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.

813 thoughts on “Re-branding Dissent”

  1. 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!!

  2. 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.

    1. 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.

          1. 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!

        1. 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.

          1. 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.

          2. 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,

          1. 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.

      1. 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.

        1. 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!

          1. 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…

          2. 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.

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

            Every new loan is new money.

          4. 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…

      2. 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.

          1. 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.

        1. 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.

          1. 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…

    2. 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.

          1. Wesley fully reserved

            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

  3. 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.

    1. 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.

    2. 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.

    3. 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.

  4. 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.

    1. Generalfeldmarschall von Hindenburg

      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.

    2. Wesley - Against

      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.

  5. 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

    1. 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.

      1. 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

      2. 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,

        1. “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.

      3. 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…

        1. 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

    2. 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.

      1. 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

        1. “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”.

          1. 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?

          2. 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

      2. @ 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

        1. 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.

          1. 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?

          2. 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/

          3. 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.

          4. 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.

          5. 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.

      3. 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!

        1. 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.

          1. 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… ☺

        2. 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.

          1. 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!

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

            A rookie mistake.

          3. 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.

          4. 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.

          5. 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.

          6. Wesley - the rude

            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.

        3. 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.

          1. “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.

          2. 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.

          3. 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.”

          4. @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…

          5. 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.

          6. 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.

          7. Wesley - from under his vine

            @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…

          8. Wesley - the abusive

            @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…

          9. 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.

      4. Wesley - fully loaned

        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?

  6. 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.

  7. 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).

    1. 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.

      1. 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

        1. 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.

      1. 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.

        1. 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.

      2. 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.

  8. 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.

  9. 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.

  10. 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.

      1. 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

        1. 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.

          1. 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

          2. 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.

  11. 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?

    1. 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.

      1. 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.

  12. 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.

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

      1. 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.

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

    And a happy New Year to you.

    Bio

  14. 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.

  15. 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 )

  16. 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

  17. 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

  18. 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

    1. “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.

      1. 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.

        1. 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.

        2. 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…

          1. 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.

    2. 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.

      1. 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.

        1. 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.

          1. 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.”

          2. Wesley - the terrorist?

            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.

          3. 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.

          4. 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.

          5. 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.

          6. 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?

        2. Wesley - in the sunshine!

          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.

          1. “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.

      2. The series of gUuest posts on this Blog by Hawkeye are an invaluable part of my own education directed at digging into these questions. https://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´´

        1. 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.

          1. 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.

        2. 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.

          1. 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

          2. 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.

          3. Wesley - on language

            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.

          4. 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.

          5. Wesley - viewing the world

            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…

          6. 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.

          7. Wesley - the sophist

            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.

          8. 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.

          1. 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…

          2. 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.

          3. ”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

        3. 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.

        4. Wesley - Under his fig tree

          @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.

          1. “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.

          2. Wesley - Honest and Unbranded

            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.

          3. 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?

          4. “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.

  19. 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

  20. 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.

  21. 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?

  22. 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

  23. 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.

    1. 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.

  24. 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

    1. Wesley - free banker

      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!

    1. Wesley -newly enlightened

      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?

      1. 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.

        1. 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.

          1. 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!

          2. @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.

        2. 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!

          1. 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.

          2. 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?

          3. 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

          4. 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.

          5. Wesley - the thirsty horse

            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?

          6. Wesley - the inane ranter

            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.

          7. 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.

          8. 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.

        3. 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.

          1. 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.

      2. 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.

        1. Wesley - Libertarian? Austrian? American?

          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.

          1. 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.

          2. 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.

          3. Wesley - in his "safe space"

            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.

          4. 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.

          5. Wesley - crybaby?

            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.

          6. 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.

        2. 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.

          1. Wesley - "Just a Fella"

            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!

      3. 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.

        1. 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.

          1. “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.

          2. Wesley - on a Sunday

            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.

          3. Wesley - the NEOLIBERAL???

            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,

    2. 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

      1. 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)

        1. 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?

          1. 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.

          2. 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.

          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.

          4. Hi again Roger.

            How do these crypto currencies deal with cancellation?

            i.e. how do the credit units get extinguished?

        2. 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.

          1. 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. https://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 https://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

          2. 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

          3. Hi Roger, it is no surprise that Bitcoin is connected to spookdom.

            A lot of these ‘revolutionary’ events or phenomena are.

          4. Wesley - aka Guy Fawkes

            @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.

  25. 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).

    1. Wesley - the admiring

      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.

      1. (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.

        1. Wesley and his IRE

          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.

      2. @ 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

          1. @ 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

          2. 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).

        1. Wesley - with Greenspan

          @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!

    1. 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

      1. 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.

        1. “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

    2. 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.

        1. 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.

          1. 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.

  26. 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.

    1. 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/

        1. “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

          1. 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

          2. 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.

      1. 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?

        1. 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.

          1. 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.

        2. Wesley - and Muammar

          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.

    2. Wesley - Avatarless

      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…

        1. 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.

          1. Wesley - the coin collector

            @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.

        1. Well that didn’t work. User the greater than and less than symbols with an i and close with the same symbols with /i.

        2. 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 https://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…
          😉

      1. 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.

        1. Wesley - taxpaying voodoo doctor

          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.

          1. Capitalists – small business entrepreneurs

            Language. You are changing the meaning of words to make conversation almost impossible.

        2. Wesley - redirected

          Having just seen @Roger ‘s link to the interesting 2013 GolemXIV discussion:

          https://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…

        3. 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.’

          1. 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.

      2. 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.

        1. Wesley - the non-Monetarist

          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”?

          1. 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.

          2. 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).

          3. Wesley - the Stipulator

            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?

          4. 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.

          5. 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?

      3. 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.

        1. Wesley - virtually

          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/

          1. 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.

        2. Wesley - Progressing!

          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!

        3. Wesley - Legally Tender

          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!

      4. “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.

        1. Wesley - from Airstrip One


          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?

          1. 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.

          2. 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).

      5. 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.

    1. 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.

      1. @ 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:
        https://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

        1. 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.

        2. 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

          1. 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.

        3. 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.

    1. 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

        1. 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;
          [email protected]
          and
          Adam Tickell
          School of Geographical Sciences, University of Bristol, Bristol, UK;
          [email protected]

          1. 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.

          2. 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.

          3. https://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.

      1. 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.

  27. 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.

  28. Wesley, with Humpty Dumpty

    @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.

    1. 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

    2. Wesley - clarifying

      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.

    3. 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.

  29. 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.

    1. 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.

        1. 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.

      1. 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.

        1. 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

          1. 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?

          2. 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.

        2. 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.

          1. 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

          2. 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 .

          3. 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,

          4. 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.

          5. 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.

          6. 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

          7. 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

          8. 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.

          9. Well that looks like running away from an argument Roger.

            What’s wrong?

            Can’t defend your assertions?

          10. 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.

          11. Playing to the audience Roger?

            Your views have been exposed.

            You don’t give a f*** about anyone but yourself.

  30. 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.

    1. 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.

      1. 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.

        1. 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

        2. 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!!!!!!

          1. 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

  31. 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.

    1. 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.

      1. 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

      1. 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.

        1. Me butting in again after the 3 of you have gone many rounds which appears to have ended in a stalemate. It’s a shame that it’s ended in such discord, as in my case, I consider that you all have made good points & are all very knowledgable about these things, which has probably resulted in some of the mud sticking in my brain, which is good as my only formal educational exposure to economics was part of a short lived day release for an OND in business studies, & 2 of the 4 modules were accounts & economics under the title of ‘ The organisation & the environment “. Neither of these sunk into my 18 year old head – I guess I just don’t have that aptitude, but I was introduced to Social history & fell in love with that.

          As I said before economics is not a true science & there are no elegant equations that prove anything either way. I suppose that the above battle of minds gives an idea of the wars on economis theory that might be fought in the future – if & when the present system does indeed collapse.

          Thanks for the passionate input fellas, but getting personal does you all a disservice, although I admit that I have often let passion as they say in Ireland make me ” Lose the run of myself “.

          Anyhow, chill out & watch these unlikely 1970’s prophets of what we are up against :

          https://www.youtube.com/watch?v=YUhb0XII93I

          1. economics is not a true science & there are no elegant equations that prove anything either way.

            This is a standard cant of mainstream economists because their own brand/s of voodoo fails when tested with scientific rigour and by mathematics.

            As do the endeavours of the ‘real money’ vigilantes.

            It’s like trying to say that you can only design an aircraft that works by suspending gravity.

          2. PS And that was no debate. That was genuine dissent being attacked by any means, mostly foul.

            Whatever ‘points’ have been made by my 2 interlocutors have not been related to any position that I or the MMT school of thought take.

            I note that they are still at it, willfully misrepresenting and/or inventing positions that we don’t have.

            It’s far beyond believable that these are misunderstandings or misconceptions. Even to the point of denying mathematics.

            It’s downright dishonesty.

            It’s a shame to see David’s blog being taken over by ‘libertarians’ with an agenda.

          3. Wesley - Interlocutor?

            I was disappointed to learn, when reading through the comments in David’s 2013 “Myths of Creating Money” posting:

            https://www.golemxiv.co.uk/2013/06/creating-money/

            that a disruptive “interlocutor” in the MMT school of evangelism was also THERE (going by the name of Mike Hall) using similarly aggressive tactics, telling everyone how “wrong” they were. It finally got to a point where the patron actually required a bit of a slapping down by our gentlemanly host with his comment at Golem XIV June 6, 2013 at 7:57 pm.

            The Re-branding of Dissent takes many forms – but all of them seem to revolve about deceit and its application by force if necessary.

          4. Wesley Interlocuting

            Your perspective is quite revealing, JohnG (together with Mike Hall). David’s ‘blog cannot be “taken over” by anyone other than him – he who already has custody and complete control of such. Just like every other reader, you have the option of reading or ignoring these comments, together with the content of the fine blog itself. You may filter the comments in any manner that you choose. And David may delete with abandon any comment that he so chooses, or even the presence of a guest entirely. It’s a funny world view you seem to possess JohnG, where voluntary actions seem foreign to you.

            Is a view Dissenting to your view something that you feel should be “wisely” removed from consideration? I cannot help but imagine the humor with which David may one day read some of these musings, having been coaxed out by his very own probitive THOUGHTS themselves.

            So I ask you… Have you humbly asked David to remove your offensive postings herein (which by all accounts add nothing to the dialog but to demean the totality). Perhaps with an accompanying apology?? That small contrition alone would take great strides toward rehabilitation and civil discourse.

  32. Good to have you back David

    Excellent debate all around. Took me a while to slog through the thread and here is my observation.

    Missing from your debate is the concept of property.

    If we agree that since the black plague and, more decisively, after the Renaissance the 2 pillars of Western society have been the right to self determination and the right to private property, then our current monetary system presents a dilemma if not a problem.

    Fractional reserve banking is not, in and of itself, a problem.

    The problem resides in how the governing elite have successfully manoeuvred to, on one hand, define and impose one unit of account (money) and, on the other hand, keep the management of the monetary system outside of the democratic process.

    That done, the governing elite decided to run fiscal deficits as a matter of course. Whether the economy was expanding or contracting, governments of the industrialised world run fiscal deficits and, at the same time, incur debts that are never meant to be paid back ever.

    If you agree that your ideas, your skills and your time are your own natural property, then the fact that you are exchanging your labor and time for this type of money presents various problems.

    In a first instance. The money you receive in exchange for your work does not belong to you. Physically, the bills in your pocket are the property of the central bank so that you are merely allowed the temporary use of the money.

    In a second instance. Since the management of the monetary system falls outside of the democratic process, you have no say in whether government should or should not incur perpetual debt. But since you are not allowed to make use of any other unit of account but the one imposed by the government and since government runs perpetual debt, the money you receive in exchange for your work is immediately devalued.

    Ergo, by accepting money in exchange for your work, you are exchanging something you own outright for something you do not own, whose value you cannot control and upon which you owe taxes.

    A corollary to this first problem of property rights is that in this monetary system, profit must gradually but inexorably migrate towards the ultimate owner of the currency. With profit, the owner of the currency also acquires title.
    .
    https://www.newscientist.com/article/mg21228354-500-revealed-the-capitalist-network-that-runs-the-world/
    .

    Ergo, this monetary system negates private property.

    Moreover, perpetual debt must necessarily conform to the law of diminishing marginal utility. This is a compounding dynamic that will go parabolic.

    As the diminishing marginal utility of debt works its magic, government must arithmetically compensate the loss of purchasing power. This is done by bestowing progressively greater privileges and immunity to selected entities and by increasing fiscal pressure on the economy. As fiscality becomes more onerous, legislation must inevitably become more complex.

    Increasing fiscal pressure and legislative costs along with greater privileges and immunity for selected entities, act as barriers to entry in business and industry effectively monopolising the economy by stifling business dynamism.
    .
    http://www.brookings.edu/~/media/research/files/papers/2014/05/declining%20business%20dynamism%20litan/declining_business_dynamism_hathaway_litan.pdf
    .

    This dynamic is directly responsible for the increase in both the cost of living and the cost of doing business. The direct result is decreasing natality rate, off shoring of business and manufacturing, declining salaries and increasing unemployment.

    This is a self reinforcing dynamic of course.

    So, beyond arguing whether or not fractional reserve banking is or is not a problem or a crime, the fundamental problem of this monetary system is that it directly undermines the right to property thereby concentrating power in the hands of those entities that gravitate around the ultimate owner of the unit of account.

    Ergo, this is a closed monetary system designed to divest society of its responsibility thus of its wealth by forcing an all powerful central government upon it.

    An open monetary system would contemplate the accumulation of wealth by individuals thus multiplying many fold the creative drive thus productivity by maintaining a limited government under the control of society.

    1. Wesley - back under his Fig Tree

      Here, here!

      While Under my fig tree January 12, 2016 at 6:43 pm – I made reference to the Natural Laws of the Philosophers/Scholars. I elected to leave that well respected (I hope) body of settled beliefs to be self-sustaining, and especially self-explanatory.

      The Theory of Natural Law maintains that certain moral laws transcend time, culture, and government. There are universal standards that apply to all mankind throughout all time. These universal moral standards are inherent in and discoverable by all of us (including adherents of MMT and Monetarism), and form the basis of a just society.

      There is a good reason the words life, liberty and PROPERTY are often found adjacent to each other! And the essential nature of property rights derives from the starting assumption that we “own” our own bodies. I suppose I should’ve started there!

      Pleased to make your “acquaintance”, @Guidoamm!

      1. Wesley - Hear, Hear! too

        Yes – I know how it’s spelled… and before I’m directed to a dictionary, I should clarify for those of you who do not have the context of this big thread, I was simply using a play-on-words to conflate the sense of the location of my indirect earlier references to property, and the sense of my attempt to exclaim approval at Guidoamm’s sentiments/words above. Humour matters, too! 😉

        Since this entire back-and-forth actually began with a rather perplexing statement about Fractional Reserve Banking, and these well-timed words above also take a position on the practice…

        Permit me to state, for the record, that I agree that “Fractional Reserve Banking” per se is neither immoral, nor improper. If anyone elects to make a loan of her own MONEY (not that ponzified credit instrument in use today), and holds back a portion in reserve (for whatever reason), that practice is perfectly valid. Where the banks (and Greenspan above) have got into trouble (beyond the essential premise of the violation of property outlined so well above), is in their legally protected ability to permit multiple simultaneous claims to the same “money”. Improper, fraudulent maturity and duration transformations of “credit money” should be ended. Demand Deposit “money” should be treated as a bailment. Should I wish to consent to the reserved lending of my money, and agree to the terms (interest, duration etc.) – Terrific! Bank “runs” cannot occur if this property fraud is properly fixed. I hope that position was clearly made in my earlier comments.

        Heading to MY vine…

    2. Hi Guido,

      Great to get your input, hope all is well with you and yours.
      One question to both you and Wesley and a point I made earlier about the Philosophy found in Hayeks system of political economy and that is the visceral hatred of Moral relativism, if one does not reject Moral relativism one lacks then the anchor from which Wesleys statement obtains its appeal to authority. Benthams critique of the declaration of independence is very funny on the Notion of Self Evident truths

      ´´They are about “to assume,” as they tell us, “among the powers of the earth, that equal and separate ( 120 ) station to which” — they have lately discovered — “the laws of Nature, and of Nature’s God entitle them.” What difference these acute legislators suppose between the laws of Nature and of Nature’s God, is more than I can take upon me to determine, or even to guess. If to what they now demand they were entitled by any law of God, they had only to produce that law, and all controversy was at an end. Instead of this, what do they produce? What they call sell-evident truths. “All men,” they tell us, “are created equal.” This rarity is a new discovery; now, for the first time, we learn, that a child, at the moment of his birth, has the same quantity of natural power as the parent, the same quantity of political power as the magistrate.’

      https://ia600401.us.archive.org/19/items/cihm_20519/cihm_20519.pdf

      Following Tarski again ”No sufficiently powerful language is strongly-semantically-self-representational.”

      On RIghts to personal property and the distinction between Personal and Private property it is difficult not to refer to Henry George and get into Georgism. When all the Land runs out indeed when say as in London all the housing runs out or ´´The Market´´excludes most people from home ownership how does one address this.

      The money we are asked to accept is effectively as you say Guido merely rented by us and on a use it or lose it basis, its not even as good as a Rain Check which at least entitles you to the same value you contracted for at the time you booked your round of golf, similar to the example of the Papua new guinea tribesman.

      ”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)”

      What we are talking about is a man made system and the stewardship of the smooth running of that system I would leave this talk from Stafford Beer to make my point for me regarding distributed networks and their advantages over command and control, I would add these are natural qualities found in the Blockchain.

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

      at 4.20 Stafford says´+´I was going to say ‘ and this Mr President is you, Allende said are Professor beer I see here we have the people´´Distributed P2P networks are bottom up self regulating systems that respond to systemic feedback. We do not need to get into any existential philosophy to determine this as Beer says ´´The purpose of a system is what it does.

      https://veritaseum.com/index.php/download/research/category/4-research

      see https://veritaseum.com/index.php/download/research/download/4-research/313-pathogenic-finance
      ”So, what happens when you combine zero trust
      (the ability to transact without having to trust your counterparty)
      attributes with the freedom of autonomy? You create a machine that can’t
      be controlled by the oligarchy and/or the entrenched rent seekers who benefit from the friction, opacity, and heterogeny that runs rampant in the absence of trust”’

      Veritaseums Reggie Middleton has some interesting things to say and I agree with him on some of them I do however anticipate a Post Work/leisure based economy which asks a question of our personal wealth expressed as the value of our labour, essentially we are all becoming redundant in the traditional Protestant work ethic sense and we need to think of our systems design to acknowledge that fact.
      .

      Work without Hope
      By Samuel Taylor Coleridge

      Lines Composed 21st February 1825
      All Nature seems at work. Slugs leave their lair—
      The bees are stirring—birds are on the wing—
      And Winter slumbering in the open air,
      Wears on his smiling face a dream of Spring!
      And I the while, the sole unbusy thing,
      Nor honey make, nor pair, nor build, nor sing.

      Yet well I ken the banks where amaranths blow,
      Have traced the fount whence streams of nectar flow.
      Bloom, O ye amaranths! bloom for whom ye may,
      For me ye bloom not! Glide, rich streams, away!
      With lips unbrightened, wreathless brow, I stroll:
      And would you learn the spells that drowse my soul?
      Work without Hope draws nectar in a sieve,
      And Hope without an object cannot live.

      1. Just a further aside as I do not want to lump all Hayekians in with all Von Misesians and conflate all neo liberals , neo conservatives, Neo Statists or Libertarians in with one another.

        Anarcho Capitalists tend to hate Moral Realtivism in my interactions with them also neo Conservatives and Classical Liberals. It does boil back to Graebers observation that most opposing schools of thought break down to the old quarrel between Heraclitus and Parmenides.

        What is clearer to me these days is that the Establishment itself is made up of competing factions what unites the Establisment though is its shared objective of suppressing the masses outside of the Elites.

        The evolution we are seeing in our governance structure is one in which the competing elites described in Schumpeters theory of democracy are ditching the ideaof Representative democracy shallow as it ever was for one of Autocratic Technocracy effectively we are changing from the republic to the Imperium https://en.wikipedia.org/wiki/Roman_emperor

        Ruskins idea of the opposite side of wealth being illeth is interesting here as the impartiality of the monetary unit and its administration can see it employed as a force for general or common good or used for the benefit of a few against the general or common interest. To avoid partiality in the the casting of the rules of the system so as to ensure an even field of interaction and exchange is a huge task in which everyone should have a voice, the re branding of dissent as a means of disenfranchising, expelling and excluding those of us who are supposed only to follow and do as we are told is as David has pointed out a further oppression across the yoke imposed by our technocratic over seers

        1. Wesley - The Stand

          @Roger re: moral relativism
          I think that we have to make certain starting assumptions, or at least state what ours are, when taking a position. I perfectly well understand that there are those who reject the notion of personal property, and perhaps other positions of mine (some more vociferous than others!)… I think that’s probably why @Guidoamm prefaced his initial remarks with:

          @Guidoamm: “If we agree that since the black plague and, more decisively, after the Renaissance the 2 pillars of Western society have been the right to self determination and the right to private property, then our current monetary system presents a dilemma if not a problem.”

          I DO start with accepting and embracing the notion of self-ownership and the essential right to property. According to JohnG, my association with the sanctity of property rights immediately brands me a “libertarian”. I’ve been called worse. Yes, many indigenous peoples do not recognize real property rights (to land) per se. These are interesting issues. But in this Republic (and never very democratic), which I’ve chosen to remain in as a citizen, I start with property rights as valid.

          That’s really the extent of starting assumptions necessary to determine the rightness or wrongness of the banking model and monetary system such as we have today, and to make the necessary changes. The exciting efforts of the Positive Money people (though I disagree with their solutions) has been so very helpful in at least educating much larger swaths of the community to the actual perversion that our monetary system has become. Once everyone has a clearer understanding (which they do not have at present) of the nature of “money” creation today, we will be better equipped to decide the appropriate remedy.

          In re-reading Soddy’s fascinating 1934 “The Role of Money” – I am not terribly surprised to learn of his horror at the methods being used by banking to defraud. His solutions are novel, view the system as an engineer or scientist might, and better than using the concept of zero – goes one better, and views the monetary calculus from the perspective of the commons. Soddy would have us contemplate the implications of less than zero – negative sums. I’m still processing his ideas, and they merit a look by everyone, IMHO. I think you would like his notion that his ideas “have to be introduced into the base, and can in no wise be met by a change in the superstructure of society.” He recognizes and uses at his starting premise that it is the “dangerous monetary system that, primarily, is at fault.”

          Here we have a Nobel-prize winning Chemist in the prime of his life writing some very well considered ideas (revolutionary at the time – and often eliciting odd MMT frissons) – but discredited! Why. Branding. All sorts of branding is used against this brilliant man – still to this very day.

          Rather than losing the baby with the bathwater, I’m extracting from his vast, extraordinary thoughts those I deem in the “best-practices” category, and integrating them into my grand plans!

          Dismissed as a “crank” and “outside the bounds” by the NYT, I believe his monetary views integrating physics (thermodynamics, and the conservation of energy) are still far ahead of the times (pun intended). It’s not surprising to me that the one view of Soddy’s considered beyond the pale, was his simple recognition of the fraud in thin-air counterfeit credit creation. If only this respected scientist would have concentrated his policy prescriptions ONLY the crime of ex-nihilo counterfeit credit creation…

          Soddy’s propositions are also considered to be basis for modern “ecological economics”.

          http://www.nytimes.com/2009/04/12/opinion/12zencey.html

          “Soddy criticized the prevailing belief of the economy as a perpetual motion machine, capable of generating infinite wealth — a criticism echoed by his intellectual heirs in the now emergent field of ecological economics.”

          It’s ironic actually, that the “perpetual motion” criticism was already invoked long ago, given similar references in these very threads… Even worse, as almost everywhere else, the NYT is still perpetuating a false myth of money-creation. Illiteracy, or propaganda?

          Soddy knows well the differences between wealth, money and debt/credit – that debt is merely a claim on the economy’s ability to generate wealth IN THE FUTURE. Unfortunately for the MMT crowd, he also recognizes that exponential ex-nihilo debt creation (in the private OR government sector) is a systemic flaw. Soddy is often associated with his support for abandoning the “gold standard” – a loaded term if there ever was one. Soddy did have interesting views on gold, though:

          “Correct Use of Gold: Nor is there anything in all this in the least detrimental to gold being used as a convenient form of merchandise to correct purely temporary or spasmodic disturbance of the exchanges. For this, indeed, it is very well suited. But it must be regarded as a commodity and divorced altogether from its ” gold-standard ” function of producing by its outflow and inflow thirty-fold reductions and increases of the total quantity of money.”

          He even used scare-quotes around the words! Well aware of the manipulations taking place by banking interests, and the gearing (leverage) factor of money creation on-top of a legislated gold-pound “price” – Soddy urged the abandonment of THAT bastardized so-called “standard”.

          To me, Soddy’s biggest contribution to the discussion, though – is his unique view of money from the eyes of the user, rather than those of the banker:

          “All the shades of distinction which money in the course of its evolution has passed through, from barter to pure credit (or debt), concern not the something initially given up for it, which is the one essential to all its forms. They concern merely what is received in exchange for it.”

          He realizes that when “nothing” is given up for money (the essential element to all money) – a crime is occurring:

          “It is not the issue of proper receipts that ought to be attacked, but the getting for nothing by the issue of money of more than the public are able to give up for it. If printing receipts, instead of giving gold for what the owner of money gives up for money, is an immoral practice, how much more immoral it is not even to give receipts ! How utterly hypocritical it is to proceed against the counterfeiter of a forged note, who gives a false receipt, for treason rather than theft, and strictly to limit by Act of Parliament the amounts which the banks are allowed to obtain from the public for nothing by the issue of tangible receipts, while allowing them to extract for their own profit incomparable vaster amounts so long as they do not acknowledge the receipt at all !”

          And we still permit the practice under law!

          1. He realizes that when “nothing” is given up for money (the essential element to all money) – a crime is occurring:

            Taleb highlights the Moral hazard represented by this asymmetry in this interview (http://www.econtalk.org/archives/2013/09/taleb_on_skin_i.html) which is well worth a listen. He also talks about Skin in the Game a question which I found interesting applied to the troika and Greece.
            http://letthemconfectsweeterlies.blogspot.se/2015/07/so-how-much-skin-do-troika-have-in-game.html

            I started with an analogy to Bricks without straw
            http://letthemconfectsweeterlies.blogspot.se/2015/07/bricks-without-straw-economic-recovery.html
            I ended with this

            http://letthemconfectsweeterlies.blogspot.se/2015/07/bankers-and-skin-in-game-taleb.html

            Roger Lewis21 July 2015 at 03:01
            ´´any doubling is approximately equal to the sum of all the preceding growth!´´My researches have lead me to the Exponential Function. and Doubling Times
            The notion of doubling time dates to interest on loans in Babylonian mathematics. Clay tablets from circa 2000 BCE include the exercise “Given an interest rate of 1/60 per month (no compounding), come the doubling time.” This yields an annual interest rate of 12/60 = 20%, and hence a doubling time of 100% growth/20% growth per year = 5 years.[1] [2] Further, repaying double the initial amount of a loan, after a fixed time, was common commercial practice of the period: a common Assyrian loan of 1900 BCE consisted of loaning 2 minas of gold, getting back 4 in five years,[1] and an Egyptian proverb of the time was “If wealth is placed where it bears interest, it comes back to you redoubled.”[1][3]https://en.wikipedia.org/wiki/Doubling_time.

            I have found a paper that researching money supply growth in the US, Japan and Germany states a doubling time of between 8 and 10 years. If Money supply growth doubles in 10 years then that is roughly equivalent to all money supply combined in previous periods. looked at it this way it is easy to see how a catastrophic collapse after a particularly large boom in money supply and hence Bank profits would cancel out all previous profit. I think it will take rather longer to reduce the notion back down to some empirical data but it does exist albeit used to demonstrate other concerns on money supply mainly regarding inflation and not the consequences of debt.

      2. Wesley - Wooden Nickel?

        @Roger re: your 20Jan
        Cited: ”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)”
        ]
        @Roger: “What we are talking about is a man made system and the stewardship of the smooth running of that system I would leave this talk from Stafford Beer to make my point for me regarding distributed networks and their advantages over command and control, I would add these are natural qualities found in the Blockchain.”
        ——
        Current reading tends to influence one’s instant thinking, but the words of Soddy are compellingly relevant to the concept of “tokens”. Purely and simply, Soddy states the problem in 1934 – words that are NOT permitted to be spoken still today. Given the evolution of technology since 1934, and especially the possibility of the Blockchain to ensure that “negative” tokens cannot exist, I find his words, (from the Role of Money) to be “devastatingly” simple:
        [”
        Let there be no mistake as to what is wrong. It is not the bill of exchange in itself nor any of the legitimate devices which the commercial world have invented to facilitate international trade, but all banking tricks that could not be performed if the money were made of physical tokens or counters, which cannot be made negative in number. If this were so, then no one whatever, can get money without someone else giving it up, except the State which issues the money in the first instance. The acid test, like the remedy, is really devastatingly simple, but that will not stop it being opposed to the last ditch by the bankers who, while making all sorts of ridiculous claims that they are not continually creating and destroying money by their methods, do not want such claims put to this simple physical test.

        Is it so absurd to suggest that the whole complex of the world’s madness could and would be cured by replacing the banker by an honest adding machine? That sort of dictatorship already exists universally in fact, whatever the pretence, and the nation that first recognizes the truth will not need to set up any other dictator within its realm nor fear aggression or interference
        from without.

        Reculer Pour Mieux Sauter. Thus we have traced the origin of the present-day social and international unrest, and the frustration of the beneficient scientific advances and inventions which have put at the service of man the primary forces of Nature, to one single cause, to debts that from their nature can never be repaid!
        ]

        While I believe that the tokens (countable only once) need not be a creature of State, I concur fully with the statement of the problem. Acknowledgement of this one problem by a wide enough constituency to eliminate the practice, in my mind is the most pressing need in the world today.

        One token. One claim. One vote on the Blockchain??? Trusted relations and accounting verifiable instantly. I like.

  33. Wesley - The Indivisible

    @Roger : January 19, 2016 at 12:32 pm — “I reckon that a substitute of “Real” money should therefore have a stable and possibly (sic) intrinsic value (at least agreed upon)… (Gold is one – but is there enough?)”

    W Comment: Don’t fall for the very common image bandied and propagated by the mouthpieces of consent manufacture (MSM) – that all the gold in the world fits into an Olympic sized swimming pool, or many variations along those lines. Or at least examine your premises. In the first instance, no one can reasonably claim to know how much gold there IS in the world. Gold’s visceral enmity of and by the State has caused much of its possession to be hidden for centuries. It’s hiding right now – lying very still. I’ve touched on one of the unique characteristics of gold above, in a discussion of its stock-to-flow ratios. There are MANY others. Of all the physical commodities that have been used as money (including wheat – for daily bread; salt – for a preservative; cattle – self-propelled wealth; and peppercorns – delicious and portable… etc.) Over time, human preferences universally settled on gold as the MOST desirable. Gold is non-perishable. Even salt must be kept dry, a requirement also of iron and most other metals. Gold is divisible to the smallest unit and each unit is identical to every other unit of the same mass. (It is this factor that you may not be accounting for Roger, when you wonder aloud about the quantity of gold. There were times (in China, I believe) where even the poorest man would commonly have some possession covered with gold – often it was the roof of his home.

    The malleability of gold permits it being pounded out to the thinnest of foils imaginable – so thin that you may have even once tasted one of those decadent Sake brands which contain gold foil. The smallest units of gold can be recombined together by melting them. Gemstones, on the other hand – well no two are alike. And divisibility of a gemstone into smaller denominations presents obvious hurdles. Only a metal has these two properties.

    Gold has a very high value to weight or size ratio; a lot of value is stored in something that is both light and compact. Few metals have a value density anywhere near gold. For example, one would need about 75 ounces of silver today to equal the same value as one ounce of gold. An ounce of silver is twice as bulky in terms of volume. $1200 worth of gold is about the size of a silver dollar; you could easily tuck it into a corner of your wallet. The same value in silver would weigh many pounds, and be impractical to carry around.

    Lastly, gold is expensive to mine, but not overly rare in the earth’s crust. By definition, if something is unobtainable by the majority of people then it will not be selected and used as money – only a curiosity or a collectible for the wealthy. As to its distribution in the entire universe, new understandings about its celestial origins are also fascinating:

    http://www.smithsonianmag.com/science-nature/all-the-gold-in-the-universe-could-come-from-the-collisions-of-neutron-stars-13474145/

    So Gold’s rarity, too, falls just at the sweet spot. Too common, gold would also fail as money – for obvious reasons. Think about the collision of Colonial man with wampum-man. This was not a good intersection of value for value trading initially – but obviously was rapidly self-correcting. Supply-demand may not exist in the MMT world, but it does exist in the real world.

    Now – as to my point about human labor and its relation to gold, or any other money chosen by man: Generally speaking, the cost to extract an ounce of gold from the earth is usually about one ounce of gold. When the cost of production falls below the value of an ounce, the miners go to work; when the cost rises above, production essentially ceases. The mechanism of price, when unimpeded by State, does function to regulate supply/demand.

    How long has mankind been accumulating gold? As far as we can tell, gold has been hoarded for thousands of years. Think about this incredible fact in comparison to Crude Oil, for example. Presently, a small surplus has created a dramatic collapse in price, which is still falling like a prom dress this very day. (I’ll leave out comment on the factors leading to its inflated price previously for another day.) UNLIKE ANY OTHER COMMODITY, man is willing to accumulate whatever gold the miners produce, without any particular limit. In fact, the largest producer of gold in the world today also happens to be the largest importer of gold: China. Hmmmmm…

    The gold stock-to-flow ratio is estimated as in excess of 80 years – but could very well be much higher – perhaps even multiples higher. As suggested above, we’ve been hiding gold from our benign governments for as long as the concept of tax was “coined”. Conversely, governments have been hiding their gold possessions from the people for just as long. The People’s Bank of China withheld updating and publishing their gold holdings for years until recently, and it’s reasonable to speculate that they are understated. Refer to Greenspan’s speculation about China gold holdings in the link above. The US Federal Reserve, recoiling in horror to protect their necessity for “independence” (translation: No democratic accountability) – has furiously fought any attempts at auditing its gold holdings – whether custodial or otherwise. Gold is also considered the “thing” with the slowest-declining marginal utility – and its inventories are proof of that claim. People are still willing to acquire it thousands of years after they first began accumulating it.

    Gold cannot really be consumed – and though there are some specialized industrial applications, its ability to be recycled infinitely (coins – bullion – jewelry – art – rings – repeat) is another extraordinary feature. Silver is used in small quantities industrially too – but while it is equally recyclable – its value does not merit reclamation. As I mentioned above, most gold mined in history is still well accounted for – and has the capability of restructuring the wealth distribution in the world quite dramatically, if permitted to come out of hiding. That assertion should appeal to those who would tend to favor using the force of State to redistribute wealth, without first contemplating its moral propriety. For example, India is thought to be in possession of over 15,000 tonnes of gold. So is India really one of the world’s poorest countries? Not in my book. Who knows?

    Gold may be the ONLY commodity in the world sufficiently large a thing of universally recognized intrinsic value to hold man’s wealth at present. In pure market terms, gold at larger scales has the smallest differential in price between the bid and the offer of any other commodity. Ask yourself about the differential between the bid vs offered prices on a yacht, for example. Lots of wealth may be stored there, and eminently movable I suppose, but not very liquid.

    Silver does possess one advantage over gold, hinted about earlier. In its use for transactions of relatively smaller values, Silver has always been the preferred medium. An average wage earner may be able to save 10% of his weekly earnings more practically in Silver than Gold. There is a bit more “friction” when dealing in small values of gold that often makes silver a more efficient media.

    My knowledge of the bid-offer differential stems from a substantial professional experience as an individual ring-dealing, trading member of a multiple exchange-traded markets. The brutally efficient concept of trade-settlement also stems from my background as both an open-outcry, and physical merchant trader of a varied number of real “things” – as well as some NOT-things: like fiat currencies and stock index derivatives.

    So, as to your question of is there enough? Well, if the entire world were using gold as the basis of its MONEY and unit of account, gold could be efficiently exchanged in measures of molecules. You needn’t carry them in your pocket either – perhaps there’s even a blockchain method of handling their use??? A couple of ounces are sufficient to meet universal needs when viewed in this manner. Mainstream media, (and the Statists associated with MMT) will continue to brand this form of dissent to the status-quo with derision, and double-speak. Hope this provided some insights.
    😉

    ps: I’m NOT a goldbug, JohnG. I prefer Silver, but anything more real than fraudulent credits will do. And I stand by my desire that you be permitted to use any money that you freely choose as well! Even fiat paper.

      1. Wesley - Bimetallic?

        An interesting perspective – thanks! The image from this video of the two hands necessary to support a bi-metallic standard will remain with me. Much like Soddy would urge one to view money from that of the community commons (Virtual Wealth, he calls it) – he describes a similar process (money stock manipulation) occurring in England too – engineered by the collusion of Bankers in the fraudulent expansion and contraction of “money”. His chapter in the 1934 Role of Money concerning the frenzied efforts ” to crucify the country on a cross of gold and glut “, as well as the consequences to these actions in International Economic Relations (Chapter V).

  34. Wesley - Marked to Reality

    @JohnG : January 17, 2016 at 12:14 am “Balance sheets aren’t ‘magic’ Wesley. They’re maths. You’re really not getting it.”

    Wesley: “… 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.”

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

    In the toolkit of Rebranding Dissent, denial is one of the big-guns. An ongoing theme of yours, inter alia, has been to express comfort in the warm and fuzzy maths of balance sheets. Riddle me this: why are Generally Accepted Accounting Principles not applicable to the Government, or the Central Banks, or the Commercial Banks?

    Here’s an analysis of GAAP principles applied to government. What I said above, concerned the effect on the purchasing power of the dollar, if the Government began applying the same rules to its balance sheet, that it would have me apply to yours. Needless to say, these conditions have deteriorated since…

    http://www.shadowstats.com/article/no-500-special-commentary-us-government-gaap-based-2012-financial-data

    Below, we have from the Board of Governors of the Federal Reserve System, a fairly stunning admission:

    http://www.federalreserve.gov/monetarypolicy/bst_fedfinancials.htm
    [
    “The financial statements of the Board of Governors and the consolidated LLCs are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”); those of the Federal Reserve Banks are prepared in accordance with the Financial Accounting Manual for Federal Reserve Banks (“Financial Accounting Manual”). Accounting principles for entities with the unique powers and responsibilities of the nation’s central bank have not been formulated by accounting standard-setting bodies. The Board of Governors has developed specialized accounting principles and practices that it considers to be appropriate for the nature and function of a central bank. These accounting principles and practices are documented in the Financial Accounting Manual.

    The primary difference between the accounting principles and practices in the Financial Accounting Manual and GAAP is the presentation of all System Open Market Account (SOMA) securities holdings at amortized cost rather than the fair value presentation required by GAAP. Treasury securities, government-sponsored enterprise (GSE) debt securities, Federal agency and GSE mortgage-backed securities, and investments denominated in foreign currencies comprising the SOMA are recorded at cost on a settlement-date basis rather than the trade-date basis required by GAAP. The cost basis of Treasury securities, GSE debt securities, and foreign government debt instruments is adjusted for amortization of premiums or accretion of discounts on a straight-line basis. Amortized cost more appropriately reflects the Reserve Banks’ securities holdings given the System’s unique responsibility to conduct monetary policy. Accounting for these securities on a settlement-date basis more appropriately reflects the timing of the transactions’ effects on the quantity of reserves in the banking system. Although the application of fair value measurements to the securities holdings may result in values substantially above or below their carrying values, these unrealized changes in value have no direct effect on the quantity of reserves available to the banking system or on the prospects for future Reserve Bank earnings or capital. Both the domestic and foreign components of the SOMA portfolio may involve transactions that result in gains or losses when holdings are sold prior to maturity. Decisions regarding securities and foreign currency transactions, including their purchase and sale, are motivated by monetary policy objectives rather than profit. Accordingly, fair values, earnings, and gains or losses resulting from the sale of such securities and currencies are incidental to the open market operations and do not motivate decisions related to policy or open market activities.

    In addition, the Reserve Banks do not present a Statement of Cash Flows because the liquidity and cash positions of the Reserve Banks are not a primary concern given the Reserve Banks’ unique powers and responsibilities. Other information regarding the Reserve Banks’ activities is provided in, or may be derived from, the Combined Statements of Condition, Income and Comprehensive Income, and Changes in Capital.”
    ]

    Fair value presentation of securities holdings required by GAAP is ignored. “Unique powers and responsibilities” indeed. Talk about control fraud.

    Some are more equal than others it would appear. No, I have no idea what that has to do with MMT’s Sectoral Balance Accounting – but I have a fair idea of what it means in terms of generally accepted accounting principles, which are designed to account for reality.

    1. Indeed, favourable accounting treatment for selected entities is part and parcel of the need for the governing elite to extend privilege and immunity in order to keep the arithmetic “working”.

      Likewise, the need to continually torture the GDP figure to the extent where in Italy and France for example, they now add the black economy (prostitution and drugs) in the calculation of GDP in order to maintain the veneer of growth thus investment rating.

      Because you can only do 3 things with debt, debt based economies can only exist in two very distinct phases.

      The first phase allows you to add more debt provided each new unit of debt gives you at least one unit of GDP

      Once 1 new unit of debt gives you LESS than 1 unit of GDP, debt based economies enter their second phase of life

      The second phase calls for either repayment of the debt or debt cancellation. Anything else that may be done merely buys you time but the underlying problem is not resolved.

      Either way, the second phase of debt based economies requires ever increasing degrees of coercion.

      This is an arithmetical identity.

      So the fundamental issue here is not whether or not the governing elite makes use of debt based money or fractional reserve banking. This arithmetical truth holds true even for debt free money.

      The fundamental problem is the unilateral imposition of one arbitrary unit of account AND the imposition of perpetual debt with no date of redemption.

      1. Allow me to clarify. Sovereign debt does, of course, have a date of redemption. But common practice is merely to borrow more to pay what is owed.

        The problem is that sovereign borrowing does not fall within the democratic process thus not all economic entities have a say.

        Furthermore, note too that I speak of a “governing elite” and not of government as the political entity.

        Once the monetary system is imposed by law (i.e. by threat of violence) AND the management thereof is exclusively awarded to a third party ostensibly outside of government, then you have a governing elite that inherently and arithmetically benefits from every single action taken by individuals. Hence the concentration of profit and title.

    1. He was was one of those people I didn’t want to believe, but he has again & again for the most part been proven correct, especially on US foreign policy – but after all he was there in the Reagan administration when the Neo-Cons started to gain ground. I like probably everybody else hope he is wrong about it coming to war & this from the Asia times, might suggest some hope as Obama, but for his many faults appears to be keeping up the diplomacy with Putin while perhaps managing to keep a lid on the lunatic idealogues like McCain & Nuland – we live in hope.

      http://atimes.com/2016/01/obama-changes-tack-on-russia-calls-up-putin/

          1. Hi Stevie Have you seen this today. Pathogenic Finance on Kaiser report it mentions the https://en.wikipedia.org/wiki/CFA_franc And Frnaces role in Libya ( I alos wonder about Mali, which was in the news a lot last year.

            https://www.youtube.com/watch?v=jjJqQKLi2AM&feature=youtu.be

            I wonder if David knows anything about this French currency in Africa the Portuguese links to Angola which David has written about here before are all very interesting as well. We seem very much to be in a kind of awful time machine with the Clock being wound back at an alarming rate.

  35. Will add them to my youtube watch later list mate as I am working long hours at the minute & am just popping onto the net during waits for coats of mouldmaking material to harden. Heading backwards is right – reminds me of the old Thatcherite slogans of ” Victorian Values ” ( In the true sense ) & ” The enemy within “, never mind the looting, which seems to have been ongoing but now accelerated.

      1. Thanks mate – yep, a lifesize bronze of James Connolly best known for the last few months of his life’s involvement in the 1916 Easter Rising, but most of his life was spent as a trade unionist. It is to celebrate his work for both communities in Belfast before the bosses upped the sectarianism ante as a handy divide & conquer tool. Not allowed to show pics publicly until after the March 25th unveiling – nearly finished the mouldmaking, thank goodness.

    1. Abba Lerner – The Economics of Employment 1951

      A rewritten version of the 1941 article The Economic Steering Wheel where he elaborated his version of Keynesian thinking. He began the book as such (1951: 3-5):

      Our economic system is frequently put to shame in being displayed before an imaginary visitor from a strange planet. It is time to reverse the procedure. Imagine yourself instead in a Buck Rogers interplanetary adventure, looking at a highway in a City of Tomorrow. The highway is wide and straight, and its edges are turned up so that it is almost impossible for a car to run off the road. What appears to be a runaway car is speeding along the road and veering off to one side. As it approaches the rising edge of the highway, its front wheels are turned so that it gets back onto the road and goes off at an angle, making for the other side, where the wheels are turned again. This happens many times, the car zigzagging but keeping on the highway until it is out of sight. You are wondering how long it will take for it to crash, when another car appears which behaves in the same fashion. When it comes near you it stops with a jerk. A door is opened, and an occupant asks whether you would like a lift. You look into the car and before you can control yourself you cry out, “Why! There’s no steering wheel!”

      “Of course we have no steering wheel!” says one of the occupants rather crossly. “Just think how it would cramp the front seat. It is worse than an old-fashioned gear-shift lever and it is dangerous. Suppose we had a steering wheel and somebody held on to it when we reached a curb! He would prevent the automatic turning of the wheel, and the car would surely be overturned! And besides, we believe in democracy and cannot give anyone the extreme authority of life and death over all the occupants of the care. That would be dictatorship.”

      “Down with dictatorship!” chorus the other occupants of the car.

      “If you are worried about the way the car goes from side to side,” continues the first speaker, “forget it! We have wonderful brakes so that collisions are prevented nine times out of ten. On our better roads the curb is so effective that one can travel hundreds of miles without going off the road once. We have a very efficient system of carrying survivors of wrecks to nearby hospitals and for rapidly sweeping the remnants from the road to deposit them on nearby fields as a reminder to man of the inevitability.”

      You look around to see the piles of wrecks and burned-out automobiles as the man in the car continues. “Impressive, isn’t it. But things are going to improve. See those men marking and photographing the tracks of the car that preceded us? They are going to take those pictures into their laboratories and pictures of our tracks, too, to analyze the cyclical characteristics of the curves, their degree of regularity, the average distance from turn to turn, the amplitude of the swings, and so on. When they have come to an agreement on their true nature we may know whether something can be done about it. At present they are disputing whether this cyclical movement is due to the type of road surface or to its shape or whether it is due to the length of the car or to the kind of rubber in the tires or to the weather. Some of them think that it will be impossible to avoid having cycles unless we go back to the horse and buggy, but we can’t do that because we believe in Progress. Well, want a ride?”

    2. Wesley - Drachma

      You have quite rightly criticised the monetary structure of the EU. I have a simple question for you (which relates to my rookie mistake from earlier)…
      [
      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.”
      ]
      If any one of these countries were to withdraw from the currency union, (thus allowing issue of their own currency) – so that they might then enter into the MMT-twilight of unending State issue of “money” into the prosperity and savings by the public, do you think the equivalent of a 40% or 50% devaluation in the labor-purchasing power of their incomes would take place? More perhaps. The Drachma will return, perhaps as soon as March… Let’s see how much it’s worth then shall we?

  36. Blew all together.” [894]

    Thus interest rolls on interest as wave upon wave, and he that is involved in debt struggles against the load that bears him down, but cannot swim away and escape, but sinks to the bottom, and carries with him to ruin his friends that have gone security for him. But Crates the Theban, though he had neither duns nor debts, and was only disgusted at the distracting cares of housekeeping, gave up a property worth eight talents, and assumed the philosopher’s threadbare cloak and wallet, and took refuge in philosophy and poverty. ,,And Anaxagoras left his sheep-farm. But why need I mention these? since the lyric poet Philoxenus, obtaining by lot in a Sicilian colony much substance and a house abounding in every kind of comfort, but finding that luxury and pleasure and absence of refinement was the fashion there, said, “By the gods these comforts shall not undo me, I will give them up,” and he left his lot to others, and sailed home again. But debtors have to put up with being dunned, subjected to tribute, suffering slavery, passing debased coin, and like Phineus, feeding certain winged Harpies, who carry off and lay violent hands on their food, not at the proper season, for they get possession of their debtors’ corn before it is sown, and they traffic for oil before the olives are ripe; and the money-lender says, “I have wine at such and such a price,” and takes a bond for it, when the grapes are yet on the vine waiting for Arcturus to ripen them.”

    [894] “Odyssey,” v. 291-295.

    https://whenthecrisishitthefan.wordpress.com/2012/01/24/the-irony-of-reading-plutarch/

    The domain that this blog is published on has expired. The domain actually now redirects to a porn hub of the same name. This particular blog has much as anything else I have read in the last 4 years has been profoundly influential on my thinking. I recommend it highly.

  37. Total non-government debt to total non-government credit = 0

    Total government (net) debt = total non-government (financial) assets

    Ergo government debt = non-government savings.

    In stock/flow terms (I – S) + (G – T) + (X – M) = 0.

    1. Johng,

      the questions of Economics and its accounting mechanisms and sums as it were are one thing what is the wider concern to me is the Political aspects of Economic necessities. The Capitalistic control of Money creation is anti democratic that is unacceptable to me. Replacing the Capitalistic method of banking control by substituting the State or a proxy for the state in the intermediary role is also unacceptable to me, my objection could be summed up as ´´no intermediation without representation´´
      ”The present time, likewise, is that peculiar time, which never happens to a nation but once, viz. the time of forming itself into a government. Most nations have let slip the opportunity, and by that means have been compelled to receive laws from their conquerors, instead of making laws for themselves. First, they had a king, and then a form of government; whereas, the articles or charter of government, should be formed first, and men delegated to execute them afterwards: but from the errors of other nations, let us learn wisdom, and lay hold of the present opportunity—To begin government at the right end.” http://www.bartleby.com/133/4.htmlThomas Paine (1737–1809). Common Sense. 1776.
      Of the present ability of America, with some miscellaneous reflexions.s.IV para20.

      The whole of the intercourse between all of the actors in Civil Society can not be reduced to a balance sheet expressed only in Monetary terms,a governments and a states success can not be expressed as a mathematical function proving that all of the terms sum to zero.

      That a complex dynamic system can not be expressed in a function without induction is what Tarski shows , there is plenty of writing which grapples with the conflicts of idealism and materialism, I like Graebers Parmenidese vs Hereclitus
      http://commoner.org.uk/10graeber.pdf

      ”philosophy, after all, really begins with the quarrel between Heraclitus and Parmenides; a quarrel that Parmenides won.´´

      I also like Steve Keens Economist Quipp ”Thats all well and good in reality but does it work in Theory´´
      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

      Quines Two Dogmas of empiricism gives many insights to the limitations of technocratic faith systems.

      ´´ As an empiricist I continue to think of the conceptual scheme of science as a tool, ultimately, for predicting future experience in the light of past experience. Physical objects are conceptually imported into the situation as convenient intermediaries — not by definition in terms of experience, but simply as irreducible posits18b comparable, epistemologically, to the gods of Homer. Let me interject that for my part I do, qua lay physicist, believe in physical objects and not in Homer’s gods; and I consider it a scientific error to believe otherwise.´´
      http://www.ditext.com/quine/quine.html

      Most of all I like Rupert Sheldrakes, ” 6 mins 50 quoting Thomas Mc Kenna he says
      ”Give us one free miracle and we´ll explain the rest”
      https://www.youtube.com/watch?v=JKHUaNAxsTg

      And the Pragmatist in me inspired by C S Pierce my favorite modern philosopher and one of the finest logicians that has come down to us says this.

      CHARLES SANDERS PEIRCE: In order to
      reason well …. it is absolutely necessary to possess … such virtues
      as intellectual honesty and sincerity a
      nd a real love of truth (2.82). The cause [of the success of scientific
      inquirers] has been that the motive which has carried them
      to the laboratory and the field has been a craving to
      know how things really were … (1-34).
      [Genuine inquiry consists I in diligent inquiry into truth for truth’s sake
      (1.44), … in actually drawing the bow upon truth with in
      tentness in the eye, with energy in the arm (1.235).
      [When] it is no longer the reasoning which determines wh
      at the conclusion shall be, but … the conclusion which
      determines what the reasoning shall be … this is sham
      reasoning…. The effect of this shamming is that men
      come to look upon reasoning as mainly decorative….

      http://web.ncf.ca/ag659/308/Peirce-Rorty-Haack.pdf

      1. Roger, please don’t clutter up my comments with your drivel anymore.

        I don’t care who you quote (that’s just a blind for not being able to think for yourself). Nor do I care what you think money ought to be.

        Money is virtual. That’s it. Get over it.

        I reject your analysis totally.And I reject your motivations i.e. personal profit.

        You’re not a dissenter, Roger. You’re a UI for the status quo. Like your mate Wesley.Albeit he is a higher fuctioning I.

        The banksters are playing 3 dimensional chess while you and Wesley are coming to grips with Drafts. Maybe Wesley has mastered Drafts.

          1. It’s a shame that you don’t get it.

            When I’m presented with different facts, I change my mind.

            Clearly you don’t.

            But 2+2=4 in my world. And more aptly -2 + 2 = 0.

            And you nuts are arguing with that.

          2. And if you genuinely think that what you and your mate here have done is engage in discussion, you’re an even bigger idiot than I thought.

            https://www.youtube.com/watch?v=0g_MNpS9hM0

            Bulls On Parade”

            Come wit it now!
            Come wit it now!
            The microphone explodes, shattering the molds
            Either drop tha hits like de la O or get tha fuck off tha commode
            Wit tha sure shot, sure ta make tha bodies drop
            Drop an don’t copy yo, don’t call this a co-op
            Terror rains drenchin’, quenchin’ tha thirst of tha power dons
            That five sided fist-a-gon
            Tha rotten sore on tha face of mother earth gets bigger
            Tha triggers cold empty ya purse

            Rally round tha family! With a pocket full of shells
            They rally round tha family! With a pocket full of shells
            They rally round tha family! With a pocket full of shells
            They rally round tha family! With a pocket full of shells

            Weapons not food, not homes, not shoes
            Not need, just feed the war cannibal animal
            I walk tha corner to tha rubble that used to be a library
            Line up to tha mind cemetary now
            What we don’t know keeps tha contracts alive an movin’
            They don’t gotta burn tha books they just remove ’em
            While arms warehouses fill as quick as tha cells
            Rally round tha family, pockets full of shells

            Rally round tha family! With a pocket full of shells
            They rally round tha family! With a pocket full of shells
            They rally round tha family! With a pocket full of shells
            They rally round tha family! With a pocket full of shells

            Bulls on parade

            Come wit it now!
            Come wit it now!
            Bulls on parade!
            Bulls on parade!
            Bulls on parade!
            Bulls on parade!
            Bulls on parade!

          3. But 2+2=4 in my world. And more aptly -2 + 2 = 0.

            Who is arguing with your sums John G, I am not arguing with the arithmetic you have just put forward it is consistent within a clearly defined and ordered system , it is neither complex or dynamic and should anyone wish to propose a change in the meaning of any of the terms they could do that and make others aware of the proposed change in value of any of the terms.

            Get it? I take it form this that you are saying that I do not get that MMT is the only answer we need to bother ourselves with.

            My not getting MMT extends to the transparency and accountability of the intermediary institution. No Intermediation without representation meaning who’s aims are served or prioritised and what are the boundaries.This is seeking a clarification and that clarification requires political disclosure regarding which feedbacks will be prioritised in meeting the wishes of those’ who are supposed to be represented.

            Tony Benn once said this

            “The House will forgive me for quoting five democratic questions that I have developed during my life. If one meets a powerful person–Rupert Murdoch, perhaps, or Joe Stalin or Hitler–one can ask five questions: what power do you have; where did you get it; in whose interests do you exercise it; to whom are you accountable; and, how can we get rid of you? Anyone who cannot answer the last of those questions does not live in a democratic system.”

            Tony Benn Commons Hansard [16 Nov 1998: Column 685] Volume 319 Debate on: European Parliamentary Elections Bill , from 7.20 pm

            Regarding Facts changing and Minds changing

            Keynes is always ready to contradict not only his colleagues but also himself whenever circumstances make this seem appropriate. So far from feeling guilty about such reversals of position, he utilizes them as pretexts for rebukes to the less nimble-minded. Legend says that while conferring with Roosevelt at Quebec, Churchill sent Keynes a cable reading, “Am coming around to your point of view.” His Lordship replied, “Sorry to hear it. Have started to change my mind.”
            http://quoteinvestigator.com/2011/07/22/keynes-change-mind/

            Facts actually do not change and the pedant in me which comes out when I am irritated so I will point it out. Our understanding of facts change given different contexts and when interpreted in the light of other evidence. I did recommend some Ken Wilber earlier John G. Worth taking a look at that , everybody whose views you find challenging of your own is not an idiot, I may well be an idiot but do consider that I am not statistically significant sample. I should also add that Facts are sometimes demoted to mistakes. When a Fact is found to be mistaken in is obviously no longer a fact. Even things that are facts and accepted as such might fall out of favour distinctions between Belief, Truth and Knowledge are important here which is very basic philosophy.

            http://yanisvaroufakis.eu/2016/01/21/in-conversation-with-gerardo-pisarello-on-democracy-europe-and-municipalism/

          4. I take it form this that you are saying that I do not get that MMT is the only answer we need to bother ourselves with.

            Then you’re an even greater fool (or outright liar) than I thought before.

            This is dynamic but not complex.

            In stock/flow terms (I – S) + (G – T) + (X – M) = 0.

      2. The whole of the intercourse between all of the actors in Civil Society can not be reduced to a balance sheet expressed only in Monetary terms,a governments and a states success can not be expressed as a mathematical function proving that all of the terms sum to zero.

        Yes they can Roger. Yes they can.

        It’s just inconvenient to your agenda is all.

        Money is maths.

  38. ”I take it form this that you are saying that I do not get that MMT is the only answer we need to bother ourselves with.

    Then you’re an even greater fool (or outright liar) than I thought before.

    This is dynamic but not complex.

    In stock/flow terms (I – S) + (G – T) + (X – M) = 0.”

    and John G this is neither dynamic or complex.

    But 2+2=4 in my world. And more aptly -2 + 2 = 0.

    Your intellectual dishonesty is staggering.

    Your psychological projection is also deeply worrying John G. All that you are charging me with seems to be amplified in your own actions. Are you some sort of professional troll that seeks to disrupt people wishing to challenge the current system which serves both the State and the Banking interests perfectly well?

    We have obviously got nothing left to say to each other, frankly if we were in a Bar I would have offered you outside by now.

    https://www.youtube.com/watch?v=azM6xSTT2I0

    1. frankly if we were in a Bar I would have offered you outside by now.

      Dude, you’d have been tossed long ago as a nutter.

      Good to see your comitment to non-violence is a sham though.

      serves both the State and the Baking interests

      How does it serve the state?

      You’re playing drafts while the bankers play 3 dimensional chess, dude.

      We have obviously got nothing left to say to each other,

      Then stop cluttering up my comments. I don’t want to talk to you, Nutter.

      You think in Austrian terms by your own admittance.

      So -2 + 2 = 0 is an anathema.

      Bye Roger.

      1. John G,

        Gatekeepers and Bouncers, neither have ever troubled me.
        Your own conduct marks you out as a person in need of some encouragement only a weak faith could be shaken so much by simple inquiry, In encouragement I would say MMT is not such a bad idea and I hope you will realise that it does not require such a vindictive defense.
        On MMT i will continue to study it on its merits you are however the most appalling advertisement that there could be for adopting its tenets I would encourage anyone who has followed our exchange to look at MMT and make up their own mind it seems unlikely anybody would ever take your word for it, it is worth considering and in considering it no one would be wasting their time.( A discourse with you though JohnG leaves much to be desired.)

        All the best

        Roger

        1. https://en.wikipedia.org/wiki/Wittgenstein's_Poker

          On 25 October 1946, Popper (then at the London School of Economics), was invited to present a paper entitled “Are There Philosophical Problems?” at a meeting of the Moral Sciences Club, which was chaired by Wittgenstein. The two started arguing vehemently over whether there existed substantial problems in philosophy, or merely linguistic puzzles—the position taken by Wittgenstein. In Popper’s, and the popular account, Wittgenstein used a fireplace poker to emphasize his points, gesturing with it as the argument grew more heated. When challenged by Wittgenstein to state an example of a moral rule, Popper (later) claimed to have replied “Not to threaten visiting lecturers with pokers”, upon which (according to Popper) Wittgenstein threw down the poker and stormed out. Wittgenstein’s Poker collects and characterizes the accounts of the argument, as well as establishing the context of the careers of Popper, Wittgenstein and Bertrand Russell, also present at the meeting.

          The book follows three narrative threads, each pivoting off the 1946 confrontation at Cambridge; the first is a documentary investigation into what precisely took place and the controversy over the differing accounts from observers; the second, a comparative personal history of the philosophers, contrasting their origins in Vienna and their differing ascents to philosophical prominence; and thirdly an exploration of the philosophical significance of the disagreement between the two and its relevance for the great debates in the early 20th century concerning the philosophy of language.[1]

          I have no idea what made me think of this.

          1. I have no idea what made me think of this.

            Nor do I. The question was ‘how does it serve the state?’

        2. it does not require such a vindictive defense.

          Dude, read back through the thread.

          Who’s been attacked here?

          You’re just getting a little bit of your own back and you’re whining.

          Your own conduct marks you out as a person in need of some encouragement only a weak faith

          Oh spare me the rationalisations for your friend’s appalling conduct.

          Your ‘real money’ friends right or wrong at best.

          I reject your personal criticism completely.

          1. John G,

            Gatekeepers and Bouncers, neither have ever troubled me.

            OOooooh I’m sure you’re a real tough guy.

            Idiot.

          2. John G,
            Who is cluttering who’s comments and what happened to not wishing to engage?
            As i have said before I am perfectly happy with how I have conducted this exchange between us,
            I have no intention to and have not attacked you personally I have questioned ideas and I have challenged you on your conduct and your resorting to personal attacks and then only in respect of your attacks on my arguments not the ad hominem.
            I do not know Wesley and I am no more his friend than I am your friend This is the first discussion I have noticed either of you participating in on this blog and if we have exchanged views in the past I do not recall.

            Your continuing disruption of the discussion of the questions posed in the original piece by David and of the ensuing discussion of Money creation is here for all to see. A cursory examination will find that no one has escaped your anger as far as I can see, certainly anyone who has disagreed with you.

            This sort of conduct I have seen on linked in before where the disruptive and aggressive parties have been able to delete their comments or in some cases whole discussions following presumably regretted outbursts. That can not happen on this platform so what ever claims you make the record is still here for all to see and it is not for me to draw conclusions for anyone who comes to this discussion at this juncture, they are perfectly capable of making up their own minds as to the merits of the substantive arguments and also the conduct of the participants including me and your good self.

      2. John G I am an Anarchist and not a Libetarian. I am not a pacifist and do believe in self defense, I have an admiration for the philosophy on non violence but have not reached and doubt I ever will reach that degree of enlightenment or inner peace. Meanwhile I have a temper which I do control and sometimes have to make a very large effort to control, this is not posturing and I am not threatening you. Message boards internet discussions are very hard to gauge for instance I wondered if at first you were being zany or maybe making the odd off Joke, by this stage and at the point I said I do become pedantic when irritated I said so.
        Even all said and done I am still smiling and bear you no ill will or indeed any ill will towards MMT. I have confirmed in my own mind the technocratic aspect of MMT and the personalities that bureaucratic power attracts, you paint the picture of a quite dogmatic and authoritarian individual, in my very first post I outlined the difficulties in guagiing meaning from anonymous avatar correspondents in cyber space. I am myself and do not hide who I am my real name and avatar link to me I do not hide behind anything or anybody, that probably does make me an idiot by many standards.

        If I acted like you have acted in this exchange between us I probably would want to do it as an avatar as well.

        1. I have confirmed in my own mind the technocratic aspect of MMT and the personalities that bureaucratic power attracts,

          We are not in power nor part of any bureaucracy We are actively marginalised and attacked by the mainstream.

          heterodox |ˈhetərəˌdäks|
          adjective
          not conforming with accepted or orthodox standards or beliefs : heterodox views.
          DERIVATIVES
          heterodoxy noun
          ORIGIN early 17th cent. (originally as a noun denoting an unorthodox opinion): via late Latin from Greek heterodoxos, from heteros ‘other’ + doxa ‘opinion.’

          you paint the picture of a quite dogmatic and authoritarian individual

          ad hominem |ˈad ˈhämənəm|
          adverb & adjective
          1 (of an argument or reaction) arising from or appealing to the emotions and not reason or logic.
          • attacking an opponent’s motives or character rather than the policy or position they maintain : vicious ad hominem attacks.
          2 relating to or associated with a particular person : [as adv. ] the office was created ad hominem for Fenton. | [as adj. ] an ad hominem response.
          ORIGIN late 16th cent.: Latin, literally ‘to the person.’


  39. The whole of the intercourse between all of the actors in Civil Society can not be reduced to a balance sheet expressed only in Monetary terms,a governments and a states success can not be expressed as a mathematical function proving that all of the terms sum to zero.

    It’s not hard to understand.

    The government is on one side of the balance sheet and the non-government is on the other.

    Pretty simple stuff that seems to elude ‘educated’ western people.

    Makes you wonder whether western people are being misedumacated.

    1. Civil Society
      can not be expressed as a mathematical function proving that all of the terms sum to zero.

      Thus.

      In stock/flow terms (I – S) + (G – T) + (X – M) = 0.”
      where

      The private domestic balance (I — S) …
      The Budget Deficit (G — T) …
      The Current Account balance (X — M)

      Where in this balance sheet ( Function) or (Identity) do we find a Spirit Level component or a Gross national Happiness level? Balance sheets do often include an entry for Goodwill in the business which isn´t really the same thing and in any case society is not a business and other metrics are necessary.

      Confusing the description or depiction of a thing for the thing itself is a silly mistake in music as in art as in life politics and economics it is not so much what you see or play or put in as much as it is what you don’t see what you don’t play and what you leave out.

      The concepts of opportunity cost and Potential are missing from a reduction to a balance sheet.Where is the love in this technocratic MMT balance sheet?

      Guido perhaps gives a clue in the Italian governements. ” need to continually torture the GDP figure to the extent where in Italy and France for example, they now add the black economy (prostitution and drugs) in the calculation of GDP in order to maintain the veneer of growth thus investment rating.”

      1. Where is the love in this technocratic MMT balance sheet?

        How much more ridiculous can you get?

        It’s a starting point. Understand it before you go on.

        One would have hoped that it may get you thinking about income as a flow.

        Instead you engage in more hand waving.

