War I, it has been virtually the sole international standard of exchange. If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society’s divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.

        A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.

        When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one — so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the “easy money” country, inducing tighter credit standards and a return to competitively higher interest rates again.

        A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

        But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline — argued economic interventionists — why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely — it was claimed — there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks (“paper reserves”) could serve as legal tender to pay depositors.

        When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve’s attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain’s gold loss and avoid the political embarrassment of having to raise interest rates. The “Fed” succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930’s.

        With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain’s abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed “a mixed gold standard”; yet it is gold that took the blame.) But the opposition to the gold standard in any form — from a growing number of welfare-state advocates — was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

        Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

        In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

        This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

        http://www.constitution.org/mon/greenspan_gold.htm

        • JohnG January 17, 2016 at 6:47 am #

          Oh the multidimensional irony.

          • Spartacus Rex January 17, 2016 at 7:29 am #

            @ John G (obviously not “Galt”)

            You have repeatedly demonstrated your lack of capacity to carry on any serious debate in a respectable, or even simply an adult manner, and your objective herein is indeed obvious to those with eyes to see, as it is nothing short of an attempt to further propagate the “financial” religion of which you have been consuming its Koolaid for far too long to have any mind left in which to remotely keep open.

            Unfortunately as well, the Statute of Limitations would likely bar you from suing your alma mater for any refund of that ‘edumacation’ that your were stiffed with therein.

            Nevertheless, good luck with that!

            Amazing how Upton Sinclair explained ‘cognitive dissonance’ so long ago:
            “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”

            Cheers,
            S. Rex

          • JohnG January 17, 2016 at 8:54 am #

            And I’m not propagating Koolaid (sic). You are. The big business flavour.

            My income depends on state money exactly the same way as yours does. You just don’t know it.

            PS Don’t forget to buy more gold from Peter Schiff (who’s selling it because it’s going to the moon).

        • JohnG January 17, 2016 at 12:14 pm #

          The first irony is Rex that you think he ‘went over’ to anywhere.

          He didn’t.

        • Wesley - with Greenspan January 19, 2016 at 9:02 pm #

          @REX: Greetings! I’ve been distracted by a few matters, but there were some items in your cite by Alan Greenspan that caught my attention…

          Re: http://www.constitution.org/mon/greenspan_gold.txt (Greenspan in 1966)

          You may find it interesting to note, that after an extended visit to the dark-side, he’s recently made some interesting comments in relation to gold. An Ex-banker with his wealth safely stored I imagine, tends to be more honest, than a current banker! (Comments by another EX-FED-head Fisher of the Dallas Federal Reserve are almost as shockingly true…)

          http://www.cfr.org/financial-crises/alan-greenspan-central-banks-stagnation-gold/p35762
          http://www.zerohedge.com/news/2014-11-07/greenspans-stunning-admission-gold-currency-no-fiat-currency-including-dollar-can-ma
          https://www.foreignaffairs.com/articles/united-states/2014-09-29/golden-rule

          Fisher:
          https://youtu.be/7nuzT3rchPU

          Ironic, actually, that these comments should be delivered by Greenspan at the CFR. In a disturbing twist, at least one version of the official transcript published by the CFR actually censored-out his most stunning statements (see Zero-Hedge link). I don’t have time to investigate that now, but his comments are well documented in any case (see video):

          [Sample extract
          TETT: Do you think that gold is currently a good investment?

          GREENSPAN: Yes… Remember what we’re looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.
          ]

          Greenspan (in 1966):

          “Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.”

          Examining his choice of words is telling… and if there is a man in the world careful about his choice of words, it would be Alan Greenspan! MONEY… is that commodity which serves as a medium of exchange. These words shed needed light on the differences between money and credit – something that Alan Greenspan knows a bit about.

          In a later paragraph, beginning with “A Free banking system based on gold…” Greenspan goes awry when he goes on to describe a form of banking fraud, or at least a simplified example of improper maturity transformation:

          [But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.]

          In the following, Greenspan raises alarm bells in my mind when conflating the term Gold with Standard, but I’ll give him the benefit of the doubt – as he never really details what HE means by a “standard”. Legislating value will not work, and he knows that better than most:

          [Thus, under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade.]

          Rather than cite more examples to buttress my assertions about “free banking” above, I’ll cite Greenspan’s words here:

          [A fully free banking system and fully consistent gold standard have not as yet been achieved.]
          Bravo. Quite correct.

          Notice Greenspan’s use of the word credit:
          [Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks (“paper reserves”) could serve as legal tender to pay depositors.]

          [Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset.]

          Most of his words ring true here, and are even prophetic, given the chronology of his remarks. You should realize, too, that at the time he wrote these words, it was illegal for Americans to own monetary gold!

          Cheers!

  31. JohnG January 17, 2016 at 4:07 am #

    Woops misquote edited.

    • Spartacus Rex January 17, 2016 at 9:35 am #

      Re: John G @ 8:54am

      The statement was that you were propagating “financial” religion, of which you simply have been imbibing the Kool-Aid of same for far too long.

      You merely assume that my earnings are similarly “depend(ent) on state money”
      Again however, I have no difficulty in distinguishing what is actually “money”, and mere IOUs for same, thus do not suffer from cognitive dissonance, such as yourself.

      Furthermore, there is indeed a reason why such ‘currency’ explicitly expresses thereupon that such is a ‘NOTE’ (ie Debt OBLIGATION)
      and FYI, Federal Reserve Notes are NOT “Dollars”

      However, do not simply take my word for the matter.
      Here:

      “Federal Reserve Notes are not dollars.”

      RUSSELL L.MUNK, former Assistant General Counsel, Department of the Treasury

      In case you weren’t aware of the fact, however current U.S. Law still mandates that FRNs are to be redeemed into lawful money, as well, not only explicitly expresses what constitutes a “dollar”, but as well, mandates that such is indeed the official Unit of Account throughout the United States.

      Plus, the Internal Revenue Code actually provides the substantial Annual Tax Write Off, for those diligent enough to redeem whatever FRN currency they receive each year back into lawful money “dollars” (ie “$”).

      There are Maxims of Law which have been around for eons which you are undoubtedly unaware of as well.

      Would you like to know what they are?
      If so, would you prefer to read them in Latin, or English?

      Cheers,
      S. Rex

      • JohnG January 17, 2016 at 9:53 am #

        You merely assume that my earnings are similarly “depend(ent) on state money”

        Your earnings depend upon state money the same as mine. You assume that you know enough about the system to say otherwise.

        Would you like to know what they are?

        Don’t bother yourself. I’m not interested in the slightest.

        • Spartacus Rex January 17, 2016 at 10:03 am #

          “Don’t bother yourself. I’m not interested in the slightest.”

          Of course not! Ergo:

          “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” Upton Sinclair

          “Knowledge will forever govern ignorance and people who mean to be their own governors must arm themselves with the power which knowledge gives.” James Madison

          All the perplexities, confusions, and distress in America arise, not from defects in their constitution or confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit, and circulation. John Adams Letter to Thomas Jefferson, August 25, 1787

          Cheers, S. Rex

          • JohnG January 17, 2016 at 11:01 am #

            Well elevate yourself from your ignorance, buddy.

    • Wesley - typo January 18, 2016 at 2:52 am #

      Ditto: Typo malfunction above. An earlier version of the paragraph below used “interesting threads” instead of “interesting threats”… in error.

      “A: Well aware of the payments’ systems – thanks. In fact, the development (by China and Russia and others) of competing international payments and clearance/settlement systems (see SWIFT) is one of the more interesting threats to US/Dollar hegemony in quite some time.” The ability of America to use the SWIFT payments system to exclude a country from world commerce (trade sanctions etc.) is coming to an end.

      Historical note: The fairly well-documented and successful use by so-called medieval “fairs” of tokens and/or paper credit instruments for trade settlement is an interesting example of efficient credit issuance, and its self-liquidation. Only small differentials resulting from the trade-netting needed to have been settled with real moneys such as gold, silver or copper. Thin-air credit could NOT be used to settle these differences. An examination of the functioning of “Real Bills” as a self-liquidating form of credit is insightful. It’s also instructive to note that the legitimate use of Real Bills and their efficient discounting mechanism was destroyed by the practices of the Federal Reserve, and other similar central banking practices worldwide.

      • JohnG January 18, 2016 at 3:22 am #

        SWIFT has nothing to do with the Fed payments system.

        • Wesley - SWIFTy January 19, 2016 at 6:12 am #

          You’re missing the point JohnG – The FED payments and clearance mechanisms (well understood by yours-truly) are part and parcel of the status-quo paradigm that you appear to be touting. Bitcoin, and other mechanisms for payments’ settlement and trade clearance have no need for the FED. Central Banks are disintermediated with Bitcoin. Whether the FED is in a tiny sub-basement of Treasury or not, still presupposes its very existence. I do not accept that premise, nor the functions of the Central Bank that you advocate.

          A “Through the Looking Glass” MMT view appears to be altering your field of vision.

          • JohnG January 19, 2016 at 6:20 am #

            No, you’re trying to cover for your ignorance yet again.

            Your reference to SWIFT clearly demonstrates that you don’t know what the payments system is.

            You’re trying another bait and switch and yet again, willfully misrepresenting my position.

            You have no dignity and have proven yourself incapable of honest debate or discussion.

  32. JohnG January 17, 2016 at 5:04 am #

    Wesley, these comment threads are getting out of hand. Whether it’s my browser or the site I’m not sure but the reply function seems patchy and I’m having trouble directing replies to the correct posts/clusters.

    And it’s all too disjointed and too much in terms of conversation.

    For the ease of posting and so as to not clog up the board making it impossible for others to ignore our comments, maybe we can post further comments to cluster with this one.

    • Roger January 17, 2016 at 9:11 am #

      Hi John G. Hopefully this will be at the end of the thread.

      1. Hi again Roger.

      1.a How do these crypto currencies deal with cancellation?

      Crypto Currencies are not created as debt they are unashamedly created by Mining and rewards for proof of work in maintaining the integrity of the distributed network. The job of the network is to prevent fraudulent double spending, DOuble spending is possible for a time if a successful 51% can be mounted. This Video helps to contextualise the Crypto Currency creation process and the tendency of its structure in Bit-coins application to monopoly. https://www.youtube.com/watch?v=YaaknMDbQGc

      1.b i.e. how do the credit units get extinguished?

      Bitcoins are not Credit units in the sense that they are not created by a process of making loans they are accepted as a token that may be exchanged , the proof of ownership/stake and proof of work distinctions in the peer coin white paper are helpful here.
      Bit-coin is limited to 21,000,000 bitcoins other crypto currencies have different denominations and finite numbers of blocks . Used as Virtual currency Biitcoin/crypto Currencies are ledgers of exchanges taking place at proportional values expressed in the virtual currency unit they are inextinguishable receipts confirming that A performed something of value for B in exchange for the receipt which is now offered in exchange of something of value to C.
      Bit coin has value in and of itself a trusted proof having put skin into the game.

      2. (and its propagation in publicly funded schooling)

      And even more so in privately funded universities who produce most of the text books that perpetrate the myths. Not to mention the ‘libertarian’ think tanks and politicians.

      Be aware of who and what you’re pointing your ire at.

      Wesley and John G and Sparticus rex I think we are getting somewhere this conversation is not about converting each other politically its about identifying what the monetary system is , where it is corrupted or where it is just plain broken. There is a lot of appeal to Authority in the academic and public discourse as we are dealing at the limits of a construct or outside of the defined bounds of the function.

      3. Hi Roger, re pegging.

      That’s effectively what banks do now. Their bank credit is pegged to the state currency and by dint of being LFIs (and thus having an account at the central bank) their credit is convertible to state money.

      The problem with pegging the crypto-currency to state money is that they aren’t convertible. You still have to find someone who’ll exchange your crypto-units with their state units.

      It’s easy to see where that goes.

      A. This is true at the moment , the power of distributed networks is in their ubiquity, a critical mass of people holding their tokens as a store of value breaks this pegging phenomena , should adoption ever become so widespread that this will occur. I personally believe that it will. ( Belief is the operative word there, there is every chance that I am completely and hopelessly mistaken in my belief.)

      4. Hi Roger, the point is that it is exchange rather than conversion. It’s sloppy language again.

      If you go to the fx desk with pounds and ‘convert’ them to euros or whatever else you are exchanging your pound units with someone else’s euro units.

      There are no pounds destroyed nor euros created. They’ve just moved around by change of ownership.

      Currency zones are closed loops. The exporters gaining foreign currency have to find an intermediary if they wish to hold their domestic currency rather than the foreign currency.

      Which they usually do but that just means someone else owns the foreign units, (usually a bank or the like) with access to an account with the foreign central bank.

      Eventually it all ends up as foreign reserves in central banks and eventually the central bankers get together and do currency swaps, which is a fancy way of saying destroying money.

      A. This point John about the annihilation of Money when Debt is repaid does not apply to the basic design of Bit coin. In Nu Bits there is a Minting operation which kind of looks a bit like it may end with annihilation but I do not think that that is what it does. the Answer to 3 above therefore covers this question as well.

