"...I'll try my best to spread the news that THE WORD IS OUT! And also spread the further news that the Government can't run out of money, no matter how much it owes and that there is no solvency problem.
So there is also no deficit reduction problem, no national debt problem, or any Social Security, Medicare, or Medicaid problems, or grandchildren burden problems based on fears of, or claims about, insolvency unless we pay our debts back!
I have to say however, that even though THE WORD IS OUT that solvency is not a problem, and that the austerity/human sacrifice crowd must now either fall silent or flip flop to inflation as their new rationalization for driving working people into poverty; I don't think for a minute that they will do either one.
Instead, I think they will assume that the news will never get out to most people and that they are free to go on with their same old narrative about possible insolvency making austerity necessary, without people either laughing at them or calling them liars. The MSM is unlikely to notice that the Government can create currency whenever it wants to, and they will just forget about the admissions made this week after the S & P downgrading, and reinforce the old money scarcity story, without missing a step, to please the Peter Petersons, Kent Conrads, Alice Rivlins and David Walkers of this world. The president already did this in a speech he made today.
So, I think that besides doing our best to spread THE WORD, we also need to pressure the President to prove that the United States Government has no solvency problems, and can never run out of money. In other words, we need to call for the President to use very high value Proof Platinum Coin Seigniorage (PPCS) to begin to pay back the national debt and also to create a balance in the Treasury General Account (TGA) that is so large that no insolvency claims are even thinkable.
The basic idea is to mint a $60 Trillion platinum coin, turn it into electronic credits at the Fed, use the money, first to pay down $6.2 Trillion in debt immediately and the rest as it falls due, and confront Congress with a balance of of about $52 Trillion in the Treasury General Account (TGA). Then, facing that $52 Trillion in available financial resources, and with the President using the bully pulpit, let's see the austerity/human sacrifice crowd, even with all the money in the world behind them, try to justify voting for spending cuts in entitlements and other much needed areas of domestic spending."
Me:
"This MMT...stuff, while often very well argued, and well intentioned, reads exactly like Glibertarian calls for the repeal of the 16th and 17th Amendments, like a newly minted syndicalist's calls for the immediate abolition of the state and the sui generis rebirth of a complete socialist order, like a conservatarian's demand for a 19th century application of the Constitution, or like Gold Standarders demand for the end to fiat currency and the fiat return to a metal standard.
Before I'm misread - I understand that you are arguing for an aggressive use of the fiat, but you don't seem to really get that the public doesn't care, and you cannot make them care.
This is futile agitation, because the state that actually exists is never, ever going to do what you want."
Commenters:
"Since it's so useless...why don't you just go back to despair and staring into the void. Thanks."
"Could be. But I'll keep trying because I know the public will care when there's $52 Trillion in the bank.
Me:
"When my youngest...wants to spend hours talking to me about Guild Wars and this new ranger build he's worked out, I don't feign interest. I am interested. Because I love him and he's so fucking beautiful it hurts me to realize that he's ever going to die.
But, I have no illusions that his fascination with a video game character will substantively change the world.
Because it won't. No matter how earnestly or honestly he tries to communicate the importance, right at this very moment, of this figment un-thing he's made, this little fraction of the total noos which he believe he controls all by himself, I know that his passion alone cannot move people to care.
Because this toy doesn't resonate. Its language is not the language of people in their everyday lives. It cannot move them, or us, because we have a shared knowledge, a common and sad recognition: a distraction is the admission of impotence. The obsession with a perfect game, or a fantasy world where the impossible hero has the one key which saves the kingdom? This is the admission of powerlessness.
Back when I was much, much younger, I had friends who were just as invested, just as passionate, just as fascinated with their Dungeons and Dragons characters. They longed for the end of the school day, or the absence of a parent in the house, to rush into contact with the suspended and unrealized worlds they'd spent hours imagining into a labile half-existence, fraught with imperfectability because they were precisely and utterly fictitious, always bordering as they were on a complete collapse, following the slightest interruption, perhaps from mom's return, or a phone call, the bark of the neighbor's dog, or the need to take a shit.
This is your MMT, as I read it.
