Tally sticks

[stone]

Also, referring to endless wars, poverty and corruption?  Do you realy think the monetary policy, or the lack thereof, prevents those in any way, shape or form?

I think resource conflicts are behind all of those and monetary policy is very much a cause of and a weapon used in resource conflicts. We use monetary policy to ensure that we get the oil rather than all 7bn people on Earth bidding the price up to the point where we would have to change our ways. I think almost all of global poverty, corruption and war can be traced back to that effort to elbow our way into getting oil and commodities in general.

The best way to get commodities for nothing in return is to have a dictator of the exporting country corruptly syphon the money you spend on the commodity back into savings in your asset markets.

[moda0306]

stone,

Interesting perspective.

Digesting...

[MachineGhost]

Like religion, I don't believe the government should be in the business of money.

But if you mean what the government should use as money, I see no reason why it can't continue to issue Treasury debt on behalf of the taxpayers (who are financing the issuance with their implied signature and promissary notes) and contract out to private moneychangers in a competitive marketplace when it needs currency.  Come to think of it, the present system is not really all that far from that.  There's just not competition in the moneychanger area as the Fed has a monopoly privilege. 

MG

Maybe it's in there somewhere, but what exactly do you suggest the government use as a system of money?

[MachineGhost]

Its so easy to conflate "central banking" with the Fed or Treasury.  But either way, I am referring to fiscal policy as that is how it is done nowadays.  Without the Treasury having the ability to emit credit, how would government finance wars or even be predisposed to starting wars, engage in New Jim Crow, keep people in poverty, etc.?  Idle hands are the Devil's hands.

MG

MG,

Also, referring to endless wars, poverty and corruption?  Do you realy think the monetary policy, or the lack thereof, prevents those in any way, shape or form?

[moda0306]

MG,

I think the government being in the business of money is ok... we may just disagree on this.  I think there are things people can do to protect themselves from debasement, both in their wealth and their contracts.  I think reducing captital gains taxes for CPI adjustments would make things even better, but we have what we have... I don't think we're all that hindered from protecting ourselves.

I think the stability of a common currency helps.  I tend to view our currency like our freeway/road system.  A private alternative would be a mess in our modern economy, in my opinion.  I'd rather have people have common currency and transportation system, enjoy the efficiencies of both, and be free outside of those systems to save, contract, and live as they please.

[stone]

Machine Ghost, to me the massive problem with having a diverse array of privately concocted forms of money is that everyone then has to try and cut through the bamboozlement to choose what to use. Average Joes will get ripped off by the insiders. That is why I think it is important to have a simple, transparent, universal system that everyone can understand and chuck out the politicians if they screw it up. To me what we need to do is strip down a state money system to being utterly no-frills. We could have something along the lines of the trade able phone talk-time credits used as digital money in Kenya. People there text talk-time to each other to pay for stuff. The talk-time credits can be exchanged for official currency at an enormous number of outlets (market stalls etc) across the country. Basically we could have a no-credit digital system with say one trillion units always in circulation each with a digital object identifier. No endogenous money creation that could be enforced by contract law. Basically no-nonsense.

[MachineGhost]

I just finished reading the introduction to MMT (descriptive).  I'm amazed a few people managed to put the bits and pieces from high level officials, alternative economic theories, tax protestor theories and central banking conspiracy theories all together.  I would say MMT is a perfect example of the collaborative nature and power of the Internet.  With apologies to the Rothschilds and Hamilaton, I would also say there is no way in hell what MMT describes was planned; it had to arisen through spontaneous evolution and co-operation.

So I understand your perspective better now.  To me, the question still comes down to whether the free market or a Politiburo can create a more just infrastructure and direct spending.  I say just because while the free market is definitely more utilitarian and efficient in terms of providing value for the money, it is not always just.  Lets suppose we had an technological "Big Brother" AI that finally made a voluntary anarchist society feasible.  It would still have to be initially programmed in with all of the values we held dear or it would be as tyrannical and unjust, if not more, than any human dictator.  So just values are arguably more important than the means to the end.

