October 9, 2013

There Is No Government Shutdown


It’s nothing but a political charade. I’ll start with a quick review of how government money works, and how the central government wants to use it.
A government sovereign in its own currency has no debt issues as long as it spends constructively and its spending doesn’t grossly exceed the productive capacity of the economy. That’s the basic premise of greenbackerism, including its current version, Modern Monetary Theory (MMT).
What we have today, however, are lies about alleged debt constraints. This is the deficit scare-mongering which is meant to conjure the right political environment for “austerity”. To the credit of the people, they haven’t let themselves be stampeded by this propaganda. The people consistently consider the deficit and debt to be lesser issues, compared to the quality of government spending. I.e., that it should be on programs which benefit the people as a whole, rather than which benefits corporations. We see how the Washington class and their corporate media simply impose this deficit-terror program against the will of the people.
Which leads to the second point, that US government spending is almost all corporate welfare, and simply goes down a destructive rathole. The only exceptions are pre-existing programs like Social Security, which the elites, including both Washington parties, want to gut.
I’m writing about this today to highlight again how the government’s ploys are all simply setting us up for further austerity assaults, when in fact there’s zero reason why the quantity of the deficit or debt, as opposed to its quality, ought to be an issue at all.
The so-called “government shutdown” needs to be seen in this light.
Every word that politicians, economists, and media pundits say about any alleged legal or “constitutional” restraints on spending is a lie. In general, we see how the system believes it has infinite money for corporate welfare, wars, weaponry, and the police state, and only starts claiming “budget constraints” where it comes to spending which might actually help some people.
In the same way, during this alleged “shutdown”, the government feels free to keep spending on those same malign and destructive things, but only claims its legal inability to spend where it comes to spending which might help anyone.
It’s a total fraud, intended, as I said, to further the “austerity” assault. Many of the programs now “shut down” are intended never to come back online again. Meanwhile, the two phony sides are wrangling toward their shared real goal, gutting Social Security and Medicare, which Obama will try to present as a Grand Compromise, while Republicans will put all the blame on Democrats. (But as usual it’ll be the Dems left making the affirmative claim, that some monstrosity is somehow a “good” thing. So it was with the health insurance bailout, AKA the right wing Heritage Foundation plan, AKA Obamacare.)
As always, the government does exactly what it wants to do and feels it can get away with, nothing more, nothing less. And why is the imperial executive so imperial and lawless where it comes to wars of aggression, assassinations, murder of US citizens without trial, GMO approvals, etc., but suddenly claims it can’t spend money because of the same Congress it otherwise ignores at its convenience?
There is no “government shutdown”. It’s pure theater.