That I understand it exactly as a tinkering with a character, or a map, or a dungeon from a role playing game does not mean I'm somehow committed to despair. I'm not. I just believe that a different set of paths to justice are more likely to become trails, and then roads, and perhaps even highways.
So, here we are:
You are role playing, in my humble opinion, from your own recognition of powerlessness and impotence. And I don't mean that as any sort of condemnation, or disapprobation.
I am without material substance. I'm ill, and poor, and because I decided to undertake the role of homemaker so my wife could return to the workforce, I'm a joke applicant now even at Wendy's. I kid you not when I tell you that one of the interviewers said to me, "Dude, you can't be a dude who stayed home to raise your kids for five years and expect to get a job. We have real men applying every day."
I understand powerlessness, and impotence.
I'm looking at your tinkering from the outside. And not with any hostility. It reminds me like nothing else as much as it reminds me of a teen aged, geeky dungeon master crafting the perfect Saturday night mission.
(I know you are not the only one, and I'm using the "you" in its plural form as well.)
But, there the lot of you are, with your maps and your graph paper and your manuals, and you really have built the best story, with the most fully developed narrative and characters imaginable. It's just that the guys on the football team, and the school principal, and the guidance counselor, and the mean office secretaries are not going to ever hand you access to the school's PA system, so you can tell all those kids sitting through home room about this best-est, totally most gnarly game ever.
And even if you did steal into the office, and risk detention or suspension in order to get your game notice out over morning announcements, anyone with a sober head and a kind heart could predict the outcome.
You are in for a long year of unremitting misery.
Which doesn't mean you shouldn't try. It's just that you don't really have a grasp of your own actual environment, at least as I see it.
And me - an anarchist - telling you this is some kind of irony, I know.
But, that's fundamentally also where we differ. I'm no stranger to utopia. I believe our reach must always exceed our grasps, or the stumbling forward into the future backwards that is such a salient feature of our too brief existences becomes a headlong pitch into the mud and the muck, with no real reason to get up again.
You've got to know your world well, you have to know how to hate it, in order to place a flower of hope in the vase of utopia. You've got to be honest about it. You have to be sober before and after your fancy, and your intoxication. If you're not, the drunkenness loses its charm, and becomes an uglier kind of fixation, and then - an addiction.
The state we have is not constituted to embrace or promote your form of Chartism. That state is a wholly owned tool of the capitalist over class. It is not run for the benefit of the proletariat. It only interfaces with that other perfect fiction, the middle class, to task the smallholders with hating on brown and/or poor people. You will never capture it and make it something it cannot be until you get rid of the over class which constitutes it.
And if you can actually get rid of that over class, there will be no efficient national state to capture in order to impose this perfect, fantasy fix."
*
Thoughts?
24 comments:
There is really nothing to add this. This is the banal truth.
Jack,
I think you're selling this idea a little short.
First, I am sure that MMT's description of the macro economy and money is absolutely correct. These guys have nailed the macroeconomic stuff for years while everyone that matters gets it wrong. Never underestimate the value of being right to a geek; it's definitely worth more than changing the world. I should know, I used to play Dungeons and Dragons. It's even better being right when most people are wrong.
Second, your own writing grants that MMT is subversive. A lot of its proponents don't see it that way, so it's kind of a trojan horse. The failure of the system to adopt what's so obviously correct may bring some of these guys around to your point of view. At the least it takes away the "we can't afford it" excuse for not caring about others from a few comfortable, middle aged, white, former D&D players like me.
I think I'll just settle back and smugly ablute, since by the simple act of listening to you I've gotten you to totally sell out some cause and pander to me personally without remorse or relent.
Put everything in gaming terms? I'll eat out of your hand until you punch me.
I'm honestly not sure how this differs, as an analogy for MMT or any political/economic theory, from an analogy for blogging in general. Though perhaps I just keep my filters turned a little dark, there. You're certainly right about the likelihood of the state doing what MMT (or any political/economic/social) enthusiasts want.
Jack: Just wrote a lengthy comment, which promptly got trashed.
Have you an email address? Looked for one in vain. You can write to me at arthur4801 at yahoo dot com.