Nonetheless, I think your concern about barriers to entry with a free market medium of exchange is not a particularly strong justification to support the current system with its Politiburo-induced inflationary devalutions as technological innovation could easily make it a moot point (all that necessary is the understanding and the will). 

But hey, I'm a techno-optimist.

MG

MG,

I think the government being in the business of money is ok... we may just disagree on this.  I think there are things people can do to protect themselves from debasement, both in their wealth and their contracts.  I think reducing captital gains taxes for CPI adjustments would make things even better, but we have what we have... I don't think we're all that hindered from protecting ourselves.

I think the stability of a common currency helps.  I tend to view our currency like our freeway/road system.  A private alternative would be a mess in our modern economy, in my opinion.  I'd rather have people have common currency and transportation system, enjoy the efficiencies of both, and be free outside of those systems to save, contract, and live as they please.

[Gumby]

I just finished reading the introduction to MMT (descriptive).  I'm amazed a few people managed to put the bits and pieces from high level officials, alternative economic theories, tax protestor theories and central banking conspiracy theories all together.  I would say MMT is a perfect example of the collaborative nature and power of the Internet.  With apologies to the Rothschilds and Hamilaton, I would also say there is no way in hell what MMT describes was planned; it had to arisen through spontaneous evolution and co-operation.

MMT was originally theorized in the late 1800s and then refined in the 1940s. What you read is simply a modern-day explanation of how the US now obeys the original MMT blueprint.

http://en.wikipedia.org/wiki/Chartalism

MMT is also known as Neo-chartalism. Technically it is the only descriptive economic theory that describes the mechanics of a fiat currency (descriptive) and how it can be managed (prescriptive).

The collaborative nature of the Internet has certainly helped revived an interest in MMT — particularly since MMT brings sense to our large deficits and low interest rate environment while also explaining Europe's debt bomb.

[moda0306]

MG,

I don't think the people that broke the gold standard in the 1930's specifically had MMT in mind, but certain Keynesian/monetarist beliefs about the economy.

I don't think Tricky Dick took us off the gold standard because he understood the monetary system would work much better as MMT describes.

I literally think MMT's description is simply trying to whittle down to the core of what our common currency truly is.  If it isn't a contract to exchange for gold with the government, it must be something else... we can't simply be relying on a continuum of contracts to keep the dollar's value high.  MMT accomplishes what no Keynesian or Austrian can, in a descriptive way, and looks at our economy for what it truly is: 1) The real people, assets, production, capacity, services, and abilities we have, and 2) the paper system our government has devised to make #1 happen in a more efficient manor.

Beyond descriptive MMT, I think any system of private currencies will involve so much exchange rate nonsense and instability due to default risk that it'd be a mess... even with the internet... if we can suppose that the USD would act in the background of such a system, letting people choose between saving in the USD and contracting in securities denominated in the USD, vs currency and securities denominated in "STARBUCK$," I can't help but think it's laughable that any private currency would develop in any meaningful way.

People always have the option of indexing contracts to CPI or any other means to make sure they're not being bamboozled by the fed... so why would they start contracting in some goofy currency issued by the private sector subject to all the risks implied.  Maybe I'm stuck in some statist state of mind, but I just don't see it working.

[stone]

moda, the transferable talk-time phone credits used as currency in Africa are a private sector currency that is extremely widely used. It is curious that an old article in the Economist talks about attempts to do that in the developed world but I guess nothing has come of it:
http://www.economist.com/node/1101473

If a Kenyan buys a goat with one hour's worth of mobile phone credit, then they are using a private currency. It could be thought of as being pegged to the cost of telephone services. It can not be inflated away by government dictat only by improvements in phone technology. In a way it seems like a fairly good system. They use text messaging to transfer phone credits from person to person and you can exchange them for official Kenyan currency pretty much anywhere there.

[stone]

Machine Ghost, I don't think MMT is saying that the current monetary system was drawn up and enacted like that as part of a plan. Rather MMTers are saying that that is simply how it has turned out. I guess the monetary system is a bit like the UK constitution. In the US you have a written constitution that was drawn up by the founding fathers. In the UK we don't have a written constitution. Instead things have just happened as they have and traditions have been set.