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Modern monetary theory - a cargo cult?

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  • Bernard Rooney
    Government can can afford to purchase anything that is for sale in its own sovereign currency. This means that debates about affordability become
    Message 1 of 7 , Mar 8, 2011
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      Government can can "afford to purchase anything that is for sale in
      its own sovereign currency.

      "This means that debates about "affordability" become inapplicable. As
      this becomes more widely understood, we can begin to have a completely
      different -- and vastly more important -- debate about the size and
      role of government. What do we, as Americans, want? Medicare for all?
      A job guarantee? High-speed rail? Renewable energy?"

      http://neweconomicperspectives.blogspot.com/2011/03/deficit-spending-time-to-reframe-debate.html

      This sounds too good to be true, right? A modern cargo cult?

      What do our esteemed economists and georgists make of MMT and ideas like this?

      Also, what do people make of Stephen Zarlenga and his book Lost
      Science of Money? Worth reading?
    • Emer O'Siochru
      Modern Monetary Theory is kosher. It simply describes the way things are but concealed from most because it is believed we can t handle the truth . Keep
      Message 2 of 7 , Mar 8, 2011
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        Modern Monetary Theory is kosher. It simply describes the way things are but concealed from most because it is believed 'we can't handle the truth'. Keep reading and you will eventually accept it. It works well with Land Value Tax. Check out Smarttaxes.org where we support both MMT and LVT. Emer

        Sent from my iPhone

        On 8 Mar 2011, at 23:23, Bernard Rooney <bernardrooney@...> wrote:

         

        Government can can "afford to purchase anything that is for sale in
        its own sovereign currency.

        "This means that debates about "affordability" become inapplicable. As
        this becomes more widely understood, we can begin to have a completely
        different -- and vastly more important -- debate about the size and
        role of government. What do we, as Americans, want? Medicare for all?
        A job guarantee? High-speed rail? Renewable energy?"

        http://neweconomicperspectives.blogspot.com/2011/03/deficit-spending-time-to-reframe-debate.html

        This sounds too good to be true, right? A modern cargo cult?

        What do our esteemed economists and georgists make of MMT and ideas like this?

        Also, what do people make of Stephen Zarlenga and his book Lost
        Science of Money? Worth reading?

      • roy_langston1
        ... Right. ... They re ridiculous. Their silly equation is enough to tell you that. ... There is a lot of good historical information in the book, but
        Message 3 of 7 , Mar 8, 2011
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          --- In LandCafe@yahoogroups.com, Bernard Rooney
          <bernardrooney@...> wrote:

          > Government can "afford to purchase anything that
          > is for sale in its own sovereign currency.
          >
          > "This means that debates about "affordability"
          > become inapplicable. As this becomes more widely
          > understood, we can begin to have a completely
          > different -- and vastly more important -- debate
          > about the size and role of government. What do
          > we, as Americans, want? Medicare for all?
          > A job guarantee? High-speed rail? Renewable
          > energy?"
          >
          > http://neweconomicperspectives.blogspot.com/2011/03/deficit-spending-time-to-reframe-debate.html
          >
          > This sounds too good to be true, right? A modern
          > cargo cult?

          Right.

          > What do our esteemed economists and georgists make
          > of MMT and ideas like this?

          They're ridiculous. Their silly equation is enough
          to tell you that.

          > Also, what do people make of Stephen Zarlenga and
          > his book Lost Science of Money? Worth reading?

          There is a lot of good historical information in the
          book, but Zarlenga and the AMI are radical chartalists,
          and don't have a handle on the difference between
          commodity money, fiat money and debt money.