        1. See Keens analysis below of MMT and Monetary Circuit Theory.
          I have been an avid student of Keens since around 2010 so in 6 years I have enjoyed the first use of Minsky when it became available and I have it on my computer tool bar. I am also a qualified Chartered Surveyor the branch I belong to is the Valuation branch My business I was in business seriously , was all about income flows John G.
          If you were interested enough to follow keens lecture, it is 20 minutes long you will see he gets into the mathmatics of the Mathmatical Identity you posted earlier, representing your sectoral balances approach.
          The Post Ante Nature of your summed flows is a weakness which I have explained due to the ill posed nature of a derivative that can experience large Changes as a result of small increases in inputs. This is a particular problem for Ex Post models like the Balance sheet identity represented by MMT theory in Sectoral balances.

          Moving form linear systems thinking to complex non linear systems is always necessary after demonstrating first principles with simplified proofs of concept. In reality all other things never remain equal or stationary and this is what will always vex the less than dedicated mathematical modeler

          Fast Fourier Transformation is actually a very good way of thinking of ´´The Love´´in the economy, The Love denoting the in expressable frustration that comes from Herding Cats or Commanding the seas to recede as the tide comes in. What FFT does is alows one to seperate out Time boud variable from frequency bound variabbles the frequecy bound variablesare the Cats, the tidesor the love if you will, they are in a sense random as thier actions arise out of infinite possible outcomes. This is the tradfe of in precision and prediction, over shorter time frames we have better odds or rather smaller potential errors in our prediction of frequency variable.

          Hopefully form this you will see what I meen By where is the Love? but also you will see very clearlyI feel the flow and realise that one has to a certain extent have to go with it.

          I get it all right but I aint down wid Dat. No Can Do.

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

          1. Wesley - Complex and Dynamic!

            Quite right! This is precisely the effect that I attempted to convey in my Butterfly wings-tempest analogy… It’s also why the Socialists do not have an answer to the “calculation” problem mentioned in Spartacus’ 9 interview questions…
            [
            Wesley – from Airstrip One January 18, 2016 at 10:41 pm Man’s economy is a complex, dynamic system that defies these (and all previous nightmarish) attempts at centrally planned control… 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.
            ]

          2. This is a particular problem for Ex Post models like the Balance sheet identity represented by MMT theory in Sectoral balances.

            No it isn’t. You’ve misunderstood both the accounting and Steve Keen. Ot you are being disingenuous again.

            It isn’t a model you very silly person. It’s an accounting statement.

            I find it very difficult to believe you’ve been following Steve at all.

          3. In 1943 Abba Lerner published an article, “Functional Finance and the Federal Debt,” that announced a new approach to fiscal policy. (The subject was further developed in his Economics of Control and the Economics of Employment.) He noted that conventional fiscal wisdom was based on the principles and morals of good household management: don’t spend what you don’t have – a tacit reminder that the words “economy” and “economics” are etymologically derived from oikos, the Greek word for household.

            Lerner, however, picking up on the summary Keynesian prescription of deficit spending, argued that governments should not be concerned with conventional morality but rather should consider only the results of their actions. The aim of government spending and taxing, he said, should be to hold the economy’s total spending at a level compatible with and conducive to full employment at current prices – in other words, no unemployment and no inflation. In doing this the government should not be concerned with deficits or debt. Second, the government should borrow or repay only insofar as it wants to change the proportions in which the public holds securities or money. Changing this proportion will raise or lower interest rates and hence discourage or promote investment and credit purchasing. If the only question, then, was how to finance a deficit, Lerner advocated printing money. Third, the government should put money into circulation or withdraw (and destroy) it as needed to effect the results called for by the first two principles.

            ………
            The central idea is that government fiscal policy, its spending and taxing, its borrowing and repayment of loans, its issue of new money and its withdrawal of money, shall all be undertaken with an eye only to the results of these actions on the economy and not to any established traditional doctrine about what is sound and what is unsound. This principle of judging only by effects has been applied in many other fields of human activity, where it is known as the method of science opposed to scholasticism. The principle of judging fiscal measures by the way they work or function in the economy we may call Functional Finance …

            Government should adjust its rates of expenditure and taxation such that total spending in the economy is neither more nor less than that which is sufficient to purchase the full employment level of output at current prices. If this means there is a deficit, greater borrowing, “printing money,” etc., then these things in themselves are neither good nor bad, they are simply the means to the desired ends of full employment and price stability …

          4. Wesley - Science at work!

            The scientifically observable effects of unsound fiscal policies (together with unsound central and commercial banking policies – in any number of awful combinations) range from repeated utter destruction of nations’ currencies (what you call “money”), complete undermining of nations’ credit markets, or the slow theft of their populations’ savings through the insidious centrally-planned and intentionally “engineered” inflations. And if MMT and “functional finance” describes what we have now – well, you’re about to be provided with some additional “science” in terms of how these zombie-finance precepts are working out in the largest deficit-finance disaster in history. In fact, Japan (a currency issuer and deficit finance master) has been providing you with 30 years of results. How much more “Scientific” data do you need to examine before you realize that you cannot spend your way to prosperity with false claims to wealth, and you can’t solve a debt and solvency problem with more debt and added “liquidity” magicked into thin air?

  40. Steve Keen on Sectoral Balances MMT and Monetary Circuit Theory Minsky and Schumpeter.

    https://www.youtube.com/watch?v=UzxQcTOs4JA

    Keen draws the important distinction between Post Ante and Ex ante measurement of Aggregate incomes.
    https://www.youtube.com/watch?v=UzxQcTOs4JA
    My presentation at the UMKC Post Keynesian conference in 2012 where I prove that, given endogenous money, effective demand is income plus the change in debt, and show that this is compatible with sectoral balances.

    Keens Program minsky is fun to play with. What I would add with this is this is all Economics it is definitely not rocket science, frankly this is all pretty basic stuff the maths is not difficult. Its the Politics and the Ethics that make any of this controversial because they are the motivations behind the economic choices behind monetary policy and the resultant effects on wealth distribution.

    http://www.debtdeflation.com/blogs/2012/09/16/fields-institute-mmt-mct-seminar/comment-page-2/

    1. http://claesjohnson.blogspot.se/2013/11/standard-calculus-as-ill-posed-unstable.html

      Steve keen is I think quite kind to MMT and the the sectoral balance approach

      On the other hand, the process from integral/primitive function x(t) to derivative Dx(t), is ill-posed and unstable, in the sense that small perturbations in x(t) may give rise to large perturbations in the derivative, because

      Dx(t)=limΔt→0x(t+Δt)−x(t)Δt

      at 21.22 mins keen says measured income is time looking backwards,
      Following through Claes and his ill posed point, where a Small change in input can have a large change in output the derivative is ill posed .

      it is this instability that Minsky articulated and which Keen shows so well in his Minsky modelling it is however the sort of Instability that leads Technocrats to allow themselves to be fooled by random and unstable events which are simply not predictable.

        1. Just to wrap up this line of reasoning and to propose a more realistic treatment of the economy I would venture the Fast Fourier Transform which is used in this example to demonstrate Time domain and frequency domain components in a Sound Signal.

          An economy is clearly not a linear phenomena and neither is Sound when one wishes to model subtleties such as Timbre in a sound one finds that Timbre actually lives in the frequency and not the time domain the FFT allows one to relate the two although there are trade offs in accuracy in technical modeling questions such as windowing for that I am linking to a second video entitled why precision matters.

          https://youtu.be/69A1kGNFYIc?t=3m49s

          This should open at 3.49 mins and describes the FFT and its real and imaginary components

          Now with respect to Precision here is my Friend Katta with her incredible explaination of a very deep concept.

          https://www.youtube.com/watch?v=93632nc8LVs

          Anyway economic modelling is really no different to Sound or climate modelling the maths , geometries, complexities and dynamics all use the same mathematical and computing tools.

          This is here as a note to self as much as anything when I collate all the information gathered here which will probably find its way into a blog post.
          My practice in participating in on line discussions is to use them as a sort of seminar to gather together reading from diverse areas of interest and that leads to not begrudging any amount of time it takes to read posts watch links and re read posts.

          I never expect anyone to read my own posts or indeed t read my poems , listen to mysongs or music . I think out loud in writing effectively occasionally some pennies drop for me sometimes not.

          “Never forget that justice is what love looks like in public”
          ― Cornel West

          I would venture that Economists tend to trivialize the subtleties required in the application of these tools in their rush to reduce the economy which is embedded into society and social relations into Economic variables which they also forget are driven by their own policy inputs.

      1. Just to be clear here, Roger, you are completely misinterpreting what Steve Keen is saying.

        And to further clarify your muddle headedness on this particular subject, Circuit Theory and MMT are entirely compatible. And even further Circuit Theory models of endogenous money creation fit perfectly within sectoral balance accounting and MMT.

        In fact, the Circuit Theorists thinking is accepted as established by the MMT school. The maths fits one side of the equation.

        You haven’t been listening to Steve very well it turns out.

        Macro isn’t just the sum of all micro.

        It has nothing to do with any musical red herrings or anything else you care to muddy the waters with.

  41. Out of the mouths of babes. …
    By Alasdair Macleod
    GoldMoney.com, St. Helier, Jersey, Channel Islands
    Thursday, January 21, 2016

    “The nine questions that follow are best asked so that they are answered in front of witnesses, adding to the respondent’s discomfort. Equally, journalists and financial commentators, who make a living from mindlessly recycling others’ beliefs, can be great sport for an interrogator.

    The game is simple: we know that macroeconomics is a fiction from top to bottom, the challenge is to expose it as such. If appropriate, preface the question with an earlier statement by the respondent, which he cannot deny; i.e. “Last week you said that…” ”

    https://www.goldmoney.com/out-of-the-mouths-of-babes

    Cheers,
    S. Rex

  42. Uh oh!

    Economic Unease Puts Top Central Bankers Under Renewed Pressure – WSJ 21 Jan

    By TOM FAIRLESS in Frankfurt and JON HILSENRATH in Davos, Switzerland

    Central banks in the U.S., Europe and Japan face renewed pressure to keep interest rates low or expand easy-money policies in response to gyrating stock markets, tumbling oil prices and slow growth in China and elsewhere.

    In a telling example, European Central Bank President Mario Draghi sent a strong signal Thursday he is prepared to launch additional monetary stimulus in March, a response to persistently low inflation tied to slow growth and falling commodities prices.

    “We don’t give up,” Mr. Draghi said at a news conference in Frankfurt. “We are not surrendering in front of these global factors.”

    In Japan, calls are increasing for Bank of Japan Gov. Haruhiko Kuroda to launch new stimulus measures as early as next week, with Japan’s economy sputtering and inflation near zero.

    “The credibility of BOJ policy will likely take a hit” if the central bank doesn’t act, said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance. Inaction, he said, could lead investors to believe the central bank has run out of measures that might help.

    …The ECB, like other central banks, faces serious questions about the effectiveness of its policy tools. Inflation in Europe has remained below 2% despite repeated efforts to lift it toward the official target. There is also a risk that markets could be disappointed again.

    http://www.wsj.com/articles/economic-unease-puts-top-central-bankers-under-renewed-pressure-1453415366

    Cheers,

    S. Rex

  43. Wesley - checking premises

    Hi Roger, just catching up with yours of January 21, 2016 at 11:22 am 
    [
    The Capitalistic control of Money creation is anti-democratic that is unacceptable to me. Replacing the Capitalistic method of banking control by substituting the State or a proxy for the state in the intermediary role is also unacceptable to me, my objection could be summed up as ´´no intermediation without representation´´
    ]

    To avoid getting one fine point enmeshed with a separate, unrelated back and forth, I would urge you to re-examine your premises above. In my view, the suggestion that the banking system resembles in even its remotest shadows a Capitalistic system belies a faulty assumption. Banking is a tightly managed, fascist Cartel, controlled by 5 institutions in America, and perhaps 10 more worldwide. The State and this Cartel are and have been inextricably linked, feeding off of the host (the population at large), and protecting themselves from any form of threat. The blockchain, and similarly disruptive technologies, have the potential to open that fist, or to crush it into a disfigured mass of pulp. Other mechanisms than purely technical means could end the crime just as suddenly. That would start with a charismatic leader at the bully pulpit surrounded by pope-like security.

    Either way, State protected monopolies of this nature have always failed and this one will be no different. The question is will we allow it to fail in slow motion, over a period of thirty years of excruciating horrors to the entire population (as in Japan since 1989), or all at once in a conflagration of epic proportions deeply affecting the false claims to paper wealth of a few. I think it may have been Hemingway describing his descent into bankruptcy: “slowly at first, then very fast.” We likely won’t be given a chance to decide. Just as in 2008. Nothing has really changed since then except the fraudulent transfer of the banking cartel’s toxic assets onto the black hole of the JohnG / MMT’s central-planning balance sheet, and their replacement with fresh thin-air cash to chase newer and more exciting assets. Those who dwell in the twilight zone believing in a straight line, linear or even scalar relationship between those balance sheets is about to get a first level lesson in elemental maths.

    None of the prices, production, or even distribution of banking “industry” goods (ex-nihilo credit funny-money) are determined by competition in a free market. Otherwise there would be competitive currency and payment/settlement systems, for one. Capitalism in banking has not YET been permitted to exist.

    Check your premises.

    1. Fiat Currency = Fiat (ie Feces) Capitalism

      Ergo, CRAPITALISM

      Those that champion same are Crapitalists!

      “Paper money eventually returns to its intrinsic value: zero”
      Voltaire (1729) [Francois Marie Arouet ] (1694-1778)

      Cheers,
      S. Rex

    2. Wesley, This is a major point on which you and I clearly differ, I have stated above that I see Capitalism and all forms of Statism as two sides of the same coin. Capitalism goes through stages, Quiggley describes the different stages in Britain, France Germany and the United States and also in Japan and other Imperial Powers.

      Quiggley points out that the US enters Financial Capitalism at a different stage to Other countries and the nature of each of the categories and tendency in different cultures to remain more inclined to one sort to another.

      Capitalism is not a sacred cow to me Wesley and neither is ´´the Market´´ all ideologies have their appeal to Authority get out of jail catchall!Because God, Because Markets , Because Capitalism, Because the singularity, Because Science, Because Human Nature.

      So when we examine premises we must agree which can be agreed upon for an agreed period of time during which we wish to have our interests bound together.
      This is like a contract with a fixed termination date.

      Absent economists , absent politicians and absent Capitalism the people who identify as Economists, Politicians and Capitalists will still remain in the context of their Community and wider society how would they organise themselves with modern technology in a new Foucaultian episteme.

      ”I would define the episteme retrospectively as the strategic apparatus which permits of separating out from among all the statements which are possible those that will be acceptable within, I won’t say a scientific theory, but a field of scientificity, and which it is possible to say are true or false. The episteme is the ‘apparatus’ which makes possible the separation, not of the true from the false, but of what may from what may not be characterised as scientific.”[1]
       
      Michel Foucault.

      E F Schumacher’s Small is beautiful sits well with where my own ethos lies.

      ´´Schumacher’s philosophy is one of “enoughness”, appreciating both human needs, limitations and appropriate use of technology. It grew out of his study of village-based economics, which he later termed Buddhist economics, which is the subject of the book’s fourth chapter.´ https://en.wikipedia.org/wiki/Small_Is_Beautiful

      Schumacher’s Guide for the perplexed is also well worth seeking out.

      ”It is also a treatise on the nature and organisation of knowledge and is something of an attack on what Schumacher calls “materialistic scientism”. Schumacher argues that the current philosophical ‘maps’ that dominate western thought and science are both overly narrow and based on some false premises”.

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

      I discovered Maimonides through Schumacher and recommend dipping into his works
      religion is after all politics on earth.

      ´´ For it is said, “You shall strengthen the stranger and the dweller in your midst and live with him,” that is to say, strengthen him until he needs no longer fall upon the mercy of the community or be in need.
      Book 7 (Sefer Zera’im “Seeds”), Treatise 2 (Mattenot Aniyiim “Laws of obligatory gifts to the poor”), Chapter (Perek) 10, Halacha 7 (Translated by Jonathan J. Baker.)
      Variant: Concerning this [Leviticus 25:35] states: “You shall support him, the stranger, the resident, and he shall live among you.” Implied is that you should support him before he falls and becomes needy. (Translated by Eliyahu Touger.)

      https://en.wikiquote.org/wiki/Maimonides

      Mutual aid existed before Capitalism existed as a category and will outlive it . I would argue that it has outlived its purpose and it is not necessary to argue whether other forms of cooperation between mutual and conflicting interests would have lead us to a better starting point than we are at now.

      I am a keener student of Spinoza than I am of Maimonides, there are distinct similarities. It is also speculated that Leibniz was fascinated by Spinoza at least, if not influenced by him. Contrast this from Spinoza’s Tractatus politicus and then the following quote from Wealth of Nations.

      “Better that right counsels be known to enemies than that the evil secrets of tyrants should be concealed from the citizens. They who can treat secretly of the affairs of a nation have it absolutely under their authority; and as they plot against the enemy in time of war, so do they against the citizens in time of peace.”
      ― Baruch Spinoza
      See also P.12 Para 9. http://www.spinozacsack.net78.net/Political%20Treatise,%20Benedict%20de%20Spinoza.pdf
      p.28 para 8
      ”8. There is another accession to the cause of peace and concord, which is also of great weight: I mean, that no citizen can have immovable property (Chap. VI. Sec. 12). Hence all will have nearly an equal risk in war. For all will be obliged, for the sake of gain, to practise trade, or lend money to one another, if, as formerly by the Athenians, a law be passed, forbidding to lend money at interest to any but inhabitants; and thus they will be engaged in business, which either is mutually involved, one man’s with another’s, or needs the same means for its furtherance. And thus the greatest part of this council will generally have one and the same mind about their common affairs and the arts of peace. For, as we said (Sec. 4), every man defends another’s cause, so far as he thinks thereby to
      establish his own.”

      “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

      Adam Smith

      I would venture that what we have never had is a distributed network whereby feedbacks from elemental nodes of interests resolve their social and economic interactions free from the distorted practices of corrupted intermediaries who game the exchange process, such gaming is in the very nature of power relations in Capitalism and Statism that is premised on the Top Down control model.

      Wesley, you could go on at great and knowledgeable length I am sure, for my self I could certainly goon at length if not at knowledgeable length.

      We have touched upon Moral relativism much despised by many libertarians, the other grouping which attracts much ire is the allegation of ´´Collectivism´´. Spinoza is interesting in his distinction between States and Commonwealths, the notion of Capitalism existing outside of either a State or a commonwealth is difficult for me to imagine. Capitalism allows the marshaling of resources into concentrations which represent Economic Power Blocks we then will see Kings, Princes, aristocrats, Oligarchs and the other descriptive names of persons holding positions of formal authority within the structures of government or economic organisation. Power relations are a necessary component of any jointly motivated effort such as Commerce and trade, Capitalism is just one way of enforcing jointly organised motivated effort for a centralised and privileged elite group and not for the commonwealth.

  44. Apparently I and the MMT school are responsible for the (ongoing) Wall St fraud now.

    Which is about as bizarre as it gets (although I wouldn’t bet on that given that we’re talking about ‘libertarians’ here).

    If anyone wants to explore the vast criminality of both the banks and the government players in detail, absent the Rothbardian language and mythology, it’s hard to go past Professor Bill Black, a prominent MMTer at UMKC with qualifications in Law, Economics and Criminology.

    This is Warren Mosler’s view of what banks should be reduced to doing. Warren is probably the most pro-capitalist prominent MMTer around (although again in ‘libertarian la la land, banksters aren’t capitalists).

    Given that the public purpose of banking is to provide for a payments system and to fund loans based on credit analysis, additional proposals and restrictions are in order:

    Banks should only be allowed to lend directly to borrowers, and then service and keep those loans on their own balance sheets. There is no further public purpose served by selling loans or other financial assets to third parties, but there are substantial real costs to government regarding the regulation and supervision of those activities. And there are severe consequences for failure to adequately regulate and supervise those secondary market activities as well. For that reason (no public purpose and geometrically growing regulatory burdens with severe social costs in the case of regulatory and supervisory lapses), banks should be prohibited from engaging in any secondary market activity. The argument that these areas might be profitable for the banks is not a reason to extend government sponsored enterprises into those areas.
    US banks should not be allowed to contract in LIBOR. LIBOR is an interest rate set in a foreign country (the UK) with a large, subjective component that is out of the hands of the US government. Part of the current crisis was the Federal Reserve’s inability to bring down the LIBOR settings to its target interest rate, as it tried to assist millions of US homeowners and other borrowers who had contacted with US banks to pay interest based on LIBOR settings. Desperate to bring US interest rates down for domestic borrowers, the Federal Reserve resorted to a very high risk policy of advancing unlimited, functionally unsecured, US lines of credit called ‘swap lines’ to several foreign central banks. These loans were advanced at the Fed’s low target rate, with the hope that the foreign central banks would lend these funds to their member banks at the low rates, and thereby bring down the LIBOR settings and the cost of borrowing US for US households and businesses. The loans to the foreign central banks peaked at about600 billion and did eventually work to bring down the LIBOR settings. But the risks were substantial. There is no way for the Fed to collect a loan from a foreign central bank that elects not to pay it back. If, instead of contracting based on LIBOR settings, US banks had been linking their loan rates and lines of credit to the US fed funds rate, this problem would have been avoided. The rates paid by US borrowers, including homeowners and businesses, would have come down as the Fed intended when it cut the fed funds rate.
    Banks should not be allowed to have subsidiaries of any kind. No public purpose is served by allowing bank to hold any assets ‘off balance sheet.’
    Banks should not be allowed to accept financial assets as collateral for loans. No public purpose is served by financial leverage.
    US Banks should not be allowed to lend off shore. No public purpose is served by allowing US banks to lend for foreign purposes.
    Banks should not be allowed to buy (or sell) credit default insurance. The public purpose of banking as a public/private partnership is to allow the private sector to price risk, rather than have the public sector pricing risk through publicly owned banks. If a bank instead relies on credit default insurance it is transferring that pricing of risk to a third party, which is counter to the public purpose of the current public/private banking system.
    Banks should not be allowed to engage in proprietary trading or any profit making ventures beyond basic lending. If the public sector wants to venture out of banking for some presumed public purpose it can be done through other outlets.
    Use FDIC approved credit models for evaluation of bank assets. I would not allow mark to market of bank assets. In fact, if there is a valid argument to marking a particular bank asset to market prices, that likely means that asset should not be a permissible bank asset in the first place. The public purpose of banking is to facilitate loans based on credit analysis rather, than market valuation. And the accompanying provision of government insured funding allows those loans to be held to maturity without liquidity issues, in support of that same public purpose. Therefore, marking to market rather than evaluation by credit analysis both serves no further public purpose and subverts the existing public purpose of providing a stable platform for lending.

    http://www.huffingtonpost.com/warren-mosler/proposals-for-the-banking_b_432105.html

    1. Professor Bill Mitchell.

      I start from the proposition that the only useful thing a bank should do is to facilitate a payments system and provide loans to credit-worthy customers. Attention should always be focused on what is a reasonable credit risk. In that regard, the banks

      should only be permitted to lend directly to borrowers. All loans would have to be shown and kept on their balance sheets. This would stop all third-party commission deals which might involve banks acting as “brokers” and on-selling loans or other financial assets for profit.
      should not be allowed to accept any financial asset as collateral to support loans. The collateral should be the estimated value of the income stream on the asset for which the loan is being advanced. This will force banks to appraise the credit risk more fully.
      should be prevented from having “off-balance sheet” assets, such as finance company arms which can evade regulation.
      should never be allowed to trade in credit default insurance. This is related to whom should price risk.
      should be restricted to the facilitation of loans and not engage in any other commercial activity.
      So this is not a full-reserve system. The government can always dampen demand for credit by increasing the price of reserves and/or raising taxes/cutting spending.

      The issue then is to examine what risk-taking behaviour is worth keeping as legal activity. I would ban all financial risk-taking behaviour that does not advance public purpose (which is most of it).

      I would legislate against derivatives trading other than that which can be shown to be beneficial to the stability of the real economy.

      So I support bank nationalisation? Probably, but that is for another day. Having a strong public banking system to compete against the private banks will achieve mostly the same ends and is more likely to be politically acceptable in the current climate.

      1. As to being technocrats:

        technocracy |tekˈnäkrəsē|
        noun ( pl. -cies)
        the government or control of society or industry by an elite of technical experts.
        • an instance or application of this.
        • an elite of technical experts.
        ORIGIN early 20th cent.: from Greek tekhnē ‘art, craft’ + -cracy .

        One wonders how any sane person could ascribe this to MMT.

        It’s absurd on its face.

        authoritarian |əˌθôriˈte(ə)rēən; ôˌθär-|
        adjective
        favoring or enforcing strict obedience to authority, esp. that of the government, at the expense of personal freedom : the transition from an authoritarian to a democratic regime.

        Ditto.

        1. Statism

          The term “statism” was introduced to American political discourse by the writer Ayn Rand[2] in a series of articles in 1962.

          So the racist islamophobic nut job shill for big business Ayn Rand lives on in the blockchain “community”.

          No surprise really.

          1. Statism as I use the term means a centralised concentration of political and financial power in the state.

            The key word here is centralisation. WIth Centralisation comes less accountability and less transparency.

            If one happens to believe in Democracy as a viable form of Societal organisation where the interests of the common wealth are served the direction in which power flows is very important, where the feedback and authority flows from the network into an agreed series of amalgamated matters of economic and social interest a system more grounded in realities of citizens emerges out of a flow in this direction. A Centralised system where power is delegated into administrative outposts is essentially less transparent.

            A participation in the affairs of community and society is not usually seen as welcome in Technocratic or Authoritarian types of Government. My Chief question for MMT is what are the feed back mechanisms and who decided priorities how networked is it within a sovereign domain and do the nodes of the network select the coordinating centre or does the directing centre demur to the distributed power in the nodes.

            Democratic processes matter and so does participation and limits on the extent to which delegated authority can be exercised.

            Bill Mitchell in this interview gives a good account of MMT, my question mainly form this interview is Why a Job Guarantee? technological progress is such that Jobs and work require re defining
            The Citizens Income remains for me a much more Modern way of considering Distribution considerations regarding buying power, these questions obviously vary regionally as well.
            http://ineteconomics.org/ideas-papers/interviews-talks/demystifying-modern-monetary-theory

          2. I’m all for more democracy, more participation, less centralisation and far more people power over the government. There is nothing inconsistent with all those ideals and MMT.

            Nor do I see that having a state money system is incompatible with those ideals.

            Any system can be corrupted, ours certainly has been hijacked. But I think you have the causality wrong.

            My Chief question for MMT is what are the feed back mechanisms and who decided priorities how networked is it within a sovereign domain and do the nodes of the network select the coordinating centre or does the directing centre demur to the distributed power in the nodes.

            My question would be: why are you asking this of MMT?. MMT has no position in and of itself.

            I think you’ve been fooled by your right wing mate’s rantings into seeing MMT as an ideology rather than a tool for studying macroeconomic interactions in a financial economy. It’s not a political party.

            Why a Job Guarantee? technological progress is such that Jobs and work require re defining

            What better way to allow us redefine work? Maintain income, productive capacity, price stability and ensure social participation for anyone who wants to work. (And people do want to work and participate). It would also eliminate a lot of bad low pay jobs that we are now forcing people to do.

            CBI won’t address any of those issues, would be inflationary and would be prone to the same social branding that we get now.

        2. Wesley - non-technocratic

          How can you on the inhalation of a breath advocate repeatedly for the nationalization of Banks; multiple “public-private partnerships”, Centrally-planned control of interest rates (price controls), and “credit worthiness” decisions – only then to exhale while stating MMT policy prescriptions of this nature are neither technocratic, nor authoritarian? Your own definitions self-evidently describe perfectly well the very actions you deny the labels describe. Going back to Airstrip One for an explanation of MMT Newspeak! Yikes!

          Do you think these decisions as to credit-worthiness are going to be made Democratically in the soft-focus MMT world ? Banning (that means by use of force) all risk-taking that does not advance public policy kinda’ implies someone evaluating the “public policy” implications of a given enterprise seeking credit. Are we going to vote on it? Of course not! A technocrat, or worse, an entire team of technocrats to spread the risk of decision-making around within will decide. Your denial of the Authoritarian and Technocratic basis for MMT policy implementation is preposterous on its face. But let’s rebrand these words’ meanings with something more palatable shall we? Labels can be so confining! I know! MMT technocrats will be called “Teachers” henceforth… and MMT Authoritarians shall be known as Principals! There! Kinda’ sounds like Principles, too. We agree, then right? We have ways of encouraging your understanding in more compelling terms, too!

    2. Wesley with Warren

      You say MMT would not change the monetary system. Mosler’s massive slate of new law-making to rein in the acknowledged fraudulent structure of the current system is a fairly far-reaching line-up of changes. Dodd Frank, watered-down to reflect banking wishes, would be so proud. Your naïve belief that such a monstrosity of legislation could be enacted in the current paradigm is nothing if not idealistc. Very positive vibes, indeed. But the analysis leaves remaining in place the single most important aspect of the fraud – and its absence is indicative of MMT’s ongoing support of the current mechanism of control fraud. What’s that itsy-bitsy little thing it left out?

      Soddy says it best. It’s his biggest contribution to the discussion, by taking a view of the credit creation function from the eyes of the user, rather than those of the banker. And he knows the proposition is so simple, that the entire dilemma may be solved by the use of a simple adding machine (or a Blockchain):

      Soddy – 1934:

      “All the shades of distinction which money in the course of its evolution has passed through, from barter to pure credit (or debt), concern not the something initially given up for it, which is the one essential to all its forms. They concern merely what is received in exchange for it.”

      “It is not the issue of proper receipts that ought to be attacked, but the getting for nothing by the issue of money of more than the public are able to give up for it. If printing receipts, instead of giving gold for what the owner of money gives up for money, is an immoral practice, how much more immoral it is not even to give receipts ! How utterly hypocritical it is to proceed against the counterfeiter of a forged note, who gives a false receipt, for treason rather than theft, and strictly to limit by Act of Parliament the amounts which the banks are allowed to obtain from the public for nothing by the issue of tangible receipts, while allowing them to extract for their own profit incomparable vaster amounts so long as they do not acknowledge the receipt at all!”

      Warren, and MMT still permit the ex-nihilo creation of fraudulent forms of credit issuing from this vision of a banking system. All of the fuss and pother is unnecessary, if one simply ensures that there is something real behind every claim. Wanna loan some money? Come up with some money! Laws ensuring this mechanism are far simpler, less intrusive, more transparent and much more easily enforced.

  45. @ Johng My question would be: why are you asking this of MMT?. MMT has no position in and of itself.

    The devil is in the detail Johng. why have a system with intemediaries when the intermediarie can be retired as technology has advanced to the point where the intermediary can be retired. This is what Blockchain encryption technology allows. As we see in the Bitcoin Fork civil war currently monopolising odf mining has led to the real possibility of 51% attack which compromises the independence of the network, Its democracy if you wanted to put it that way.

    MMT can’t just simply say that by changing the controllers and regulating the banks that this will ensure a democratic outcome.

    It is a very political position to take Full employment and a Job guarantee as a tenet of MMT. As it happens I would vote for such a tenet myself although I would argue first that CItizens income unconditionally is more democratic , less authoritarian and better suited to the post 40 hour week future.

    Money, or credit/debt based state sanctioned money is such a major lever of state power or centralized monopoly power in the United Kingdom there is no doubt that the Establishment and Banking are one and the same thing, it is also true here in Sweden, its certainly true in the EU EURO block it is also true in the US , also Australia and Canada.

    All of these places have been following Neo Liberal Economic and social policies for the past 40 years or so. Clearly the experiment has failed. I am all for the maxim, ´íf it aint broke don´t fix it´´but is is neither working or in my view it is no longer fit for purpose.

    Technology and society far from having driven us to the edge of oblivion has actually advanced to the stage that the Establishment Elite are no longer required they are effectively Redundant and what we see is a classic Turkeys do not vote for Christmas scenario.

    Ruskin tackles this question in Unto this last when he poses the question what does the doctor feel when he discovers that some one has discovered the panacea to cure all ills?

    Transition periods from one management structure to another are of course sensible and one can see perfectly well how MMT might be used as an interim system when say Steve Keen Debt Jubilee is implemented and moving towards a truly democratic form of governence.

    Wesley has said above already that True Capitalism has never existed, I could equally say true democracy has never existed, for MMT I guess you could also say a true FIAT based state money system has never existed.

    I think we all know the score of what the current system does and how it does it, Positive money tackle the Political transparency and democracy question by saying they would keep the Bank of England Monetary policy committee and make electable appointments to it. That is at least a starting point.

    another question which I will have a look for myself on is how MMT tackles international trade? Already you have said and Bill Mitchell says in his interview I linked to that a sovereign money issuer can never go bust if they can issue their own tokens and these are used to buy domestic goods and services this of course leads on to the question what about imports/exports.

    JohnG
    ´´What better way to allow us redefine work? Maintain income, productive capacity, price stability and ensure social participation for anyone who wants to work. (And people do want to work and participate). It would also eliminate a lot of bad low pay jobs that we are now forcing people to do.´´

    I do not disagree with these aims in fact I fully support them there is though a very deep crisis in democracy or the tendency towards a tolerance of some democratic ideals in the Establishments clear direction in policy right now, Not least in the re branding of consent.

    A citizens Income is a direct right of everyone in my case as I agree with Thomas paine and Napoleon Bonapartes view.

    ”In 1795, American revolutionary Thomas Paine advocated a citizen’s dividend to all US citizens as compensation for “loss of his or her natural inheritance, by the introduction of the system of landed property” (Agrarian Justice, 1795).

    French Emperor Napoleon Bonaparte echoed Paine’s sentiments and commented that ‘man is entitled by birthright to a share of the Earth’s produce sufficient to fill the needs of his existence’ (Herold, 1955).”

    Both Paine and Napoleon will have had a contemporary grand stand view of the Enclosures and the Clearances which are part and parcel of the primitive accumulation of Capitalism. Capitalism is forged in the very coercion that I think Wesley decries now of the state, it was the state and Capitalism that made their partnership and it endures today.

    Of course one has to ask the question how far back does one go , what wrongs should be righted etc. Personally I live only in the present and whilst learning form history is very important turning the clock back is always impossible. We must always start form Now.

    I despise Authoritarian attitudes and link them to centralisation of power both economic and administrative itr ios this that motivates my enquiry into the democratic context into which you propose we place the existing system with the ´´State´´in the driving seat.

    In a democracy there is no need for a state. Democracy is functional peaceful society .

    Kants forms of government are these

    Anarchy is democracy without violence. As summary Kant named these four kinds of government:
    A Law And Freedom without Violence (Anarchy)
    B Law And Violence without Freedom (Despotism)
    C Violence without Freedom And Law (Barbarism)
    D Violence with Freedom And Law (Republic)

    http://letthemconfectsweeterlies.blogspot.se/2015/04/on-baltimore-riots-us-spring-and-what.html

    1. Interesting article :

      ” Insight into the role of emotions in nonviolent action can be obtained from studies by psychologist Jonathan Haidt and colleagues into “moral foundations.” These are six basic factors that shape human judgments about good and bad: care, fairness, liberty, loyalty, authority and sanctity. These have great relevance to activists ”

      .http://wagingnonviolence.org/feature/understanding-gut-reactions-key-to-building-powerful-movements/

      1. L E S S O N 2 1 . T H E H U MA N A NI MA L
        P 179

        The cold analysis of the Human condition here is the interesting chapter I refer to above.

        http://wagingnonviolence.org/feature/understanding-gut-reactions-key-to-building-powerful-movements/

        Stevie the reactive mind referred to in the Article or the Reflective mind , the rider and the Elephant. I think the rider is actually called the Lizard brain in medical science. David Ike and Barack Obama have both mentioned this in interviews I have watched with both of them?

        1. You are probably way ahead of me matey – I just thought that the ideas on how to combat what David is referring to were interesting.

          I agree on the lizard thing as it strikes me that the majority of the real powers that be are nothing more than appetites on legs. I cannot understand why anyone needs many mansions etc & I think they are slaves to power & end up stewing in their own rancid juices. I think I got the baboon video from you, in which the alpha males viciously bullied those under them, which then got passed right down to the bottom, basically resulting in a miserable existence for the whole troop – until the greedy Alphas insisting that they get the first pickings to gorge themselves on – poisoned themselves, leading to a much egalitarian system from which all members benefitted. It puts me in mind of the Koch brothers, who by their own standards are extremely successful, but appear to spend most of their time trying to make everyone elses life a misery – which I think reflects their own state of being. Maybe their keyboard assets will turn out to be the equivalent of the poison food.

    2. @ Johng My question would be: why are you asking this of MMT?. MMT has no position in and of itself.

      The devil is in the detail Johng. why have a system with intemediaries when the intermediarie can be retired as technology has advanced to the point where the intermediary can be retired.

      You’re confusing the macroeconomics with the political. And you’re asking me to build a (perfect) system before you’ve understood the basic architecture of state money.

      But in terms of credit provision, my personal preference is that the state would own some banks that would finance larger business oriented projects and and that communities, towns, cities would have their own locally controlled and strictly regulated and audited banks for provision of credit to small business, home loans and consumer credit.

      I’d keep privateers and corporations out of the credit provision system altogether.

      Large infrastructure projects would be directly funded by the state via government spending i.e. fiscal outlays. There is no need for any horizontal money to be involved as far as I can see.

      But again, this is a political question, not an MMT question. MMT merely shows that the present structure is NOT inevitable.

      It is a very political position to take Full employment and a Job guarantee as a tenet of MMT. As it happens I would vote for such a tenet myself although I would argue first that CItizens income unconditionally is more democratic , less authoritarian and better suited to the post 40 hour week future.

      Pretty much the only times I’ve voted for years is for Social Credit parties or candidates. I understand the concept very well.

      But over the years I’ve also become convinced that it wouldn’t work because of the sociological and political implications AND the economics combined.

      I’ll still vote for them while they’re not aligned with the Positive Money types because at least they’re still thinking about it. and they’re anti-neoliberal.

      I’ll come back to that later if you wish.

      Money, or credit/debt based state sanctioned money is such a major lever of state power or centralized monopoly power.

      Not if you decentralise its provision. But you have to understand what money is to appreciate that. With respect, I don’t think you and Wesley do.

      As I said way up the thread to someone else, you are trying to define money as what you want it to be, not what it is.

      To understand it is the first step and then beyond that point you can see why state money has to be and then why there is vertical money and horizontal money.

      Understanding the mechanics is vital to seeing the problems in a clear light.

      All of these places have been following Neo Liberal Economic and social policies for the past 40 years or so. Clearly the experiment has failed. I am all for the maxim, ´íf it aint broke don´t fix it´´but is is neither working or in my view it is no longer fit for purpose.

      I agree. You won’t find any MMTers supporting neoliberalism or the status quo. I totally agree with getting bankers out of the government.

      Neoliberalism is class war dressed up as an economic doctrine. It’s just old pre- Keynes neoclassical bunkum. It relies on many of the money myths that were debunked long ago.

      But again, the bankers power over government is an illusion. It isn’t the mechanics of money that makes it so.

      So, overthrow the bankers by all means. I’m happy to help.

      But if you think changing money to ‘real money’ or ‘positive money’ will do that, you’re way off course. You’ll give them real control Their illusion will become a reality.

      Their illusion now is sustained by the deficit myths being peddled and the supposed horrors of so called ‘government debt’.

      It’s all nonsense designed to limit social spending i.e. bottom up economics.

      Wesley has said above already that True Capitalism has never existed, I could equally say true democracy has never existed,

      Wesley, like most staunch supporters of capitalism, doesn’t know what capitalism is. His opinions are worth nought. True democracy is an ideal and an ongoing process. You’re never going to achieve perfection but it doesn’t mean that you abandon it altogether.

      The capitalist class pays democracy lip service but they hate it and they will never ever stop undermining it. They have to be fought.

      The general adoption of neoliberalism has neutered the fight against them.

      And the most outrageous part of its adoption is that it has largely been the so called leftist parties in the west have been at the forefront of the process.

      I left the Australian Labor Party in 1984 because of it. And I’ve fought them ever since. I’ve watched them for a very long time.

      So there’s not much you can teach me about it.

      for MMT I guess you could also say a true FIAT based state money system has never existed.

      Not at all. It does exist. That’s what we have now. But don’t mistake the political for the mechanics.

      One could argue that all money systems have been state/sovereign fiat money system and that the battles and arguments over their provision have been largely about placing restrictions on their use.

      The gold standard for example is an artificial, politically motivated restriction on vertical money i.e. government spending/fiscal policy. It doesn’t change the basic nature of money, it just makes bankers more powerful.

      BANKERS LOVE GOLD. They love anything that restricts government spending on anyone but their class interests.

      But these constraints always either fail because the maths reaches its limits (they face revolution) or class interests make them impractical (usually when they want to go to war).

      I think we all know the score of what the current system does and how it does it, Positive money tackle the Political transparency and democracy question by saying they would keep the Bank of England Monetary policy committee and make electable appointments to it. That is at least a starting point.

      Sorry bit I dismiss PM altogether. I suspect they are a ginger group for the elite, like the ‘libertarian’ right are.

      They present the current system in a completely false light and their prescriptions for solving what they purport are the problems lead directly to the end of democratic government and a centrally planned economic dystopia.

      I’m sure most of the followers are well meaning but they are being duped.

      I’ve tried to engage PM people over the years but in my experience they tend to be extremely authoritarian types who have internalised PM’s falsehoods in the form of slogans and simply won’t entertain that they have it wrong.

      In that respect they are similar to the ‘libertarian’ right.

      As an aside I’ve always wondered whether there’s some (elite humour?) in the symmetry of the ‘libertarian’ slogan about the US worker losing 97% of their purchasing power etc (you know the one) and the PM slogan about bank debt being 97% of our money supply.

      Both statements are catchy (and there’s a little bit of truthiness in there) but false.

      Our governments DO NOT BORROW THEIR MONEY FROM PRIVATE BANKS. Period.

      Of course one has to ask the question how far back does one go , what wrongs should be righted etc

      I we’re talking about economics and the neoliberal paradigm, to understand how we got here, you can go back to Keynes General Theory and the mistake he made within it (but later acknowledged as a mistake), which was to not reject part of Walasian equlibrium theory. Thus to give Hicks and Hansen et al a foot in the door to bastardise his work with their IS-LM crap which survives to this day in the New Keynesian School (Krugman, Stiglitz?, Picketty etc).

      Or you can just go back to the 1970s and read how the powers that be funded, populated and lined up the ‘debate’ to falsely discredit the bastard Keynesian policies (and labour) for problems that weren’t of their making.

      The Austrians and ‘libertarians’ were their foot soldiers. And the economics academy largely surrendered with a whimper.

      I despise Authoritarian attitudes and link them to centralisation of power both economic and administrative itr ios this that motivates my enquiry into the democratic context into which you propose we place the existing system with the ´´State´´in the driving seat.

      No it doesn’t. But it does recognise the need for a state and the part of state money being a stabilising enabler of economic activity and to provide some financial security.

      In a democracy there is no need for a state. Democracy is functional peaceful society .

      Is it? I’d have thought democracy was where all people have equal power in a functional peaceful society.

      You have to recognise that greed, sociopathy and psychopathy exist.

      In our capitalist world, we elevate the psychopaths to positions of power, we elect them as presidents and prime ministers and they happily go to war and kill people on an industrial scale (for the capitalist class).

      We laud sociopaths for their ‘ingenuity and entrepreneurial spirit’ in the private sector or their ability to ‘take hard decisions’ in government.

      And we celebrate greed i.e. the desire to accumulate financial wealth far beyond its utility value as an end in itself.

      In a democracy these people would not gain social power. In a democracy the state would represent to social power of the collective.

      A dollar, pound, yen, kroner, euro, ruble, yuan or whatever is an accounting entity in a big scoring system.

      In and of itself an accounting entity cannot control anything much. You have to guard against the perversion of its use.

      You cannot eliminate all possible dangers and have a functioning system. You have to be aware of the dangers and guard against them.

      We’ve lost that ability as societies.

      But what would I know?

      1. Just an addition, I’ve met a lot of people in my life who think they know about Marx, Keynes, Adam Smith etc who’ve never read them.

        And I see endlessly repeated supposed authoritative quotes from a lot of people on these money discussions that are mostly bogus.

        Probably about 97% of them.

        BTW, how do you have a UBI without a state?

        1. John G,

          I have read a fair measure of all 3, although not all of their out put.
          Wealth of Nations is pretty short and I read it many years ago as an Undergraduate and I read a good bit of Keynes at the same time.
          Marx I came to later so I followed David Harveys Reading Capital Course
          on Line.

          Steve Keen has so far escaped the silly silly/misguided/stick , DO you think he understands what Money is? and do you think he is able to communicate that to his students?

          Here are a link to some papers/books on money and a final one to a short article on Economania which I have always thought quite good.

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

          http://honest-money.com/

          http://www.jamesrobertson.com/futuremoney.htm

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

          http://www.levyinstitute.org/pubs/wp_717.pdf

          http://www.economania.co.uk/various-authors/money-matters-bill-kruse.htm

          When one starts reading seriously one soon realises that reading everything on a subject is impossible especially if one wishes to examine other sides to a question in something approaching a balanced measure.
          Johng, when you say,
          ´´In and of itself an accounting entity cannot control anything much. You have to guard against the perversion of its use.’´

          Accounting is a matter of record of course it can not control anything? the entity itself that does the accounting does this according to standards that are political in their nature just as the membership of the judiciary effects the quality of justice so too does the membership of the money accounting entity.

          Did you have any answers to the foreign trade question I found a few articles , of course how we do foreign exchange is a big question as sovereign nations that can have sovereign money are quite equally able to use that Sovereignty to reject MMT. What is the tipping point for MMT adoption in your estimation, if the US went in that direction ( with MMT rules as it were) would the dollar gain importance or lose importance? If STirling or The Aussie Dollar adopted MMT rules together or solo and the dollar remained on its course what effects would one have on the other. What of the EURO?

          1. I know for a fact that Steve understands MMT. I don’t think he makes that clear but I guess he has his own reasons for that.

            My understanding of what he’s teaching these days is mostly about horizontal money i.e. bank credit. I’m not aware of anything much that he’s said about vertical money in public.

            I don’t know whether he communicates well with his students or not. My eyes tend to glaze over at the maths. Circuit theory bores the christ out of me.

            But I don’t need to do it for exams or work. Its workings don’t impinge on anything I’m interested in other than the fact that private debt drains aggregate demand but net government spending will decrease the rate of private debt expansion.

            And bubbles are about private debt expansion, not government spending.

            Accounting is a matter of record of course it can not control anything? the entity itself that does the accounting does this according to standards that are political in their nature just as the membership of the judiciary effects the quality of justice so too does the membership of the money accounting entity.

            Me looking at a macro spreadsheet that tells me the relevant numbers gives me no control over anything.

            What I can tell you is that if the government is running a surplus (deficit) then the non-government i.e. domestic private and foreign sectors is running a deficit (surplus).

            So if the non-government is running a deficit and the foreign sector a surplus or is in balance i.e. a trade deficit then the domestic private sector is being drained of savings and will go into recession and unemployment will rise.

            The macro accounts of the currency issuer, in and of themselves, have little to no real world effect. They’re just numbers on a spreadsheet.

            The fiscal balance reflects the saving desires of the non-government sectors.

            If the combination of the domestic private and the foreign sectors is a surplus, then the government fiscal balance will be in deficit.

            So the ‘national debt’, which is the accrued deficit spending of government, is in fact the government spending (of its own dollars i.e. vertical money) that is yet to be cancelled by taxation.

            Thus, given that private debt or bank credit nets to zero i.e. matching credits and debts, the national debt exactly equals or IS the net private and foreign sector savings in that state’s currency.

            If the private sector is in deficit either either it will go into recession or expand private sector debt.

            Which brings you back to Steve Keen’s work.

            So, in whose interest is it to scare people about government spending and the whole deficit/debt hoo ha?

            Who wants poverty and unemployment?

            I’ll touch on the foreign sector later.

          2. another question which I will have a look for myself on is how MMT tackles international trade? Already you have said and Bill Mitchell says in his interview I linked to that a sovereign money issuer can never go bust if they can issue their own tokens and these are used to buy domestic goods and services this of course leads on to the question what about imports/exports.

            No advanced nation’s government should be buying things in foreign currency or guaranteeing private sector actors currency conversion or protection. If foreign reserves from private sector trade are accrued by the central bank then maybe there’s a case.

            They should never, ever take out foreign currency loans. Period.

            But they usually buy military equipment which adds nothing to the domestic economy.

            The rush to trade at any cost is misguided.

            It’s a bit different for developing nations. Keynes tried to address these issues before Bretton Woods but lost to US (and possibly City of London) arrogance and belligerence.

            Instead the world was saddled with the IMF and World Bank.

    1. ”One would not be altogether wrong in saying that the currency school elements in the table are in line with the analyses and policy approaches put forth by most contemporary reform initiatives, in particular the American Monetary Institute
      , Positive Moneyin the UK, Sensible Moneyin Ireland, Monetative in Germany and Monetary Modernisationin Switzerland.4These clearly represent new currency teachings (NCT).Furthermore, most advocates of monetary reform explicitly understand what they are doing as an endeavor to modernize the money system
      –which implies modernizing money theory.
      5
      MMT too, explicit in its name, seems to have modernized money theory. MMT scholars nclude Warren Mosler, Scott Fullwiler, Stephanie Kelton and Randall Wray.
      6
      As their forefathers’ they cite Godley (sector balances), Lerner (functional finance) and Mitchell Innes (state theory and credit history of money). Against the background of ‘currency vs banking’, NCT definitely represents a mod
      ernized currency paradigm. MMT’s positioning within this field, however, is ambiguous. MMT declares itself to represent a state theory of money and to
      stand for sovereign currency. One thus might expect it to be a currency teaching too. In actual fact, however, MMT repeatedly reproduces banking views, and even has it that bank money under contemporary fractional reserve banking is a benign implementation of the sovereign

      currency system we are supposed to have. This creates misunderstanding and talking past one another.”

      Above quote form this 60 page paper, I continue to paraphrase highlights below the link.

      http://www.paecon.net/PAEReview/issue66/Huber66.pdf

      ” The question is who ultimately holds the whip hand. As was rendered obvious by the eurosystem’s sovereign debt crisis, the banks and bond markets were powerful enough to let governments down, but governments could not afford not to bail out failed banks. A short time before, the closure of Lehman Brothers resulted in an unintended lesson for governments; a lesson for all governments, not just those of weaker economies. Unless a state decides to recapture from the banking industry the full and unimpaired monetary prerogative of a sovereign state (as explained below), the government of that state is not really sovereign and will have to give in to the demands of the banking industry.”

      ´´At first glance, it might seem as if both MMT and NCT rely on the same notion of chartalism. But seeing money as a creature of the law is less common ground than one might expect. Most people understand by sovereign money or chartal money a means of payment issued by the treasury or the central bank. Similarly, NCT as well as today’s monetary reformers attach three aspects to a state’s monetary prerogative:

      1. determining the national unit of account (currency prerogative)
      2. issuing the money denominated in that currency (legal tender prerogative)
      3. benefitting from the first user advantage of new money (prerogative of seigniorage, be this in the form of genuine or interest borne seigniorage).

      ”MMT’s chartalism can thus be characterized as being partial or incomplete in that it includes only the first of three components. NCT, by contrast, stands for full or complete chartalism encompassing all of the three components.”

      ”For the most part today, monetary sovereignty is something
      that has to be recaptured from the banking industry.”

      ”Walsh and Zarlenga concluded that ‘money need not be
      something owed and due, it’s what
      we use to pay something owed and due. … We pay our
      debt with money.’In real economic transactions money is used as a means of settlement. As such it does not create or transfer debt. The inscription on dollar notes is absolutely appropriate: ‘This note is legal tender for all debts, public and private’ period.Moreover, the creation and issuance of money can, but need not, involve a financial transaction of lending/borrowing and redeeming. In actual fact and as a rule, traditional coin currencies for about 2,500 years were created and issued debt free by being spent rather than loaned into circulation by the rulers of the realm. ”

      ”The idea of paying a debt with another debt of the same kind only seems to make sense within a framework of bankingtype reasoning. Outside such self contained reasoning it is less
      obvious ”

      ” Debt money, i.e. the false identity of credit/debt and money, is not a necessity at all. What was true for traditional currencies holds all the more true for modern fiat money, because it can freely be created at discretion by those who are authorized to do so. There is no reason why modern money should not be spent into circulation debtfree by a monetary authority rather than being loaned into circulation as debt money. ”

      ”If money is spent into circulation through government expenditure, or as citizens’
      dividend, for the purchase of real

      economic goods and services, this creates genuine
      seigniorage free of interest and redemption.
      Debt free money, to come back to Bezemer’s
      dry water metaphor, might rather be likened to
      pure water not contingent upon credit and debt at
      source.”

      ”Moreover,
      some such common ground would imply for MMT to think over its contempt of monetary
      quantity theory and carelessness about deficits and debt.”

      Paraphrase ends.

      I highly recommend that anyone interested read the linked paper I think it is a fair and balanced consideration between differences in MMT, NCT and Austrian schools of thinking.

      1. As their forefathers’ they cite Godley (sector balances), Lerner (functional finance) and Mitchell Innes (state theory and credit history of money). Against the background of ‘currency vs banking’, NCT definitely represents a mod
        ernized currency paradigm. MMT’s positioning within this field, however, is ambiguous. MMT declares itself to represent a state theory of money and to
        stand for sovereign currency. One thus might expect it to be a currency teaching too. In actual fact, however, MMT repeatedly reproduces banking views, and even has it that bank money under contemporary fractional reserve banking is a benign implementation of the sovereign

        Nonsense. Just a flat out lie. Ad hominem.

        ” The question is who ultimately holds the whip hand. As was rendered obvious by the eurosystem’s sovereign debt crisis, the banks and bond markets were powerful enough to let governments down, but governments could not afford not to bail out failed banks. A short time before, the closure of Lehman Brothers resulted in an unintended lesson for governments; a lesson for all governments, not just those of weaker economies. Unless a state decides to recapture from the banking industry the full and unimpaired monetary prerogative of a sovereign state (as explained below), the government of that state is not really sovereign and will have to give in to the demands of the banking industry.”

        Fallacy of composition. That they didn’t, doesn’t mean they couldn’t.

        2. issuing the money denominated in that currency (legal tender prerogative)

        Meaningless without definition. Nobody cares about legal tender laws.

        3. benefitting from the first user advantage of new money (prerogative of seigniorage, be this in the form of genuine or interest borne seigniorage).

        That doesn’t mean anything. Gold standard thinking. Nothing to do with MMT.

        ”MMT’s chartalism can thus be characterized as being partial or incomplete

        Another fallacy of composition. Meaningless.

        ”For the most part today, monetary sovereignty is something
        that has to be recaptured from the banking industry.”

        Stupid statement. Currency sovereignty and banking are separate issues.
        Worthless.

        ”Walsh and Zarlenga

        Oh I get it now. Worthless polemic.

        I think it is a fair and balanced consideration

        Written by lobbyists for the Positive Money crowd whose primary spokesperson is a Bilderburg attendee.

        PM’s primary goal is to centralise credit creation to an unelected group of technocrats.

        Ironic that you’d be pushing their barrow.

        And here I was thinking that we were getting somewhere, Roger.

        1. http://bilbo.economicoutlook.net/blog/?p=30827

          Iceland’s Sovereign Money Proposal

          Posted on Tuesday, May 5, 2015 by bill
          In a way this blog is being written to stop the relentless onslaught of E-mails coming, which seek to promote so-called positive money. I am regularly told that I need to forget Modern Monetary Theory (MMT) and instead see the benefits of this alleged revelationary approach to running the economy. Other E-mailers are less complimentary but just as insistent. Then there are the numerous E-mails recently with the following document attached – Monetary Reform: A Better Monetary System for Iceland – which I am repeatedly told is the progressive solution to bank fraud and, just about all the other ills of the monetary system. The Iceland Report was commissioned by the Icelandic Prime Minister and is being held out as the solution to economic and financial instability because it would wipe out the credit-creating capacity of banks. It has been endorsed by the British conservative Adair Turner, who formerly was the chairman of the UK Financial Services Authority and who recently advocated so-called overt monetary financing (OMF) as a way to resolve the Eurozone crisis. I agree with OMF but disagree with his view that it is the credit-creation capacity of banks that caused the crisis. The crisis was caused by banks becoming non-banks and engaging in non-bank behaviour rather than their intrinsic capacity to create loans out of thin air. A properly regulated banking system does not need to abandon credit-creation. Further, I am aware that in holding this view, I and other Modern Monetary Theory (MMT) proponents are accused of being lackeys to the crooked financial cabals that hold governments to ransom and brought the world economy to its knees. Let me state my position clearly: I am against private banking per se but consider a properly regulated and managed public banking system with credit-creation capacities would be entirely reliable and would advance public purpose. I also consider a tightly regulated private banking system with credit-creation capacities would also still be workable but less desirable.

          Not that our actual position is important to the censors here.

          1. 100-percent reserve banking and state banks

            The debt explosion that has brought the World economy to its knees was not the fault of endogenous money creation. It was the result of lax regulation; criminal activity; and a neo-liberal obsession that national governments had to run surpluses (and hence squeeze private sector liquidity and wealth).

            With this obsession dominating public policy over the last few decades, economies could only grow (mostly) if the private sector took on increasing debt levels. The rise of the financial engineering sector – with the elimination of regulations that might have reasonably controlled its errant tendencies – guaranteed that the households would take on this debt … on increasingly dubious grounds.

            http://bilbo.economicoutlook.net/blog/?p=7299

          2. https://en.wikipedia.org/wiki/Joseph_Huber_%28economist%29

            I neglected to put the huber wikipedia entry in my previous post.

            Johng,

            I am not accusing MMT or you of being anyones lackey, your view is stated and I accept that it is offered in goodwill and with sincerity.

            We all agree I am sure that in any political policy decision avoiding throwing the baby out with the bathwater is sensible.

            My view ultimately is that Interest is the core of the problem and as such my inclinations are ot a re design from the ground up as opposed to the variants offered by MMT, MCT or Commodity money solutions that retain an interest element essentially as I stated earlier I am with Proudhons camp in his quarrel with Bastiat I mentioned early on in our discussion.

            With regard to the last sentence I am unaware of any sensors here? David has not troubled himself to intercede or sanction or censure let alone censor anyone.

            Schumacher in this lecture talks about the differences between Unity and universality and how they are mutually exclusive I would venture that it is possible to have a democratic unity or an Autocratic Universality, Unity and Democracy and Universality and Autocracy are ‘both at the end of the day merely human costructs.
            Schumacher argues that Unity and Democracy can only be found in decentalised smaller structures which are actually more complex and richer that Monolithic centralised universalities.
            This sort of reasoning may seem too esoteric and metaphysical and have no place in Economic Theory, I would disagree, our economic system should serve the people not the people serve the Economic system as with so many things where we start our reasoning determines where we draw our conclusions to a close.

            https://archive.org/details/SchumacherA3

            AT the start of this talk Schumacher tells a joke, it goes like this,

            A Surgeon and Architect and an Economist are discussing whose is the oldest of their three profession. The Surgeon starts stating well gentlemen surely it is mine after all God when he created Adam then made Eve by taking a Rib from Adam a surgery I would say.

            The Architect speaks he frowns and laughs, surely dear Mr Surgeon you must see that God at first created The World and he did this out of Chaos surely you must admit that this precedes surgery and is indeed an act of Architecture.

            The Economist shakes his head and thumps the table around which they sit triumphantly. And who do you suppose created the Chaos?

          3. I am not accusing MMT or you of being anyones lackey, .

            Clearly you are.

            your view is stated and I accept that it is offered in goodwill and with sincerity.

            Concern trolling. And I certainly don’t accept that you’ve posted in good faith.

            Hand wringer.

          4. Wesley - A Real Bill

            I completely agree that a regulated private banking system with credit creation capacities is a public good. Don’t let your obsession with fractional reserve banking (or 100% reserve banking) cloud your understanding of what I believe to be the source of ill. Namely, the creation from thin-air of counterfeit credit. To provide, under power of state and monopoly, the ability to issue multiple simultaneous claims to money is immoral on its face. If bankers wish to invest their own previously earned capital (MONEY), and lend that out – that is perfectly fine, and the intended purpose of investment banking. If they also represent to their banking clientele, that they are going to lend out their depositors’ money, then it should be on the basis of true maturity matching. In other words, if I make a deposit in an on demand vehicle – that cannot form the basis of a loan to someone for a 30 year home mortgage. If I place money with the bank in a 2 year time deposit, that money may well be loaned for a term not exceeding 2 years, and pay me an appropriate rate of interest reflecting the use of that money in a higher yielding environment. That is the function of banking.

            It’s the essential insolvency of the banking system and its ability to transform maturities, and create purchasing power from thin air that I find immoral and contrary to good public policy. When you learn to separate the functions of money from credit (and discount and interest), you will better understand how a banking system can function AND permit the contraction of total credit. The banking system you adore cannot permit the contraction of total credit without imploding.

            The MMT model also lacks a proper functioning method for discounting trade – eg, real bills – and is deficient in this regard as well. Any private or public banking system that ONLY permits growth in instruments of fiduciary media and purchasing power, without a means to extinguish them by payment of legitimate money, is condemned to a state of permanent inflation, and improper redistribution of wealth to first-receivers and debtors, and away from Savers. That is what we have now – and it is failing.

            At least the Iceland and Positive Money proposals are getting the public talking about the essential nature of the money function, and its issue. It would seem that Mr. Mitchell is a bit frustrated in his inability to generate similar levels of excitement for MMT…

          5. MMT does NOT hold that irresponsible credit-creation (endogenous money creation ex-nihilo by private banks) was at the root cause of the global financial crisis!

            Where Bill Mitchell (MMT) stands:
            “I do not support a 100-percent reserve banking system. It is the work of a lobby that hates and distrusts government. I agree with OMF but disagree with his view that it is the credit-creation capacity of banks that caused the crisis. The crisis was caused by banks becoming non-banks and engaging in non-bank behaviour rather than their intrinsic capacity to create loans out of thin air. A properly regulated banking system does not need to abandon credit-creation.”

            I wonder where the “money” (credits) came from to buy those homes; to buy those Credit Default Swaps; to buy those Collateralized Debt Obligations; to fuel the stocks advance — where did those fraudulently issued credits come from, if not the private banking sector? To engage in the behaviors that he attributes to non-banking functions, you had to be a BANK! His words are preposterous on their face. Think on that for a moment. MMT says don’t change the mechanism! It’s not broken. Add some more laws to regulate the existing mechanism more tightly. Uh-huh… Yeah – Dodd Frank is doing a great job of reigning in fraudulent credit growth. Anyone who would take away thin-air credit-creation capabilities from the private banking system is a hater. Very subtle. Full reserve banking is anti-government. Yep. You’re either with us, or against us – there are no other alternatives… Those constructions kinda’ remind me of the reasons for this instant posting!

            Notice: any suggested change to the actual status-quo is actively vilified – without anything more than words. Reasons are not necessary… the status-quo is behind you!

    2. https://rwer.wordpress.com/comments-on-rwer-issue-no-66/

      These are the comments on the Huber paper and here is his Wikipedia entry with some links to other papers, He is the Joint Author of Robertson’s book Future Money.

      Consider further,

      https://en.wikipedia.org/wiki/Bancor
      The bancor was a supranational currency that John Maynard Keynes and E. F. Schumacher[1] conceptualised in the years 1940-42

      I reference Schumachjer earlier in the concept of ‘enoughness’.

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

      Are SDR´s XDR´s the real high powered money?
      see.
      The Balance of Payments dilemma.
      and consider.

      ´´Currently the IMF’s SDRs are the closest thing to the proposed Bancor but they have not been adopted widely enough to replace the dollar as the global reserve currency.´

      Johng, when you say
      ”They should never, ever take out foreign currency loans. Period.”

      Did you recognise what Spinoza had said about the Athenians.

      ”Hence all will have nearly an equal risk in war. For all will be obliged, for the sake of gain, to practise trade, or lend money to one another, if, as formerly by the Athenians, a law be passed, forbidding to lend money at interest to any but inhabitants; ”’ see spinoza above.

      This is the point on Historical perspective made here.
      ´´ robert r locke
      July 25, 2014 at 7:57 am
      Reply

      Jamie Morgan & Brendan Sheehan

      ”The discipline, since its inception and mathematization in the 19th century, has never succeeded as a prescriptive science, i.e., it has never been able to clarify the dumb sea of facts. Then, why use the neoclassical economics as a point of references for clarifying system failures, when their claim that their axioms/assumption expressed in a logically consistent symbolic exposition of their invention has clearly always been fraudulent?’

      ”Hence all will have nearly an equal risk in war. For all will be obliged, for the sake of gain, to practise trade, or lend money to one another, if, as formerly by the Athenians, a law be passed, forbidding to lend money at interest to any but inhabitants; ”’ see spinoza above.

      1. Why would anyone type that post if not to cover for their inability to carry on a rational conversation and/or conduct a reasonable, cogent argument.

        It’s absurd.

        No wonder that you admire Austrian ‘logic’.

  46. JohnG,

    Thankyou for you link to Neil Wilsons Sovereign money Illusion post I have read it and several of his other Posts.

    Neil Concludes one such with this

    There are some key points though:

    People who put money in the banks believe they are storing an asset safely. It’s important that the reality reflects that belief. The bank illusion must be maintained at all times – whether individual institutions fail or not.
    We can keep the free banking and mutual nature of our cash machines and payments system. It’s a good thing to have a freely available rapid transaction system just like it is a good thing to have freely available banknotes and coins.
    Lenders have to be allowed to go bust. Constant forbearance is a bad thing in a capitalist system. Failures must fail and the costs borne by those funding those operations. The state’s job is to mitigate the effects of failures in the private capitalist system.
    Lending of state money is a valuable way of dynamically increasing and shrinking the money supply. It’s automatic and distributed. It helps the capital development of the economy and helps to dilute the ownership of equity. But the nature of that lending has to be tightly controlled.
    Getting the state to lend directly via agents in the field would lower the barrier to entry in lending.
    from here

    http://www.3spoken.co.uk/2013/05/making-banks-work.html

    I have more than enough material on MMT to continue my own critique of it and other proposed solutions.

    Good Day JohnG.

  47. Bill Mitchells Blog already linked to by others.
    http://bilbo.economicoutlook.net/blog/?p=22701

    An interesting comment from a gentleman who has also been previously linked to by others.

    ”Ultimately all macro economic models have underlying them a belief structure – whether that is One True Money, The Wizard of the Central Bank, or a Guarantee of a Job and Income for all. And we’ll only know if the model and the belief stack up when we implement it.” http://bilbo.economicoutlook.net/blog/?p=22701 Neil Wilson says:
    Tuesday, February 12, 2013 at 17:59

    Any financial system has to have the confidence of the general public Locke knew that only to well I was looking for the paper he wrote for Newton when he was the Director of the royal mint, people back then took the king messing about with their money seriously, remember Greshams Law?