      For crypto Currency it boils down to ownership and control of the network, in its ideal state the Network is actually part of the digital commons the challenge being to prevent the digital enclosure of the digital commons. As a student of Marx the allusion to the commons and the Enclosures will not be list on you.

      http://letthemconfectsweeterlies.blogspot.se/2013/06/democracy-and-state.html

      https://aluation.wordpress.com/2011/06/15/coercive-aggregation-vs-primitive-accumulation/

      • Roger January 17, 2016 at 10:17 am #

        https://www.youtube.com/watch?v=RBwkNekicak

        Saskia Sassen seems to have some important things to say about catagories and language which just can not explain the extremities created in the new Political and Economic realities. Her idea of the expelled is very powerfull.

        http://www.columbia.edu/~sjs2/PDFs/savage.pdf

        • Roger January 17, 2016 at 10:38 am #

          https://www.youtube.com/watch?v=-tNWniDpsJo

          A bit of Sunday Morning Comedy. There are quite a few in this series the Alex Jones But Rape one is pretty funny.

        • Spartacus Rex January 17, 2016 at 10:59 am #

          “Abuse of words has been the great instrument of sophistry and chicanery, of party, faction, and division of society.” John Adams, U.S. President

          Cheers,
          S. Rex

        • JohnG January 17, 2016 at 11:37 am #

          Saskia Sassen?

          Really?

          • Roger January 17, 2016 at 2:15 pm #

            Yes really JohnG, What she says regarding the Expelled are very pertinent , Sociologists, Psychologists and Antropoligists have a lot to add to Economic Thought the orthodoxies of which have become so bogged down in their own dogmas.

            ”A wit once defined an economist as someone who, when shown that something works in practice, replies “Ah! But does it work in theory?”
            Steve Keen Quoted here today http://www.globalresearch.ca/a-loophole-allows-banks-but-not-other-companies-to-create-money-out-of-thin-air/5501623

          • JohnG January 17, 2016 at 8:50 pm #

            Re: Saskia Sassen.

            We”ll have to agree to disagree. Maybe I’m wrong but I put her in the Krugman, Picketty, Stiglitz category of using a lot of words that sound progressive but ultimately saying not very much of value.

            I’m far more interested in solving the immediate problems immediately i.e. getting people back to work in well paying jobs.

            If I get time I’ll have another look at her stuff.

            Werner is being a bit disingenuous there. The literature and the knowledge has existed for a long time. The neoclassicals and the Austrians ignore it because it doesn’t fit their ideological bias that government is bad, big business good and people don’t matter.

      • JohnG January 17, 2016 at 10:54 am #

        1 a. It’s a very good argument that he makes to pose what remains a question.

        1 b. 1.b OK so being limited to a finite number means it isn’t suitable for an economy.

        Or am I missing something?

        2. I haven’t got into my ideology. I’m just trying to explain the nuts and bolts of the money system.

        3. .With respect, I think you’re wrong. If you can’t pay your taxes with your crypto-currency you’ve got nothing. But the state has no reason at all to accept your currency. Quite the opposite.

        The primary aim of taxation is to establish the demand for state money.

        The state doesn’t need your taxes to spend, so why would it give up its currency sovereignty to your currency?

        4. It’s late here, so I’ll be brief for now on this one. Marx aside, or on one hand perhaps, the state should be the commons or the manifestation thereof, shouldn’t it?

        Assuming we have a state.

        A state money system has to have a means of extinguishing its tokens. Otherwise inflation is guaranteed.

        Taxation is how states extinguish their tokens and thus regulate demand in a dynamic system.

        I’d suggest that a system limited to a finite number of tokens can’t deal with an economy in total.

        So no. You’re back to artificially stifling economic activity.

        To what purpose?

        • Roger January 17, 2016 at 11:57 am #

          Hi John G.

          1.b The 21 million whole Bitcoins are divisible I think its to 8 decimal places, thats just bit coin. The point I think you are missing is that You can have localised Block Chain Technologies acting as an unfalsifiable ledger which means no role is required from either a State or Corporate honest broker as it were. The dynamics between Inflation Deflation Debt and money supply are very complicated and suffice to say Crypto Currenices are no better and no worse at dealing with some or all of the aspects of them as they arise.

          2. Yes I know that . Which parts do you see as corrupted or broken?

          3. JohnG you are presupposing Taxes, here. In any cases Payment of taxes in Bitcoin or crypto currencies is just as feasible as in Bank created credit/debt based money they are no different qualitatively. Also see the case of the Silk Road Bitcoin Auctions. http://money.cnn.com/2014/06/12/technology/security/silk-road-bitcoin-auction/index.html
          Sassen in the link above makes some very good points about localisation which encompass local currencies , what we can see here is a difference in perspective , I perceive that your perspective is Centralised and hierarchical my perceptions are grounded in Localisation and Direct democracy ( flat structures). I live in Sweden these days and consensus is big part of Swedish culture stifling and inspiring in different measures at different times.

          4. The state is antithetical to the idea of the commons, self provisioning and self sufficiency were the two great freedoms stolen from Mankind by Capitalism and the State which I believe are one and the same thing.

          The rest of your reasoning here I think is not inevitable and I appreciate you may be pressed for time due to lateness of the hour. On the annihilation of money and its necessity to prevent inflation I am sure lots of theory modelling and empirical data are available to demonstrate that argument. I would look a little more optimistically at the future and look at notions of citizens income founded in traditions of the commons and recognising the real sense in which we all have a birth right. I have in the past discussed with another MMT theorist here the Citizens Income vis the Job Guarantee there is a very big political exponent to our differences on that question which may also be run up against in our own discussions John G. To Go Forward or to go backwards we have to start from here and now Vijay Gupta says at one point in the Video I linked to that its difficult to aim for success whjen we do not know what success looks like.

          • JohnG January 17, 2016 at 8:37 pm #

            1. It’s not really that complicated when you strip away the myths. I’m always suspicious when I hear ‘money supply’ used in these inflation discussions. It suggests looking at a stock where the flow is the important driver.

            2. Pretty much all of it bar the core of the monetary system. Sovereign, fiat, non-convertible, floating exchange rate currencies are pretty much as good as it gets.

            If only we could get a government to use it to public purpose.

            3. There is no reason for a state to accept anything but its own currency as taxes.

            Sweden, from what I’ve seen is stumbling head first into neoliberal madness after so long as a social democratic bulwark where capital was kept on a tight leash.

            4. OK, well my idealistic view of a state would be that it acted as the commons. Capitalism relies on state power, yes. But state power can also be used against it.

            Democracy is a constant struggle after all, not a destination.

            You’ll probably laugh but Libya was a pretty good example of a direct democracy. Strip away all the western propaganda and it worked pretty well.

            That’s what Gadhaffi’s real threat to the western powers was.

            I just can’t see the point of these local currencies. Can’t we have well regulated, democratically controlled localised banks, building societies, co-ops etc?

            I’d keep private corporations out of the banking system altogether personally. The credit creation mechanism should not be in the hands of profiteers and rent seekers. It should be for public purpose.

        • Wesley - and Muammar February 8, 2016 at 12:07 am #

          JohnG January 17, 2016 at 10:54 am #
          “OK so being limited to a finite number means it isn’t suitable for an economy. Or am I missing something?”

          W: You ARE missing something. A money system, agreed to by the parties using it (such as Bitcoin) can function very well with a limited, finite number. If the system is closed, and the demand for those finite number of tokens rises, the value of each token will be increased. Increases in population or productivity improvements can both result in such events. However, in a free and open economy, only force could cause the imposition of a single monetary unit. Where freely competing monetary units exist, the supposed finite limitation that you perceive (21 million Bitcoins for example) vanishes. Multiple, voluntary exchanges could use any number of “tokens” – whether fiat or gold is irrelevant. Another point that you are missing is the natural expansion and contractions of credit that would appear as complements to these multiple currency systems. Remember, Wesley the Farmer and David the Baker. That simple example of the use of credit on top of an agreed commodity unit of exchange permitted the balance sheets to expand AND contract without fraud. The layer of credit is what permits elasticity. Unfortunately, imposition by State of a means to create purchasing power out of thin-air in the form of irredeemable credits that may ONLY expand, such as MMT describes and embraces so warmly, does not know how to grok a finite measure of MONEY. Separate money from Credit, and you’ll get it!

          J: “I haven’t got into my ideology. I’m just trying to explain the nuts and bolts of the money system.”
          W: Every aspect of your MMT prism, by acceding to and accepting the status quo, is an ideological expression (in this case, one of consent and support). What we have now is a credit system imposed by force of State, without money, in the guise of a monetary system.

          J: “With respect, I think you’re wrong. If you can’t pay your taxes with your crypto-currency you’ve got nothing. But the state has no reason at all to accept your currency. Quite the opposite.”

          A: There you go again — starting from fixed, unmovable assumptions and premises about the State. First of all, the imposition by force of the State of taxation upon men’s labors should not be an essential premise to the functioning of government. Quite the contrary. And why shouldn’t State accept any reasonable “money” units for its purposes. The State can spend units of my preferred Money system, as well as any other. The State has no valid reason to reject other forms of Money than its own.

          J: “The primary aim of taxation is to establish the demand for state money.”

          W: Check your premises. Demand for state money existed long before the imposition of taxation upon income. That the further bastardization of our monetary system coincided with the imposition of taxation upon labor is no coincidence. But, having sipped some MMT Kool-Aid in an attempt to understand that fictional world, haven’t you stepped off the reservation a bit? The party line in MMT normally suggests that the function of taxation (supposedly not necessary at all), is to regulate inflation. You may suffer some awful consequences at the inscribing of these heresies in the permanent record. Tsk, tsk.

          J: “The state doesn’t need your taxes to spend, so why would it give up its currency sovereignty to your currency?”

          W: Your starting premises reveal your inherent biases, starting with the necessity of State to begin with. However, if we must go past a logical anarchy, then your premise still does not allow for even the possibility that the spending by State, if limited by the collection from the populace (by force) of taxes in real Money, would naturally also limit the size of your State. Your “inside the state” box limits your thinking to a point of view that I reject. BTW, your un-examined premises also appear to limit your thinking to the inherent necessity of “currency sovereignty”. I reject that notion as well. The State, if it is to exist, may assert sovereignty over its own issue, but not mine own.

          J: Marx aside, or on one hand perhaps, the state should be the commons or the manifestation thereof, shouldn’t it? Assuming we have a state.

          W: State exists. The mechanisms for control over said state have been captured, diluted, and destroyed systematically.

          J: “A state money system has to have a means of extinguishing its tokens. Otherwise inflation is guaranteed.
          Taxation is how states extinguish their tokens and thus regulate demand in a dynamic system.
          I’d suggest that a system limited to a finite number of tokens can’t deal with an economy in total.
          So no. You’re back to artificially stifling economic activity. To what purpose?”

          W: Agreed. If we must accept a State money system (and that’s certainly not my starting premise), it must be one that provides for dynamic contraction as well as expansion. Despite my repeated efforts, you have NOT even attempted to show how the current system will tolerate the extinguishment of its credits without deflationary disasters. Taxation rates have fluctuated wildly over the years, but inflation continues unabated — during both low and high tax rate genres. You SAY that taxation extinguishes their tokens, and yet – the population of their tokens only grows. Why is that JohnG? MMT may well describe portions of the system we have, but its ideological and pathological acceptance of those mechanisms is flawed. The system does not work. It cannot extinguish its own, hideous creations. The Frankensteinian zombie only grows…

          As to using a finite number of tokens, I have demonstrated how, in a closed system, a layer of legitimate credit functions atop a fixed number of money-tokens can work very well — without stifling economic activity, and without the systematic theft of wealth from all but the first users of credit instruments of your continually inflating disaster. In an open system, either competing money systems presupposes the existence of a theoretically unlimited number of “tokens” and render moot your objection.

          ps: Muammar Gaddafi was actively promoting the use of a pan-african gold standard using a real-money system. It is sometimes remarked in the non-mainstream sphere about the speed with which he (and Saddam Hussein) was not only removed from power after threatening dollar hegemony in this way, but also with which a Central Bank was set up in Libya prior to the dust even settling from his assassination.

    • Wesley - Avatarless January 17, 2016 at 4:40 pm #

      Agreed – had similar difficulties earlier (relating to my use of a portable device perhaps)… But my next question will muddy even this thread. I’ll either reply to your next original thread entry, or start a new one of my own at the bottom. The content will be contextualized for your convenience. 😉

      BTW – how does one apply the font attributes (italic, bold) etc. which more effectively sets off one another’s content when quoting etc.? I saw you include those attribute recently to good effect. And, @Roger, how does one substitute an optional Avatar for the grey/white silhouette default?

      ps: The NSA patent reference is fascinating. I’m preparing some notes about the Blockchain/Bitcoin paradigm…

      • Roger January 17, 2016 at 5:32 pm #

        On the Avatar Wesley, I don´t know it defaults to that when I use my regular e mail address so I think it probably takes it from my Blogger account or Gravatar account.https://en.gravatar.com/rogerglewis
        Look forward to seeing your take on Blockchain / Bitcoin.

        • Wesley January 18, 2016 at 3:24 am #

          One of the interesting metrics in measures of “money” is VELOCITY. Since the advent of the GFC, and the application of massive worldwide central bank balance sheet expansion with “QE”, money velocity in the States has fallen to record low levels.

