I looked up MMT and found the Wikipedia page - Modern Monetary Theory. I tried reading it but it made my head hurt. By the way Rachel have you come across Charles Eisenstein? He is into something called the Gift Economy - a pre-modern system where everybody just gives each other things if they can and the recipient returns the favour when they can. 'Paying forward' I think it's called.
The existentialists, especially Simone de Beauvoir, believed that personal freedom also entails a responsibility to others as we all share the same human condition.
“But surely a world in which more things are free would increase our freedom? “
When you write “free” , I read “paid for by taxes collected forcibly by government and distributed through the instrumentalist of government, without charge”.
Without money, work will have to be coerced by physical force.
This is feudalism.
Money is the social structure we use to set ourselves free from feudal systems of coerced labor.
We do need a new conversation about money. You are correct when you that money has become an instrument of market elitism.
We do need to set ourselves free from that elitism.
The path to that freedom lies through new learning about money that will inform innovation in the deployment of money to shape the choices by which we shape our economy.
In an economy with a non convertible and freely floating fiat currency, taxation has not been required to pay for govt spending since the termination of the Bretton Woods agreement in 1971. For the last 52 years, tax has performed many functions eg create demand for the Govt's currency to enable it to set the macroeconomic environment etc, however it is not required to pay for spending. For instance, taxes did not increase to pay for QE. Indeed, in the US, Trump gave the super rich a huge tax cut. This may not be commensurate with the writings of Hayek, Friedman, Lucas, Laffer etc, but it is a description of how the monetary system functions. It is supported by the Bank of England and other central banks. For instance see the article Money in a Modern Economy, Bank of England Quarterly, Quarter 1, 2014.
All true but it doesn't mean taxation is not important - it is vital. Its role is to drive the denomination and free resources. Ultimately, cutting taxes too far threatens the very monetary system - when people have far more money than their tax obligations, money loses not only its value but its purpose. It means the collapse of government and, as others have pointed out, the return to a far more onerous situation - serfdom to the local tyrant or, these days, to the biggest global tech company as long as there's sufficient government purpose left for a police force and court system to imprison those who value their 'freedom' more than their need to pay their unpayable debts. It's akin to the situation many developing counties find themselves in.
By the way, QE did not have to be 'paid for' because it's just an asset swap - as Stephanie Kelton says, switching money from your saving to checking account. It leads to another blind spot that MMT explains. Money can have three attributes - liquidity, time, and interest. Cash is fully liquid and pays no interest. A bond has a term and interest rate. They're all 'money' but we think of only the first as money and bonds as 'debt' - hence the US debt ceiling. In fact they're all forms of money and if you want to know what the national debt is, it's the national money supply. The two are precisely and necessarily identical.
I agree with all of that. I linked QE with taxation precisely to show the nonsense that there's a direct link between govt spending and taxation. I would take the asset swap mechanism further and argue it demonstrates that while a primary and secondary capital market is still required to enable the central bank to determine the overnight interbank rate in order to maintain the credibility of its monetary policy, direct monetary financing, where the central bank purchases bonds directly from the Treasury, shows capital markets are unnecessary for the conduct of fiscal policy.
I'd go further still and argue that capital markets are unnecessary. A bit of an exaggeration since Mosler thinks the financial sector is just ten times bigger than it needs to be and Steve Keen says three of four.
I agree wholeheartedly that capital markets have nothing whatsoever to do with fiscal policy. And on monetary policy, MMTers generally advocate that we drop the requirement that the Treasury cannot run an overdraft at the Central Bank so flooding it with reserves caused by deficit spending will cause the base rate to fall to zero, where it should stay.
Managing the yield curve is a bit more subtle - maybe you want a higher rate for 5- and 10-year bonds?
As for secondary markets - an MMT insight is that there's no need for pension funds at all - governments can spend money for pensions as it wishes and there's not just no need, but actually no way, to 'save' for them. And payroll deductions are nothing more than a tax on paycheques because we'd rather not tax the wealthy.