    Such a belief structure as this A CHARTALIST CRITIQUE OF JOHN LOCKE’S THEORY OF PROPERTY,
    ACCUMULATION, AND MONEY:
    OR, IS IT MORAL TO TRADE YOUR NUTS FOR GOLD?
    *
    Stephanie A. Bell
    Center for Full Employment and Price Stability
    Department of Economics
    University of Missouri, Kansas Ci
    ty
    John F. Henry
    Department of Economics
    California State University, Sacramento
    Visiting Professor, University of Missouri, Kansas City
    L. Randall Wray
    Center for Full and Employment and Price Stability
    Department of Economics
    University of Misso
    uri, Kansas City

    As Warren Sammuels argues, one must construct:
    11(a) theory of the organization and control of the economy, a theory
    of the economy as a system of power, with attention to power
    within the legal and economic (i.e., market) spheres, and the impact
    of social structures on economic organization (Sammuels 1992:
    21)
    http://www.csus.edu/indiv/h/henryjf/PDFS/Locke.pdf

    http://www.nakedcapitalism.com/2012/12/stephanie-kelton-explains-modern-monetary-theory-to-you.html

    AT 6.58 Stepanie Kelton states that the constraint on Government spending in MMT is a question for law makers and legislators.

    At this point One needs to consider theories of Democracy, The Best I have come across is from Schumpeter.

    ( quotes from Roy Madron​, Super Competent Democracies).

    ‘Democracy is that institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for the people’s vote’.” Joseph Schumpeter, Quoted from Roy Madron , Super Competent Democracies who in turn Cites. “Participation, and Democratic Theory” by Carole Pateman. Dr. Pateman says that, Schumpeter and his followers: … set the current Anglo-American political system as our democratic ideal (with) a ‘democratic theory’ that in many respects bears a strange resemblance to the anti-democratic arguments of the last (i.e. 19th) century. No longer is democratic theory centered on the participation of ‘the people’; in the contemporary theory of democracy it is the participation of the minority elite that is crucial and the non-participation of the apathetic, ordinary man lacking in the feelings of political efficacy, that is regarded as the main bulwark against instability.´´

    MMT seems to be conservative in its nature regarding the existing apparatus and does it seems to me seem to be elitist, top down and managerial . these are not by my standards democratic tendencies.

    Top down or Bottom up that’s a political taste issue. It seems to me that Henry ford in his famous quote applies equally well to the current Private Oligarchy power as it would to a Government Oligarchy implementation of the current system after-all people do not want to have that which they have accepted at face value to be repudiated at the whim of some other external power.

    ”It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

    Henry Ford

    Personally I think we are beyond money technologically and beyond work technologically we are also beyond the need for power structures for managing scarcity. we are though still in a moral psychology that submits to power and top down control through oppressive privelidge enforcing regimes.

    This is the example of the baboons that Stevie mentions above.

    https://youtu.be/efbJ5w803cg?t=1m49s

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

    In the full movie there is a hysterical segment with Sapolsky recounting work he did studying the British Civil service and how health outcomes of those in the middling ranks were badly effected by their positions of ineffectuallity.

    I will definitely keep my hat in the block chain and peer 2 peer space it is clear to me that that is where something more concrete than money as an expression of power relations is being built it is a space where Mutual exchange of real value is taking place. FIAT money really is the ultimate abuse of the states monopoly on violence I applaud MMT´s making this so obvious, that is perhaps going to be its greatest achievement.

    1. Appeal to audience.
      Logos
      Main article: Logos
      Logos (plural: logoi) is logical appeal or the simulation of it, and the term logic is derived from it. It is normally used to describe facts and figures that support the speaker’s claims or thesis. Having a logos appeal also enhances ethos (see above) because information makes the speaker look knowledgeable and prepared to his or her audience. However, the data can be confusing and thus confuse the audience. Logos can also be misleading or inaccurate, however meaningful it may seem to the subject at hand. In some cases, inaccurate, falsified, or miscontextualized data can even be used to enact a pathos effect. Such is the case with casualty numbers, which, while not necessarily falsified, may include minor casualties (injuries) that are equated with deaths in the mind of an audience and therefore can evoke the same effect as a death toll.

      1. Stoics

        Stoic philosophy began with Zeno of Citium c. 300 BC, in which the logos was the active reason pervading and animating the universe. It was conceived of as material, and is usually identified with God or Nature. The Stoics also referred to the seminal logos (“logos spermatikos”), or the law of generation in the universe, which was the principle of the active reason working in inanimate matter. Humans, too, each possess a portion of the divine logos.[29]

        The Stoics took all activity to imply a Logos, or spiritual principle. As the operative principle of the world, the Logos was anima mundi to them, a concept which later influenced Philo of Alexandria, although he derived the contents of the term from Plato.[30]

          1. In the spirit of debate.

            Modern monetary theory is not left-wing just as much as it is not right-wing. It is an operationally-based characterisation of the way the monetary system operates and the way that the government sector interacts with the non-government sector. It is a stock-flow consistent framework.

            The reality is that whatever the government does (using its opportunities) – big or small, surplus or deficit, whatever – will have implications for what the non-government sector does. If they run surpluses then the non-government sector runs deficits. We have to get down to that level of understanding and acceptance before we can discuss other matters that might reflect our values.

            Then, what you do with this understanding by way of policy design reflects your ideological slant.

            http://bilbo.economicoutlook.net/blog/?p=5199

          2. Wesley - Back from Bilbo

            http://bilbo.economicoutlook.net/blog/?p=5199
            In this discussion between Keen and Mitchell – it would seem there is quite a lot of disagreement (between two parties whom you have said both perfectly understand MMT) about accounting for Money vs. Debt and the ratios between Debt and M3 (no longer collected) being greater than 1.0 (Oh my?!!). That the “system” was functioning with net NEGATIVE financial assets. Oh my! Mitchell washes this all away with some truly clever use of language:

            This also cannot be correct. All the dollar debt (always) has a corresponding dollar financial asset held by the borrower. You need to dig below the surface of the numbers to the conceptual level to fully understand the situation. This is the danger of taking a particular view of what money is.”

            Hmmm – I really think that the danger is that there are more claims to assets than assets. Of course – musical chairs. Keen says he handles this with a non-bank financial sector creating debt without creating money. Mitchell, quite rightly suggests this cannot be the case if the “usual” accounting rules are followed. EXACTLY. The system is an accounting fraud.

            A careful study of this banter back and forth between these two giants of Modern Monetary Theory quickly led me to conclude that bland acceptance of a competing monetary system, existing alongside an MMT system could not be permitted – as it would allow for the creation of financial assets in the private sector independently of government additions/subtractions of assets. Oh my!

            MMT does not permit “money” to be anything other than someone’s liability. Bingo! Chartalists cannot really get their arms around anything other than accounting identities – and money (something not created by State) has no offsetting liability. Does not compute. Net Negative numbers – uh oh!

            The MMT community cannot agree what goes on the balance sheet and how to account for real money. Here’s Steve Keen:

            “Yet the system functions (albeit it’s c#cking up now): our actual monetary system appears to function with net negative financial assets. Using the broadest measure of money the USA ever published (does it rile you that the Fed has stopped recording M3? Sure annoys me!), total debt was 2.25 times M3 in the 1950s, and was 4.3 times M3 when the data collection stopped in 2006 (the ratios of only private debt to M3 were respectively 1.25 and 3.3). So even at a time when Minsky described the USA as financially robust, debt exceeded money: the system functioned well with net negative financial assets.

            It therefore appears to me that what we need to explain is how a monetary economy can function with net negative financial assets – or more strictly, with monetary debts substantially exceeding money holdings.”

            I wonder what the ratios are today?? When the music stops, we’re sure to find out how many seats will be missing!

    2. MMT seems to be conservative in its nature regarding the existing apparatus and does it seems to me seem to be elitist, top down and managerial . these are not by my standards democratic tendencies.

      Then you simply don’t understand it even at a basic level.

      Or you’re just bullshitting again.

      I’ve never come to grips with how the authoritarian follower’s mind works.

      I might get back to Bob Altemeyer with the case of the authoritarian anarchist.

      1. John G , note the small ´c´in conservative. conservatism in the sense of retaining the current system.

        ”Modern monetary theory is not left-wing just as much as it is not right-wing. It is an operationally-based characterisation of the way the monetary system operates and the way that the government sector interacts with the non-government sector. It is a stock-flow consistent framework.”

        My point Johng is that The Governement, The Establishment , the ruling elites through , Law, religion, Education, Government and Corporate industry and finance control both sides of the Stock and Flow it has been this way since the beginning of the current paradigm, what we would say since the Industrial revolution.

        The money, finance and trade nexus is nested in and operated in conjuntion with all of the other apparatus of State which encompasses The Establishment, the revolving door has been ever present prior to and since the Industrial revolution.

        Breaking down the Industrial revolution into stages is not necessary to make the point regarding the false dualism inherent in the notion of Private and public sector or Capitalism (in its various types and Government as regulator) if one wants to make a distinction we could view the state as a sort of HR department and Trade union rolled into one.

        I have stated it it several time Johng, I am not a Capitalist, i also reject the idea of competitive markets my objections boil down to the argument that ´´Small is beautiful´and in an age of nano technology it is now possible to organise our communities around small scale production of many many things both efficiently and with less externalities than the Capitalist mode of production entails.

        What about now?

        Citizens income/ training and education opportunities/ restoration of Academic freedom , proper investment in the arts science and technology sports, leisure and caring and nurturing of the environment and each other free of the profit motive and all of its inefficiencies etc.

        The project for liberating all Human beings needs to be about flattening out structures of organisation of communities and regions , bottom up and not top down. within this type of societal structure other sorts of questions will undoubtedly arise. Economics is an outmoded discipline a classic courtier/bureaucratic type of discipline this type of functionary will not find many people wishing to listen , once people realise that scarcity is not the problem. Scarcity is one myth which has not come in for any abuse so far and Abundance has barely been mentioned.

        Change is a big challenge embrace it.

          1. Hilarious, Johng, charicature is a wonderful tool to deflate ones own pomposities, Touche.

            Try this as well, I more or less agree with the whole of Peter Josephs Position on this video and in his quarrel with Stefam Moleneux, I find Stefan very challenging.

            https://www.youtube.com/watch?v=onNkP_wQngE&feature=youtu.be

            I will be spending today analysing comparitively these two documents.

            http://thezeitgeistmovement.com/uploads/upload/file/19/The_Zeitgeist_Movement_Defined_PDF_Final.pdf

            http://www.technocracyinc.org/wp-content/uploads/2015/07/Study-Course.pdf

            Heres some performance art from a year or two back which may amuse you.

            https://www.youtube.com/watch?v=zAWnOFoO2P0

            http://letthemconfectsweeterlies.blogspot.se/2011/05/nature-of-predictability-probability.html

            https://www.youtube.com/watch?v=U-Bvd09Z_Rs

          2. Wesley - Laughing

            @Roger – I found your links above to the Zeitgeist Movement and Technocracy to be informative – especially in the context of Dissent Branding.

        1. Wesley - challenging!

          MMT is not even prepared to accept that the credit-creation capabilities (and issuance) from the banks was at the root cause of the GFC! And they steadfastly stand behind the continued fraud that such credit issuance represents: the status-quo. They are anti-change… The record is quite clear.

          Positive Money, and dozens of other groups worldwide (including the crypto-set) are actively seeking best-practices. The paradigm is crumbling. Look at them bonds scream!

      2. Wesley - Sloganeer

        Sorry but I dismiss MMT altogether. I’m quite sure they are a ginger group for the elite, like the ‘progressive’ lefties are.

        They present the current system in a completely false light and their prescriptions for solving what they purport are the problems lead directly to the end of democratic government and a centrally planned economic dystopia.

        I’m sure most of the followers are well meaning but they are being duped.

        I’ve tried to engage MMT people over the years but in my experience they tend to be extremely authoritarian types who have internalised MMT’s falsehoods in the form of slogans and simply won’t entertain that they have it wrong.

        In that respect they are similar to the ‘progressive’ left.

        =========]
        @johng,
        By now I’m sure you’ve recognized your handwriting and branding techniques. See yours of January 24th at:

        https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-607786

        Do you really think that you can just dangle such outrageous assertions like these out there, completely unsupported by anything other than utter arrogance? Do you not see the complete hypocrisy of your position, in the light of David’s ‘blog entry here???

        I can only imagine the anger welling up in you at the reading of such heresy spoken of MMT. The horror!

        Still unbranded,

  48. We take gold by making a hole in South Africa, Turkey, or Amazonia… We dig and we take gold from a hole, and after taking it from a hole, we take and put it in a hole under a bank. I mean… From a hole to another hole. Holy ****, let’s build the bank over the first hole and **** off!

    Beppe Grillo.

    1. Wall St can steal without creating credit.

      Stock Buybacks and the Wall Street Sharktank: “A Whole Lotta Stealin’ Goin’ On”
      by MIKE WHITNEY

      http://www.counterpunch.org/2016/01/25/stock-buybacks-and-the-wall-street-sharktank-a-whole-lotta-stealin-goin-on/

      I’m talking about the way that corporate bosses are allowed to take the hard-earned money from Mom and Pop investors and divide it among their freeloading shareholder friends via stock buybacks. You see, buybacks have been driving the market higher for the better part of six years, and every year the amount of cash diverted into this swindle gets bigger and bigger.

      1. Wesley - on Wall Street

        @JohnG – your entire article is about credit creation. Goodness, man, the opening paragraph is about borrowing! The difference is, much like my Loan-shark analogy above, when you loan your cousin “Pauli 5,000 bucks so he can get his fledgling construction business off the ground” – you had to “make” that money first with your labors. On Wall St, thin-air credit-“money” may be loaned into existence by the banking cartel in support of these share-buybacks. This process is largely a form of fraud – but with the innocent collusion of the very hardworking Mom & Pop whom you profess to advocate. How: intentionally or not, most of the savings of Mom & Pop are directed through pensions and annuity vehicles into the asset markets. When shares prices are increasing based upon share-buybacks driven by an artificially deformed, Centrally planned fraud, everybody (especially including Mom & Pop) is chanting Rah-Rah! But these signals, purposely induced by the Central Bank efforts to stimulate demand through the fallacious “wealth-effect” channel, are false. Just like the “money” used to finance the share-buybacks. So how does Wall St. steal without creating credit? Where did this “money” come from to pay for the share buybacks? Your cited article actually provides specifics on these credit functions – which you have chosen to ignore. Why? The real swindle is occurring by the Central Bank efforts to channel “money” inappropriately into already inflated asset markets to fool people into thinking they are wealthier. And yet what choice are they given, when saving their “money” will result in a GUARANTEED loss through the effects of financial repression and inflation. You’re making an error of chronology again…

    2. Wesley - with Beppe Grillo

      I’ve made repeated detailed descriptions of my views on what should constitute “money”, together with careful distinctions between the money and credit functions. Others have done the same. The fact is, man has VOLUNTARILY chosen to use gold as money for thousands of years. Man can and should have the right to choose anything he wishes to use as money. The improper use of force in law to compel the use of a fraudulent form of money is a travesty. Putting aside the relative merits of Man’s choice of gold as money, the fact is that an ounce of gold has always represented just about the value it costs to produce an ounce of gold. Given the need for more money, man has the option to produce more gold, and SHOULD have the option to agree on alternate competitive forms of money, without the coercive influence of state. At the very least, gold embodies the human labor necessary to extract it from Beppe’s holes. And as you’ve learned from other contributors to this dialog, banks are not needed as intermediaries in this function. And, try though they may, (“paper gold”), banks have not yet come up with a way to manifest from thin air – gold (or silver). That frustrates the money powers, and the governments who wish to be unshackled by a fiduciary instrument that they may freely debase, to the detriment of every holder of that credit instrument. Legal Tender law that infringes these choices are improper and should be abandoned.

      When American Politicians talk of creating a strategic petroleum reserve on a grand scale, they discuss the relative merits of stockpiling one or two months worth of usage in inventory. (And for some a certain weight and fineness of a certain type of oil makes a very fine form of money!), Monetary Gold exists in the world in amounts equal to probably 100 years’ of inventory! That is a staggering fact. Let’s say the Saudi’s have 100 years of energy stockpiled in their Eastern (Shia) region. That precious store of energy must be extracted by dint of labor and time. That is true wealth. It’s not credit. Our debt-based monetary unit is backed only by force – the force of state to extract taxes from its citizenry, and the force of arms that keeps the Saudi State intact and accepting our paper fiat for their oil.

      Beppe is quite funny – but I’m not certain he sees the irony of the “holes” that are being drilled for oil, and the banks that are sitting atop those same holes. But the Petro-dollar is a myth, right?

      ps: I still prefer Silver – and kinda’ like the fact that man has devised infinitely more uses for Silver than gold… hint, hint!

      1. BTW, JohnG – it occurs to me that the US Treasury (US Mint) is still creating huge numbers of monetary gold and silver sovereigns (NO – not from “thin-air”), with dollar denominations imprinted that are far below their traded market values. In fact when the Treasury “sells” these amazing gold and silver coins, they don’t exchange them for the number of dollars that are imprinted on their faces, but rather at premiums to even their bullion content. How do (or should) these exchanges get accounted for on your precious balance-sheets? Are they using metals stored in the custody of the FED? Or are they sourcing these metals on the open market, and going into debt to purchase them? How does this work exactly?

        And, if your very flexible and democratic MMT paradise were to allow me to trade with my fellow man using coins of my own manufacture, from the fruits of my own labor, how would this be accounted for in the great spreadsheet in the sky? There would appear to be a great deal of Money (in many different forms) that are viable alternatives to the existing paradigm, or complementary to same, that merely need some simple law changes to enable. Would this be incompatible with the MMT-world envisioned by the central mind?

  49. What if the Public Understood How Money Works?
    Posted on January 14, 2015 by William Black | 12 Comments
    By William K. Black
    Bloomington, MN: January 13, 2015

    Economists as the Secular Priestly Caste Guarding Knowledge of the Holy of Holies

    There’s something invigorating about people freaking out about modern monetary theory (MMT). They treat MMT as akin to the Ark of the Covenant in the first Indiana Jones movie. They are petrified that knowledge of the financial equivalent of the “holy of holies” will be released to normal people because they project their greatest terrors onto the possibility that the public will be transformed and empowered by their knowledge of matters that much of the financial world has understood for at least a century.

    The Other MMT: Monetary Myth Theory

    Randy Wray has written about the time when the Nobel Laureate in Economics, Paul Samuelson, explained in an interview with Mark Blaug (in his film on Keynes, “John Maynard Keynes: Life/Ideas/Legacy 1995″) the need to limit the knowledge of true nature of money to the priestly caste of economists.

    “I think there is an element of truth in the view that the superstition that the budget must be balanced at all times [is necessary]. Once it is debunked [that] takes away one of the bulwarks that every society must have against expenditure out of control. There must be discipline in the allocation of resources or you will have anarchistic chaos and inefficiency. And one of the functions of old fashioned religion was to scare people by sometimes what might be regarded as myths into behaving in a way that the long-run civilized life requires. We have taken away a belief in the intrinsic necessity of balancing the budget if not in every year, [then] in every short period of time. If Prime Minister Gladstone came back to life he would say “uh, oh what you have done” and James Buchanan argues in those terms. I have to say that I see merit in that view.”

    Notice the breadth of ideology represented by the economic priesthood – from the hardest right represented by the Nobel Laureate James Buchanan to wherever one places Samuelson on the spectrum. One can see why Samuelson foisted a bowdlerized version of Keynes on economics students for decades in which massive unemployment is essential to avoiding “inefficiency.”

    Notice also the depth of the disdain the priestly caste of economists has for democracy. Samuelson is vituperative about the folly of allowing the public to learn about the true nature of money – it will cause not just “chaos,” but “anarchistic chaos.” Normal humans cannot be trusted with the sacred knowledge of money because they lack the “discipline” of economists. They are at heart anarchists. Samuelson entered the University of Chicago at the age of 16 at a time when anarchists were the most infamous people in America and Chicago had been home to many of the Nation’s most famous anarchists. To Samuelson, anarchists were the willful destroyers of all the “bulwarks” necessary to the preservation of society. The mission of the priestly caste of economists was to ensure that the citizenry did not learn the great secret of money. It was meet and right that they should do so by creating and spreading “myths” about money designed to “scare” the citizenry into believing the myths.

    But why can economists be trusted with the knowledge of the great secret of money? Economists differ (statistically) from human beings of similar intelligence in one key characteristic – they score lower in altruism when they begin their studies and by the time they complete their studies they are even worse – and proud of it. Normal human beings, seeing the misery of the unemployed would use their knowledge of money and the realization that helping the unemployed would improve the economy would rush to make that win-win occur. Altruism and empathy are related concepts.

    Economists are not simply (statistically) low on altruism, they are taught to be proud of it. Ayn Rand famously condemned altruism as a vice and praised selfishness as a virtue. Many economists agree with her that “society” does not exist and that individuals owe no duties to the public. Keynes’ famous explanation of why Ricardo’s most specious claims proved so attractive to so many economists is instructive.

    “It must have been due to a complex of suitabilities in the doctrine to the environment into which it was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority.”

    Economists and CEOs’ Enema Strategy

    A long, slow recovery from a serious recession that depresses wages for a decade or more by creating a massive “reserve army of the unemployed” can be an enormous boon to CEOs. The statement that President Herbert Hoover (controversially) attributed to his Treasury Secretary Andrew Mellon shows that the powerful understood this dynamic. “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system.”

    Whether or not Mellon actually uttered these phrases, the key is that Hoover knew that conservatives often advised him to liquidate and purge. Hoover rejected that advice, but he also rejected effective stimulus. There is no dispute that a famous economist who is a hero among conservatives, Joseph Schumpeter, argued against government reducing the severity of depressions because “artificial stimulus leaves part of the work of depressions undone.” (Public education is “artificial,” baubles for the Gatsbies of the world are “real.”) Normal human beings, knowing that the government could avoid much of the pain of the recession and make the recovery stronger and faster while causing no harm, would promptly do so.

    Economists and Sadomasochism

    Many economists are not simply weak on altruism, they are strong on sadism. They write repeatedly about the need to inflict “pain” on the public through austerity. They’re not into masochism, of course, as one can observe at any economic conference in which turgid presentations about meaningless models echo off the walls of deserted rooms. Economists who shill shamelessly for CEOs know they will be well rewarded. As the secular priestly caste these economists perform some of the same functions that religious priestly castes have for millennia – they venerate and legitimize their powerful ruling patrons by creating myths such as the divine right of kings (and CEOs). They sell indulgences that immunize the wealthy from accountability for their crimes. Lawyers, another priestly caste in America that serve CEOs, use economists because they make great expert witnesses (for huge fees), for the defense in the (rare) cases they are sued or prosecuted. If the public were to learn the great secret of money and see through these myths these economists would be exposed as shills and lose income and prestige.

    The Real Fear of Libertarians and Conservatives

    The attacks on MMT and my UMKC colleagues’ development of job guarantee programs from the hard right and libertarians for informing the public about what people in finance have known for roughly a century are understandable. They both project their worst fears of government unto the proposals. Their worst fear, of course, is that democratic governments would be successful in helping people and that the people would view democratic decision-making favorably. They know, however, that openly stating their worst fears is a poor strategy. They have long talked instead of the sure ruin of inflation should the government fund effective social programs.

    Freaking Out over Kelton’s Appointment

    Senator Bernie Sanders’ appointment of our colleague Stephanie Kelton as Chief Economist of the Senate Budget Committee brought increased attention to MMT and the desirability of ensuring full employment through a jobs guarantee program. Dylan Matthews’ January 10, 2015 column explained the significance of her appointment – and promptly generated a full-fledged Forbes freak-out entitled “Watch Out, MMT’s About, As Bernie Sanders Hires Stephanie Kelton.” Tim Worstall wrote the column. His Forbes bio begins: “I’m a fellow at the Adam Smith Center in London….”

    Worstall, as Randy Wray and Scott Fullwiler have aptly explained, is the most recent proof of our family saying that it is impossible to compete with unintentional self-parody. I won’t repeat Randy and Scott’s detailed takedown. The first key takeaway is that Worstall admits what my colleagues have been emphasizing for years – first and foremost, MMT explains how money actually functions, including how a sovereign currency functions v. how non-sovereign currencies function. This explains why finance practitioners have long been supporters – indeed, most famously in the case of Warren Mosler, developers – of MMT. It also explains why MMT’s core is actually not controversial – as Worstall admits.

    Keynes as Prometheus and the Revenge of the Priestly Caste

    There are variants of the story of the Titan Prometheus (foresight), but the common element is that he enrages Zeus by taking an action that aids humans. The variant I discuss is his bringing the secret of fire (symbolic of light, warmth, and knowledge) to humans. Zeus is pissed, and Zeus is really mean when he is pissed off. He chains Prometheus to a rock and sends an eagle (his avatar) to peck out and eat Prometheus’ liver every day. Prometheus is immortal, so his liver regenerates daily so the endless cycle of torture can continue.

    Prometheus has for millennia been the greatest hero of humans. Indeed, it is another hero, Heracles who frees Prometheus after ages of torment. Prometheus never renounces humans even while suffering endless agony.

    A comment by a reader of Scott’s column over at Naked Capitalism illustrates the continuing temptation to “unleash the eagle” at the liver of anyone who brings the secret of money to the public. The commentator agrees that MMT is correct, but believes that Keynes did a terrible disservice by trying to help the public understand money.

    “Thankfully Mr. Worstall’s fears will dominate for the foreseeable future. Knowing how an Indy car is built and driving one are too [sic] different skill sets. Should MMT gain any traction it will not resemble itself by the time it comes out the end of Social Policy and Buchanan’s Public Choice. It would be like giving the keys to your ten year old. Now if you have a fondness or belief in an enlightened overlord class MMT in the hands of your favorite politico might sound wonderful.”

    Humans are “ten year olds.” We must protect them from their crazed desire to be productively employed. Put everything in the hands of the economists who serve the biggest banks (the rapacious and corrupt overlord class) – but avoid democracy like the plague.

    Worstall trots out the following parade of horribles – Kelton’s arrival could lead the Republican-dominated Congress to fund “another 7 carrier battle groups.” Worstall’s comment illustrates three serious flaws in his anti-democracy screed. First, we all know that the Republicans will not do so for multiple reasons.

    They do not believe that doing so would be desirable.
    The Pentagon, even the CNO, does not believe it would be desirable.
    The electorate does not want them to do it.
    If they tried to do it, Obama would veto their legislation and the Republicans would not be able to override his veto
    There would be (as MMT scholars repeatedly warn) real resource constraints if we tried to build another 7 carrier battle groups” in a very short time period.
    To sum it up, Worstall’s example is false and the reasons it is false are important. It turns out that democratic governments and reasoning impose real constraints that limit terrible decisions.

    We should look also at what Worstall does not take into account about defense spending. I think that U.S. defense spending is far too high and that much of the money is spent poorly because of the influence of government contractors. From my perspective, U.S. democracy is not working properly to prevent these defects. I don’t think democracy is even remotely perfect.

    Under Monetary Myth Theory, the proponents of the existing seven carrier battle groups (and the 600 vessel proponents) claim (1) their desires must be the overriding priority and (2) that even when there are zero real resource constraints their spending has paramount priority and should “crowd out” spending on education, health, infrastructure, prosecuting the elite banksters, regulating effectively to prevent the next financial crisis – or even caring adequately for our veterans when they are grievously wounded in our wars.

    Even in response to the Great Recession, when increasing the deficit through increased net government spending would greatly aid the recovery of the economy and reduce future deficits, even when the programs that would be funded would be effective and would reduce suffering, and even when there are no real resource constraints Monetary Myth Theory teaches that we should adopt austerity by slashing helpful government spending and actively makes things worse. That is a nightmare result and Europe shows it isn’t hypothetical. Monetary Myth Theory is now law in the Eurozone in the form of the oxymoronic “Stability and Growth Pact,” which produces recurrent crises and cripples growth. The European priestly caste chants the “TINA” (there is no alternative to austerity) mantra. Unless Monetary Myth Theory is successfully countered it must corrupt the democratic governance process by not spreading a myth that prevents the alternative of what Worstall concedes is the ready alternative of the economic reality of how money actually functions from even being heard. Worstall wants to produce the same result in the U.S. – excluding reality in favor of myths that he knows cause, gratuitously, epic levels of harm.

    Defense also raises the questions of “good wars.” I’m not a pacifist. I’m very happy that the Allies defeated the Axis in World War II. One of the great truths of fighting wars of survival like World War II is that national leaders discover MMT even if the priestly class of economists yammers on about the terror of deficits and sovereign debt. No UK leader would respond to a German invasion by saying: “Sadly, we’re ‘out of money’ because we’re already running a deficit and our sovereign debt to GDP ratio is high – so I’ve ordered our troops to lay down their arms and surrender.”

    Notice the lack of a financial footnote in Winston Churchill’s famous speech on June 4, 1940 to the House of Commons about the military disaster in France, the hard-won miracle of Dunkirk, and the prospect of a German invasion.

    “The British Empire and the French Republic, linked together in their cause and in their need, will defend to the death their native soil, aiding each other like good comrades to the utmost of their strength. Even though large tracts of Europe and many old and famous States have fallen or may fall into the grip of the Gestapo and all the odious apparatus of Nazi rule, we shall not flag or fail. We shall go on to the end, we shall fight in France, we shall fight on the seas and oceans, we shall fight with growing confidence and growing strength in the air, we shall defend our Island, whatever the cost may be, we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender, and even if, which I do not for a moment believe, this Island or a large part of it were subjugated and starving, then our Empire beyond the seas, armed and guarded by the British Fleet, would carry on the struggle, until, in God’s good time, the New World, with all its power and might, steps forth to the rescue and the liberation of the old.”

    His entire speech says not a word about financial constraints. His speech is filled with discussions of real resources, particularly limitations in those resources and how the government was working urgently to provide the monumental increases in real resources required for national survival. There is no footnote saying “we shall never surrender”* (*“until we ‘run out of money’”). Nations with sovereign currencies faced with threats to survival discover within hours that their problem is not “running out of money” but running out of bullets. If they have lead they can make bullets. The next thing that nations discover is that real resource constraints do start binding as they mobilize for a war of survival – it can make sense to have people volunteer their pots and pans – to beat plowshares into swords.

    The Fear of Knowledge

    Prometheus’ tales inherently include the Gods’ fear that regular people will learn the secrets of the Gods and priests – and that the result will be chaos. In one variant Zeus retaliates for Prometheus’ efforts to help humans by sending Pandora. Her box is not the key in some variants of this tale – the key is sending women. Women, of course, make men’s lives a living hell. This anti-female message played out again in the story of Eve, the snake, and the apple (symbolizing knowledge). Mary Shelley portrayed Frankenstein (the doctor, not the revived kind-of monster) as “The Modern Prometheus.” So, how many people wish we had never been “cursed” with knowledge (and women)? Right, this is why I find it bizarre for libertarians to freak out about the public learning the reality of money.

    Worstall: It is “Intensely Dangerous” to my “Liberty and Freedom” to Cut Unemployment

    I’ll leave you with Worstall’s admission that his real fear is that people would make different choices, such as full employment with price stability, if they learned the truth about money.

    “And given that I tend to believe that there’s vast areas of life (not to mention quaint concepts like liberty and freedom) that work best in the absence of government MMT is a theory that I particularly don’t like. That I think is intensely dangerous in fact: even though I’m perfectly willing to accept many of the economic points they’re making….”

    Yes, he actually wants to ensure that the governments not work effectively on behalf of their citizens, that tens of millions of people suffer in gratuitous Great Depressions, because he thinks ending their misery is “intensely dangerous” to his “liberty and freedom” even though he concedes that the stimulus would also help him personally by speeding the economic recovery. He is the very model of the Libertarian Looney. Again, his real concern is that if people learned that governments could use their potential for the citizens instead of for the CEOs by providing full employment the citizenry would respond to that success by voting to cause democratic governments to address other societal needs. Some of us still favor “quaint concepts” like candor, transparency, democracy, and the golden rule – and disfavor secular priests’ secrets.

    1. The Fear of Knowledge

      Prometheus’ tales inherently include the Gods’ fear that regular people will learn the secrets of the Gods and priests

      More from the Peoples poet, that sensitive quiet youth ( Farts)

      https://www.youtube.com/playlist?list=PLA3EE08164A421834

      We will remember for prometheus and use his gift of fire

      we´ll burn our paper chains of debt, a massive funeral pyre.
      ——

      Oh, Burn those paper chains throw them in the fire

      own the sweat for your own sweet love

      Don´t listen to those liars

      This is the most personal song I have ever written, In fact I have pretty much hung up my Axe since I roughed out the fianl arrangement. My Freind Ken committed suicide I see his death at his own hands the inevitable cosequence of StructuraL violence …?

      https://www.youtube.com/watch?v=i7XdJ8zjMO0&list=PLA3EE08164A421834&index=32

    2. Wesley and Prometheus

      Paper burns. Fraudulently created, thin-air paper burns rapidly. Money does not burn.

      And a lotta’ thin air Paper is burning rapidly, all around us right at this very moment… Prometheus will have his revenge! 😉 The battle with the banks will be won by the people.

  50. On a completely different Tack I watched this movie yesterday which is about the Enquiry into intelligent design as a scientific endevour regarding Origins of cellular structure ( Building Blocks of life.

    The film highlights the US education departments pursuing academics who teach creationism instead of Darwinian Evolution theory and also Research academics who lose tenure for publishing on intelligent design which is conflated with creationism.

    https://www.youtube.com/watch?v=V5EPymcWp-g

    In terms of re defining dissent it seems to me that other avenues of debate are also being plugged up in many fields. Climate Science, Molecular Biology, Economics, Physics, Maths

    The point was tackled in a documentary series called heretics of science some years back.

    https://www.youtube.com/watch?v=QcWOz1xjtsY

    heres a clip regarding Blombergs book cool it.

    https://youtu.be/oXXNGjeNQTo?t=11m12s

    Heres one with Svensmark regarding clouds and Cosmic rays.

    https://youtu.be/Z4XYxL66O_s?t=3m26s

    list of heretics of science episodes.

    https://episodecalendar.com/show/heretics-of-science

    I do wonder how often I block out certain thoughts and refuse to express them simply as the fuss that voicing an opposition view will cause.

  51. JANUARY 26, 2016
    Faking History
    by LUCIANA BOHNE

    “This is the final struggle

    Let us pull together and tomorrow
    The Internationale
    Will be the human kind.”

    — Written by Eugene Pottier in 1871, “The Internationale,” is the anthem of socialists, communists, anarchists, and social democrats. Anti-fascist Republicans sang it during the Spanish Civil War (1936-39).

    Singing “The Internationale” today in Ukraine is punishable by up to ten years in prison. The Kiev Rada passed a law in December making it a crime to deny the “criminal nature” of the Soviet regime (1917-1991). From selling a Soviet-era postcard, to membership in the communist party, to singing the Soviet national anthem, the law penalizes all symbols and activities connected to the USSR.

    __________

    “De-communization”—the stripping of all traces of the Soviet past —will cost bankrupt Ukraine millions of dollars. The names of cities, streets, parks and other places bearing the memory of Soviet or communist heroes will have to be changed. The hammer and sickle, the coat of arms of the Soviet Union, is being removed from the Motherland Monument in Kiev, tribute to victory over Nazi Germany. Scheduled for a change-of-name are Dnepropetrovsk, honoring the revolutionary Grigory Petrovsky, and Kirovgrad, named after Sergey Kirov, assassinated First Secretary of the Central Committee of Leningrad. It is an offense to say, “The Great Patriotic War”; the dispassionate “Second World War,” in tandem with the West, replaces the official, Soviet-era designation.

    I realize that some of these anti-communist acts may not shock the American public, disciplined for seventy years to a narrative similar to the one being re-written in Ukraine. It is a simplistic narrative: the communists were unthinkable. They still are. Mention “communism”—even neutrally–in liberal-left circles and the temperature drops to below zero. What they hear are memory’s sound bites–“Great Terror,” “Purges,” “Gulag,” “Totalitarianism.” A crime greater by far than that of the Nazis. Maybe 100 million killed by “Stalin’s terror.”

    http://www.counterpunch.org/2016/01/26/faking-history/

    1. Wesley - Below Zero

      From JohnG link above concerning “faking history”: http://www.counterpunch.org/2016/01/26/faking-history/

      “These clichés, virtual advertisement jingles, are passed from institutional hand to institutional hand like buckets of water putting out the fire of dissent—of imagining a different future; of knowing differently by virtue of the trauma of experience; of questioning official “truths.”

      History is thus also a community bond, composed of tears and laughter, darkness and light, remembering and forgetting, forged in extreme moments of complex and passionate contradictions. Lying about history is breaking that bond and dividing communities.”


      Those words resonated most with me…

      The well known successes of the victorious to customize “history” (or erase it) is a lamentable fact. Fortunately, today, it’s becoming more and more difficult to create a false narrative. A look at the monetary system of the world and the institutionalized frauds describing its mechanisms are being attacked each day. The improper actions taken by the US to destabilize a democratically elected government in Ukraine are fairly well documented. In the past – the stripping of historical markers etc. would have gone unnoticed by the vast majority. One of the earliest images of the Taliban destroying priceless artifacts of history in Afghanistan were cleverly used to manipulate public opinion in the West and manufacture consent to the “war” on terror. Technology is changing that – and we each have the ability to be “everywhere” – but it requires initiative, and an inquiring mind. While Mainstream media is being dismantled, to the great consternation of the powers-that-be, the vast majority are still mindlessly ingesting the chaff of circus. Your mobile camera can be as powerful as an RT or CNN video-cam. The very fact that we’re being made aware of these limitations to freedoms in the Ukraine (in Saudi Arabia???; in America? Wherever I care to inquire) – speaks to a source of change that I think is positive.

      But I couldn’t help getting a chuckle at the writer’s reference to fiscal actions by a “bankrupt” Ukraine…

      Isn’t the Ukraine an issuer of its own currency? YES – the Ukrainian hryvnia. Therefore the thought of the Ukraine going “bankrupt” by the spending (wisely, or unwisely) is an impossibility (in the MMT world), no? Won’t the expenditures of these millions by the Government contribute to employment? Is it not possible to increase private sector savings by magicking, out of thin air, some more Hryvnia’s into existence to “pay” for these activities? Keeping people employed is certainly more important than the public policy implications at the activities chosen by wise technocrats in Central Planning to determine how those monies shall be spent, no? At what point in the Central Planning of the economy does one slide into the dark hole of Communism? If the banking system is Nationalized, does this constitute Socialism, but not Communism? Where is the Branding red-line between so-called Democratic-Socialism, Socialised Democracy, or even more extensive State control over the means of production. If cement prices are going up too fast, how is demand for cement to be modulated to the ideal, gentle 2% increase so desired? And if prices for Sugar are going down (God forbid), how will the State engineer increased demand for just sugar such that it does not cause demand in excess of production for Corn Syrup? Haven’t these things been tried before???

      I’m confused about these fine distinctions that are drawn on the slippery slopes of MMT Central Planning.

      Soon, we will be dwelling on a planet completely populated by persons who have never lived within a system possessed of even the shadow of honest money. And every time I read of the the cliches used by those who advocate for the status-quo money powers, my eyes glaze over with disgust.

      1. Wesley spending Hryvnia

        Still missing your response concerning the sovereign issue of the hryvnia in the Ukraine… (see above)

        You know the one thing that was NOT stripped away by the communist revolution in Russia, or changed in any substantive way after the wall came tumbling down? The banking system! The paradigm was, and is the same.

        I wonder why that might be… How really different are the history books from each other, if they are ALL completely missing the story of money, and how it was corrupted and eliminated by inferior, fraudulent credit-substitutes issued by the banking sector? The tortured linguistic mechanisms that are being used by the MMT high-priestesses to rewrite history (especially when describing – or rather eliminating the the “Medium of Exchange” mechanism that money has always performed), are a singular study in RE-BRANDING.

  52. Student of "Randy" Wray - the Wray-way

    Hi – It’s really just me – Wesley! I thought perhaps if you sensed the source of these communications as originating from anywhere other than MMT-Central, you might discard them out of hand…

    Knowledge is transmitted and processed through communication. I understand that the MMT world uses custom lens or filters through which they define and interpret the world. So let’s examine the world with a common “lens”. Man has a demonstrated ability to communicate using multiple “languages”. I merely wish to understand MMT, through communication in words we all understand. After careful reading, I’ve concluded that within the MMT world itself there is quite a lot of contention over the “word” – and as a result, MMTers are having trouble spreading the word. (See Bill Mitchell at:
    http://bilbo.economicoutlook.net/blog/?p=32502
    )

    Recently, @JohnG an avowed MMT advocate, attempted to assert a simple proposition: that the loss of purchasing power of the unit of account (commonly understood as “inflation”) is no great problem.

    [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.”

    On January 24, 2016 at 10:05 pm, JohnG apparently enters into some sort of conspiracy-theory mode (attempting to conflate Libertarians with the Positive Money folks… and while I should think both groups would be horrified, and I’m not affiliated with either of them – it seemed to be worth addressing):
    JohnG: [ “As an aside I’ve always wondered whether there’s some (elite humour?) in the symmetry of the ‘libertarian’ slogan about the US worker losing 97% of their purchasing power etc (you know the one) and the PM slogan about bank debt being 97% of our money supply. Both statements are catchy (and there’s a little bit of truthiness in there) but false.”
    ]

    Let’s attempt to set a few things straight for the record. Given the amount of time I took to reach consensus over a simple description of the process of “money”-creation, I don’t hold out a lot of hope – but I can set out the terms. Especially, since I’d really love to know why MMT holds that inflation is not really any problem. Right – let’s get through this one, one step at a time shall we?

    What is a fact?: If you accept the proposition that a fact is a close agreement among people of a series of observations of the same phenomenon, then we can proceed. (I know, in the squishy world of MMT – making any assumptions about the meaning of words presents its own dangers – so if you need to go out to the community to get approval from the collective before accepting such a premise, I will understand the delay).

    Next step: what exactly are we measuring? Well, the Central-Planners have been changing not only the mix of things that are used to express inflation measures, but also the way in which those measures are taken. That is a whole entirely different topic. But let’s just use the commonly-accepted general proposition that man has always needed food-clothing-shelter throughout the entire period being measured. Are we together so far? Central Planners love to measure things right? Amazing!

    Lastly – the measuring stick itself. Ahh – there’s the rub, eh? I’ve made attempts in the past to describe the difficulties associated with using a rubbery measuring stick, but these were dismissed without explanation. Elasticity of money (and mental discipline) are fluid concepts. Let’s try again!

    See: https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-605663

    Alright, to make things really simple, I’ll accept your definition of the unit of measure (unit of account) – as being the dollar (what you call “money”). I think we can all agree that the dollar is generally accepted as the dominant unit of account today, a world reserve currency, and commonly accepted as “money” throughout large swaths of the world’s populations, yes? Wonderful!

    Okay: so, as to the actual, observable results of the Modern Monetary experiment. Do you, or do you not agree, that the purchasing power of these units of account (Dollar or Cable, or Marks, or Francs, or Lira, or Pesos – or any other State-issued “money” emissions during the 20th Century) for a common basket of these essential items – was substantially diminished? I know of not one person in the world who is in denial about this fact, even including the blurry world of MMT.

    Splendid! So now, it’s just a matter of quibbling over price. Perhaps you might assert that the dollar has only lost 92% of its purchasing power during the relevant period. I may assert that it is 98%. But, I think it is safe to say, and generally accepted as FACT, that the unit of account that you would have me use as my “money” in your MMTopia has NOT, in fact, maintained its purchasing power – despite your repeated protestations about all the dedication of MMT to “price stability”.

    Now, if you can continue to divorce yourself of the “source” of these comments coming from ME (an alleged libertarian, austrian, terrorist etc), you will be able to actually absorb some non-controversial knowledge. Not only have we NOT experienced price-stability (the measure of the prices of things necessary for survival), we have not experienced price-stability in interest-rates either – arguably the most important price in the economies of the world, and a huge determinant in the price of everything else. (Else, why would there be so much attention paid world-wide to a measly 25 basis point change in the Centrally-planned so-called Fed-Funds “target” rate – and so much disruption to the price of everything associated therewith?)

    And so, as is my habit, I make statements that are built upon a wall constructed brick-by-brick with facts. You know, those annoying things that everyone viewing agrees about! So, we’ve defined some things, and I’ve put forward my own little premise. Inflation = BAD. You’ve said, and the MMT world agrees, that Inflation=GOOD.

    [
    Wesley – from Airstrip One January 18, 2016 at 10:41 pm “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 redistribute 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.
    ]

    Before we get into the amounts of “inflation” that are tolerable by the technocratic, authoritarian central-planning elite envisioned by MMT “theorists”, shouldn’t we first examine whether the prospect of inflation should be tolerated AT ALL as a “public policy” goal? Of course. Starting premises. First principles. Now, the Central-planners of the world are insisting that the arbitrary (or technocratic?) number of 2% is the appropriate amount of “inflation”. Not 1.87%. Not 2.01%. Just 2.00%. You’ll barely notice, right? But let’s not haggle over price, just yet.

    You seem to be comfortable with “hard” numbers, JohnG, and with technocrats. Here’re some numbers from your ‘mates: (US Bureau of Labor Statistics). I’m not quibbling over the specific numbers – although there is a whole body of factual, observational data supporting even worse conclusions than these:

    http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=100.00&year1=1913&year2=2013

    $100 in 1913 (the year of the formation of the US Federal Reserve) had the same purchasing power as $2,353.10 in 2013. See?! In America, unlike the UK, we’ve only lost 95.25% of our purchasing power, according to the Central Planners! There is No Conspiracy on the 97% number! The number in America is 95%!

    Okay, so let’s take the current fashion: MMT Central Planning has determined arbitrarily that the goal of 2% inflation is not only acceptable – but desirable… and apply this laudable goal to my hard-earned savings (you know, those excesses of my labor-derived income that I choose NOT to spend above and beyond NOT going into debt – admittedly an MMT horror movie – but that’s what I choose to do!). You’ve said all along that MMT correctly describes what we have now, right?

    Still on the same general page of music I trust, simple maths should allow us to agree, in general terms:

    $100 dollars saved today will ONLY lose HALF of its purchasing power during the period of time less than that commonly understood to be the span of a normal working career.

    So, onto my logical, public-policy questions: In what universe do you / MMT feel it is acceptable that the non-democratic mechanism of “inflation” (or whatever MMT is calling it this month); that inflation should be permitted – or is Okay – or is not a problem? Why are these processes, little understood by most and certainly not VOTED, which steal my time and labors OKAY? Why should I be forced to go into debt, or even worse, borrow to invest, to counter these unseen, immoral forces? (We’re not talking about taxes yet, JohnG – and I’ve expressed both an acknowledgement of their possible necessity, and a willingness to pay them).

    This is a specific matter of public-policy that can be discussed in the most commonly accepted terms without haggling over price, and without Branding any speaker with one label after another, but rather by discussing specifics. So you define inflation differently? Of course you do. So give me MMT-speak, together with their intended meanings, and we can swim in the same pond. If you cannot stomach my definition of inflation, then please start by defining, in English that a 10 year might understand, how the MMT world accounts for these non-controversial, observable phenomenon (that of the constantly declining purchasing power of the unit of account) as a justifiable public policy goal? What amount of “inflation” is considered acceptable to MMTers?

    What if some things are going up (in price), and some things are going down? What if health care costs are going up by 15%, asset prices are going up by 7%, fuel prices are going down by 25%, tuition is going up by 12%, and a basket of groceries is going up by 5%? Interest on savings is 0%, and interest on credit card debt is 17% How do the technocrats at MMT-Central expect to control these demand butterflies? How does MMT account for the billions of individual, changing daily circumstances of every human subjected to and monitored by the MMT-demand-dashboard? “Collateral Damage” is often used to describe unintended consequences of human-actions on the battlefield – how does MMT brand these unintended effects?

    FACT: Every attempt in the recorded history of man to control these factors has failed – and created untold misery, death, and destruction. MMT cannot and will not answer these questions, with or without the aid of all the computing power at man’s disposal.

    If, after applying your critical thinking skills to my use of this description of the 95% loss of purchasing power commonly understood to measure the unit of account over 100 years, as relating to any coincidental use by the Positive Money people to “measures” of the “money” supply – well I would ask you to maintain vigilant communication with the MMT-collective through the requisite, serial-numbered aluminium-foil headgear assigned to you. Further sightings of Libertarians in the company of Positive Money people (or, even worse, the reverse!) should be reported immediately. Do not inquire why the MMT collective requires this information.

    For clarity:
    I state herewith again for the record what I REALLY mean: I define inflation as the creation of counterfeit credit through the issuance by the banking system of claims to wealth that does not yet exist, or the fraudulent creation of multiple simultaneous claims to wealth that does. I equate inflation, so defined, with confiscation and theft, and therefore believe that as a matter of optimal public policy, should be eliminated not only as a matter of just law, but common sense. I believe that the extraordinary variations in the prices of man’s common basket of necessities, together with the massively damaging related price instability in the rate of interest, are caused by the mechanism of inflation, and attempts to control it artificially. I believe the confiscation of wealth (however measured) through this insidious and unjust process of inflation, and its improper redistribution to the first-receivers of these counterfeit credits is the biggest single threat to mankind’s exercise of freedom in the world today.

    If you wish to continue branding these precepts and ideas that I’ve constructed above on the shoulders of all mankind (and from wide bodies of thought that span the ages and the rainbow of man’s endeavors), with broad, undefined and undefinable labels to evoke a desired propaganda response, I understand that you are only following orders. The Re-Branding of Dissenting views such as mine must be terminated with prejudice, if MMT and any number of other coercive forms of central-planning are to continue.

    If, on the other hand, you would tell us why the intentional and systematic devaluation of “money” and the unit of account is deemed Okay and not a problem in the MMT world, I would be filled with gratitude.

    1. Wesley - Questioning

      Those who’ve gotten this far should ask themselves some simple questions, including:

      Why is it so difficult to compare the price of something today with the price of something in the past? (What is price stability, and why is it important?) (Is it wise, or fair or just to accept a system of money that intentionally engineers the loss of 95% of one’s purchasing power over a lifetime?)

      What is a price deflator? Why do we have inflation indexes? Why are so many payments indexed to one method of measuring the devaluation of “money”, and other measures (like GDP etc.) use different measures? How does one compare apples with oranges in that case? What happens when my pension payments are linked to an artificial measure of inflation that’s low, and my cost of living goes up by a lot?

      Speaking of price-stability and the inability of the Central Planner to keep everything in predictable, steady balance on which plans can be made – what about them interest rates? Sometimes they are very high. Sometimes they are variable. Sometimes they are very low (or even negative???) – like today? Why have interest rates generally been falling for 35 years? Is that normal? Is there a natural rate of interest? How am I supposed to make any plans for the future, if the prices of money is always swinging so widely? Isn’t there a better way?

      Why do economists have so many different ways of measuring the quantity of money? Why shouldn’t we be able to measure precisely amount of “money” in existence, and precisely how much of it is flowing to any given place, at any certain time?

      My checkbook money is said to be available to me “on-demand”. Then why when the depositors in Greece and Cyprus tried to get their money out of the bank, were the banks and ATMs closed? With deposit insurance, can’t an insolvent bank just be closed? Why can’t I take more than $3,000 dollars out of my account without raising a ruckus?

      Is it true that the total amount of credit instruments (“money”) must keep growing, and the value of each one of those credit instruments declining, for the current monetary system to work?

      Something just seems “wrong” with the ways things are done in the Modern Monetary system – and perhaps I should learn more about how such things may be improved…

  53. Wesley - Outraged

    @JohnG January 11, 2016 at 2:30 am “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.”

    Wesley’s comment: The vast majority of needless poverty and privation arises from and is created (ex-nihilo) by the very system of money creation in use today, and purported to be described by MMT. Your words above struck a chord with me – and their irony merits specific examination. First of all, (in the order of your words): you have taken great efforts to stress MMT work on price stability (a “notion” that I put in the same ball-park with purchasing power). However, the current monetary paradigm has demonstrably NOT maintained price-stability, neither purchasing power (if you make a distinction). Next, I have NOT ever suggested a fixed quantity of “tokens”. In fact, I have made repeated attempts to make it clear to any who would listen with a discerning ear, that my definition of money (separate and distinct from credit), should be anything agreed by mutual consent between parties reckoning exchange. You well know that my criticism of the Gold-standard is the money-issuer’s attempt to fix quantity and price. You well know that my expressed criticism of Bitcoin as a monetary unit relates to its “fixed” number of units. However, if these parties agree to use Bitcoins, or gold, or Ithaca-hours, or coffee-beans – I am all in favor of the natural formation of competitive money systems. History is replete with examples affirming man’s ability to make very rational choices when it comes to money, and the attempts by government to legislate the value of money have all failed. Gresham’s law is not really controversial, and your own citation to “What is money” opened my eyes to more examples of government attempts at mis-pricing than I’d imagined. Legal Tender laws that compel the use of one money by force of State, are inherently improper and contrary to freedom of choice in this most essential of man’s endeavors. Moreover, you have shown stubborn refusal to acknowledge that an honest money system will naturally have an honest credit creation component too. It’s the flow of credit, and its ability to expand and contract in an expression of actual underlying commerce that I believe is naturally good, and is indeed an essential function of private banking. All in favor!

    Where you go wrong, is in the violation of the social contract and public trust associated with money. Your MMT system permits the creation of counterfeit credit through the issuance by the banking system of claims to wealth that does not yet exist, and the fraudulent creation of multiple simultaneous claims to wealth that does. Claims to wealth by Government in their levying of taxes must occur after the creation of wealth by society, not from synthetic wealth magicked into thin air by government fiat and expenditure. All that does is create competitive forms of purchasing power that systematically debases all other money in existence – and it does it in favor of the first receivers, and those whose burdens of debt are being reduced improperly. And the mechanism steals disproportionately from the weakest members of society, who neither have the education to understand the process, nor the means to protect themselves in asset markets that benefit by these deformations. It was quite a slip of the tongue, IMHO, when Janet Yellen essentially advised the poor, unwashed masses to “invest” in order to help themselves. Your outrage is misdirected.

    ———-
    JohnG January 17, 2016 at 10:54 am “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.”

    Response: The State money system in use in the Western world does NOT have a means of extinguishing its tokens. I agree with you. This is the fatal flaw of MMT, and of the current monetary fiasco. Inflation IS guaranteed. Without inflation, the system dies an almost immediate death. The slightest little contraction in monetary aggregates (and their related flows) during 2008 brought the world to its knees. The extraordinary measures taken by the world’s central banks to artificially re-inflate those aggregates and their related flows since 2008 are mind boggling. Total Credit Market Debt Outstanding in America is about 60 Trillion dollars, and the growth of those units of account have outstripped the growth in the underlying economy by MULTIPLES. This cannot end well – and end it will!

    Can you point to a single instance of the use by Government of taxation to reduce their tokens and “regulate” the growth in our dynamic system? NO! Because it has not occurred. There are no constraints. And any rational analysis of the expected, continuing growth in public sector debt clearly projects an exponential function far and away greater than growth in the underlying economy from which it feeds. Looks good on paper, I suppose – but it ain’t workin’. Measures of what you call “inflation” do not take the whole picture into account. Asset price inflation is not measured. The inflation that we export to the rest of the world in the form of our trade deficit is not well accounted, and neither are the moral implications of those actions. The theft, by interest rate manipulation, of a man’s ability after a career of saving to exchange his wealth for income in retirement is not accounted. Again, your moral outrage is misdirected. A proper monetary system based on honest money and credit will have the ability to rapidly expand and contract to reflect actual underlying economic activity – and will promote the greatest enhancement to public prosperity imaginable. Unfortunately, as even the MMTers know, in order to get to that stage, the improper, fraudulent growth in the monetary aggregates and the assets they have “purchased” through a fraudulent system of rehypothecation and leverage, will need to be unwound or evaporated from whence they came (ex-nihilo) – before a just system may be implemented. The status-quo will resist that process with all their power, and the destruction of the system fostering these morally outrageous results will cause widespread grief and untold strife worldwide, and probably result in war – these things always have in the past. Bretton Woods grew out of World War II. What Phoenix emerges from the ashes of the current monetary paradigm depend on conversations such as we’re attempting to have here.

    Outrage is motivational, John – just consider where its expression might more properly be directed.

  54. Wesley – Laughing January 26, 2016 at 11:18 pm #

    @Roger – I found your links above to the Zeitgeist Movement and Technocracy to be informative – especially in the context of Dissent Branding.
    Hi Wesley,
    I spent yesterday going through them both more of a reconnoiter than an exploration.
    Exploration is I think worthwhile so I will don my Pith helmut and strike out with boots on the ground in both terrortories for a few days.

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

    http://letthemconfectsweeterlies.blogspot.se/2011/05/i-alluded-to-this-elephant-proverb.html

    you might find this blog I did recalling the certitude of This poet of the people back in 2009.

    http://letthemconfectsweeterlies.blogspot.se/2011/05/dont-look-back-pillars-of-salt.html

    ” Just re read this whole debate from January 2009 on House prices. It’s strange even though I now believ the Banking System has to be reformed root and branch and the intervening 2 years or so has brought to light a hell of a lot of stuff about liquidity ratios at Banks going beserk I wonder How positions on this discussinon would now change.
    My philosophical outlook has changed markedly and my world view is certainly one that yes as an earlier poster in this discussion pointed out perhaps my own timing and decisions were more due to luck than Judgement. I would have to agree with those sentiments absolutely , perhaps for different reasons than the comment might have been implying, but I see the observation as very wise non the less. It also reminds me of where I first came across the Elephant tale.”

    At this point I would like to Thank both you and Johng for providing plenty of food for thought, for me at least this is proving to be a highly nourishing discussion.

    1. My business partner in the merchant steel trade kept a ghastly stool in his sitting area – made from an Elephant foot. It was horrifying to me, but somehow he managed to get it back to the ‘States from South Africa, and I often found myself sitting atop this anachronism from a very different age. I thought of this while perusing your links…

      I also reflected during my readings last evening about the ever widening public dialogue concerning the money function. All in all, as Ford well said, when a large enough portion of the human spirit comes to know of the equally ghastly crime of money creation as it is performed today, blood of another kind will run in the streets. I’ve always thought the notion of never letting a crisis go to waste to be somewhat cynical – but the collapse of the monetary system is certainly one crisis that has the potential to yield a real benefit. The rapid destruction of improperly created paper claims to real wealth will result in such vast destruction, that a wider public cannot help but come to a better understanding of the nature of the “beast” – no matter what portion of the animal is being “sampled”. Unfortunately, often crises of that nature have the potential to yield an even more Frankensteinian result – especially when such huge swaths of the population will be devastated, and crying out for “help”. My only hope is that cry for help is made with the realization that the entire paradigm must finally be discarded, and that just mechanisms are ready to fill the void.

      The technocracy link actually discusses the repeat-ability aspect of observation and its relation to “facts”. I’m not a scientist by training, but have a clear enough understanding of logic to make a reasoned argument. While I experienced, unexpectedly, an entire range of emotions during my exploration of these issues here, net-net I’m encouraged by the results. And I’m still today catching up through some more of the links above, myself… Cheers! Wesley.

      1. Hi Wesley,

        I was reading Graeber again this morning ( http://commoner.org.uk/10graeber.pdf#page=34&zoom=200,-171,599) and wondered what work had been done on A heuristic approach to money over time. I was delighted to find and then read this from a Swedish Economist and historian https://www.academia.edu/7333921/Mind_and_Monetary_Arrangements_A_Method_to_Assess_Monetary_Heuristics_in_Historical_Time_Mind_and_Monetary_Arrangements_A_Method_to_Assess_Monetary_Heuristics_in_Historical_Time

        Schumpeter (1917-18) considers money as tickets that give access to a share of the opportunity space of commodities rather than to a specific commodity and regards the value of money as the purchasing power of the unit of income.

        and the same search found this.

        https://aisberg.unibg.it/retrieve/handle/10446/26746/7146/Lucarelli%20n.%201-2012.pdf

        Credit money plays a crucial role
        in Schumpeterian theoretical an
        alysis of economic development.
        Recollection of the famous passage in
        The Theory of Economic Development
        (Schumpeter, 1934,
        p. 74) should suffice:
        The banker […] is not so much primarily a middleman in the commodity ‘purchasing power’ as a producer
        of this commodity […] He stands between those who wish
        to form new combinations and the possessors of
        productive means. He is essentially a phenomenon of development, though only when no central authority
        directs the social process. He makes
        possible the carrying out of new combinations, authorizes people, in the
        name of society as it were, to form them. He is the ephor of the exchange economy. In other words – as Schumpeter wrote in his ambitious and unlucky
        Business Cycles credit creation is the monetary complement of innovation
        (Schumpeter, 1964, p. 110):

        ”The word “ephors” (Greek ἔφοροι éphoroi, plural form of ἔφορος éphoros) comes from the Greek ἐπί epi, “on” or “over”, and ὁράω horaō, “to see”, i.e. “one who oversees” or “overseer”.

        ”The carrying into effect of an innovation involves, not pr
        imarily an increase in existing factors of production, but
        the shifting of existing factors from old to new uses. […]
        If innovation is financed by credit creation, the shifting
        of the factors is effected not by th
        e withdrawal of funds—“canceling the ol
        d order”—from the old firms, but by
        the reduction of the purchasing power of existing funds which are left with the old firms while newly created
        funds are put at the disposal of entrep
        reneurs: the new “order to the factors” comes, as it were, on top of the old
        one, which is not thereby canceled. (p. 110-111)

        Persuaded by this line of thinking Johng I do think when you say this

        ”The financial system is a massive scoreboard of credits and debts.

        In the end, it all nets to zero. And it always will.”

        I wonder if the Map and the territory are being confused.

        1. Wesley - Just the ticket!

          Hi Roger – thanks for the interesting links. I was just tapping out a few thoughts about “tokens” (and “tickets” now) and managed a quick look-see at your post. I’ve downloaded but not yet consumed the Monetary Heuristics paper by Marmefelt. However, I did give a quick read to Tomlinson’s 1993 Honest Money work, and must say, that I admire his fortitude. His use of the bread analogy for a simple balance sheet way of looking at the purchasing power of money, and the insidious process of inflation is memorable. Imagine, having the will of mind to defy the status-quo as he did, and suggest that the Iranians (more, even all of OPEC) were quite justified to ask for more “bread” for their oil when the unit of account was being manipulated in favor of the issuers of said unit. It would be interesting to investigate whether the establishment went on to attempt to discredit this position – I would not be surprised! Marmefelt’s “cognitive” perspective, when analyzing media of exchange (commodity bundles) and their accounting looks at valuation changes in the underlying media. As I have been discussing in recent postings, (Bilbo/Really!) – the idea of accounting for the negative (accounting for the creation of a unit of purchasing power created from thin air) presents certain unavoidable problems. I like his approach to the “clearing” aspect of credit; ie, its extinguishment.

          Lucarelli’s 2012 Stock-Flow analysis confronts the fundamental problem (that of negative numbers – today’s theme!!!) early on:
          [”
          The opposite conception – loans make deposits – may be described in the following words: «Banks could add to the existing means of payment by lending promises to pay, and entrepreneurs could have access to bank money by mortgaging goods which they would acquire with the borrowed purchasing power. Thus, total credit could be greater than if it there were only fully covered credit» (Bossone 2000, p. 13)”]

          His immediate insistence on the use of, in my view oxymoronic, “credit-money” construction from the start is an immediate tip-off to conceptual problems. His concluding remarks with “There are great advantages, we believe, in developing this methodology to explain the meaning and the consequences of credit creation considered as the monetary complement of innovation” are just an academic’s way of saying that it’s okay to create credit-money “ex-novo”. The status-quo way of doing things is justified, he says in essence. I totally disagree, for the explicit reasons outlined elsewhere here ad-nauseum.

          Using a two-dimensional object to model a three-dimensional world (maps v territory), introduces known deformation and distortions. These myriad “innovations” and “new combinations” that Lucarelli gushes about are only made possible by the fraud of “Ex-novo” credit creation, and the protection of this fraud by State. Nothing more than an abacus is needed to account for that failed math, no matter how deceptively it is disguised in the dressings of Academia. Follow the money – and you’ll find there’s not enough to extinguish the “innovative” credits.
          W.

          1. http://www.forbes.com/sites/stevekeen/2015/03/30/the-principal-and-interest-on-debt-myth-2/4/#4336f06415d5

            http://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Keen1995FinanceEconomicBreakdown_JPKE_OCRed.pdf
            Keen I think does a very good job of following the currency 😉

            Hi Wesley,

            My main purpose with my study into this is to place my understanding of Blockchain and Crypto Currency as local currencies into a wider context of monetary theory as a piece, not according to what I hope money is or can be.

            My main interest is actually philosophy outside of Poetry and music and not particularly Economics and Politics I think Graebers politics (Anarchist) and his Main area of Study ( Anthropoloogy ) which seems to me to be a sort of philosophy of human society is what keeps me coming back to his paper ( http://commoner.org.uk/10graeber.pdf#page=34&zoom=200,-171,599 )

            “As Paul Ricoeur has”
            “noted:”
            “It is striking that Plato contributed to the construction of Euclidian geometry”
            “through his work of denominating such concepts as line, surface, equality, and the similarity of figures, etc., which strictly forbade all recourse and all allusion to manipulations, to physical transformation of figures. This asceticism of mathematical language, to which we owe, in the last analysis, all our machines since the dawn of the mechanical age, would have been impossible without the logical heroism of Parmenides denying the entirety of the world of becoming and of praxis in the name of the self-identity of significations. It is to this denial of movement and work that we owe the achievements of Euclid, of Galileo, modern mechanism, and all our devices and apparatus (Ricoeur 1970:201-202; also in Sahlins 1976:81-82n.21)”
            “There is obviously something very ironic about all this. What Ricoeur is suggesting is”
            “that we have been able to create a technology capable of giving us hitherto unimaginable power to transform the world, largely because we were first able to”
            “imagine a world without powers or transformations. It may well be true.”

