I share this content from Steve Keen's latest newsletter because it reminds me that I have the book he is referring to, and have yet to even open it, and because he obviously thinks so much of it that it is worthwhile promoting:
A 65-page preview of the book is available here.
Steve's mail list is well worth being on. The Substack version is here.
And if you are looking for a hard copy, this is what you're seeking:
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I’m not sure if Richard Vague actually uses this term in his new book but debt since it’s a promise is really “monetisation of the future” plain and simple. If we query what Voltaire’s comment “The comfort of the rich depends upon an abundant supply of the poor” actually means then it’s monetisation of the future that substantially creates poverty.
To take but three examples, firstly we know that to keep the value of money (debt) stable there has to be some reflux of it but the rich do their level best to ensure the burden of that reflux falls on the poor particularly through indirect taxes such as VAT at 20% in the UK.
Secondly, because of the wide spread “Stone Age” belief government has no money of its own the rich are able to earn interest on government issued treasury bonds whilst simultaneously getting subsidies and exemptions from government on a whole raft of their investments.
Thirdly, if the rich invest in China because its government doesn’t freely allow trade in its currency and the Chinese government uses this avoidance to suck out value from foreign currencies to buy treasury bonds (from governments that don’t believe government has any money of its own, spot the linkage!) in order to keep its own currency very cheap for exporting purposes then again the poor in countries like the UK get landed with lower paying service jobs as opposed to the opportunity also of manufacturing jobs.
Thanks for the link – this is one of the reasons why I come here – for reasons of triangulation.
This is something you have mentioned here yourself Richard.
The see-saw between private wealth and government debt and how the two are linked in a way that renders the government balanced budget and austerity orthodoxy a joke.
For me it is all down to semantics:
➡️ When I have debt it must be paid back, often with interest.
➡️ Some government debt needs to be repaid
➡️ But the National debt does not need repaying (e.g. public service salaries, new roads, etc). So it is often called a “deficit”, which most people see as a “debt”.
I think we need to change the language, as it will change the understanding.
Would National Investment be a better description?
We need new language for this
It’s the Rumpelstiltskin effect; once properly identified, the evil dwarf lost his powers. Similarly, once properly named, money creation and govt debt can be seen for what they are and consequently understood, losing their power to alarm in the process. The misleading language currently and traditionally used to describe them has not developed through chance, I imagine.
Here’s the history of the UK/English National Debt before MMT came along. It makes for very interesting reading in the context of thinking that money is a promise monetised into debt for convenience and security:-
http://financeandsociety.ed.ac.uk/article/view/3017/3999
National Investment would indeed be a better description Ian, but I suspect its chances of it being adopted are slim. It’s too convenient for our neo-liberal masters, Tory or Labour, to stick with “National Debt” and “deficit” and continue with their deceptions about the need for austerity, or the roles of the BoE and the Treasury, or the fallacy of the government having no cash of its own, or the need for higher taxes before investment & growth can happen, and all the other petty deceits they deploy. Heaven forbid! They’d have to start being truthful and I suspect that’s never been seen in a manifesto (if it did, nobody would believe it!).
I think national capital would be much better.
Investment is a debit.
Capital is a credit, like debt.
I think national capital would be much better.”
Who cares, the consequences are the same, that’s what matters
If you head the slightest understanding of the significance of language you would not say that, but you clearly have not.
Ah for a country that understands the need for Moral and National Capital since they both need each other! The UK is still stuck in the Stone Age in understanding this linkage with its politicians. How many are actually arguing for a really big shake-up so that incomes are made more equitable but the free market is retained??? Instead we have voters limited to choosing Greedy Clown Party No. 1 or 2 or 3 etc. If only the Green Party would do MMT then you might get some decent politicians on the basis that if you want to save the planet then your heart must be partly in the right place!
Mr. Keen and Mr. Vague – what a shame Roger Hargreaves never got round to including them in the Mr. Men canon. 🙂
If only we’d had Mr MMT many of our problems wouldn’t exist!
I’ve just ordered a copy of Richard Vague’s book having read the excerpt. There would appear to be a lot of statistics in it maybe more than I can cope with and it will fry my brain before the planet will! But I’ve read a couple of his books before and he’s good very through. Maybe there’ll be new insights worth passing on there again maybe not but if you don’t look you won’t find!
The point about language resonates with me.
My own view is that words, aside from the bald dictionary definition, often carry something akin to “value judgement”.
“Debt” or “borrowing” sometimes equates to “sin” or “shame” in addition to “something owed”: “deficit” similarly to “failure”…..
Unfortunately, this kind of meme, if repeated often enough, sticks – hence “we must pay down the National Debt”….”the deficit must be eliminated”…etc….& it is damned hard to shift.
I am therefore all for National Asset or Investment….whatever…the sooner the better!
This needs to be thought through but it needs to be done
“My own view is that words, aside from the bald dictionary definition, often carry something akin to “value judgement”.”
I think it is worse than that, words are often misappropriated and used with the opposite meaning they were intended.
The 15th century Spanish Catholic priest and theologian who founded the Jesuits “was the first to recognize the force which specific words carried. It was therefore essential to control those words. To capture them absolutely for the use of the Church. Better still, by treating these captured words as icons, they could be packaged in order to produce a politically useful meaning.” [..]
“In this century words such as capitalism or revolutionary or free are used in the same way. The very act of getting the word free into the public domain on your side places the other side in a difficult position. That is why politicians or businessmen, about to cut back on social benefits or to close factories, always invoke fairness as part of their justification, along with such concepts as justice, rationalization and efficiency.” — Source: Voltaire’s Bastards: The Dictatorship of Reason in the West (1993) by John Ralston Saul. https://amzn.eu/d/iF8oZRn
Well noted
It has dawned on me that the example Vague gives (State minus $3 trillion, private wealth plus $14 trillion) makes a strong case for “Schrodinger” dollars.
Just as the unfortunate cat may or may not be alive when you open the box, Schrodinger dollars may or may not be there when you need them. Only a fraction of the shares in a company will be traded on any day, but the shares that are not traded are valued as if they had been traded. The stock market may be deemed to have increased $10 trilion in value, but perhaps only $100 billion has actually been moved from elsewhere to buy shares. Where has the rest of the $10 trillion come from?
Also, when banks “print” real dollars to make loans, they are using assets valued in Schrodinger dollars as security. When a loan goes bad, the bank first tries to recover Schrodinger dollars from the asset. When the Schrodinger dollars are not there, the bank tries to recover the dollars from the interest on performing loans. When that fails, the state is expected to step in and “print” dollars to save the day. Finally, the state is castigated for “printing” money.
I know Richard doesn’t like the idea of money disappearing into thin air. Perhaps he might bend a little, when it is pointed out thatone of the side effects of a wealth tax is that it would be a tax on the Schrodingerisation of money.
Money disappears by being taxed, by loan repayment or by the promise to pay being broken.