          -- Roy Langston
        • Scott on the Spot
          Roy, are you kidding? I can t imagine anyone who has a BETTER understanding of the difference between commodity money, fiat money, and debt money. Zarlenga s
          Message 4 of 7 , Mar 9, 2011
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            Roy, are you kidding?
            I can't imagine anyone who has a BETTER understanding of the difference between commodity money, fiat money, and debt money. Zarlenga's magnum opus "The Lost Science of Money" is practically about nothing else! Our HG reading group is about 2/3 of the way through it now, and Zarlenga makes a pretty compelling case that commodity money has failed virtually everywhere it's been tried, as it restricts the money supply to some arbitrary constraint of the commodity supply - usually gold or silver. We tried it here under Van Buren, and had a disastrous depression, until he reversed course a bit and produced paper money unbacked by anything, but functioning more like a bond than a bill. However, as Lincoln later made clear with the first Greenbacks ($450 million), all that is required of money to function is:
            1. That it be produced from a central authority, and in limited quantity, though not too limited, and
            2. That it be accepted for taxes.
            As Aristotle said, money is a legal creation.
            So, yes, we can pay for the things we really want like universal health care, bullet trains, a new energy grid - from debt-free money.
            Of course, we have to live within our means, but means should not be defined as tax receipts, which nowadays makes up only about 40% of government revenue anyway, most of the rest being "borrowed" via the private Federal Reserve's purchase of treasuries, which we have to repay with interest.
            No, "means" means living within our productive capacity, which, right now, is being severely underutilized. There are millions of people who want to work and millions of jobs to be done, and the only thing standing in the way is MONEY. It's time to recognize that our abrogation of our sovereign right to "coin money" is responsible for both the national debt-monster and the inability to do what needs doing, and then follow article 1, section 8, to allow Congress to "coin money."

            --- In LandCafe@yahoogroups.com, "roy_langston1" <roy_langston1@...> wrote:
            >
            > --- In LandCafe@yahoogroups.com, Bernard Rooney
            > <bernardrooney@> wrote:
            >
            > > Government can "afford to purchase anything that
            > > is for sale in its own sovereign currency.
            > >
            > > "This means that debates about "affordability"
            > > become inapplicable. As this becomes more widely
            > > understood, we can begin to have a completely
            > > different -- and vastly more important -- debate
            > > about the size and role of government. What do
            > > we, as Americans, want? Medicare for all?
            > > A job guarantee? High-speed rail? Renewable
            > > energy?"
            > >
            > > http://neweconomicperspectives.blogspot.com/2011/03/deficit-spending-time-to-reframe-debate.html
            > >
            > > This sounds too good to be true, right? A modern
            > > cargo cult?
            >
            > Right.
            >
            > > What do our esteemed economists and georgists make
            > > of MMT and ideas like this?
            >
            > They're ridiculous. Their silly equation is enough
            > to tell you that.
            >
            > > Also, what do people make of Stephen Zarlenga and
            > > his book Lost Science of Money? Worth reading?
            >
            > There is a lot of good historical information in the
            > book, but Zarlenga and the AMI are radical chartalists,
            > and don't have a handle on the difference between
            > commodity money, fiat money and debt money.
            >
            > -- Roy Langston
            >
          • roy_langston1
            ... No, it s about how all money is fiat money. But it isn t. ... The two most successful monetary standards in history -- cowrie shells and the Roman aureus
            Message 5 of 7 , Mar 9, 2011
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              --- In LandCafe@yahoogroups.com, "Scott on the Spot"
              <ssbaker305@...> wrote:

              > I can't imagine anyone who has a BETTER understanding
              > of the difference between commodity money, fiat money,
              > and debt money. Zarlenga's magnum opus "The Lost
              > Science of Money" is practically about nothing else!

              No, it's about how all money is fiat money. But it
              isn't.

              > Our HG reading group is about 2/3 of the way through
              > it now, and Zarlenga makes a pretty compelling case
              > that commodity money has failed virtually everywhere
              > it's been tried, as it restricts the money supply to
              > some arbitrary constraint of the commodity supply -
              > usually gold or silver.

              The two most successful monetary standards in history
              -- cowrie shells and the Roman aureus -- were
              commodity money. I don't advocate commodity money,
              but I do advocate factual history.

              > We tried it here under Van Buren, and had a
              > disastrous depression, until he reversed course a
              > bit and produced paper money unbacked by anything,
              > but functioning more like a bond than a bill.

              It was not a pure commodity system, but a hybrid
              commodity/debt system.

              > However, as Lincoln later made clear with the first
              > Greenbacks ($450 million), all that is required of
              > money to function is:
              > 1. That it be produced from a central authority,
              > and in limited quantity, though not too limited,

              Cowrie shells were not produced by a central
              authority or in legally limited quantity.

              > 2. That it be accepted for taxes.

              AFAIK cowrie shells were rarely or never accepted
              for taxes.

              > As Aristotle said, money is a legal creation.

              That was not his only error. Cowrie shells were not
              a legal creation.