            “Roy Bhaskar and those who have since taken up some version of his “critical”
            “realist” approach (Bhaskar 1979, 1986, 1989, 1991, 1994a, 1994b; Collier 1990, 1994; Archer, Bhaskar, Collier, Lawson and Norrie 1998) have been trying for some years now to develop a more reasonable ontology. The resulting arguments are notoriously difficult, but it might help to set out some of his conclusions, in shamelessly”
            “abbreviated form, before continuing:”
            “1. Realism. Bhaskar argues for a “transcendental realism”: that is, rather than”
            “limiting reality to what can be observed by the senses, one must ask instead “what would have to be the case” in order to explain what we do experience. In particular, he seeks to explain “why are scientific experiments possible?,” and also, at the”
            “same time “why are scientific experiments necessary?””
            “2. Potentiality. His conclusion: while our experiences are of events in the real world,”
            “reality is not limited to what we can experience (“the empirical”), or even, to the sum total of events that can be said to have taken place (“the actual”). Rather,”
            “thecommoner N.10 thecommoner.org”

            Value As The Importance of Actions 22
            Bhaskar proposes a third level (“the real”). To understand it, one must also take
            account of “powers”— that is, one that defines things in part in terms of their
            potentials or capacities. Science largely proceeds by hypothesizing what
            “mechanisms” must exist in order to explain such powers, and then by looking for
            them. The search is probably endless, because there are always deeper and more
            fundamental levels (i.e., from atoms to electrons, electrons to quarks, and so
            on. . .), but the fact that there’s no end to the pursuit does not mean reality doesn’t
            exist; rather, it simply means one will never to be able to understand it completely.
            3. Freedom. Reality can be divided into emergent stratum: just as chemistry
            presupposes but cannot be entirely reduced to physics, so biology presupposes but
            cannot be reduced to chemistry, or the human sciences to biology. Different sorts
            of mechanisms are operating on each. Each, furthermore, achieves a certain
            autonomy from those below; it would be impossible even to talk about human
            freedom were this not the case, since our actions would simply be determined by
            chemical or biological processes.
            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.
            5. Tendencies. As a result, it is better not to refer to unbreakable scientific “laws” but
            rather of “tendencies,” which interact in unpredictable ways. Of course, the higher
            the emergent strata one is dealing with, the less predictable things become, the
            involvement of human beings of course being the most unpredictable factor of all.5
            For our purposes, the details are not as important as the overall thrust: that the
            Heraclitean position, which looks at things in terms of their dynamic potentials, is not a
            matter of abandoning science but is, rather, the only hope of giving science a solid
            ontological basis. But it also means that in order to do so, those who wish to make
            claims to science will have to abandon some of their most ambitious—one is tempted
            to say, totalitarian, paranoid—dreams of absolute or total knowledge, and accept a
            certain degree of humility about what it is possible to know.

            See N10.

            Sorry for the long cut and pastes, I do think that Graebers Article in the Commoner is a tour de force.

            I did this blog back in 2011 entitled Little Acorns, Of course Mighty Oaks come from Little Acorns. ( http://letthemconfectsweeterlies.blogspot.se/2011/06/from-little-acorns.html )Mathematical abstractions and abstract concepts like Interest ´´Make your money grow´´of course nothing is actually growing unless some thing is growing like harvested acorns planted in nurseries or Apples falling not to far from the tree etc. At the ned of the blog theres a talk by Merlees on Mathmatics as a langauge, its very very good, I see he got his nobel price for Assymetric ( During his time at Oxford, he published papers on economic models for which he would eventually be awarded his Nobel Prize. They centred on situations in which economic information is asymmetrical or incomplete) https://en.wikipedia.org/wiki/James_Mirrlees
            https://www.youtube.com/watch?v=-39znKX8kC8

            The various other quarrels in different schools of thought can only really exist in the idealised world , I very much enjoy my own Ivory Tower but have to admit it is not real or indeed practical, comfortable for one and the odd visitor but certainly not a family home.

            ´´Follow the money – and you’ll find there’s not enough to extinguish the “innovative” credits.’
            W.

            There is plenty of stuff and not enough money in the hands of enough of the people that need the stuff effectively that is the technocratic position and it is also the resource based economies position. I think it´s MMT´s political position and I have not met anyone , perhaps a few who do not have an ethical position with some sympathy for the starving, even the mildly hungry? this is not an appeal to emotion but a question what is the purpose of political economy, is Economy even relevant without the political and social taken into account?

            I can not express my own hopes and beliefs better that Kropotkin

            ”Consequently, when my attention was drawn, later on, to the relations between Darwinism and Sociology, I could agree with none of the works and pamphlets that had been written upon this important subject. They all endeavoured to prove that Man, owing to his higher intelligence and knowledge, may mitigate the harshness of the struggle for life between men; but they all recognized at the same time that the struggle for the means of existence, of every animal against all its congeners, and of every man against all other men, was “a law of Nature.” This view, however, I could not accept, because I was persuaded that to admit a pitiless inner war for life within each species, and to see in that war a condition of progress, was to admit something which not only had not yet been proved, but also lacked confirmation from direct observation. ”
            http://libcom.org/library/mutual-aid-intro

            https://en.wikipedia.org/wiki/Catallaxy I agree with Von mises is a much better word for the practice of academic Economic etc what constitutues Field work in Catallaxy?

        2. I wonder if the Map and the territory are being confused.

          No, you’re just confusing yourself. Trying to tease complexity out a subject that you haven’t yet grasped the basics of is a fool’s errand.

          That is the economics profession’s fatal flaw.

          1. “Every sentence I utter must be understood not as an affirmation but as a question.

            [A caution he gives his students, to be wary of dogmatism.]”
            ― Niels Bohr
            Johng, all that I have ever really learned about anything is that I know very very little and should keep an open mind. I am accustomed to being wrong always , in the end, and listen and read far more than I speak and write. I ask many more questions of myself and others than I make pronouncements and such preferences that I do express are ones which are agreeable to me and I would not presume that my own preferences would be the preferences of anyone else or that I should impose them upon another person. I do not have a sense of self importance and a sense of privelidge what I do have and what I always remember is that I have my own sense of self worth, this itself is something I have worked hard to establish over the years and it is the only thing which I willfully try to project onto other people, my reasoning in that is that a sense of self worth in a person does provide a voice even if it remains an inner voice. I actually do think that a self is absent without a feeling of self worth.

            This Essay on Ego the false center was an important piece of the jigsaw puzzle of my own self discovery. http://deoxy.org/egofalse.htm
            Osho its author by all accounts was himself, a bit of a card his faults and they were allegedly manifold do not diminish the truth I found in his essay for me at least, I found it explained a lot about myself.

            ´´Try to see your own ego.

            Just watch it.

            Don’t be in a hurry to drop it, just watch it. The more you watch, the more capable you will become. Suddenly one day, you simply see that it has dropped. And when it drops by itself, only then does it drop. There is no other way. Prematurely you cannot drop it.

            It drops just like a dead leaf. ´

            What is dogma? dogma is perhaps a code by which obedience will suppress a sense of self worth. What this discussion is originally about is the re branding of dissent with respect to persons who would disagree with the Powers that be. Dogma does not only belong with the powers that be of course it is a membership rule book that sets to stand its society apart as special.

            It is ironic that your chosen example of MMT as a somehow suppressed and censored school of thought , presumably looking for succor from others who also question the current political system feel it necessary to insult or otherwise diminish others who would ask questions skeptical of your own claims.

            Society Johng is complex even the most basic fundamental truths we claim to know are complex interactions between very simple systems get very chaotic very quickly. If we reduce MMT to double entry bookkeeping which sums to zero why does that give us a code for living. The answer seems to be ´´well the politicians make the decisions and they are elected by all of us afterall so we get our preferences on how things should be allocated? Money and markets are OK and do a perfectly good job? Context please, and with context one gets complexity only snake oil salesmen, politicians and dogmatists would say otherwise and it is probably true that they really believe it.

          1. It’s still not any kind of intellectual response to my post but it’s at least in better taste than links to your appalling musical efforts.

            What will the kids do when you’re gone, oh people’s poet?

            I can’t grasp that one’s self worth and willful intellectual dishonesty can go together.

        3. Wesley and Schumpeter

          @Roger:
          https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-608110
          re: (Schumpeter, 1934 – The Theory of Economic Development
          p. 74) “The banker […] is not so much primarily a middleman in the commodity ‘purchasing power’ as a producer of this commodity…]

          It’s interesting that Schumpeter is uttering these words at the same time as Soddy (Role of Money – 1934) is also, correctly, recognizing the banker is not acting as an intermediary of bank “deposit” credit-moneys – but rather is actually creating them out of thin air. Of course, he then blathers on in some bizarre, indistinct apology for the banks… I guess, because he must. Soddy knows what’s going on and knows that a simple adding machine can put an end to the fraud. Soddy is outraged. Schumpeter waxes poetic. Isn’t it funny that Stiglitz (from your Forbes link), is seemingly NOT even AWARE of this 82 years later? Do you think that’s plausible? I don’t. Keen understands, and is trying to do something about it… Bravo!

          1. I think Schumpeters Ephor, Met(ephor) 😉 Analogy? I think I´ll stick with Metaphor , is very on the money as it were.

            I am working on an article to accompany the prospectus to my Tychastic Investment mutual fund at the moment and what I have concluded is that the Bourgoise Economists of Bachunin with their metaphysics of property have became and still are Schumpeters Ephors.

            As regards what they do or do not know or wish to pass on , admit to the rest of us or lock down in religious doctrine the holy of holy´s is Usury the debt at interest

            The approach I am taking to paint this picture Wesley is Allagorical and revolves around Art, Myth and Magic and a Goldfish in a bowl conjured by a magician.

            Watch this video and I think you will guess what I am working on for my Article .
            Boijmans TV episode 4. Genuinely fake.

            Each episode of Boijmans TV can be viewed here on ArtTube after it has been broadcast.

            This episode shows a monument of German artist Anne Wenzel and Van Meegeren’s Fake Vermeer ‘The Supper at Emmaus’, one of the most famous forgeries of Han van Meegeren.

            The project was funded by VSBfonds, partner in education of Museum Boijmans Van Beuningen, Mediafonds and the Rotterdam Mediafonds.

            https://www.youtube.com/watch?v=no_geZuQh2o

            The artist Anna Wendt says in the film ..
            In making a monument ….
            ´´You petrtify the fleeting of a moment … You also Solidify Time thats what I like about it .

            You Solidify Time ?´´

  55. Did Wall Street Banks Create the Oil Crash?

    By Pam Martens and Russ Martens: January 26, 2016

    From June 2008 to the depth of the Wall Street financial crash in early 2009, U.S. domestic crude oil lost 70 percent of its value, falling from over $140 to the low $40s. But then a strange thing happened. Despite weak global economic growth, oil went back to over $100 by 2011 and traded between the $80s and a little over $100 until June 2014. Since then, it has plunged by 72 percent – a bigger crash than when Wall Street was collapsing.

    The chart of crude oil has the distinct feel of a pump and dump scheme, a technique that Wall Street has turned into an art form in the past. Think limited partnerships priced at par on client statements as they disintegrated in price in the real world; rigged research leading to the dot.com bust and a $4 trillion stock wipeout; and the securitization of AAA-rated toxic waste creating the subprime mortgage meltdown that cratered the U.S. housing market along with century-old firms on Wall Street.

    Pretty much everything that’s done on Wall Street is some variation of pump and dump. Here’s why we’re particularly suspicious of the oil price action.

    Americans know far too little about what was actually happening on Wall Street leading up to the crash of 2008. The Financial Crisis Inquiry Commission released its detailed final report in January 2011. But by July 2013, Senator Sherrod Brown, Chair of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection had learned that Wall Street banks had amassed unprecedented amounts of physical crude oil, metals and other commodity assets in the period leading up to the crash. This came as a complete shock to Congress despite endless hearings that had been held on the crash.

    Full article ….

    http://wallstreetonparade.com/2016/01/did-wall-street-banks-create-the-oil-crash/

    1. Wesley - Pumping and Dumping!

      So, tell us JohnG – how is it, given your lovely citation above, do you not see the relationship between the ability of banks to create essentially unlimited purchasing power out of thin air, and the conclusions pointed to by this alleged manipulation? Oil (and the entire commodity sector) actually rallied back up to all-time highs in 2011 before crashing in the manner outlined. Gold, Silver, grains, coffee, sugar, cement, fertilizers, iron ore, steel – the works! How can you/MMT still condone the obviously improper ex-nihilo credit creation capabilities of the private banking sector on the one hand, and then Cheshire-cat-wise post a link such as this, smiling as if you’re MMTopia is not still supporting these very same mechanisms. Bill Mitchell says he wants to eliminate credit creation by the banks for financialized assets – the real world works with real commodities… and the price manipulations suggested by this article are likely caused by UN-real credit money created from thin-air on your beloved spreadsheets… The positions are not consistent. Explain.

      After writing to David, and asking him to remove your inflammatory, and unnecessary ad-hominem nonsense during your last two “fits”…

      I’ll be travelling and largely off-grid for quite some time, so I’ve tried to busy myself in help you focus your efforts on answering the hard questions, instead of just hurling slogans and insults. Cheers,

  56. Anyway, If you can’t accept that money is virtual, then you misunderstand what money is, for whatever reason.

    And that’s the fact of the matter.

    Get over it.

    The financial system is a massive scoreboard of credits and debts.

    In the end, it all nets to zero. And it always will.

    Wishing to make it not so is to howl at the moon.

    1. Wesley - Really!

      @JohnG: The “misunderstanding” that exists between you and I concerning the differences between money and credit, well documented here and elsewhere – lie at the heart of the issue. The refusal by you, (and the MMT community at large – even persons whom you yourself allege are masters of the art -Messrs. Mitchell and Keen) to acknowledge those differences, or even the possibility that such differences may exist, are the essence of our as-yet irreconcilable differences here.

      http://bilbo.economicoutlook.net/blog/?p=5199

      A careful read of that ‘blog posting is really quite shocking in its blatant acknowledgement of the inherently, undeniable question of facts, between two “giants” in the MMT community. In the world of law, dear JohnG, when one wishes to assert Summary Judgement, such may be granted by the Courts only when there are no questions of fact on the record. When the record contains questions of fact, these must be resolved in further proceedings before judgement may be rendered. A solicitor who pounds her fist on the table suggesting that questions of fact do not exist, will not soon be invited to return. You may not, in this dimension, assert that your definition of “money” as FACT. I would recommend that you take some of PROFESSOR Mitchell’s sound advice: “This is the danger of taking a particular view of what money is.” The MMT community within itself cannot even come to terms with what money is, because it does not acknowledge a distinction between things that are real, and NOT-things that are created ex-nihilo, virtually.

      So NO, JohnG: to assert this position as FACT – well, that belies a different sort of arrogance, and one that you’ve been exhibiting all along. Few would doubt that the generally accepted definition of a fact include something akin to: N. “A truth known by actual experience or observation; something known to be true…” However, in the bizarro world of MMT-speak, you seem to take license to define words however you wish, Humpty-Dumpty style. The very FACT of the existence of a disagreement between Messrs Keen and Mitchell over how to account for things as basic as monetary aggregates and NEGATIVE Financial Assets, and the very VALID assertion by Keen of the existence of negative numbers in the balance sheets confirms the existence of a question of fact! I very patiently set out a few facts yesterday, discussing “inflation”. Whether you attribute the existence of inflation to it effects (the common understanding of price inflation), or to its causes (my view), the FACT inflation is undisputed. That fact alone, should suggest to you that something is quite wrong with your sums! And the willful silence of MMT on inflation is quite revealing.

      And NO – JohnG – I won’t “get over it”. For the record, your bald, false assertion at: https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-606397
      “[Roger and]…Wesley are in agreement on is that there are no negative numbers.” is hereby denied by me. That’s a FACT.

      There ARE negative numbers JohnG. And they are showing themselves in greater and greater quantities each day, as claims to real things being made by the false, fraudulently created ex-nihilo paper claims that you hold so dear come due. If we were indeed using “tokens” (as Soddy rightly advocated, and you prattle about from time to time) – then these problems could not exist. The last time this accounting reality confronted the banking system (GFC 2008), the solution was to create massive quantities of additional negative numbers, using ex-nihilo “credits” and restoring “confidence”. The sheer number of claims to real chairs needed to accommodate a cessation in the music is now so vastly greater than chairs in existence, I’m not certain that even your “Helicopter Money” can be distributed fast enough to stem the rush to be seated. In any case, the chairs will be crushed.

      The irony of your words in that same posting will one-day become clear to you:
      @johng 19Jan2016: “As imperfect as state money is, thanks, but I’ll stay with the tokens that don’t defy mathematics.” Soddy discusses negative numbers at length in his “The Role of Money”. At: (Wesley – The Stand January 20, 2016 at 8:26 pm). I go on to express appreciation for a specific attribute of the Blockchain that may provide the basis for a mechanism able to absolutely, without doubt, prevent the existence of these negative numbers used by the banking system to defraud:
      At: Wesley – Wooden Nickel? January 21, 2016 at 1:40 am
      Soddy correctly laments that this entire issue could be resolved by a simple adding machine!

      When you, and the misguided MMT community come to understand that Money is REAL, and credit is virtual, we may resume this discussion. The reason that your revered “scorecard” is malfunctioning so badly, is that it does not know how to process the negative sums created by our current banking fraud. The sums are NOT netting to zero, and MMT refuses to acknowledge this FACT. Engaging in the simple maths that need nothing more than an adding machine, still require that you acknowledge negative signs in front of ex-nihilo credit creation. At that moment, the differences between MMT and “honest money” folks will melt away, and real progress may be made.

      Keen’s got it. Soddy figured it out decades ago. Give it a try John – there is a minus sign on your calculator for a reason. And the numbers are not adding up in the way that you are told to believe.

      Moriarty and Negative Waves (2min30secs) – hilarious!
      https://www.youtube.com/watch?v=ncbEucjsNFU

        1. Wesley - Howlingly Factual!

          What possible relevance does this date have? The stock market bottomed in March of 2009. The banking system, which you claim MMT describes so perfectly, has most certainly NOT changed in the interim (except to become massively larger!). The facts have not changed, John. Your replies are at once rude, and non-responsive. Whatever you are suggesting (and I can’t figure it out because you haven’t said anything here???), by pointing out the date of this Mitchell ‘blog posting does not change the facts of what occurred and when. Does MMT dogma change, depending on what’s going on in the world? Are his words from this ‘blog posting now disavowed? MMT-speak is probably the religion’s biggest turn-off. It’s almost like a secret hand-shake. One can immediately discern another MMTist just by the utterance of a few key, indecipherables from the “inside” lexicon.

    1. All the banks have been taking aggressive steps to socialize, in advance, their derivatives exposures. But, not to worry: As johng says, the insolvent banks should have been liquidated with prejudice long ago. And the FDIC stands ready to honor all these claims to “money”! BAC ingested Merrill Lynch (and Countrywide) during the onset of the GFC, and promptly off-loaded as much toxicity from these balance sheets onto the taxpayer as the FED could “buy”. So now the “balance sheet” of the FED, marked to reality has it insolvent too! But not to worry, government cannot go bankrupt right? The paper issuing from government to back their obligations is as “good as gold”, eh? Well, the law says that we may value these “credits” on our balance sheet as money – so it must be true, yes?

      So it is written. So it shall be done. In God we trust! What could possibly go wrong? Have some faith! And Gee! The Dow is over 16,000 again as I write, so everything must be okay…

  57. Wesley - Stocking and Flowing!

    JohnG’s (MMT) Accounting balance sheet:
    Deposits: $200 Cash: $100
    Ex-nihilo Loans:$100
    Total $200 $200

    Actual position, i.e., REALITY:
    Receipts issued: $200 Stock in hand: $100. Accounting Reality: $100 money DEFICIT. Try substituting REAL tokens into the equation, and you’ll rapidly see why a Scientist like Soddy was able to detect the fraud so easily. Regardless of WHO issues the tokens!

  58. John G.

    http://heteconomist.com/internet-marxists-who-are-more-neoclassical-than-austrian/

    http://heteconomist.com/internet-marxists-who-are-more-austrian-than-neoclassical/

    And from the same blog, this may help with some of your misconceptions.

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

    ”There is thus no conflict between the statements “Recorded income equals recorded expenditure” and “Expenditure equals income plus the change in debt”. But there is a very big difference between a macroeconomic theory which begins from the proposition that “Aggregate demand equals aggregate income” and one that commences from “Aggregate demand equals income plus the change in debt”. The former is only true in a Loanable Funds model of lending; the latter is true in the endogenous money world in which we actually live—as Schumpeter, Minsky, and (arguably) Keynes have asserted before us.”

    Steve Keen.

    http://www.debunkingeconomics.com/endogenous-money-and-effective-demand/

    this moves on from your link where Bill Mitchell and Steve Keen are clearly considering each others view point. Wesley has it seems also looked at this and might find Steve Keens quote above interesting. I read this yesterday but couldn’t find the link until I looked again this morning.

    1. ”There is thus no conflict between the statements “Recorded income equals recorded expenditure” and “Expenditure equals income plus the change in debt”. But there is a very big difference between a macroeconomic theory which begins from the proposition that “Aggregate demand equals aggregate income” and one that commences from “Aggregate demand equals income plus the change in debt”. The former is only true in a Loanable Funds model of lending; the latter is true in the endogenous money world in which we actually live—as Schumpeter, Minsky, and (arguably) Keynes have asserted before us.”

      Steve Keen.

      Which, in the context of private sector income means, that the private domestic sector is running a deficit i.e. taking on debt.

      But aggregate demand could rise absent increased debt if the combination of government net spending and foreign sector spending were in deficit.

      Spending equals income.

      (I – S) + (G – T) + (X – M) = 0

      If he wants to talk about loanable funds theory, he should resume his little cat fight with Krugman. It’s nothing to do with MMT.

      1. http://michael-hudson.com/2012/03/mmt-as-the-austerity-alternative/

        From Michael Hudsons Blog on a platform with Stephanie Kelton.

        Does Stephanies definition accord with your approved view John G and Is Michael Hudson also a safe pair of hands free of thought crime?

        I have heard a number of Michael Hudsons speeches and lectures and really do agree with most of what he says, The same goes for Steve Keen. I also have nothing against You or Bill Mitchell Full employment is better than unemployment as a general principle (definitions of the particulars not withstanding). It seems we have very different world views , is that so surprising Australia is a very different place to Sweden or indeed the UK. I am not an academic, I presume that you are. I have always been self employed since i became professionally qualified.I assume you do not run and own your own academic institution. I undoubtedly fit the definition of oppositional defiance disorder, I’m wondering if you feel that you do too?

        Krugman and Keen will no doubt in due course either find an accommodation or agree to disagree ´´little Cat Fight´´ seems a weak metaphor for their quarrel.

        As I have said before thanks for the links and substantive points you have made they have been helpful to broadening my understanding of MMT.
        Michael Hidson on Max Kaiser
        https://www.youtube.com/watch?v=MBJ6airQhR0

        Our Host on Max Kaiser

        https://www.youtube.com/watch?v=nkM8Q1n66T8

        1. What a load of ad hominem and drivel. You’re way off the mark.

          The difference between our world views has nought to do with geography.

          You clearly don’t understand MMT at the basic level. You haven’t got your head around the macro at all.

          You’re muddled yourself up with complexities and you’ve obscured the basic premise. So you are seeing conflicts where there are none.

  59. ” JohnG January 29, 2016 at 8:30 am #

    It’s still not any kind of intellectual response to my post but it’s at least in better taste than links to your appalling musical efforts.

    What will the kids do when you’re gone, oh people’s poet?

    I can’t grasp that one’s self worth and willful intellectual dishonesty can go together.”

    Cheer up Johng, life is fun and variety they say is the spice of it.

  60. Another thoughtful article though, as usual, I’m not convinced by the need to create new terms or overly complex explanations. I made a comment ages ago on here that we need to get snappier. Interesting as I may find these articles they are either impenetrable or fail to resonate with the majority. We need thoughts and language that counter popular memes such as ‘socialists always run out of other peoples money’ and ‘the government could go bust’. Thankfully most people seem to think the ‘austerity breeds growth’ is garbage but it doesn’t stop the MSM from spouting it.

    As for the ‘debate’ below the line, well my hat is off to John G, a tremendous effort and a display of patience far beyond me. I just don’t see what’s so hard to understand…MMT is merely an explanation for what exists.

    At the most basic level we have 3 pillars – labour, resource and capital – two of these are real and tangible and the third is what we’ve invented to allocate/utilise the other two. It is just a tool to be used, that it isn’t used to the benefit of all is political and nothing to do with the tool itself…hence MMT being non political.

    The problems faced, IMO, are those of rent seeking abetted by regulatory, political and media capture. The solutions are many and varied but none of them, barring perhaps anarchy and dissolution, require the tearing down of existing structures.

    Personally I do support a full liveable UBI though I recognise that this may be politically impossible. But at least a target of full employment would be a start.

    1. Wesley saying Horseapples!

      Hey Alastair! Pleased to make your acquaintance.
      January 29, 2016 at 10:04 pm “As for the ‘debate’ below the line, well my hat is off to JohnG, a tremendous effort and a display of patience far beyond me. I just don’t see what’s so hard to understand…MMT is merely an explanation for what exists.”

      Horseapples! JohnG’s frequent outbursts of impolite impatience are scattered throughout… blurring the unifying MMT gospel. Your blatant willingness to ignore such improprieties to characterize his often barely penetrable “tremendous efforts” is clearly somewhat MMT-serving, a rather common characteristic of that caste. MMTers always display amazement about others’ inability to grasp the dogma. The very existence of tens of thousands of pages in the public domains alone expressing failure-to-grok should suffice to provide a sense to even those, blessed with MMT-adeptness, of the lesser-mortals’ difficulties. Heck, even a Noble-prize-winning economist (and dozens of other professionals) publicly and repeatedly display inability to see the light. MMT-speak always starts with “we’re just describing the way that it is…” – well, EVERY scholarly economic paper attempts to do just that. To characterize dissenting views expressing a different perspective as NOT describing the way that it is – well, that’s a bit disingenuous. And, it’s a really ineffective Dissent-Branding mechanism. This now-trademarked cloak immediately identifies your ilk – just as a uniform functions. Those parties here discussing these matters have clearly made sincere and ongoing efforts to slog through MMT’s opaque explanations of only “what exists.” Keep hope alive.

      Alastair continues… patiently and pedantically explaining the way it is: “At the most basic level we have 3 pillars – labour, resource and capital – two of these are real and tangible and the third is what we’ve invented to allocate/utilise the other two. It is just a tool to be used, that it isn’t used to the benefit of all is political and nothing to do with the tool itself…hence MMT being non political.”

      Yikes! So you mean to have me accept that the mere fact of the existence of something magicked into being on a spreadsheet, something NOT real, but capable of being represented on a balance sheet using double-entry bookkeeping methods is sufficient by itself to suggest MMT is NOT political? Check your premises ‘mate – and the color of the unicorns in the MMT playbook. Man is just as capable of using “real”, physically countable tokens (even fiat tokens of no intrinsic worth a-la Soddy and others) and accounting for them just as accurately as unreal, ex-nihilo Bank-credits. Or any number of other mechanisms described in the non-MMT world. These are just a tools too! Did it ever occur to you that the tool could be REAL and TANGIBLE too???

      MMT accepts as a GIVEN the current monetary paradigm as a starting premise: this position in and of itself stakes a political stance. MMT starts and ends with the premise that the current monetary system, being “the way that it is”, (with a tweak here and a tweak there), is the way that it should be. You say it another way in your concluding remarks that the “existing structures” do not need to be torn down. The two sides of the State-enforced and nurtured balance sheet having netted to zero, after magicking purchasing power into existence on a digital ledger is an accepted good. That is the essence of an ideological position, and hence VERY political. I reject that paradigm on its face, for the reasons I’ve outlined carefully above. Countless others before me and together with me also reject that premise. I am as amazed as you, perhaps, that an acknowledged and respected scholar of economics can be expressing such a completely improper and misguided understanding of the monetary system’s functioning (Krugman and endogenous bank-credit). My saying he’s wrong does not make me right!

      But saying that’s just the way it is, does not make “the way it is” right either! And saying that’s NOT the way that it should be, is not heresy – it’s the essence of dissent. MMT attempts to discredit those who do not accept “the way it is”, or those who would describe “the way that it is” with a DIFFERENT lens. Re-branding dissent in this manner is wrong, and ineffective. When MMTers accept that reality, that everyone ELSE sees the MMT position as an ideology, the MMT theocracy might have a more rational starting position from which to argue the merits. But the MMT’s starting assumption is that their view IS reality. How can you not understand that??? Don’t you see the arrogance of that posture? As I’ve mentioned above, more often than not, it’s the very people in the MMT-choir itself that are expressing confusion about the “way it is”…

      Amusingly – even Krugman, who knows that the MMTers are closer to his position from an ideological point of view, and is reluctant to be too critical – is also openly hostile to MMT in terms of their style points. Those stylistic features of MMT-speak seem to be ubiquitous, even in this very ‘blog going back to 2011. Take lessons from Edward Bernays, and Madison Avenue: style matters if you’re selling something – and I’m not buying it…

      Krugman, 15 August 2011
      [In a way, I really should not spend time debating the Modern Monetary Theory guys. They’re on my side in current policy debates, and it’s unlikely that they’ll ever have the kind of real — and really bad — influence that the Austrians have lately acquired. But I really don’t feel like getting right back to textbook revision, so here’s another shot. First of all, yes, I have read various MMT manifestos — this [link] is fairly clear as they go. I do dislike the style — the claims that fundamental principles of logic lead to a worldview that only fools would fail to understand has a sort of eerie resemblance to John Galt’s speech in Atlas Shrugged — but that shouldn’t matter.]

        1. Wesley - Directly on Point!

          My message – directly on-point and relevant in each paragraph to the instant posting on the Re-branding of Dissent by our kind host.

          However, your clearly time-wasting, whining, and useless links to the twilight-zone of You-tube are deffo worthy of the troll-fodder designation.

          Reminder: once you’ve cut back on the Kool-Aid by half, and the light appears more inviting, please write kindly to David requesting the removal of your garbage-mouthed utterances when he has a moment.

      1. Hats off to you Wesley, you express exactly my own consternation as to the MMT fanaticism. if MMT is merely accountancy with the government as monopoly token monitor at the very least a discussion of the form of government this arrangement would operate under is in order, there is a very considerable crisis in democracy which MMT can not address as a mere monopoly token monitor, where do MMT´ers stand on these things, MMT may be the measure or provider of the unit of account but is it Aussie rules, Cricket, Soccer, Rugby union Rugby Leaugue or Grid iron football we will be playing?.

        With respect to saying that the Government is already monopoly token monitor again empirically that is seen not to be so due to bank credit, which is keens point.What I really want to know is which game we will be playing.

        MMT fanatisism expressed as simple rules.

        Because MMT
        Because Horizontal
        Because Stock Flow
        Because (I – S) + (G – T) + (X – M) = 0

        http://www.nakedcapitalism.com/2014/03/neo-liberalism-expressed-simple-rules.html

        1. if MMT is merely accountancy with the government as monopoly token monitor.

          That’s almost the direct opposite of what MMT says.

          You’re like no anarchist I’ve ever met, Roger.

          In fact, I don’t think you’re an anarchist at all.

          I think you want to make a buck from a block chain ponzi scam.

        2. Wesley - Token monitor

          “… if MMT is merely accountancy with the government as monopoly token monitor at the very least a discussion of the form of government this arrangement would operate under is in order…”

          Quite right, Roger… The privately owned FED, in America, is not only responsible for monetary policy, but is also responsible for the regulation and prudential oversight of the banking system. However, it’s clear that they do not have the tools or the power to be “token monitor” — or worse, are unwilling to use these…

          No, I’ve been forced to do considerable reading of the MMT-playbook in order to take up this conversation here. And each marginal addition to the library finds me more and more convinced that the proponents of the MMT voodoo are a highly organized shill for the status-quo. Every ‘blog posting I’ve examined recently making references to the monetary system, has comments peppering the readers with uncannily similar slogans, and smear campaigns — but lack all substance. Were it not for my sincere efforts to understand this process in terms of David’s own posting here, and for my own purposes, these systematic patterns would not have been made obvious to me.

          It’s transparent. Why is MMT so deathly opposed to changing the status-quo? One that is clearly crumbling and failing? Could not their treasured balance sheet account for other mechanisms to facilitate the traditional utility that is a legitimate banking function, but which do not result in the systematic transfer of wealth from the entire population to the few, under the guise of “Government is not revenue constrained…”??? The answer should’ve been obvious to me sooner.

          1. saw this yesterday and came to the same conclusion Wesley.

            http://neweconomicperspectives.org/2016/02/guest-post-positive-money-action.html#more-9995

            Following on from my other idea that usury is the elephant in this enfilade . it really is the Interest that pays the bills for the bourgeois and the bourgeois as can be seen plainly in say Jack Fitzgeralds criticism of Mc Cauglanns pamphlet.

            http://www.worldsocialism.org/spgb/socialist-standard/1900s/1909/no-60-august-1909/tyranny-usury

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

            The idea of working with the middle-class Liberal Party to achieve working-class representation in parliament was not universally accepted, however. Marxist socialists, believing in the inevitability of class struggle between the working class and the capitalist class, rejected the idea of workers making common cause with the petty bourgeois Liberals in exchange for scraps of charity from the legislative table. The orthodox British Marxists established their own party, the Social Democratic Federation (SDF) in 1881.

            https://archive.org/stream/ascientificsolu00kitsgoog#page/n22/mode/2up

            Kitson and Proudhon both get the crank treatment from Fitzgerald.
            I am reading Kitson art the moment clearly he is a keen student of tolstoy and also Proudhon.

            For some reason debt at interest is seen as some how OK for MMTists I do not know if that is true but it seems to be and it is also true that the Conservative or Petit Bourgoise Elements of the Labour Movement in the UK have always margiunalised the money reformers who wish to eliminate usury?

            Short and sweet look at where the Kison Wikipedia entry links too , all there but not Proudhon. https://en.wikipedia.org/wiki/Arthur_Kitson A lot of Kitsons pamphlets are there I will be reading through those and seeing what other pieces of the jig saw puzzle they point to.

  61. OK, so if either of the loons Roger or Wesley can explain what they think money should be in their own words, please do so here.

    That means no appealing to authority, Roger. And it means no Rothbardianese million word essays of gobbledegook and vitriol Wesley.

    Explain it to us in plain language that a 10 year old could understand.

    I won’t hold my breath.

        1. Wesley - using 10-year-old-speak

          Hi JohnG;
          Open links; shed MMT fog-of-war; read links. Understand multiple clear statements of money concept, and how money differs from credit. Relax in the “a-ha” of enlightenment… and the knowledge that money may be anything that man freely chooses it to be, and accepted by any counter-party by mutual consent, without the coercion of fiat and legal tender artifice.

          I don’t care if you choose di-lithium crystals, bit-coins, or wampum for your exchanges John – heck, you can use constantly debasing fiat for all I care. Just know in advance, I won’t willingly accept your MMT paper for my goods or services.

          To suggest, in the remotest shadow of reality that I offered anything for sale here, or directed any reader to any form of commercial undertaking is indicative of your foul-play. The insinuation is a lie and insulting. I object.

          1. That’s just meaningless gobbledegook. You’re talking about barter, not money.

            And you can do that now. “Legal tender’ laws notwithstanding.

            You’re an idiot.

        2. Step 1: learn to read. (This may disqualify you as an MMTer, though)

          Step 2: click on multiple links above in direct response to your self-evident inability to read my (and other’s) answers in earlier posts;

          Step 3: Allow the endorphin-rush of enlightenment aid your withdrawal from the MMTopia KoolAid.

          Step 4: Apologize to the “Thoughts” community for your impertinence, and beg forgiveness.

  62. Wesiey’s crazies. #1

    January 7, 2016 at 4:57 pm “In the current system, there is no mechanism for the extinguishment of debt.”

    “All dollars end up as Treasuries.”

    1. #2.

      January 5, 2016 at 3:21 am

      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

      Wesley points at website selling gold.

      1. January 6, 2016 at 10:59 pm #

        “JohnG: I’ve not proposed any “Austrian” or Libertarian solutions”

        Wesley Jumps the shark claiming to be not a libertarian nor Austrian.

        1. John, valiant as your effort is do you really think either of these two are bothering to listen? You’ve put it across in plain simple terms and all you get in return are flights of fancy…overlong as well.

          I don’t know how it’s so hard to understand, a tool is a tool, misuse of that tool doesn’t mean it’s no good.

          1. Perhaps you should just ring up your advocate and discuss these issues privately with him on the tele? In that manner, there will be no dissenting views interfering with your smooth channeling of the MMT gospel… Else, we’re trying to have a discussion here for the benefit of all readers.

          2. True. They’re actively NOT listening. And intentionally misrepresenting. It’s the intellectual dishonesty that annoys me most.

            I should never have engaged them in the first place.

            I’ve wasted more time on this than I would normally allocate to ‘libertarians’ for a decade.

            They’re idiots.

          1. Hi Wesley have you got another link that one is not working for me, I read and linked to Understanding the Modern Monetary System
            Cullen O. Roche
            August 5, 2011 Roger January 30, 2016 at 11:30 am #

            Enjoyed the cheat sheet.

      2. Wesley - Not selling gold

        Your dishonest and counter-factual assertion, in the remotest shadow of reality that I offered anything for sale here, or directed any reader to any form of commercial undertaking is indicative of your distasteful foul-play. The insinuation is a lie and insulting. I object.

        Your tactics, by all accounts quite emblematic of MMTers, are those of a bully, and certainly do not serve to advance your position as an advocate of that discredited ideology.

        And you’ve once again begun hurling blatant, insulting language at readers here (“idiots”)… the first resort of thugs. Unprovoked violence is the usual next step. Not becoming, JohnG. Not even from a 10 year old.

        1. You pointed to a gold bug site.

          You’re an idiot and a hypocrite of the highest order.

          Standard ‘libertarian’ stupidity and childishness. You think you can insult people and not get any back.

          You’re like 5 year olds that don’t want to share their toys.

    2. Wesley - $=T &quot;Crazy&quot;

      Sticks and Stones, JohnG… You really have trouble with the whole violence thing, don’t you?

      I stand by my statement. I’ve shown above why this is so, and even provided “visuals” that you could understand. You seem to think the ever-expanding fiat and debt-based credits in the world have a mechanism for contraction. And perhaps on your MMT-balance sheet, contractions in overall debt may be accomplished. Unfortunately, in the REAL world, even the slightest contractions in total credit market instruments outstanding (you know- that stuff you mistakenly call “money”) result in instantaneous collapse of our system that MMT describes so well. YES: debt-money is created and destroyed all the time in the banking system by the creation and repayment of loans. We agreed to that simple math long ago. But in aggregate, JohnG – it cannot happen without system failure. You say MMT addresses this mechanism – but have been fairly coy about details. Taxation? The growth in total credits outstanding are growing at rates that are multiples above the growth in the economy. Is this a good thing in the MMT world? Total credit market debt outstanding is many multiples larger than public debt. How does MMT prevent that happening – or is that a good-thing in the MMT world where Government Debt = Private Sector Savings?

      So YES, JohnG: there is NO mechanism for the extinguishment of total debt in the system. If I pay a debt owed, I merely transfer that liability to a bank, who buys a treasury (Macro).

      So far, your position seems to be:
      https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-604090

      “No, in the long run all government dollars are extinguished by taxation. All bank credit dollars are extinguished on repayment of principal.”

      And I’ve shown that to be preposterous. To extinguish government dollars in the long run by taxation amounts to un-payably large sums on the order of hundreds-of-thousands of dollars per citizen right now… and I’m not aware of too many people asserting that these liabilities are going to get any smaller. In the “long-run” we’ll all be dead, and MMTers will still be hurling insults at anyone showing how laughably naive their balance sheet maths is…

      You know what happened the last time total Bank Credit dollars contracted, the world was brought to its knees in the worst financial crisis since the Great Depression. So yes, they CAN be extinguished – together with the entire financial system. If MMT describes what we have now, then it’s doing a wonderful job of describing something that doesn’t work!

      1. And I’ve shown that to be preposterous.

        You’ve done no such thing.

        Huge swathes of money are created and extinguished every day of the week, week in and week out.

        You have no idea of what you’re talking about. And appear unable to process information.

        The government creates dollars by marking up numbers in private bank accounts (spending) and it extinguishes dollars by marking down numbers in private bank accounts (taxation).

        Its liabilities at any given time are the non-government’s net dollar denominated financial assets (savings).

        The non-government sectors are not only not liable for government liabilities they are the beneficiaries. Thus they are assets.

        It really isn’t difficult to grasp.

        This isn’t theory. It is simple accounting. True by definition.

        It’s rich that you can’t grasp these simple principles yet condescend to me.

        So YES, JohnG: there is NO mechanism for the extinguishment of total debt in the system. If I pay a debt owed, I merely transfer that liability to a bank, who buys a treasury (Macro).

        Utter clap trap. You don’t have a clue.

        Treasuries can only be bought with government money. They are risk free term deposits.

        1. Wesley buying Treasuries

          JohnG February 1, 2016 at 6:39 am “Huge swathes of money are created and extinguished every day of the week, week in and week out.”

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

          I stand by my point: All dollars go to Treasuries. I have shown definitively (with some simple TCMDO-pictures that even an MMTer might understand) that, in aggregate, total credit market instruments MUST grow or the system is subject to nearly instantaneous failure. You and I actually agreed long ago (amazingly) about the micro-level process concerning the creation and destruction of credit-funny-money issued by commercial banks by the respective creation, out of thin-air, of loans, and their repayment. However, what you have NOT shown, is how this process may be successfully reversed, in aggregate. The reason is, the system does NOT have such a mechanism. You make these wonderfully coy references to taxation as a means to limiting demand, moderating inflation, and extinguishing “money”, but are mighty skimpy on details and specific examples of a structural reduction in the overall banking balance sheet using such mechanisms. You may continue keeping your eyes closed, JohnG, but I’m still here. Denying something does not make it go away! (Reality playbook – preface.)

          JohnG: “The government creates dollars by marking up numbers in private bank accounts (spending) and it extinguishes dollars by marking down numbers in private bank accounts (taxation).”

          So, as I’ve mentioned multiple times JohnG, how many units of your splendidly price-stable credit-money units must I come up with for my fair contribution to the extinguishment of these dollars? By what mechanism is total Government debt held by the Public reduced in reality? By taxation, you say? I figure around $300,000 ought to be fair, yes? If only everyone in America would come up with those $300,000 dollars EACH, we could eliminate some small portion of the dollar liability of US Government… not in Generally Accepted Accounting terms, but at least in on-your-beloved-balance-sheet terms, yes? Now that’s how to pull demand from the future to the present, eh? Create the demand out of thin air. Those finite resources being purchased by those ex-nihilo creations of the banking zombie are keeping people employed. It’ll all be okay. We’ll create some more… Tell me something, JohnG – has total government debt held by the public contracted in any Western currency issuing countries that you know of? How about in non-currency-issuing countries, like Greece, or Portugal, or Italy, or Spain? Target2 imbalances? The ECB balance sheet growth, and threats by Draghi of MOAR are certainly helping the Euro debasement! Race to de-bottom…

          And the Private Banking sector creates dollars by marking up (creating loans) and marking down accounts (receiving repayments of loan principal) in the ledgers, too! Got it! But the total number of dollars on banking ledgers does NOT GO DOWN. Why is that JohnG? Because all dollars eventually go to Treasuries…

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

          The fraud is everywhere. Now, since the private sector bank liabilities for on-demand deposits are fungible with Government money (actual currency printed by Treasury), how tell us how commercial bank could legitimately honor those claims (“gimme the green”) at any given moment? They cannot. And tell me, do you believe that the growth of Total Credit Market Debt Outstanding (that which you consider to be some form of “money”) increasing at multiples of actual underlying economic activity is a healthy thing? Also, please tell me how the system can extinguish even a small portion of the TCMDO? The last time that metric contracted, the entire world was brought to its knees, is still on its knees, and is still being force-fed with High Powered Money (The FED is still using QE injections to keep its balance sheet from getting smaller through debt maturation).

          JohnG: “Its liabilities at any given time are the non-government’s net dollar denominated financial assets (savings).”

          Ridiculous on its face. Does not compute. Common sense: Currently US Debt held by the Public amounts to $13.2 Trillion. The Asset side of JP Morgan Chase’s balance sheet alone boasts over $2.5 trillion. TCMDO is around $63 Trillion. Those “Liabilities” are someone’s assets – and those numbers don’t balance very well. Steve Keen, an MMT expert in your own words, has been trying to explain that to you. Perhaps the Government should bring all those off-balance-sheet liabilities onto the balance sheet! That way, all of that missing collateral needed to honor all the debt-money obligations can be met. If they would just spend another 50 Trillion or so dollars into existence, I’m sure everything will work out fine. AND, we haven’t even begun to discuss the implications of shadow-banking “balance sheets” and the implications of asset-liability re-hypothecation, to this nightmare.

          Regardless of the accounting mumbo-jumbo – please show me (a simple 10 year old) how the total credit market debt outstanding may be made smaller without causing a system failure. I like simple pictures too! Your Nobel is in the mail.

          I’m sure it’s all easy to grasp. The only thing I’m having trouble grasping, is your inability to explain how the banking sector can be made smaller – as you repeatedly claim is the case – without showing how! How? Unwillingly, the banking sector DID become smaller in late 2008, and the entire financial system almost evaporated into the same thin-air from which it was fraudulently loaned. Guess what? That’s what happened in 1929 too.

          Johng: “It’s rich that you can’t grasp these simple principles yet condescend to me.”

          Enlighten us, JohnG! Despite your horribly misplaced sense of condescension, I am in the company of multitudes who do not understand MMT. When I do bump into someone who seems to have a sense of what MMT is really trying to say, I find out that they are either just as confused as I am, or have been branded “disgruntled, former MMTers” whose music is now off-key. What you also do not seem to understand, is these are my criticisms of MMT (and other disastrous fiat systems based on a form of fraud) – not of you personally. Part of the MMT KoolAid seems to force the drinker to equate message and messenger. Try a different flavor!

          I have found it VERY interesting, though, to observe recently that the worldwide reserves of Dollar assets held by foreign Central Banks (and especially China) HAVE indeed been contracting. This was one of the more significant events of 2015, IMHO.

          Have you been printing business cards again, JohnG? Naughty, naughty!

          ps: I’d composed much earlier today a far more interesting response to your silly, empty refutation based on a non-fact-based denial… but I was dealt an unexpected re-boot when my guard was down. I apologize for this notes’ hasty preparation…

          pps: I recently had the privilege to attend an airing of an amazing film entitled “Unbranded”… awarded “best in show” at the event. It’s an inspirational tale of 4 lads who ride “unbranded” Mustangs from Mexico to Canada on public lands.

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

          1. Wesley - MMT unable to explain...

            Cat got your tongue? Seeking doctrine from the establishment? Your silence on this essential issue, requesting a simple example of an aggregate, SECTORAL decline in these metrics that has not resulted in damage to the economy is telling. It doesn’t exist. The system MUST expand or die. The ecological (and intuitive) conflict of that function in a finite world is a death sentence. Wakey-wakey, JohnG!

  63. http://letthemconfectsweeterlies.blogspot.se/2015/04/paying-for-promises-on-defecits.html

    Paying for promises. On defecits Political promises and Patronage.

    ”All arguments in modern political Economy stem from the question of Where is the money coming from to pay for it? this is an interesting question but also ask, What resources do we have where is the wealth of the nation what are out talents and what means do we have to feed, clothe house and keep ourselves warm. Thought of this way we begin to realise that absent money the means of meeting out needs remain its a question of how we marshal them and ensure they are fairly distributed to meet the needs of the common wealth. Tokens for our contribution and due to our essential stake-holding in our own societies can take many forms, Money can be democratic and a tool with great benefits or it can also become a MASTER used as a tool to serve the wishes of a minority. How should we structure our social relationships of commerce and exchange how should our money be designed by whom and for whom. ”

    Supply Side Jesus

    https://www.youtube.com/watch?v=Gc-LJ_3VbUA

    Or Demand Side Jesus

    https://www.youtube.com/watch?v=epKya360YXc

    http://www.nakedcapitalism.com/2015/06/the-standard-definition-of-money-is-in-error.html

    ´The standard definition of money is given in terms of its three functions:

    1: Money is a medium of exchange.
    2: Money is a measure of value.
    3: Money is a store of value.

    Number 1 is at best misleading. Numbers 2 and 3 are simply wrong, and these things are easy to show. It is also easy to show that this is important.

    First, the actual definition of money:

    1: Money is a token, or instrument, of demand, which is exchanged for goods or services. Or simply: Money is demand.
    2: Money is a measure of demand.
    3: Money is a store of demand.´´
    Yves Smith
    I would add that money has to maintain the confidence of the people who make use of it whether this use is compelled by Government or not as Governments fall so do Currencies there is a very real element of consent.

    http://www.nakedcapitalism.com/2015/12/randy-wray-debt-free-money-and-banana-republics-part-ii.html

    Here is our “teaching moment”:

    Debt-free stimulus, or more generally a debt-free government finance spending proposal, actually requires interest payment on debt, unless the central bank adopts a permanent policy of ZIRP.

    Either the Fed or the Treasury must pay interest on debt to avoid ZIRP. We can have the Fed issue the debt rather than the Treasury, but it is still debt and it still pays interest. Or we have permanent ZIRP.

    This is why I made the claim that all debt-free money proposals reduce to permanent ZIRP.

    To which one has to say to Prof Wray, yes and why is that a problem for people that advocate debt free money?

    Understanding the Modern Monetary System
    Cullen O. Roche
    August 5, 2011
    ABSTRACT
    This paper provides a general understanding of the
    workings of the modern fiat monetary system
    in the United States within the context of the glob
    al economy. The work is primarily descriptive
    in nature and takes an operational perspective of t
    he monetary system using the understandings of
    Monetary Realism.
    http://poseidon01.ssrn.com/delivery.php?ID=756021072024120107120087094000019069015032009051054004022004114025031120094098069078007052003023030014055090119110099080069124056022088032093122081120091065094009025053006012092081102001073083092103016079080089104112126085066027079018086064109120094064&EXT=pdf
    ”The federal government’s true constraint is never solvency, but inflation and foreign currency risk. The government must manage its policies so as to avoid imposing undue harm on the populace via mismanagement of the money supply or via inefficient use of government taxing/spending. Although insolvency via inflation or sovreign exchange is quite different from a true solvency constraint it should not be confused as necessarily being less harmful. ´´
    Cullen O. Roche

    I made the point early on that there should me no Intermediation without Representation. Money should not be a token capable of corruption through patronage. Soddy´s energy based unit of account could in one version be divided into two forms a form for needs or necessities and a form for wants or luxuries the first as of birth right and the second to be earned through participation in community or commerce or allocated through lottery.

    1. Wesley - Energy Dollars

      You may find it interesting to note (in relation to Soddy’s “energy based unit of account”) that two equally influential men put forth important ideas concerning the structure of the monetary system in 1921. Thomas Edison, and Henry Ford – good friends who viewed the world as engineers would, each advanced ideas advocating debt-free money issues by government. These ideas were ridiculed in the banking sector-controlled “mainstream” media at the time, just as they would be today. And America was still living in a “hard-money” paradigm – money was redeemable for Gold!

      The quotation you used above, oft cited, was made in 1921 – at a time when the US was on a gold-exchange standard (only a portion of the dollars in issue were “backed” by gold”), and both Thomas Edison and Henry Ford were actively campaigning for a different monetary basis – and energy basis. One that I find has tremendous merit.

      Edison on ex-nihilo fiat-money creation:

      “People who will not turn a shovel full of dirt on the project (Muscle
      Shoals Dam) nor contribute a pound of material, will collect more money
      from the United States than will the People who supply all the material
      and do all the work. This is the terrible thing about interest …But here is
      the point: If the Nation can issue a dollar bond it can issue a dollar bill.
      The element that makes the bond good makes the bill good also. The
      difference between the bond and the bill is that the bond lets the money
      broker collect twice the amount of the bond and an additional 20%.
      Whereas the currency, the honest sort provided by the Constitution pays
      nobody but those who contribute in some useful way. It is absurd to say
      our Country can issue bonds and cannot issue currency. Both are
      promises to pay, but one fattens the usurer and the other helps the
      People. If the currency issued by the People were no good, then the
      bonds would be no good, either. It is a terrible situation when the
      Government, to insure the National Wealth, must go in debt and submit
      to ruinous interest charges at the hands of men who control the fictitious
      value of gold. Interest is the invention of Satan.” — THOMAS A. EDISON

      I am finishing some research of the period, but have already found that the process of the “re-branding” of these dissenting, and really revolutionary ideas to be quite revealing.

      ps: on Edison’s math. 30 year money at 4% returned 2 times the principle plus 20% more, from thin-air credit “money”…

      1. Wesley - Rebranding 19th Century Style!

        In the Re-Branding of Dissent : the efforts by the American Bankers Association (and the banking community in general) to maneuver public opinion towards the formation of the Federal Reserve at the onset of World War I may be familiar to many of you. But the incessant intrigue leading to that day was merely one of many small steps in a 100 year process!

        I have been researching equally insidious (yet successful) efforts by that same Viper (as President Jackson called the Money Powers) to shape public consent to the demonetization of Silver, and to the elimination of debt-free money creation (bypassing the money-lenders) in regards to the famous “Greenbacks” issue of money by Lincoln’s Treasury during the Civil War. Propaganda, shall we say of the time, was a bit less subtle than the Mad-Men of today… The facts are truly extraordinary!

        https://books.google.com/books?id=y2Y6AQAAMAAJ&pg=PA97#v=onepage&q&f=false (Page 97)

        The Dearborn Independent – July 1, 1922 (Yes – a publication owned by Henry Ford)

        In an editorial entitled “Why Do the Financiers Rage?”, Ford himself rages against the fraud of GOLD:
        [
        Why Do the Financiers Rage?

        EVER was such a flood of bankers’ propaganda let loose upon the country as during the past five months. All because THE DEARBORN INDEPENDENT suggested that you cannot run a broad-gauge business on a narrow-gauge monetary system. Literary liars have set forth in bank circulars and financial columns and Wall Street publications that the destruction of the gold basis was being advocated, that the uncontrolled issue of paper money and a general upheaval of sound business policy were being urged. A perfect rage of resentment and deception has characterized the pronouncements of the professional financial worldand not only rage and deception, but an appalling amount of ignorance. The average man who handles the people’s money knows less about the monetary structure than the ordinary ribbon counter clerk knows about the textile industry. THE DEARBORN INDEPENDENT maintains what everybody knows, that business is strangled in its functions because the neck of money through which it must pass is too narrow; and that money also is strangled in its functions because the neck of gold through which it must pass is too narrow. There is more wealth than there is money; there is more money than there is gold; yet the private owners of gold hold the whip hand over money, over industry and thus over the people’s life. It is not a question of THE DEARBORN INDEPENDENT shoving the world off the gold basis; it is a question of the world seeing that it is already, by the very force of business necessity, shoved off the gold basis. Seeing this and acting upon it will release the nation’s energies and liberate us from the stupid tie-up into which the gold superstition has thrust us. The propaganda of the financial interests is not a new thing. Indeed, it is older than the Christian Era. We herewith present two such circulars issued in our own country. One is the famous Hazard Circular, issued in 1862. Read it:

        “Slavery is likely to be abolished by the war, the power of chattel slavery destroyed. This I and my European friends are in favor of. For slavery is but the owning of labor and carries with it the care of the laborer, while, the modern or European plan is capital control of labor by controlling wages; this can be done by controlling the money. The great debt which capitalists will see to it is made out of the war must be used as a measure to control the volume of money. To accomplish this, bonds must be used as a banking basis. It will not do to allow the ‘Greenback, as it is called, to circulate as money for any length of time. We cannot control them. But we can control the bonds, and through them, the bank issue.”

        Another circular issued by the American Bankers’ Association, in 1877, follows:

        “It is advisable to do all in your power to sustain such newspapers, especially the agricultural and religious press, as will oppose the issue of greenback paper money, and that you also withhold patronage or favors from all applicants who are not willing to oppose the government issue of money. Let the government issue the coin and the banks issue the paper money of the country, for then we can better protect each other.

        “To repeal the law enacting national bank notes, or to restore to circulation the government issue of money, will be to provide the people with money and therefore seriously affect your individual profits as bankers and lenders.”

        There you have it. The old circulars were more honest than the present ones—they spoke truthfully the animus behind them. But they are still the same in their bludgeoning of popular thought. Differences exist, however, especially in this, that today the agricultural and religious press is no longer the subsidized organ of an insufficient money system. The Money Power has made stupendous gains since 1877, but so has popular understanding of its methods. And that is what brings about change, and evil becoming so big that its removal is necessary, and a public opinion becoming so great that it can effect the removal.
        ]

        The two cited Circulars are truly astounding! The Bludgeoning of popular thought, indeed! incredibly, these pamphlets directly ordered the bankers to “withhold favor” from any who would advocate for the simple, Constitutionally guaranteed notion of a direct issue of money by government. So why was Lincoln assassinated?

        References:
        https://fraser.stlouisfed.org/docs/publications/mq52c/mq52c_hr_0028.pdf
        http://www.scribd.com/doc/240517700/The-Hazard-Circular-Documentary-Evidence

  64. http://bilbo.economicoutlook.net/blog/?page_id=1984

    Bill Mitchells Comments policy.

    3. I don’t allow personal attacks. I consider these are different from attacks on ideas held by persons though. If you wish to attack ideas that is fine but then you have to provide an argument and engage with the discussion. Simply saying: “what are you on?”; “this is a mass generalisation”; “you f**kwit”, “this site sucks” etc are not engaging in discussion. All comments like that are deleted immediately so it is better you save your time and not send them in.

    4. I will not allow comments that contain comments likely to be slanderous (as best I can judge being a non-lawyer) or which use excessive language that is not necessary for the argument being made.

    5. Please don’t publish links to advertising – the complete comment will just be deleted.

    6. I welcome free speech but it has to be relevant free speech. Relevance is measured by how well the comment engages with the particular blog topic that the comment is being registered under. If you just want to talk about anything then start your own blog. But given this is my blog then I welcome you to engage with my viewpoint or bounce of the viewpoints recorded by other comments. For or against is fine.

    7. I also consider free speech carries a responsibility to “own that speech”. I have noted that those who descend into personal abuse (which I delete) also provide fake E-mail addresses. Then they have the audacity to suggest I advocate censorship.

    https://www.youtube.com/watch?v=tvH8jFL3CvY

  65. Excelent post David.
    I see you have stirred up a veritable hornets nest.
    What would the professionals say ?

    Abstract/Distract/Extract.

    According to the neorealisticists.
    Money is an ethereal thing.
    In and of itself, it has no substance other than its existence.
    Money when instantiated carries only two attributes.
    Denomination and Liquidity

    Neorealysticism rejects the conflict of yin and yang, the fixed denomination and fluidity of liquid by introducing the third, resolved, attribute of Value.

    Both Denomination and Liquidity => Value is what Money are.

    ‘The question is,’ said Hompty Dompty, ‘who is to be master — that’s all.’

    1. Wesley - Looking through the Non-MMT Glass

      Throughout all history, man has voluntarily chosen forms of money that possess the ability to carry “value” forward in time. Debt (and credit) also have temporal aspects, but unrealized. Money exists in the now – while debt is an attempt to pull money forward from the future to the now. The fraudulent creation of debt-money in the now, to represent that which cannot be manifest by man’s honest creation of wealth in the future, is dishonest. Good money is effective at carrying value forward in time, inter alia. Credit is ethereal; it loses value with time. Debt-based “money” has a demonstrated inability to carry value – in fact, a programmed loss of value is an attribute of our current monetary system. The “masters” are self-evident: they are the issuers of the credits from thin-air. I aim to break some egg-shells… 😉

  66. ”Cullen Roche is a disaffected former MMTer.

    He appears to hate the idea of full employment.

    http://www.economonitor.com/lrwray/2013/12/11/mmt-often-imitated-never-duplicated/

    ”So Cullen and his merry band of Neocons jumped the MMT ship in a huff and formed something called MMR, which is supposed to be MMT but without progressive ideas. – See more at: http://www.economonitor.com/lrwray/2013/12/11/mmt-often-imitated-never-duplicated/#sthash.XL70Yhgc.dpuf

    The Job guarantee is a political choice, in Capitalism according to Marx at least a band of unemployed is a logical necessity, Fundamentalist Capitalism it seems is inconsistent with MMTísm.

    The conclusion here must surely be it is possible to get MMT but it is not possible to disagree with MMTism and reject the policy choice of full employment, or to pursue a conservative approach sympathetic to the current status quo.

    Bill Mitchell is very acute in his approach when he says something like under the current system when politicians say there is no money the government can prudently access they are really rejecting the policy choice for some other ideological or political reason. Thats a fair point.

    On the Job guarantee I would support that, in the absence of guaranteed income, if it were the only thing on offer as an alternative to what we have now.

    Bob Rocket, we have certainly marched them up to the top of the hill and were neither up nor down, Humpty Dumpty simply did not understand that his men were really a flow and not a stock and was too concerned with the Vertical aspects of the hill when he should really have surrounded it horizontally! 😉

  67. JohnG January 31, 2016 at 2:29 am #
    Cullen Roche is a disaffected former MMTer.

    He appears to hate the idea of full employment.

    http://www.economonitor.com/lrwray/2013/12/11/mmt-often-imitated-never-duplicated/

    CUllen ROche responded in the comments to Randall Wrays article.

    · 111 weeks ago
    Randy,

    For not knowing who I am, you sure do seem certain of my political beliefs and monetary understandings. Next time you decide to attack us so personally, you could start by at least getting the name of our approach right (it’s just MR – Monetary Realism). It might bolster your argument.

    Phil, I never said that. I said the the “printing press is not more powerful than the private production line”. After all, money has no value if there is no output for it to be used to purchase. I don’t think this is “austrian” or even that controversial….

    Bod/Dismayed, I never said govt has no role in the economy. In fact, I’ve been in favor of greater govt regulation, deficits, and I am not even against the JG (despite MMT’s misinterpretations otherwise). You regularly read my work and comment at PC so I know you’re aware of this.

    Is this what MMT has resorted to now? Petty blog posts, personal attacks and blatant misrepresentations and personal defamation? I sure hope not. I am sorry I disagree with some of your positions, but calling people “retarded”, “anal” and telling them to “get a life” in your blog post is not helping your cause. Feel free to call me all sorts of names now and misrepresent everything I say….
    – See more at: http://www.economonitor.com/lrwray/2013/12/11/mmt-often-imitated-never-duplicated/#sthash.XL70Yhgc.dpuf

    1. This exchange is key Neilw´s blog is well worth a read ( http://www.3spoken.co.uk/search/label/mct ) I think his point regarding the emergent properties expressed as a vector being more rich in meaning than a backwards looking balance sheet are very acute. Neil w has made some very insightful and intelligent contributions to a lot of discussions on MMT I have found on the Web.

      · 111 weeks ago
      I = I + (S – I)

      is straightforward if you think in computer code.

      It’s X = X + 1

      What they are saying is that you have to offset last year’s excess savings of the private sector with more private investment this year.

      It’s nothing sophisticated and is exactly what Steve Keen has been saying in his dynamic equations for years.

      It’s *not* a mathematical equation. It’s a time progression.
      Reply
      11 replies · active 110 weeks ago
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      L. Randall Wray · 111 weeks ago
      Neil: logically impossible. Saving is the accounting record of Investment (plus Def+NX). There’s no excess to be used.It is all “used up”. Saving in the next period will be the accounting record of Investment in the next period (plus Def+NX).
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      NeilW 37p · 111 weeks ago
      “Neil: logically impossible.”

      Within the notation system you use and the limitation of accounting perhaps. But that is a static notation, not a dynamic one.

      X = X + 1 is similarly logically impossible, but I execute it all the time on a computer – because it is actually a statement of the state change from one time instant to the next.
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      PhilippeJames 12p · 111 weeks ago
      Neil,

      not sure what you mean. That’s not what they are saying.

      S = I + (G – T) + (X – M)

      (G – T) + (X – M) = S – I

      so

      S = I + (S – I)

      It’s just a rearrangement of the sectoral balances equation that tells you nothing in particular.

      It’s simply a rhetorical device used to say something like ‘private saving mainly equals private investment plus a little bit extra on top which is the net saving part’. The idea is to try to rhetorically reverse the MMT position, which presents ‘net saving’ as central to private saving.
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      NeilW 37p · 111 weeks ago
      Yes, I know its an attempt to quantify a belief in some sort of different causality using fairly lame and incorrect mathematics.

      However causality always has a time element. For something to be before something else it has to precede it in time.

      It would be so much more understandable if the time elements were made specific. Then perhaps everybody would be able to determine what the underlying beliefs actually are and be able to analyse them.
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      L. Randall Wray · 111 weeks ago
      Neil sorry neither of those explanations work. (Not blaming you, of course). From the 1950s, some mainstream Keynesians tried to make their simple models “dynamic” along these lines. They fail logic and accounting. Don’t forget that identities are identities. Always. Every point in time and over time.
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      NeilW 37p · 111 weeks ago
      The equation is stupid. Let’s get that straight. It’s an attempt to be really clever that falls flat on its face (hence X=X+1 which similar is completely understandable by me but nobody else has a clue what I’m on about. The difference is I will drop that device now because it didn’t work).

      But balance sheet accounting has limitations in that it is a historic snapshot, and is based on policies, and it doesn’t show the causation from one snapshot to the next very easily.

      And it holds all the time because of the logic of double entry that makes sure it does – tortuously sometimes!

      It’s really the delta from one snapshot to the next that is interesting, and then coming up with a way of expressing why that change occurred.
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      L. Randall Wray · 111 weeks ago
      Neil and of course the Keynesians did use proper notation, putting in time subscripts. But then the equations don’t hold. In any event, investment is forward looking, not backward looking to what saving was last year. I expect a couple of years of college economics would help straighten all this out for them.
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      NeilW 37p · 111 weeks ago
      “In any event, investment is forward looking, not backward looking to what saving was last year”

      It it outside the balance sheet within the causality structure. Within the balance sheet what you call investment relates precisely to what you call saving within that balance sheet. And that’s because if you call expenditure on something investment it instantly creates the equal and opposite saving – because that’s what double entry requires.

      The whole problem with the S=I+(S-I) approach is torturing residuals to try and express something that would be better expressed in a different way.

      If you say capitalists are dirty profit hoarders and that’s why things never clear, then there is something to go on. Probably pointing out that the capital debates established that about 40 years ago, and are (I presume) implicit in the MMT analysis.
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      L. Randall Wray · 111 weeks ago
      Neil I pretty much agree but you can get both the flows and stocks in the accounting, as shown in the original Ritter piece (which I am pretty sure is what Wynne originally used to derive his approach). There is an identity for both flows and stocks, obviously. Again, so much time would have been saved if instead of trying to derive the silly and flawed equation, the developer would have taken a couple of economics classes.
      – See more at: http://www.economonitor.com/lrwray/2013/12/11/mmt-often-imitated-never-duplicated/#sthash.XL70Yhgc.dpuf

  68. Some Sunday Morning Henry George.

    Audio. ( yours truly imagination of the event with sound effects)

    https://www.youtube.com/watch?v=DQ3d5NAvapo

    Full Transcript.

    http://www.cooperative-individualism.org/george-henry_peace-by-standing-army-1894.htm

    ´´As long as politics is the shadow cast on society by big business, the attenuation of the shadow will not change the substance´´.
    Quoted in John Dewey and American Democracy by Robert Westbrook (Ithaca: Cornell University Press, 1991), p. 440; cited in Understanding Power (2002) by Noam Chomsky, ch. 9, footnote 16; originally from “The Need for a New Party” (1931) by John Dewey, Later Works 6, p. 163. (Via Westbrook.)

    ´´Capital is a result of labor, and is used by labor to assist it in further production. Labor is the active and initial force, and labor is therefore the employer of capital´´.
    Henry George

    Regarding re-branding dissent.