          I have no idea if it’s even possible to ascertain a velocity measure in the Bitcoin universe – but I suspect it would be the exact opposite. Bitcoins may not be replicated, but they may be transferred infinitely many times, no? No printing required. Bitcoins (and others’) inherent ability to tolerate these high levels of velocity may be its strong suit. I’ll bet the Bitcoins have flowed across the Chinese borders with unimaginable velocity of late. Let’s see if the authorities in China, in order to keep their credit money bubble inflated, permit the purchase with Bitcoins of real property.

          • Wesley - the coin collector January 19, 2016 at 5:28 am #

            @Roger – thanks for the Bitcoin news… I was glad to get the real back-story on the “fork” in the road that Bitcoin seems to be facing. It would also seem that my notion of “velocity” above is actually something far more measurable in the Bitcoin-verse than I’d imagined… In fact, that very metric may be at the root of the problems now faced by this novel cryptographic undertaking.

      • JohnG January 17, 2016 at 9:02 pm #

        Use with an i between them then end with the same at the end with a / inside.

        • JohnG January 17, 2016 at 9:14 pm #

          Well that didn’t work. User the greater than and less than symbols with an i and close with the same symbols with /i.

        • Wesley January 19, 2016 at 5:24 am #

          Wesley the Avatarless agreed on January 17, 2016 at 4:40 pm to move into a new comment zone – and it seems to be working quite well now. Roger’s pointer to the http://www.golemxiv.co.uk/2013/06/creating-money/ came long after. Hence my subsequent offer to stipulate. Which still stands, though I’m scratching my head at your reaction – admittedly not for the first time…
          😉

      • JohnG January 18, 2016 at 1:49 am #

        Re: Wesley – January 18, 2016 at 1:09 am

        I think you’re just very confused and you’ve been reading too much Austrian/libertarian voodoo.

        Unless you can make a cogent argument on what the difference between credit money and your money would be (if it’s not barter) then I can’t make any meaning of where you’re trying to get.

        I think you just don’t want to pay tax.

        The only part of MMT that you appear to have understood is our analysis of bank credit creation.

        Ironic indeed.

        • Wesley - taxpaying voodoo doctor January 18, 2016 at 7:29 pm #

          As to the insolvent US banking system, and their resolution by government:

          JohnG January 17, 2016 at 1:39 am “The FDIC stood ready to do so. They were overruled.”

          A: Federal Deposit Insurance “Corporation”. Wikipedia: [is an independent agency of the United States (U.S.) federal government that preserves public confidence in the banking system by insuring deposits.]

          Gotta love that “independent agency” of government bit. Kinda’ like the Federal Reserve and its “independence”. And there’s that bit about confidence, too. Gotta’ preserve confidence (trust) in the system at all costs – else the credit bubble goes boom.

          https://research.stlouisfed.org/fred2/series/WDDSL
          2016-01-04: 1.3461 TRILLION Dollars!

          The banking cartel in the world is a crony-thing coddled by government. This is not capitalism. “Wall Street” is comprised of banks, dear JohnG, not capitalists. Even Goldman rapidly restructured itself nearly overnight during the GFC to become a bank holding company and to suckle from the government teat with the rest of those “institutions” of public trust. This is a fraud. Capitalists – small business entrepreneurs (the source of the healthiest forms of employment) do not have their solvency guaranteed by an independent agency of the United States Federal Government, the costs of which are socialized among the entire taxpaying public.

          Good thing the FDIC also has a US$100 billion line of credit with the United States Department of the Treasury, to insure our on-demand “deposit” liabilities. Stocks and flows?: Try taking more than $3,000 units of your “on-demand” funny-money deposited at HSBC or JP Morgan at a given moment. You will again be given a polite smile, as the knee of the teller notifies security, and she begins filling out some sort of report that will likely put you on a watch-list.

          But FDIC solvency is not an issue in the MMT world, correct? The US Treasury and/or the Federal Reserve can simply magick the needed funds to ensure solvency from thin air, just as I do when I need to pay my bills… So what’s all the fuss? Easy-peasy.

          • JohnG January 18, 2016 at 10:45 pm #

            Capitalists – small business entrepreneurs

            Language. You are changing the meaning of words to make conversation almost impossible.

        • Wesley - redirected January 19, 2016 at 12:18 am #

          Having just seen @Roger ‘s link to the interesting 2013 GolemXIV discussion:

          http://www.golemxiv.co.uk/2013/06/creating-money/

          I will happily stipulate that further discussion of the “What is Money” and Money vs. Credit variety properly belongs there. While I am still reviewing that content, I do believe the discussions here in that regard have added considerably to that posting, which only indirectly (in the comments) takes up the essential differences between money and credit.

          I shall endeavor to avoid such lapses in the future by paying careful attention to new content, and looking backward at existing content as time allows…

        • Roger January 19, 2016 at 8:06 am #

          Hi John G,

          Personally I am neither an Austrian or a Libertarian but I have respect for the World view and also the philosophical system which is followed by those who hold that world view. Hayek is very good on monetary history and whilst I disagree with his prescriptions politically I always pay close attention to Austrian Analysis simply because Austrians care about their logical system underpinning their world view. The Analysis I find is invariable to be trusted , the conclusions drawn form the empirical analysis are however moulded to a political and philosophical world view with which I disagree in the main. I might just venture in clarification that to understand does not bring with it an obligation to agree with conclusions. in the process of re-branding dissent the No True Scotsman type of argument and the you are for us or against us ultimata are already evident. The Bitcoin Fork going on at the moment is full of similar violence being done to others freedom of speech and expression , censorship . self censorship and quite a lot of Hatred. Our discussion here is I think giving us a wider appreciation of the different points of view we all hold. I have in the past found Ken Wilbers work on Integral theory very helpful https://en.wikipedia.org/wiki/Integral_theory_%28Ken_Wilber%29
          from Wikipedia.
          ´´Wilber uses this grid to categorize the perspectives of various theories and scholars, for example:

          Interior individual accounts (upper-left quadrant) include Freudian psychoanalysis, which interprets people’s interior experiences and focuses on “I”
          Interior plural accounts (lower-left) include Gadamer’s philosophical hermeneutics which seeks to interpret the collective consciousness of a society, or plurality of people and focuses on “We”
          Exterior individual accounts (upper-right) include B. F. Skinner’s behaviorism, which limits itself to the observation of the behaviour of organisms and treats the internal experience, decision making or volition of the subject as a black box, and which with the fourth perspective emphasizes the subject as a specimen to examine, or “It”.
          Exterior plural accounts (lower-right) include Marxist economic theory which focuses upon the behaviour of a society (i.e. a plurality of people) as functional entities seen from outside.’

          • JohnG January 19, 2016 at 8:44 am #

            Personally I am neither an Austrian or a Libertarian but I have respect for the World view and also the philosophical system which is followed by those who hold that world view. Hayek is very good on monetary history and whilst I disagree with his prescriptions politically I always pay close attention to Austrian Analysis simply because Austrians care about their logical system underpinning their world view.

            Roger, I’m tired so forgive me for speaking plainly. Write me off as just a crude uncouth Australian if it helps. We’re awful people.

            Im sorry, but Austrian School ‘logic’ isn’t logic in any scientific or mathematical meaning of the word.

            It’s almost the direct opposite. Not only is it unfalsifiable in intellectual terms, it is empirically provably false in historic terms. Especially in the neoliberal period i.e. the here and now.

            So they go history shopping, dissembling and outright lying to justify their illogical conclusions (which are in fact their precepts). And they reject mathematics as trickery and magic.

            When challenged it always turns out that there is no there there.

            Their foot soldiers in the ‘libertarian’ movement are the Khmer Rouge of right wing ideology whose moral underpinning is closely aligned with, albeit disguised as peaceful, outright fascism.

            Where is the difference between the violence of state force and the Pinkertons (just enforcing contracts)?

            To think you can have money without credit, you have to be completely unaware of what a balance sheet is.

            And comp[letely unaware of the notion of dividing zero.

      • JohnG January 18, 2016 at 2:03 am #

        Wesley – January 18, 2016 at 1:35 am #

        You suffer from the monetarists’ view of the engineering of the system. So you are, in that sense, cohorts.

        There’s no such thing as the ‘natural price mechanism’.

        Taxation (at the federal level) is the act of the government removing its own money from the system i.e. extinguishing its credits.

        It doesn’t pay for anything.

        Inflation is not a function of the quantity of money in the system, it is a function of spending.

        Spending = income.

        Government spending = private sector income.

        If any combination of private and government spending exceed the capacity of the real economy (real goods and services) then that will cause inflation.

        If the private sector saves (i.e. spends less than its income and absent a foreign sector surplus i.e. net exports) and the government does not replace that spending via a fiscal deficit then you will cause unemployment.

        You need to develop your ability to think stock/flow consistently.

        • Wesley - the non-Monetarist January 19, 2016 at 1:31 am #

          No, JohnG – it’s precisely the “engineering of the system” by the well-intentioned (or NOT?) Monetarists and MMTers that I am attempting to eliminate. Natural systems do not need any more engineering (and that statement even allows for forms of spiritual belief)! When MMT-man (you) attempt to engineer the activities of Non-MMT man (me), I bristle at the seizure of my freedom by force. As you have suggested to me, please form your community of MMTers, create your MMT credits, spend them into the community to employ everyone without causing inflation, and then remove them from said community by taxation, creating prosperity for everyone. Just don’t impose your will on me by force. I would choose my own money, thank you.

          “There’s no such thing as the ‘natural price mechanism’.”
          A: I’m with Roger and Noam on this one. For you to simply deny a commonly accepted body of thought on the function of price and its effect on supply/demand (an experience that all humans have direct knowledge of), will require a bit more – perhaps in an earlier thread that covers the denial of reality.

          “Taxation (at the federal level) is the act of the government removing its own money from the system i.e. extinguishing its credits.”
          A: Ditto. I understand this is language from the MMT play-book. At least it confirms my earlier statement. The government “credits” (commonly known as the “public debt” in the non-MMT world) in America could be extinguished if every man, woman, child, illegal immigrant, and legal refugee were taxed (and paid) $58,000 today. This would not extinguish the unaccounted off-balance sheet obligations already incurred by the US Government amounting to about $300,000 more per taxpayer – but let’s start somewhere! We’ve made more progress still…

          “You need to develop your ability to think stock/flow consistently.”
          A: There is an interesting aspect to the stock/flow nature of monetary gold and silver. Nearly every ounce of gold ever mined in world history, by dint of human labor, is well accounted for. That monetary stock was created by man’s labors. In fact, there is nothing else like this in existence. The inventory “stock” of wheat for bread-making on the planet is measured in months. Even the stock of usable, above-ground energy supplies is measured in relatively minute quantities of time by comparison to gold (dividing inventory to annual production). MMT techniques for analyzing supply and demand are inapplicable to gold and silver, because the monetary metals have such high inventories. The world just does not keep much inventory in wheat or oil. No – gold and silver stocks to flow measurements yield in the decades.

          Gold does not disappear when it is used to permanently extinguish a credit relationship established by man willingly. The gold passes from one to another. Counterfeit credit creation by the banking system, under protection of law, improperly distorts the legitimate wealth creating efforts of man in favor of the first receivers of that counterfeit credit. Each subsequent user of those counterfeit credits is harmed by the process itself. The working man, who does not understand this process, is the last to receive those credits – credits whose purchasing power that man is counting on for his daily bread, is declining each day by the issue at the top of food chain of ever increasingly large amounts of additional, counterfeit credits.

          Put that stock-flow calculus into your MMT pipe when considering the relative merits of credit money.

          But, but – in the MMT world, I’ve learned that the elite can centrally-plan those stock-flow mechanisms. In the MMT world, the stock of credits (irredeemable fiat money created from thin-air) can be artificially increased by government deficit spending, and decreased by taxation, carefully guiding all of mankind’s myriad endeavors to prosperity. All at the push of a button. See how I’m “getting it”?

          • JohnG January 19, 2016 at 1:57 am #

            I’m just going to ignore all the stupendously stupid ad hominem ‘use of force’ and ‘central planning’ nonsense. It’s just an hysterical screeching series of strawman constructions and is thus irrelevant outside your desire to goad, insult, denigrate or censor. Or any combination thereof.

            The only thing I will say is that the ‘taxpayer’ is not in any way shape or form liable for the so called government debt of the USA.

            Quite the reverse. Federal government liabilities i.e the ‘national debt’ are assets of the non-government sector/s (credits).

            In fact (i.e. the real world), the federal ‘debt’ exactly equals the non-government sector/s’ net US$ financial assets.

            To the penny.

            I think you could do with an intensive course on how to read a balance sheet. Perhaps starting with ‘what is a balance sheet?’

            I don’t have the patience.

          • JohnG January 19, 2016 at 2:25 am #

            Oh and buy a dictionary for all our sakes please.

            e.g. I will happily stipulate that further discussion of the “What is Money” and Money vs. Credit variety properly belongs there.

            stipulate 1 |ˈstēpyəˌlāt|
            verb [ trans. ]
            demand or specify (a requirement), typically as part of a bargain or agreement : he stipulated certain conditions before their marriage | [as adj. ] ( stipulated) the stipulated time has elapsed.

            MMT and monetarism are entirely oppositional views. YOU sir, have a monetarist view albeit minus the multiplier view of bank credit. (where you’ve adopted the MMT description).