Thanks,
Arthur
I don't think Jack is selling the idea a little short. I think he's just saying that if the people in control of the Government wanted to do it, they would and could, but it won't happen because they don't want it to happen. There are lots of great ideas, aside from monetary policy, that they could do, but they won't. Abolishing the practice of "fracking" by energy companies to prevent the contamination of groundwater is a great idea, but they're not going implement that idea. There is too much money at stake for the rich ruling class. You can make all the Erin Brockavich movies you want to try to sway opinions, but at the end of the day, they are still going to do what they want.
Okay, I've reconstructed my earlier comment. Here goes:
Leaving aside my other (numerous) questions about and objections to MMT (which I plan to write about at some point, but who knows when), I'll too briefly mention my primary objection. MMT ultimately represents *the glorification of the State and of State power.* That's all it can represent.
One critical question (perhaps the critical question) is: under an MMT regime, why does money have value? Money has value because the State says it does. That is, the State will *make you* act as if money has value whether you or anyone else thinks it does, whether there is any reason to think it has value or not. (No, the fact that something or someone *makes* you act as if money has value is not the only basis for money having value.) MMTers say this explicitly and repeatedly. For example, here: "We are now able to answer the question posed earlier: why would anyone accept government’s “fiat” currency? Because the government’s currency is the main (and usually the only) thing accepted by government in payment of taxes. To avoid the penalties imposed for non-payment of taxes (that could include prison), the taxpayer needs to get hold of the government’s currency."
As I said: the glorification of the State and of State power. At this late date in the age of the metastasizing Surveillance-Terrorist State, and after the horrors of the last century and in the midst of the horrors of the new century, one might have thought yet another theory glorifying the State would not be high on the wish list of those who are politically engaged. As usual in such matters, one would be surprised.
Besides which, as you argue, the State as it will continue to exist for the rest of our lifetimes ain't never gonna do it. But if you think about what would happen if it did in some magical D&D world, I think you might agree that It. Would. Not. Be. A. Good. Thing. (Also: what happens when MMTers collide across State borders? Not pretty.)
In the end, MMT is another version of the view offered by all those who still advocate the State, especially the massively powerful State we have today. They're saying: "Hey, the State is A-okay, or it would be A-okay, if only people *like us* were running it!" Sure, baby.
As indicated, I have more to say about this subject, which I'll get around to if I live to be 80 or so (also not going to happen).
Arthur
To echo (and maybe expand a bit on) Arthur's excellent comment above, it's not just that those running the state won't do it, it's that they know they can't do it without killing the value of the currency. I think a trap that a lot of leftists fall into is in assuming that the state *could* just create a bunch of money and hand it out but that it doesn't because the rich don't want to share the wealth. That's true, as far as it goes, but it ignores the fact that there would be real economic (I know, dirty word) consequences if they did, and that the people that would get screwed the hardest would be, as usual, the ones on the bottom.
While it is certainly true that this will never happen and agitating for it is a fool's game (and has all the negatives that Arthur demonstrates) it can provide a useful foil for helping the thicker of head understand that those in charge really do not love them. Showing that it is perfectly within their power to fix the "problem" and yet choose not to, might help people understand that maybe they just don't want to help.
This is probably my WoW fantasy...
Heh. It's like a game of Monopoly. They own all the properties, and the rest of us have run out of money.
Suddenly, the bank has an infusion of money to hand out. We can keep on playing. If we're lucky, we'll land on Marvin Gardens more often than Park Place, and we can keep playing a little while longer this time!
awesome jack as always, but the thing that sticks w/me is that fucking comment from Wendy's. very dispiriting.
A dollar, A $60 trilion dollar coin, and hour of labor, They all are worth what we agree they're worth. Right now, Jack's hour at Wendy's isn't worth much. A Platinum coin is worth what the scrap dealer would give you for it and a dollar won't get you much. It is a construct. All of it.
"I understand that you are arguing for an aggressive use of the fiat, but you don't seem to really get that the public doesn't care, and you cannot make them care."