    ´´He who sees the truth, let him proclaim it, without asking who is for it or who is against it´´.
    Henry George

  69. Wesley – Complexity January 31, 2016 at 5:12 am #

    Sorry -try this one…
    https://www.google.com/url?sa=t&source=web&rct=j&url=http://web.mit.edu/2.75/resources/random/How%2520Complex%2520Systems%2520Fail.pdf&ved=0ahUKEwjv6vbyl9PKAhXLGx4KHdjiAXQQFgggMAA&usg=AFQjCNHXlnkUVpuWA6hMwy22ClryqlUAKw&sig2=LmwCc1HAnq2ym771DH_GeQ

    Google how complex systems fail… PDF @ MIT.edu.

    Hi Wesley,

    Its a nice summary and generalisation of a huge feild,

    Hoefstader

    https://www.youtube.com/watch?v=n8m7lFQ3njk

    Wolfram

    https://www.youtube.com/watch?v=_eC14GonZnU

    This is a great site for messing around with mathematical conumdrums.

    http://www.wolframalpha.com/

    Topolsky. ( biology has a lot to teach us, mother nature and all that.)
    Limits of reductionism and Chaos

    https://www.youtube.com/watch?v=cwaRtew-CIU

    Emergence and Complexity

    https://www.youtube.com/watch?v=o_ZuWbX-CyE

    I am myself a modeller of non linear systems, Guitars and Valve Amplifiers I never confuse my models for the real things they model if my models were left running on my computer making amplified guitar sounds an actual instrument would not emerge.

    Guitar modelling

    The coding bit

    https://www.youtube.com/watch?v=05FuBKPvTgs

    The Analog bit

    https://www.youtube.com/watch?v=Trb3UAXWNn8

    The real system. Building your own guitar.

    https://www.youtube.com/watch?v=uIlV8FLqUns

    when will we know
    for then to tell
    how as energy we flow
    through fates sweet sorrow

    https://www.youtube.com/watch?v=1aiPnve6Iwc

  70. http://positivemoney.org/2015/03/positive-money-versus-modern-monetary-theory/

    From our perspective, there are some really good points that apply for both MMTers and us. The only thing we would want to point out here is that the main argument for our reform is not about transforming “…the current endogenous money system into a true loanable funds system”. While we seek to ensure that banks function as genuine intermediaries, we are more concerned with returning the power to create new money to an accountable body working in the public interest, and removing the dependency on debt-fuelled growth.

    The primary difference is that money could be created endogenously in a Positive Money system, if voters and the incumbent government chose to do so, by allowing banks to have overdrafts at the Bank of England. In contrast to the current monetary system, Positive Money proposals would give the Bank of England more flexibility, allowing it to choose when to slow down the rate of creation of new money directly, rather than trying to restrain the creation of money by the banks.

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    Clint Ballinger

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    Discussion on Positive Money 1 comments
    To what extent can Positive Money and Modern Monetary Theory join forces?
    Clint Ballinger
    Clint Ballinger 7 months ago

    Just now ran across this – excellent article, thank you for breaking my article down in a clear and thoughtful way. I may have a few responses when I have some time.
    I guess my main one would be that I agree that the purpose of PM reforms is not to create a loanable funds system per se (PM goals are about power, dependency and accountability as you say). But the effect, in a language MMT and Circuit Theorists will understand (as well as even orthodox ‘economists’), is to create a loanable funds system, and my intent on highlighting this term is to unify/clarify the dialogue between the various groups involved. The result of changing to a loanable funds system in the way PM proposes would be to return the power to create new money to an accountable
    body in the public interest & to remove the dependency on
    debt-fuelled growth.
    Cheers, Clint

    Its worth reading the whole article .

    1. http://clintballinger.edublogs.org/2014/10/12/endogenous-mmt-pm/

      On the AMI, PM, monetary reform side –

      Realize the danger of being thought “not to get” endogenous money (or of actually not getting it for those in group I above). Educate those who still talk about “full/fractional reserves” and a money multiplier that these are just not the issue. Irrelevant terms such as full/100%/fractional reserves immediately suggest that the banking system is simply not understood. The loanable funds system PM and others propose is a “no reserves” system, not a full reserve system. PM type proposals are about changing the endogenous money banking system to a (no reserves) loanable funds system.
      Strongly support MMT proposals that get part of the way to your goals, even if you ultimately want further changes. Warren Mosler’s proposals go a significant way towards reducing negative aspects of the current endogenous money system and are in accordance with PM type views; two in particular:

      “Banks should only be allowed to lend directly to borrowers and then service and keep those loans on their own balance sheets.”

      “Banks should not be allowed to accept financial assets as collateral for loans.” (Mosler)

      Both of these would significantly alter and restrict the current endogenous money system in ways that move the system towards PM and similar plans’ goals. Indeed, PM itself lays out what their ultimate goals (brief version here) are and separately shorter-term goals that in part are similar to what many MMT and similar proposals for bank reform want.”

      Link to full article by Clint Ballinger.

    2. returning the power to create new money to an accountable body working in the public interest

      In other words, they’re idiots who, like Roger and Wesley, cannot understand the distinct difference between government money and bank credit.

      These loons think that currency issuing governments borrow their money from banks.

      Why would an anarchist who wants to banish state money and central control promote this undemocratic government and central control by technocrats?

      Loons. Utter loons.

      1. Johng,
        have you even read the linked articles?Have you read the comments where actual discussions where people consider and reflect without adhominen?
        MMTism against the world is a bunker mentality that is not going to result in any sort of resolution towards a fairer system.
        Auburn Parks
        October 22, 2014 at 21:06
        ……

        Again, wrt Roche. Saying MMTers believe that Govt has a monopoly on money creation is a strawman. It is a misrepresentation. Given that you’ve made the same error, I guess its no wonder why you dont mind when Roche does it. Anyone can create MONEY, only the US Govt can create actual US DOllars, otherwise they are counterfeit.
        Reply
        clintballinger
        October 23, 2014 at 01:15

        “None of this limits the technical ability of the TSY to spend” –
        No one says it does; MMT is very clear that inflation is the primary limiting factor; there is good reason to suspect that endogenous money creation exacerbates inflation.

        “Obviously you don’t know the arguments, MMT never says that “money” is a monopoly of the state”
        Mosler – “Money is a ‘simple public monopoly.’” Yes, they are often more specific and say HPM. You are avoiding the discussion – which is precisely this: Do those other types of money present difficulties for a “state theory of money”? Should they be limited?

        “Anyone can create MONEY, only the US Govt can create actual US DOllars”
        Again, you insert the word “actual” when you need to; what most people think of and use as US Dollars are the “dollars” in their checking accounts; this is virtually all endogenously created private credit-dollars, not HPM. Again, the discussion is about what the effect truly is on the gov and its abilities to control inflation while carrying out functional finance. And who benefits really from allowing banks to create private credit-dollars? Does this lead ultimately to systemic corruption?

        “Again, this is all political and has nothing to do with MMT and the way Govt’s do and can spend their money.” Auburn – read Steve Keen’s work closely, and Bill Black’s. Endogenous money creation is precisely at the intersection of government, money, the private sector and seems to influence that nexus in ways that are beyond just politics, indeed are systemic. Again, the very question is whether, b/c of influence on the FIRE sector and through automatically exacerbating inflation the endogenous money system should be limited for pubic purpose.

        “PM-type groups think that issuing TSY securities is “borrowing” just like neo-liberals use the term.” Can you clarify and provide citations please? PM type groups essentially want to circulate zero-interest permanent TSY notes. They, like MMT, know the gov does not need to issue tsy bonds for money; bonds might serve some other uses that MMT has usefully pointed out. “Tsy securities” is vague, and remember I pointed out there are two basic groups of money reformers. So please be more specific and give sources.

        (PS you may enjoy TOWARDS A PURE STATE THEORY OF MONEY )
        http://clintballinger.edublogs.org/2013/03/05/towards-a-pure-state-theory-of-money/

        Take heart Johng, MMT as a proposition is not damaged by your perception that others are misunderstanding it, it is the person who misunderstands the proposition who loses something the proposition itself if true stands unmolested.

        As Epictetus teaches us it seems so to you, I will, not trouble myself further,.

        42. When any person harms you, or speaks badly of you, remember that he acts or speaks from a supposition of its being his duty. Now, it is not possible that he should follow what appears right to you, but what appears so to himself. Therefore, if he judges from a wrong appearance, he is the person hurt, since he too is the person deceived. For if anyone should suppose a true proposition to be false, the proposition is not hurt, but he who is deceived about it. Setting out, then, from these principles, you will meekly bear a person who reviles you, for you will say upon every occasion, “It seemed so to him.”

        http://classics.mit.edu/Epictetus/epicench.html

        1. Why are you cluttering up the comments with comments from other blogs?

          I commented on a specific point as per the quoted text.

          Are you always this obtuse?

          You and Wesley haven’t done much bar ad hominem, so heal thyself, you self unaware old goat.

          Yes I have read the articles and yes, as per the comments the writer misunderstands PM’s position.

          I note that, as always, you have not actually responded to my point.

          So don’t be trying to teach me manners you rude ignorant fool.

          You’re as bad as your extremist right wing mate at dissembling and ill mannered intellectual dishonesty.

          1. Johng,

            The comments from the other blogs demonstrate that plenty of other people have discussed MMT and other hetrodox economic positions without spitting out their dummies.
            JohnG there are links to very good analysis of MMT and the various factions around the central position.your interjections are frankly useless.

            You continue to claim that my positions are obtuse or that I am engaging in personal attacks on you personally this is simply not the case.

            I am now at the end of my patience with you John G and this is a personal statement to you. I have nothing further to say to you.

            JohnG February 1, 2016 at 8:03 am #

            returning the power to create new money to an accountable body working in the public interest

            In other words, they’re idiots who, like Roger and Wesley, cannot understand the distinct difference between government money and bank credit.

            These loons think that currency issuing governments borrow their money from banks.

            Why would an anarchist who wants to banish state money and central control promote this undemocratic government and central control by technocrats?

            Loons. Utter loons.

            Your comment

            ”I commented on a specific point as per the quoted text.´´

            Are you always this obtuse?

            Do you seriously expect anyone to engage with that?
            Johng you have lost any respect I could possibly have for your position I am done with you.

          2. The comments form the other blog demonstrate that plenty of other people have discussed MMT and other hetrodox economic positions wothout spitting out their dummies.

            Yes but they’re not occurring with people like you two are they? You’re not discussing anything.

            Trying to discuss anything with you is like trying to nail jelly to a wall but a lot less fun.

            And yes Roger, it’s damned rude.

            If you’re not being deliberately obtuse, then you must be as thick as mince.

  71. Wesley - The Re-Branding of Henry Ford

    On the Re-branding of Henry Ford in 1921, in the matter of Muscle Shoals and his ideas concerning the “Energy Dollar”:

    [Background:
    Henry Ford and Muscle Shoals
    The onset of World War I brought about an urgent need for the production of the synthetic nitrates used in nitrate explosives. To that end construction on Wilson Dam and the two nitrate plants began in 1918; a number of sites were originally in the running however President Woodrow Wilson chose the Muscle Shoals, signed the bill authorizing construction, and the dam was named after him. Ironically, construction on the two nitrate plants was completed just in time for the signing of the armistice which ended World War I. The Dam however was not completed until around March of 1926. Thus the vast government complex sat idle. Enter Henry Ford. Wednesday, June 15, 1921, residents of Florence were surprised when automobile magnate and industrialist Henry Ford (1863-1947) arrived in Florence for a surprise inspection tour of the Wilson Dam and US Government Nitrate Plant No. 2.

    Ford told Shoals residents that he was a great believer in water power, using it whenever possible, building many of his plants where water was readily available. According to Ford: ”Water power made my profits.” Ford ultimately wanted to use the hydroelectric power generated by the dam to power his industries. When asked if he intended to build another automobile factory Ford responded that he had other plans for the Muscle Shoals. Ford envisioned a huge metropolis, 75 miles long, stretching from Seven Mile Island in the Tennessee River, all the way to Huntsville in Madison County. This giant city would employ one million people and would be a modern, decentralized, regional industrial center, but also a utopia of culture, education and recreation.

    Ford returned in December 1921. On this second trip Ford brought with him the great inventor Thomas Alva Edison (1847-1941). Ford had earlier enlisted Edison as his scientific advisor, since the famed inventor knew a thing or two about electricity and creating hydro-electric power with dams. According to the *Florence Times* they were met by a “tremendous crowd,” according to the *Florence Herald,* “a crowd which probably numbered not less than 2000 persons,” and Edison warmly greeted the children and shook hands with several people.

    When questioned by local reporters, Ford stated that his life’s work had been to abolish war. This was ultimately why he wanted the Muscle Shoals. Ford told attentive reporters of the *Florence Times* that if his proposal was accepted by Congress, it would abolish the gold standard, which Ford believed was the root cause of all wars. “Liberate business from slavery to gold, as a basis for currency, and you break the money-brokers’ control of world affairs,” Ford said. Gold, Ford stated, could be supplanted by the “energy dollar” produced by water power and other energy resources. His new dollar would “break the strangle-hold of Wall Street.” Displace Gold as the standard, and you eliminate war, Ford said. But it wasn’t really even necessary to abolish the gold standard, only to issue redeemable, non-interest bearing currency instead of bonds with their heavy interest charges, when the government needed to fund a project. Ford also stated that he didn’t want to own the Muscle Shoals, only to finish and develop it so that it could never be exploited for private ends.
    ]

    Naturally, the local press in Muscle Shoals was overwhelmingly positive, and since the idea had just been mooted, Mainstream Media covered the event without much spin:

    http://query.nytimes.com/mem/archive-free/pdf?res=9C04E0D7103EEE3ABC4E53DFB467838A639EDE

    Ford’s proposal to the government was to fund the operation without cost, by issuing currency against the property instead of interest-bearing bonds. Thomas Edison reiterated Ford’s belief that if this method of currency issuance were used in raising money for public-infrastructure improvements, the country would never return to the borrowing method. “Make it perfectly clear that I’m not advocating any changes in banks and banking,” said Mr. Edison. “Banks are a mighty good thing. They are essential to the commerce of the country. It is the money broker, the money profiteer, the private banker, that I oppose. They gain their power through a fictitious and false value given to gold. If everybody in the United States demanded gold for their money, there would not be enough gold.” [Wesley’s note: the ponzi-pyramid made legal by illegitimate laws only provided that a fraction of the currency in circulation be “backed” by gold]

    Edison goes on: “And it is the control of money that constitutes the money question. It is the control of money that is the root of all evil”

    Asked “How can this system be improved or changed?”, Mr. Edison replied: “It can come about in several ways. There is a complete set of misleading slogans kept on hand for just such outbreaks of common sense among the people. There would be new shrieks of ‘fiat money,’ and ‘paper money’ and ‘greenbackism,’ and all the rest of it…”

    [See the source article – and Edison’s reference to the 2%… He might be the original coiner of the 98%! The distribution of wealth is now much worse… ;-)]

    The great inventor continues:

    Edison: “The only dynamite that works in this country is the dynamite of a sound idea. I think we are getting a sound idea on the money question. The people have an instinct which tells them that something is wrong, and the the wrong somehow centres in money. They have an instinct also, which tells them when a proposal is made in their interests or against them.

    Based on soil and energy (Edison):
    “Now, as to paper money, so called every one knows that paper money is the money of civilized people. The higher you go in civilization the less actual money you see. It is all bills and checks. What are bills and checks? Mere promises and orders. What are they based on? Principally on two sources – human energy and the productive earth. Humanity and the soil – they are the only real basis of money.

    “Don’t allow them to confuse you with the cry of ‘paper money.’ The danger of paper money is precisely the danger of gold – if you get too much it is no good… There is just one rule for money, and that is, to have enough to carry all the legitimate trade that is waiting to move.”

    “Now here is Ford proposing to finance Muscle Shoals by an issue of currency. The bills are issued directly by the Government, as all money ought to be. They will be the same as any other currency put out by the Government; that is they will be money. They will be based on the public wealth already in Muscle Shoals, and their circulation will increase that public wealth, not only the public money but the public wealth – real wealth. When these bills have answered the purpose of building and completing Muscle Shoals, they will be retired by the earnings of the power dam. That is, the people of the United States will have all that they put into Muscle Shoals and all that they can take out for centuries – the endless wealth-making water power of that great Tennessee River – with no tax and no increase of the national debt.”

    Mr. Edison was asked, “But suppose Congress does not see this, what then?”

    Edison replied, “Well, Congress must gall back on the old way of doing business. It must authorize an issue of bonds. That is it must go out to the money brokers and borrow enough of our own national currency to complete great national resources, and we then must pay interest to the money brokers for the use of our own money. That is to say, under the old way , any time we wish to add to the national wealth we are compelled to add to the national debt.” [Ring any bells, JohnG???]

    Edison: “Now, that is what Henry Ford wants to prevent. he thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 – that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal…

    “But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good, also… the currency pays nobody but those who directly contribute to Muscle Shoals in some useful way. Both are promises to pay; but one promise fattens the usurer, and the other helps the people. Therefore it is the people who constitute the basis of Government credit. Why then cannot the people have the benefit of their own gilt-edged credit by receiving non-interest bearing currency on Muscle Shoals, instead of the bankers receiving the benefit of the people’s credit in interest-bearing bonds? If the United States Government will adopt this policy without contributing to the interest collector – for the whole national debt is made up of interest charges – then you will see an era of progress and prosperity in this country such as could never have come otherwise.”

    ============

    An interesting side bar in the same NYT article from 1921 documents that Henry Ford and Thomas A. Edison went on to visit the former home of President Andrew Jackson – most famous for his war with the banking establishment. Mr. Ford admitted that “I have everything that I could get hold of on the life of Andrew Jackson, and now that I am here, I want to say that this alone compensates for the trip.”

    1. Wesley - with Henry Ford

      Obviously, this kind of thinking was not to be permitted! Here’s what the very same New York Times had to say about Ford’s ideas on December 6, 1921. The irony of the statements made in this withering critique of Ford’s idea of a “new” currency system are mind-boggling:
      [
      MR. FORD’S ENERGY DOLLAR
      Henry Ford’s conception of displacing gold money by a unit of energy stumbles and falls headlong on the threshold of its proposal. “Under the new currency system a certain amount of energy exerted for one hour would be equal to one dollar.” Why mention the dollar? Would the new or the old currency be the standard of value? It would be idle to pass a law making them equal in value if in fact they were unequal. The value of currency redeemable in gold does not rest upon the law making it redeemable in gold. There are many present examples of currencies redeemable in gold by law which are not so redeemed, and are at a discount. The best currency in the world today contains items not redeemable in gold by statute, and yet which are equal to gold in reliance upon a mere declaration of policy of redemption in gold. Quantities of goods estimated of equal value by their owners must necessarily be equal in value to equal quantities of gold. Things equal to each other cannot be unequal, whatever the statutes may say.

      If Mr. Ford agrees to that, he must see his slip in lugging the dollar in as a measure of the value of his new measure of value. No standard is tried by some other standard. Any standard which needs such a comparison is disqualified as a standard. Gold is valued every time that it is offered in exchange for goods. Laws fixing the weights of gold in coins do not fix the values of the coins. The coins are valued by the exchanges of goods for them, not by the laws of coinage.

      Who would say how many dollars Mr. Ford’s unit of energy might be worth? If permanency of value is desirable in currency, it certainly is possessed more surely by gold than by energy.

      Every step beyond the threshold of Mr. Ford’s funny proposal reveals fresh difficulties. His patent money is not a basic patent, covering any principle. It is a mere patentable detail, of worth disproved by experience. The notion of a unit of energy is void both for lack of novelty and for violation of the principles of money. Impracticable as it is, it is better worth consideration than the idea that currency is cheap because it carries no interest. Losses of interest are trivial compared with the losses through currencies intrinsically bad. Non-interest bearing currency is one of the world’s greatest afflictions today. There is no greater delusion than that a cheap currency is desirable or that a cheap currency is cheap. How can Mr. Ford doubt this as he looks around the world today, or as he reads his history? But the latter question is superfluous. Mr. Ford does not read history, and flouts its teaching. It is only a few weeks since he said “History is bunk. What difference does it make how many times the ancient Greeks flew their kites?” So many kites like his present currency kite have been flown by Americans that there is no danger to them in this particular kite-flying proposal. Still, the “energy dollar” is likely enough to be the basis of a new currency system proposed by the Agricultural bloc in the House.
      ]

      1. Wesley and Wilson Dam

        So what happened?

        Well, first a little context. The period when these pieces were written, the US was just at the tail-end of a massive economic depression caused first by the artificial inflations of exploding Federal Debt induced by WWI spending. The FED and the Government did exactly the opposite of what is being prescribed now – they slashed the fiscal budget and hiked interest rates. From 1919 to 1920, fiscal outlays were slashed by 65%, and then by almost another 50% to 1922. The FED’s discount rate was raised to 7% by June of 1920. The system was rapidly purged of a credit-induced bubble. The FED and the banking system then spent the rest of the Roaring 20’s inflating another massive credit bubble, culminating in the next Great Depression.

        What happened to Ford’s Eagle Shoals proposal? A Republican lead the charge to keep the entire project from being privatized! The Wilson Dam was not completed until 1924 at staggering costs. It was incorporated into the Tennessee Valley Authority in 1933 and part of FDR’s New Deal push. No currency was issued based on the energy production of the dam.

        1. Wesley - Ford's Revolution

          ”It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
          Often attributed to Henry Ford Sr.

          There are enough references to these words being attributed to Henry Ford, that I sought to validate their provenance… Accuracy matters. It seems that Wikipedia and my other sources were unable to validate a definitive source. However, there are multiple paraphrase references to this attribution in reliable source material (including the Congressional Record) dating back to the 1930s (while Ford was still alive) to provide a level of confidence that though these may not have been his EXACT utterances, his views on the monetary system were widely known. My research in this regard leads me to conclude that Mr. Ford would likely not disavow such sentiments, and would likely be pleased to know that these attributions, if not his exact words, were still being propagated even today.

          http://skeptics.stackexchange.com/questions/18247/did-henry-ford-predict-revolution-if-people-understood-the-banking-and-monetary

          http://www.unz.org/Pub/SocialJustice-1937apr19-00008

          This citation is quite important – coming from a Farm Belt Senator (confirming the Ford quote) and making reference to actual minutes of proceedings of the Federal Reserve and their forcible contraction of credit and increase in interest rates I referred to above. The point of view of looking at the “purchasing power of interest…” is a VERY helpful insight into our current blight, as well:

          “They wanted to make money scarce,as thereby they could increase the purchasing power of interest, so It would crowd down the price level of labor and the products of labor, and so that interest could buy more, as it was a fixed charge.”

          Price stability in my view, involves much more than just the perceived value of a basket of goods, but ALSO involves the stability of the rate of interest. This is seldom discussed – and obviously our rate of interest (leading up to the GFC) has been in a roller-coaster, with gravity being the seemingly dominant force… It’s my view that the tampering by a group of un-elected PhDs with the natural formation of interest rates structures (along the whole curve) artificially, and the vast, incalculable damage this inflicts on the price levels of almost everything else, is a crime. Regulation, ala Professor Black is indeed necessary (or at least the uniform enforcement of just laws), but price-fixing has always been shown to be counter-productive. Centrally-planned rate-setting by the FED (and other Central Banks) is a disaster!

          1. The ‘natural rate’ of interest is zero.

            But you don’t understand the monetary system even on a superficial level, so you won’t understand why the Fed does what it does or doesn’t do.

          2. Wesley - Naturally!

            I’m tempted to refer you to Roger’s wonderfully creative auto-bot discussion, but I fear watching it again for the hundredth time for some laughter, will take more time than a simple, common-sense reply…

            The only place where the “Natural” Rate of interest is zero is in the exhortations of Christian and Muslim teachings… where even there, the threat of burning in some form of hell or being united with 90 Virgins has not been very effective — else the State, (through the Federal Reserve; the ECB; SNB; BOE and dozens of other Central Banks of credit issuing countries) has resorted to force to manipulate interest rates. Simple proposition JohnG: if the “Natural” rate of interest is Zero, then why shouldn’t we just let man agree to exchange credit-money’s at their natural rate without the interference of State? Are you sure man’s Time-Preferences for “money” will naturally see him loaning his purchasing power today, for it’s repayment in 10 years, for ZERO? And, what of the evil Saver? The woman who works for her entire productive live, with the expectation that during her retiring years, she will be able to loan the excesses of her production (Money saved) to entrepreneurial functions (Notes and Bonds) for income? The real, honest, method and purpose of banking?

            I suppose there IS one other place where the “natural rate” of interest is Zero: the MMT gospel – a place where the natural laws are suspended, (something to do with KoolAid) – where force of State is used to make things happen “naturally”. Elsewhere, JohnG, the natural rate (confirmed by the Archaeological record for thousands of years) is something quite above zero (and I’m not talking about the MMT Black hole of Negative interest rates!).

            When you spout these MMTisms, without any form of logical argument supporting them, you perform a disservice to the readership, and to your fellow Kool-Aid drinkers… Naturally, this will likely have you reacting violently, so if you do feel those uncivilized urges welling up in you again, please go to:

            https://youtu.be/195HTzx31So

            I’ll see you there! Cheers…

      2. Wesley - on irony

        How the public dialogue has shifted! How was this done? The amount of bitter irony in the record presented by just this one case is truly astounding. Just think about the massive non-democratic transformations that have taken place around the monetary system since that time. In the context of this incredible posting on dissent, I took note of a number of seemingly timeless themes still being manipulated:

        Public dialogue clearly understood that the currency, though represented as being redeemable in Gold – was NOT redeemable in gold. Banking laws enacted in the country decades earlier had already legitimized the fraudulent issue of multiple simultaneous claims to one single object. This version of the fraud was successful right up until FDR was forced to close the banks, and seize the gold forcibly from the American Citizenry – and yet the man on the street still had no clue as to what had really happened!;

        The difference between direct emissions of “money” by Government without debt (zero coupon Treasury issues), and bank issued credit-money based on interest-bearing public debt was better understood then, than now – but still not one in a thousand understood the process;

        All attempts to issue debt-free units of purchasing power have been defeated by the banking lobby since the formation of the country (Continental Scrip; Greenbacks; Gold and Silver Certificates);

        Ford recognized the inherent fraud in the so-called Gold-standard of the 1920’s, and the power emanating from a “fictitious and false value” being assigned to the currency by force of law;

        The people of the time well understood the difference between Money and Credit – (“bills and checks” – “promises and orders”);

        Ford’s idea embodied the essential function of retiring the currency based on the REAL output of the dam – energy; his currency was self-liquidating;

        The irony of the outcry by the MSM concerning “fiat” credit-money issue (NYT article) and fixing the value of something by statute. I especially liked the concept that the unit of money (gold) is valued every time that it is offered in exchange for goods or services. Each exchange constitutes a form of price discovery, if done freely, and without coercion of State;

        Incorrectly rejecting energy as a unit of MONEY, (which I find perfectly valid) the New York Times asserts that permanency of VALUE is an essential element of representative currency. Ironically, both gold and energy have maintained its purchasing power, and the unit of account used in the world (counterfeit credit fiat currency), obviously has not; In fact the NYT very criticisms of the Energy Dollar were the very same flaws that collapsed the so-called Gold Standard!;

    2. Wesley and Thomas A. Edison

      By the first quarter of 1922, The Commercial and Financial Chronicle, Volume 114, Part 1, was out with this:
      https://books.google.com/books?id=KT09AQAAMAAJ&pg=PR2&lpg=PR2&dq=henry+ford+and+%22energy+dollar%22&source=bl&ots=PLO5rpFm-j&sig=JbaMXexzFCcSKo43IB0rkHrkJE4&hl=en&sa=X&ved=0ahUKEwjf_fqEm9fKAhWEKB4KHUugCFo4ChDoAQgoMAI

      THE DREAM OF THE “ENERGY” DOLLAR
      Mr. Edison submits some questions to bankers by which he apparently expects to bring the reductio ad absurdum to bear upon criticism of the notion of his friend Henry Ford that currency issued against the potential productivity of water-power (as at Muscle Shoals) and against the resources of the country, realized and to be realized, would have the qualities of service and safety which inhere in all sound money. He first asks bankers what would be, in their opinion, the approximate value of an ounce troy of pure old if all Governments of the world demonetized that metal. As literally put, this question hardly admits answer, because the “value” must be state by reference to some standard, and the question itself assumes that standards have departed. If the value inquired for is to be expressed in paper, the answer would be utterly out of the question, as if one attempted to predict the gold value of the German “mark” a twelvemonth hence; but the most reasonable expectation is that in the case imagined the gold would have at least as high a purchasing power as it has now. None of its qualities and uses as mere metal would be affected. If, however, a general abandonment of it as a monetary basis by all Governments at once could be imagined that would be chaos complete, and it is not worth while speculating what the results would be.

      Mr. Edison asks how paper issued against only 50% of the value of necessaries in Government warehouses could be unsound and could produce inflation; why the equity left in the warehouses could not be discounted at commercial banks; whether the farmer would be moved by the situation to overproduce; and how here could be greater danger of overissuing paper than there is now, when there is overissue on the gold basis. These questions may be reduced to one: what necessity is met and what service is rendered by gold as the basis of circulating money and the standard of values?

      To this the answer is that while iron ranks highest among known metals in intrinsic utility the “precious” metals are justly so called because, in addition to peculiar usefulness in certain arts, they possess qualities which make them unique as the ultimate “money” and as furnishing an indispensable standard and measure of values; thus, they are exactly suited for subdividing and marking in coinage, and their scarcity and the difficulty of getting them from their depositories in the earth are the best guaranty against overabundance and consequent depreciation, although this guaranty is not quite perfect. Mr. Edison might have put another question: what would happen to mankind in consequence – if they became as plenty and as easily gathered as the grass of the field? They represent labor and substance, because labor must be expended to get them and they cannot be obtained except in comparatively limited quantities.

      If, says Mr. Edison, “fiat” money in any currency not redeemable in gold at par, no nation ever had or ever will have gold enough to thus redeem all its paper. But he does not thus succeed in turning the dilemma upon those who reject his theory. It has always been contended by fiat-money advocates that the Government stamp gives money its value, whereas “the” dollar is 25.8 grains of gold 90% fine and the mint’s stamp merely certifies to the substance and purity of the coin. This country has had ample experience with fiat or irredeemable currency, to its long-continued loss and sorrow; but redemption on demand does not imply or require having in hand a stock of gold against the currency, dollar for dollar. No bank could pay, in any forms of money, its entire deposits in the afternoon, and few if any could meet the call for settlement at the clearing-house in the morning if its entire deposit account were presented; a reserve equal to ordinary or probable need suffices.

      [Wesley note: one needn’t read an inch further in 1922 to have known where this bastion of Establishment thinking was coming down on the issue of a debt-free, fiat currency issue. The writer at once blatantly asserts that issuing multiple, fraudulent money-like claims for redemption into Gold is Okay, but issuing a fully redeemable currency based on actual production of energy is Baaaaaaaad]

      “In our present paper currency, the “silver” note sets forth that a silver dollar has been deposited and can be had by presenting the certificate therefor; the Federal Reserve note and the National Bank note respectively set forth that the United States and the bank will pay the bearer on demand the sum stated; the greenback legal-tender note likewise promises to pay on demand; but none of these forms of paper affirms that it IS a dollar; it merely promises to pay a dollar in exchange. When Mr. Edison tries to show that we are now on the basis of irredeemable and representative money by citing the fact that all the paper could not be simultaneously redeemed in gold if demanded he merely shows that he does not clearly comprehend the subject. [Ring any bells, JohnG??]

      It is, however, entirely true that money is in an essential and substantial sense “representative.” Here is where Mr. Edison, in unreservedly adopting the fantastic notion of his friend Henry Ford on this subject, permits himself to go hopelessly astray. Banks discount paper against stocks of actual substance, and it is true that, in a sense, all paper currency has behind it not only the real resources of the issuer but the entire realized or potential wealth of the country, giving here to “wealth” a very broad meaning. Mr. Edison likens currency issued against water powers owned and leased by the Government (the Muscle Shoals scheme) to 100 millions in first mortgage bonds of the Union Pacific Railroad. Here he compares things utterly unlike. A sound lender takes as security something which already is, not things which are to be or may be; real property improved and already earning its way is a good mortgage basis, but vacant land is not; the distinction must be entirely clear. The Union Pacific or any other good road is accomplished and existing value, not something which may be or may not be and whose potential substance is a matter of the future and faith. Nobody knows what the Muscle Shoals or any like scheme will become “good” for, and if currency is to be issued against projects still in the air it could be issued against next season’s crops (a borrowing recourse too often and too largely used in the past) or against the potential value of inventions still to be made, or against a dozen other things, or even against the “country” itself. [W: Oh my – do you mean against the tax base?]

      Mr. Edison tries the dilemma again by saying he would like to know why not, if currency issued against water-powers and the like potentialities is not sound money. The answer is that such currency has not definite substance behind it (or close enough behind it) and that there is therefore no fixed limit to its volume. This notion which he has adopted might be caught up by the bonus advocates in their desperation, and one of them has declared that Alaska alone could answer the demand for bonus money. Possibly Alaska could, if given sufficient time; but there is a shorter cut to national misery than any yet suggested, for it would be physically possible to print within a twelvemonth fiat legal-tender paper enough to cover the nominal needs of the most generous bonus, and this paper could have behind it all our national resources and future, thus being “energy” money.

      But energy money would doom energy to idleness and want. The curse which clings to fiat paper is that, like other forms of falsehood, “uttering” it at all compels increasing its volume, in the attempt to keep up with its loss of purchasing power; here is a slide towards economic destruction which has no fixed stop. If our own past experience is not lesson enough Europe is now furnishing a terrible example.

      Mr. Edison is unique; he has been a great benefactor of mankind, and the only just feeling towards him is that of respectful admiration; yet he also has his limitations, and he meets them when he turns aside from his own special lines of study. Unhappily, we always have many who misunderstand the duties and powers of Government and suppose that its mere imprint turns promises into good money, of which they think there cannot be too much. Because of Mr. Edison’s fame it is of consequence that the mistaken notions on currency and economics which he indorses be not left to circulate without challenge.

      ]

        1. Wesley - Electric!

          The efficacy of Alternating Current had been settled for 30 years at the time of this monetary proposal JohnG. Only an MMTer might try to rewrite history and suggest that Edison was not a man of reason and logic – and his countless patents are testament to such.

          The explanation of how MMT is like Alternating Current is so incredibly bizarre that even those under the spell had trouble making the connection – and of course your link bears no relation whatsoever to the branding of a man who proposed monetary reform… More Koolaid please?

          In any event, your link is a complete non-sequitur to the concept of a unit of energy being a valid basis for a form of money, and another blatant attempt at distraction and subterfuge.

          As far as linking Ford’s anti-Semitic prejudices to a discussion of the Re-branding of Henry Ford and his views on a new monetary construct, it actually took you longer than I’d predicted. Glad to see you’re looking at the merits, as usual JohnG! Surely you are now qualified to make ad-hominem remarks about my personal views now too, given the fact that I’ve mentioned Henry Ford by name, yes? LOL..

          1. The Horror of Rothbardian Natural Rights

            Murray Rothbard adopted a natural rights ethics to justify his system of anarcho-capitalism. I have already written a post here showing the logical foundations of his ethical system are incoherent and unconvincing.

            John Maynard Keynes once wrote of Hayek’s book Prices and Production:
            “The book, as it stands, seems to me to be one of the most frightful muddles I have ever read, with scarcely a sound proposition in it beginning with page 45 … It is an extraordinary example of how, starting with a mistake, a remorseless logician can end up in Bedlam.” (Keynes 1931: 394).
            With the requisite changes, one can say that same thing about Rothbard’s ethical theory.

            When judged by the standards of most other ethical theories (whose starting propositions and arguments are at least not so obviously false as natural rights), the logic of Rothbard’s theory takes him to conclusions that can only be described as moral insanity.

            This can be illustrated in Rothbard’s argument for why parents should actually have the legal right not to feed their children and even kill them by starvation or neglect:
            “Suppose now that the baby has been born. Then what? First, we may say that the parents-or rather the mother, who is the only certain and visible parent-as the creators of the baby become its owners. A newborn baby cannot be an existent self-owner in any sense. Therefore, either the mother or some other party or parties may be the baby’s owner, but to assert that a third party can claim his ‘ownership’ over the baby would give that person the right to seize the baby by force from its natural or ‘homesteading’ owner, its mother. The mother, then, is the natural and rightful owner of the baby, and any attempt to seize the baby by force is an invasion of her property right.

            But surely the mother or parents may not receive the ownership of the child in absolute fee simple, because that would imply the bizarre state of affairs that a fifty-year old adult would be subject to the absolute and unquestioned jurisdiction of his seventy-year-old parent. So the parental property right must be limited in time. But it also must be limited in kind, for it surely would be grotesque for a libertarian who believes in the right of self-ownership to advocate the right of a parent to murder or torture his or her children. We must therefore state that, even from birth, the parental ownership is not absolute but of a ‘trustee’ or guardianship kind. In short, every baby as soon as it is born and is therefore no longer contained within his
            mother’s body possesses the right of self-ownership by virtue of being a separate entity and a potential adult. It must therefore be illegal and a violation of the child’s rights for a parent to aggress against his person by mutilating, torturing, murdering him, etc. On the other hand, the very concept of ‘rights’ is a ‘negative’ one, demarcating the areas of a person’s action that no man may properly interfere with. No man can therefore have a ‘right’ to compel someone to do a positive act, for in that case the compulsion violates the right of person or property of the individual being coerced. Thus, we may say that a man has a right to his property (i.e., a right not to have his property invaded), but we cannot say that anyone has a ‘right’ to a ‘living wage,’ for that would mean that someone would be coerced into providing him with such a wage, and that would violate the property rights of the people being coerced. As a corollary this means that, in the free society, no man may be saddled with the legal obligation to do anything for another, since that would invade the former’s rights; the only legal obligation one man has to another is to respect the other man’s rights.

            Applying our theory to parents and children, this means that a parent does not have the right to aggress against his children, but also that the parent should not have a legal obligation to feed, clothe, or educate his children, since such obligations would entail positive acts coerced upon the parent and depriving the parent of his rights. The parent therefore may not murder or mutilate his child, and the law properly outlaws a parent from doing so. But the parent should have the legal right not to feed the child, i.e., to allow it to die. The law, therefore, may not properly compel the parent to feed a child or to keep it alive. (Again, whether or not a parent has a moral rather than a legally enforceable obligation to keep his child alive is a completely separate question.) This rule allows us to solve such vexing questions as: should a parent have the right to allow a deformed baby to die (e.g. by not feeding it)? The answer is of course yes, following a fortiori from the larger right to allow any baby, whether deformed or not, to die. (Though, as we shall see below, in a libertarian society the existence of a free baby market will bring such ‘neglect’ down to a minimum.)” (Rothbard 1998: 99–101).
            Even as it stands the argument is blatantly unsound:
            (1) Rothbard contradicts himself by asserting that a newborn “cannot be an existent self-owner in any sense,” yet arguing in the very next paragraph that every newborn “is therefore no longer contained within his mother’s body possesses the right of self-ownership by virtue of being a separate entity and a potential adult.” Thus the parents’ “ownership is not absolute.” It beggars belief that Rothbard can accept that no child can be killed by active attack, but at the same time can be killed by passive neglect.

            (2) According to Rothbard, even though the parents “own” their children in some limited way, they have the legal right to not feed it, and hence kill it by starvation. Rothbard attempts to justify this by appealing to negative rights:
            “the very concept of ‘rights’ is a ‘negative’ one, demarcating the areas of a person’s action that no man may properly interfere with. No man can therefore have a ‘right’ to compel someone to do a positive act, for in that case the compulsion violates the right of person or property of the individual being coerced. Thus, we may say that a man has a right to his property (i.e., a right not to have his property invaded), but we cannot say that anyone has a ‘right’ to a ‘living wage,’ for that would mean that someone would be coerced into providing him with such a wage, and that would violate the property rights of the people being coerced. As a corollary this means that, in the free society, no man may be saddled with the legal obligation to do anything for another, since that would invade the former’s rights; the only legal obligation one man has to another is to respect the other man’s rights.”
            Yet this argument blatantly contradicts Rothbard’s argument elsewhere that creation of fiduciary media (debt money such as fractional reserve banknotes) and use of this as money is not moral, because others suffer the effects of inflation and loss of purchasing power. Yet private transactions in which parties freely and voluntary create and use debt money must be regarded as moral by Rothbard’s own argument here: whatever effects free transactions using debt money have on others’ through inflation is not an argument for banning debt money, for “no man may be saddled with the legal obligation to do anything for another, since that would invade the former’s rights.” Thus Rothbard’s contention that only negative rights must be respected is not even a consistent position in his own work.
            It is quite apparent that the Rothbardian moral world is a grotesque, vile and cruel landscape, affording no protection to the most helpless human beings from irresponsible parents. This is a world where parents who are mentally ill, psychopathic or pathologically cruel can kill their children at will, albeit passively by withdrawal of care.

            It also raises other issues: if parents have a legal right to withhold food from a newborn child in Rothbard’s mad world, then what about a crippled adult child? If my 40 year old son is a quadriplegic, lives with me and is dependent on me, with no other person to support him, do I as a parent have the legal right to kill him by withholding food or care? Even when he is capable of clearly saying he does not wish to die? If not, why not?

            Logically, it appears Rothbard is equally committed to the legal right of parents to kill mentally or physically disabled adult children as well: and, at that point, Rothbard’s world would allow “private sector” groups of humans who, as in Nazi Germany, practise euthanasia of the disabled, even when the disabled vehemently object to being killed.

            For most people this is proof enough of the moral bankruptcy both of Rothbard and his natural rights theory, and it is difficult not to agree. (I also direct readers to a fine article by Gene Callahan called “Liberty versus Libertarianism” [2012] that discusses this passage on pp. 8–9.)

            As Keynes said of Hayek, one could also say that this is also a perfect example of how Rothbard, starting with flawed assumptions, himself ends up in utter Bedlam.

            http://socialdemocracy21stcentury.blogspot.co.nz/2012/06/horror-of-rothbardian-natural-rights.html

          2. https://en.wikipedia.org/wiki/High-voltage_direct_current

            A high-voltage, direct current (HVDC) electric power transmission system (also called a power super highway or an electrical super highway)[1][2][3][4][5] uses direct current for the bulk transmission of electrical power, in contrast with the more common alternating current (AC) systems.[6] For long-distance transmission

            It seems that there are a few aspects of Electricity distribution which is mangled in the analogy on the 3spoken blog post.

            FFT analysis is the go to technique to produce non linear oscillating systems. The geometries of simple sine waves is rather easier elctrical currents are conditioned by various techniques to make them linear by the use of such things as capacitors. Keens minsky is by far an away one of the best natural modeling programs for the essentially chaotic economy in the context of nature even the most nailed down economic rules will succumb to chaos as The Economy does ‘not exist in a vacuum.

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

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

            Nicola Tesla and Edison had quite a few rows and also JP Morgan was an adversary of Tesla as he wanted to ensure a monopoly for his copper interests.

            All this leads into consumerism and planned obsolescence.
            The Lightbulb Conspiracy – Planned Obsolescence
            https://www.youtube.com/watch?v=zdh7_PA8GZU

            This dutch documentary is very well worth watching regarding designing for re cycling and longevity.
            Documentary: The End of Ownership (VPRO Backlight)
            https://www.youtube.com/watch?v=oOO-pYUl9-w

            Currently reading this book,

            https://web.archive.org/web/20121021020841/http://www.max-neef.cl/download/Max_Neef_From_the_outside_looking_in.pdf

            ‘It is strangely moving to observe the persistent efforts of so many
            economists to promote their field to the category of a science devoid
            of contradictions, while physics-the inspiration of the economic
            mechanicism-gave up this pretence over fifty years ago. Just as the
            ‘Principle of Complementarity’ of Niels Bohr (1885-1962) emerged
            from the inescapable necessity of having to ac’cept that the electron
            may sometimes behave as a wave and sometimes as a particl~forms
            of mutually incompatible behaviour-so economic theories should be
            prepared to accept the co-existence of mechanical and entropic processes
            which also seem to contradict one anoth~r.´´p.49

            ”’Such an eutopic society, which I conceive as oriented by a political
            philosophy which I would identify (for the sake of giving it a name)
            as ‘humanist eco-anarchism’, consolidates, in my opinion, many of
            the possibilities for an adequate solution of the problem. But there
            can be nothing definite or permanent about even this attempt, for
            there lies a future beyond the future I can conceive, and that future
            could well place us at a new crossroads where everything would once
            more have to be rethought and reconstructed.” p.55

            Max neef makes some very cogent points regarding the mechanistic redcutionism of Economic theory, MMT and Circuit’ theory indeed the very notion of Money Qua Money in Economic theory seems the apotheosis of Redcutive idealism which is not tolerant of holistic philosophies.
            Max Neef on Democracy now,.
            https://www.youtube.com/watch?v=bBLDh0Rug14

      1. Wesley and the Onion

        More irony

        And so, in this bastion of Financial opinion formation, we have continued ironies:

        The concept of Sound Money versus Credit is found throughout (even an MMTer might notice the differences!);

        Asked to speculate on the demonetization of Gold, the writer practically throws up with a form of cognitive dissonance when asked to value something without a “standard”, that it would be “chaos complete” and most humorously invoking the wildly hyper-inflating German Mark. And yet today, the entire world has demonetized gold, its purchasing power is still intact; all the world’s Central Banks are doing everything in their power to debase their own currencies and achieve inflationary “liftoff” – and it is the almighty dollar that has lost nearly all its purchasing power!;

        You see repeated references to the “discounting” function: then, the Central Bank’s primary function was to issue credit that was self-liquidating based on discounted paper of actual economic activity. Real Bills represented real trade, real transactions, and real money. Money still bore some resemblance to real things, and these credit-type instruments never had a duration longer than 90 days, and were perfectly matched to actual trade;

        The almost quaint expression of the “definition” of a dollar (changed in 1873 from the Silver definition) to a weight and fineness of gold; The duo of Edison and Ford (and Soddy and others) correctly observe out loud the hypocrisy of issuing dollars that cannot be redeemed on this basis, despite the constant protestations to the contrary – it’s all smoke and mirrors, but the public is still “buying it”. Trust is a fragile thing, and this pair were suggesting that trust should be extended to an issue of self-liquidating credit money coming from someplace other than commercial banks! QUASH! The hypocrisy is mind-numbing;

        Ask a Central Banker to give you a legal definition of a Dollar today – and you will see them twist and turn uncomfortably; in 1921, even knowing the fraud of 5 claims to each token, there was some accountability, however flimsy. But even these “shackles” to the unlimited fraudulent expansion of fiduciary media by the banking cartel were soon to be shed. The Great Depression was the crisis that was NOT wasted on such quaint notions as accountability!

        Some parting humour:
        http://www.theonion.com/article/us-economy-grinds-to-halt-as-nation-realizes-money-2912

  72. http://bilbo.economicoutlook.net/blog/?p=1075

    A simple budget game!

    Here is an example to help you think about all of this economic jargon. The concepts are simple and the numbers are small which makes it easy to understand and relate to (thanks to Warren Mosler for the original idea for this heuristic).

    Imagine the economy is my household which is comprised of me (the parent) and you (the kid)! As the parent I assume the role of “government” and you thus comprise the non-government (private) sector. As the government I decree that I will offer 100 of my business cards per week, if you agree to tend the garden on a weekly basis. These are the cards I exchange at meetings with business associates outside of the household. They are normal size rectangles of cardboard.

    You say, naturally: “Why would I want your worthless business cards?”

    I reply (reflecting my knowledge of how modern monetary systems like the household work): “because to stay living in the house I expect 100 business cards a week to be paid in taxes”.

    You say: “when do I start work!”

    Immediately, by imposing tax obligations in the currency of issue (the business cards) I have created a demand for the currency and this allows me to transfer private resources (your work in the garden) to the public sector (the nice garden). However, also note that I have to spend the 100 cards each week before you can pay the tax of 100 cards – which clearly means that the taxation can never be considered a source of revenue which “finances” or allows me to spend the cards in the first place. The cards come from no-where and I have the monopoly rights to spend them. I am never financially constrained in my own business cards (the currency).

    So this sort of currency is what we call a fiat currency – being made legal by legislative fiat. It has no intrinsic worth and its value is tax driven. Just like the Australian dollar!

    Note that I probably would never “print” any cards. I would run some spreadsheet on the house computer and just keep “bank entries” to record all the outflows (spending) and inflows (taxation). All the transactions would just be numbers entered into relevant columns. If I slipped up and added a 0 to my spending one week, I wouldn’t have to “print” 900 new cards. You would be better off by 900 cards because it would show up as a deposit in your account. But nothing else would be required. Same as in the Australian economy.

    Now under these conditions, the household budget would be balanced each week: I spend 100 cards and you pay 100 cards. You are unable to accumulate any cards (that is, save) because you can only get access to the volume of cards that I make available via spending. Same as in the Australian economy.

    What if I wanted to teach you to save as preparation for managing your own affairs when you became an adult? Well the only way you can save is if I, for example, decided to employ you more each week and offered, say, 120 cards per week as wages (government spending) yet continued to tax you only 100 cards. The same effect could have been if I reduced the tax rate and held spending constant or a combination of increasing spending and reducing taxes.

    Whatever, and lets stick to the spending of 120 and the tax of 100, the budget now goes into deficit of 20 cards per week. You now can save 20 cards per week because my spending (the government spending) has provided the “finance” to permit you to do that. As the weeks go by you could accumulate more and more savings (numbers in the spreadsheet would increase) and you would soon see that the non-government saving over time is the exact record of the cumulative deficits being run by me (the government). Same as in the Australian economy.

    Now, you might want to make more money (cards) on your savings. The only way that can happen is if I offer you a government bond (a bit of paper saying that if you deposit your savings with me each week I will pay them back at some future time plus some interest all in business cards). So the offer of a new financial asset – the household debt instrument (the bit of paper) gives you a chance to compound your saving and maybe take a holiday – not work some weeks but still pay taxes!

    So the debt issuance in the household establishes a non-zero rate of interest in the household and increases your wealth. I didn’t have to issue the bond to keep running the deficits. The bond just replaced non-interest bearing savings (reserves in our “banking” system) with an interest-earning asset (the bond). Same as in the Australian economy.

    Now lets say I am reading some neo-liberal literature on the Internet which warns me against running budget deficits. As a result I get the feeling we have to get back into budget surplus to be a responsible government. So I tax 100 cards but cut my spending on garden work to, say 90 cards per week.

    Can you predict what will happen now? Well in that particular week there are not enough cards “spent” to generate the funds necessary for you to pay the tax. There are 10 cards short. The household (government) budget is in surplus for that week to the tune of 10 cards. But this shortage of cards liquidity in the private sector (that is, you!) means that you will:

    (a) Demand more work to earn the shortfall – noting that the household has now reduced employment levels (in hours) and there is some underemployment creeping in. If I made the example more complicated with 2 or 3 kids in the house I could have easily cut spending by not paying anything to one or more of the kids thus creating unemployment.

    (b) Try to sell some of your possessions to get some cards. In this simple case, you will offer your bonds (the bits of paper) for sale to get the funds. So the surplus starts to eat away at your wealth portfolio. I would be boasting like a neo-liberal would that I was running down the government debt – “getting the debt monkey off the government’s back” – which may help me sleep better – but you would just be feeling less well off (and maybe developing insomnia!).

    (c) Start to run down any savings that are not being stored in bonds. Either way you run down your wealth holdings.

    But in aggregate, the budget surplus is squeezing your card liquidity and forcing you to run down wealth. Same as in the Australian economy.

    If I kept running budget surpluses, you would eventually run out of assets and your labour would be severely underutilised. You might be able to persuade me to start lending you the money (I might set up a privatised bank in the household) and this would keep you afloat (paying the taxes) as long as you were prepared to accept increasing private debt levels. But this is not a sustainable option. Same as in the Australian economy.

    1. Wesley and the Aussie Wife

      And then the evil OZ-Wife, tells me, her first born child, that I am hereby granted the privilege of issuing business cards into existence, too. No printing required. I may make an entry in my OWN ledger, and credit my siblings (and even their friends) with cards – so long as they pay me back with cards at interest… I am only limited to expanding the total number of cards in existence by 2% per year, but as long as I observe some simple rules, I may create this same card-based purchasing power out of thin air. I can even purchase securities with them. My cards are exchangeable with your cards 1 to 1. They are fungible! Yippee – everybody’s purchasing power is now secretly, and unobserved slowly funneled in my direction – and I benefit each day from the labors of my siblings without more than lifting a pen to record my surplus. Mum is delighted. I’m a banker! Care for some bubbly?

    2. Wesley doesn't like business card design!

      JohnG – your attempt to mirror the MMT website here onto the GolemXIV site without even the most transparent linkage to the instant topic of “Re-Branding Dissent” is a form of theft. You are wasting the time of readers who come here to benefit from David’s insights, and other readers’ insights into his thoughts. You’ve made reference to your business-card dystopia in the past, together with brilliant links to their provenance. Any intrepid reader was free to follow them to their logical, non-nonsensical end. However, to pull that content over here in toto, is almost worse than your maddening, uncivilized insults. While I rely totally on the moderator of this fine site to determine suitability, I feel perfectly compelled to mentioned that this content, as well as the seemingly irrelevant Rothbard missive (inter alia), posted here without any form of insights, analysis or interpretation to the instant topic of Re-branding Dissent – has no interest to me. I know Yoda said, “There is no try – do or do not!” – but I would truly appreciate your trying not to intentionally waste my time. Print as many business cards as you like in the privacy of your own home, but at least your unprovoked insults were BRIEF, as well as laughable. Your boring attempt at filibuster should minimally contain something interesting or funny, no? BTW, while frantically looking for more content to mirror here and mixing KoolAid, please do NOT starve your kids or your animals JohnG… Not cool!

      1. You attacked me buddy. And pretty much all of your screeds of nonsensical bollocks since has been attacking me and MMT generally.

        Your hysterical verbosity and syntax is straight Rothbard.

        And, like Rothbard all his nutty followers when you get stumped and exposed, you change the subject and/or project.

        You’re a busted flush, kid.

    3. Wesley with Master Po

      Imagine, a-la David Graeber: a place in time before there were evil business-card tyrannies. You are born into a world of plenty, and you learn how to look after food, clothing, shelter, and even a bit of time for Spiritual pursuits – since Spirits go down nicely with your food! You enjoy tending your garden, so much so that you even grow some flowers in addition to all your foodstuffs, too! You tend, admire, eat, tend, admire – and contemplate all the lessons learned atop the mountain in Qingdao. Once in awhile, you’re able to vary your diet by trading your goods with passers-by. One day, a pretty girl lingers to admire your garden, and you admire hers too! Then, an evil Australian-man comes along and tells you that you are probably in danger of a terrorist attack. But, not-to-worry, if you give him 1/3 of your produce, he will protect you! Each year, in the springtime, as you are planting your new crop, he stops by to tell you he’s here to help you. Not to plant, but rather to sell you some business cards that you may pass along on his behalf. If you don’t buy his business cards, your crop will probably burn, says he. But if you DO buy 100 lovely business cards this year, you will only have to buy 102 business cards the next year – even if you don’t use them! Completely voluntary. Just like in the outback!

      https://en.wikipedia.org/wiki/Kung_Fu_(TV_series)
      Master Po: Close your eyes. What do you hear?
      Young Caine: I hear the water, I hear the birds.
      Po: Do you hear your own heartbeat?
      Caine: No.
      Po: Do you hear the grasshopper which is at your feet?
      Caine: Old man, how is it that you hear these things?
      Po: Young man, how is it that you do not?

      1. Wesley - hearing the grasshopper!

        Imagine… tending your garden, admiring your garden, consuming some part of your garden, and even managing to save a portion. Each year, this un-eaten part of your garden, perfectly preserved, perfectly divisible, a perfect embodiment of your time, devotions, and self-reliance grows larger and larger (though not exponentially!) NOT like the debt of a fiat-based economy. One day a passer-by, nick-named “Locust” is felled on her horse while passing through your land. You take her into your care, and using your hard-earned-savings and surplus, and trading that surplus with your community for things that you needed, ensure that Locust is returned to full health. With incredible gratitude felt by both parties, goodbyes are expressed and memories are made indelible. Many years later, Locust returns with her family, and eats your entire crop… Same as in the Australian economy. You continue to thrive on the bounty of your surplus, realizing that Locust wasn’t that attractive to begin with. Just like the Australian Dollar!

          1. Insights for the MMT temple of awesomeness.

            https://www.youtube.com/watch?v=195HTzx31So

            As wesley points out there is a lot of MMT explanation around the web that does justice to its undoubted insights and provides a tool to challenge the mis use of a design for money debt and credit which is deeply flawed democratically. Sadly there are a whole bunch of mmt’ists and a raft of mmtism fanatics who do not advance the aim of making the basic empirical observations of MMT widely appreciated simply because they are in no need of a hysterical fawning worship.

            Fanaticism and Fundamentalism breed a hatred of other approaches to matters subject to possibilities where ever they are found. It is fanaticism and Fundamentalism that breed the paranoia and bigotry that is leading the ruling class to re brand dissent.

          2. Oh naff off you heinous, hypocritical, old coot.

            Have a good look at yourself.

            Talk about double think. Not that you would admit it to yourself.

            The power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them … To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just so long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies – all this is indispensably necessary. Even in using the word doublethink it is necessary to exercise doublethink. For by using the word one admits that one is tampering with reality; by a fresh act of doublethink one erases this knowledge; and so on indefinitely, with the lie always one leap ahead of the truth.

      1. Wesley - with Adam Smith and Noam Chomsky

        Ahhhh… progress! You’re learning! Language matters! So now you know better than to blindly hurl labels out like so many tennis balls. Noam Chomsky, a hero who says what he means, and defines what he says. Just like Humpty Dumpty! Wonderful. One excruciating inch at a time… my hope is restored.

        To the real Adam Smith! It’s perfectly valid to seek that which ought to be… and that’s what Noam Chomsky has always advocated.

    1. This guy is quite sensible…

      Bravo! Bernard Lietaer – Why money needs to change now! –Published on Nov 29, 2014
      The current monopoly of conventional money is a main source for unsustainable behaviors. New currency designs – among which crypto-currencies, but not only crypto-currencies ! – can contribute to make the necessary shifts more smoothly.

      https://www.youtube.com/watch?v=M4ThwS1Xln0

      Discusses: inherent monetary instability; how the world’s economies are steaming straight for a wall. Mentions specifically the mathematical compulsory necessity of growth (will you accept the proposition from HIM, JohnG???); and the systematic redirection and concentration of wealth.

    2. “Academically MMT has not been challenged. And from what I study on it, they are right!”

      Shame he didn’t study MMT before he was involved in the disaster that is the euro.

      He’ll never wash that blood off his hands.

    1. Yeah, the problem isn’t unemployment and poverty. It’s all about rich, old, lazy, fat, musically talentless, white men preserving their unearned wealth at the expense of others.

      The reality is that crypto currencies are at best ponzi schemes and largely exist to facilitate tax evasion and promote illicit drug and arms trafficking and human sex slave trafficking.

      There’s your anti-democracy rationale right there.

          1. What an utterly pathetic excuse for a human being you are.

            Yet more evidence that thee block chainers are easy marks for the security services.

            Anarchists my arse.

  73. MMT auto bot, programmed default response.5

    https://youtu.be/195HTzx31So

    The examined life is not worth living.

    “It takes more courage to examine the dark corners of your own soul than it does for a soldier to fight on a battlefield”

    ― W.B. Yeats

    https://www.youtube.com/watch?v=xfD3X3f5C_w

    https://youtu.be/8jadVu0JscY

    http://www.cornelwest.com/

    http://www.zeitgeistfilms.com/examine

    Original track written and produced by Roger Lewis, featuring Cornel Wests amazing dialogue from the Movie the Examined Life.

    I discovered Prof. West through a Joint Interview with Simon Critchley and Cornel West on how to love.

    http://www.youtube.com/watch?v=UaxrHE

    http://pastebin.com/u8dhRUrW
    Verse 3 (Paranoid):
    We in the middle of a war and got a mission
    Exposing these ho’s as controlled opposition
    Listen, I ain’t hating or dissin
    I’m just trying to expand your vision (for real)
    It’s sickening the conditions we live in
    They’re trying to transform the planet to a prison
    Now most of these sheep, is half way asleep
    Sitting in their living rooms, watching their television (yea)
    But some of us is different
    We read the newspapers thinking who the fuck they kidding?
    We hate these politicians and it doesn’t really matter
    If their last name is Bush, Obama or Clinton
    We saw the twin towers and we thought – DEMOLITION!
    The powers that be said – BOY YOU GOTTA GET EM!
    You can tell em anything to make em feel like victims
    So long as Jesuits and Zionists are never mentioned

    https://www.youtube.com/watch?v=dYxcdQeAmC4
    Check it out!
    I revolve around science.
    What are we talking about here?

    Do your math
    One.. t-t-two.. three, four James Brown
    What are we talking about here?

    1. CRITCHLEY 2012 SHITISFUCKEDUPANDBULLSHIT

      https://www.youtube.com/watch?v=aq2k2VFKWOY

      The Anarchist Turn – Simon Critchley

      https://www.youtube.com/watch?v=8Y6ANkKyeZQ

      http://letthemconfectsweeterlies.blogspot.se/2011/07/democracy-2011.html

      Democracy 2011

      Pontificate, Certificate, Defecate.
      Agitate, Aggregate,, Obviscate.
      Repudiate, Obviate,Opiate,
      Satiate Fascist Hate

      HATE HATE HATE

      Pontious Pilate, Judas Kiss
      Politics of envy, Divide and Rule
      3 legged Milking Stool
      Mushroom Clouded vision
      Dark Room
      No Hope
      Fed Shite

      Ponzi State, Economic Bubble
      Death of Ethics, No Spiritual Revolution
      Satanic Absolution, Hypocritical Contortion.
      Legalised Extortion.

      Keep in Unstable , Wear your skin like Sable
      3 legged stools and uphill tables
      Tables turned and loyalties spurned
      Dark Room, No hope , Fed SHITE!

      DEMOCRACY? YEAH FUCKIN RIGHT::::

  74. Wesley - with Clint Ballinger

    Dissent – it’s a funny thing! Imagine focusing on ASSENT!

    Imagine focusing one’s attentions on areas of positive overlap! Imagine – MMT and Positive Money together, both now detox’d from their respective Kool-Aids having a cuppa’ together! Imagine, finding out that the most common criticisms of the PM propositions (by MMTers) are indicative of MMTers’ inability to read! Imagine, critiques of MMT (the horror!), also clearly originating from a lack of understanding (Krugman-style) of the actual reality of fraudulent, endogenous credit-creation in the private banking system! (PMers DO know how the system works, JohnG – no need to worry about any fractional-reserving money-multipliers over there!)

    http://positivemoney.org/2015/03/positive-money-versus-modern-monetary-theory/
    [”

    Ballinger also notes that both MMT and Positive Money are often unfairly criticized:

    “Many of the concerns with the PM proposal I have seen brought up are actually discussed in some detail in the PM literature…and it often seems that critics of the plan simply do not closely read PM explanations of the details of the plan.”

    “There are plenty of critiques of MMT – most of which are completely misguided and due to fundamental misunderstandings of the economy due to orthodox economic blinders.”

    Subsequently, concerns regarding both approaches are laid out. For Positive Money, Ballinger asks:

    “Would the new system of exclusively state money be able to create a fair system for large business loans? How would that system differ from the current system?”

    And for Post-Keynesians and MMTers, Ballinger asks:

    “Does the fact that endogenously created private credit-money dwarfs state money restrict the ability of the government to act in the public purpose in the way MMT believes?

    “Does this render MMT ideas on the role of the state in the economy unworkable? Does the inherent instability and pro-cyclical nature of endogenous money have too many social costs? Does the endogenous money system stealthily but inexorably lead to regulatory capture? …Lead to unsustainable levels of private debt? To highly inequitable wealth distributions?”
    “]

    Imagine – having a civilized conversation without waving a chain-saw around…

    1. Wesley - Not waving a chainsaw!

      I’ve just noticed that Mr. Balliger has “approved” of the analysis as being clear and thoughtful… Funny, no comments from the MMT world, with or without chainsaws!

      From the comments to that same link:
      http://positivemoney.org/2015/03/positive-money-versus-modern-monetary-theory/
      [
      Clint Ballinger • 7 months ago
      Just now ran across this – excellent article, thank you for breaking my article down in a clear and thoughtful way. I may have a few responses when I have some time.
      I guess my main one would be that I agree that the purpose of PM reforms is not to create a loanable funds system per se (PM goals are about power, dependency and accountability as you say). But the effect, in a language MMT and Circuit Theorists will understand (as well as even orthodox ‘economists’), is to create a loanable funds system, and my intent on highlighting this term is to unify/clarify the dialogue between the various groups involved. The result of changing to a loanable funds system in the way PM proposes would be to return the power to create new money to an accountable body in the public interest & to remove the dependency on debt-fuelled growth.
      Cheers, Clint
      ]

      Hmmmm? Dangerous thoughts eh?!! Removing the ability of the banking system to create debt-based fiduciary media from thin air. Thoughts like that can lead to revolutionary new paradigms. OMG!

      1. This,

        https://www.youtube.com/watch?v=t-o510T5jwM

        not this

        https://www.youtube.com/watch?v=195HTzx31So

        Verse 2: (Payday Monsanto)
        Aye yo Chris,
        I can feel ya like a hundred and twenty percent
        Haters and infiltrators are hell bent
        I wanna tie them up and make them repent
        And then find out by whooom they were sent
        These days they seem all out
        And if you know Payday, you know he’s balls out
        Alex Jones, he can’t stand criticism
        And I don’t trust him as far as I can spit it at em
        That’s the way it’s gotta be
        Until we know the details of the Council For National Policy
        I can only take a stab at it
        But what I do know is their agenda is very elaborate
        So who the fuck can we trust?
        When it comes down to the grizzle my nizzle
        I’m ready to bust
        Til the clip is empty
        These days I don’t even trust Gerald Celente

        https://www.youtube.com/watch?v=CHoJHrgZ41c&feature=youtu.be

        Cointel Pro

        This is a famous interview Chomsky gave inthe UK, this Cointelpro part goes with the Chris geo track the whole Marr Chomsky interview is worth watching.

        https://www.youtube.com/watch?v=oG24vg8js4o

    2. I tried to have a civilised conversation with you. All I got in return was a tsunami of insults, strawmen and incoherent bullshit.

      Clint Ballinger and PM aren’t saying anything that chimes with your ideological stance.

      Quite the opposite. The only thing you have in common with PM is that they criticise MMT. And that fits in with your crusade.

      But then you, like PM don’t understand the monetary system. They are probably less confused than you. But confused they are.

      I’ve tried to explain to you and Roger where they and you both are going wrong but neither of you has acknowledged the point.