          • Wesley - the Stipulator January 19, 2016 at 4:54 am #

            I used the future-tense with intention, JohnG: (“I WILL happily stipulate”), hoping for your consent as part of an implied bargain or agreement, to transfer that part of our discussions concerning money versus credit over to that (previously unknown to me) ‘blog posting. Obviously you missed the invitation to agree. I’ll try to keep it less subtle. Language continues to matter, John.

            A brief look at the comments in that entry, BTW, seem at first blush to indicate that your views, like those of Keynes, have undergone some serious indoctrination since then. Is that not so?

          • JohnG January 19, 2016 at 5:07 am #

            Ooooooh you twist and turn like a twisty turny thing, BlackAdder, but you don’t get to stipulate anything.

            “When I use a word,” Humpty Dumpty said, in a rather scornful tone, “it means just what I choose it to mean – neither more nor less.”

            I offered a workable solution to the clustering and cluttering problem but in your eternal wisdom, you’ve chosen to ignore it. And filled even more of the screen with your long winded hand waving.

          • JohnG January 19, 2016 at 7:44 am #

            A brief look at the comments in that entry, BTW, seem at first blush to indicate that your views, like those of Keynes, have undergone some serious indoctrination since then. Is that not so?

            What the **** are you gibbering about now?

      • JohnG January 18, 2016 at 2:11 am #

        I think you’re overstating the ‘legal tender’ laws somewhat. They’re probably not really even necessary anymore.

        My understanding is that your crypto-currencies are considered as commodities and will be taxed as capital gains.

        Which seems to be about right because they are commodities, not money.

        I don’t think anything in the legal tender laws prohibit barter though do they?

        As an aside for you to think about, when you have negotiated your labour for payment (in whatever medium) you have issued credit.

        • Wesley - virtually January 18, 2016 at 7:43 pm #

          Language matters:

          In America, the virtual currency is not permitted to compete with the dollar, and accounting for its use alone will be nigh impossible. However, in Europe, Bitcoin has not been classed as property or a commodity, but rather as a currency!

          http://www.forbes.com/sites/irswatch/2014/12/04/irs-approach-to-taxation-of-bitcoin/#2715e4857a0b7f43164198c7
          https://www.irs.gov/uac/Newsroom/IRS-Virtual-Currency-Guidance
          http://blogs.wsj.com/digits/2015/10/22/eu-rules-bitcoin-is-a-currency-not-a-commodity-virtually/

          • JohnG January 19, 2016 at 12:15 am #

            Dissembling.

          • Roger January 19, 2016 at 8:45 am #

            http://www.coinfox.info/news/4429-the-investigative-committee-director-russia-unless-bitcoin-is-banned-it-can-displace-ruble

            Government power ultimately comes form the people even in an autocracy this was taught to the Swedish ROyal Family in this episode.
            https://en.wikipedia.org/wiki/Coup_of_1756 The COup against the Government was lead by the Queen against Parliament , her punishment was a sever telling off part of which reinforce what had already been made explicit in Swedish government that Power comes from the People represented by the 4 estates.

            The point about Power and also about the instruments of bureaucracy that power administers , including money is that they have to be accepted by the people who ultimately are of course self interested. Regardless of what category Crypto Currencies are prescribed by law what people choose to accept in payment is what people choose. Its a false argument to define money as that which is acceptable to Government for payment of taxes. A lot of circular reasoning can go on here but do remember one of the things which Thomas Paine gives a good account of in Common Sense is there can be no taxation without representation m the aspects of colonial Scrip also did not escape Paine’s interest either. The politics of Numismatics what might be called Political numismatics should not be ignored.

        • Wesley - Progressing! January 18, 2016 at 7:53 pm #

          The exchange of my labour for money is a perfect example of the extension of legitimate credit. Once my labor is complete, this extension of credit to those who would employ my labours is settled with payment of money. Today, that contract has been defiled by force of legal tender laws. If I contract to exchange my labour for silver, and she who would then settle that extension of credit immorally with payment of dollars (ie, another credit), would be found perfectly acceptable under the legal tender laws of the world.

          But, since you seem to think that the legal tender laws are not necessary, then we have found another point of agreement. Progress!

          • JohnG January 18, 2016 at 10:47 pm #

            No. There’s no progress in that. You’re just going around in circles in melodramatic language.

        • Wesley - Legally Tender February 8, 2016 at 12:29 am #

          No, JohnG – nothing in our laws prevents exchanges through barter. However, those exchanges are taxed. Gains or losses in that which I choose to use as a monetary unit, as measured in Fiat, are arbitrarily taxed also for capital gains. This, by the obvious disincentives of unjust laws, discourages their use. Remove the taxation of monetary metals, (or any other money system that you and your freely consenting counter-parties would agree) and watch them shine further!

      • JohnG January 18, 2016 at 3:15 am #

        “Predatory capitalism” is a VERY populist term – but I would agree that the State’s asymmetric support of a few has perverted any notion of capitalism being present

        Dude, you really really need to think about the language you’re using.

        If you don’t think that these Wall St masters of the universe who’ve made themselves richer than Croesus aren’t capitalists you need your head examined.

        Most of this stuff that you’re typing involves perverting plain English a la Humpty Dumpty. You can’t just redefine words to suit your needs and expect to have a rational conversation.

        It’s tiring and tiresome.

        I’d recommend reading some Orwell on the subject of language.

        • Wesley - from Airstrip One January 18, 2016 at 10:41 pm #


          JohnG January 17, 2016 at 1:50 am “Hmmm, Keynes was an analyst that formalised the discipline of macroeconomics. Not the architect of anything much. He also radically changed his views over time. The only thing that didn’t change was his excruciatingly impenetrable prose.”
          A: Keynes, brilliant by any measure, was exceedingly cogent and clear when he chose to be – as my verifiable quotations will attest. When he was asked by the banking establishment to come up with his Theory, he was by all accounts, impenetrable – agreed. One must ask oneself whether that foggy prose was not a product of a tortured mind. It’s probably the only legacy of Keynes’ that gives me the faith that he knew precisely what he was doing when he wrote that monstrosity. And the establishment paid him for it handsomely. In fact, we continue to pay for it now!

          “‘Confiscation’ and ‘theft’ imply something taken from one and given to another. I don’t see that inflation does that.”
          A: Of course not. MMT requires that you embrace inflation with a different meaning. I have defined inflation. Many have defined inflation differently – MMT especially included. I have also even allowed in my discussion for the common understanding associating “inflation” with consumer price increases. Question: if I “deposit” one hundred thousand dollars in the bank in a demand (checkable) deposit at the beginning of the year, and I receive 0.25% in interest, and the Federal Reserve “targets” and successfully achieves 2% inflation during the course of that year, how much “money” have I NOT had confiscated or stolen from me? By whatever definition of inflation YOU choose?

          MMT may label that process something other than confiscation or theft – in fact, they probably hail that mechanism as a public policy success. Ask Noam Chomsky and George Orwell about that use of semantics in that manner, and then think about the process of “Re-branding” that MMT would have me swallow with my lunch today…

          “Either way I’m not really interested in semantics.”
          A: I am VERY interested in semantics. Semantics lie at the basis of understanding. This ‘blog posting is about semantics. You have employed countless instances herein to use the indecipherable new-world-order-defined language of MMT to propose incredible hypotheses, while labelling anything else to be a form of “voodoo” and “libertarian humbuggery.”

          “Plain language has a perfectly good word for inflation. “Inflation”. Understanding what causes it and what it does is the important part. And I think you are wildly wrong on both.”
          [Addressing the loss of 97% of my purchasing power through the processes of inflation]
          JohnG : January 18, 2016 at 5:37 am You labelled this process [not] “any great problem” and “Stripped of the melodramatic language that means nothing much.”
          A: Language matters. Semantics matter. This is about Dissent and its rebranding. Take a look at the proposition of “inflation” in the bizarro world of MMT:

          http://neweconomicperspectives.org/2013/03/what-is-modern-monetary-theory-or-mmt.html
          [
          …The great virtue of modern, fiat money is that it can be managed flexibly enough to prevent *both* deflation and also any truly damaging level of inflation – that is, a situation where prices are rising faster than wages, or where both are rising so fast they distort a country’s internal or external markets. Without going into the details prematurely, there are technical reasons why a little bit of inflation is useful and normal. It discourages people from hoarding money and encourages healthy levels of consumption and investment. It promotes growth – provided that a country’s fiscal and monetary authorities manage it properly.]

          Wesley’s comment: Digest these semantics a bit in the context of manufacturing consent to MMT precepts: Deflation will not be tolerated (discussed earlier) – and (this will only pinch a bit, and over a lifetime, you’ll barely notice) – we’ll see to it that just small (not specified) amounts of inflation (nothing TRULY damaging, mind you) by central MMT management. “A little bit of inflation is useful and normal”? Saving money is considered “hoarding”. If you’re in debt, inflation will help you! If you save, inflation will forcibly redistrubte your savings to those who do not hoard. And then there’s that serious trigger-word that I tipped you off about above: GROWTH. Translation: Inflation is necessary to maintain growth.

          The MMT link continues:
          “The trick is for the government to spend enough to ensure full employment, but not so much, or in such a way, as to cause shortages or bottlenecks in the real economy. These shortages and bottlenecks are the actual cause of most episodes of excessive inflation. If the mere existence of fiat monetary systems caused runaway inflation, the low, stable rates of consumer-price inflation we have seen over the past thirty-plus years would be pretty difficult to explain.”

          Response: The Central-Planning MMT mindset would have you believe in this trick. That their “dashboard” of computers is powerful enough to predict the outcomes of every economic transaction on every price of every commodity and service in the economy – ensuring non-inflationary full employment, and avoiding shortages. Utter Machiavellian pipedreams. Man’s economy is a complex, dynamic system that defies these (and all previous nightmarish) attempts at centrally planned control. Just ask the men and women in the socialist paradise of Venezuela about their attempts to get tampons and toilet paper. These items cannot be spent into existence with ex-nihilo credits being viewed as the source of demand. I’m sorry – but the flapping of a housewife’s butterfly wings in St. Louis buying some bread has not yet been well connected (by MMT computers) to the raging tempests of inflations occurring in the rest of the world as a result of our fiat-dollar hegemony.

          Same link – next paragraph:
          “The essential insight of Modern Monetary Theory (or “MMT”) is that sovereign, currency-issuing countries are only constrained by real limits. They are not constrained, and cannot be constrained, by purely financial limits because, as issuers of their respective fiat-currencies, they can never “run out of money.” This doesn’t mean that governments can spend without limit, or overspend without causing inflation, or that government should spend any sum unwisely.
          ]

          Response: Those of you reading this thread mindful of the relationship of the last sentence above, should be shuddering in fear over the implications. We (MMT) cannot allow you to choose unwisely, and with us in charge, you needn’t worry that government should spend any sum unwisely either.

          Choose wisely.

          ps: Will the above heresy be considered a “thoughtcrime” in the MMT world?

          • JohnG January 18, 2016 at 11:00 pm #

            1. Pointless.
            2. Clumsy attempt at sophistry.
            3. Ad hominem.
            4. Still not interested in semantics or your attempts to redefine words.
            5. No I’m using plain language. Your misuse of language and rhetoric makes conversation tiresome.
            6. Then what does it mean in real world terms? It’s a scare meme without any real world application.
            7. Just absurd drivel.

          • JohnG January 19, 2016 at 2:33 am #

            Wesley – the non-Monetarist January 19, 2016 at 1:31 am

            I’m just going to ignore all the stupendously stupid ad hominem ‘use of force’ and ‘central planning’ nonsense. It’s just an hysterical screeching series of strawman constructions and is thus irrelevant outside your desire to goad, insult, denigrate or censor. Or any combination thereof.

            The only thing I will say is that the ‘taxpayer’ is not in any way shape or form liable for the so called government debt of the USA.

            Quite the reverse. Federal government liabilities i.e the ‘national debt’ are assets of the non-government sector/s (credits).

            In fact (i.e. the real world), the federal ‘debt’ exactly equals the non-government sector/s’ net US$ financial assets.

            To the penny.

            I think you could do with an intensive course on how to read a balance sheet. Perhaps starting with ‘what is a balance sheet?’

            I don’t have the patience.

            Oh and buy a dictionary for all our sakes please.

            e.g. I will happily stipulate that further discussion of the “What is Money” and Money vs. Credit variety properly belongs there.

            stipulate 1 |ˈstēpyəˌlāt|
            verb [ trans. ]
            demand or specify (a requirement), typically as part of a bargain or agreement : he stipulated certain conditions before their marriage | [as adj. ] ( stipulated) the stipulated time has elapsed.

            MMT and monetarism are entirely oppositional views. YOU sir, have a monetarist view albeit minus the multiplier view of bank credit. (where you’ve adopted the MMT description).

      • JohnG January 18, 2016 at 5:37 am #

        Since the imposition by force of the FED, the US Citizen has lost 97% of her purchasing power through a continuing, immoral confiscation of saved wealth representing human labor.

        Stripped of the melodramatic language that means nothing much.

        Either about labour purchasing power or the causality of what isn’t any great problem.

        Libertarian humbuggery.