But people have cared in the past. In fact, the current political situation seems pretty similar to the situation when Bryan's gave his "Gold Cross" speech: http://historymatters.gmu.edu/d/5354/
"On the 4th of March, 1895, a few Democrats, most of them members of Congress, issued an address to the Democrats of the nation asserting that the money question was the paramount issue of the hour; asserting also the right of a majority of the Democratic Party to control the position of the party on this paramount issue; concluding with the request that all believers in free coinage of silver in the Democratic Party should organize and take charge of and control the policy of the Democratic Party. . . . "
People used to care about these very issues and it has split a party before and become a paramount issue of the day. And it is important. It gets right to the heart of how bankers and Corporate have their boots on our necks. Plus, if the president did unilaterally create $52 Trillion he would focus minds very clearly on the "money question."
But of course it's foolish to think Obama would do this. So in a sense, you're right, the Democratic party wants nothing to do with any of this (and notice that Krugman provides a nice assist in this regard). I expect the two legacy parties to quickly close this particular coin seignorage loophole as well. The Democrats certainly have no interest in talking about it--which makes me even more interested. This issue is fundamental--as is becoming more obvious to me as I learn about it. Highlighting these things can only help, imho.
"if the president did unilaterally create $52 Trillion..."
Does this not strike you as just a bit...odd? As just a tad...peculiar?
But okay, let's assume the president can "unilaterally create" a massive amount of wealth where none had existed before. I think we might agree that this would endow the president with a colossally huge amount of power.
Why, it's such a huge amount of power that the president might think he could assassinate anyone he chose, including American citizens, for any reason or even for no reason at all. One minute he's "creating" trillions in wealth, the next he's murdering one, or a hundred, or a million human beings.
I offer this only as a wild and crazy example. Of course, nothing like that could ever actually happen in "real life."
"How terrible the president has such awful, life and death powers! Let's give him some more!"
Beam me the fuck outta here, Scotty.
To clarify the above: the MMT request for the president to immediately issue $53 Trillion is more akin to what the Greenbackers were proposing back in the day (1860s to 1880s). The cross of gold speech simply proposed a bit of tinkering around the edges (bimetalism), rather than addressing the fundamental problem (bankers controlling and profiting from the common currency). Plus, the tinkering around the edges appears intended to co-opt the populists and former Greenbackers and to keep them in the two party system.
MMT's main value is the *abstract* demonstration that it is a political choice to choose to fight inflation over unemployment. That even if we accept all of the assumptions of present-day economic models, there's still that one remaining choice---and the powers-that-be are choosing to fight inflation.
That is what it is primarily good for.
It would be peculiar, I suppose, for the president to mint this coin. And definitely 'boldly progressive.' Ha. Which is why it won't happen.
Look, we all know this is a fantasy, and if the president were to do this, it would look weird because there has been a propaganda campaign to make this very idea unthinkable. But in the MMT fantasy, the president would educate people as to why he was taking this action, and then the action itself would learn people real good--especially the bankers--they wouldn't like it at all.
But I should not have described this fantasy presidential action as "unilateral." The fact of the matter is Congress has already passed a law authorizing him to mint coin in any amount. So he would be acting in concert with Congress (but, I think the case can be made that the executive does have "unilateral" constitutional power to issue currency to pay debts authorized by Congress). Plus, this money would only go to pay debts Congress has already authorized. This proposal from the MMTers, while 'bold' in the current political landscape, is not as bold as it could be. They are not proposing he spend that money on things he alone wants to do--which I agree would not be pretty in the current environment, because Obama would simply buy more killing and torture toys.
But this action would free us of one of the main shackles the banks have on us, right? Why do we pay banks to make our common currency in the first place? We should expose this fiction, or what good is the state, right? I am becoming more dubious that the state can use its fiat power wisely, and that the people will indeed be able to control their currency and inflation, but if they could pull off the biggest leech currently sucking on the body politic, it is a net good.
Plus, we're simply talking about upholding the miserly benefits Congress has already given to the people and people have already paid into, like Medicare and Social Security, etc. Why shouldn't the government 'print money' for these debts, as they did for Wall St? Even if this action is too "bold", I bet most people would be cheering wildly if it meant they get their Social Security check or Medicare as these pricks promised.