April 4, 2013

Money, Reprise


One of the basic lies is that there’s only a “fixed” amount of money available at any given time, and that the measure of this amount is based on how much of a particular metal you have. This metal has usually been gold. According to system lies, if more paper money is issued than is justified by the amount of gold the system holds, the result is inevitably destructive inflation.
The lies here are that money is a real thing in itself, that this real thing is naturally based on gold, and that inflation as such is a bad thing. The goldbuggers often add an element of moralizing, that money not based on gold would be immoral and reckless, and that inflation is the consequence of a moral failure.
(I’ll add that the banks always overstate the amount of gold which is actually available. If at any time, including today, everyone who has invested in gold were to demand physical redemption, they’d immediately discover that they’d been sold fraudulent paper backed by nothing. So even given the framework of the gold standard, the banksters were precisely the immoral inflationists they accused others of being, along with committing flat out fraud.)
The truth is that money is nothing in itself, but in a normal economy would merely reflect the real production of that economy. As one Populist put it, money is just the yardstick measuring the yarn. But the goldbug ideology claims that the yardstick itself is worth as much as the yarn it measures.
Money’s only constructive role would be to exist in sufficient form to represent the real economy’s production, and to represent its productive capacity. This latter means that there should always be somewhat more money in circulation than the value of what the real economy is producing at the moment, since this extra money is what greases the skids of new productive investment and innovation. (I’ll add that it also means that to have legitimacy, money must always be circulating. The “velocity of money”, in the jargon, must be high. Money’s legitimate functions are as a medium of exchange and, as Graeber emphasizes, a unit of account. But to hoard money, to use it as a “store of value”, is always illegitimate. Taking money out of active circulation renders it pointless and therefore malevolent, since it’s no longer reflecting real productivity.)
It follows from this that if you’re going to have a central government and centralized money, the government should directly issue money in a sufficient amount to lubricate the entire productive capacity of the economy. This is called greenbackerism, named after the “greenbacks” the Lincoln administration issued to finance the Civil War (which of course couldn’t be financed with the existing gold-constrained system). This would bring only mild, constructive inflation. This mild inflation is economically healthy and good for borrowers. Real production, wages, and quality of life would increase in tandem. In fact, it’s increasing productivity which ought to dictate the pace and amount of money issuance. But the goldbug straitjacket, dedicated as it is to the artificial scarcity of money and to a generally deflationary pressure (which favors creditors over debtors), constantly puts an artificial ceiling on productivity, resulting in frequent economic crises and depressions.
Goldbuggery is utterly incapable of dealing with the complexities and productive surge of a modern fossil fuel economy. To maintain bankster control of the money but render this control more flexible, the banks dictated the establishment of the Fed in 1913. The Fed is nominally a hybrid government-bank institution, but is 100% under the control of Wall Street. In this way Wall Street continues to issue the money, which the government borrows.
(Meanwhile the silver scam has twice been the system’s response, under duress, to an uncomfortable debate and confrontation between gold and greenbacks. Most famously, in 1896 the People’s Party, having heroically forced the greenbacker idea into the public discussion, committed ignoble suicide by selling out to silver and embracing the Democratic Party instead of fighting for itself and the Populist movement which extruded it in the first place. Sound familiar? In 1896, at the LATEST, history proved that the Democratic Party was a tar pit for all human aspiration. Yet to this day people rush in droves to entomb themselves in this pit.)
I can’t stress enough that the money belongs to the people. We create 100% of the real productivity and wealth, of which money is a reflection. It’s OUR MONEY. If there’s to be a central government at all, then directly issuing the money is indisputably one of the core functions of this government. The Constitution itself mandates this.
But under all systems of bank money, including the system centered on the Fed, the government abdicates this core role, the banks illicitly usurp it, and we the people now have to pay extortion rates to rent OUR MONEY back from the banks who stole it.
One of the infinite vilenesses of the liberals is how we the people had a golden opportunity (pardon the pun, and note the profound corruption of the vernacular itself) in 2009 to smash this system once and for all and take back our money. But instead the liberals presided over the aggressive bailout of Wall Street, using trillions in taxpayer money to bail out the robbers who intentionally crashed the economy. This example was at least as awesomely self-destructive as 1896, and far more malevolent. Will America learn a lesson this time?


June 8, 2012

Elections, Money, Government


I hope no one mistook my remark in yesterday’s post about “big money” to be another lament over Citizens United or another cry for campaign finance reform. On the contrary, my point was that electoralism as such is necessarily under the control of money, wherever this money is imposed from the top down, as a command economy policy.
The goal is not to reform money in elections, since the goal is not to reform command money as such, but to abolish and transcend it.
1. Why do we need money?
The fact is we don’t. Historically, naturally, we didn’t use money as a dominant medium of exchange. Nothing during the ahistorical fossil-fueled blip called “modernity” has changed this vastly longer arc. But those who want to use money and other reifications to impose enclosure and tyranny, the 1% and their flunkeys, tell that lie.
2. Those who impose, from the top-down, the use of money (corporations and government) do so in the following way. They “print”/computerize/reify vast amounts of it; they force every part of the real economy to function according to the exchange of it; they subordinate the real economy to fictive economic features like finance, property, intellectual property, the stock market; and this then hands effective control of all real things and relations to those who possess vast amounts of it.
All this printing is done for the corporate benefit, corporate welfare. In theory it’s possible that government could print for the benefit of the people, handing the money itself over to the people as part of our rightful money sovereignty. This is how greenbackers like the MMTers would have it.
But this theoretical possibility is a practical fable, since the corporate state would never actually do this. History’s record is clear.
To think this reform could happen in reality is the same as thinking government itself could actually exist to serve the 99% rather than the 1%. (Which would mean abolishing much of the wealth inequality spectrum.) We know government will never do that.
3. So we need to abolish and transcend money itself. Just as we need to do with centralized government itself.
Given those democratic imperatives, it’s obvious that the more picayune goal of reforming electoralism rather than overcoming it is also unworthy of us.