It's yet another MMT insight that QE did not lead to inflation - it barely budged the inflation needle. The major lesson is that CBs cannot fight inflation with interest rates. Mosler, again, has been prescient in suggesting high interest rates are, actually, inflationary. Inflation is not a simple matter and cannot be 'controlled' with a simple lever. Today's inflation is mostly supply side - partly oil which has to do with unnecessary speculation and partly profit seeking which requires price controls. MMTers, generally, think Central Banks are incompetent and have no idea how the economy works.
Of course, given today's vast inequality, one wonders why we don't let inflation rip while pumping money in at the bottom end - increasing the minimum wage, pensions, education and health spending etc - but doing nothing for the wealthy so their speculative gains are depleted. Instead we're doing the opposite - sending high interest 'wealthfare' cheques to the wealthy and imposing austerity at the bottom end. Shear madness!
Before we go tiptoeing through the tulips of the logical impossibility that money can be at one and the same time both a worthless fiction and an inexhaustible supply of unlimited wealth, let us explore in our imaginations the physical realities of our uniquely human way of being together, and apart, in mutual aid societies for sharing an abundance of technology solutions to the everyday problems of everyday people living our everyday lives through networks of connections for enterprise and exchange to create, curate and innovate a safe and dignified house for humanity within a built environment of Urban, Rural, Curated and Left-Alone landscapes on the creative edge of an interactive Human-Nature partnership that is constantly. changing, adapting and evolving, from time to time, and over time, as times change and humanity evolves prosperous adaptations to life's constant changes through inquiry and insight that informs innovation, making new technologies more popular as better fit to changing times, while letting previously popular technologies fade into history as a good fit at an earlier time, driving the flourish and fade of the social contracts between enterprise and popular choice.
These social contracts are courses of dealing between people that continue until times change and new beginnings are chosen to fit those changing times.
We enter into these social contracts voluntarily, but eventually our voluntary choices do become legally enforceable against us, because we have induced others to rely on our expressions of willingness to enter into a transaction, so that society takes an interest in not letting us back out.
Transactions are completed for a price paid in money. Money is a legal instrument for completing exchanges remotely, between people who do not otherwise know each other. If we can trust the money, we don't have to trust the other party in order to complete a transaction using money.
So, how do we, as society, establish and maintain a system of money that people can trust in, and rely upon?
The integrity of the money system requires a constancy of connection between quantities of money and quality of life. There always has to be enough money so that people can complete the transactions they choose to enter into, but never so much money the connection between money and stuff is broken.
The purpose of the central banking system is to maintain the integrity of the money supply, so that there is always enough, but never too much.
Don't you think freedom is just another rabbit hole to go down? Early economists, eg Adam Smith, saw 'free' markets as free from rentiers - people (the nobility) who extracted from the market without giving back. That definition has been turned on its head by the current crop of economic sycophants so that 'free' now means a market in which monopolists and special interests are free to exploit.
When I think of a market, I think of produce on display by many vendors with me being free to choose. But financial markets allow people to take on debt - in other words to sell themselves into debt bondage. And there's not much competition - most financial institutions offer the same products at the same prices.
Be careful about your definition of money. Money is a measuring system (measuring debt), denominated in state IOUs. It's taxes that free us from feudal coercion (whatever the local tyrant decided he would take) but at the cost of taxation, which is itself coercive. But at least it's democratic coercion with the public having a say in how much and on what.
Money - public and private - is created out of 'thin air' by governments and banks respectively. The genius of private money is that we are all free to take on debt to make 'improvements' to our world. It also allows asset price speculation - gambling - which we have come to regard and reward as 'investment'. Public money, on the other hand, is created for the public interest but we've allowed it to be Reaganized to mean wasteful, inefficient, and bad.
As to things being free, MMT enshrines a job guarantee not a basic income. First, people generally want to contribute, ie, have a job. Second, if you encourage demand in your economy with a free income, then who is suppling the demand if no one is working? It's true that government spending is 'free', although its value is set by taxation. But wouldn't we want to give people jobs being nurses, care-givers, land repairers, social workers - all kinds of caring work that is currently going undone because 'we can't afford it'.