  33. Spartacus Rex January 18, 2016 at 12:50 am #

    Slump of the Real Economy. The Chart That Explains Everything.

    http://www.globalresearch.ca/slump-of-the-real-economy-the-chart-that-explains-everything/5501851

    Cheers,
    S. Rex

    • JohnG January 18, 2016 at 2:31 am #

      Basic economic theory suggests that when private sector can’t spend, then the government must spend to offset deflationary pressures and prevent a major slump. Cutting the deficits removes vital fiscal stimulus from the economy. It’s like applying leeches to a patient with flu symptoms thinking that the blood-loss will hasten his recovery. It’s madness, and yet this is what Obama and the Congress have been doing for the last six years. They’ve kept their hands wrapped firmly around the economy’s neck trying to make sure the patient stays in a permanent state of narcosis.

      Hear hear.

      Good to see Mike Whitney gets it.

      • Spartacus Rex January 18, 2016 at 4:33 am #

        @ John G

        Perhaps this will help:

        “Basic economic >>>theory suggests<<< that when private sector can’t spend, then the government must spend to offset deflationary pressures and prevent a major slump. Cutting the deficits removes vital fiscal stimulus from the economy. It’s like applying leeches to a patient with flu symptoms thinking that the blood-loss will hasten his recovery. It’s madness, and yet this is what Obama and the Congress have been doing for the last six years. They’ve kept their hands wrapped firmly around the economy’s neck trying to make sure the patient stays in a permanent state of narcosis.
        That’s the goal, to suffocate the economy in order to reward the thieving vipers on Wall Street. And Obama and the Congress are every bit as guilty as the Fed.”

        Which part of the graph presented within the article still eludes you?
        http://static1.businessinsider.com/image/55f90fbfdd0895393a8b46f7-805-651/nomura-koo.jpg

        ergo, the issue to which I was addressing in my response to David:
        http://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-603308

        ' …any honest person should have no difficulty in answering the question as to ‘Gee, how’s that been working out for us so far?’ Or as they say in Latin:
        Quis custodiet ipsos custodes? '

        Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
        John Maynard Keynes The Economic Consequences of Peace (1919)

        Cheers,
        S. Rex

        • JohnG January 18, 2016 at 4:56 am #

          Which part of the graph presented within the article still eludes you?

          I understand the chart. And I understand Mike Whitney’s point.

          Which is not what you think the chart is telling you.

          The point is that monetary policy has never ever been about, or at the very least been ineffective at, stimulating the real economy.

          Fiscal stimulus is needed i.e. more government spending. Bigger deficits. Job creation.

          Stop the deficit terrorism.

          QE is not spending. It only rearranges the asset portfolio. The Fed on its own cannot create net financial assets in the private sector.

        • JohnG January 18, 2016 at 5:17 am #

          You will never balance the Budget through measures which reduce the national income. The Chancellor would simply be chasing his own tail – or cloven hoof! The only chance of balancing the Budget in the long run is to bring things back to normal, and so avoid the enormous Budget charges arising out of unemployment…Even if you take the Budget as your test, the criterion of whether the economy would be useful or not is the state of employment…I do not believe that measures which truly enrich the country will injure the public credit… It is the burden of unemployment and the decline in the national income which are upsetting the Budget. Look after the unemployment, and the Budget will look after itself.

          JM Keynes 1933

          • Roger January 18, 2016 at 7:54 am #

            Re: Saskia Sassen.

            ”We”ll have to agree to disagree. Maybe I’m wrong but I put her in the Krugman, Picketty, Stiglitz category of using a lot of words that sound progressive but ultimately saying not very much of value.

            I’m far more interested in solving the immediate problems immediately i.e. getting people back to work in well paying jobs.

            If I get time I’ll have another look at her stuff.

            Werner is being a bit disingenuous there. The literature and the knowledge has existed for a long time. The neoclassicals and the Austrians ignore it because it doesn’t fit their ideological bias that government is bad, big business good and people don’t matter.”

            By all means John G. I might venture however Chomskys point from Manufacturing consent . The one regarding concision being a great censor. If one challenges a dominant paradigm then ones claims require rather more explanation than the sort of indexing and meme play that is acceptable when remaining within the Nostrums of received orthodoxy´´

            This is particularly important to remember when If one chooses to propose an MMT ( Modern Monetary Theory) solution which is offering the present hegemony effectively with a different more benign ownership.

            ´´Sovereign, fiat, non-convertible, floating exchange rate currencies are pretty much as good as it gets.´´

            (your point 2 above)

            also yoiu make this point.” I just can’t see the point of these local currencies. Can’t we have well regulated, democratically controlled localised banks, building societies, co-ops etc?”

            Ellen Brown has written extensively on the Bank of North Dakota and we have seen the EURO and ECB attacking the municipal and regional banking structures of The Federal Republic of Germany.

            What you are arguing for John g is more centralisation limited by state sovereignty granted which is better than Where the current system is headed what is clear to me though is that in a scenario where Big is seen as ever beautiful , it is easy to go past the point of balance and see diminishing Marginal returns as it were.
            FInally for me John G
            3. There is no reason for a state to accept anything but its own currency as taxes.
            This is the crux of my objection The commons is local and customary the State can not be the commons , The statte along with Capitalism destroyed the commons facilitating the Enclosures. Michale Perlmans excellent The Invention of Capitalism makes this point very clearly and the attitudeswe see in Neo Liberalism and Advanced financialised State Monopoly Capitalism is summed up by this story which is recouynted by Perlman but copy and pasted from WIkipedia.
            https://en.wikipedia.org/wiki/Highland_Clearances
            ´´The Duchess of Sutherland, on seeing the starving tenants on her husband’s estate, remarked in a letter to a friend in England, “Scotch people are of happier constitution and do not fatten like the larger breed of animals.”

            To give this quote a modern context Sassens notion of the Expelled is as I have already said very powerful.

        • JohnG January 18, 2016 at 8:56 am #

          Roger, I read her paper and it told me nothing that I didn’t already know. To be honest, I’d do better.

          I’ve been watching at first hand this dispossession take place for a long time. At least since the hoax that was the Green Revolution.

          This is particularly important to remember when If one chooses to propose an MMT ( Modern Monetary Theory) solution which is offering the present hegemony effectively with a different more benign ownership.

          What we’re saying is: understand the system as it is and then maybe find a better way of steering the ship. It’s up to you how far you want to go.

          It’s the baby and bathwater situation.

          I don’t believe in destroying the village to save the village.

          I won’t comment on Ellen Brown other than to say that North Dakota is a reasonable example of a state owned bank that works.

          The ECB is a political enterprise and the EZ is an abomination. Completely dominated by extremist neoliberal and libertarian corporatist fools and gangsters.

          There is nothing in Europe but lessons in how not to do things. Quite a graphic (but tragic) advertisement for MMT principles actually.

          I don’t see any future where state money will be obsolete and I can’t see how your crypto-currencies can work either mathematically or politically.

          The challenge (for mine) is to make state money work for society wide progress.

          As I said, I’m sympathetic to left anarchism but even my most ardent anarchist friends know that it has a paradox that can’t be beaten.

          Only the power of a state with the will of its people can defeat the power of monopoly capitalism.

  34. Spartacus Rex January 18, 2016 at 12:57 am #

    Henry Hazlitt: Economics In One Lesson
    https://fee.org/files/doclib/20121116_economicsinonelesson.pdf

    Murray Rothbard: What Has The Government Done to Our Money?
    https://mises.org/sites/default/files/What%20Has%20Government%20Done%20to%20Our%20Money_3.pdf

    Murray Rothbard: The Case Against The Fed
    https://mises.org/sites/default/files/The%20Case%20Against%20the%20Fed_2.pdf

    Cheers,
    S. Rex

    • Roger January 18, 2016 at 8:44 am #

      I am just adding my posts to the very last answer that appears and referring back to wherever it is directed. So pardon me Sparticus Rex, Thank you for those links i will read them later although I am pretty familiar with both Rothbard and Hazlitt.

      @John G ”Sweden, from what I’ve seen is stumbling head first into neoliberal madness after so long as a social democratic bulwark where capital was kept on a tight leash.´´

      I think Sweden has been pushed rather than stumbled into its Neo Liberal turn. AT the last election the obvious Neo Liberal block was rejected and a Left Block came to power and both the Neo Liberal and Left block agreed a compromise on Economic Policy to prevent the Swedish Democrats ( basically a proto fascist and racist party more BNP than UKIP, but in a Swedish way.)

      Sweden’s Political Economy is complicated and in many ways more like Switzerland’s than anywhere else in Europe. The Swedish Banking crisis in 1990 and how it was dealt with probably saved Sweden from going to deeply down the Neo Liberal Rabbit hole but there is an Oligarchical Fifth Column here as there is every where else. I will spare you the Swedish History Lesson John G but Olof Palme speaks for the Swedish very well here, people are well educated here still and know only to well what Palme is saying here.

      https://www.youtube.com/watch?v=QQ0h5Xywfm8

      Heres A band I used to play in doing their version of Stadt och Kapitallet which also is still very popular in Sweden as a song.

      https://www.youtube.com/watch?v=-AW9T_dt8D4

      http://www.lilagatubandet.se/

      Capital raising rents
      and state housing benefits
      you can wangle a tad
      the iron law of wages
      and even pay less in salary
      than the price of food and for rent
      the government contributes so much to the
      if the cost of living has become
      too expensive.

      Side by side, they help each
      state and capital, they are in the same boat
      though it is not them that rowing Rowing so sweaty
      and whip that tickle, tickle, nor
      their fat necks.

      The school’s mission is as it should be
      the school workforce
      the brooms to sweep good
      we must not be careless with the handles
      barriers and quotas and testing program
      is a system to screen
      wheat from the chaff, and was one o
      to his right fold.

      Side by side, together they emphasize the
      state and capital, two wolves pious as lamb
      though it is not them that rowing Rowing so sweaty
      and whip that tickle, tickle, nor
      their fat necks.

      Side by side, they help each
      state and capital, they are in the same boat
      though it is not them that rowing Rowing so sweaty
      and whip that tickle, tickle, nor
      their fat necks.

      The tempo is raised at the machines,
      This trills male elite
      production can not accommodate the
      that has become badly worn
      but lest anyone should think that there is something wrong
      with the heavy chords
      he is regarded as a disease and treated
      the compassionate care work.

      Side by side, together they emphasize the
      state and capital, two wolves pious as lamb
      but it is not them that rowing Rowing so sweaty
      and whip that tickle, tickle, nor
      their fat necks.

      Side by side …. Aah aah aaaah aaaaah!

      Lagom! truly is the Swedish way.

      https://en.wikipedia.org/wiki/Lagom

      • JohnG January 18, 2016 at 9:11 am #

        Not to mention a US fifth column.

        • Roger January 18, 2016 at 11:33 am #

          Only the power of a state with the will of its people can defeat the power of monopoly capitalism..

          The people through Direct Democracy will overcome the control and exploitation of State Monopoly Capitalism.

          Bachunin Here sums up my own Ardent Anarchist Belief.

          Bachunin predicted that ;

          ”They [the Marxists] maintain that only a dictatorship—their dictatorship, of course—can create the will of the people, while our answer to this is: No dictatorship can have any other aim but that of self-perpetuation, and it can beget only slavery in the people tolerating it; freedom can be created only by freedom, that is, by a universal rebellion on the part of the people and free organization of the toiling masses from the bottom up.´´

          —Mikhail Bakunin, Statism and Anarchism[36

          The Blockchain can enable ‘both decentralised Currencies but is also infinitely applicable to any ledger based record of social relations.