March 21, 2012


Filed under: Freedom, Law, Reformism Can't Work, Time Banking and Co-Production — Tags: — Russ @ 7:03 am


“Money is the root of all evil.”
For a long time I used to regard this as synonymous with “greed is…” or “ambition is…” or similar formulations. I suspect most other people do this as well.
But nowadays I recognize that these are distinct concepts and should be separated. We don’t need to confront allegedly natural traits like greed or competitiveness in order to analyze the fact that we can produce and distribute everything we need and want without using money (we don’t need this “medium of exchange”), and would be much better off without it, practically and in terms of human happiness.
The facts are that money is not a natural law, humanity did better without it for 99% of our natural history, and that the road to freedom and happiness includes, as a necessary goal, the abolition of money.
Of course this argument has nothing in common with liberal sanctimony about money being the root of evil. Liberals believe money is normative, that its existence is a natural law, and most of them also consider it progressive and desirable. They only deplore its “abuses”, usually where they see the non-rich behaving badly in order to obtain some.
We must always be clear that we need to abolish money as such, that humanity shall be more free, more prosperous, and happier without it, and that the whole 99%* needs to seek this goal.
We do not, on the other hand, moralize in an ad hoc manner about the abuses of money. Such liberal sanctimony always, somehow, ends up seeking the ends of the 1%.
But to morally reject money as such, and seek to rebuild the human modes of exchange which have been temporarily submerged, is on the road to rejecting the 1% as such and obliterating them completely.
These human modes of community exchange and credit have only been submerged, not destroyed. This is proven by the fact that capitalism and the state free ride completely on the vast majority of real work, at “the workplace”, in the community, and in the home, which goes unpaid by the 1%’s money system.
To this day, even in corporatism’s darkest slough of despond, the economy and society remain overwhelmingly anarchist and democratic. If a critical mass were to embark upon a Work to Rule strike, confronting the boss, the owner, the government, the cop, with an absolute adherence to the strictest letter of the job description and the law, the system would collapse in a day.
That fact tells us where the real power lies. The way to render this power kinetic is to understand its potential. Part of this understanding is to understand money, and the fact that it has no practical, rational, or moral validity. Education and, wherever possible, action, must proceed along this path. 
[*That is, a critical mass.]


August 17, 2011

MMT Housekeeping (The Lost NC Comments)

Filed under: Reformism Can't Work, Sovereignty and Constitution — Tags: , , — Russ @ 1:49 am


Sorry to indulge myself, but blogger’s prerogative, reasons of state, force majeure and all:
It’s insufferable when NC goes haywire and absolutely refuses to post a comment (and no one ever plucks it out of moderation limbo, where I know this one was). And it’s never what I consider a throwaway comment, but one I consider worthwhile, in this case about the proper use of MMT.
Replying to this comment (my other comments are there in the thread) :


Except NYT commenters (and readers) DONT know the basics of MMT (and if they did, then this blog post wouldn’t even be necessary). Again, there are a set of regular commenters, who would essentially post the same comment on every blog post of his, nearly every time, claiming, as Krugman states, that deficits don’t matter, without the inflationary qualifier.

But either way, your comment “No matter how much everyone involved knows the basics of a point, unless its advocate explicates each and every one of those basics in each and every comment, its detractor is justified in claiming he doesn’t imply the omitted basics” applies to Yves’ blog post equally.