I am just in the process of reading and re-reading some of the works by Fred Harrison (Land Research Trust) and other followers of the 19th Century self taught economist Henry George.
Turns out there is such a thing as a free lunch and it is those who benefit from it that tell the rest of us that there is no such thing. (Un)Funny that!
Fred might be a good one to interview Rachel. He puts up a good argument for the corrupted taxation system being responsible for many of our problems. See his book/s #WeAreRent
If the UK goes renewable, then we will need 18,000 gwh of backup energy, to allow for unreliable renewables (probably pumped storage systems). But at present we only have 10 gwh (the Dinorwig plant). .
But remember that Dinorwig was the most expensive power station in the world – because the Greeneys insisted it was built INSUDE a mountain. We need to cost in that missing 17,990 gwh of backup (which will cost £trillions), before saying renewables are cheap. And these backup storage systems will take decades to build. And where will we put them??
And if we run out of electricity and heating during a cold winter anticyclone, there will be no food, water, sew.erage, petrol, transport etc. So we will probably loose hundreds of thousands of people, just in one winter. And we will have ten or twenty of those devastating winters, before these backup systems are completed.
CO2 is not primary feedback agent.
Please see my peer review paper on ice ages.
This demonstrates that the primary feedback aged controlling ice ages, is dust on Arctic ice sheets, lowering their albedo. Strangely, this dust is caused by LOW CO2, which causes CO2 deserts, and therefore lots of dust. Thus it is LOW CO2 that causes interglacial warming.
Make more things free. That actually means there would still be things that are not free. Thus money is still needed to transfer assets and liabilities.
I looked up MMT and found the Wikipedia page - Modern Monetary Theory. I tried reading it but it made my head hurt. By the way Rachel have you come across Charles Eisenstein? He is into something called the Gift Economy - a pre-modern system where everybody just gives each other things if they can and the recipient returns the favour when they can. 'Paying forward' I think it's called.
The existentialists, especially Simone de Beauvoir, believed that personal freedom also entails a responsibility to others as we all share the same human condition.
Just get the billionaires to pay their fare share of taxes and use all that money to offer the freebies!
“But surely a world in which more things are free would increase our freedom? “
When you write “free” , I read “paid for by taxes collected forcibly by government and distributed through the instrumentalist of government, without charge”.
Without money, work will have to be coerced by physical force.
This is feudalism.
Money is the social structure we use to set ourselves free from feudal systems of coerced labor.
We do need a new conversation about money. You are correct when you that money has become an instrument of market elitism.
We do need to set ourselves free from that elitism.
The path to that freedom lies through new learning about money that will inform innovation in the deployment of money to shape the choices by which we shape our economy.
Federal taxes do not pay for federal spending. They are required by sovereign govts to provide a universal means of settling accounts.
In an economy with a non convertible and freely floating fiat currency, taxation has not been required to pay for govt spending since the termination of the Bretton Woods agreement in 1971. For the last 52 years, tax has performed many functions eg create demand for the Govt's currency to enable it to set the macroeconomic environment etc, however it is not required to pay for spending. For instance, taxes did not increase to pay for QE. Indeed, in the US, Trump gave the super rich a huge tax cut. This may not be commensurate with the writings of Hayek, Friedman, Lucas, Laffer etc, but it is a description of how the monetary system functions. It is supported by the Bank of England and other central banks. For instance see the article Money in a Modern Economy, Bank of England Quarterly, Quarter 1, 2014.
All true but it doesn't mean taxation is not important - it is vital. Its role is to drive the denomination and free resources. Ultimately, cutting taxes too far threatens the very monetary system - when people have far more money than their tax obligations, money loses not only its value but its purpose. It means the collapse of government and, as others have pointed out, the return to a far more onerous situation - serfdom to the local tyrant or, these days, to the biggest global tech company as long as there's sufficient government purpose left for a police force and court system to imprison those who value their 'freedom' more than their need to pay their unpayable debts. It's akin to the situation many developing counties find themselves in.
