In modern states, demand for currency comes from the ongoing self-imposed liability for the currency. There is no need to pay savers in order for them to desire to hold the currency (interest on sovereign bonds issued for "deficit spending"). Any justification for doing so must rest on some other perceived benefit of paying savers.
Before continuing with posts on this topic I want to note: I started these posts with a twitter comment by Nathan Tankus on replacing the dollar in international trade. That thread continues – that he foresees “a world of swap lines as alliance politics... Swap lines may seem like technocratic high politics now but it's … Continue reading The Two Families of Global Reserve Proposals & Swap Lines
It is important to note that the proposals for a supranational currency have been made with various, disparate goals. Some are primarily interested in some aspect of commodities, others primarily or completely the supranational-currency aspect. These can overlap in several ways. The primary possibilities:
The currency of international trade has been on a lot of peoples' minds in the last few years. The hierarchy of currencies literature, the related questions of reforming the international monetary and financial system (IMFS), the effects of US monetary policy on the rest of the world (ROW). Add to that the war in Ukraine and Chinese trade-related discussion on the role of the ruble, dollar, yuan, oil and natural gas, wheat etc.
An important area of concern among many cryptocurrency proponents revolves around the idea that the current banking and government finance systems are inherently unstable or inflationary. Ultimately all finance is about debits and credits, assets and liabilities. How would total adoption of crypto by a country change these?
The sentence in Ben Shapiro's book preceding the title quote is this: "Discussions of income inequality, after all, aren't about prosperity but about petty spite." I'm sorry Mr. Shapiro, but this is entirely about prosperity. And not at all petty.
These issues are yet again the problem of our age. Their seeming trajectory towards resolution post WWII, with widespread prosperity and a rising middle class, has been undone. What undid them points to the underlying problem: Immediate causes include the spectacular increase in financialization and unearned rents, the lack of and lack of enforcement of progressive taxes, both in turn largely due to a shift in the public's understanding of these issues. What caused this shift in public understanding is the age old problem—power and the lack thereof.
This sixteen-part series, The Souls of the People, will explore these issues and the ideas and economics behind them. The values, origins, economics and philosophy behind the call to "cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub" (Norquist). The creation of think tanks specifically to provide a pseudo-intellectual foundation for inequality, and that along with media convince the middle class to vote against their own interests. The rise, reasons for, and effect of beliefs that markets without law allow for full employment and that wage laws cause unemployment. That competition alone can bring about good working conditions. The rejection of progressive taxes, and of the right to avail ourselves of the power and resources of the country through organizing public goods. And most importantly, how all of these are maintained by laws that impoverish the powerless and enrich the powerful, and thus are self-perpetuating.
The payments system is merely a technical and bookkeeping question, mundane in the end. The idea of operating it with only reserves puts in stark relief a far more important question: What is the point of banks at all?
I have been interested in better economics for years, including MMT.There have been a number of sea changes in recent years. Starting sometime around 2019 came the flurry of high profile criticisms of MMT – always a sign that you are winning. Then of course the well-deserved popular success of Stephanie Kelton's The Deficit Myth … Continue reading Whither MMT?