I agree with Walter and Mandos above in the sense that the whole MMT debate might be worth having because it would illustrate that we're tying ourselves in knots and pauperizing large parts of the population over fictions. If the fictions work or are useful or entertaining, like D&D or your kid's game, cool, but if they're not, we can choose (like you do) not to believe in them. That would be a useful message to put out there - at the end of the day, are you willing to see your neighbors, friends, and relatives suffer because of an abstraction, or are you fed up with it and think it's a monstrous lie? The danger that the MMT people seem to fall into (and that occasionally makes me laugh involuntarily) is that they take their own fiction VERY VERY seriously. Never forget that the fictions you invented ARE invented and aren't real - they're only meant to serve a purpose.
Whoa. Sometimes the best thing for a discussion is if I stay away from my computer. Well done, here.
I just got my hands on free movie passes and I'm taking the boy(s) to see "Rise of the Planet of the Apes."
Hope to be able to add longer comments, later.
To add to what Arthur (and a thanks for stopping by and classing up the joint to Arthur, Jeff, Walt, Redscott; also, a fond welcome back to Happy Jack, Mandos and drip; the rest of you scamps, well, you've already got my number - you should know better by now, or something like that) said:
If I were proposing a method for using the fiat powers of the state to snap a corporate shackle or two, writing 50 trillion onto the books and daring the loyal opposition to flinch would be at the top of the list.
It just doesn't take into account the state we actually have.
Over the last month, Justin and I have been going back and forth about the benefits and drawbacks of opting out of the economic/cultural/electoral system. We've both been arguing our points by way of exaggeration, and admittedly so, in order to tease out the implications of focusing on the individuality and/or collectivity disobedience.
As an illustration of the state's impact upon social relations, and priorities, and of the vulgar lie which pretends to narrate its alleged limitation in addressing poverty, liquidity, debt and even employment, MMT has a similar function, I agree. It exaggerates to draw certain propositions to the fore.
But, it still refuses to anticipate the likeliest of futures which would follow upon even a single act of seignorage, as best as I can read the theory, because its entire premise depends upon assuming two conditions which cannot be met.
First, that those drawn to rule a nation of 300 millions, and those equipped to gain office in the hierarchy of that power, can be persuaded to betray their own class interests, especially against the concentration of wealth which funded their rises to power.
And second, that those who might replace them in order to do the right thing are immune to the persuasions and inducements of the same concentrations of wealth, power and influence.
Put another way - allowing power to concentrate as an outgrowth of wealth's concentration can only result in the state we have.
To all,
First, if you think MMT is about coin seniorage, you're wrong. That proposal was recommended as a legal way to break the debt ceiling impasse, but MMT it is not. Many MMTers consider issuance of govt debt an unnecessary subsidy to the wealthy and would do away with it completely.
Walter hit the mark - MMT is very similar to the old greenback.
Should "a newly minted syndicalist's calls for the immediate abolition of the state and the sui generis rebirth of a complete socialist order" ever come to pass, one of the things that will have to be overcome is the fact that there is no such thing as neutral money. All money throughout history is fiat; if there is no fiat money, you can only have a barter economy. The latter may be what you want, but should the topic of money ever arise I think you'd want to be well informed on the subject.
Here is a reasonably accessible, but in depth link for those who would know more:
http://johnsville.blogspot.com/2011/06/modern-monetary-theory-mmt-in-nutshell.html
I completely agree with the host that it's never going to happen, but I find it interesting to understand how things work. I guess that's just the geek talking, but it's very useful to know exactly when I'm being lied to.
Yea nothing really to add here, money is an invention of the state, and in order to live without the oppression of the market one must live without a state.
Jack, Justin, your words lately remind me of many arguments I've had with myself. Good stuff.
And now seeing Arthur posting in comments and IOZ back, my brain can't get enough food.
This is probably a different way of saying what you said to Joe at Corrente, but it seems to me the problem with this tactic has less to do with legal arguments than the powerful fluidity of the reality offered by the media and the government, etc.
If Obama (or some other leader) tried to do this and the corporate media and all or most marquee pols denounced it in unision, saying it would be inflationary, or that China would dump all the treasuries, etc, then people would believe this and the idea would be dead, even if it were technically sound.