By the way, QE did not have to be 'paid for' because it's just an asset swap - as Stephanie Kelton says, switching money from your saving to checking account. It leads to another blind spot that MMT explains. Money can have three attributes - liquidity, time, and interest. Cash is fully liquid and pays no interest. A bond has a term and interest rate. They're all 'money' but we think of only the first as money and bonds as 'debt' - hence the US debt ceiling. In fact they're all forms of money and if you want to know what the national debt is, it's the national money supply. The two are precisely and necessarily identical.
I agree with all of that. I linked QE with taxation precisely to show the nonsense that there's a direct link between govt spending and taxation. I would take the asset swap mechanism further and argue it demonstrates that while a primary and secondary capital market is still required to enable the central bank to determine the overnight interbank rate in order to maintain the credibility of its monetary policy, direct monetary financing, where the central bank purchases bonds directly from the Treasury, shows capital markets are unnecessary for the conduct of fiscal policy.
I'd go further still and argue that capital markets are unnecessary. A bit of an exaggeration since Mosler thinks the financial sector is just ten times bigger than it needs to be and Steve Keen says three of four.
I agree wholeheartedly that capital markets have nothing whatsoever to do with fiscal policy. And on monetary policy, MMTers generally advocate that we drop the requirement that the Treasury cannot run an overdraft at the Central Bank so flooding it with reserves caused by deficit spending will cause the base rate to fall to zero, where it should stay.
Managing the yield curve is a bit more subtle - maybe you want a higher rate for 5- and 10-year bonds?
As for secondary markets - an MMT insight is that there's no need for pension funds at all - governments can spend money for pensions as it wishes and there's not just no need, but actually no way, to 'save' for them. And payroll deductions are nothing more than a tax on paycheques because we'd rather not tax the wealthy.
It's yet another MMT insight that QE did not lead to inflation - it barely budged the inflation needle. The major lesson is that CBs cannot fight inflation with interest rates. Mosler, again, has been prescient in suggesting high interest rates are, actually, inflationary. Inflation is not a simple matter and cannot be 'controlled' with a simple lever. Today's inflation is mostly supply side - partly oil which has to do with unnecessary speculation and partly profit seeking which requires price controls. MMTers, generally, think Central Banks are incompetent and have no idea how the economy works.
Of course, given today's vast inequality, one wonders why we don't let inflation rip while pumping money in at the bottom end - increasing the minimum wage, pensions, education and health spending etc - but doing nothing for the wealthy so their speculative gains are depleted. Instead we're doing the opposite - sending high interest 'wealthfare' cheques to the wealthy and imposing austerity at the bottom end. Shear madness!
Before we go tiptoeing through the tulips of the logical impossibility that money can be at one and the same time both a worthless fiction and an inexhaustible supply of unlimited wealth, let us explore in our imaginations the physical realities of our uniquely human way of being together, and apart, in mutual aid societies for sharing an abundance of technology solutions to the everyday problems of everyday people living our everyday lives through networks of connections for enterprise and exchange to create, curate and innovate a safe and dignified house for humanity within a built environment of Urban, Rural, Curated and Left-Alone landscapes on the creative edge of an interactive Human-Nature partnership that is constantly. changing, adapting and evolving, from time to time, and over time, as times change and humanity evolves prosperous adaptations to life's constant changes through inquiry and insight that informs innovation, making new technologies more popular as better fit to changing times, while letting previously popular technologies fade into history as a good fit at an earlier time, driving the flourish and fade of the social contracts between enterprise and popular choice.
These social contracts are courses of dealing between people that continue until times change and new beginnings are chosen to fit those changing times.
We enter into these social contracts voluntarily, but eventually our voluntary choices do become legally enforceable against us, because we have induced others to rely on our expressions of willingness to enter into a transaction, so that society takes an interest in not letting us back out.