          Again I link to something from earlier James Burkes predictions which see both Corporations and states extinct technology has always rendered them both obsolte, political technology of command and control have just not caught up as they are more concerned with protecting their own structures.

          https://www.youtube.com/watch?v=fiM3CV4Z6w8

          Heres an early and prescient paper on Neoliberalism in a geographic context with some highlighted quotes, Adam and I were at School together and are still freinds today.

          https://www.researchgate.net/profile/Jamie_Peck2/publication/227652742_Neoliberalizing_Space/links/02e7e53173e89589de000000.pdf

          p.385
          The conclusion
          that we drew at the time was that—in the absence of a more stable,
          socially/spatially redistributive, and supportive extralocal framework
          —the neoliberal constitution of competitive relations between
          localities and regions placed real limits on the practical potential of
          localized or “bottom-up” political action (Amin 1999). In the asym

          metrical scale politics of neoliberalism, local institutions and actors
          were being given responsibility without power, while international
          institutions and actors were gaining power without responsibility:
          a form of regulatory dumping was occurring at the local scale, while
          macrorule regimes were being remade in regressive and marketized
          ways

          p.388
          The first of these shifts occurred in the late 1970s, as neoliberalism
          underwent a transformation from the abstract intellectualism of
          Hayek and F
          riedman to the state-authored restructuring projects of
          Thatcher and R
          eagan. This can be characterized as a movement from
          “proto-” to “roll-back” neoliberalism: a shift from the philosophical
          project of the early 1970s (when the primary focus was on the
          restoration of a form of free-market thinking within the economics
          profession and its subsequent [re]constitution as the theoretical
          high ground) to the era of neoliberal conviction politics during the
          1980s (when state power was mobilized behind marketization and
          deregulation projects, aimed particularly at the central institutions of
          the Keynesian-welfarist settlement). The backdrop to this shift was
          provided by the macroeconomic crisis conditions of the 1970s, the
          blame for which was unambiguously laid at the door of Keynesian
          financial regulation, unions, corporatist planning, state ownership,
          and “overregulated” labor markets. In this context, the neoliberal
          text—freeing up markets, restoring the “right to manage,” asserting
          individualized “opportunity rights” over social entitlements—allowed
          politicians the right to be both conservative and radical.

          p.389

          neoliberalism is
          increasingly concerned with the roll-out of new forms of institutional
          “hardware.” In the neoliberal heartlands, this is associated with a
          striking coexistence of technocratic economic management and invasive
          social policies. Neoliberal processes of economic management—rooted
          in the manipulation of interest rates, the maintenance of noninflation

          ary growth, and the extension of the “rule” of free trade abroad and
          flexible labor markets at home—are increasingly technocratic in form
          and therefore superficially “depoliticized,” acquiring the privileged
          status of a taken-for-granted or foundational policy orientation. Mean

          while, a deeply interventionist agenda is emerging around “social”
          issues like crime, immigration, policing, welfare reform, urban order
          and surveillance, and community regeneration.
          p.392

          F
          ollowing the blue-collar shakeouts of the
          1980s and the white-collar downsizings of the 1990s, the attention of
          policymakers has focused with increasing insistency on the challenges
          of reproducing regimes of precarious work and mobilizing the poor
          for low-wage employment. Market discipline, it seems, calls for new
          modes of state intervention in the form of large-scale incarceration,
          social surveillance, and a range of microregulatory interventions to
          ensure persistent “job readiness” (P
          iven and Cloward 1998).

          p.398
          the management of
          urban “underclasses,” the regulation of contingent labor markets, and
          the displacement of welfare entitlements with socially authoritarian
          packages of rights and responsibilities (P
          eck 2001; T
          ickell and Clark
          2001; W
          acquant 1999). F
          or W
          acquant (1999:319–320), this represents
          an aggressive and deliberate internationalization of a “new penal
          commonsense,” rooted in the recriminalization of poverty and the
          resultant normalization of contingent labor:

          ”[Neoliberal nostrums] did not spring spontaneously, ready-made, out
          of reality. They partake of a vast constellation of terms and theses
          that come from America on crime, violence, justice, inequality, and
          responsibility—of the individual, of the “community,” of the national
          collectivity—which have gradually insinuated themselves into Euro

          pean public debate to the point of serving as its framework and
          focus, and which owe the brunt of their power of persuasion to
          their sheer omnipresence and to the prestige recovered by their
          originators” (( BECAUSE MARKETS?))

          The specter is there

          fore raised that the very same channels through which the neoliberal
          project has been generalized may subsequently become the trans

          mission belts for rapidly diffusing international crises of overaccumu

          lation, deflation, and serial policy failure. Indeed, as we hover on the
          brink of a global recession—the first since the 1930s, when an earlier
          form of liberalism was the commonsense of the time—neoliberalism
          may be about to face its sternest test of credibility and legitimacy.

          © 2002 Editorial Board of
          Antipode
          .
          Published by Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden,
          MA 02148, USA
          Neoliberalizing Space
          Jamie Peck
          Department of Geography, University of Wisconsin-Madison, WI, US;
          jpeck@geography.wisc.edu
          and
          Adam Tickell
          School of Geographical Sciences, University of Bristol, Bristol, UK;
          a.tickell@bristol.ac.uk

          • steviefinn January 18, 2016 at 3:29 pm #

            Phew – helluva lot to catch up on here between you Roger, John & Wesley…….should be interesting if Mike Hall turns up. I will start next week when I get a minute – I already have a pile of your videos to watch.

            My own probably simplistic view on Neoliberalism is those who push it, feel they cannot lose as with Chile all that time ago, they still have control of most of the methods of wealth extraction even after the Chicago boys were kicked out. Maybe they have modern day mind set of the Vikings who started with small raids, found it worked & then expanded. I also suppose that any economic theory especially as it becomes larger & more complex, being not true science will have it’s limitations & that most importantly, we need to control the actions of our looters, whatever system is in place, as they rarely sleep while we too often slumber.

          • Roger January 18, 2016 at 4:03 pm #

            Hi Stevie, I am sure you are correct. On Bitcoin this is a very impiortant Article that bears serious thought, non of these problems with Bitcoin are new to me. The Blockchain and other Crypto currencies and applications addressed many of these things, looksas if Bit coin could go the way of My Psace, I only hope that Facebook goes the same way.

            https://medium.com/@octskyward/the-resolution-of-the-bitcoin-experiment-dabb30201f7#.su567oz4v

            ”Think about it. If you had never heard about Bitcoin before, would you care about a payments network that:

            Couldn’t move your existing money
            Had wildly unpredictable fees that were high and rising fast
            Allowed buyers to take back payments they’d made after walking out of shops, by simply pressing a button (if you aren’t aware of this “feature” that’s because Bitcoin was only just changed to allow it)
            Is suffering large backlogs and flaky payments
            … which is controlled by China
            … and in which the companies and people building it were in open civil war?

            I’m going to hazard a guess that the answer is no.” It was on the BBC, Web site too.

            http://www.bbc.com/news/technology-35343561

            In these interesting times all investment and business decisions require a high degree of circumspection.

          • Roger January 18, 2016 at 6:23 pm #

            http://www.golemxiv.co.uk/2013/06/creating-money/

            Hi John G, Much of what we have been discussing is all here in Davids Blog Linked above. Toby who writes the Econosophy Blog is very eloquent, Toby is one of my intellectual crushes I have to admit as too is David here at Golem XIV.
            Myths of Creating Money
            Toby June 6, 2013 at 3:18 pm #

            This is a good article. I especially like the angle that what is happening now is probably more important than the impenetrable origins of this mysterious and powerful phenomenon.

            And sorry in advance; this is a very, very long comment.

            I think money is the gatekeeper of the rot that is capitalism, and perhaps, deeper than that, what we think of as civilizational progress itself, what Charles Eisenstein calls The Ascent of Humanity, so it warrants close attention. I’ve come to agree with the “money is a creature of the state” position, but this requires having a quite tight definition of money, such that exchanging some group-agreed item in something resembling barter does not make that item money proper, but a sort of pseudo-money, a quasi-money, which looks money-like to our modern eyes. Perhaps that’s academic, but I like to think it’s a constructive distinction, because it prevents unhelpful mission-creep and helps us see what’s been going on these last 5 millennia or so.

            David Graeber’s tracing of the origins of money along several different strands of development is the best I’ve read. Mix wergild with slavery with the early state with armies with taxation with markets and you end up with money as an exquisite tool of control for the state, as well as engine of civilizational progress. We see this mighty power, I believe, in the global domination of the nation state, the corporation and modern global markets. As such, I think the infamous State vs. Market battle is a Punch and Judy show, though also a ‘real’ one (that’s another topic). State and Market are joined at the money system via banks and all that Wizard of Oz chicanery. There’s no separating them, no matter how fervently libertarians and others might wish otherwise.

            Regardless of money’s ‘true’ origins, it commoditizes everything, even itself. This is an important point. Even though, as Soddy rightly argues, money is a nothing (imagine escaping with all the earth’s money and precious metals to the moon – how rich would you be?), even though it can be ‘created out of thin air’ – theoretically at will by government – while money is money it necessarily has commodity value, and thus market becomes powerful too. Once money exists and functions, it is required while there are scarce goods and services to be bought and sold by societies that need them to live and enjoy life. It is equally true that money requires scarcity to exist, and thus must make scarce everything it touches/commoditizes. For a whole host of reasons it also requires or tends to push economic growth, such that Perpetual Economic Growth is an “imperative”, regardless of the fact that it is impossible. It is no coincidence that states and corporations also need to grow forever. Like I say, State and Market are joined at the money system.

            So money commoditizes everything it touches, like King Midas turning everything he touched into gold. It also appears to measure value, but even in failing to do so (via the far-from-scientific price system) is extremely effective in shaping how government and people behave. If it makes no financial sense to do a thing, it is unlikely that thing will get done. This simple equation steers society. On Naked Capitalism last week, some wag wrote something like, “A long time ago money started talking. We haven’t been able to shut it up since.” That sums it up nicely. Money is a nothing of enormous power that can bewitch and tightly shepherd billions of people. If the market reacts positively to something it must be good, if it reacts negatively it must be bad, and we must obey the market. Money has become our endlessly opinionated new god, one that must grow and grow and grow to take over every aspect of our lives, just as the state seems to want to do.

            One of the matters it holds sway over is how we culturally understand terms like wealth and productivity. Something vital like sleep is not productive, while something destructive, like fracking is. Productive (which is good) is that which produces something for sale. Non-productive (which is bad), is any activity which does not. Because of money and regardless of its origins, we are at the mercy of the market’s greed- and growth-based visceral instinct on what is good and what is bad. We all know that human life is far more nuanced than the market can possible understand or represent, and yet trying to imagine a society not run by money is far from easy. Can we demote money? I sure hope so, but believe that would necessarily demote the state as well. Neither half of the State-Market behemoth remotely wants this, and yet I strongly suspect that history is pushing us in precisely that direction. Money is all about control, as is the state, as is civilization, but time is running out for money. The question is whether or not this means time is running out for civilization too.

            Two things are becoming increasingly evident and both are slowly eroding money’s utility (in its current form). One is the end of economic growth, the other is increasing technical sophistication, or technological unemployment. Because of the work ethic (remember that money strongly influences our sense of wealth and productivity), valuable work is that work the market says is valuable. Because consumerism (money’s wet dream) and perpetual growth do not deliver happy and healthy societies and are unsustainable to boot, and because we are technically capable of producing what humanity needs to live decent lives largely without human labour, money’s utility is under pressure. As fewer and fewer people can find a job, so fewer and fewer people have purchasing power. As the world runs out of ‘idle’ resources with which to fuel perpetual growth, so debts mount without being able to foster and provoke the main street economic growth that ultimately backs modern money (market-driven commodity price rises notwithstanding). And I suspect too that we are slowly growing tired of consumerism, though this element is impossible to prove, especially with China and India wanting to join the consumerist party.

            How should we react to the end of growth and the ‘onslaught’ of technological unemployment? If we go for 100% employment, we implicitly agree with money that work that causes money to change hands is more valuable than work that does not and thus continue to allow money to be our master. Further, if we go the 100% employment route, are we not betting the farm on growth being reignited? Can the planet afford that? And is there enough meaningful economic work out there for everyone, or would most people be employed to do anything at all, just so as to have a job?

            I think a guaranteed income made financially viable by a (necessarily) very different money system, alongside some process which shrinks the state and consumerism and market etc. as smoothly as possible, is the safest way forward, though also the path we’re the least likely to tread. Money so has us in its grip, we simply cannot imagine, at the cultural level, a sufficiently different system. And besides, the Money Power wants to keep itself alive and kicking, which makes deep change very unlikely. Sadly, in its death-throws, the things it is kicking are you and me, and the ecosystems which are its, and our, real sources of life and wealth.

      • JohnG January 18, 2016 at 10:37 pm #

        Hi Roger,

        my position is that the concept of ‘money’ is the wrong focus. So I understand Mike Hall’s frustration in that other thread.

        It isn’t money that is financialising the commons etc. It is men.

        Money is a social instrument that capitalists crave and will use to their benefit. Not a capitalist instrument. Their power over the system is an illusion.

        A basic element of the neoliberal project has been to confuse and mislead the public (and I include politicians and the media) about the nature of money and the way that it works.

        Especially to blur, or indeed wish away, the difference between government money and bank credit.

        I also (tend to) believe that the ‘libertarian’ movement and Positive Money are part and parcel of maintaining that confusion.

        If we want to go back to first principles we need to know what those principles are.

  35. steviefinn January 18, 2016 at 8:52 pm #

    That makes a lot of sense to me Roger, as in money being a tool of the state & the assertion that nothing gets done unless it is deemed productive is especially pertinant in terms of Neoliberalism. As with any tool it’s use depends on the user & as the politicians have now for the most part been bought by vested interest, which makes it pretty obvious that it is the money grubbers who are running the show. Their definition of productive wouldn’t be hard to guess & the value of it would be calculated on the level of them being able to dip their beaks. Productive in the sense of it’s benefits to the majority within society wouldn’t I think, even come into it. Life must be very simple if all you can see is a trough.

  36. Wesley, with Humpty Dumpty January 19, 2016 at 4:38 am #

    @Roger January 18, 2016 at 6:23 pm “…what is happening now is probably more important than the impenetrable origins of this mysterious and powerful phenomenon.”

    Completely agree. I think Graeber’s anthropological insight into the possibility that credit-type relations probably preceded use of money is a reasonable hypothesis. But as Clinton is fond of saying, “What does it matter”. He’s acknowledged the difference between credit relations and money. I think it’s also especially insightful into the whole money v credit concept, that as between strangers (where trust relations necessary for the use of credit were missing), the use of money developed organically. That thing that was most universally chosen as money (despite many fascinating uses of other things such as peppercorns!), and had the widest acceptability worldwide, has always been gold. The expression of that fact by me should not result, I should think, in my being labelled incorrectly a gold-bug by JohnG – but perhaps I’m being too generous.