              > So, yes, we can pay for the things we really want
              > like universal health care, bullet trains, a new
              > energy grid - from debt-free money.

              No, we can't, unless we want hyperinflation.
              Emitting debt-free (i.e., fiat) money in excess of
              the amount required to accommodate economic growth
              will produce inflation. While I agree we should
              wind down the debt money system and replace it with
              fiat money, it is absurd to think we can pay for
              everything by just printing money.

              > Of course, we have to live within our means, but
              > means should not be defined as tax receipts, which
              > nowadays makes up only about 40% of government
              > revenue anyway, most of the rest being "borrowed"
              > via the private Federal Reserve's purchase of
              > treasuries, which we have to repay with interest.

              Where did you get that idea?

              > No, "means" means living within our productive
              > capacity, which, right now, is being severely
              > underutilized. There are millions of people who
              > want to work and millions of jobs to be done, and
              > the only thing standing in the way is MONEY.

              False. If the only problem was money, Zimbabwe
              would be booming.

              > It's time to recognize that our abrogation of our
              > sovereign right to "coin money" is responsible for
              > both the national debt-monster and the inability to
              > do what needs doing, and then follow article 1,
              > section 8, to allow Congress to "coin money."

              How is that working in Zimbabwe?

              While I agree that the monetary (i.e., debt money)
              system is utterly broken, Zarlenga's idea that
              everything can be solved by just printing more money
              is ridiculous.

              -- Roy Langston
            • Scott on the Spot
              Zarlenga can defend himself better than I can, but I will say he has said consistently, to me personally when I asked him about the inflation issue, that you
              Message 6 of 7 , Mar 10, 2011
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                Zarlenga can defend himself better than I can, but I will say he has said consistently, to me personally when I asked him about the inflation issue, that you have to produce money "within reason." The official fear until recently has been deflation, not inflation. He said that could be cured by simply producing money and mailing a check for $10,000 to every American (or perhaps a different amount TBD).
                For the record, his American Monetary Act would have a 9-member monetary authority to determine the money supply - not too much nor too little. Yes, the Federal Reserve is supposed to do that; how's that workin out for ya?
                Zarlenga wouldn't argue with your Cowrie shell example - although it's a bit unfair to say they weren't used for taxes if there WERE no taxes - except to say those people had an imperfect understanding of money.
                Sure, he is promoting a fiat money system. In his analysis, that is the most workable form of money system there is. You can disagree with that if you wish, but I don't see how you can say his book is all about a fiat money system. Most of it isn't, since he is pointing out the failures of commodity money all along.