      I suspect because it’s inconvenient to your faux moral outrage.

      You’ve all ‘discovered’ that banks create credit out of thin air.

      That’s great. But there’s much more that you seemingly refuse to entertain so you fall back into your neoclassical mythology (and totally manufactured history) and end up with an entirely incoherent, muddled view.

      PM sees the symptoms but misdiagnoses the problem because their basic understanding of the system is false. So they’re trying to treat the wrong illness with quackery.

      And they, like ‘libertarians’ are being led by oligarchs. Funny that.

      Revolutions led by oligarchs probably aren’t going to go the way the followers think.

      1. MMT auto bot, programmed default response.6

        https://youtu.be/195HTzx31So

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

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

        Schön claimed to derive the notions of “reflection-on-action, reflection-in-action, responding to problematic situations, problem framing, problem solving, and the priority of practical knowledge over abstract theory” from the writings of John Dewey, although education professor Harvey Shapiro has argued that Dewey’s writings offer “more expansive, more integrated notions of professional growth” than do Schön’s.[18]

        1. Lesson #14: Functional Finance is not a policy; it is a framework within which all sorts of policies may be conducted.
          There may be misconceptions that functional finance is equated with a particular policy, e.g., running a big deficit. Functional finance is rather a general approach within which a whole series of policies may be conducted. The actual policies which will be implemented will depend on the economic circumstances that exist at a particular time. Functional finance is an outlook that what matters are the effects of policies and not the policies themselves, which are mere means. Thus functional finance does not advocate big deficits under any and all circumstances, just as it does not view a balanced budget as inherently ‘good’ in and of itself, independently of its impact on the economy.

          What functional finance advocates first and foremost is that policy be based on an understanding of the monetary and financial system in which we live, and not some idealized vision of some other system, or some system that may have existed at some other time. For example, if fiscal and monetary policy is formulated as if we were on a gold standard, we not only will sacrifice tremendous potential benefits, we may subject ourselves to grave danger. You cannot, and should not, run a fiat currency system by the logic of a metallic standard system.

          1. https://www.youtube.com/watch?v=7_yh4-Zi92Q
            Bio:
            Damon has had two fairly different lives—one as an overachiever serving the financial empire, and another as a hopeful advocate for the victims of the empire: local community, indigenous population, the American republic, and the individual heart. He graduated from the United States Military Academy, served as an officer in the US Army, then graduated from Harvard Business School, took a short detour on Wall Street, and had a career in Silicon Valley in several leadership positions in technology corporations. Since leaving empire service, he became a mountaineer, attended Mars Hill Graduate School, and now works toward redemption as a writer and post-neoclassical economic philosopher.
            Damon can be reached at: [email protected]

            http://www.forbes.com/sites/stevekeen/2015/03/30/the-principal-and-interest-on-debt-myth-2/#663322e06823

            This series of posts in comments to Keens article are interesting I believe the commentor is probably the author of the Videos Damon Vrabel. linked to the first of which is above.

            All Risk No Reward 10 months ago

            Hi Steve,

            While the question you set out to answer is a common misconception, there is a much simpler way to explain the reality of the mechanism at play.

            Simply put, the bank accrues the interest on all new money (created from nothing) as an asset as the borrower accrues the interest liability. The interest is created, but it is **controlled** by the bank.

            Using your example as a guide, there is the Bank, the Firm, and the Workers. The Bank is the lender, The Firm is the borrow and the Workers work for the borrower. The Bank lends $100 million at 5% interest to the Firm (the only loan in this system). Double entry bookkeeping demands that an interest liability ($5 million in the first year) is accrued by the Firm and an interest asset is accrued by the Bank. Therefore, after one year, there monetary assets and liabilities balance at $105 million… the interest is absolutely create – AS AN ASSET ON THE BANK’S BALANCE SHEET.

            After 1 year, there is $95 million in the Firm / Worker system and $5 million in the Banker system.

            Now, in your scenario, you assumed something totally unrealistic – and Susana brought this out. The Banks don’t spend all their money back into society. They retain earnings (both the shareholders and the banking company itself.

            Since you assume this reality out of existence, your conclusion is incredibly misleading.

            Assuming the banks only spend half their $5 million back into the economy (leaving $2.5 million as retained earnings for the company and its shareholders), in 40 years there is exactly $0 money left in the economy ($2.5 million *40 = $100 million in Bank and Banker retained earnings).

            Now, how do you propose that the Firm in this economy, given this much more realistic basic scenario where reality isn’t assumed away, can generate profits greater than their $5 million in accrued interest liability when $0 is available in the economy and $100 million is controlled by Banks and Bankers… or is that Banksters.

            This is the prima facia fraud inherent in debt-money systems and you give the appearance that this very real mechanism is a myth. It is only a myth if the arguer assumes reality out of existence.

            The truth is actually very simple. Debt-money is a zero sum game. Money is effectively a debt receipt and only debt receipts can pay back the debt-money debts. One person’s net positive debt-money receipt position is someone else’s, or some other group’s, inextinguishable debt.

            This little video does an excellent job explaining this very simple to comprehend aspect of debt-money systems…

            Poverty – Debt is Not a Choice https://www.youtube.com/watch?v=juQc0rLdB-E

            My next post will address this issue from a different angle, and one that contains 1/100 the conplexity of your example without losing the essence of truth.

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            All Risk No Reward

            All Risk No Reward 10 months ago

            Hi Steve,

            In order to make this issue as simple as possible, assume two segments of society: 1) The Money Lenders and 2) The Money Borrowers.

            The Money Lenders lend the Money Borrowers $100 million at 5% interest. In one year, the Money Borrowers owe $105 million due to double entry bookkeeping adjustments that add a $5 million interest expense to their balance sheet and a $5 million interest asset to the Money Lender balance sheet.

            How can the Money Borrowers pay the $105 million debt when they only have access to $100 million and the lender to whom they owe the money controls the only $5 million available to pay back the debt? WHO has the POWER in this scenario – the private Money Lender or the government, business (ex-banking), and citizenry Money Borrower? WHO finances the political apparatus?

            “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” ― Napoléon Bonaparte (Napoleon was a bad man, but he was no dummy! He took Sun Tzu’s advice and learned to know his enemy!)

            There are only two ways the debt can be paid after one year. Make the unrealistic assumption that the Money Lender voluntarily gave all $5 million (not keeping back one red cent!) back to the borrower because Mr. Lender is so charitable (really? Really?? Really???) OR CREATE MORE DEBT MAKING THE PREVIOUS DEBT PAYABLE.

            Now, you claim to have debunked this claim, but you haven’t until you can rationally address the issue above. Since the Money Lenders retain earnings (personally, through their corporate banking fronts, through their multinational corporate fronts, through their foundation fronts, etc…), society, by definition, doesn’t have access to the money required to pay their debts.

            It is true that I have assumed 100% retained earnings by the Money Lender. But I don’t need to. As I said, if they hold back even 1 cent, that loan can’t be paid back in full… it will be 1 cent short and the default assured. No matter how you slice it ALL POWER is in the hands of a privately operated banking cartel and in the hands of the Money Borrower (in reality, that is government, business outside the money creating banking cartel, and the every day citizen).

            By definition, the retained and closely held monetary wealth of the Bankers and their “club” are the INEXTINGUISHABLE DEBTS OF EVERYONE ELSE!

            Now, given the reality of Banker controlled retained monetary assets into the trillions, how do they manage the unpayable debts?

            They issue new debt in a closely controlled exponential manner. There very thing you claim to debunk is the very thing they actually do in order to keep the inextinguishable debts from collapsing Main Street before their “chosen time.”

            As you, the Bankers, and I well know, exponential debt growth is unsustainable. So the Bankers aren’t growing debt-money exponentially to “save the system,” rather, they are blowing the world’s biggest debt-money bubble in anticipation of eventually bankrupting and seizing the assets of others to the maximum extent possible.

            In closing, I’d like to share a clear insight the essence of a “bailout” with you and your audience.

            Continuing with the $100 million example, a “bailout” is when $100 in debt-money is created by the Big Banks out of thin air, the proceeds of which are stuffed into the pockets of the Banking corporate fronts, and the $100 million debt obligation is offloaded onto the general public even though they never received the $100 million in debt-money proceeds.

            Read that as many times as necessary to comprehend the Machiavellian evil that underlies “bailouts.”

            They are doing this in Europe, too. The Big Banks made bad loans to Greece, but the Big Banks want to get paid out. So they “bailout” Greece with money guaranteed by German and other pension funds and pay off the private Big Banks that made the bad loans in full, or at least nearly so.

            In essence, the Big Banks stole the pension funds of Germans and others, the Germans just haven’t figured it out yet. But they will.

            This stuff really isn’t that complex.”

            The basic objection I have to MMT is that it accepts that Governments are actually sovereign, I do not believe that that is the case. Governments should assert sovereignty and then if one then accepts that the debt based system can become benign with the primary objective of a job guarantee, then a case may be possible except that it does not address the questions related to infinite growth in a finite system these are aspects of the question which lietaer summarises here. http://www.lietaer.com/2010/09/effects-of-interest-based-currencies/

            re watching this at the moment

            https://www.youtube.com/watch?v=p5Ac7ap_MAY
            “Princes of the Yen: Central Banks and the Transformation of the Economy” reveals how Japanese society was transformed to suit the agenda and desire of powerful interest groups, and how citizens were kept entirely in the dark about this.

            Based on a book by Professor Richard Werner, a visiting researcher at the Bank of Japan during the 90s crash, during which the stock market dropped by 80% and house prices by up to 84%. The film uncovers the real cause of this extraordinary period in recent Japanese history.

            Making extensive use of archival footage and TV appearances of Richard Werner from the time, the viewer is guided to a new understanding of what makes the world tick. And discovers that what happened in Japan almost 25 years ago is again repeating itself in Europe. To understand how, why and by whom, watch this film.

            “Princes of the Yen” is an unprecedented challenge to today’s dominant ideological belief system, and the control levers that underpin it. Piece by piece, reality is deconstructed to reveal the world as it is, not as those in power would like us to believe that it is.

            “Because only power that is hidden is power that endures.”

            A film by Michael Oswald

          2. I know who Damon Vrabel is. Although it isn’t his real name.

            He’s a spook.

            And it’s just really bad accounting.Interest payments to banks aren’t bank assets.

            They’re income.

            And yet again, sovereign currency issuers don’t borrow their money from banks.

  75. Jesus Guys! How long are you going to keep this up.

    500+ comments…detente would be nice, agree to differ… no one is going to win this.

    1. WHAT SHOULD BANKS DO? A MINSKYAN ANALYSIS

      L. Randall Wray

      http://www.levyinstitute.org/files/download.php?file=ppb_115.pdf&pubid=1301

      http://www.levyinstitute.org/publications/what-should-banks-do

      Functional Finance and Full Employment: Lessons from Lerner for Today?
      by
      Mathew Forstater

      The Jerome Levy Economics Institute

      http://econwpa.repec.org/eps/mac/papers/9908/9908002.pdf

      Lesson #14: Functional Finance is not a policy; it is a framework within which all sorts of policies may be conducted.
      There may be misconceptions that functional finance is equated with a particular policy, e.g., running a big deficit. Functional finance is rather a general approach within which a whole series of policies may be conducted. The actual policies which will be implemented will depend on the economic circumstances that exist at a particular time. Functional finance is an outlook that what matters are the effects of policies and not the policies themselves, which are mere means. Thus functional finance does not advocate big deficits under any and all circumstances, just as it does not view a balanced budget as inherently ‘good’ in and of itself, independently of its impact on the economy.

      What functional finance advocates first and foremost is that policy be based on an understanding of the monetary and financial system in which we live, and not some idealized vision of some other system, or some system that may have existed at some other time. For example, if fiscal and monetary policy is formulated as if we were on a gold standard, we not only will sacrifice tremendous potential benefits, we may subject ourselves to grave danger. You cannot, and should not, run a fiat currency system by the logic of a metallic standard system.

      And for that we are branded as “little Hitlers and Stalins” by know nothings.

    1. Here are the individual segments broken down

      http://www.tfmetalsreport.com/forum/debunking-money-series-damon-vrabel-6-part-series/498

      Debunking Money Damon Vrabel –

      1 Myth and Machiavelli 1 of 6 Damon Vrabel

      2 Orwell and the Animal Farm 2 of 6

      3 of 6 PR, Financial Power, and Evaluating Some Popular “Solution”

      4 of 6 Financial Power and the question “End the Fed”?

      5 of 6, 20th Century – Where We’ve Been

      6 of 6, 21st Century – Where We’re Headed

      Dismissing this as ´´Risible nonsense.

      Reinforcing stupid money market myths.´

      Is akin to waving around a chainsaw and chanting the MMT Dirge.

      1. It is risible nonsense because it’s factually wrong.

        If you wish to stifle dissent that’s your business.

        But I’ll stick to discernible facts, thanks.

        1. Generalisations do not cut it with specifics Johng,

          ”If you wish to attack ideas that is fine but then you have to provide an argument and engage with the discussion. Simply saying: “what are you on?”; “this is a mass generalisation”; “you f**kwit”, “this site sucks” etc are not engaging in discussion”’ Bill Mitchell

          Roger January 30, 2016 at 4:40 pm #

          http://bilbo.economicoutlook.net/blog/?page_id=1984

          Bill Mitchells Comments policy.

      2. Wesley - Balanced!

        Vrabel’s balance sheet explanations are clean and simple. Very sensible indeed! His insights are useful. Thanks!

  76. @Johng

    ”I know who Damon Vrabel is. Although it isn’t his real name.

    He’s a spook.

    And it’s just really bad accounting.Interest payments to banks aren’t bank assets.

    They’re income.

    And yet again, sovereign currency issuers don’t borrow their money from banks.””

    John g,

    Saying someone is a spook does not address the substance of their argument, even calling someone an idiot and proving that they are an idiot does not address the substance of their argument.

    The possibly fictitious alleged spook Damon is not the only one that challenges Steve Keens article , it is interesting that Steve does not respond to the posts made in the name All Risk No Reward.( who I allege is the alleged spook whose name Damon Vrabel also allegedly false) Who´s on first base? https://www.youtube.com/watch?v=tbJwwJ33TEI

    Even should one concede the ”spooks´´arguments there are also the point’s raised by Leitaer and his 11th round parable and 3 effects of money at interest. ”

    ”Three consequences of interest as a built-in feature of our monetary system are that (1) it encourages systematic competition among the participants in the system; (2) it continually fuels the need for endless economic growth; and (3) it concentrates wealth by transferring money from the vast majority to a small minority.”

    If one reads the 11th round parable, which ends with this concluding paragraph

    ´´In the current national currency paradigm, one reason why so much attention is paid to central bank decisions is that increased interest rates necessitate more bankruptcies in the future. The economic pie must grow that much faster just to break even. The monetary system obliges us to incur debt and compete with others in order to perform exchanges and pay the resulting interest to the banks or lenders. No wonder “it is a tough world out there,” and that those who live within a competitive monetary system so readily accept Darwin’s supposed “survival of the fittest.”

    http://www.lietaer.com/2010/09/the-story-of-the-11th-round/

    One has to ask in answer to the question ´´What functional finance advocates first and foremost is that policy be based on an understanding of the monetary and financial system in which we live, and not some idealized vision of some other system, or some system that may have existed at some other time. ´

    The system we have now is decidedly not one founded on the monetary sovereignty of Nation States see ; ´´Princes of the Yen: Central Bank Truth Documentary 『円の支配者』’
    https://www.youtube.com/watch?v=p5Ac7ap_MAY .”’, For details .

    examining your two statements further

    1. ´´And it’s just really bad accounting.Interest payments to banks aren’t bank assets.

    They’re income.”

    is it? http://www.double-entry-bookkeeping.com/accounts-receivable/accounts-receivable-journal-entries/
    sorry formatting will not trasfer its easier to see at the link.

    A credit note is issued to a customer Account Debit Credit
    Revenue XXX
    Accounts receivable XXX
    To write off an accounts receivable as a bad debt Account Debit Credit
    Bad debt expense XXX
    Accounts receivable XXX
    To set up an allowance for doubtful debts Account Debit Credit
    Bad debt expense XXX
    Allowance for doubtful debts XXX
    To use the allowance for doubtful debts to write off an accounts receivable Account Debit Credit
    Allowance for doubtful debts XXX
    Accounts receivable XXX
    To record cash received after an accounts receivable has been written off Account Debit Credit
    Cash XXX
    Accounts receivable XXX
    Accounts receivable XXX
    Allowance for doubtful debts XXX
    http://www.answers.com/Q/Where_does_interest_paid_on_loan_go_in_the_balance_sheet

    This exchange can tell us a lot about accounting conventions.
    2. ”And yet again, sovereign currency issuers don’t borrow their money from banks.”

    Under the current system this is an arguable point. There are two questions here,

    2.1.Should Governments re-assert sovereign control ?Indeed can they without being invaded?

    2.2. If Governments assert sovereign control is an interest based debt money the most democratic and sustainable currency solution.

    1. You’re just being played, dude.

      You’re just too stupid to realise it.

      When people come along and point it out you yell at them.

      You’re your own worst enemy.

        1. It’s laughable that you present yourself as a student of Keen and Minsky.

          Who are you trying to fool?

          It’s Alex Jones level disinformation that you’re falling for.

          1. MMT auto bot, programmed default response.9

            https://youtu.be/195HTzx31So

            Turkeys voting for christmas?
            https://youtu.be/7_yh4-Zi92Q?t=29m2s

            Renaissance 2.0 – Financial Empire – Full Length – Damon Vrabel
            Ahijab

            https://www.youtube.com/watch?v=96c2wXcNA7A

            Segment: “Alex Jones is a Butt-Rape Machine” | From Culture In Decline #5 by Peter Joseph

            https://www.youtube.com/watch?v=A3NOj_aXzew

            ”It is an axiom of practical politics never to believe anything until it has been officially denied.”

            http://quoteinvestigator.com/2015/08/07/believe/

    1. How can someone who claims to understand Minsky then turn around and promote Vrabel’s view?

      It’s nuts.

      Roger is insane.

    2. John G,

      Which aspect of Vrabels story are ficticous? All of it clearly is not.

      If one looks at Werenrs story regarding ´´Princess Yen´´one would argue , I would contend convincingly, that Vrabel has the dynamic between Government and Banking sector about right as regards which hand is on top. Who bails out who if one follows the money.

      fitzy103 said…

      I think this is the cirlce of debt…

      1. “Spain is not Greece.”Elena Salgado, Spanish Finance minister, Feb. 2010

      2. “Portugal is not Greece.” The Economist, 22nd April 2010.

      3. “Ireland is not in ‘Greek Territory.’”Irish Finance Minister Brian Lenihan.

      4. “Greece is not Ireland.”George Papaconstantinou, Greek Finance minister, 8th November, 2010.

      5. “Spain is neither Ireland nor Portugal.”Elena Salgado, Spanish Finance minister, 16 November 2010.

      6. “Neither Spain nor Portugal is Ireland.”Angel Gurria, Secretary-general OECD, 18th November, 2010

      If you understand this lot, you havent been paying attention…

      31 May 2011 18:49

      First Fitzy I am chuckling away even as I write this that’s a slam dunk very very funny.

      http://letthemconfectsweeterlies.blogspot.se/2011/05/golem-and-sturdy-strike-again-how-to.html

      Here is Davids original blog called a peoples debt jubilee

      https://www.golemxiv.co.uk/2011/05/a-peoples-debt-jubilee/

      If Governements were not happy to maintain a subservient position as Vrabel Claims why were the banks bailed out both with Tarp in US and with the UK nationalisations and the conversion of the whole thing into a ´´Soverieghn Debt Crisis´´. There are surely a lot of smoke and mirrors in all of this I think Vrabels explanation of a sort of soft fascism morphing into a more overt hard fascism is very credible actually.

      Consider this.

      http://oestrem.com/thingstwice/2013/09/this-machine/

      I mention Umberto Ecos UR Fascism earlier as well also a blog I did called Narcissism of small differences is related to this http://letthemconfectsweeterlies.blogspot.se/2012/11/the-narcissism-of-small-differences-in.html

      http://letthemconfectsweeterlies.blogspot.se/2011/06/condense-of-mortgage-reform-valuation.html

      Johng I think it is you that presents a fictitious view of the Monetary system the empirical evidence as to what it is and more importantly what it does is doing and has done tends to throw up too many questions to accept the Government is in the driving seat.

      1. Richard Werner
        ‏@ProfessorWerner

        First empirical test in 5000 years of banking on whether each individual bank can create money out of nothing is out http://ac.els-cdn.com/S1057521914001070/1-s2.0-S1057521914001070-main.pdf?_tid=781b835e-8880-11e4-8cf9-00000aacb35f&acdnat=1419104788_bcaee65302916a2bab37a5cf7f63c992

        http://www.sciencedirect.com/science/article/pii/S1057521914001070

        Since the tenets of this theory are never stated in Eatwell et al. (1989), the chapter on ‘Cranks’ ends up being a litany of ad hominem denigration, defamation and character assassination, liberally distributing labels such as ‘cranks’, ‘phrase-mongers’, ‘agitators’, ‘populists’, and even ‘conspiracy theorists’ that believe in ‘miracles’ and engage in wishful thinking, ultimately deceiving their readers by trying to “impress their peers with their apparent understanding of economics, even though they had no formal training in the discipline” (p. 214). All that we learn about their actual theories is that, somehow, these ill-fated authors are “opposed to private banks and the ‘Money Power’ without their opposition leading to more sophisticated political analysis” (p. 215). Any reading of the highly sophisticated Soddy (1934) quickly reveals such labels as unfounded defamation.

        To the contrary, the empirical evidence presented in this paper has revealed that the many supporters of the financial intermediation theory and also the adherents of the fractional reserve theory are flat-earthers that believe in what is empirically proven to be wrong and which should have been recognisable as being impossible upon deeper consideration of the accounting requirements. Whether the authors in Eatwell et al. (1989) did in fact know better is an open question that deserves attention in future research. Certainly the unscientific treatment of the credit creation theory and its supporters by such authors as Keynes, who strongly endorsed the theory only a few years before authoring tirades against its supporters, or by the authors in Eatwell et al. (1989), raises this possibility.
        5.4.2. Implications for government policy

        There are other, far-reaching ramifications of the finding that banks individually create credit and money when they do what is called ‘lending money’. It is readily seen that this fact is important not only for monetary policy, but also for fiscal policy, and needs to be reflected in economic theories. Policies concerning the avoidance of banking crises, or dealing with the aftermath of crises require a different shape once the reality of the credit creation theory is recognised. They call for a whole new paradigm in monetary economics, macroeconomics, finance and banking (for details, see for instance Werner, 1997, Werner, 2005, Werner, 2012, Werner, 2013a, Werner, 2013a and Werner, 2013b) that is based on the reality of banks as creators of the money supply. It has potentially important implications for other disciplines, such as accounting, economic and business history, economic geography, politics, sociology and law.
        5.4.3. Implications for bank regulation

        The implications are far-reaching for bank regulation and the design of official policies. As mentioned in the Introduction, modern national and international banking regulation is predicated on the assumption that the financial intermediation theory is correct. Since in fact banks are able to create money out of nothing, imposing higher capital requirements on banks will not necessarily enable the prevention of boom–bust cycles and banking crises, since even with higher capital requirements, banks could still continue to expand the money supply, thereby fuelling asset prices, whereby some of this newly created money can be used to increase bank capital. Based on the recognition of this, some economists have argued for more direct intervention by the central bank in the credit market, for instance via quantitative credit guidance ( Werner, 2002, Werner, 2003b and Werner, 2005).

        The view of the author, based on more than twenty-three years of research on this topic, is that it is the safest bet to ensure that the awesome power to create money is returned directly to those to whom it belongs: ordinary people, not technocrats. This can be ensured by the introduction of a network of small, not-for-profit local banks across the nation. Most countries do not currently possess such a system. However, it is at the heart of the successful German economic performance in the past 200 years. It is the very Raiffeisen, Volksbank or Sparkasse banks – the smaller the better – that were helpful in the implementation of this empirical study that should serve as the role model for future policies concerning our monetary system. In addition, one can complement such local public bank money with money issued by local authorities that is accepted to pay local taxes, namely a local public money that has not come about by creating debt, but that is created for services rendered to local authorities or the community. Both forms of local money creation together would create a decentralised and more accountable monetary system that should perform better (based on the empirical evidence from Germany) than the unholy alliance of central banks and big banks, which have done much to create unsustainable asset bubbles and banking crises (Werner, 2013a and Werner, 2013b).

        1. Wesley with Werner

          The little “cat-fight” would seem to have some broader implications… eh? I find it truly astounding that this isn’t being discussed in every parlour and cafe all the time… My research from the period in the 1920s when the issue of “money”, and credit was very much in the public dialog, finds that anyone making utterances against the banking madness were literally destroyed! Henry Ford (together with Edison), as a result of his individual wealth, and ownership of the Dearborn Independent (with only a circulation of about 700,000) were no match for the opinion moulders and shapers, who belittled him (and Edison and Soddy and the others) relentlessly. Ford gave up. Here we are nearly 100 years later, and economists are only just now re-discovering how the system works? Astounding! The efforts by MMT, which begins from the starting assumption of “this is how it is” – makes an explicit policy of supporting the propriety of that fraudulent credit creation mechanism – one that I’ve been riling about for this entire month. The MMT people need to check their premises at the door of inquiry, before endorsing such blatant conversion and theft of the public purse.

          This is important research… and the lines of inquiry which he recommends for further study are crying out for Law Enforcement actions (Prof. Black – where are you?). It’ll be interesting to see how the community of Economists, funded by the banking establishment, treat these empirical results…

          1. Literally destroyed, eh?

            LOLz.

            Werner isn’t saying anything new, so redirect your abuse to the neoclassicals and their Austrian comrades.

          2. Wesley - The Conspiracy!

            Werner’s conclusions are truly astounding! I like their understated elegance:

            [
            The empirical evidence shows that of the three theories of banking, it is the one that today has the least influence and that is being belittled in the literature that is supported by the empirical evidence.

            Furthermore, it is the theory which was widely held at the end of the 19th century and in the first three decades of the twentieth. It is sobering to realise that since the 1930s, economists have moved further and further away from the truth, instead of coming closer to it.

            This happened first via the half-truth of the fractional reserve theory and then reached the completely false and misleading financial intermediation theory that today is so dominant.

            Thus this paper has found evidence that there has been no progress in scientific knowledge in economics, finance and banking in the 20th century concerning one of the most important and fundamental facts for these disciplines.

            Instead, there has been a regressive development. The known facts were unlearned and have become unknown.

            This phenomenon deserves further research. For now it can be mentioned that this process of unlearning the facts of banking could not possibly have taken place without the leading economists of the day having played a significant role in it.
            ]

            …THIS PROCESS OF UNLEARNING THE FACTS OF BANKING COULD NOT POSSIBLY HAVE TAKEN PLACE WITHOUT THE LEADING ECONOMISTS OF THE DAY HAVING PLAYED A SIGNIFICANT ROLE…

            It would seem that the almighty Keynes may have been among the MOST guilty of the deceptions.

            It’s nice to see the truth of things set out in step-by-step, empirical ways. The citations in the paper are truly mind-boggling. Goebbels had nothing on these economists – he was a rank amateur. MMT efforts to educate people about the money creation process (and flows), though reprehensible in its overt support of the status-quo, at least gets the facts in front of the people. The implications of those facts deserve fuller amplification.

            WOW.

        2. Wesley with monetary Cranks and Brigands!

          With Cranks and Brigands!

          At a point in time almost exactly midway between the formation of the Federal Reserve and the Great Depression induced by same, a small journal owned by the great industrialist Henry Ford made an attempt to educate the masses in the true nature of money, and in so-doing re-brand the discussion away from the realm then (and now) controlled by the true money powers. BTW, JohnG – your belief that these de-facto powers lie with your beloved Government institutions only re-confirms your continuing naïveté.

          The Dearborn Independent carried articles such as these for approximately 15 weeks, in a nationwide campaign. Here is one of the articles that are relevant to this discussion:

          https://books.google.com/books?id=y2Y6AQAAMAAJ&pg=PA18-IA294&dq=dearborn+independent+1922+%22money+mystery%22&hl=en&sa=X&ved=0ahUKEwjO6ZbNveDKAhXDKx4KHfG_CfYQ6AEIHDAA

          A direct reprint of the above journal article is here captured at some personal expense in time, and will certainly repay your time in its reading:
          [
          Dearborn Independent – January 21, 1922

          What Do You Know About Money as Money?
          A Plain Basic Catechism: the “Whys” of Certain Fiscal Facts:
          Rescuing the Money Question From Cranks and Brigands

          THERE are nine kinds of money circulated in the United States. Some kinds of it are not as fully acceptable as are other kinds. Some kinds of it are not redeemable as are other kinds.

          If you read the back of the Federal Reserve Note and the Federal Reserve Bank Note you may have in your pocket, you will find that they differ: the Note is redeemable in gold if you carry it to the Treasury at Washington, or “in gold or lawful money” if you carry your demand to any Federal Reserve Bank; while the Bank Note is not specifically “redeemable” in anything, but is receivable for public dues, which makes it good.

          If you look at your “greenback,” its name being “United States Note” you will discover that you have a bill which has nothing behind it at all – nothing but the United States!

          Your Federal Reserve Bank Note and your United States Note are not good for all purposes—you will read on the back of them these words, “Except duties on imports” and “Except interest on the public debt.”

          Many money facts of interest are to be had by any person of ordinary intelligence. Many money questions are of personal interest to every man who earns his living. If you were sure that the cost of rent had little to do with the house itself, but very much to do with the difference between the price of the dollar when the house was built, and the price of the same dollar the month you pay your rent—the chances are you would see that the money question was not only for financiers and economists, but also for rent-payers. If the shift in the price of potatoes was not due to the potatoes, but to the shift in the value of the dollar—the potato question would appear as a Money Question.

          Money has always been a mystery. The time has come to solve the mystery — rather, to lift the curtain and to show that there is no mystery at all. Certainly, the time has come to make money less of a Master and more of a Messenger.

          Money is one of the necessaries of life—of civilized life. It is part of our transportation system; it is the agency by which we get things moved to people who need them. Money offers a much cheaper way of doing business than barter does—barter takes too much time. Money must be kept 100 per cent sound. But there must be enough of it to move business—if money does not move business, if there is not enough of it, if it is not sound enough to carry business, then it is not “good money.”

          Dollars that are worth so much more than a dollar that they are hard to get, and dollars that are worth so much less than a dollar that they fail to perform their dollar function, are both “bad money.”

          So many mere theorists and hare-brained “reformers,” with nothing to recommend them, have set out to reorganize the money system, that the public is justly suspicious of anything that promises a flood of easy money.

          But even the inexperienced man can see that any money system ought to be sufficient to carry on business that is waiting to be done.

          Any man is able to see that the United States ought not to turn over its money function to private firms, any more than it should turn over the control of its army and navy to private contractors.

          In a country where there is a vast amount of work waiting to be done, where there is a vast number of men waiting to do it, where there is a vast quantity of material waiting to be used in it—but where the whole circle of labor, production and use is stopped because of the insufficiency of money: any man knows that such a country needs better facilities to make things move.

          The Money Question is the People’s Question. It is for all sensible men to think about, and to think more and more as perhaps the principal task whose right performance will bring in the era of economic liberty.

          WHAT is Money? Money is the accepted medium of exchange in any political unit exercising complete national power. Of what is it made? It is immaterial. The decree of government that gold or silver, properly certified, shall be a legal tender, makes metal money. Similar certification of any other material or thing of value would have the same effect. Is not the metal of final redemption in this country gold? Yes and no. The unit of value, is the gold dollar, but gold dollars are no longer coined and all the forms of money in use are not specifically redeemable in gold. For instance, the silver dollar is the only dollar issued that is not a mere promise to pay. It is legal tender, although carrying a smaller proportion of metal at market value of bullion, than would make it equal to gold. Yet it is a dollar and its own redemption. Silver coins of other nations, carrying a greater metal content than our silver dollar, are worth less in this country.

          Why is gold selected as the unit of value? On the fallacious reasoning that such a unit is needed. Why is that reasoning fallacious? Because gold has no fixed value. It, like all commodities, is subject to the law of supply and demand. The government has fixed its price at $20.67 an ounce, and for that reason it appears to have a fixed value. But this is not a fact. Being of a fixed price, any variation in value must be shown in the prices of other commodities, the prices of which are not so fixed.

          When Gold Was “Cheap Money”

          COULD the government make anything but gold the unit of value? Certainly. Prior to the demonetization of silver that metal [silver] was a unit of value.

          Is not gold a universal money; that is, does not the gold dollar of the United States pass current in foreign countries? No; gold coins of any nation are estimated at bullion value elsewhere than in the country of issue.

          Has gold ever been demonetized? Yes. In the ’50’s the Netherlands, Belgium and Germany demonetized gold and made silver the sole unit of value, or money base, in their respective jurisdictions.

          Why was this done? The discovery of vast deposits of free gold in California and Australia, led to the fear on the part of holders of money credits that the increase of the world’s supply of gold would render the metal so cheap as to depreciate its money value.

          Has paper money ever been at a premium over gold? Yes. It is stated that at the expiration (in 1811) of the charter of the Bank of North America, the first national bank organized in the United States, its notes were at a premium over coin. The government held the majority of the shares of that institution, and it was the only bank in the history of the country that was not owned by private capital.

          Has there ever been another instance of the kind? The governor of the Island of Guernsey, in the English Channel, refused in 1847 to sanction the borrowing of money to build a market house, but financed the enterprise on the strength of the credit of the island by issuing scrip that was made receivable in taxes and market rentals. The project was successful and the demand for the scrip finally exceeded the supply, so it rose to a premium over the ordinary coin of the realm—gold and silver. To remedy this, it was decreed that market rentals might be paid in the ordinary currency. When the scrip was retired the market house had paid for itself and the island had its improvement without the payment of a farthing in interest to the money lenders.

          How are price fluctuations to be accounted for? A prime cause of the changes in the level of prices, as agreed by all economists, is the expansion and contraction of the volume of money in circulation. If the volume of money increases more rapidly than the volume of goods, prices naturally become higher; if it does not increase or is diminished, the trend is to lower price levels for commodities. Naturally the money lenders fear expansion and favor contraction.

          What is the effect of hoarding money? To reduce its volume. Banks hoard for the same reasons that monopolies restrict production—to be able to secure greater profits on their stock in trade.

          What is the effect of this course on industry? It places business and production on a credit basis, so compelling the producer to finance his business with borrowed money and the consumer to supply his needs in the same way. This adds to the taxes of each for the privilege of existence.

          To borrow money one must give “adequate security.” What is adequate security? The security for all loans rests on land and labor in the last analysis. Could that security be utilized in the solution of the Money Problem? One school of economists says it could. The theory is that the government itself should issue money without the intervention of fiscal agents, basing it on the faith and credit of the nation and limited only by the taxable values of the land.

          This it claims is the real basis of money, whatever its nature. But control of the volume of money in circulation has, since the organization of the United States Bank in 1816, (the bank fought by President Jackson) been delegated to fiscal agents, who have administered the trust for their private profit.

          Question About Federal Reserve

          HAS no attempt been made to remedy this situation? Yes; the national bank act of the Civil War period was intended to supply a legal tender currency of sufficient volume and so distributed as to supply local needs. National banks were encouraged. They were given the right to issue “money,” based on the deposit of government bonds. Other banks of issue were driven out of business by the levy of a prohibitive tax of 10 per cent on their circulation, leaving the national banks a monopoly in this field.

          With what result? The volume of money in circulation was restricted to the limit necessary to maintain high interest rates. Few if any banks approached the limit of their authorized circulation, excusing their delinquency by claiming the demand did not warrant it.

          How about the Federal Reserve System? The Federal Reserve System is a modification of the plan presented by Senator Aldrich for a Federal Reserve Association, in which the money issuing power was to be centralized in one great bank owned and operated by the “Money Trust.”

          This plan was evolved by an international banking house in Wall Street. The Federal Reserve System established regional banks, broadened the power of issue to include, in addition to government bonds, other public and commercial obligations as a base. It is capitalized by national and state banks, each of which could demand a sufficient volume of notes, made a legal tender by the government, for local needs, on deposit of approved securities. But the mandatory provisions of the law were nullified by the Federal Reserve Board by the exaction of prohibitive rediscount rates. Not only was this restriction effected, but an arbitrary retirement of notes issued was decided on, and it is due to this that there is a “money shortage” today.

          Keep Money Function in Public’s Hands
          IS THERE a money trust? A good answer to that question was made before the Pujo investigating committee, in 1913, by J. P. Morgan. He asserted that the system of fiscal legislation since the Civil War had been “unscientific banking,” and pointing to the banks of Europe as models (although they have failed to serve their peoples since), he denied that there is a money trust, claiming competition in banking is as keen as in other lines of business. He admitted that, as in other lines, business policies of rival concerns are necessarily identical, but that the co-operation and understanding essential to a trust is absent. There can be small difference to the public whether it is squeezed between two mighty engines or under their combined weight.

          What can be done to remedy this situation? Several plans are advanced, but none can succeed unless backed by public opinion. There is practical unanimity on one point—that the delegation of power to fiscal institutions must cease. The government, without the endorsement of which no currency can be made a legal tender, must reclaim that authority and exercise it. One of the leading economists who has labored for years for the nationalization of our finances insists that the government shall cease to go to the bond market as a borrower. He would have the government alone exercise the power to issue money, as it is really the backer of the banks. To provide funds for public use, he would have the government issue Treasury notes of full legal tender, in exchange for non-interest-bearing bonds, limited in amount to a stated proportion of the taxable land values, redeemable at the rate of four per cent a year. To avoid excessive inflation, the Treasury notes would be retired as they were paid in by the borrower. This would serve automatically to keep the volume of currency adjusted to the needs of the public. Taking public bonds out of the market would lighten the interest burden of industry and commerce, and cause money to seek legitimate investment.

          What would be the saving? The cost to taxpayers for interest today averages more than three dollars to one dollar paid for the actual improvements—streets, sewers, schoolhouses or other. This is not paid by the generation borrowing, but is a legacy of debt to future taxpayers. It makes the international financiers masters of all property and business, with power to arrange conditions so that foreclosure is at their option. The swelling tide of tax delinquencies is but a forerunner of what is to come. The reform will come when public opinion is alive to the need through understanding for itself the inside of the question.
          ]

          I find it interesting to note a few things:

          Greenbacks (debt-free, interest-free bearer notes issued by the US Treasury were still in circulation, 60 years after their introduction by and assassination of President Lincoln;

          The redeem-ability of the Federal Reserve Note for Gold was an acknowledged fiction and a fraud that everyone just seemed to ignore — to their obvious consternation only 11 years later during the default of the banking system, and the force-able seizure by the State of the nation’s privately owned gold stock;

          Unlike today, both inflations and deflations of the monetary construct could occur, because a portion of the fiduciary media was still connected to something of objective value (gold and silver). Today, our monetary system, being totally disconnected (as of 1971) from anything of real-value, can only expand – contraction equals catastrophic failure;

          A clear understanding of the differences between money and credit are demonstrated;

          There article contains perhaps one of the earliest and favorable descriptions of “Positive Money” type constructs in its description of state-issued fiat on the island of Guernsey;

          Advocates the removal of money issuance from the private banking sector, in favor of a debt-free money issue by the Sovereign.

          ps: The irony of Ford’s warning of turning over the Nation’s Army and Navy to “private contractors” should not escape any careful reader’s attention either!

      2. Governments bailed the banks out, not the other way around. So the real power rests with government.

        Sovereign currency issuers do not get their money from commercial banks. Period. They create money by spending into the private sector.

        Government spending is private sector income and net government accumulated spending is non-government net savings.

        Refer to the business card economy above.

        The politics are a separate issue. The banks’/money market’s power is an illusion, whether politicians and the general public believe it or not. They are totally dependent on government money.

        Vrabel and PM are reinforcing the illusion.

        EZ governments are NOT sovereign. They are currency users.

        1. ´´The politics are a separate issue. The banks’/money market’s power is an illusion, whether politicians and the general public believe it or not. They are totally dependent on government money’.

          If this is true Johng, could you explain Werners thesis on the Yen deflation?
          the princes of the yen film is very specific in its conclusions. The sovereign Japanese treasury was effectively neutered and effectively occupied by the Central Bank of Japan acting under Federal Reserve and US treasury duress.

          Further the Bail outs were not done with strings in the case of US, UK and German/French banks at any rate.How can this assymetry go uncorrected and why was it proffered?

          The Swedish debt crisis of 1992 was resolved with a bail out with strong strings establishing moral hazard was at least given a tip of the cap as it were..

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

          The politics are absolutely not a separate issue and whats more it is the the geo politics which are of paramount concern, that is where large wars come from, whilst war is described as ´´The Health of the State ´´it can equally be described as the ´´prosperity of the bankers´´

          A final acid test regarding who runs the show. How many bankers have done Jail time for the litany of scandals etc since Boesky and Milken say, its non since 2008 except in Iceland another case worthy of study to test your proposition that sovereign governments are not the Dog wagged by the Banking tail.

          What MMT claims vis ´´ Sovereign currency issuers do not get their money from commercial banks. Period. They create money by spending into the private sector.’ as proofed with Government spending is private sector income and net government accumulated spending is non-government net savings. is a classic circular argument and does not explain why Bond holders are always pretty much given the red carpet treatment in any crisis/insolvency siituatiuon.

          In the theory of money which you are presenting Joihng,( and I do not for a moment accept that what you speak for is the theory of MMT or other MMT adherents, the very real possibility that you are not doing justice to MMT has occured to me more than once.) it seems that a money theory ignoring real poliik or Vrabels Maccievellian power structures seems impotent to me.

          FInally the currency issuer / User point regarding the euro crisis. The bank in werners example is in the euro zone and it is creating money? as most of the money created and in the m3 measure is actually bank created money it seems that the Governments own position at the central Bank ATM and bond market needs a little more work your end.

          Finally Finally this then only addresses the question of who is creating the debt based money in the Economy the next big question comes regarding Interest ( usury for me)

          see.
          Roger February 4, 2016 at 11:34 am #

          @Johng

          ”I know who Damon Vrabel is. Although it isn’t his real name.
          He’s a spook.”

          This exchange can tell us a lot about accounting conventions.

          http://www.answers.com/Q/Where_does_interest_paid_on_loan_go_in_the_balance_sheet

          2. ”And yet again, sovereign currency issuers don’t borrow their money from banks.”

          Under the current system this is an arguable point. There are two questions here,

          2.1.Should Governments re-assert sovereign control ?Indeed can they without being invaded?

          2.2. If Governments assert sovereign control is an interest based debt money the most democratic and sustainable currency solution.

          1. Further the Bail outs were not done with strings in the case of US, UK and German/French banks at any rate.How can this assymetry go uncorrected and why was it proffered?

            Because politicians are corrupt and ignorant. The law was not followed. This is a result of neoliberalism, not the monetary system.

            A final acid test regarding who runs the show. How many bankers have done Jail time for the litany of scandals etc since Boesky and Milken say, its non since 2008 except in Iceland another case worthy of study to test your proposition that sovereign governments are not the Dog wagged by the Banking tail.

            It’s no sort of acid test.

            You’re saying that a car crashed by a drunk driver is proof that the car was faulty. You’re peddling a false dichotomy.

            What neoliberals believe and do in terms of policy is entirely antithetical to MMT and post-Keynesians in general.

            I watched a few minutes of Princes of the Yen quite some time ago. I didn’t find it helpful. So I can’t comment.

            In the theory of money which you are presenting Joihng,( and I do not for a moment accept that what you speak for is the theory of MMT or other MMT adherents, the very real possibility that you are not doing justice to MMT has occured to me more than once.)

            Personal attack. You can’t refute the argument so you attack the messenger. A common theme in your posting.

            I’ve been well aware of your method of enquiry all through this. You’re not looking at MMT at all. You’re searching for critics and using the same tired strawman arguments that get trotted out fairly regularly and then resorting to cliched rhetorical trickery.

            it seems that a money theory ignoring real poliik or Vrabels Maccievellian power structures seems impotent to me.

            I see, so a body of thought that doesn’t cover everything is worth nothing. This is a dishonest rhetorical ruse. Have some dignity.

            No one, least of all me is ignoring those things. We just can’t get to square one of how the system actually works because you don’t seem to want to concede that your view may be wrong.

            You’ve consistently ignored the critical point of understand vertical vs horizontal.

            One wonders why. Could it be that it just destroys your mythological views?

            FInally the currency issuer / User point regarding the euro crisis. The bank in werners example is in the euro zone and it is creating money? as most of the money created and in the m3 measure is actually bank created money it seems that the Governments own position at the central Bank ATM and bond market needs a little more work your end.

            I’ve no idea of what that means. We’re not talking about EZ countries. They are effectively running a gold standard type stranglehold over governments.

            It’s an insane system and it will continue to fail.

            This exchange can tell us a lot about accounting conventions.

            I se no relevance to anything I’ve been saying.

            Under the current system this is an arguable point.

            No it isn’t. The arguments of Huber, Zarlenga et al are specious. They rely on portraying the central bank as a separate entity to the government and the Treasury as just another horizontal entity i.e. a client of the banks.

            They see the old gold standard conventions as matters of nature rather than just arcane legal relics.

            And they gloss over the vertical/horizontal distinction with falsehoods.

            Their criticisms of MMT are largely strawmen and academically dishonest. But they have an agenda to run and they’re raking in the big bucks.

          2. Just to be perfectly clear here, what I’m saying is that your thesis i.e. that the monetary entity that we call dollars etc is the cause of the worlds problems so destroying it will solve all the world’s problems, is a false reading.

            I am not saying that we don’t have serious problems with the power of bankers or the moneyed elites.

            What I am saying is that the notion of changing the monetary system to something else (mostly seemingly barter arrangements) will not only not fix those problems, it will make them worse.

            We DO need to change the power structure. Changing the money system won’t do that. Changing to a hard money system would be a disaster for the many.

            Economic Darwinism and mass impoverishment would swiftly follow.

            Your and Wesley’s continual misrepresentations and personal attacks have rendered any progression of the discussion impossible.

            So don’t pretend that my understanding of the world is shallow because we can’t get past the technical aspects. All I’ve been able to do is defend my position from your belligerence and the tsunami of falsehoods and misrepresentations.

          3. Takahashi Korekiyo was before Keynes and saved Japan from the Great Depression

            http://bilbo.economicoutlook.net/blog/?p=32355

            Japan thinks it is Greece but cannot remember 1997

            http://bilbo.economicoutlook.net/blog/?p=20607

            Moodys and Japan – rating agency declares itself irrelevant – again

            http://bilbo.economicoutlook.net/blog/?p=15787

            Japan’s growth slows under tax hikes but the OECD want more

            http://bilbo.economicoutlook.net/blog/?p=29017

            Japan will (yet) run out of money. Never!
            Posted on Monday, November 11, 2013 by bill
            A regular occurrence is the prediction of doom for Japan. Some minor upturn in Japanese government bond yields or a movement in some other irrelevant financial statistic relating to the Japanese public sector sends the financial press into apoplexy. The latest signal of impending bankruptcy being bandied about relates to the rising trend in foreign holdings of short- and longer-term Japanese government debt. This trend is explained by financial markets moving into less risky assets (in this case, Japanese government bonds) as uncertainty in other markets, for example the Eurozone, remains. However, the narrative then goes that eventually these purchasers will refrain from buying Japanese government debt and with the funding from the savings of the ageing domestic population drying up, the Japanese government will run out of money. Policy response? Cut fiscal deficits immediately through a combination of tax rises and spending cuts. All of which is nonsense and if the Japanese government follows the advice – there will be a 1997-style recession and public debt ratios will just rise faster than they are at present. It is better that we now all turn to the sport’s section of whatever news you read and relax.

            http://bilbo.economicoutlook.net/blog/?p=26054

            To talk about Japan without talking about neoliberalism is an exercise in voluntary blindness.

            The triumph of the monetarists over rational fiscal policy.

            Time to shed your voluntary straightjackets.

            Japan is suffering deflation through deflationary fiscal policy. The fiat currency options are not being utilised by the Abe government.

        2. BTW, JohnG – your belief that these de-facto powers lie with your beloved Government institutions only re-confirms your continuing naïveté.

          LOLz. Your continued resort to neoclassical mythology and knee jerk rejection of operational reality confirms your utter confusion.

          Garbage in, garbage out.

          Keep following those oligarchs.

  77. Fiat money Cui Bono

    Courtesy of the Raging Bullshit blog and renegade economist /four horseman documentary.

    http://ragingbullshit.com/2015/06/03/fiat-money-cui-bono-and-cui-doesnt/

    TTIP TTP TISA

    International trade agreements further inoculate International banks from Government regulation.

    http://wolfstreet.com/2015/07/02/leaked-how-megabanks-are-conspiring-to-rip-up-financial-regulations-around-the-world-tisa-tpp-ttip/

    David Malone ( Our very own Golem XIV), Interviewed on the Renegade Economist

    https://www.youtube.com/watch?v=FE-84S7Xyac

    Davids Blog Series on Syria, Syria Cui Bono

    Governments policies aligned to private financial interests , really? read on.

    https://www.golemxiv.co.uk/2013/09/syria-cui-bono/

    ” As long as politics is the shadow cast on society by big business, the attenuation of the shadow will not change the substance.”
    Quoted in John Dewey and American Democracy by Robert Westbrook (Ithaca: Cornell University Press, 1991), p. 440; cited in Understanding Power (2002) by Noam Chomsky, ch. 9, footnote 16; originally from “The Need for a New Party” (1931) by John Dewey, Later Works 6, p. 163. (Via Westbrook.)

    My Blog Feeding the 5000 Bejeebus.

    http://letthemconfectsweeterlies.blogspot.se/2013/07/feeding-5000-bejebus.html

    Paying for your ticket To watch the farce.
    Knowing you’ve made you’re contribution
    To the systems fucked solution,
    To their political pollution.
    https://www.youtube.com/watch?v=4CNLhBefmLg

    1. Wesley and the Falling Sky

      David’s engaging interview on the Renegade Economist contains very good cautionary advice for the MMTers: The sky will NOT fall in if the Status Quo monetary paradigm were to be changed. Have a little faith! Embrace change – ’cause it’s coming!

      ——————
      Kelly’s Heroes satire:

      Wesley: Why don’t you knock it off with them negative waves? Why don’t you dig how beautiful it is out here? Why don’t you say something righteous and hopeful and beautiful for a change?

      JohnG: Crap!

      1. As noted, you don’t know anything about MMT. You are merely engaging in a personal crusade for your own reasons.

        What you are is an inveterate liar and smear merchant.

        A common trait of the extreme right.

        As for Henny Penny shrieking, read back through your own posts predicting certain doom.

        You are the poster child of cognitive dissonance and fallacy of composition.

  78. ”Changing to a hard money system would be a disaster for the many.”

    I do not advocate a hard money system, I can not presume to speak for Wesley.

    Johng your arguments are what I have challenged and also the ordering of presumptions regarding initial causes and final causes in the power dynamic within the existing monetary system.

    I am grateful for your input and I have learned a lot from this exchange the overwhelming take away for me is positive and I am grateful to have added many more books to my ever growing reading list.

    On the renegade economist interview that David does he makes the point regarding RIghts and Obligations , obligations being essential rights wholly un necessay? its a circualr argument that has the citizen ending up with exactly the same things as David points out. Money in my preffered verion would be decentralied and democratic and bankswould not have the power to create debt based money in an assymetrical exchanges as is presently the overwhelmong case.

    Here is Penny RImbauds´ Poem America (he was/ Is the drummer in Crass by the way.

    https://www.youtube.com/watch?v=YRE5QcYWwcA

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

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

      1. Thats the nature of debt based money it is not the nature of money that is not the subject of usury. that is the point which leitar makes and with which I agree.

        Three consequences of interest as a built-in feature of our monetary system are that (1) it encourages systematic competition among the participants in the system; (2) it continually fuels the need for endless economic growth; and (3) it concentrates wealth by transferring money from the vast majority to a small minority.

        it is also the essential dispute between Proudhon and Bastiat in the dialogue I referred to very early on it is also a position I made quite clear when I spelled out my own political beliefs again at the out set of this discussion.

        Again for the third time and for clarification.

        http://www.answers.com/Q/Where_does_interest_paid_on_loan_go_in_the_balance_sheet

        This exchange can tell us a lot about accounting conventions.

        2. ”And yet again, sovereign currency issuers don’t borrow their money from banks.”

        Under the current system this is an arguable point. There are two questions here,

        2.1.Should Governments re-assert sovereign control ?Indeed can they without being invaded?

        2.2. If Governments assert sovereign control is an interest based debt money the most democratic and sustainable currency solution.

        1. We are thus aligned with the
          position pointedly formulated by Graeber: ‘money has no essence. It’s not
          “really” anything; therefore
          , its nature has always been and presumably always
          will be a matter of political contention’ (Graeber 2011, 372). As demonstrated by
          Ingham ‘the mainstream, or orthodox, tradition of modern economics does not
          attach much theoretical importance to money’ (
          Ingham 2004, 7).

          http://research.cbs.dk/en/publications/uuid%28e39c39cd-2c52-48f1-9be9-d21d9c641c22%29.html

          http://www.cbs.dk/en/research/departments-and-centres/department-of-management-politics-and-philosophy/staff/obmpp

          Studying this paper on the ontological aspects of Bitcoin, today I will be reading some of Olegs other work on FIAT money as well.

          Sourced from this blog here for anyone else who is interested.

          http://economicsociology.org/?s=money

          1. At the same time, there are of course also crucial differences between Bitcoin
            and conventional fo
            rms of credit money. Most importantly, Bitcoin creates new
            money denominated in its own currency. When ordinary commercial banks are
            allowed to issue new credit denominated in the national currency of the state, in
            which they are operating, they are in eff
            ect granted the license to issue the money
            supply of that state. This license means that commercial bank credit money
            26
            circulate on par with actual physical cash printed by the central bank. When
            merchants accept money as payment for goods or services, they
            do not care much
            if the payment is made in electronic credit money or in physical cash. And
            ultimately even the state accepts bank credit money as payment for taxes, fines
            and other debts to the state. In brief, commercial bank credit money is sanctioned
            by fiat pp25.

            At least Bitcoin is not
            parasitic on the national currency of any sovereign state. If Bitcoin should
            eventually collapse in a spiral of hyperinflation, it is o
            nly going to affect those
            money users, who have voluntarily chosen to invest some of their money in
            Bitcoin. When sizeable commercial banks collapse, they tend to take with them
            their host organism, which is the whole currency of the state in which they ar
            e
            operating. This is of course why the hosting government often does not allow
            these parasites to fail.

        2. Three consequences of interest as a built-in feature of our monetary system are that (1) it encourages systematic competition among the participants in the system; (2) it continually fuels the need for endless economic growth; and (3) it concentrates wealth by transferring money from the vast majority to a small minority.

          Nonsense.

          Again for the third time and for clarification.

          http://www.answers.com/Q/Where_does_interest_paid_on_loan_go_in_the_balance_sheet

          This exchange can tell us a lot about accounting conventions.

          2. ”And yet again, sovereign currency issuers don’t borrow their money from banks.”

          Under the current system this is an arguable point. There are two questions here,

          2.1.Should Governments re-assert sovereign control ?Indeed can they without being invaded?

          2.2. If Governments assert sovereign control is an interest based debt money the most democratic and sustainable currency solution.

          It doesn’t clarify anything because it’s not stock/flow consistent. Interest is income. Remember spending = income.

          The military aspect is political not monetary. We all have sovereign money systems.

          Is it “interest based”? “Debt money” must also be “credit money”.

          I understand that you are opposed to interest, and I sympathise with the philosophy. But I just can’t see an effective system where it can be eliminated altogether.

          Even the no reserve system that PM advocate has to build interest in.

          But they erroneously believe that government money comes from private banks at interest. Which it doesn’t.

          Until you can understand that, you’re just going to go around in circles like they do.

        3. Three consequences of interest as a built-in feature of our monetary system are that (1) it encourages systematic competition among the participants in the system; (2) it continually fuels the need for endless economic growth; and (3) it concentrates wealth by transferring money from the vast majority to a small minority.

          1. You’d need to expand on that. I don’t see how it does that.

          2. If there are more people employed over time as the labour force expands then there will be higher incomes generated, more output produced and more government and private spending. That is, economic growth will expand.

          It is false to claim otherwise.

          3.I think I’ve covered my thoughts on private banking adequately. But this is a political question not an operational systemic question.

      2. Wesley - On the Nature of It

        Nonsense. The creature that you describe as “money”, and that which you assume is the only way of doing “things”, is a fiction. Pure, debt-based, privately issued “money” (check-book, demand deposit liabilities) is a relatively new invention – one that the vast majority of people do not even understand. The “nature” of money is that which we make it. The non-interest-bearing bearer credit instruments known Federal Reserve Notes in my pocket are quite a different type of “money” than the so-called check-book, demand deposit “money” that has no physical form. One is a creature of the Federal Reserve – one is a creature of the private banking system. Both are created out of thin air and based upon a debt (different sorts of debt). It’s quite interesting to watch, as the world glides inexorably to the black hole of negative interest rates structures, how the banking system is now taking steps to eliminate even that one last remaining shred of Government issued tokens (paper money). With negative interest rates on your false-idol “money”, why keep any in the banking system if you’re to be charged interest for your account. The only way to impose negative interest rates on the public’s checking accounts, is to take away their ability to exchange check-book “money” for Federal Reserve “money” – neither of which are good MONEY in my book. The method for accomplishing this, of course, will be the force of State.

        There are many alternatives to this inherently fraudulent system. The vast iniquities inflicted upon the common man by the current system that MMT unsuccessfully describes so poorly are a matter of discussion. Merely saying that “that’s the way it is” – is totally insufficient, and dishonest.

        I have no idea to impose a “hard money” system – whatever that is (and you’ve certainly not described it…) I’ve made some of my views quite clear on the issue of money – and I’ve also made it quite clear that I’m developing these further.

        For your part however, (as part of the MMT mechanism for not only re-branding dissent, but eliminating the possibility of discussing dissenting options entirely, as if none other exist!!) you have again confirmed an irrational rigidity. By your rejection of the notion of any form of change to the current monetary system (one that has been evidencing nearly utter failure since inception), you are explicitly endorsing that monetary system.

        https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-609520
        JohnG: “What I am saying is that the notion of changing the monetary system to something else (mostly seemingly barter arrangements) will not only not fix those problems, it will make them worse. We DO need to change the power structure. Changing the money system won’t do that. Changing to a hard money system would be a disaster for the many.”

        To say, as you do, that the monetary system is fine, it’s just being used the wrong way by the powers-that-be is incredibly naïve, circular, and self-reverential. Wakey-wakey JohnG: the establishment (and the MMT shills supporting it) are doing exactly what they want with your approval. They are one in the same.

        I do NOT approve of the monetary system as currently constituted, and reject your premise for reasons well outlined above in this ‘blog.

        In the America of 1922, there were 9 different forms of “money” in circulation. Prior to the Civil War, there were many more than that. Gold and Silver were only a portion of the legal tender in circulation. But the only forms of “money” causing problems were those credit-based instruments issuing from the private banking realm. We have never had a one-to-one relationship between something of real value, and our money issue in history. This is the main, and simplest point that Soddy and others have made when they say that the problems of the monetary system may be solved with an adding machine.

        You attempt to equate “barter” with something primitive. Soddy’s point (and mine), is that the general public (and most economists) still don’t even understand money. The incredible breach of trust that occurs each time that fiduciary media (purchasing power) is fraudulently created out of thin air by the banking system should be nullified. When purchasing power is made to have a a one-to-one relationship with a known quantifiable value, these problems will end. It’s incredibly simple. YES, the system needs the ability to expand and contract – and that can be accomplished with credit. The ceaseless expansion of that thing you call “money” is not working. The wealth of man cannot then be stolen by the machinations of a few, and supported by unjust law, imposing an infinite growth paradigm in a finite world.

        As I’ve said before, I’d rather have a direct, debt-free and interest-free fiat issue by Government than that which we have now. To be indebted for the use of our own “money” is a crime. And to be indebted to the banking system for the use of our own “money” is even worse. Once you, the high priests of MMTism (and all our other deluded fellow citizens) realize that, we will have taken the biggest single step possible in mankind’s development as a species.

        1. Worth a listen this I think one for the train ride or commute home.
          https://soundcloud.com/this-is-hell/794olebjerg

          I have been reading some of Ole Berg´s work todday. Very nice to see a philosophical and political economy approach to the question of money this paper is a great read. How is Bitcoin Money http://research.cbs.dk/…/ole_bjerg_how_is_bitcoin_money_pos… also this interview on Ole´s book Making Money and interview with Stephen Dunne http://research.cbs.dk/…/ole_bjerg_making_making_money_publ…

          1. Wesley with Ole Bjerg

            @Roger – thanks for the link…

            Bjerg touches on the so-called Ford quote (which I’ve clarified above) at the end of the interview and fumbles a bit. Had he looked at the period more closely, (using materials that are present here), his answer might have been more compelling. The public then, unsurprisingly, (given the amount of time the money-powers have had to shape opinion and remove the notion of our fraudulent credit-money system as anything more than an assumption – such as that evidenced by the MMTers) — was actually much more aware and conversational about money matters in the 1920s than they are today!

            I’m glad to be aware of this man’s efforts which I find enlightened… Thanks!

          2. Wesley with the Princes of the Yen

            Richard Werner’s “Princes of the Yen” book (and film based on same) is a compelling outline of worldwide Banking cartel manipulations of entire governments, and the peoples whom elected them.

            https://www.youtube.com/watch?v=p5Ac7ap_MAY

            It was worthwhile to watch this well documented film again, in the context of the Re-branding and manufacture of “consent” and this wonderful ‘blog. One cannot help but wonder, after the concerted, worldwide collusion of the Central Banking cartel to reflate the world’s economies in unison to the tune of $11 Trillion of global QE (excluding China), $65 trillion of more debt, 3 more recessions in Japan, the collapse of many EM economies — and probably another $15 Trillion dollars (equivalent) in China alone – all at the same time — whether Dr. Lerner shouldn’t name the sequel “Princes of Money”.

            Now that the global puppeteers have begun to raise interest rates, it’ll be interesting to watch exactly what sort of “structural” changes will be wrought as this next crisis is engineered in the manner of Dr. Werner’s incisive ideas…

        2. The non-interest-bearing bearer credit instruments known Federal Reserve Notes in my pocket are quite a different type of “money” than the so-called check-book, demand deposit “money” that has no physical form. One is a creature of the Federal Reserve – one is a creature of the private banking system. Both are created out of thin air and based upon a debt (different sorts of debt).

          Indeed. You should think on that for some time. Vertical vs horizontal.

          your false-idol “money”

          Dude, it seems to me that it is you fixated on money. To me, money is just like the oil that keeps my vehicle running smoothly.

          negative interest rates

          These are the work of neoclassical/neoliberal idiots who operate on the same theories of the system that you do.

          It’s absurd. QE is absurd. Nothing to do with me or MMT. All to do with you and your neoclassical mythology.

          There are many alternatives to this inherently fraudulent system.

          Let’s hear one. You’ve singularly failed to enunciate any alternative.

          Using the word ‘fraudulent’ doesn’t make it so. Especially when you’ve repeatedly demonstrated that you don’t understand how it works.

          I have no idea to impose a “hard money” system – whatever that is (and you’ve certainly not described it…)

          Then clearly you need to be more specific and write with clarity in plain English.

          I have no idea of what your system would look like and you’ve not enunciated one.

          I’ve made some of my views quite clear on the issue of money

          You’ve expressed moral outrage on discovery that money is virtual. You’ve then ascribed that fact to all the ills of the world.

          So it’s all one big logical fallacy.

          For your part however, (as part of the MMT mechanism for not only re-branding dissent, but eliminating the possibility of discussing dissenting options entirely.

          Utter nonsense. It’s all in your mind. I’m arguing my side in plain language and rejecting your myths, your tactics and your hysterical nonsense.

          And I’m defending myself and MMT generally from your voluminous, repeated. hysterical personal attacks.

          If you had a valid, cogent argument to defeat me, you wouldn’t need to resort to all the ad hominem strawman arguments to ‘discredit’ me and MMT.

          The dishonest actor here is you, buddy.

          By your rejection of the notion of any form of change to the current monetary system (one that has been evidencing nearly utter failure since inception), you are explicitly endorsing that monetary system.

          I’ve made quite clear at the outset that I believe that a sovereign, fiat, non-convertible, floating exchange rate currency is, on an operational level, as about as good as we can get.

          Based on the fact that everything else has failed because they are mathematically flawed.

          That does not mean that I accept the way that it is being run or that I accept the existence of the banks and politicians that are rorting the whole thing.

          Trying to explain the operational workings of the system is not endorsing the operators.

          Instead of flinging abuse at me, you would do well to acknowledge the point.

          Only then can we have any sort of rational discourse.

          To wit:

          To say, as you do, that the monetary system is fine, it’s just being used the wrong way by the powers-that-be is incredibly naïve, circular, and self-reverential. Wakey-wakey JohnG: the establishment (and the MMT shills supporting it) are doing exactly what they want with your approval. They are one in the same.

          A personal attack revolving around a logical fallacy.

          In the America of 1922, there were 9 different forms of “money” in circulation. Prior to the Civil War, there were many more than that. Gold and Silver were only a portion of the legal tender in circulation. But the only forms of “money” causing problems were those credit-based instruments issuing from the private banking realm. We have never had a one-to-one relationship between something of real value, and our money issue in history. This is the main, and simplest point that Soddy and others have made when they say that the problems of the monetary system may be solved with an adding machine.

          More false history. American society and economy were an absolute disaster in those years.

          I note that you’ve completely rejected David Graeber’s work and chosen to believe a myth.

          Isn’t this “hard money”?

          The fact that you’ve never had it may suggest that it’s an impractical pipe dream that could destroy society as we know it. (Almost a certainty I’d say).

          You attempt to equate “barter” with something primitive. Soddy’s point (and mine), is that the general public (and most economists) still don’t even understand money.

          Barter is something that you do when you don’t use money. It’s never going to fulfill the needs of complex societies.

          As I said earlier, I didn’t read much Soddy. It is true that most economists don’t understand money. That is something that MMT constantly points out and is trying to correct.

          The only thing that YOU have learned about money is that it is created ex nihilo. And you reject that as being a)morally repugnant and b) not money.

          I’d suggest that changing the politics and having the monetary system used for general welfare and public purpose is going to be hard enough.

          Overthrowing money and changing to a barter economy is a) much harder again and b) a recipe for the annihilation of most of mankind.

          And this is where we get into the real evil of your (not overtly stated) philosophy.

          As I’ve said before, I’d rather have a direct, debt-free and interest-free fiat issue by Government than that which we have now.

          Yes well, if you understood the operational realities of our fiat systems, you’d understand that we can have that now.

          Refer back to your paper dollar vs electronic dollar.

          Horizontal vs vertical. Horizontal vs vertical. Horizontal vs vertical. Horizontal vs vertical. Horizontal vs vertical. Horizontal vs vertical.