    What IS happening now, is the debt-based monetary system imposed by the Polygarchy (in the wonderful Noam Chomsky video linked), is failing. The ability of the system to force more debt into use has neared saturation – and the powers-that-be are frantically trying to come up with another equally fraudulent system for succession (SDRs etc.) In the meantime, disruptive technologies are facilitating a discussion in forums such as this and cafes worldwide, for the first time in over a century, (a discussion not permitted by the MSM) – about the functions and nature of money. As you can see, the discussion is fraught with well-known dangers – but take place it will…

    As Soddy himself said, (in the preface to his 1934 book The Role of Money): “With the monetary system of the whole world in chaos, this mystery has never been so carefully fostered as it is to-day.” I think your conception of money – and mine (counterfeit, thin-air credit loaned into existence), are the same thing – and lie at the root of the greatest evil and rot of society. Credit is a creature of state. Money is a creature of man.

    States, and their State-planned markets are coming apart around our ears. There is opportunity, with knowledge, to plan for alternative forms of wealth preservation and transfer that would mitigate these failings. It is not money that forces the impossible “growth” paradigm in a finite world – it is the ceaseless growth of fraudulently issued credit-money and its associated interest that pushes man ceaselessly to grow in a finite world of resources. This is simple math. If man only exchanges money, and lubricates commerce with legitimate credit that can be permanently extinguished – in other words, a system that can contract as well as expand – even the world’s population would be given quarter to stabilize. The limits of the carrying capacity of the planet are being explored by man, but man’s ability to issue more debt-based credits has been exceeded many times over. Those infinite and unrealizable financial claims to a finite world must be collapsed before progress can be made. Debt that is unpayable will not be paid. We should discuss best practices – with this reality in mind.

    Can we demote money? I say, let’s demote credit – at least fraudulently issued counterfeit credit. If the State cannot feed itself with the ability to monetize its own debt, the State too will be deflated! If man is free to choose what form of money will change hands relating to his “employment”, and is not forced to use the debt-money of State, I think the palette of “work” that man will be free to choose will become quite vividly wider indeed. Work that is forced to use only one form of State-issued credit, versus work that I am free to exchange for the credit of my neighbor willingly agreed – will result in unimaginable new and wonderful relationships.

    I would conclude with Soddy’s own preface ending:
    “To allow [the monetary system] to become a source of revenue to private issuers is to create, first, a secret and illicit arm of the government, and last, a rival power strong enough ultimately to overthrow all other forms of government.”

    Given this has already occurred in the interim, I find Soddy’s words prophetic.


    ps: Discussions are taking place in Finland presently for a form of guaranteed income such as you mention. I believe such plans to be misguided – but we both may have a chance to observe its workings.

    • JohnG January 19, 2016 at 4:55 am #

      This is simple math.

      And yet you have it wrong.

      Alice laughed: “There’s no use trying,” she said; “one can’t believe impossible things.”
      “I daresay you haven’t had much practice,” said the Queen. “When I was younger, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”
      Alice in Wonderland

    • Wesley - clarifying January 19, 2016 at 5:10 am #

      When I say, above “Credit is a creature of state…” – I am strictly carving out that massive subset of irredeemable credit that is manifest ex-nihilo by the banking system. I fully embrace and recognize as right and proper other forms of credit (such as the Labor for silver and Flour-bread-Silver arrangements detailed by me above.)]

      I believe the use of Real Bills, and the discount-function of credit in trade relations (discredited by mainstream thinking since the 1920s), and displaced from use by the imposition of counterfeit credit may play a much larger role in providing the characteristic of “elasticity” so important in these functions – with the benefit of having the ability to contract. I should have been more careful.

    • Roger January 19, 2016 at 9:22 am #

      Hi Wesley,

      I do think we are between paradigms both Technologically and Pollitically, the ability to adapt in human structures of governance and human psycology are being tested hugely. Post WW1 Quiggleys analysis does clearly point to a new economic capacity being accellerated in the war economies that precluded the return to the post war political accomoadation on world trade and banking systems. Ezra Pound in ABC of Economics alrady points to a leisure Economy and the ´Ábundance´´now possible in the ´´Fordist´´industrial economies.

      Meanwhile we have remained in what I would call an Edwardian intellectual rut and the post work to Leisure society hasn´t been explored and we are now entering a sort of Post leisure era. Thje Citizens Income experiment in Finalnd will be interesting there are also proposals in Holland, work sharing experiments here in Sweden in Gothenberg and if you have not come across it before heres the Famous project from Canada in the seventies. https://en.wikipedia.org/wiki/Mincome

      It is here that we can pay tribuite to our host David and the TIltle of this Blog Golem XIV.

      https://www.youtube.com/watch?v=wl9be4bSZa4

      Someone elses Paradigm, Not mine
      Roger Lewis

      https://www.youtube.com/watch?v=hlH4QZtCjWc

      http://soundcloud.com/roger-glyndwr-l

      Someone elses Paradigm But not mine.

      You say that its true, what’s truth?
      Not my understandin,I say your talkin Jive
      Talk like yours is a dozen and dime
      Sure as hell aint my Paradigm

      Gotta get thew funk outta this Paradigm
      Get the funk outta this paradigm
      Gotta shift my ass outta this paradigm
      It aint my paradigm
      It aint my Paradigm

      Don’t make no sense, aint bying this time
      don’t sound like the truth, that aint so fine
      it’s Ok for you it’s your pantomime
      Sure as hell aint my paradigm

      Gotta get thew funk outta this Paradigm
      Get the funk outta this paradigm
      Gotta shift my ass outta this paradigm
      It aint my paradigm
      It aint my Paradigm

      Always your rules, suit you every time
      you never lose youré callin the time
      your god , your money your pantomime
      Well get the funk out
      it aint mine. Said no no no

      It aint my Paradigm
      Gotta get the funk outta this Paradigm
      Get the funk outta this paradigm
      Gotta shift my ass outta this paradigm
      It aint my paradigm
      It aint my Paradigm

      Obamas uncle aint Thomas paine no hes another Uncle Tom
      Uncle Sam aint no uncle of yours or mine
      Two horse one race, one owner their callin the shots
      aint your aint mine no no no
      I’m sayin its time to shif outta their Paradigm

      Gotta get thew funk outta this Paradigm
      Get the funk outta this paradigm
      Gotta shift my ass outta this paradigm
      It aint my paradigm
      It aint my Paradigm
      New Paradigm New Paradigm Shift Shift New Paradigm shhift shift New Paradigm.

  37. JohnG January 19, 2016 at 10:26 am #

    A brief look at the comments in that entry, BTW, seem at first blush to indicate that your views, like those of Keynes, have undergone some serious indoctrination since then. Is that not so?

    What are you gibbering about now?

    Explain both comments/assertions (dishonestly) contained within the sentence.

    • Roger January 19, 2016 at 10:46 am #

      Hi John G,

      I think wesley is saying that your advocacy for MMT based solutions are bordering on evangelical. Wesley is saying by analogy say, that In that older thread the Catechism of MMT was pre council of Nicaea and the gospel now fully formed should be considered infallible. This sort of approach to dogma is well formed as well in the Anthropomorphic global warming dogmas and is well illustrated in much of the strictures coming into force for ”Re-branding Dissent´´. The other day I was sent this , one wonders how advanced the MMT PR effort has got with this sort of ´Education`?

      http://climateoutreach.org/resources/visual-climate-change-communication/

      Cool it is a wonderful FIlm that really demonstrates the ´´Well Meaning ´´censorship saving people from bad thoughts.

      https://www.youtube.com/watch?v=oXXNGjeNQTo

      ”A fire, a fire is burning! I hear the boot of Lucifer, I see his filthy face! And it is my face, and yours, Danforth! For them that quail to bring men out of ignorance, as I have quailed, and as you quail now when you know in all your black hearts that this be fraudGod damns our kind especially, and we will burn, we will burn together!”

      John Proctor quoted from Arthur Millers Crucible.

      • Roger January 19, 2016 at 11:10 am #

        From that Climate Change propaganda web site, It isf rom people such as these we can learn how DIssent will be re branded. Flat Earthers ! anyone.?

        https://www.youtube.com/watch?v=KaLQhjBMIf4

        • JohnG January 19, 2016 at 11:28 am #

          I’ll ask you the same question, Roger, that I asked your buddy Wesley early on.

          What are you going to do for the unemployed right now?

          The honest answer is nothing.You don’t care about them.

          As someone once said “libertarians are like 5 year olds screaming about sharing their toys”, Roger.

      • JohnG January 19, 2016 at 11:14 am #

        I think wesley is saying that your advocacy for MMT based solutions are bordering on evangelical.

        And I think, Roger that you are inclined to agree with him.

        I’m sorry, I mistook you for someone smarter than that. Mathematics doesn’t exist in your world.

        What you and Wesley are in agreement on is that there are no negative numbers. And dividing zero will result in you either tossing your toys out of the pram like Wesley or trying to create a blockchain that defies mathematics.

        Fools and their money eh?

        My apologies to David for saying so, but you’re just idiots. You’re going to give up your capital to someone else through foolishness.

        As imperfect as state money is, thanks, but I’ll stay with the tokens that don’t defy mathematics.

        • Roger January 19, 2016 at 11:39 am #

          John G, I am sorry you feel that way, its not for me to guess why you feel that way only you can ultimately know why that is. Your conclusions regarding what I do or do not care about and who I do or do not care about are wildly wrong you are also quite mistaken regarding my respect for Mathematics and interest in it as a language offering unique and valuable insights.
          Clearly we have strong political differences, I respect your position and understand and respect the sincerity of your arguments. I simply draw different conclusions drawing upon a different world view and philosophical and Political well that is all this is why I think my proposed solutions are different to your own. I believe in democracy and I am happy to make my own representations to fellow citizens not privileging any of my own sources of information or suppressing the views of others I trust people to make their own informed choices.

          “[T]he more radical the person is, the more fully he or she enters into reality so that, knowing it better, he or she can transform it. This individual is not afraid to confront, to listen, to see the world unveiled. This person is not afraid to meet the people or to enter into a dialogue with them. This person does not consider himself or herself the proprietor of history or of all people, or the liberator of the oppressed; but he or she does commit himself or herself, within history, to fight at their side.”
          ― Paulo Freire, Pedagogy of the Oppressed

          • JohnG January 19, 2016 at 12:59 pm #

            Roger, you need to think for yourself.

            That isn’t what you’re doing now.

            Maybe have a long hard think about your belief system eh?

          • JohnG January 19, 2016 at 1:33 pm #

            It’s kind of absurd how people like you worm out of losing your arguments, Roger.

          • JohnG January 19, 2016 at 2:00 pm #

            And face it Roger, who gives a flying one about your endless irrelevant quotes that have no connection to the discussion at hand?

            And all the while pretending to be a Marxist.

            You’re here selling shit.

        • JohnG January 19, 2016 at 11:49 am #

          Nobody, least of all me, is asking you to guess.

          Your post reads like a form letter from a PR/HR agent.

          How could you respect my political opinions when you don’t know them?

          Laughable.

          The real economy is whee real people labour for real income and the necessities of life.

          And you or Wesley don’t give a flying F about that.

          • Roger January 19, 2016 at 12:03 pm #

            JohnG,

            There seems very little left to be learned from our exchange here. Good luck with your work I hope as you think, it will make a difference and help people.

            Best Wishes,

            Roger

          • JohnG January 19, 2016 at 12:18 pm #

            So you’re going to wimp out, Roger, rather than defend your position?

            Not surprised.

            I wish you the same luck as I wish all fraudsters .

          • Roger January 19, 2016 at 12:32 pm #

            John G,

            If you wish to discuss the subject at hand I am all ears and very much available for further discussion and argument.
            A slanging match has no interest for me, sorry if that disappoints or frustrates you it just isn’t my thing.

            This is an interesting post in the other thread from june 2013 on Money Creation.

            shaun s June 10, 2013 at 4:34 pm #

            I think that neither side is creating money – just tokens, and that is the basis of all the problems.

            There is a system used by the highlanders of Papua New Guinea. (Ie. Tribesmen)

            Observe carefully a photo of a highland warrior. Across the front of his chest can be seen a series of small bamboo strips held horizontally. EACH strip represents a pig that has been “lent”. The warrior is therefore a “big-man”. Who has the right to recall ALL of those pigs if necessary. (This can also be for ceremonial use – where many pigs are killed at the same time.)

            Basically – debts TO the warrior.
            Why? There are no locks on “doors” – theft cannot practically be stopped.
            If you have two shirts, “give” one to someone who doesn’t have one – the debt can be called in when you need a new shirt. Thief-proof.

            The “mythologies” of barter or money creation both fail when “tokens” can be made in the back-hut, either by Governments or Banks. So what happens is a race to find a gold(ilocks) standard that substitutes itself for”value”.

            The papou solution is direct lending of a value that retains it’s original value as an asset when recovered.
            Note that “interest” is not part of the affair.
            I reckon that a substitute of “Real” money should therefore have a stable and possiby intrinsic value (at least agreed upon). Not be subject to artificial fluctuations and should be free from interest – to be effective. (Gold is one – but is there enough?)