                --- In LandCafe@yahoogroups.com, "roy_langston1" <roy_langston1@...> wrote:
                >
                > --- In LandCafe@yahoogroups.com, "Scott on the Spot"
                > <ssbaker305@> wrote:
                >
                > > I can't imagine anyone who has a BETTER understanding
                > > of the difference between commodity money, fiat money,
                > > and debt money. Zarlenga's magnum opus "The Lost
                > > Science of Money" is practically about nothing else!
                >
                > No, it's about how all money is fiat money. But it
                > isn't.
                >
                > > Our HG reading group is about 2/3 of the way through
                > > it now, and Zarlenga makes a pretty compelling case
                > > that commodity money has failed virtually everywhere
                > > it's been tried, as it restricts the money supply to
                > > some arbitrary constraint of the commodity supply -
                > > usually gold or silver.
                >
                > The two most successful monetary standards in history
                > -- cowrie shells and the Roman aureus -- were
                > commodity money. I don't advocate commodity money,
                > but I do advocate factual history.
                >
                > > We tried it here under Van Buren, and had a
                > > disastrous depression, until he reversed course a
                > > bit and produced paper money unbacked by anything,
                > > but functioning more like a bond than a bill.
                >
                > It was not a pure commodity system, but a hybrid
                > commodity/debt system.
                >
                > > However, as Lincoln later made clear with the first
                > > Greenbacks ($450 million), all that is required of
                > > money to function is:
                > > 1. That it be produced from a central authority,
                > > and in limited quantity, though not too limited,
                >
                > Cowrie shells were not produced by a central
                > authority or in legally limited quantity.
                >
                > > 2. That it be accepted for taxes.
                >
                > AFAIK cowrie shells were rarely or never accepted
                > for taxes.
                >
                > > As Aristotle said, money is a legal creation.
                >
                > That was not his only error. Cowrie shells were not
                > a legal creation.
                >
                > > So, yes, we can pay for the things we really want
                > > like universal health care, bullet trains, a new
                > > energy grid - from debt-free money.
                >
                > No, we can't, unless we want hyperinflation.
                > Emitting debt-free (i.e., fiat) money in excess of
                > the amount required to accommodate economic growth
                > will produce inflation. While I agree we should
                > wind down the debt money system and replace it with
                > fiat money, it is absurd to think we can pay for
                > everything by just printing money.
                >
                > > Of course, we have to live within our means, but
                > > means should not be defined as tax receipts, which
                > > nowadays makes up only about 40% of government
                > > revenue anyway, most of the rest being "borrowed"
                > > via the private Federal Reserve's purchase of
                > > treasuries, which we have to repay with interest.
                >
                > Where did you get that idea?
                >
                > > No, "means" means living within our productive
                > > capacity, which, right now, is being severely
                > > underutilized. There are millions of people who
                > > want to work and millions of jobs to be done, and
                > > the only thing standing in the way is MONEY.
                >
                > False. If the only problem was money, Zimbabwe
                > would be booming.
                >
                > > It's time to recognize that our abrogation of our
                > > sovereign right to "coin money" is responsible for
                > > both the national debt-monster and the inability to
                > > do what needs doing, and then follow article 1,
                > > section 8, to allow Congress to "coin money."
                >
                > How is that working in Zimbabwe?
                >
                > While I agree that the monetary (i.e., debt money)
                > system is utterly broken, Zarlenga's idea that
                > everything can be solved by just printing more money
                > is ridiculous.
                >
                > -- Roy Langston
                >
              • roy_langston1
                ... And that means just enough to accommodate economic growth with little to no inflation: i.e., a few percent of GDP/yr. While that is a significant sum, it
                Message 7 of 7 , Mar 10, 2011
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                  --- In LandCafe@yahoogroups.com, "Scott on the Spot"
                  <ssbaker305@...> wrote:

                  > Zarlenga can defend himself better than I can, but I
                  > will say he has said consistently, to me personally
                  > when I asked him about the inflation issue, that you
                  > have to produce money "within reason."

                  And that means just enough to accommodate economic
                  growth with little to no inflation: i.e., a few percent
                  of GDP/yr. While that is a significant sum, it is not
                  going to pay for universal health care. And land rent,
                  by comparison, is about _20%_ of GDP in the USA, even
                  more in more crowded countries. While land and money
                  both have to be fixed, land is far more important.

                  > He said that could be cured by simply producing money
                  > and mailing a check for $10,000 to every American (or
                  > perhaps a different amount TBD).

                  Yes, well, that would certainly stop deflation, but I
                  have explained why just giving people money is a bad
                  idea. Better to spend the money into circulation and
                  reduce unfair taxes and/or government debt.

                  > For the record, his American Monetary Act would have
                  > a 9-member monetary authority to determine the money
                  > supply - not too much nor too little.

                  The number of members is not important. The goal --
                  price stability -- and how performance on that goal
                  is monitored and enforced are important.

                  > Yes, the Federal Reserve is supposed to do that;
                  > how's that workin out for ya?

                  That's not the Fed's goal. The Fed exists to use
                  monetary manipulation to alleviate and conceal the
                  economic damage inflicted by unfair taxation.

                  > Zarlenga wouldn't argue with your Cowrie shell example
                  > - although it's a bit unfair to say they weren't used
                  > for taxes if there WERE no taxes - except to say those
                  > people had an imperfect understanding of money.

                  There usually WERE taxes, and Zarlenga's understanding
                  is also imperfect.

                  > Sure, he is promoting a fiat money system. In his
                  > analysis, that is the most workable form of money
                  > system there is.

                  And I agree. But his radical chartalism blinds him to
                  the historical facts about commodity money systems,
                  which often worked quite well.

                  > You can disagree with that if you wish, but I don't
                  > see how you can say his book is all about a fiat money
                  > system.

                  He is a radical chartalist. He essentially claims that
                  ALL money is fiat money, and ignores crucial historical
                  facts about commodity money systems.

                  > Most of it isn't, since he is pointing out
                  > the failures of commodity money all along.

                  Even where it didn't fail. That's the problem.

                  -- Roy Langston
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