          Rather than form opinions on MMT based on reading the strawman arguments of its detractors, maybe read the actual literature.

          For someone who criticises the mainstream economists to then accept the views of mainstream economists (that MMT rejects for the same reasons that you claim to) about it, appears to me to be extraordinarily bad epistemological methodology

          It’s almost like you suffer an a priori rejection for reasons unknown.

          Calling us Hitlers and Stalins is a dead giveaway. And offensive.

    1. Money in my preffered verion would be decentralied and democratic and bankswould not have the power to create debt based money in an assymetrical exchanges as is presently the overwhelmong case.

      OK. Let’s take that as your base point. And bear in mind that I’m totally in agreement on the democratic and decentralised aspect.

      How would you do that?

      1. A new story of money and a new story of self.

        https://www.youtube.com/watch?v=GEe3sZJg5kQ

        Charles Eisenstien’s take on complementary currencies and a gift economy are interesting but enimicable to the status quo. The character I play in life wants to be in the CHarles Eisenstien story and not the MMT/Johng Story.

        https://www.youtube.com/watch?v=wBe8MTcCqKs

        Signs Symbols Stories Language.

        Winston/Chomsky.( MIT)

        Understanding in our minds and what we express through communication in language are not systems designed to compliment each other . This leads to confusions and the disjoint can be manipulated against our own best interests.

        I have been pondering lately whether in Sweden a country that uses a language with 41,000 words; (approx.)

        http://reference.yourdictionary.com/o

        One way to get an estimate of the number of words in the Swedish language is to look at a dictionary. The online Woxikon dictionary lists over 41,000 Swedish words. It is interesting to note that more words started with “s” than any other, by far, and the least number of words started with “q” and “x.” This is only a rough estimate of the number of words in the Swedish language.

        http://oxforddictionaries.com/words/h

        The Second Edition of the 20-volume Oxford English Dictionary contains full entries for 171,476 words in current use, and 47,156 obsolete words. To this may be added around 9,500derivative words included as subentries. Over half of these words are nouns, about a quarter adjectives, and about a seventh verbs; the rest is made up of exclamations, conjunctions, prepositions, suffixes, etc. And these figures don’t take account of entries with senses for different word classes (such as noun and adjective).

        I do wonder if with less words Swedes have more common stories and communicate their shared understanding at a more sub-concious level than the attempts at precision, English speaking nations make inevitably ending in a wider opportunity for misundertanding the points being made by the other person?

        The above notions arise from my watching a film celebrating MIT’s Artificial Intelligence department and two themes developed by Professors Chomsky and Winston on the apparatus used for Language and the idea of Story Telling in communication and learning being the re awakening of Latent understanding.

        Are we bound more by our shared stories than by our Understanding of being. I would say yes of course we are we understand very little but actually share a common conditioned understanding of our stories. Politicians call them narratives, Ad men ‘keep on message’. Meme’s, Buzz words, Soundbites the unquestioned Facts of life communicated in Language often against our instinctive better natures.

        Reference these quotes at the links here.

        letthemconfectsweeterlies.blogspot.se/2013_04_01_archive.html

        Philosophy is a battle against the bewitchment of our intelligence by means of language.

        Intuition and concepts constitute… the elements of all our knowledge, so that neither concepts without an intuition in some way corresponding to them, nor intuition without concepts, can yield knowledge.

        The oldest, shortest words – ‘yes’ and ‘no’ – are those which require the most thought.

        We have two ears and one mouth so that we can listen twice as much as we speak.

        In words are seen the state of mind and character and disposition of the speaker.

        The aim of art is to represent not the outward appearance of things, but their inward significance.

        The metaphor of language and prison:

        “Whorf himself, and some of his followers, have suggested that we live in a kind of intellectual prison, a prison formed by the structural rules of our language. I am prepared to accept this metaphor, though I have to add to it that it is an odd prison as we are normally unaware of being imprisoned. We may become aware of it through culture clash. But then, this very awareness allows us to break the prison. If we try hard enough, we can transcend our prison by studying the new language and by comparing it with our own.”

        Widening the prison:

        “Admittedly, the result will be a new prison. But it will be a much larger and wider prison. And again, we will not suffer from it. Or rather, whenever we do suffer from it, we are free to examine it critically, and thus to break out again into a still wider prison.”

        Prisons as Frameworks:

        “The prisons are the frameworks. And those who do not like prisons will be opposed to the myth of the framework. They will welcome a discussion with a partner who comes from another world, from another framework, for it gives them an opportunity to discover their so far unfelt chains, to break these chains, and thus to transcend themselves. But this breaking of one’s prison is clearly not a matter of routine: it can only be the result of a critical effort and of a creative effort.”

        http://leakygrammar.net/2012/07/15/ka

        I quote others only in order the better to express myself.

        Lastly get emotionally connected to your story so you can deliver it, you know, if you can’t deliver the emotions to your script there’s no point to your story. Story is the key.
        0 up, 0 down

        1. OK. I’ll take that as an ‘unable to do so’ then.

          It’s all just a big pretense.

          You don’t care a wit about the lives that you’d destroy.

          Which is your point of agreement with Wesley.

          I quote others only in order the better to express myself.

          You quote others to cover for the fact that you can’t think for yourself.

          Again, just like Wesley.

          I’ll stick to saving villages thanks.

          1. Put your chainsaw away Johng, I will make a full analysis of your substantive arguments in my own time, your childish wish to declare some sort of victory is just that Childish.

            You might care to start thinking about some of the points made by Toby Russel in these two blogs,

            http://thdrussell.blogspot.se/search/label/MMT

            http://thdrussell.blogspot.se/2013/05/the-meaning-of-money.html

            WIth respect to the points made regarding language Toby makes this point

            ”Thus there are no discreet things, no objects per se, only networks of relationships. In place of causal linear chains of discreet objects impacting each other like billiard balls on the baize of time, we have in systems theory A–>B–>C–>D–>A, a closed loop that creates a system, an “integrated whole” in which each ‘part’ is itself a system of further relationships, no matter how deeply down we drill. And we cannot really say where the system starts. I could equally well express this loop as C–>D–>A–>B–>C. That said, this does not imply pure randomness. There is progress; there is crawling before walking before running, etc. ”

            You can continue to wave your chainsaw at the first sign of danger that your own prejudices will be challenged and found to be lacking in real merit or you can try to present some reasoned critique of apparently contradictory stories explaining this slippery phenomenon ´´Money´´and the Monetary System. the choice is yours..

            Autobot response no 12 ( I could count its much higher than that but here we go.

            https://www.youtube.com/watch?v=195HTzx31So

        2. If you see my capacity t as a chainsaw what can I do?

          I went easy on you Roger. I’d have continued to feel sorry for you if you hadn’t voluntarily sided with the right wing extremist.

          But let’s get this straight.

          You’ve tried to impugn me on many occasions on many levels.

          None are true.

          Do I need to list them?

          For a start. I’m not in the academy and I am in business.

        3. I will make a full analysis of your substantive arguments in my own time

          If only you were capable, Roger.

          As I said earlier, it looks like you’ve entered a battle of wits completely unarmed.

  79. JohnG February 5, 2016 at 8:46 am #

    Further the Bail outs were not done with strings in the case of US, UK and German/French banks at any rate.How can this assymetry go uncorrected and why was it proffered?

    Because politicians are corrupt and ignorant. The law was not followed. This is a result of neoliberalism, not the monetary system.

    A final acid test regarding who runs the show. How many bankers have done Jail time for the litany of scandals etc since Boesky and Milken say, its non since 2008 except in Iceland another case worthy of study to test your proposition that sovereign governments are not the Dog wagged by the Banking tail.

    It’s no sort of acid test.

    John G see Chainsaw waving video.particularly the reference to the pot calling the kettle black. As for personal attacks I do not think you know what is an attack on a persons character and what is a dispute of their arguments

    Bill Mitchell spells it out in his comments policy.

    I will not post auto bot response no11 that it has reached that many applications tells anyone who wishes to know what my view has been regarding the number of reductio absurdium ruses and ‘general Schopenhauerian stratagems have been employed by you in this discussion. As I have previously commented I was suprised that you took that observation up as some sort of challenge. Synopsis

    The following lists the 38 stratagems described by Schopenhauer, in the order of their appearance in the book:

    The Extension (Dana’s Law)
    The Homonymy
    Generalize Your Opponent’s Specific Statements
    Conceal Your Game
    False Propositions
    Postulate What Has to Be Proved
    Yield Admissions Through Questions
    Make Your Opponent Angry
    Questions in Detouring Order
    Take Advantage of the Nay-Sayer
    Generalize Admissions of Specific Cases
    Choose Metaphors Favourable to Your Proposition
    Agree to Reject the Counter-Proposition
    Claim Victory Despite Defeat
    Use Seemingly Absurd Propositions
    Arguments Ad Hominem
    Defense Through Subtle Distinction
    Interrupt, Break, Divert the Dispute
    Generalize the Matter, Then Argue Against it
    Draw Conclusions Yourself
    Meet Him With a Counter-Argument as Bad as His
    Petitio principii
    Make Him Exaggerate His Statement
    State a False Syllogism
    Find One Instance to the Contrary
    Turn the Tables
    Anger Indicates a Weak Point
    Persuade the Audience, Not the Opponent
    Diversion
    Appeal to Authority Rather Than Reason
    This Is Beyond Me
    Put His Thesis into Some Odious Category
    It Applies in Theory, but Not in Practice
    Don’t Let Him Off the Hook
    Will Is More Effective Than Insight
    Bewilder Your opponent by Mere Bombast
    A Faulty Proof Refutes His Whole Position
    Become Personal, Insulting, Rude (argumentum ad personam)

    27 to go.

    1. Well Roger, I have to say that you are projecting.

      I think you should have a good look at your own conduct.

      And to suggest that Wesley has argued in good faith, as you did in an earlier comment, is to demonstrate rank dishonesty.

      He launched into personal attacks from the get go.

      I’d rather be blunt and speak plain English. I don’t need to write 3000 word essay to call you a ****. And I don’t need to manufacture strawmen to knock down your arguments.

      That’s just plain intellectual dishonesty.

      And then to turn the instances of my own self defence into some sort of accusation of fanaticism is as dishonest as it gets.

      Defeat my arguments by all means. But don’t personally slag me and then complain when you get some back.

      Jamie Galbraith is NOT an MMTer but it’s hard to disagree with what he writes here about other economists.

      Who Are These Economists, Anyway?

      By James K. Galbraith

      http://www.levyinstitute.org/publications/who-are-these-economists-anyway

      I would suggest to you Roger that your method of gaining knowledge is highly flawed in that you rely on opinions generated by others rather than decide on the merits of the source material.

      Some of us don’t work that way.

      Your confusion and rejection of balance sheet methodology in macroeconomics tells me much about you.

      I understand that macro appears counter-intuitive to most people at first encounter. But you need to get over it.

      And stop abusing those who do get it.

  80. Wesley - It's Ontological!

    @Roger: The How is Bitcoin Money? (Ole Bjerg, Dec 2015) article you linked earlier provides useful insights into the money question!

    “It is argued that Bitcoin is commodity money without gold, fiat money without a state, and credit money without debt.”

    @JohnG February 5, 2016 at 9:59 am
    https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-609529
    [
    “debt based money
    Money involves a credit and a corresponding debt.
    That’s the nature of it.”
    ]

    The conventional definition of Money is kinda’ like that famous Supreme Court Justice’s view of pornography: You’ll know it when you see it! And MMT-Money ain’t money. It’s credit. On this JohnG most pointedly agrees! The only difference is, MMTers equate money and credit – and for their bizarre T-balance sheet view of the world to work, that is a logical starting place. However, it’s a fallacy, and this paper draws the same insight very colorfully. (See concluding remarks)

    Generally accepted definitions of money include lots of different aspects: Unit of account (You can use it for measurements and an economic calculus); Store of Value (transferring wealth forward in time); Medium of Exchange (payments). I’ve discussed other important attributes earlier. These are the ones that most can pull from memory. I’ve shown, and you all know that the MMT-Dollar fails on 2 out of the 3 necessary characteristics of money:

    Debt-based fiat “money” is not a good unit of account. Why? If it were meeting its function as a Unit of Account effectively, there would be no need for Cost of Living adjustments; there would be no need for a Consumer Price Index; there would be no need to discuss accounting matters in terms of whether they are “Real” or “nominal” (which means “unreal” in the MMT world). There’s another, simpler way of looking at this failure of the current dollar (the MMT dollar) which is understood by everyone: A dollar today does not buy what a dollar bought in 1916.

    Debt-based fiat money is not a good store of value, for the same reasons that it is not a good unit of account. It is an “elastic” band that never stops stretching (until it breaks!). This awful crime is now more obvious than before. Today, in our world of Centrally-planned financial repression, do you really think that if you save your MMT-dollars each day (and not allow yourself to be pushed into the financialized asset markets), that they will have the same purchasing power (or greater) when you are at the retiring end of your life? Of course not. The MMT-dollar is guaranteed to lose value at varying rates… currently agreed by the theologians to be 2% per annum. The rate at which your money has been stolen from you has varied to much higher rates that are well documented. The mere fact that NO ONE can even agree on a method for measuring the rate of “inflation” (growth of counterfeit credit), should give you a hint as to the problem. All the economists are trying to measure the symptoms, rather than the cause. An understanding of what true Money is, will permit you to see the cause of ill, namely: the programmed, intentional and permanent growth of fraudulently issued credit money. Linguistically, (and using the paper’s ontological perspective, too!) when using Real Money, one will not be required to QUALIFY the comparison between money in 2000 with money in 2016 temporally (i.e., when comparing dollars to one another over long periods of time, one must “adjust” those dollars to a benchmark year, and state the basis of “deflating” the latter issued dollars. Income, and “real” income are the same thing!). One kilogram of Gold will always account for the same number of molecules of that substance. One Meter is an observable, unchanging (we hope) unit, observable in nature. One Ampere is agreed upon throughout the world in the International System of Units as a measure of the unit of electrical current. A Candela is a candela. And so on. Did you ever wonder why, a measure of money does not exist in the SI system? That such a thing, used by virtually every person on the planet, multiple times per day, and whose whole lives are basically revolving around – is not an agreed thing? I wonder about that MOST of the time! I’ve told you why: it’s a man-made construct that differs throughout the world and is constantly changing. That need not be so.

    The only reason that MMT-money works as a medium of exchange, is that we are forced by law (laws calling for taxation, and legal tender laws etc.) to accept these pseudo-money issues in the payments system. So everyone uses them. By force of State, and convenience of ubiquity. But it’s not money – it’s credit, and other things work as well (or better), including Bitcoin.

    The paper does a good job of explaining Bitcoin’s functions succinctly. Using the same 3 common metrics, Bitcoin passes only one of the tests also: it is an incredibly efficient medium of exchange! When Ms. Li agrees to take 100,000 of her Yuan out of Beijing for a swinging weekend in the Casinos and shops of Macao, she may place her State issued, fiat “money” on the blockchain for a few hours, with a certain confidence that when her plane touches down, she may remove her 100,000Y from the blockchain (minus fees and carry risk etc.) without subjecting herself to the increasingly onerous capital controls being imposed by that lovely State. Ms. Li knows absolutely that she is the only owner of those units – unlike your MMT-dollars. As a store of value into the distant future? Not so much! (Except perhaps the founder and early adopters of Bitcoin, and rightly so, are doing quite well, thank-you.) And as a unit of exchange, in which to perform economic calculus and planning for the future – again, it’s a fail. The pseudonymous Nakamoto knew this quite well. Bitcoin is best at doing exactly what it was designed for: a payments system! There are many other public-policy questions associated with Bitcoin, not least of which concern its ability to eliminate the issue of counter-party “trust” from a transaction on the good hand, and its potential security vulnerabilities on the other – but that’s clearly for another ‘blog.

    What this Copenhagen Business School paper rightly points out that, like MMT, the Bank of England (“perfectly reflecting orthodox thinking”) naturally takes the conventional definition of money AND the conventional forms of money for granted. It also recognizes that in conventional economics, money is NOT EVEN RECOGNIZED. JohnG would, I’m sure, love to know that the author conflates the “fiat theory of money” with the “chartal theory” of money. What JohnG and other misguided chartalists may not like so much, are the paper’s keen insights into the ontological, existential fallacy that is MMT. I was glad to see that an increasing number of people beyond Steve Keen are recognizing this flaw in the MMT ideology:

    [
    The paradox of fractional reserve banking is that on the one hand, commercial bank credit money circulate at the same value as state issued fiat money, while on the other hand the amount of outstanding credit money vastly exceeds the amount of fiat money on reserve in the bank. We can understand the way that this system is maintained through Zizek’s concept of ideology:

    Ideology involves translating impossibility into a particular historical blockage, thereby sustaining the dream of ultimate fulfillment – a consummate encounter with the Thing. On the other hand … ideology also functions as a way of regulating a certain distance with such an encounter. It sustains at the level of fantasy precisely what it seeks to avoid at the level of actuality. …. So ideology appears to involve both sustenance and avoidance in regard to encountering the Thing. (Žižekand Daly 2004, 70–71)

    The ideology of fractional reserve banking ‘translates’ the structural ‘impossibility’ of all bank customers demanding their credit money paid out in state issued fiat money into a particular, practical matter of convenience. Each individual customer could in principle go down to the bank and have his deposits paid out in cash. And the bank makes sure to manage its holdings of liquidity to accommodate any customer wishing to do so. But precisely by offering this possibility, the bank prevents the majority of customers from ever doing so. By maintaining the fantasy among customers that they can convert their credit money 25into ‘the real Thing’ at any time, this ideology ‘regulates a certain distance with such an encounter.’ Since electronic credit money is typically much more convenient than fiat cash money, there is no reason for customers to convert their money. Convertibility of credit money into fiat money is ‘sustained at the level of fantasy precisely to avoid it at the level of actuality.’ Today we live in the age of post-credit money, where the vast majority of payments are nothing but the exchange of commercial bank credits between money users and these credits rarely come back for redemption in any other form of money than simply more commercial bank credit (Bjerg 2014, 155–192).

    Since credit money is ultimately a contractual relation between a creditor and a debtor, the materiality of the money has very little significance. In fact, credit money is most often purely virtual as it is nothing but the recording of the relation between creditor and debtor in a book keeping system. We can easily recognize this feature in the case of Bitcoin. The core of Bitcoin is the block chain, which functions as a public ledger registering the credits of the money users in the system. The value of a particular Bitcoin wallet is the corresponding credit recorded in the block chain.

    At the same time, there are of course also crucial differences between Bitcoin and conventional forms of credit money. Most importantly, Bitcoin creates new money denominated in its own currency. When ordinary commercial banks are allowed to issue new credit denominated in the national currency of the state, in which they are operating, they are in effect granted the license to issue the money supply of that state. This license means that commercial bank credit money circulate on par with actual physical cash printed by the central bank. When merchants accept money as payment for goods or services, they do not care much if the payment is made in electronic credit money or in physical cash. And ultimately even the state accepts bank credit money as payment for taxes, fines and other debts to the state.

    In brief, commercial bank credit money is sanctioned by fiat. Bitcoins obviously differ from these conventional money created in the zone of indistinction between official government and private banking enterprise, since Bitcoin is not only a system for the creation of new money but even also an independent currency. When people hear about Bitcoin for the first time, they are often puzzled by the way that the system seems to create new money out of nothing. While there are indeed reasons to be puzzled about Bitcoin, IT IS PERHAPS EVEN MORE CURIOUS THAT WE READILY ACCEPT THE CREATION OF NEW MONEY OUT OF NOTHING BY THE CONVENTIONAL COMMERCIAL BANK SYSTEM. [My emphasis]

    At least Bitcoin is not parasitic on the national currency of any sovereign state. If Bitcoin should eventually collapse in a spiral of hyperinflation, it is only going to affect those money users, who have voluntarily chosen to invest some of their money in Bitcoin. When sizeable commercial banks collapse, they tend to take with them their host organism, which is the whole currency of the state in which they are operating. This is of course why the hosting government often does not allow these parasites to fail.

    Another difference between Bitcoin and conventional bank credit money is that new bitcoins are created and introduced into the economy free of debt. When commercial banks issue new credit that circulates as money, this is typically the other side of the customers’ debt to the bank. Since the customer’s debt to the bank is typically charged with a much higher interest rate than the bank’s debt to the customer, there is an inherent tendency in this system for the total amount of debt to grow faster than the total supply of money (Binswanger 2013).

    As we have already touched upon, Bitcoin is similar to state issued fiat money in this respect. A bitcoin does not represent a claim on any particular debtor but rather a claim upon the whole ‘society’ of Bitcoin users. Bitcoin is credit money without debt.
    ]

    Bitcoin is a voluntary system. How refreshing! The fiction of convertibility of MMT credits into fiat-money will be sustained at the level of FANTASY precisely to avoid it facing Reality. Just as the neo-classical commodity theory of money (redeemable money etc) cannot be used to describe the monstrosity of what we have now (bank-credits).

    We all know “something” is very wrong. There are better ways… and I aim to show you how!

    1. The value of Bitcoin is the same as the value of gold. You can exchange it for state money with someone who has state money that wants to buy your commodity.

      As we have already touched upon, Bitcoin is similar to state issued fiat money in this respect. A bitcoin does not represent a claim on any particular debtor but rather a claim upon the whole ‘society’ of Bitcoin users.

      A dollar i.e. a government liability, is a claim on the state, not society.

      This is a crucial point that neither of you are able to understand.

    2. And ultimately even the state accepts bank credit money as payment for taxes, fines and other debts to the state.

      False.

      A fundamental flaw in your knowledge.

      1. Wesley Fundamentally Flawed?

        @johng: You really ought to read more carefully. I clearly cited the Bjerg paper and set it off in brackets – so that even YOU might distinguish between my humble words, and those of another… This is also true of Roger’s use of the same citation. It’s from an academic paper submitted through the Copenhagen Business School.

        Here’s the citation AGAIN, for your convenience, dear chain-saw-man!

        http://research.cbs.dk/files/44436178/ole_bjerg_how_is_bitcoin_money_postprint.pdf

        The citation stands. It’s a good paper. And it’s accurate. To the extent that it simplifies things such that a 10 year old can read and understand it, and it’s not loaded with a bunch of meaningless math, and even more meaningless MMT balance sheets – well it has my complete support.

        Rather than waving a chain-saw about today, while cursing irrationally, why don’t you ask David to remove your belligerent comments? I would take that as a willingness to ADD to the conversation, rather than chasing people away.

        Next step: Be patient JohnG! There are souls here possessed of lesser knowledge of the magic of MMT than thee. Understanding is conveyed NOT by simply rejecting another’s proposition out of hand (i.e., your saying it is meaningless) without carefully backing up your statement with something that resembles reasoning and logic.

        Take a breath, have a cuppa’ and behave!

  81. Wesley Radical and Revolutionary!

    Consider this written nearly 100 years ago – issuing from a journal owned by that simple, pamphleteer known as Henry Ford… decades before the formation of the IMF or the BIS; decades before the implementation of a purely privatized money-issue cartel of banks backed by fiat; and fully aware of the risks associated with butting-heads against the money-powers-that-be… Are you still convinced that the money-power lies with Government?

    [
    Dearborn Independent 1922 March
    The “Money Mystery” Baffles the Government
    “Gold Fiction” by Politicians Dependent on Financiers for Monetary Counsel
    By A. R. PINCI

    The National Monetary Commission [1892] was the last of many sporadic attempts made by the Government of the United States to investigate the mystery of money and its related problems. … Mystery is the right word to use, because politically at Washington the exact nature of money’s functions is unknown. Either from the standpoint of an administration or that of the average Congress, the aggregate knowledge about finance, banking and currency is no greater than that of the great majority of their respective constituent members. Reducing this to a common opinion, as far as this is possible, it can be safely stated that no matter how high the office, its holder is content to accept the common and current idea about money. He has no intention to delve into theories of his own, to seek out the history, to separate the true from the false genesis. Occasionally there appears upon the governing horizon an individual who is recognized as an expert. More probably than not he forces this recognition, an easy thing to do, with almost blind assurance that there is no one foolish enough to dispute whatever contentions are thus advanced. The only measure by which the latter is tested is the reaction upon public opinion, a very unrepresentative plan, since the only reaction manifested will be in financial circles. The press as a rule will not discuss money. Like the average politician and the average layman and the average professional, the average editor realizes the futility of analyzing the subject, confused by theories and facts adduced throughout several centuries. Moreover, he feels safe in shunning it because of the certainty that most readers are not interested, as nothing about money appeals to them except how to make it quickly. As a topic it is disguised as “cost of living.”

    International Bankers Control Our Money Ideas

    THE financial world, however, keenly scenting the political breath, reacts at once. This reaction varies. It ignores, it objects, it approves. Sometimes it misses its point, but without serious results. What happens thereafter is obvious. If it is a routine administrative matter nothing is done. If it is something that the financiers consider as being advantageous to themselves, they support it, overtly or secretly, depending upon the circumstances, and the times. If it is against their interests, they object and act accordingly.

    From time to time there have been Americans who have gone on record with their views, disputing the present system of finance…. It has been, however, the single, unhonored voice. Where it attained the distinction of a hearing, it was dismissed without compliment as revolutionary or radical. This criticism has always been deadly. The mere combination of the two words, “radical” and “money,” strikes panic everywhere. Greatly to the advantage of these protected financial interests, they can now point to certain war-ravaged European nations and say triumphantly: “There; they have tried their new notions; there the government is money; see what it has caused?”

    Finance as practiced today in the United States is a very poor example of progress. It has not yet reached the point where it consumes itself, but it has virtually stopped reproducing. American finance today yields nothing except to the fortunate few who are not in immediate need. It points to existing ills elsewhere but does not advance any suggestions which might cost money or effort. This is true of the politicians as well as of the financiers whose views they unconsciously reflect.

    The hope of displacing London with New York has been frequently uttered; but it is a vain hope. Feeble, almost unnoticeable attempts, have been made by associations to wag the financial dog by its tail, but in every case they have been afraid of both bark and bite. At Washington proud plans have been laid to do by law what could not be done with money, and the results have been nil.

    Bankers Lose Most If Gold Standard Goes

    SUGGESTIONS have been advanced for the establishment of a great international bank, on a gold basis. The theory is excellent, but the one fact remains—that gold failing to do what it was expected to do at the first serious emergency, it can hardly fulfill expectations through the operation of an experimental organization as that proposed. In setting aside this particular suggestion note should be made that its only weakness is to provide the very metal that for the time being has been set aside in Europe, within certain boundaries. Dissenters have raised the cry that any attempt to trade with Europe now means the depreciation of our prosperous dollar, whatever a prosperous dollar may be, to the level of worthless money. The point they raise is obvious; but the twist of meaning is even more so. There is, naturally, every reason why the dollar unit of exchange cannot be equalized to depreciated units elsewhere, but apart from this technicality, natural and artificial wealth combined has not depreciated intrinsically. Whatever difference exists in price unit, beyond the normal and accountable difference of values of a given article as between country and country, is due to the speculation in exchange, and this speculation is possible solely because the fiction that money establishes value is maintained by the money sellers. A pound of French silk or a gallon of Italian olive oil or a dozen German knives are units of wealth the world over, as is the bushel of American flour, subject in each case to the immutable law of supply and demand. If given quantities of these articles were traded in on the basis of ancient barter each trader would receive an adequate value in exchange. As soon, however, as the modern method of finance on the gold basis requires that each article must first be reduced into terms of gold, values are dislocated, and the goldless trader is penalized accordingly.

    What is the underlying lesson in all this?

    It is that while bankers in general do not regard foreign exchange operations as a very important source of their profits (not in this country in normal times) they see an immediate loss to themselves as soon as a definite attempt is made to suspend the gold standard. Yet suspended it must be, or almost suspended, since Europe will never again have gold enough to restore its own. The Orient is satisfied with silver. Bankers in America cannot retain the gold standard and do business abroad, too. Something must give.

    The suggestion arises that the government can and must enter into the breach. The government must, but whether it can or knows how is conjectural. The banks control public opinion. Regardless of the liquidity of our currency under the new laws, the professional dealers in money can instill fear in every voter by the merest hint. It is the weakness of the electorate, as of everybody else, that the pocket can be made to hurt—and financial hypochondria is the biggest card that the banking profession can play.

    American banking is essentially a family affair. From the days nearly a century ago, when Nicholas Biddle emerged as a great financier, to this moment, when his descendants are related by blood and other ties to the leading bankers of the East, this small clique has reigned supreme in money matters. This statement should not be taken to signify that these clever individuals have exercised their influence against the good of the nation, but merely that they have held to a single belief—the doctrine which today dictates or regulates every bit of financial legislation enacted at Washington.

    This is the silent and powerful wing that is marshaled for attack or defense whenever the Congress of the United States is confronted with the need of remedial laws. But what can Congress do? There is no one else to call. All bankers belong to the same single-track school of thought. The rural banker may not know how to expound his views with the same certainty, deliberation, wording and effect as can his more sophisticated fellow of the metropolis, but the class instinct is cohesive. Whenever an independent voice expresses novel views, reforms, changes, it is smothered by the opposition.

    Money-Most Common Thing-Least Understood

    THE sovereign voter has no chance. It is his money, but some greater power controls its destiny. For that he has himself to blame, although it is not solely an American shortcoming. Of a thousand who read assiduously the sport pages of the newspapers not one reads the statement of the condition of the Treasury. Some do pay the financial section the honor of a cursory glance, but that is because they may be the proud owners of stock—even if it be the first payment on a single $100 certificate. Yet the latter is essentially a speculative interest; it is not financial analysis. These negligent individuals do not realize that as taxpayers they are primarily held responsible for the government’s success in placing a block of certificates of indebtedness, and that they themselves must pay for the privilege, by devious and hidden ways. But the situation is difficult to remedy. It is a matter of evolution. The most commonplace thing in the world—money—is the least understood. In this country the government has rendered the problem even more difficult by its shortsighted policy. To reform now would be a jolt—and where are the politicians that dare to give it?

    From time to time, too, there appear monographs or statements by experts and students on the subject of money, but read as one will, they are unanimous in placing gold in its accustomed miraculous niche. This circumstance must be borne in mind because these authorities, usually university professors, are, about the only ones called at Washington, besides the bankers, whenever financial legislation is under consideration.

    One of these authorities professes to believe that there exists popular discontent over paper money. No one is actually aware of this discontent; although in relation to Federal Reserve notes—which are partly gold value and partly “promise to pay”—one might justifiably doubt the efficacy of the gold fraction. A Federal promise to pay would be just as good.

    Money metal has been in use for centuries. That does not mean, however, that it is infallible. In fact, there is every evidence that negotiable paper on the one hand, and government evidences of indebtedness, have displaced almost all metal. Said one of these authorities: “Out in the open country, far from the centers of banking, most of the millions of Americans live; and these millions do, in fact, control the government and the nation. Most of these millions know nothing of the Federal Reserve system beyond seeing this new and relatively powerless paper money.” Then follows the suggestion that gold be replaced upon the counters of all banks to “be taken at sight by bona fide depositors, as of old.” But the banks themselves do not want to be bothered with gold, apart from the cost of carrying large stocks of it and its occasional falling under the limits of tolerance. No sane American or foreigner looks to the banks for gold. He likes to get it if he wants it, but in the aggregate it is an infinitesimal amount that turns over more likely than not, since it returns to the Treasury sooner or later. A jewelry store would be the logical place to buy coins that are Federal medals.

    The modern school of thought has practically eliminated the gold standard from practice. This same school would substitute the government as the source of money, to be issued as needed, within a reasonable ratio, based upon national wealth and annual turnover. The suggestion is logical. As long as money is a medium of exchange it need not be one thing in preference to another. Practice has popularized paper, so paper may well continue its present function.

    It would be at once objected that paper without gold (or silver at least) would not be “money.” But the people do not want “money,” whether it is metal or something else. They want something that is current and which they can exchange for whatever commodities they happen to need. Today gold is the shadow behind all these exchanges—but it is a shadow that can be eliminated without disturbing the equation.

    Naturally, it will not be possible to rearrange finance on this basis as long as the present superstition holds its place. Back of it are all the stockholders of the banks. Back of these are the hosts of petty speculators. The only real profit the average banker makes today is through the gold fiction. The speculative element would vanish with the elimination of the metal standard. Moreover, if the government issued money on its own account, under a well-thought-out, practical, automatic law, the government would not have to borrow money, or sell certificates of indebtedness (to buy them back at a premium, for that is what interest amounts to) or go to great expense to accommodate its finances through the agency of the very banks it has licensed to operate.

    Fiat Money! All Money Is That

    FIAT money—that is the damning term with which bankers dispose of it. But what are their own bank notes? Fiat money, they say, would be a mere promise to pay, with nothing behind it to guarantee payment. But is gold or silver a guarantee? Are either of any use to a community that practically boycotted both years ago? Money issued by the government under its constitutional sovereign right would be, in fine, evidence of indebtedness; a promissory note of the government payable to bearer. Enough of such certificates could be issued, to put it mildly, as would in turn be repayable to the government as taxes and miscellaneous revenues. How long since the government accepted its own paper for the purpose? Only at the time of writing the Secretary of the Treasury announced that income tax could be paid with Victory notes. If money were tendered would it not oblige the government to do that much more bookkeeping?

    There is another example, not universal, not representative enough. The owner of any government bond, regardless of its issue or rate, can tender it as payment for any purchase made in the larger cities, and probably in the country, too. It is not money, no, but it is a medium of exchange. The only objection to it as things stand now is that it must be taken to the bank and sold and the banker must get his profit out of it, but as far as market value goes it is a good medium. Either the man who can keep it as an investment, or the man who must deposit it subject to “market deductions,” has faith in the words, “United States of America.”

    If bonds with a variable value prior to maturity are a medium of exchange, it is obvious that a definite evidence of United States indebtedness, like the greenbacks, would not be subject to the vicissitudes of collection charges and operations so dear to the managers of our present complicated financial system.

    The only possible objection to the value of such money is that involving the stability of government. It is a valid objection, theoretically. But how long would any government last, here or anywhere, if tomorrow the people decided to demand cash—all gold— for all their apparently cash deposits in the banks?

    Cash Business Would Ruin the Money System

    NOW the people are not hankering for governmental disturbances. What they want is the quickest, most efficacious means by which trade can be carried on. They want a medium that among themselves is at once recognized as interchangeable. The only way to give it authority is by the power of the government. They can use no more than the value of the commodities in which they trade. Nature itself imposes a limit, and the limit is not difficult to ascertain.

    The late A. Barton Hepburn, one of the best-known bankers of the country, while Controller of the Currency in 1892 said that the public should see and realize “how small a percentage of business transactions are represented by actual money, and how impossible it is for the government to furnish a volume of currency sufficient to meet the wants of the people at all times—that is, in times of general distress or quasi-panic.” Mr. Hepburn vouched for the fact that 30 years ago “more than 90 per cent of all business transactions are done by means of credit.” If credit is impaired or refused, “it is easy to realize how impossible it is for the remaining 10 per cent of money to carry on the business of the country without monetary stringency and financial distress.” Business done solely for cash would ruin the system.

    The “Money Mystery” Baffles Government (cont.)

    The inquiry of 1892 was directly aimed at the non-liquidity of currency under the laws of that time. Since then the laws have been amended and added to, but although panic has been avoided, it does not mean that there has not been money stringency and financial distress. Ask any humble business man. Try to get a loan at the banks. Pawn a bit of jewelry. When one of the largest pawnbrokers of New York City announced a maximum loan of $100 on any one pledge, regardless of its value, it was because the banks would not provide enough loanable funds. Yet there was gold, silver, platinum, precious stones, in these pledges. If gold is money why the discrimination?

    If metals and precious stones, admitting their slow marketability during the deflation period, were not good collateral, intrinsically as raw materials, what possible good could be the gold and silver in the bank vaults?

    That is merely one of the involved and incomprehensible incidents of our financial system. It is self-contradictory on the face of it. It is more than that. It is a policy that repudiates gold and silver and platinum and precious stones, all of which at one time or another have been and are media of exchange, and have a fairly fixed value, because paper money—money that means nothing, if one must take the bankers at their word—would not be given for one or two of the very metals that are supposed to guarantee the paper sought. It was not a question of a glutted market and trying to sell with no demand; it was merely a case of collateral.

    Of course, all these points are quite involved. To follow each one to its lair is no mean accomplishment. But such a mastodontic attempt would not lead to very much with the present temper of the industrial and banking world, and with the people perfectly content to get whatever money the government provides. It is not for them, in their own minds, to question the fundamental values, mythical and actual, of the coin that makes life so easy for them as long as the required supply is not interrupted. They “pass the buck” to the legislators; the legislators return it to the people. And the bankers get the lion’s share of the profits.

    Government officials are afraid of nothing so much as of establishing precedents, whether dangerous or harmless. The influence of practically the entire financial world would confront them in any attempt to reform or improve the situation. This alone is discouraging enough—and they fear the possibility of being made to appear ridiculous. The effects of the war have fortified, albeit erroneously, the ultra-conservatives. In plain, unadorned language, they know now what they have, but they do not know what they would have in the end.

    It is a fact that if the government issued all money, contracting or expanding the currency in accordance with the nation’s economic needs, it would eliminate that choice bit of investment paper—the government bond. Every ambitious investor hopes and hopes to have a few government bonds—even when the net return was less than two per cent, before the war upset the rates. No government bonds—no public debt, and there would be no interest. That is an excellent outlook, a perfect theory, but only to the man who is not a bond investor or to the one too poor to invest. Nor is that all; it might come to pass that without competition by a borrowing government, private bond issues would be floated at reduced interest, thus decreasing income all along the line: Then capital would have to work and not speculate.

    It will convince no one, generally, to say that all interest must come out of capital, and that unless capital, reproduces itself plus the interest, it must be at the expense of the multitude with consequent general impoverishment.

    Government officials base their beliefs upon environment, and what this is we all know. It is useless to look for aid from them. Aid must come from the outside. It is up to the people themselves. But one thing is evident that there is too much speculative capital, too much “lazy” money, and too little reproductive capital. The only way to readjust this discrepancy is by heavily taxing all incomes deriving from what may be termed “bookkeeping enterprises,” although such a law might split hairs with the Constitution.

    The opposition upon any single reform will be formidable. It is felt in advance of legislation, and that alone is a deterrent. We have the example of two or three noted members of Congress that do not hesitate to differ from the rest of their colleagues upon many matters, and more or less good-naturedly they are dubbed “irreconcilables,” “radicals,” and the like. It requires unbounded self-confidence to live day in and day out in this sort of official isolation. It requires nerves of iron and a powerful constitution to nourish such moral courage. In fact, it takes more than is the average administrative or legislative officer’s need of it.
    ]

    These are the things that make one go Hmmmmmmmmm???? In modern times, there was only one member of Congress who could be consistently counted on to examine the nature of the monetary system – and that was Ron Paul. In the context of Dissent Rebranding – Ron Paul has got to be the poster-boy of what happens to a man bucking the system. He was immediately branded with attempts to bring America back onto an “anachronistic gold standard” – back to the barter system using a “barbarous relic”. Of course, a closer examination of Ron Paul’s ideas – impossible to get from the MSM, would reveal that he was interested in fostering multiple, different free and competitive currency/money systems. In this aspect alone, I am completely in agreement!

    Just a rag-doll of the Oligarchy I suppose? Like Henry Ford… and Thomas Edison, and Frederick Soddy. John Tomlinson, Richard Werner and now Ole Bjerg. Or pretty much any person who dared to reveal the inherent frauds of the status-quo money system. I hope this finds you in your safe space, JohnG!

    1. You are continuously constructing false premises and misrepresentations in your attempts to smear me and MMT in general.

      Your take on it is absurd and dishonest. It is clear that you’ve not spent any time on the literature at all.

      Peter Thiel’s chief political operative Ron Paul had the same bizarre views on money as you do. Mass deflation, unemployment and societal collapse would closely follow enactment of his prescriptions.

      Because Liberdee!!!!!!!

      Those oligarchs and their revolutions eh?

      Both Dennis Kucinich and Pete Stark consistently questioned the system. They were both defeated by the neoliberal DNC as was Cynthia McKinney who also took some time to understand things from outside the Wall St perspective.

      Pete Stark was probably the only member of congress who understood the macroeconomics at all well (although I’m told Bernie Sanders does too but I’ve yet to see any evidence).

      Again, you are deliberately conflating operational reality with the political sphere. And doing so with insulting language.

      One wonders why.

      http://home.hiwaay.net/~becraft/RUMLTAXES.html

      Why have we unlearnt what was known in the 1930s and 1940s.

      Why has Keynes been trashed?

      In whose interest is it to promote neoclassicism?

      The bankers and the oligarchs. Do you really think Peter Thiel wants a revolution for the 99%?

      Really?????

    2. Just a rag-doll of the Oligarchy I suppose? Like Henry Ford… and Thomas Edison, and Frederick Soddy. John Tomlinson, Richard Werner and now Ole Bjerg.

      Ford and Edison lived in gold standard days and their blatherings have little to no relevance to modern monetary systems. That you think they are reveals your outdated gold standard thinking.

      I have no opinion on Soddy. I don’t even know who John Tomlinson is. I haven’t made any comment on Ole Bjerg and don’t have any opinion.

      Richard Werner has discovered what MMT has known for some time i.e. that banks create money. And that’s the only comment I’ve made.

      This is but one of the stock analyses that form the basis of MMT’s analysis of the macroeconomic system. In and of itself it fits in with sectoral balance accounting. As does Steve Keen’s circuit theory (in my understanding).

      There are other parts of Werner’s career that I suspect you are unaware of. Were you so aware, I don’t think you’d be pinning your flags to his mast.

      So once again, you are condescending to someone who knows a lot more about these things than you do.

      I also note that Werner has proved the proposition by using balance sheet analysis. A sound methodology.

      But up the thread you and Roger have rubbished the very principle of balance sheet analysis when it would have proved inconvenient to your ideological biases and scare mongering tales of impending doom.

      So it’s either cognitive dissonance or fallacy of composition on your part.

      Else it’s just downright dishonesty.

      There is absolutely no meeting of minds between the fraudsters of the banking world and MMT. Quite the opposite.

      Your continued torture of logic to try to infer so is intellectual fraud.

      1. Wesley -being patient!

        JohnG February 6, 2016 at 6:22 am
        Wesley: “Just a rag-doll of the Oligarchy I suppose? Like Henry Ford… and Thomas Edison, and Frederick Soddy. John Tomlinson, Richard Werner and now Ole Bjerg.”

        JohnG: “Ford and Edison lived in gold standard days and their blatherings have little to no relevance to modern monetary systems. That you think they are reveals your outdated gold standard thinking. I have no opinion on Soddy. I don’t even know who John Tomlinson is. I haven’t made any comment on Ole Bjerg and don’t have any opinion. Richard Werner has discovered what MMT has known for some time i.e. that banks create money. And that’s the only comment I’ve made.”

        You’re NOT paying attention, and beginning to look even MORE foolish:

        To suggest the mere fact of their having lived during periods of time before, during, and after so-called “gold-standard” days is not a valid basis to allege irrelevance to modern monetary systems? Kinda’ weak (read: Absent) reasoning John. Do you reject all teachings that pre-date MMTism as being irrelevant. Very sound logic! Cut back on the KoolAid by half each day until you see the fallacy of such statements.

        Ford and Edison, as evidenced VERY clearly in the writings I provided above, advocated FAR and WIDE for the abandonment of the so-called “gold standard” — Ford made weekly rantings (for a period of about 15 weeks in his journals) shouting to the rooftops in a effort to reveal the consummate fraud that was the so-called “gold-standard”. He clearly demonstrated (using balance sheets!!!) the FIAT nature of the gold-backing. The words “gold standard” are themselves are huge bit of propaganda that you bandy frequently – in a failed attempt to lump any form of linkage between a monetary system and something real — something that actually exists on earth, into one gold-standard basket. It’s not convincing, JohnG. This country has had multiple different precious-metals “standards” in its history, all of which attempted to legislate values of a commodity in relation to another commodity, and/or in relation to the dollar. And I’ve repeatedly rejected (“been there, done that”) these propositions, stating my reasoning and my logic. Your ongoing attempts to associate me with some form of undefined “gold standard” are disingenuous, reprehensible, and rejected outright. But it’s really quite an effective form of re-branding, because you are able to leverage a whole century of disinformation and propaganda associated with Gold and the “gold-bug” brand.

        When the Kool-Aid wears off, and you actually take a moment to read Ford’s and Edison’s “blatherings”, you might learn that they were advocating for a Positive Money-type fiat issue from Treasury! Wakey-wakey, JohnG. They were nearly 100 years AHEAD of their times, and their personal successes in life are a fair testament to their abilities to see the world clearly. Much like Soddy.

        So, my well documented expose of their beliefs, and their relevance to today reveals something quite different than your foggy, inaccurate representation above, which is provably wrong on the facts — and which you seem to disregard, dwelling in your MMT reverie, chain-saw at-the-ready. The gift of knowledge which I’ve given you, and all our peers here – actually requires your reading though, if you wish to grow. Don’t you feel silly now? I accept your apology.

        The reason that you “have no opinion on Soddy”, I am left to infer (since you seldom provide any reasoning!), is that the words of this Nobel-prize winning Chemist concerning the monetary system (during a period in the 1930’s that you allege is relevant to today) — words that I’ve placed in this ‘blog and you’ve studiously ignored — is that Soddy’s words invalidate the premises of MMT. Therefore, they must not and cannot exist in the closed-eyes world of JohnG. Read, JohnG, read. Learn. Grow.

        Wealth, Virtual Wealth and Debt 1926, Frederick Soddy
        The Role of Money, Frederick Soddy (George Routledge & Sons Ltd, 1934)

        John Tomlinson, more contemporary – is the author of “HONEST MONEY – A Challenge to Banking.” I support his critical views of the current banking paradigm, but have not expressed any views on his proposed solutions which strike me at first glance as unworkable. I’ve mentioned him mainly because it’s so refreshing to come across some clear-headed dissenting views to the mainstream orthodoxy (MMT included). Here’re a coupla’ his words for you:

        “In the modern paper monetary system there is no direct connection between the production of a new unit of money and the amount of products or commodities upon which it can validly claim. Any increase in the supply of units of money will mean a decrease in the exchange value of each previously existing unit. More units will be required in exchanges to equal a given previous level of exchange value. Or, more simply, prices will go up.”

        Pretty easy to understand, eh? Strip out the MMT-speak for a minute or two, and answer any one of the dozens of questions that I’ve posed to you to justify your population-wide theft of money from the populace by MMT-induced inflation… Things in the MMT world get all squishy and less balance-sheety when it comes to talking about inflation… funny thing that!

        As to Ole Bjerg – you’ve made TWO (2) – count ’em, TWO comments on Ole Bjerg – both of which again emphasized your inability to read. And then you called him a “liar”. So, now who’s lying JohnG? This bit about the reading (or lack thereof) is becoming a problem – one which I’ve made reference to in the past!
        https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-609376
        Clint Ballinger made the same observation! Are closed-eyes a pre-requisite for admission into the MMT hierarchy?? You’re due for a raise. They are paying you, right?

        In reference to Werner, you’re caught in a lie again. Or, perhaps you’re merely demonstrating your inability to read your OWN comments, JohnG. At:
        https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-609290
        You accuse him of having “blood” on his hands in association with the design of the Euro. I should think you should also take that up with him directly. So he’s got it right… he’s got it wrong… he’s got it right? You keep flip-flopping. Definitely indicative of deceit.

        How are we to know when you’ve let go of the KoolAid? I’m sure all of us understand these erratic behaviors, witnessing as we are your reaction to the complete unravelling of your distorted MMT-looking-glass world-views. When long held and cherished views such as yours end up being shown as resting on nothing but the quick-sand of deceit, it’s natural to lash out and to be angry. But please, as I’ve urged you in the past when you’re suffering these “spells”, don’t direct your anger (and violence) at your children and pets (or us)… we’ll still be here when you’ve settled down.

        Now – Have you asked David to strike your uncivilized remarks, yet??? Get going, ‘mate! It’s the civilized thing to do.

    3. Ron Paul thinks that cutting Federal spending in a recession would solve the issues.

      Do you agree?

      Ron Paul thinks that deficit spending takes money out of the private economy.

      Do you?

      Ron Paul thinks that so called national debt is a bigger problem than mass unemployment.

      Do you agree?

      Ron Paul thinks that the Fed drives down interest rates from their ‘natural level”.

      Do you agree?

      Ron Paul thinks that the Fed lends money to banks at 0% interest to buy T-Bills at 3%.

      Do you?

      Ron Paul thinks that the Fed caused the Great Depression.

      Do you?

      Ron Paul opposes social spending on principal. No Medicare, no Social Security, no unemployment payments, no public hospitals, schools or universities.

      Do you?

      Ron Paul thinks that the Eurozone is socialism.

      Do you?

      1. Wesley - Sighing!

        John – you’re really losing it… My ONLY point about Ron Paul, and my feeble attempt to keep YOU on the point of this actual ‘blog entry, is to highlight the caricature that Paul represents in terms of re-branding. You’re line of questioning above, completely irrelevant to the instant posting – serve very well to illustrate your own biases and seemingly pathological need to put a label on everything and everyone. You like brands, don’t you? My political views are an off-balance sheet item JohnG. But I do find it revealing that an MMTer such as yourself presumes to know what others are “thinking”.

        Stick with the facts, JohnG. Tell us what you’re thinking. But please, don’t tell us what you’re feeling. You’ll feel better if you share those thoughts with a professional of a different sort.

        BTW, did you ask David to remove all your rantings yet???

        Yours, unbranded!

    4. Of course, a closer examination of Ron Paul’s ideas – impossible to get from the MSM, would reveal that he was interested in fostering multiple, different free and competitive currency/money systems. In this aspect alone, I am completely in agreement!

      Why?

      What would it achieve in terms of public purpose or the betterment of society?

      1. Wesley - Competing currencies

        Amazing! Sane, reasoned, focused. The only thing lacking is a demonstration of having READ our earlier postings, wherein we discussed the relative merits of competing money systems at length. Initially, when I described my preference for multiple, voluntary competing money systems, you actually expressed a qualified concurrence. I got the impression that you wanted to reach out to your MMT-handlers to ensure that your qualified allowance of a free-competing money system would be sanctioned – but you never reported back from the high priestesses. I took your silence as meaning that in your idealized world, I (and any freely consenting counter-party) would indeed be permitted to use anything as money that I’d like. We went through this already very carefully. Let’s not rehash, shall we? I think it was your own words that said no-one cares about Legal Tender Laws…
        JohnG on legal tender
        https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-606061
        https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-607812

        To repeat JohnG, for your seemingly limited memory: If thinking man has the ability to use any money systems he freely chooses, without the coercion of State, the fraudulent, counterfeit credit issuing from the private banking sector would rapidly be eliminated in preference of systems that did not defraud. Your beloved inflation would be crowded out. Besides, if you truly believe that the $65 trillion dollars in total credit market instruments outstanding are legitimate, what disservice would a competing currency threaten? What are you afraid of JohnG? That your Fiat money would lose purchasing power if it went up against a viable alternative? That your credit-money might be shunned and humiliated? We’re soon to find out!

        ps:
        Have you sent a simple note to David yet, asking him to remove all your unneccessary profanities and other time-wasting blatherings from his cool site? Keep it simple. Let him choose… 😉

  82. Adding this here as well, I am collating a full response to the substantive points made above with clarifications where requested. Meanwhile here’s another story. A more detailed response will take several days.

    A new story of money and a new story of self.

    https://www.youtube.com/watch?v=GEe3sZJg5kQ

    Charles Eisenstien’s take on complementary currencies and a gift economy are interesting but enimicable to the status quo. The character I play in life wants to be in the CHarles Eisenstien story and not the MMT/Johng Story.

    https://www.youtube.com/watch?v=wBe8MTcCqKs

    Signs Symbols Stories Language.

    Winston/Chomsky.( MIT)

    Understanding in our minds and what we express through communication in language are not systems designed to compliment each other . This leads to confusions and the disjoint can be manipulated against our own best interests.

    I have been pondering lately whether in Sweden a country that uses a language with 41,000 words; (approx.)

    http://reference.yourdictionary.com/o…

    One way to get an estimate of the number of words in the Swedish language is to look at a dictionary. The online Woxikon dictionary lists over 41,000 Swedish words. It is interesting to note that more words started with “s” than any other, by far, and the least number of words started with “q” and “x.” This is only a rough estimate of the number of words in the Swedish language.

    http://oxforddictionaries.com/words/h…

    The Second Edition of the 20-volume Oxford English Dictionary contains full entries for 171,476 words in current use, and 47,156 obsolete words. To this may be added around 9,500derivative words included as subentries. Over half of these words are nouns, about a quarter adjectives, and about a seventh verbs; the rest is made up of exclamations, conjunctions, prepositions, suffixes, etc. And these figures don’t take account of entries with senses for different word classes (such as noun and adjective).

    I do wonder if with less words Swedes have more common stories and communicate their shared understanding at a more sub-concious level than the attempts at precision, English speaking nations make inevitably ending in a wider opportunity for misundertanding the points being made by the other person?

    The above notions arise from my watching a film celebrating MIT’s Artificial Intelligence department and two themes developed by Professors Chomsky and Winston on the apparatus used for Language and the idea of Story Telling in communication and learning being the re awakening of Latent understanding.

    Are we bound more by our shared stories than by our Understanding of being. I would say yes of course we are we understand very little but actually share a common conditioned understanding of our stories. Politicians call them narratives, Ad men ‘keep on message’. Meme’s, Buzz words, Soundbites the unquestioned Facts of life communicated in Language often against our instinctive better natures.

    Reference these quotes at the links here.

    letthemconfectsweeterlies.blogspot.se/2013_04_01_archive.html

    Philosophy is a battle against the bewitchment of our intelligence by means of language.

    Intuition and concepts constitute… the elements of all our knowledge, so that neither concepts without an intuition in some way corresponding to them, nor intuition without concepts, can yield knowledge.

    The oldest, shortest words – ‘yes’ and ‘no’ – are those which require the most thought.

    We have two ears and one mouth so that we can listen twice as much as we speak.

    In words are seen the state of mind and character and disposition of the speaker.

    The aim of art is to represent not the outward appearance of things, but their inward significance.

    The metaphor of language and prison:

    “Whorf himself, and some of his followers, have suggested that we live in a kind of intellectual prison, a prison formed by the structural rules of our language. I am prepared to accept this metaphor, though I have to add to it that it is an odd prison as we are normally unaware of being imprisoned. We may become aware of it through culture clash. But then, this very awareness allows us to break the prison. If we try hard enough, we can transcend our prison by studying the new language and by comparing it with our own.”

    Widening the prison:

    “Admittedly, the result will be a new prison. But it will be a much larger and wider prison. And again, we will not suffer from it. Or rather, whenever we do suffer from it, we are free to examine it critically, and thus to break out again into a still wider prison.”

    Prisons as Frameworks:

    “The prisons are the frameworks. And those who do not like prisons will be opposed to the myth of the framework. They will welcome a discussion with a partner who comes from another world, from another framework, for it gives them an opportunity to discover their so far unfelt chains, to break these chains, and thus to transcend themselves. But this breaking of one’s prison is clearly not a matter of routine: it can only be the result of a critical effort and of a creative effort.”

    http://leakygrammar.net/2012/07/15/ka…

    I quote others only in order the better to express myself.

    Lastly get emotionally connected to your story so you can deliver it, you know, if you can’t deliver the emotions to your script there’s no point to your story. Story is the key.

  83. And ultimately even the state accepts bank credit money as payment for taxes, fines and other debts to the state.

    Let’s just keep that gem of Wesley’s disinformation on record.

    This is a false statement. AKA a lie.

      1. It’s anusing to see a professed leftist anarchist defending an extremist right winger.

        You’re not an anarchist at all, dude,

        It’s just a label you’ve stuck on your chest.

        Pathetic.

          1. It’s not just about apearnces, It;s about what you’ve done.

            You’ve allied yourself with a fascist.

    1. Wesley is a Gem!

      JohnG February 6, 2016 at 11:04 am
      And ultimately even the state accepts bank credit money as payment for taxes, fines and other debts to the state.

      JohnG: “Let’s just keep that gem of Wesley’s disinformation on record. This is a false statement. AKA a lie.”

      http://research.cbs.dk/files/44436178/ole_bjerg_how_is_bitcoin_money_postprint.pdf

      Dear John:
      Now, it would seem that you’re not even reading your own comments! This particular sentence that you’ve cleverly italicized above is a direct quotation from the paper above – and I made that quite clear. Ole Bjerg’s paper is effective precisely because he writes clearly and concisely.

      His use of the word “ultimately” in his statement is your little tip-off JohnG. Most people understand that when they write a check for their taxes, that ULTIMATELY the Federal Government accepts those bank credits the same way they would accept Federal Reserve Notes. They’re fungible. That’s why it has the word “dollars” on the check, pre-printed!

      If you believe that Mr. Bjerg is making false statements, or worse, lying — please take that up with him directly (and report back here with your results). I accept your apology.

      Have you asked David to remove your unhelpful stream of blather yet?

  84. What t5he fuck are Roger or wesley or henry ford or any of this nonsense going to do for the unemployed?

    Fucking nothing.

    Because they don’t fucking care about people.

    At all. On any level.

  85. Keynesian Crapitalists and MMT Munchkins.

    Both believe that their rainbow farting unicorns will save the day.

    The War On Savers And The 200 Rulers Of Global Finance
    by David Stockman
    http://davidstockmanscontracorner.com/the-war-on-savers-and-the-200-rulers-of-world-finance/

    Rather than permit Kool-Aid drinking MMT Bots to waste one’s time with utter nonsense,
    simply take a mere couple of minutes to practice some Honest Meditation

    https://www.youtube.com/watch?v=92i5m3tV5XY

    You will feel so much better and remember the joy of laughing.

    Cheers,
    S. Rex

    1. I enjoyed the Meditation Sparticus Rex it made me laugh as well as relax.

      On Rainbow Farting unicorns , I hope they do exist somewhere in all possible universes as I would definitely pay to see one of those on some sort of day trip.

      With respect to savers it is true that savers are penalised the huge problem is however debt. Debt is a default setting in the financialised economy is Debt which is the new primitive accumulation the only solution to debt is to remove its ubiquity from the whole system starting with how we facilitate exchange.

      Heres some more Michael Hudson,

      https://www.youtube.com/watch?v=owslC-XNjlU

      Part 1 of that meet up is lead off by Michael Perleman Author of Inventing Capitalism

      Capitalism uses wage labour ( wage slavery) and debt as two instruments by which to force people away from self provisioning into cities to accept what they are given for work by capitalists or to starve. It is this historic fact that for me shows up the oxymoron that is Anarcho Capitalism. Also to a certain extent libertarianism does not acknowledge the true elitist formulation of Capitalism, I often argue that Libertarians need another word for what it calls Capitalism as it never describes a form of Capitalism that can exist. YMMV.

      Part of the genius of Capitalism which is the invention of the ruling classes is as Hudson points out the way in which the Parasite Finance Capitalism convinces its host Community and society that it is essential to its efficient and beneficial operation by engaging in mutual exchange The Labels which we use and ascribe to belief systems we oppose often reinforce the themes meme narratives of the 200 Rulers of Global Finance. In itself that is probably a little misleading FInance is just one division of the ruling control matrix, there is the Judiciary , the organised Church, The Media, basically the elites postulated here.

      Robert Michels in his 1911 book, Political Parties.[1] It claims that rule by an elite, or oligarchy, is inevitable as an “iron law” within any democratic organization as part of the “tactical and technical necessities” of organization´from Wikipedia. The Oligarchy is the commissariat of the ruling class, the rash of Billionaires in the past 20 years has been the blossoming of the new face of our political reality as the rest of us or the 99%. The functionaries populate the Organs of the power Elite aptly described by C Wright Mills in the Power Elite also from Wikipedia

      The resulting elites, who control the three dominant institutions
      (military, economic and political) can be generally grouped into one of
      six types, according to Mills:

      the “Metropolitan 400” – members of historically notable local
      families in the principal American cities, generally represented on the Social Register

      “Celebrities” – prominent entertainers and media personalities

      the “Chief Executives” – presidents and CEO’s of the most important companies within each industrial sector

      the “Corporate Rich” – major landowners and corporate shareholders

      the “Warlords” – senior military officers, most importantly the Joint Chiefs of Staff

      the “Political Directorate” – “fifty-odd men of the executive
      branch” of the U.S. federal government, including the senior leadership
      in the Executive Office of the President, sometimes variously drawn from elected officials of the Democratic and Republican parties but usually professional government bureaucrats”

      http://letthemconfectsweeterlies.blogspot.se/2016/01/the-iron-law-of-oligarchy.html

      1. Blogger Toby said…

        The funny thing is that the money system is both simple and complex. The complexity is, to my eyes, the famous curtain behind which the Wizard hides. The complexity is also embedded in or emerges from the fact that the system does not make sense. We have been told, in whispers and via loudly echoing propaganda, that money is a thing, that it is wealth, and that we earn it to live. The truth is the opposite. It is a Nothing controlled by those managing the system they built in their interest, to keep us non-elites in our hamster wheels. Once we can get it through our brain-washed minds that this is a system of control and nothing else we can begin to push for sensible and lasting change.

        September 8, 2011 at 11:01 PM

        http://thdrussell.blogspot.se/2011/08/money-equals.html

        http://thdrussell.blogspot.se/2011/08/money-debt-reserves-money-and-debt.html

        http://thdrussell.blogspot.se/search/label/MMT

  86. Haha.. I popped by first time in ages, to see what’s happening here.. (nice to be remembered Stevie!)

    JohnG

    Many thanks and kudos for the sheer patience and tenacity in responding to the sophistry and verbal diarrhoea on steroids of the mentally disturbed Wesley and Roger.

    Great clarity and succinctly made points from yourself – quite useful to me, as I continue to write (as best I can) from an MMT paradigm pov. 🙂

    David (Golem)

    Much as I appreciated John’s posts, Roger and Wesley’s posts could do with some serious moderating effort. I guess you haven’t much time, but I would suggest deleting them when they can’t keep them down in size and at least vaguely relevant to what they are ostensibly debating. You’ll note I’m not mentioning Spartacus Rex’s equally nutjob posts, because he at least keeps them short enough to be tolerably skipped over. But Roger and Wesley should really be told to go and start their own blogs, not clog yours up, if they continue to monopolise it.

    I’m afraid I still think your talents in program making (vs party political endeavours) would be far better utilised toward production of some mass education videos aimed at exposing the mainstream intellectual fraud in macro and monetary economics. We badly need something pitched at the introductory level, but with enough detail to show the kind of possibilities that MMT understanding gives us. (I do wish somebody would make a decent (audible!) version of Wray and Mitchell’s brilliant ‘buckaroos’ lecture. That was a light bulb monent for me understanding modern money.)

    Anyhow, love your sciencey/philosophy programs 🙂

    1. Sent to Davids private e mail.

      Hi David,

      I hope you are having a pleasant weekend.

      Mike Hall has now pitched in on the Golem Blog cajoling for heavy moderation and deletion of my posts and those of Wesley, I find this rather rich given the abuse which Johng has been hurling around and also given Mikes censorious past efforts.

      I have begun to wonder if MMT is some sort of controlled opposition gatekeeping effort I see that Toby Russel ran into similar tendancies in the MMT crowd back in 2011 I can only assume they have got rather worse. I fully expect that Welsey and SParitcus Rex will take Mike to Task
      I am in two minds whether or not to bother responding as his comment is pure puffery. I do find the censorship he is advocating offensive though.

      I am sure you are very busy and do hope we can catch up as we thought we might be able to do on Skype later,

      All the best

      Roger.

    2. Wesley w Mike Haller

      Mike Hall: Your remark may be seen to step well over the line into the region of slander.

      Your contribution to this fine entry is devoid of merit or substance! Are you in politics? Or a paid-shill of the MMT collective/hive? Both? Or are you really JohnG, talking to yourself, and in disguise?

      https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-607361

      While correlation does not equal causation, it would seem my premise concerning the inability of MMTers to read is indeed true! Or, perhaps it’s something in the Kool-Aid that automatically filters all dissenting views to the MMT gospel…

      BTW JohnG: Another day has passed. Have you yet given David your affirmative consent and urged him to remove your profane utterances above? Perhaps with an apology. They still seem to whet the air with the sickly smell of distemper… If you have, send us all some positive vibes – and I’ll write-off their continued soiling of these pages to an understandable lack of time on the part of the host to attend to such unfortunate time wasters.

  87. Wesley - On Usury

    @Roger – this is for you and it merges nicely with the concepts of parasitism! And in the spirit of the Sabbath…

    This doctrinal piece helped me to understand a shading of meaning in the concept of usury that had not occurred to me; one that also provided some “anthropological” insights into the concept of money itself; and one that is consistent with the linkage I feel is necessary between actual money and economic activity. One cannot be said to be risking anything, if that thing does not exist in the first place. Very simply, it is usury to charge for the use of a thing which does not exist. On the other hand, it is not usurious to charge for the use of something that is foregone. If a person were to lend his own capital for a return, this is justified. By this simple analysis, the act of asking for the return of something created out of thin-air (knowledge of which was not even understood at the writing of this perceptive piece), may instantly be perceived as being usurious; against church doctrines and morality.

    The implications of this view are manifold: MMT’s own doctrinal stance arguing for a 0% interest basis, though tortured, is correct! Positive Money’s stance arguing for the issue of debt-free money entirely by the State is justified. If banks are unable to charge interest for something that they themselves are not foregoing, that hateful practice would end rapidly. However, there are many simpler ways (besides invoking the will of the church) to end the practice. Democracy! Laws currently permitting the practice would simply have to be changed. As Soddy has so eloquently stated, the issue is solved with an “adding machine”.

    As these things go, the Catholic Church does not put such matters in writing without some due care and diligence. The doctrine, modernized to account for the evolution in the nature of “money”, is outwardly consistent – while still morally condemning the loaning of money at interest from a thin-air concept. In this regard, it would be VERY interesting to be able to look at detailed uses of money controlled by the Catholic church for their consistency with this doctrine – but of course that ain’t gonna happen!

    This piece was in the Dearborn Independent (a publication owned by Henry Ford) in 1922
    https://books.google.com/books?dq=dearborn+independent+archives&jtp=54&id=y2Y6AQAAMAAJ#v=onepage&q=dearborn%20independent%20archives&f=false

    [
    Catholic Theology and Interest on Money By a Reverend Catholic Professor

    Position of Church Councils Opposing Usury for Prevention of Oppression

    When a modern dips into certain ancient tomes of Catholic theology he is likely to run into a surprise. He has heard of usury in modern life, and he is in no way disturbed in the even tenor of his thoughts when he sees that these ancient volumes condemn usury, but as he reads deeper into the books the shock that he receives is more or less violent according as he has been more or less involved in the processes of modern finance. He finds in these ancient volumes that usury is not the nefarious practice which he has known by that name, but that instead it is the very innocent usage of modern business life which we call “interest.” He sets himself down to try to find out what this means: Here in these ancient tomes Catholic theologians condemn the taking of interest, and in the everyday life about him he knows of Catholics in good standing who think nothing of accepting interest on loans, he knows of Catholic institutions who invest their spare capital in bonds that are loans, he even knows of churches that have money out at interest. Are Catholics of today running contrary to principle? Or has the moral teaching of a church which insists that its morality is unchanging really shifted? No, Catholics of today when they accept interest, at least within certain limits, are not violating their conscience, nor has the standard of Catholic morality changed. It is the circumstances of life which have changed.