            Banks and the Tax-man could both be constrained, and their influence reduced, if the “creation” of money is ‘principally’ an affair “of exchange of debt” in the first place. (Not one or the other deciding to line their own hut by creating exchange-tokens on which interest is payable)

            (OK. A bit of a ramble and probably totally impractical, but some NEW solution is called for to preserve the value of money)

            What do you make of that John G,

          • JohnG January 19, 2016 at 12:41 pm #

            I make of that exactly what I make of Wesley’s rants.

            YOU don’t want to be taxed.

            You’re both primitives that won’t accept that money is credit.

          • JohnG January 19, 2016 at 12:44 pm #

            Roger, are you able to make an argument without flooding the screen with irrelevant quotes?

            Believe me, I’d love to hear a single concise credible argument from either of you.

            300 odd comments and I’m still waiting.

            Go for it dude.

          • Roger January 19, 2016 at 12:56 pm #

            John G,

            Take a look at Arthur Schopenhauer the Art of being right its a very good guide to adopting strategies to evade the question and emerge appearing victorious.
            On these political questions John G there is not a right or wrong answer and claiming otherwise or believing otherwise subjects one to unnecessary frustration. We do not agree with each other we have established that, I do not conclude from that you are a bad or wrong headed person I celebrate our differences and do not condemn your opinions and beliefs further I really do not care what you think about me I am un moved that you believe I am an Idiot and unworthy of asking questions of those you would say are more qualified than I am.
            All the best
            Roger

          • Roger January 19, 2016 at 1:23 pm #

            JohnG January 19, 2016 at 12:59 pm #

            Roger, you need to think for yourself.

            That isn’t what you’re doing now.

            Maybe have a long hard think about your belief system eh?

            John G,
            This is not doing anything to advance your own argument regarding MMT and ” ´´Sovereign, fiat, non-convertible, floating exchange rate currencies are pretty much as good as it gets.´´(your point 2 above)

            This is a very long discussion added to the June 2013 discussion it represents a large input of ideas from all sides of this question which does not boil down to only those ideas and arguments advanced by you, Wesley and myself.

            people sufficiently motivated and interested in these questions that is Re Branding Dissent and Myths of creating money will benefit by reading the whole of both discussions and making up their own minds after following up on other thoughts that will occur to them after reading through what we have said and how we have interpreted some of what we have read and paraphrased in our comments or where more lazily (typically by me, (guiltily as charged) where quotes and sources are given and linked to.

            So thanks for the discussion I have learned a lot from your insights and perspectives and I am indebted to you for participating in what has clearly been a one sided exchange from your own point of view.

            All the best

            Roger

          • JohnG January 19, 2016 at 1:48 pm #

            Hi Roger,

            I’ve learnt from our exchange, I’m not sure that you have.

            I’ve learnt that block chain nuts are at one with the ‘libertarian’ nuts who are at one with the bankers.

            Thanks for confirming that.

            Kisses,

            John G.

          • Roger January 19, 2016 at 2:13 pm #

            You are welcome. x

          • JohnG January 19, 2016 at 2:16 pm #

            Well that looks like running away from an argument Roger.

            What’s wrong?

            Can’t defend your assertions?

          • Roger January 19, 2016 at 2:26 pm #

            Well that looks like running away from an argument Roger.

            What’s wrong?

            Can’t defend your assertions?

            I am sure people who read our discussion will draw their own conclusions, I am very comfortable that my engagement in this discussion gives a good account of my views. If you have nothing further to add to your own contentions JohnG it seems that there is nothing left here to consider.

          • JohnG January 19, 2016 at 2:32 pm #

            Playing to the audience Roger?

            Your views have been exposed.

            You don’t give a f*** about anyone but yourself.

  38. Roger January 19, 2016 at 2:41 pm #

    JohnG January 19, 2016 at 2:32 pm #

    Playing to the audience Roger?

    Your views have been exposed.

    You don’t give a f*** about anyone but yourself.

    I wonder who else will believe that always assuming that you do yourself Johng.
    If you have nothing further pleas excuse me I have better things to do.

    • JohnG January 19, 2016 at 2:56 pm #

      Walk away Roger, By all means.

      You;re the same as Wesley.

      You don’t give a f*** about anyone but yourself.

      Your pathetic crypto-currencies are evidence of both your social irresposility and your mathematical stupidity.

      Or are you one of the scamsters?

      I know where I’d put my money in that bet.

      • Roger January 19, 2016 at 3:04 pm #

        The tricks, dodges, and chicanery, to which they [men] resort in order to be right in the end, are so numerous and manifold and yet recur so regularly that some years ago I made them the subject of my own reflection and directed my attention to their purely formal element after I had perceived that, however varied the subjects of discussion and the persons taking part therein, the same identical tricks and dodges always come back and were very easy to recognize. This led me at the time to the idea of clearly separating the merely formal part of these tricks and dodges from the material and of displaying it, so to speak, as a neat anatomical specimen.

        https://en.wikipedia.org/wiki/The_Art_of_Being_Right

        JohnG , really stop digging , there is no fight here for you and you continue to risk discrediting the strong arguments and lessons that MMT theorists add to this question.

        • JohnG January 19, 2016 at 3:08 pm #

          I’m not digging Roger. I;m not the one selling stuff.

          You are.

          Your crypyo-bollocks is a scam.

          Full stop.

          • Roger January 19, 2016 at 3:11 pm #

            Selling stuff? what are you talking about?

      • JohnG January 19, 2016 at 3:23 pm #

        You’re selling your crypto-bullshit here.

        • Roger January 19, 2016 at 3:40 pm #

          John G, The Block-chain is just a technology that allows an account to be kept, a ledger that is not subject to the rule or will of one powerful set of interests ( potentially). The current Fork civil war in Bitcoin is an ideal experiment in real time with real opposing interests literally fighting with technology over 3 billion dollars equivalent of created value. That is of interest to any one interested in how money will evolve in the future. I am proposing an interest in that debate I am not selling people on becoming involved or looking for private financial benefit in bringing the debate to be considered here in this context. You say that I am not interested in and neither do I understand mathematics your dismissal of and closed mind to other money technologies seems a weak position form which to advance those arguments against my own position. I am here to discuss things John G not to preach, I would hope that you are here to discuss and not to preach as well.

          If that doesn’t clear that up please explain why.

          All the best

          Roger

          • JohnG January 19, 2016 at 4:15 pm #

            OK Roger, if I lost the argument give me (all of us) a single example where you have won,

        • JohnG January 19, 2016 at 3:44 pm #

          Cone on Roger!

          Let us all se the maths that creates Positive Money.

          A credit without a debit,

          Go on.

          Co on Roger you can do it!!!!!!

          • Roger January 19, 2016 at 3:59 pm #

            John G, I have remained and will remain polite, I refuse to sink to your level of condescension. You lost this Argument many posts back and I have been doing my best to offer you some sort of way out to save you from looking foolish. You seem intent on making yourself look as foolish as possible. Your current predicament is just plain embarrassing for the rest of us JohnG please do us all the most incredible favour of either returning to an orderly and good mannered discourse or at least tell a funny joke. It would be a huge relief not to be forced into a position of making you appear a great deal more ignorant that you seem to wish to appear and which I am certain your are not.

            Go On ? you know you want to really.
            https://www.youtube.com/watch?v=4tyGLuVlQp8

          • JohnG January 19, 2016 at 4:06 pm #

            Oh bad luck, Roger. Science, you know that inconvneient Maths stuff.

          • Wesley - Cone on! February 8, 2016 at 3:07 am #

            You seem to want to look at some balance sheets. I have NOT looked at these balance sheets, but merely took the time to do what you should’ve done before asking Roger to explain someone else’s maths to you… Take the info directly from the Positive Money people themselves… and take your criticisms of their balance sheet maths to them as well. Please.

            https://positivemoney.org/2014/05/positive-money-proposal-balance-sheets/

  39. Roger January 19, 2016 at 4:18 pm #

    Oh bad luck, Roger. Science, you know that inconvneient Maths stuff.

    JohnG January 19, 2016 at 4:06 pm #

    When I linked to the art of being right I had not expected you to work through the list of all 38 strategies. Grow up please.

    • JohnG January 19, 2016 at 4:25 pm #

      Oh how very clever you must think you are.

      BN if you can just give us all the maths that says you’ve discovered how to create a credit without a debit that would be excellent.

      Thanks.

      • Roger January 19, 2016 at 5:00 pm #

        JohnG January 19, 2016 at 8:44 am #

        Personally I am neither an Austrian or a Libertarian but I have respect for the World view and also the philosophical system which is followed by those who hold that world view. Hayek is very good on monetary history and whilst I disagree with his prescriptions politically I always pay close attention to Austrian Analysis simply because Austrians care about their logical system underpinning their world view.

        Roger, I’m tired so forgive me for speaking plainly. Write me off as just a crude uncouth Australian if it helps. We’re awful people.

        Im sorry, but Austrian School ‘logic’ isn’t logic in any scientific or mathematical meaning of the word.

        It’s almost the direct opposite. Not only is it unfalsifiable in intellectual terms, it is empirically provably false in historic terms. Especially in the neoliberal period i.e. the here and now.

        So they go history shopping, dissembling and outright lying to justify their illogical conclusions (which are in fact their precepts). And they reject mathematics as trickery and magic.

        When challenged it always turns out that there is no there there.

        Their foot soldiers in the ‘libertarian’ movement are the Khmer Rouge of right wing ideology whose moral underpinning is closely aligned with, albeit disguised as peaceful, outright fascism.

        Where is the difference between the violence of state force and the Pinkertons (just enforcing contracts)?

        To think you can have money without credit, you have to be completely unaware of what a balance sheet is.

        And comp[letely unaware of the notion of dividing zero.

        My Answer starts here…

        First Logic and systems of Logic In The Austrian School they define their own boundaries we may agree or disagree with the boundaries they define for their own School of thought but the do remain consistent with in it and their analysis I usually find honest when one bears in mind that the view point expressed is from an Austrian Perspective.

        You are claiming that ´´Austrian School ‘logic’ isn’t logic in any scientific or mathematical meaning of the word.´ I think you wiull find that it is your own reasoning letting you down here.

        You say elsewhere that somebody me or wesley were Failing to submit to the laws of Mathematics did you mean Axioms, you might find this blog post I wrote reporting a discussion I had with a Dogmatic mathematician a good few years back of interest ( on second thoughts probably not)

        http://letthemconfectsweeterlies.blogspot.se/2011/05/gdp-and-are-musical-notes-subjective.html

        ” value judgments (we call them axioms in math and assumptions in science) do not in any way imply subjectivity. They are a necessary part of the reasoning process–this was proved independently a hundred years ago by Gödel and Turing and is the greatest single accomplishment in math from that time.”

        James Vaughn • Roger, inflation and GDP are hardly subjective measures. We can question the methods of calculating and the consequences of changes. But they are quantitative measures which are fairly well defined. You might as well argue that musical notes are subjective.

        SO of course I have to explain why Notes are choices and as such subjective as distinct from the laws of Harmony which of course also have preference aspects.

        Roger Lewis • James Musical notes are subjective very much so they gain most of their meaning from context but they are subjective. Any statistical analysis has a value judgement and judgements are subjective where there are more than one potential outcome there are choices to be made. A very interesting concept in music and mathematics is plurality and these pluralities are also found in uncertainty with uncertainty and unpredictability comes belief and from there one moves again to the Subjective to say that GDP is hardly subjective is to completely misunderstand relativity statistical analysis or indeed the fundamental nature of the scientific method.

        I know very well what a balance sheet is and I have a good working knowledge of business from practical experience. What you seem to forget JohnG is that the MMT system is grounded in certain axioms and that these axioms are self referential ultimately

        Davids excellent Film Dangerous Knowledge leaves off at Gödels incompleteness theorem I prefer Tarski to demonstrate the point which I am making here.

        FromWikipedia

        The proof of Tarski’s undefinability theorem in this form is again by reductio ad absurdum. Suppose that an L- formula True(n) defines T*. In particular, if A is a sentence of arithmetic then True(g(A)) holds in N if and only if A is true in N. Hence for all A, the Tarski T-sentence True(g(A)) ↔ A is true in N. But the diagonal lemma yields a counterexample to this equivalence, by giving a “Liar” sentence S such that S ↔ ¬True(g(S)) holds. Thus no L-formula True(n) can define T*. QED.

        https://en.wikipedia.org/wiki/Tarski's_undefinability_theorem

        Claes Johnson is my sort of mathematician JohnG

        http://claesjohnson.blogspot.se/search/label/critical%20thinking

    • JohnG January 19, 2016 at 4:37 pm #

      And I didn’t expect you to walk into a battle of wits completely unarmed,

      • Roger January 19, 2016 at 5:37 pm #

        JohnG your argumentation is the equivalent of variable interest rates. I will never submit to variable interest rates and I am certainly not going to allow you to keep re defining what this discussion is about at each twist. If you have a point to make or a question to ask or a point to refute then be my guest. Your conduct all through this discussion is not what I would adopt myself I fail to see how it advances your arguments for ´´MMT´´ the new improved version of what we have already. You said you were tired already this morning maybe you should get some sleep I’ll still be here, don’t worry I won’t be running anywhere, I have never submitted to any sort of Bully and have sorted out quite a few in my time. My brawling days are over but your sort of Re defining Dissent is very troubling to me and this pot certainly will not submit to beng called black by your Kettle.