Transactions are completed for a price paid in money. Money is a legal instrument for completing exchanges remotely, between people who do not otherwise know each other. If we can trust the money, we don't have to trust the other party in order to complete a transaction using money.
So, how do we, as society, establish and maintain a system of money that people can trust in, and rely upon?
The integrity of the money system requires a constancy of connection between quantities of money and quality of life. There always has to be enough money so that people can complete the transactions they choose to enter into, but never so much money the connection between money and stuff is broken.
The purpose of the central banking system is to maintain the integrity of the money supply, so that there is always enough, but never too much.
So that the people can trust the money.
Don't you think freedom is just another rabbit hole to go down? Early economists, eg Adam Smith, saw 'free' markets as free from rentiers - people (the nobility) who extracted from the market without giving back. That definition has been turned on its head by the current crop of economic sycophants so that 'free' now means a market in which monopolists and special interests are free to exploit.
When I think of a market, I think of produce on display by many vendors with me being free to choose. But financial markets allow people to take on debt - in other words to sell themselves into debt bondage. And there's not much competition - most financial institutions offer the same products at the same prices.
Be careful about your definition of money. Money is a measuring system (measuring debt), denominated in state IOUs. It's taxes that free us from feudal coercion (whatever the local tyrant decided he would take) but at the cost of taxation, which is itself coercive. But at least it's democratic coercion with the public having a say in how much and on what.
Money - public and private - is created out of 'thin air' by governments and banks respectively. The genius of private money is that we are all free to take on debt to make 'improvements' to our world. It also allows asset price speculation - gambling - which we have come to regard and reward as 'investment'. Public money, on the other hand, is created for the public interest but we've allowed it to be Reaganized to mean wasteful, inefficient, and bad.
As to things being free, MMT enshrines a job guarantee not a basic income. First, people generally want to contribute, ie, have a job. Second, if you encourage demand in your economy with a free income, then who is suppling the demand if no one is working? It's true that government spending is 'free', although its value is set by taxation. But wouldn't we want to give people jobs being nurses, care-givers, land repairers, social workers - all kinds of caring work that is currently going undone because 'we can't afford it'.
I am just in the process of reading and re-reading some of the works by Fred Harrison (Land Research Trust) and other followers of the 19th Century self taught economist Henry George.
Turns out there is such a thing as a free lunch and it is those who benefit from it that tell the rest of us that there is no such thing. (Un)Funny that!
Fred might be a good one to interview Rachel. He puts up a good argument for the corrupted taxation system being responsible for many of our problems. See his book/s #WeAreRent
Regards renewables and mining.
Energy storage for renewables.
If the UK goes renewable, then we will need 18,000 gwh of backup energy, to allow for unreliable renewables (probably pumped storage systems). But at present we only have 10 gwh (the Dinorwig plant). .
But remember that Dinorwig was the most expensive power station in the world – because the Greeneys insisted it was built INSUDE a mountain. We need to cost in that missing 17,990 gwh of backup (which will cost £trillions), before saying renewables are cheap. And these backup storage systems will take decades to build. And where will we put them??
And if we run out of electricity and heating during a cold winter anticyclone, there will be no food, water, sew.erage, petrol, transport etc. So we will probably loose hundreds of thousands of people, just in one winter. And we will have ten or twenty of those devastating winters, before these backup systems are completed.
CO2 is not primary feedback agent.
Please see my peer review paper on ice ages.
This demonstrates that the primary feedback aged controlling ice ages, is dust on Arctic ice sheets, lowering their albedo. Strangely, this dust is caused by LOW CO2, which causes CO2 deserts, and therefore lots of dust. Thus it is LOW CO2 that causes interglacial warming.
Modulation of ice ages by dust and albedo.
https://www.sciencedirect.com/science/article/pii/S1674987116300305
Ralph
ralf.ellis@me.com
Sent from my iPad
Make more things free. That actually means there would still be things that are not free. Thus money is still needed to transfer assets and liabilities.