    Let us examine into this matter. We do not want an expression of Catholic opinion more authoritative than one given by a pope in a general council. Gregory X in the Second Council of Lyons decrees thus: “And because the chance for interest takers to get interest will be less accordingly as the freedom to take interest is lessened, in this general constitution we decree that neither a society nor corporation nor an individual, no matter what his rank, position or station, shall permit foreigners or other strangers who do or who desire to engage in money-lending for interest to rent houses or to hold houses by rent or to live anywhere within their lands.” The application of this decree to strangers does not seem to mean that it was allowed to natives to take interest. If its history is investigated, it will probably be seen to mean that the only people who would be guilty of taking interest would be people from abroad.

    This decree is interesting in the fact that immediately following the words in which interest-takers are condemned they are spoken of as usurers. This application of the term “usury” makes plain to us what is meant by the council of Vienna, the Third Council of the Vatican and the Fourth Council of the Vatican when they condemn usury. It is not usury in the modern sense of the term that they are condemning, it is not an excessive rate of interest that they ban, but the acceptance of any interest at all.

    How clearly it was understood that even a moderate rate of interest was forbidden by the church is plain from the words of the great Benedict XIV when in 1745 he writes to the bishops of Italy: “That kind of sin which is called usury and which has its proper seat and place in the contract of Mutuum (loan) consists in turning that contract, which of its own nature requires the amount returned exactly to balance the amount received, into a ground for demanding a return in excess of the amount received.”

    The Why of the Church’s Stand

    IT WILL be noticed in this quotation that Benedict considers it a sin to make a loan with the idea of getting more back than one gives. It will also be noted that it is not a question of getting back any very considerable sum above that given, but of getting anything more.

    Now why did these old councils of the church and why did these old theologians condemn the taking of even a moderate rate of interest? It is all explained by two quotations from Saint Thomas which though rather long are worth while introducing here for the clear exposition which they make of this matter. In 2a, 2ae, q.77, art. 1, St. Thomas says: “If one party is much benefited by the commodity which he receives from another, while the other, the seller, is not a loser by going without the article, no extra price must be put on the article (that is, the buyer, though especially benefited by the article, is to give to the seller only what the article is worth to the seller.) The reason is because the profit which accrues to one party is not from the seller but from the condition of the buyer. Now no one ought to sell to another that which is not his though he may sell the loss which he suffers.”

    And in 2a, 2ae, q.78, art. 1, St. Thomas says: “To take usury (interest) for money is manifestly unjust because it is the selling of what is non-existent. . . . We must observe that there are certain things the use of which is the consumption of the things, as we consume wine by using it to drink and we consume wheat by using it for food. Hence in such things the use of the thing ought not to be reckoned apart from the thing itself; but whosoever has the use granted him has thereby granted him the thing; and, therefore, in such things lending means the transference of ownership.

    If, therefore, any vendor wanted to make two separate sales, one of the wine and the other of the use of the wine, he would be selling the same thing twice over, or selling the non-existent. Hence, he would be clearly committing the sin of injustice. In like manner he commits injustice who lends wine or wheat, asking a double recompense to be given him, one a return of an equal commodity, another a price for the use of the commodity, which price of use is called usury. . . . Now, according to the philosopher, money was invented principally for the effecting of exchanges; and thus the proper and principal use of money is the consumption and disbursal of it, according as it is expended in exchanges.”

    Therefore, the doctrine of St. Thomas and the Catholic church on interest in these older days was this: Money is a commodity, like food. You pay a man for the use and possession of it, because its possession without use is of no advantage. If a person lends another one hundred pounds of gold coin, he is to be repaid in the same way in which he would be repaid for one hundred pounds of wheat by getting back another hundred pounds of wheat or something equivalent to the hundred pounds of wheat. To the buyer the hundred pounds of gold and the hundred pounds of wheat are for use or consumption only. The gold and the wheat have no value beyond their use or consumption value, the same which they would have had had they remained in the possession of the seller. When the seller gets that value for them, that is, when the seller gets for one hundred pounds of gold, a hundred pounds of gold, he has the whole value of his money. All this supposes that as the wheat, inasmuch as it is wheat, capable of being made into a certain number of loaves of bread, is in terms of loaves of bread not multiplied nor increased by the fact that it has passed from one owner to another, the money, inasmuch as it represents a certain power of exchange, is not multiplied or increased in value by passing from the hands of one owner to another.

    In other words, all this supposes that money is a dead, barren thing, incapable of increase or fruit, merely a means of exchange, just as so much paper or some other substance has been at various periods in the world’s history.

    Money Then Was Barren

    THIS theory of money, that it was like a store of potatoes or of coal which we would lay in for the winter’s use, but from which we expect to reap no gain, is a theory which lasted until comparatively recent times. When the Bank of Amsterdam was founded in 1609 depositors actually paid the bank to keep their money safe. Would they have done it, if they had had the modern view that the bank could make money from their money, or in other words, if they held that money in itself was fruitful?

    Clare, in his Money Market Primer, tells us that the reason why the capital of the Bank of England was so rapidly subscribed was this: “In those days gold investments were after all a rarity and the new undertaking, backed up as it was by the guaranty of a government that seemed honestly bent on paying its way, and supported by the best known merchants in the city of London, appealed with success to the sentiments and pockets of capitalists, and by its happy combination of patriotism with eight per cent gratified at once their love of country, their love of gain and their hatred of tyranny and popery.”

    Here we have the theory of the unfruitfulness of money expressed in fact.

    History supplies other expressions of the same fact. The same author tells us that “in England almost up to the close of the seventeenth century, tradesmen or merchants, retiring from business, lived literally on their savings. It is stated that the father of Pope, the poet, having amassed a fortune in trade in London, retired to the country about the time of the Revolution, carrying with him a strong box containing nearly 20,000 pounds, out of which he took from time to time whatever was required for household expenses. It was the opinion of writers of about the same time that very large sums of money were continually kept hidden in secret places.”

    All of this goes to show that in those days money was looked upon as barren. A merchant like Pope’s father retiring from business in our days with a fortune of one hundred thousand dollars or thereabouts, simply because he was a merchant and acquainted with the uses of money, would have laid out such a sum in some such stable security as government bonds and probably have derived as much in interest as would have kept him comfortably without placing him under the necessity of cutting into the capital.

    The Word for Interest: Usury

    IT IS exactly because of the fact that to times comparatively very recent money was considered and was unfruitful that the Catholic church condemned interest of all kinds. In those older days, as Rickaby says: “Land was hard to buy, agriculture backward, roads bad, seas unnavigable, carrying-trade precarious, messages slow, raids and marauders frequent, population sparse, commerce confined to a few centers, mines unworked, manufacturers mostly domestic, capital yet unformed. Men kept their money in their cellars or deposited it for safety in religious houses; whence the stories of treasure trove. They took out the coin as they wanted it to spend on housekeeping or on war or feasting. It was very hard, next to impossible, to lay out money so as to make more money by it. Money in those days was really barren.”

    There you have the reason why the church forbade people to take any, even the least, rate of interest on money lent. The money was barren. To take interest was not to take the return for a value given but was to take advantage of a neighbor who needed money to buy food, to prepare himself for war, or in general to do something which netted him no profit. But suppose other conditions intervene ! Will it remain unjust to take interest?

    Listen! Leo X in the Fifth Council of the Vatican ruled: “Usury (then the word for interest) is properly interpreted to be the attempt to draw profit and increment, without labor, without cost, without risk, out of the use of a thing which does not fructify.” Suppose the day arrives in which money does fructify | Then the attempt to draw fruit out of it is not usury, is nothing which the church forbids. Now as a matter of fact, in modern conditions money does fructify. The very fact that a man has capital of larger extent apart from his ingenuity and application, enables him in trade to reap a profit not only arithmetically but also geometrically greater. The man who lends to big concerns the amount they need or part of the amount they need for their enterprises does this with the loss to himself of the chance of gain which he gives them. It may and undoubtedly is very difficult at times to determine just how much a corporation gets from the amount of capital which it borrows, but it does get a certain minimum of help and at least for that minimum of help the lender has a right to expect a return. The ideal rate of interest would be just that amount which the borrower gains merely from the borrowed capital outside of the increase which should be attributed to his ability and energy. This, of course, would make a scale shifting so much as to be practically impossible. It becomes quite necessary then to adopt a scale of interest which seems to fit in with the ordinary gain reaped from capital. This it would seem is just to the lender since he probably should be presumed as one who is capable of getting only the ordinary amount out of his capital were he to use it. It is also only justice to the lender even if his ability or application or luck or all of these be such as to give him greater gain, since as St. Thomas says: “If one party is much benefited by the commodity which he receives of the other, while the other, the seller, is not a loser by going without the article (in this case an extraordinary rate of interest) no extra price must be put on.” (2a, 2ae, q.77, art. 1.) In these words St. Thomas clearly indicates the principle that the lender cannot bleed the borrower because the borrower happens to be successful beyond the ordinary lot of borrowers.

    The same words to any thoughtful mind indicate that if the borrower be hard-pressed beyond the ordinary run of borrowers so that “one party (the borrower) is much benefited by the commodity (the loan)” the lender cannot for that reason charge him a rate above that ordinarily demanded. Only one apparent and not real exception will be found to this principle, that is the apparent exception of a borrower who is in such perilous condition that it is a risk above the ordinary to lend him money. In such cases you will note that you have the “risk” feature which even in the days when interest was generally denied would allow interest without condemning it to the opprobrium of usury. See the words of Leo X above. You will also observe that to charge an extra rate of interest in such case is not to charge an extraordinary rate because the ordinary rate in cases of peril is higher than the rate where there is no peril.

    Always Has Been the Same

    THE attitude of the church, therefore, toward interest has not really been different at any time. The attitude of the church has always been that the borrower should not be made to pay for anything which he did not get from the lender. When money had no value, was barren, if a man borrowed from another he returned what he got, the sum given him. When money began to have value in itself, ceased to be barren, the borrower returned what he had got from the lender, the original sum plus what the lender had lost by letting him have it, which sum is after all what the lender actually gave the borrower. The term usury, therefore, which seems to have changed its meaning in the Catholic church, has not done so. It is a term which signifies an unjust return from a loan. We are pretty well beyond the time when lenders could openly demand a rate of interest generally considered unjust, and and remain unscathed by the civil law. We have not gone beyond the time when lenders still charge an unjust rate of interest, and do so by means and methods just as underhand, we should say more underhand, and quite as unjust as those used in days gone by. It is usury to charge a man four per cent on a hundred dollars when you actually give him only eighty dollars as a loan, because, even if such dealing escape the law, it is making the man pay a usurious rate for his money. This of things in the small. It would seem to some of us, who may not have as clear a vision in the matter as we should, that this same species of usury is being plied in larger investments. For instance, some time back a very large concern, that happened to be in difficulty, floated a bond issue of twelve million dollars. It is said that after the men who handled this deal, brokers, bond houses, and so on, get through, this large concern will really have about nine million and a half dollars. Now this may be all right, but to the man in the street, it does seem that the price paid for the loan is usurious. Some amount more than the mere rate of interest should undoubtedly be paid for the placing of the loan but should the amount be almost a fourth of the sum supposed to be had by the concern in question? The rate on the bonds is not usurious, but are not the money lenders actually guilty of usury?
    ]

    Now before JohnG or anyone else starts turning this into a religious discussion, let me state at the outset that my purpose here is to stimulate thought about the nature of money and its distinction from credit — not to talk about God and his intermediaries. I’m not a real big fan of intermediaries. So religious views are off-balance sheet items. I will happily state that I don’t use brokers!

    1. An appropriate read for a Sunday evening Wesley, thanks for posting. I enjoyed reading that. I have somewhere an interesting story of a New york Priest who was defrocked in the 1930’s for asking to many questions about the churches teaching on Usury, I´ll dig it out and post it when I find it another area of Religious prohibition of sharp practices is Champerty which is taking a financial and speculative position in some elses legal dispute, the practice is particularly popular as an investment in TISA law actions by corporations against governments. I posted another link early on in this discussion about ´´´The irony of reading Plutarch“its about Solons reforms well worth a read too.

      I hope you enjoy the rest of your Sunday

      God Bless

      Roger

      1. Wesley - Livestock

        Thanks – returned! Contemplating religious doctrine about interest and usury has just led me to what I hope is a terrific insight!

        One of the earliest forms of money was livestock – cattle. It was mobile. One may rapidly understand this church doctrine about prohibitions of usury if you think in terms of the “loaning” of livestock, as opposed to its outright sale. According to the doctrine outlined by the Church, it would not have been considered usury if you were to loan cattle to your fellow man. Having borrowed those cattle, you were now obliged to feed and care for them, and had the benefit of their useful lives during the time of possession. When returning those cattle to me, fungible livestock would be exchanged back to me at an agreed time in the future of the equivalent age and robustness (and location!) as I originally provided to you. No one would even dare suggest it appropriate for you to return the original cattle to me at the end of their useful lives, having been worked on your farm, and subjected to the natural deterioration of life.

        The insight may be expanded in many ways. This concept of interest (the cost of feeding the “money” etc.) takes into account the temporal nature of credit – and it’s especially useful in terms of the earliest forms of location arbitrage: I’ll give you my cattle in Tuscany in April, if you give me a like herd in Naples during September. The moral implications of today’s money-lending in these terms is fatal to the financialized banking in existence today.

        Unfortunately, the monopoly banking cabal has, by capture and myriad other deceits, effectively convinced the average man that all they’re doing is loaning out other’s deposits! Truly remarkable. This is probably one area where the Church and its bully pulpit could actually make a huge difference in shaping public opinion in favor of the masses who are oppressed by these hidden, unseen mechanisms.

        1. “Man has too long forgotten that the earth was given to him for usufruct alone, not for consumption, still less for profligate waste.”
          – George Perkins Marsh

          Usufruct is a very useful doctrine when considering sustainable management of the common wealth it covers the loan of cattle or of an orchard whcih is a popular example used to illustrate the concept.

          This is interesrting from David Graeber in the Guardian.

          http://www.theguardian.com/commentisfree/2015/oct/28/2008-crash-government-economic-growth-budgetary-surplus

          IDscussed here at Mike Normans Blog.

          http://mikenormaneconomics.blogspot.se/2015/10/david-graeber-britain-is-heading-for.html

          and at Pragmatic Capitalism

          http://www.pragcap.com/ama/david-graeber/

          http://www.pragcap.com/ama/david-graeber-mmt-redux-more-for-jkh-omg-does-this-defy-marc-lavoies-wynne-godfreys-sectoral-balances/

          I think there is a lot of academic bad blood and egotism abounding in this nest we have inadvertently stepped on Wesley

          Boy oh boy does the ruling Oligarchy have this divide and rule business down though both camps are doing a great ‘job of throwing the baby out with the Bath Water. David Graeber is great, always good value I think when will Academic economists ever learn?

  88. 97% Owned – Economic Truth documentary – Queuepolitely cut
    QueuePolitely

    This whole film was discussed here a year or two back there are various cuts in circulation including a Positive money one I am not sure if an MMT representative made a cut too. Anyway it starts in this link at 13 minutes watch it up to the Ben Bernanke AIG quote.

    https://youtu.be/XcGh1Dex4Yo?t=13m

  89. http://www.forbes.com/sites/stevekeen/2016/01/06/note-to-joe-stiglitz-banks-originate-not-intermediate-and-thats-why-aggregate-demand-is-stuffed/#68ea5b9610a6

    Steve Keen in Forbes again
    I do agree with this comment though.
    Jon Cloke a month ago

    Unusual for Forbes to have an economist who actually knows what he’s talking about! Steve Keen is the original economic Cassandra, a man whose clear vision and massive understanding makes him extremely unpopular with the men and women of establishment economics.

    If he has one flaw, though, Steve continues to be a rational functionalist in that he believes that capitalism can be made to work properly if the mainstream of economics can be brought to its’ sense and heterodoxy and modern monetary theory can achieve its’ rightful status as the victor over the graven idols of neoclassical economics generally and the gibberish of austerity in particular.

    But it isn’t that mainstream economics is incapable of thinking rationally, it’s that it’s well-paid not to by the power structures that make a lot of money out of the system as-is; banks as intermediaries, pareto optimalities, supply and demand, equilibria, are and always have been unworkable theoretical abstracts that hide the inequalities of power which renders the system unworkable. Banks are not only powerful originators, they work on the IWBHYWBH principle, I Won’t Be Here You Won’t Be Here. So the powerful financial incentives of the managerial super-classes to keep destabilizing the system in pursuit of short-term financial interests will eventually overwhelm any and all efforts to stabilize it…

    1. Wesley - Jubilee!

      Steve Keen’s got it right… The relationship between credit growth (or contraction) and the economy is undeniable. We will likely be subjected to 2 decades of zero-growth, unless his prophecy occurs by intention (implementing a debt Jubilee), or by violence (unintended, sudden collapse and deflation of counterfeit credits outstanding).

      “The only real question we face is not whether we should or should not repay this debt, but how are we going to go about not repaying it?”

      Unpayable debt will not be repaid. His Jubilee solution will of course have amazing populist appeal, especially to those who are not mired in debt. QE for the unwashed masses – and an evaporation of existing toxic, unpayable debts.

      “Bernard A. Lietaer on Monetary blind spots and structural solutions”

      https://www.youtube.com/watch?v=Q7uJIjSO-a4 (2:00 mark)

      has the courage to actually say out loud, in public – that which cannot be said: NEVER TOUCH THE MONETARY SYSTEM. Unsurprisingly, in referring to the Academic taboo (and its relation to him by Paul Krugman while at MIT) — Lietaer makes it clear that if an economist wants to advance his career, the prospect of changing the monetary system must never be broached.

      Stiglitz’ expressed misunderstandings (and Krugman, and virtually all mainstream, orthodox economists today) of the fraudulent endogenous money creation function of private banks, when taken in the context of Lietaer’s comments, are more understandable. They’re not ALLOWED to discuss the actual mechanisms. Keen is bucking the current with this article – and I’m glad that Forbes gave him the coverage.

      Lietaer’s “ecosystem” metaphor for the money system (and its complex, dynamic features) is very insightful, too! His description of Uruguay’s acceptance of other types of money in settlement of taxes may be the first of this kind on the planet since the advent of total, worldwide fiat. As I mentioned to JohnG yesterday, there is nothing to stop Government from accepting other forms of money for taxes, including Lietaer’s interesting complementary currency ideas. Monetize that!

      1. Lieitaer nails it with that . The gatekeepers are here , I expect to see some more of the like Here they are in their own cave, linked before.

        I have sent this to Ben Dysons private e mail I expect PM will be making some representations.

        HI Ben,

        Its been a while , all well here in Sweden.

        You should be aware of this attack on the good name of Positive Money by

        New Economic Perspectives. http://neweconomicperspectives.org/2016/02/guest-post-positive-money-action.html#more-9995

        I have had a long discussion on the Golem XIV blog with a particulalry zealous mmtist in the last month and i am working on an article at the moment on the philosophical aspects of Money so have been studying the various theoretical schools in some depth as part of my research.
        https://www.golemxiv.co.uk/2016/01/re-branding-dissent/
        Aspects of MMT resemble a cult in fact it struck me the other day that ,,,,,,,,,,,,X is a kind of antipodean Pol Pot for state mandated debt slavery. I will not develop the joke any further your the only person I have mentioned it to.

        MMT, This web site linked to etc are certainly jealous of other heterodox views I think you need to nip this in the bud. They are acting like some sort of Gate-keeping controlled opposition to real reform there is a lot of the pot calling the kettle black.

        Don’t want to be over dramatic but just have your back for you, the work you have achieved with the team at PM is very important and nothing short of Historic. Keep it up

        All the best

        Roger

  90. David, I have to say it’s a shame, I enjoy your articles and used to enjoy the comment as well. I don’t know if you’d ever consider limiting length of comments, or numbers of links, but as it stands it’s become unreadable. Overly long, devoid of real content and repetitive.

    Your site, your rules but it certainly detracts for me.

  91. The Great Money Trick

    https://youtu.be/mRKVmzaHzIk?t=21m47s

    From

    https://en.wikipedia.org/wiki/The_Ragged-Trousered_Philanthropists

    The book advocates a socialist society in which work is performed to satisfy the needs of all rather than to generate profit for a few. A key chapter is “The Great Money Trick”, in which Owen organises a mock-up of capitalism with his workmates, using slices of bread as raw materials and knives as machinery. Owen ’employs’ his workmates cutting up the bread to illustrate that the employer — who does not work — generates personal wealth whilst the workers effectively remain no better off than when they began, endlessly swapping coins back and forth for food and wages. This is Tressell’s practical way of illustrating the Marxist theory of surplus value, which in the capitalist system is generated by labour.

    http://www.avine.co.uk/great-money-trick/

    Plato’s Allegory of the Cave.

    https://www.youtube.com/watch?v=69F7GhASOdM

  92. Wesley - Perfectly Clear

    https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-609520
    JohnG February 5, 2016 at 9:00 am “Just to be perfectly clear here, what I’m saying is that your thesis i.e. that the monetary entity that we call dollars etc is the cause of the worlds problems so destroying it will solve all the world’s problems, is a false reading.”

    A: This is NOT clear at all. Your calling it false, adds nothing of merit to the discussion, and your words have no standing as they do not even provide propositions, facts, and references. They are merely baseless assertions typical of MMTist dogma. Proposition: The dollar, primary world reserve currency, is inherently unstable; as a store of value, it has lost more than 95% of its value in one lifetime; it’s interest rates have been gyrating through massive swings during its FIAT lifetime; its exchange value in terms of other worldwide currencies has been at the root of huge, destabilizing capital flows and valuation changes; ad nausem. Inflation rages throughout the world. Imbalances in trade are the rule. Central banks worldwide are in a currency war of debasement. It’s not working! The current dollar system is broken. Your defense of the status-quo dollar-paradigm is so demonstrably without merit, as to beg the question of your motives (and master) in its service. NO ONE is suggesting the destruction of the dollar. Where do you come up with this nonsense? Very good ideas are being suggested for the modification of the monetary system designed around the dollar. Including the cessation of the private banking cartel’s ability to create credit endogenously; and for the sovereign to reclaim its consitutional right to issue debt-free (interest free) money directly into circulation; to ensure that the users of the nation’s monetary system are not paying interest in perpetuity for something that need not be borrowed into existence! But wait, there’s much more.

    J: “I am not saying that we don’t have serious problems with the power of bankers or the moneyed elites. What I am saying is that the notion of changing the monetary system to something else (mostly seemingly barter arrangements) will not only not fix those problems, it will make them worse.”

    W: None of the proposals mentioned involve barter. They involve the use of money, not credit. Again – where do you come up with these fictions? On what basis can you claim that the proposed changes to the system (empirically proven to work), will not fix these problems? Your saying something JohnG does not make it so. However, I can point to the success of sovereign money issues in Guernsey and the Greenback issue in America as proven examples of success. Your system is a legacy of one failure after another, leaving in its wake untold misery, wealth and capital destruction, and inequalities.

    J: “We DO need to change the power structure. Changing the money system won’t do that. Changing to a hard money system would be a disaster for the many.”

    W: Saying that changing the money system will not change the power structure in this country is really beyond the pale. The power structure of this country IS the money system. They are an identity. The existing monetary system systematically shears the masses of their wealth in an unseen, insidious way, and redistributes it ruthlessly to the banking cartel. Your sloganeering will not change that. Changing the money system will change that.

    J: “Economic Darwinism and mass impoverishment would swiftly follow.”

    W: The money system, based on debt at interest as the basis of all money, is unable to pay itself back (interest is not created at the time of debt creation). The current money system (based on fraudulently issued thin-air commercial bank credits) has already created the very essence of economic Darwinism, and a hamster wheel which guarantees default absent unsustainable growth. Eliminate the interest on the national debt, and you eliminate the hamster wheel. I really shouldn’t have to pay for the use of something that I already own, multiples of times over – to an unjust private banking cartel.

    J: “Your and Wesley’s continual misrepresentations and personal attacks have rendered any progression of the discussion impossible.”

    W: You still have not been able to point to a single personal attack originating from yours truly. You on the other hand, stand guilty on multiple counts. The record is clear. Your arrogant denials are really quite rich indeed.

    J: “So don’t pretend that my understanding of the world is shallow because we can’t get past the technical aspects. All I’ve been able to do is defend my position from your belligerence and the tsunami of falsehoods and misrepresentations.”

    W: Your understanding of the world has been warped by the ingesting of the MMT KoolAid, an unnatural affinity for analyzing political economy with spreadsheets, and an inability to read. You have not defended your position – all you’ve done is throw unfounded slogans about in a language that might as well be from another universe. I have argued effectively for change, with specific details of those changes, together with my rationale. You have argued for a continuance of the failed status-quo. It’s time to throw the bums out! Put down the chain saw JohnG, and listen to the birds…

  93. Listen, then, to the questions which you must answer: –
    DOI-IV-3.56
    1. Is it true that, though the loaning of Capital, when viewed objectively, is a service which has its value, and which consequently should be paid for, this loaning, when viewed subjectively, does not involve an actual sacrifice on the part of the Capitalist; and consequently that it does not establish the right to set a price on it?
    DOI-IV-3.57
    2. Is it true that Usury, to be unobjectionable, must be equal; that the tendency of Society is towards this equalization; so that Usury will be entirely legitimate only when it has become equal for all, – that is, nonexistent?
    DOI-IV-3.58
    3. Is it true that a National Bank, giving Credit and Discount gratis, is a possible institution?
    DOI-IV-3.59
    4. Is it true that the effects of the gratuity of Credit and Discount, as well as that of Taxation when simplified and restored to its true form, would be the abolition of Rent of Real Estate, as well as of Interest on Money?
    DOI-IV-3.60
    5. Is it true that the old system is a contradiction and a mathematical impossibility?
    DOI-IV-3.61
    6. Is it true that Political Economy, after having, for several thousand years, opposed the view of Usury held by theology, philosophy, and legislation, comes, by the application of its own principles, to the same conclusion?
    DOI-IV-3.62
    7. Is it true, finally, that Usury has been, as a providential institution, simply an instrument of equality and progress, just as, in the Political sphere, absolute monarchy was an instrument of liberty and progress, and as, in the Judicial sphere, the boiling-water test, the duel, and the rack were, in their turn, instruments of conviction and progress?
    DOI-IV-3.63
    These are the points that our opponents are bound to examine before charging us with scientific and intellectual weakness; these, Monsieur Bastiat, are the points on which your future arguments must turn, if you wish them to produce a definite result. The question is stated clearly and categorically: permit us to believe that, after having examined it, you will perceive that there is something in the Socialism of the nineteenth century that is beyond the reach of your antiquated Political Economy.
    P. J. PROUDHON.

    1. It is small wonder that the history of Brit!sh com­ mence and industry is but a recital of misery, distress, panic, and industrial unrest, the horrors of which have hardly ever been exceeded in the history of warfare!
      Failure to see this as the root cause of labour troubles lias led to a series of extravagant and futile remedies. Karl Marx, who understood a good many things, did not understand the science of money, and he saw no remedy for industrial unrest save the State ownership of all industries and the establishment of the Servile State. Mr. Henry George could see no evil in society save what the private ownership of land produces, and even went so far as to justify interest, the very exist­ ence of which depends upon the legal restrictions re­ garding the issuing of money.
      Among the various reformers of the past century, one name stands pre-eminent as having unerringly
      pointed at the root of social misery. P. J. Proudhon,
      the great French philosopher, saw that the basis of
      monopoly was in the world’s monetary systems, and fought desperately to overthrow them. All his eforts were at last concentrated on rthis one important reform, and whilst Karl Marx was receiving the plaudits of mankind as the discoverer of the only way by which labour could extricate itself from modern capitalism, Proudhon was neglected and almost forgotten.
      The last few years, however, have shown clearly that the more intelligent among the Socialists are realising that the salvation .of mankind cannot be effected by any system of State Bureaucracy, and that the l\1arxian remedy would prove worse than the disease. After all, what is the fundamental criticism of modern capitalism except that it is a legalised system under which the few are permitted to take from the masses all their surplus wealth under the method of rent, interest, and profits? And what other means are there for overthrowing the system than by repealing the laws which maintain these legal claims? This is what Proudb,:Jn aimed at, and it is the only way in which industrial peace will be finally secured.
      ARTHUR KITSON.

  94. A wise man once said at the beginning of 2016
    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.

    A Crank on February 27 1913 wrote this

    http://library.brown.edu/pdfs/1140814185593570.pdf

    value. Practically all nations to-day have adopted the free coinage of gold-through the special laws passed by the world’s financiers ,but this free and unlimited coinage of gold would cease almost instantly upon news of any vast and hitherto unexpected gold discoveries. The repeal of the Silver Coinage Laws in most countries was occasioned by the great silver discoveries in the Western States of America, because financiers found that they would not be able to control the supply, and therefore money would become a much cheaper commodity than it is, and serve to reduce the necessity of purchasing bankers’ credit.
    Money, having been made compulsorily a scarce article, it would appear to any intelligent person that………etc.etc

    1. Wesley and Kitson

      Very interesting writings – occurring one year before the formation of the Federal Reserve, and quite a long while after the 1844 Bank Charter Act in England. Kitson appears to be missing a couple of key points, but is bang on in most. He, like Henry Ford, naturally realizes the absurdity of the relationship between the BOE banknotes in circulation and their inability to be redeemed in Gold. What he seems to ignore (or be unaware of) is the fact that the Act exempted demand deposits from the legal requirement of a 100-percent reserve which it did demand with respect to the issuance of paper money. When he does his calculations on the “wealth of England”, he says, “Our legal tender laws have placed the bulk of the world’s wealth producers at the mercy of those with legal claim against them — claims for gold which can never be redeemed. And so a perpetual stream of wealth in the form of interest on irredeemable loans, is taken annually from the pockets of the producers and placed to the credit of the money-lending class.”

      He goes to great length to illustrate a point I’ve made before : that a unit of measure cannot be something changing – such as our fiat currency is. Kitson also has insights into value and price. There is nothing inherently wrong with associating a token with a certain weight of gold. But legislating a fraud (representing that the Bank of England did indeed have enough gold to back their bank notes) was untenable. Worse still, by EXEMPTING demand deposits (credit units said to be fungible with Bank of England notes) from the 100% reserve held to be “backing” the BOE notes, the Peel Act was an inherent fraud itself. This meant the commercial banking system could issue credit-money from thin air, with no backing whatsoever, and hold the population hostage to a debt-based system. Indeed, the Peel act permitted the Bank of England notes to be backed by their own debt! Think of how crazy that is! And yet, today, the entire monetary system has been disconnected from anything of real value at all – except debt upon which USURY is extracted. This is insane.

      Kitson, I think, has the essence of the point, but misses the forest. He seems to miss the source of the problem: the ex-nihilo creation of purchasing power by the commercial banking system of fungible claims to gold which does not exist. There were no limitations on the creation of bank-credit, and Kitson seems to have missed this fact when he says,:

      “For instance, accepting Sir Robert Peel’s definition, what sense is there in speaking of the wealth of Great Britain as equal to twenty thousand million pounds? This sum represents an amount of gold that has never existed, and if it did exist would make the statement of the amount of Britain’s wealth ridiculous ! It is estimated that the amount of gold existing for coinage purposes throughout the world is under two thousand millions of pounds, that is, one-tenth of the wealth of Great Britain, and the wealth of Great Britain is estimated at its present amount in sovereigns merely because of the comparatively small amount of gold that exists.”

      Kitson knows there’s a problem with the “standard” — but can’t quite figure out why. If all prices in the UK were expressed in terms of grains of gold, and gold (or any other real thing matching the banking system liabilities one for one) were exchanged for the monetary unit one for one — these problems could not exist. So if all pounds (and all bank pound equivalent liabilities) were exchangeable for 1 grain of gold – wild deformations that we have been subjected to for ages could not occur. Under such a system, for example, one loaf of bread could be priced at one grain (or one molecule) of gold. The fact is, one grain and one molecule are known, empirical, observable, repeatable measures. They are unchanging – unlike the relative value of a pound today. The merchant could accept banknotes or metal tokens (coins), or electronic digits. As long as that unit of exchange could measurably (and under the law) only be issued if it had a one-to-one relationship with something real, bank runs, and the pernicious effects of inflations caused by the fraudulent issuance of bank credit from thin-air, could not occur! This is what Soddy meant when he said the problems can be solved by an adding machine.

      So how can inflation happen? Well, under such a system, when a Sovereign allows for the free coinage of the underlying metal (gold or silver for example), and large amounts of the metal are presented for conversion into the monetary unit – the money supply would rise. But, under such a system, the Sovereign still exercises control over money growth (and contraction). Also, the price for a “grain” of gold will always be equal to its purchasing power in the free market. The banking system could not allow this to occur, if they were to maintain their near-monopoly on the unconstrained issue of credit-money.

      Kitson is right on point again when he speaks the unspeakable, though:

      It is the basis of usury, and the most insidious swindle for enslaving mankind ever conceived ! … It is as though our postal laws limited the sale of postage stamps to one-half the number required to meet the public demand, which would leave piles of letters undelivered through lack of postage stamps. Although our statesmen have never degenerated to this stage of idiocy in postal regulations, they have never risen above it in regard to the currency.

      Now, there are only two legal sources for liquidating debt–one is gold mining, and the other banking. Every debt must be paid in legal tender (gold) or by cheque. Every debt created by a loan exceeds the amount loaned by the amount of interest charged. No loan is ever sufficient to pay the debt it creates, and hence the mountain of debt must continue to grow year by year ! For it is certain that the production of gold will never be allowed-even if it could-to seriously affect the demand for loans.”

      MIND: the “liquidation of debt”. MONEY is what liquidates debt/credit relations. Kitson realizes there is something evil preventing the free flow of gold to perform this function. And realizes the mathematical growth function built into a money system that does not provide any method for extinguishment of debt otherwise. But he doesn’t quite figure out that it is the ability to pay for things with cheques representing gold that does not exist, as the basis of the problem.

      A grain or a gram are unchanging units of measure. A dollar is not. A pound is not. This is where he is wrong.

      1. Hi Wesley, As part of my own research I am examining theories of interest in some depth now. On Kitson I suspect that all the way back to the mists of time ´´´The Unspeakable´´has been broached and subsequently quashed by the powers that be. I am hesitant to declare any of them wrong on this or that particular point the written word has a habit of frustrating fluidity of thought and understanding and thought and understanding is in itself an emerging developing dynamic and not a destination. That´s not setting a dog in the fight.

        AN amusing aside from my efforts yesterday.

        “I recently heard of someone studying the ellipsis (or three dots) for a PhD. And, I have to say, I was horrified. The ellipsis is the black hole of the punctuation universe, surely, into which no right-minded person would willingly be sucked, for three years, with no guarantee of a job at the end. ”
        ― Lynne Truss, Eats, Shoots & Leaves: The Zero Tolerance Approach to Punctuation

        I have often heard Noam Chomsky venture that there are certain areas of research which guarantee exclusion from Employment or influence in academic institutions or commercial ones.

        Tony C’s link looks very interesting.

  95. More Kitson

    http://library.brown.edu/pdfs/1140814140546222.pdf

    pretence to knowledge.
    And certainly this so-called ” Study in the Economics
    of Monopoly ” gives some grounds for such criticism. The author commences with a preparatory note on
    ” Currency Cranks.”
    ” Currency cranks,” says our Fabian Oracle, ” are the most foolish of theorists, and their schemes the most futile of Utopias.” We are then informed that the author’s speculations about ” the place of gold in the machinery of commerce are put forward with diffidence
    precisely because of his distrust of the company he is keeping.”
    We are next informed that these ” speculations lead……etc….

    Again Kitson is against the Gold Standard and is challenging the Banking monopoly of creating the means of exchange at interest.

    This is also the point that Quiggley is getting at in Tradgedty’y and hope when he says.

    ”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. Quiggely also shows how Bankers want to make money more expensive and worth more etc..etc..

    Repeated once as Farce and then as tragedy ?

    Groundhog day?

    1. Shakespeares tragic sequence, by Kenneth Muir p.173

      We are accounted poor citizens, the patricians good. What authority surfiets on, would relieve us; if they would yield us but the superfluity, while it were wholesome, we might guess they relieved us humanely; but they think we are too dear:The leanness that afflicts us, the object of our misery, is an invenory to particularize their abundance; our sufference is a gain to them.
      Let us revenge this with our pikes, lest we become rakes;for the gods know I speak this in hunger for bread, not in thirst for revenge. Li. 14-23

      see Gloucester in lear that ´´distribution should undo excess´´

      When Menenius claims that the patricians care for the citizens like fathers the citizens are grimly sardonic.

      Care for us! True indeed they neér cared for us yet ; suffer us to famish, and their store houses crammed with grain; make edicts for usury, to support userers, repeal daily any wholesome act established against the rich; and provide more piercing statutes daily, to chain up and restrain the poor. If the wars eat us not up, they will; and theres all the love they bear us.

      L.i,77-84
      A banished hero of Rome allies with a sworn enemy to take his revenge on the city.
      http://www.imdb.com/title/tt1372686/

      The Tragedy of Coriolanus

      http://warburg.sas.ac.uk/pdf/emh81b2456895.pdf

      “Men. Note me this, good friend;”
      “Your most grave belly was deliberate,”
      “Not rash like his accusers, and thus answer’d:”
      “””True is it, my incorporate friends,”” quoth he,”
      “””That I receive the general food at first, 130”
      “Which you do live upon; and fit it is, Because I am the store-house and the shop”
      “Of the whole body : but, if you do remember,”
      “I send it through the rivers of your blood,”
      “Even to the court, the heart, to the seat o’ the brain ; I 35”
      “And, through the cranks and offices of man,”

      “The strongest nerves and small inferior veins”
      “From me receive that natural competency”
      “Whereby they live. And though that all at once,”
      “You, my good friends,””-this says the belly, mark”
      “me,- I40”
      “First C£t. Ay, sir; well, well.”
      “Metz. “” Though all at once cannot”
      “See what I do deliver out to each,”
      “Yet I can make my audit up, that all”
      “From me do back receive the flour of all,”
      “And leave me but the bran.”” What say you to ‘t? I45″
      “First Cit. It was an answer. How apply you this?”
      “lVIen. The senators of Rome are this good belly, And you the mutinous members ; for examine”
      “Their counsels and their cares, disgest things rightly”
      “Touching the weal o’ the common, you shall find I 50”
      “No public benefit which you receive”
      “But it proceeds or comes from them to you,”
      “And no way from yourselves. What do you think,”
      “You, the great toe of this assembly?”
      “First Cit. I the great toe? Why the great toe? I 55”

    2. Kitson’s words in Gold and State Banking (1912 – New Age) are perhaps the earliest specific reference to and coinage of the term “too big to fail” – already being said out loud by bankers over 100 years ago. Kitson also points to the Guernsey market fiat issue (just as I have earlier, together with the Lincoln Greenback issues) – and its successes. Progressive thinking indeed! I’m grateful that Positive Money and others are helping to guide the public dialogue back to a place where these issues can be taken up openly. Thanks for the links – it’s truly marvelous that readings of this nature may be had from the comfort of a WiFi connection anywhere…

      PS: there are now at least 374 uses of the ellipsis in this posting! 😉

  96. Deutsche Bank seems to be leading the pack (into the abyss), they appear to be suggesting that the problem is illiquidity rather than insolvency. (just like 2008, fool me once etc.)

    http://www.zerohedge.com/news/2016-02-09/deutsche-bank-terrified-here-what-needs-be-done-its-own-words

    AP Moller Maersk end of year results published 10th Feb

    http://investor.maersk.com/financials.cfm

    Roger/Wesley, suggest you get your own blog, WordPress is easy and free (others are available)

    1. Hi Bob rocket,

      The problem with so many questions that are taboo is the problem of concision as explained by Chomsky in manufacturing consent.

      https://www.youtube.com/watch?v=RlL2Jj-kCNU

      Opposing narratives and censorship by insistence on soundbites requires more context than indexing memes.

      Thanks for the links , Deutschebanks situation could be the giant canary in the coal mine.

      On Blogs I do have one.

      http://letthemconfectsweeterlies.blogspot.se/2015/05/dasein-what-is-aspiration-is-it.html
      https://en.wikipedia.org/wiki/Dasein

      Heidegger considered that language, everyday curiosity, logical systems, and common beliefs obscure Dasein’s nature from itself.[7] Authentic choice means turning away from the collective world of Them, to face Dasein, one’s individuality, one’s own limited life-span, one’s own being.[8] Heidegger thus intended the concept of Dasein to provide a stepping stone in the questioning of what it means to be – to have one’s own being, one’s own death, one’s own truth.[9]

      http://letthemconfectsweeterlies.blogspot.se/2012/09/a-visit-to-web-site-for-william.html

      http://letthemconfectsweeterlies.blogspot.se/2011/11/on-song-writing-and-poetry.html

      http://letthemconfectsweeterlies.blogspot.se/2011/05/plurality-pluralism-alogaries-still.html

      Chances are its not your cup of tea.

      I participate and engage in discussion here Bob when called a liar or worse one should be accorded the right of reply in the same public forum.

      I was reading Tragedy and Hope when I joined this idscussion in earnest. Heres the Blog I did at the time.

      http://letthemconfectsweeterlies.blogspot.se/2016/01/tragedy-and-hope-from-whence-we-came.html

  97. Wesley - Money & Man

    From Money and Man and – H. J. Davenport, Economics of Enterprise. New York, 1913.
    [
    More men may go hungry from a rise in the interest rate than a rise in the price of bread. A bank failure may produce more misery than a plague. A change in the money standard may provoke a revolution. “It may well be doubted,” said Macaulay, “whether all the misery which had been inflicted on the English nation in a quarter century by bad kings, bad ministers, bad Parliaments, and bad judges was equal to the misery caused by bad crowns and bad shillings.”
    ]

    1. Wesley - and his camel

      Here’s an interesting paragraph from this fine site in 2012. Guess what? Credit/Debt is NOT money…

      https://www.golemxiv.co.uk/2012/06/save-the-euro-who-for/

      “Currencies do not create wealth they merely denote it and allow its exchange. On the other hand, debt actually depends on the currency in which the debt contract is written. Wealth comes from productive activities. Debt comes from honouring an agreement to pay someone an agreed amount. Wealth creation carries on after a currency collapses and soon enough a new currency takes over the job of conveying arbitrary units of the wealth created. Again please see Germany or any other nation – and there are many – who have defaulted or whose currency has collapsed. Debt, however, either does not survive the death of the currency in which it was agreed or does so as a fragment of its former worth.”

      When wealth is denominated with MONEY, it survives the death of a debt-based currency. Debt/Credit is NOT money. Money has the ability to carry wealth forward into the future. All credit can do is pull wealth back in time to the present from the future. Credit is faith-based. Money does not require trust.

      I’ve recently found a much more ancient analog to Reagan’s famous credo; you know the one – Trust by verify:

      “One may believe in Allah, but one still must tie up one’s camels at night!

      1. This crisis has been caused by arrogant central banks
        By Allister Heath

        “It was Friedrich von Hayek, the great Austrian economist, who explained just how central the price system is to capitalism and our civilisation’s astonishing prosperity. The fact that goods, services, assets, money, time, ideas and risk all come with a price attached allows resources to be allocated remarkably effectively….”

        http://www.telegraph.co.uk/finance/economics/12152860/This-crisis-has-been-caused-by-arrogant-central-banks.html

        1. Wesley - on CB Arrogance

          A correct analysis in general terms… However, I disagree strongly with the prescription:

          [Central banks need to ensure that there is enough money in the economy. But they should follow simple rules to ensure that this happens, not seek to micro-manage sentiment.]

          Central Banks are not needed at ALL, least to control interest rates with some sort of rule book. Permit the marketplace to determine interest rates, and stability will be naturally found. Remove legal tender and tax laws’ disincentives, and there will be no scarcity of real money. Credit, though necessary and important, is not money.

    1. This is a very good working paper called shadow banking the money view. Shadow seems to imply a sort of un official aspect to it, seems to me there is nothing shadow or un official about it. As with so much of this stuff its dressed up to obscure the simple truth that Money is a social control mechanism that eschews democratic ideals and all policy militates to protecting the single currency monopoly issuer position of private banking interests.

      https://financialresearch.gov/working-papers/files/OFRwp2014-04_Pozsar_ShadowBankingTheMoneyView.pdf

      A super Lietaer interview here.

      https://www.youtube.com/watch?v=ykvRceBQRl8

      1. Wesley - MMT shadows

        This well known paper certainly begs the question of HOW (or even whether??) Modern Monetary “Theorists” the entire shadow banking sector structures are accounted for in their dogmatic balance sheet view of the world; how trillions in “money” or “money-like” (Singh’s term) liabilities can exist without an antecedent fiscal deficit matching same. I found it interesting 5o note the hard line drawn in the paper between the financial ecosystem, and the “real” economy. Singh also touches on the importance of real bills “in the time of Bagehot” but fails to nail the reasons for their disappearance.

        Bernard Lietaer correctly identifies the dangers inherent in our monopoly banking cabals. I think his research on the necessity of diversity in the success of ANY complex dynamic system is extremely important. His description of the Modern Monetary system as a dying monoculture is quite accurate, IMHO.

  98. Last Two stanzas of the epic poem on Usury I have been working on

    Concluding prayer.

    A central lack of fibre either moral or physical around which myths of debt are spun as spiders spin webs and weavers warp clothe. Spartan Ephors of prudence pass judgement on all and stand above and astride the law dispensing injustice and taking clothes of the backs of The freezing and food out of the mouths of the hungry. Passing judgement on those who perform real work asking always for more and demanding to pay less.

    So draw the bow of truth with intentness in the eye,
    Seek out the irreducible posits the epistemological gods of homer. If there be one free miracle let the ephors explain the rest. What is this power of usury, Where did this power come from, Who is it exercised for and to whom do you ephors of usury answer too and now let me ask How do we take this power away. Then we shall see good faith and brotherhood restored to the commons.

    https://youtu.be/beiWX5iqF8w

    ©Roger G Lewis 2016.

    http://letthemconfectsweeterlies.blogspot.se/2016/02/usury-hells-fuel-and-mans-oppressor.html

    1. Wesley - & Thermodynamics

      This is a terrific link! Now you’re getting somewhere! Soddy (and many others) make direct references to the elemental laws of thermodynamics and the energy input side of the equation. I truly believe this is where lies the solutions. Glad to have the read – thanks!

    1. Wesley,

      you seem to be on a crusade, it is my impression that MMT to you is the new infidel, the zeal of your condemnation only makes me question your libertarian ideology.

      I would suggest you are more totalit than liber.

      It’s not big and it’s not clever to try to take over someone else’s property whilst they are away attending to other things.

      1. Wesley - with SpaceShot

        Thanks for your time-wasting insights into my own mind, Rocket-man! MMT’s disingenuous attempts at re-branding an honest view of monetary matters into an amalgam of State and Credit Theories of money have been around formally (see Innes : 1913) for over a hundred years – and informally for much longer – so not so new, but deffo in the “infidel” category. Theft by the State, or by private institutions under cover of unjust laws is still theft. For you to characterize MY ideologies from what’s written above clearly indicates that you have not taken the time to read my submissions. Certainly, “Totalitarian” would be the diametric opposite of my views, which I naturally believe are plainly set-out. Labels (e.g., “totalit”; “liber”), unless willingly donned (such as MMT is quick to do in characterizing their positions), are NOT helpful – also discussed multiple times above. Hence, they are doffed. Label thyself, neighbor!

        A more careful read of these contributions would illustrate to you that at least three persons (or more if you count JohnG’s multiple personalities) were fairly equally balanced in the representative content. So why are you not directing your ill-timed ire at all three? Hmmm??? Obviously, it’s because you, without saying WHY, “seem” to disagree with my point of view. As far as “tak[ing] over someone else’s property whilst they are away attending to other things.” – well you appear to have missed the entire point of a ‘blog such as this!

        Content such as yours, which adds nothing to the overall conversation while stealing time from all readers (to characterize MY views rather than your own!??) IS, however, objectionable IMHO. That is a form of theft – theft of time. Your attempt to “brand” me in this way is a fail. Use facts, empirical methods, and critical thinking, and you will be more compelling. You, like every other non-participant here, are free, and encouraged to use your own devices to ignore or skip over my submissions by all means. Unless, of course, the fine host of this site has authorized you to speak on his behalf, I shall heed your ill-conceived caution. Else, I’ll thank you to keep your unwelcome advice on how I operate my own life to yourself. It’s plain why you “appear” to fall into the defense of MMT : it facilitates YOUR desire to manage MY affairs, as all Statists are prone to do. Uh Uh! Are you really JohnG in disguise?

        Traffic on this ‘blog thread (aside from SPAM) has been nearly non-existent since the beginning of February. Where were you when JohnG needed you most? Please don’t answer. Just cover your ears and close your eyes to what I say, and you’ll be fine… I trust. Ta-ta. Farewell. Goodbye.

  99. Wesley - with Steve Keen

    I stumbled across this remarkable piece last evening and was urged to share. It’s so refreshing to see these discussions of the “money mystery” more and more falling out in the pages of the mainstream media (in addition to the ‘blogosphere)! This article by Steve Keen (one characterized by our resident MMTer as being quite knowledgeable and representative of that viewpoint) in Forbes attempts to set out Keen’s view of “what is money, and where does it come from?” – while also attempting, to discredit (without really backing up his words) two other viewpoints. Give it a read:

    http://www.forbes.com/sites/stevekeen/2015/02/28/what-is-money-and-how-is-it-created/print/

    The really remarkable thing is Keen’s flat out condemnation of ex-nihilo money creation (presumably by ANY party) on the one hand:
    [
    So to be money, the token given in exchange for a good must be accepted as a final payment—but this carried the danger that whoever produced the token might be able to “get something for nothing”. In an ideal system, this had to be ruled out as well.
    ]

    So, unlike Krugman (whom Keen correctly characterizes as having no idea about money whatsoever), and Rosenberg (who only sees fraud in FED money-creation – but seems to ignore the same act by the commercial banking sector) – Keen first asserts that “something for nothing” as being inherently wrong (it is)- and then blandly goes on to excuse the behavior in both sectors as simply the “nature” of the beast:

    Keen:
    […In reality it is simply the nature of a monetary economy: money is simply a third party’s promise to pay which we accept as full payment in exchange for goods. The two main third parties whose promises we accept are the government and the banks.”]

    Quite a contradiction within the same posting! I like Keen and his insights are largely accurate. It seems he is conflicted about the ethical basis of money-issuance. I hope he comes to the correct conclusions… I certainly do NOT agree with the equity of the private banking sector’s near-monopoly benefit of Seignorage from this “token” issue! At the minimum, this benefit should accrue to the commons, if it must exist at all. That is yet to be solved.

    Glad to see this issue spilling onto the discourse of a wider public discussion. In all events – this is helpful – and probably the ONE thing that all monetary reform “schools” (save MMT – who openly nurture the broken and failed status-quo) have in common: get the dialog going and awareness of the facts more widespread! Cheers,

  100. Mind being controlled.

    The media represents the truth in our society.
    But the truth lies.
    The news media lie by omission, by change of emphasis, by distortion, or just outright lies, putting words and images and images into your mouth and eyes that were never there

  101. I think this comment will probably get lost on this particular thread, for obvious reasons. However I did want to say that I have recently come across a couple of articles in the Guardian (which may once have been a surprise, but I guess not any longer) that were talking about ‘alternative’ views, i.e. ones that were challenging the establishment, and in particular those that were critical of the media, as being very much in the category of ‘conspiracy theory’.

    Which sort of proves the point of the article.

  102. Wesley to arxsyn...

    arxsyn April 17, 2016 at 10:36 am
    https://www.golemxiv.co.uk/2016/01/re-branding-dissent/#comment-619566

    http://voxeu.org/article/banks-are-not-loanable-funds-intermediaries-macroeconomic-implications
    http://www.bankofengland.co.uk/research/Documents/workingpapers/2015/wp529.pdf

    Hi arxsyn – I’m new here too! This was my first comment thread. Thanks for your kind acknowledgement. I can only hope you see this at some point…

    The links I’ve placed just above are to a paper co-authored by Michael Kumhof (and a short summary of same) – who recently left a senior position at the IMF, to join the Bank of England on a special project. But he is also working on re-revealing to the world something that not one-in-a-million actually understands or appreciates. Worse still, this accusation is not only leveled at the man-on-the-street, but rather to most of the orthodox, professional economists in the world, including Nobel laureates and their adoring PhD candidates. (Paul Krugman was recently outed as still dwelling in the mists of the fallacious “Loanable Funds” monetary theory – see below). The implications ARE mind-boggling, and I believe that once a critical mass of persons becomes aware of these facts, real change will arise in the world. (I refer here to a process akin to the “100th Monkey theory” – https://en.wikipedia.org/wiki/Hundredth_monkey_effect) The concerted, and unprecedented worldwide experimental efforts of the world’s central banking cartels to sustain the status-quo (in the form of 14+trillion$ balance sheet expansions) is failing, and I suspect, that the next quake will be bigger than their little toolboxes of interest rate manipulations and “Quantitative and Qualitative Easing” can contain. The reason? Central Banks actually have very little control over the issue (and I mean that word “issue” also in the sense of credit-issuance…) It’s essential, IMHO, to ready a viable new and honest money-paradigm into which we can grow as a species. Efforts such as propounded here by Kumhof and others, (though not ideal) are certainly better than that which we have now. That these sorts of changes normally grow out of crises is well known – but man missed a good chance in 2008, threatened by a fear of the house burning down. The most curious thing for me is WHY the Bank of England is getting behind this line of thinking at this particular time in the BIG picture? Yes, this dirty little secret WAS well known and quite widely discussed in the mainstream up until the late 1930s. But after WWII and Bretton Woods it all but vanished from the public dialog – and was replaced by a totally incorrect, DECEITFUL and failed model. Dissent was not only re-branded – it was eliminated! Perhaps that’s why the BoE papers linked below created quite a stir among the sovereign money crowd when released…

    But let me also be clear, as I’ve stated earlier in this very thread: What you see around you and are quite properly railing about is most certainly NOT capitalism. JohnG errs again in calling our bankers capitalists. MMTers are always apologists for the status-quo banking paradigm. To me, the concepts of private property and voluntary exchange are essential properties of capitalism. Unjust, and manifestly non-capitalist Legal Tender laws forbid me from using moneys of my own choosing. The production of “money” is permitted to occur ex-nihilo in the banking system, systematically stealing the value of my existing and deferred consumption money claims to property. The price of money (interest rates) is not freely discovered in markets, but it is centrally planned and coercively enforced by unelected puppets of the very monopoly they are charged with regulating. And neither is the allocation and distribution of money goods freely determined in the marketplace. Given that money, and more importantly the price of money, affects every other transaction in the economy, can you really call our system Capitalist? When you honestly digest the implications of the facts of endogenous money creation within the worldwide commercial banking cartels, and your horrifying AHA! moment strikes — well, at that moment, the well worn Henry Ford and other quotations used in populist circles will indeed seem apt. Take a look at the adjacent thread (GolemXIV: Panama – Partners in Crime). We dwell in a thinly-veiled fascist oligarchy where the favored escape taxation; avoid prosecution under Too Big to Jail non-laws; and are the “first receivers” of newly created, virtually interest-free “money”. Yikes: we don’t even have “money” : we have centrally planned debt posing as money! True Capitalism would end our debt-based money system (and the cartel that supports it) in a weekend. And a lot of what I call counterfeit CREDEBT shall also evaporate in that same weekend. Credebt that is unpayable will not be paid. Steve Keen knows this, and calls for a Jubilee. It’s a nice thought. But we are not living in some mystical biblical wonderland… Someone’s not gonna be paid! Unfortunately, the methods used to deal with this so far have been to steal wealth from the masses in favor of the originators of the fraudulent debt in the first place – the creditors (See e.g., Cyprus and Greece). Once the woman-on-the-street actually comes to a clear understanding of how these debts were created at the start, “things” may change. Unfortunately, pitchforks and torches are messy, and often lead to a cure worse than the disease.

    Despite the rabid, errant claims of MMTers to this new-found knowledge – the rabbit hole goes quite deep, and much farther back into history than the mystical KoolAid-swilling modern founders of that sect would have you believe. In fact, a detailed working knowledge of the mechanics of endogenous money-creation by the banking monopoly was quite common knowledge – and not in the least bit controversial – in the first half of last century. Once the bankers learned how to create money from thin-air via note and deposit creation (checkable accounts in the late 19th century), Wicksell (1906), Mises, Hayek, Ford and Edison (1921), Soddy (1926), Simons, Fisher, and all the way on through 230+ economists (representing virtually the entire world of political economists of the time) who “signed” on in support of the “Chicago Plan” in the 1930’s all understood intimately and wrote openly of the impropriety of seignorage being swept into the greedy, gaping maw of the banking monopoly. MMTers blithely excuse this practice today as being perfectly fine and consistent with justice, property and apple pie! See Frederick Soddy’s prescriptive writings to more fully appreciate the earlier, justified and nearly universal contempt for the process. What’s equally amazing, is that sometime after WWII, this entire line of thinking was effectively ERASED from the common understanding and dialog – and even from the PUBLIC school curricula all the way up to university. The Money Multiplier Myth has been believed and propagated as gospel for generations! I wonder why…? The truth will out once again.
    W.

    Further readings:
    “Modern Money Mechanics – A Workbook on Bank Reserves and Deposit Expansion” published by the Federal Reserve Bank of Chicago, originally written in 1961 (This document also describes in detail the ex-nihilo credit creation of the FED when it makes “asset purchases”, i.e., QE);

    Friedman, David H., “I Bet You Thought”, Federal Reserve Bank of New York. N.Y., 1977, 36p. (“Commercial Banks create checkbook money whenever they grant a loan, simply by adding new deposit dollars to accounts on their books in exchange for a borrower’s IOU.”

    And here is the best summary (with links) of the incredible public debate between Steve Keen and Paul Krugman concerning this issue: https://unlearningeconomics.wordpress.com/2012/04/03/the-keenkrugman-debate-a-summary/

    Scott Fullwiler schools Krugman with SPECIFICS OF THE BALANCE SHEET on the way of endogenous “money” creation: http://www.nakedcapitalism.com/2012/04/scott-fullwiler-krugmans-flashing-neon-sign.html

    Kumhof in a terrific lecture at the London School of Economics in 2013 on “Revisiting the Chicago Plan”:
    https://www.youtube.com/watch?v=d6x8RqiAqno

    Standard & Poors Economic Research: “Repeat After Me: Banks Cannot And Do Not ‘Lend Out’ Reserves”
    https://www.kreditopferhilfe.net/docs/S_and_P__Repeat_After_Me_8_14_13.pdf

    “Money in the Modern Economy: An Introduction” – Bank of England Quarterly Bulletin Q1 2014 (plus an “official” video too : https://www.youtube.com/watch?v=CvRAqR2pAgw)
    Also “Money Creation in the Modern Economy”:
    http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

    “What is Money and How is it Created” (Forbes: http://www.forbes.com/sites/stevekeen/2015/02/28/what-is-money-and-how-is-it-created/#28c5f2de56a3)

    “That Couldn’t Possibly Be True”, Paul Rosenberg – 27February 2015
    Paul Rosenberghttp://www.caseyresearch.com/articles/that-couldnt-possibly-be-true-the-startling-truth-about-the-us-dollar

    “Monetary Reform: A Better Monetary System For Iceland” (See comments by Turner on pp35-36)
    https://www.forsaetisraduneyti.is/media/Skyrslur/monetary-reform.pdf

    Of course, each of these leads to many more…

    1. Wesley said “Yikes: we don’t even have “money” : we have centrally planned debt posing as money! True Capitalism would end our debt-based money system (and the cartel that supports it) in a weekend. And a lot of what I call counterfeit CREDEBT shall also evaporate in that same weekend. Credebt that is unpayable will not be paid.”

      First statement true. I’d like to try turning the others round. True money (interest-free credit) would end our debt-based Capitalism in a weekend. Genuine credit-worthiness would not evaporate, but what we give each other to meet our needs (life, food, clothing, housing etc) still has to be earned (with the help of Nature) by our reproducing and maintaining it. Credebt that is unpayable has already been paid: the rich have grown fat on it.

  103. Wesely debunks MMT's attempt at rebranding Money & Credit

    If you’d like to get a fuller, more accurate understanding of the difference between “Money” and “Credit”, and to debunk the disingenuous attempts by the Post-keynsian MMTers to conflate the two, take a look at this very considered rendering of the topic in 1859. Man had a much better understanding of “money” 150 years ago than now! The introduction is only a few pages of well-written grist… Cheers!

    “The ways and means of payment – a full analysis of the credit system with its various modes of adjustment – Stephen Colwell 1859”
    680pp.pdf

    https://archive.org/details/waysandmeanspay02colwgoog

  104. Roger Hawtrey – Currency and Credit London 1919
    https://archive.org/details/currencycredit00hawtrich

    Hawtrey’s explicit understanding of the essential differences between “Money” and “Credit” are so well described in this book… (linked above for free) It’s a masterful debunking of the MMT conflation of money and credit before the Chartalists spread their poison…

    “According to the classical theory of money, as we saw, money is a selected commodity. Law or custom decrees that debts may be paid in gold or in silver or perhaps indifferently
    in either. Gold and silver are the raw materials of certain industries and have a value as such, and in virtue of this value they supply an independent standard for the measurement of debts. A banker’s obligation, whether it take the form of a bank credit or a bank note, becomes an obligation to pay money. Such an obligation may be used as a medium of payment ; a debtor who has a bank credit may pay his debt by assigning this bank credit to his creditor. But a bank credit, not being the legal means of discharging a debt, must be readily transformable into money if required. The banker’s obligation must be to pay money.”

    Bingo.

    There’s much more… Hawtrey is a fine writer too!

  105. Look how much ink, or pixels, are debated over which form of political category is being used here, there, everywhere, and it’s all used here, there, everywhere, anyway, without actually truly knowing which entrusted party was in what genuine/ingenuine frame of mind at what time etc.
    Categorising is humanities constant failure.

    1. Thanks, Roger, for your looking for me leading me to this. It is good to see so many like minds. The odd-ball John G is as sad as certain bloggers on RWER. I have a wife who I love dearly but has the same personality trait: her memories and thus what she perceives are fixed by what she heard them called (Shane’s categorising?). Thus if I say anything different she reacts as if I’m calling her a liar, and the uncertainty that generates leaves her unable to stand being wrong. The point John G made right back on January 3, 2016 at 2:49 am,, “Money is credit. Always has been and always will be”, is quite true, but that has fixed his mind on its and so him being true, so (as my wife would) he projects his own truthfulness onto whatever anyone other than the immediate dissenter is telling him: uncritically critically accepting lies, not seeing through all those Schopenhauer evasions and perpetuating the damage made by acting as if they rather than his interest-free credit card understanding of money were true. Wishful thinking to avoid seeing himself as wrong? Of course we need to revise economic teaching, but in my view adult teaching ought to start with the old advice, “Know Thyself”, starting from the Jungian personality anaqlysis in e.g. Isobel Briggs Myers’ “Gifts Differing”, and the Freudian transactional analysis of error states in T D Harris’s “I’m OK, You’re OK”. It is not a bad idea to read brain guru Dr Edward de Bono on “Lateral Thinking”, “Parallel Thinking”, on perception in “I am Right, You are Wrong”, and reading the riot act in “New Thinking for the New Millenium”. Perhaps there is hope in the chaos theory story of the flapping of a butterfly’s wings seeding a hurricane?

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    1. https://wikitacticalvoting.miraheze.org/wiki/Main_Page

      rogerglewis
      April 19, 2019 at 8:03 am
      Your comment is awaiting moderation.
      Hi John,

      “History, as Joe Stalin said, is made by those who turn up. Thus far, the 17.4 million have failed miserably to turn up”.

      https://hat4uk.wordpress.com/2019/03/26/brexit-anarchy-how-lies-short-memories-and-apathy-killed-a-dream/

      Date: March 26, 2019
      Author: John Ward
      17 Comments
      rogerglewis
      March 26, 2019 at 10:13 am
      I can elaborate on the simplicity of the technological solution which I am happy to Marshall, of course then its a question of distribution and getting a viral click-through rate, as an Ad man extraordinaire you are just the man
      PM sent.
      —————————–
      At last, some practical ideas. JW

      Liked by you and 12 other people

      April 19, 2019

      https://longhairedmusings.wordpress.com/2019/04/19/wikiballot-wikitacticalvoting-wikipediacensorship-wikipediagatekeepers-personal-destiny-control-canton-model-direct-democracy-disintermediation-of-political-parties-and-the-state-wikiballot-putt/

      I have done what we discussed John and we both know there is a ton of work still to be done to get this framework now into a readily deployablöe format for street teamers.

      I am not a one for Bumper Stickers, my forte is strategic Analysis and Execution of blue sky ideas into new markets.
      I have noticed during the Ten years in which I have pursued several new Business ventures in Music, Music Technology, Finance and Web 3 Distributed Applications that people I encounter in Help forums of a technical nature or a consumer nature are forever found still expounding on how this or that could’ve should’ve would’ve been better, more successful more effective, all the while no discernible contribution emanates from the Armchair ( Mouse Clicking experts.)

      Stage 2 of this process relies on people using the Wiki and generating fault messages and also queries as to what is difficult to use. With that Data, I can then pårogramme the Web 3 Graphical User interface to smooth out the wrinkle in terms of processes which require to great an attention span.

      https://cantondd.beezer.com/wiki-ballot

      https://wikitacticalvoting.miraheze.org/wiki/Main_Page

      https://wikitacticalvoting.miraheze.org/wiki/Guiseley_And_Rawdon_Local_ections_May_2019

      Just notices social media share disappeared from WikiTactical Voting got to figure out Why?

      Share and adopt a page people.

      https://twitter.com/PMotels/status/1118844705993887746
      Ignore from Here Geeky SE Experiment.

      @JoeBlob20 @RogTallbloke #PDC

      #MagnaPedia Late Evening Special Edition with South Wales Argus. #TheSlog #IABATO #CantonDD #GreatestHappiness #Hedons @JoeBlob20 @bill1303 @DavidGolemXIV @wesfree @StephenStillwe2

      #WikiBallot #WikiTacticalVoting #WikipediaCensorship #WikipediaGateKeepers Personal Destiny Control, Canton Model Direct Democracy.Disintermediation of Political Parties and the State #WikiBallot putting Citizens in touch and in contr…
      #eth #Eos #IPFS #Bitcoin #Everipedia #Miraheze @miraheze @KeeperAzra @JohnFLewis1 @JoeBlob20

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      BBC News (UK) and The Hill are Tweeting about this
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