We live in upside down world. They've succeeded in persuading millions of people that Obama is a socialist/muslim/commie, that we're broke and that raising taxes on the wealthy and increasing government spending would both be disastrous.
And yes, "progressives" also believe lots of crazy stuff, like how the democrats are valiantly trying to protect medicare, and that "credit card reform" in 2009 introduced a cap on interest rates. (I've had three different people swear to me that we have such a cap now, thanks to St. Barry. But amusingly enough, they get annoyed when I ask them what it is.)
And don't forget how the president got a Nobel Peace Prize after announcing the escalation of the war in Afghanistan.
I remember a Chris Floyd column a while back in which he argued that the media would work overtime to bestow legitimacy on Sara Palin if she ran for prez and got the GOP nomination, and that millions of people would buy it.
To be clear, withdrawal is a form of independance, and independance gives you the space to engage in an attack. In other words, the more you depend upon something, the less able you are to attack it without feeling like you are attacking yourself. Our system has evolved to create total dependence upon it, hence people that typically withdraw immolate themselves in their form of attack; i.e. drug addiction, suicide, etc.
The trick is that withdrawing is easier said than done, much, much easier. It requires a certain threshold for pain and a certainty of purpose. I agree with Jack as much as I agree with myself, its both, not one or the other. Though I have, admittedly, staked out a dichotomy for just the reasons Jack stated. The discussion of money fits right in line with this. Ok, money is a false construct, and we can see how the illusionist tinkers with the image, but that doesn't mean you can just give up money without making some pretty drastic changes to your life.
Also, it does bug me when we refer to money as wealth. Wealth are real world assets. Money is an abstract measurement of that wealth. Printing $50trillion does not create wealth, it just changes the ratio of abstract measurement to real world assets.
I think the people in power are going to devalue the currency in order to ease the debt burden, and try to do this slowly because they think they can control the crash landing by doing it slowly, and because they can make a bunch of money in the process.
As for the original post, Jack, I think what we constantly run into (the royal we) are normative beliefs. These are often formed in education, and people like us (the non-royal us) have spent our whole lives breaking down and through those normative beliefs. Others have not; this is a big source of frustration. we think the system functions as intended, many others who share our criticisms and see the same corruption as us think that it just needs to be restored or fixed up a bit.
Not really sure what the answer is.
Wealth are real world assets. Money is an abstract measurement of that wealth.
Money doesn't measure anything, in fact--it's merely a formal convention representing the power one has to exploit the wealth that, in whatever form, naturally exists or can be created.* MMT does to its credit go some way toward suggesting a more realistic definition of money by offering a "solution" that nicely illustrates the artificial constraint put on the kind of liquidity that might benefit the public for the sake of Big Finance.
But as JC points out the solution--if we assume MMTers being literal--is one not likely to be put into practice, with or without Nobel Paul's endorsement, since the Treasury minting trillion dollar coins would take power out of the hands of the Fed and therefore the private banking industry.
Personally, I think something along the lines of Ellen Brown's proposal--public banking in some fashion--offers a better (if sill extremely optimistic; as is true of all left causes) chance at general economic liberation shy of revolution. With the qualification we would probably have to create some alternative currency or tally system or other "medium of exchange" as well for public (-ly controlled) finance to be sufficiently independent.
*Actually these days money is becoming little more than a speculative instrument: money by its broadest measure (what the Fed calls "M3") doesn't even get spent. It is merely a tool for influencing the outcome of bets; of the "winnings" only a tiny fraction gets "cashed out" to buy "wealth" as we might imagine it in any tangible form.
When money in America was a hard as money can be and still maintain a modern world the banking/financial/political elites were rabid defenders of hard money. Now that money is as ephemeral as clouds the elites are fanatical defenders of ever more abstract money. In the end it isn't the form of money it is its control that is the issue.
Let me take that back. Modern abstract money is debt and we, humanity, have borrowed too much. So this debt based abstract money has planted the seeds of our destruction in a way harder money never could. No money system will allow the paying back of all the debt, the money debt or the environmental one.
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