Bottom line is that Krugman, in this instance (he may have on other instances), wasn’t mischaracterizing MMT. He was correctly characterizing the position explicated multiple times, by “MMT types” in his comments.***

My reply:

Maybe we’re talking about a different line of argument. The fact is, deficits don’t matter, period. And everyone knows it.
Can you name anyone whose actions indicate he believes deficits matter? Certainly no one in government or the political class, who all advocate ever-bigger government and ever-bigger deficits, but only for corporate welfare.
The “deficits matter” Big Lie is only trotted out to give a pretext for gutting public interest spending. So “deficits matter” is only asserted by deficit terrorists who don’t actually believe it, but are merely lying as part of a political attack.
So perhaps these commenters you refer to are merely using MMT to bolster a broader argument. (And why not? Shouldn’t MMT serve some constructive purpose instead of just fueling the fantasies of unreconstructed statists?)
Or perhaps, on the contrary, they’re pro-banksters who are merely slandering the MMT idea by intentionally misrepresenting it. (In which case, why would Krugman go along with this sham rather than counterattack it? Unless he actually agreed with it.)
Either way, I stand by my initial assessment that the commenters know the basics, and Krugman knows they know.
Same thing next day, this thread.
My comment quoted part of someone else’s comment to which I was replying:
“in MMT we behold yet another ideological motif in the political tendency known as bourgeois reformism, which claims that the evils of capitalism can be mitigated or done away with altogether while keeping intact the rule of capitalism as a system.”
Yes, that’s evidently the MMTer psychology. The “theory” is really just a vehicle of unreconstructed statist fantasies. Fantasies of “good government” and so on. It’s another way of zombifying faith in “better elites”. It’s another Special Case economics.
But in practice, what they really picture happening or actually propose always falls far, far short of the soaring theoretical potentialities (for example, taken to its logical consummation, MMT is inherently anti-propertarian). Their indelible reformist meagerness comes through in things like proposed “Jobs Guarantees” which would guarantee only minimum wage makework which scrupulously avoids competing with the private sector.
Such picayune proposals demonstrate how MMTers are really the same old craven reformists in practice, who merely want to dress up their paucity with a highfalutin “theory”. Show me an MMTer who openly says that MMT means the store of value function is illegitimate, from which it follows that all hoarded property is illegitimate, and that policy should follow from that truth, and I’d say now we’re cooking. But I won’t hold my breath.
Any constructive use of the MMT idea will come independently of, and probably counter to, the intentions of the establishment MMTers themselves. But “MMT” as a pseudo-radicalism which will always be used to herd people back toward paltry reformism is a pernicious thing.

December 6, 2010

The Bridge


The Western elites used the industrial revolution and the fossil fuel heritage to organize the amassment of a vast wealth and power surplus. Their goal was always to steal as much of this surplus as they could, using the wealth and power they amassed to organize themselves to use Peak Oil itself as the ultimate opportunity to steal the rest.
First they used the power to force the Global South to pay the costs of the West’s post-war affluence. Cheap oil and the fact that non-Westerners were providing most of the resources, doing most of the work, and bearing most of the costs, enabled the West to temporarily distribute the fruits of this crime fairly widely among the populace. Out of that we saw the temporary rise of the mass middle class. As the oil crunch began in the 1970s, this middle class was carried further by the exponential debt system.
Now that cheap oil and exponential debt are over, the elites intend to clutch at 100% of the deteriorating wealth and power, forcing all the austerity of the end of cheap oil onto the Western peoples, just as they stole all the surplus in the first place. (They’ll also continue to exploit the non-Western peoples as much as possible, although the end of cheap oil will render such imperialism increasingly untenable.) Permanent mass unemployment in itself is an intentional policy goal. It’s part of the winding down of the “growth” economy which will no longer be able to grow, post-Peak Oil.
The point of “austerity” is to steal while the stealing’s good the last public pensions and other social property afforded by the oil surplus. It won’t be possible to resume productive growth. There hasn’t been any real economy growth in over ten years now as it is. All the paper growth was just fraudulent FIRE sector “growth”, and whatever gains are being temporarily measured during the phony “recovery” are of the same character. That’s why corporations are merely hoarding cash and looting “bonuses”. This is the robbery end game, while most of the people are still foolish enough to believe we’re headed for growth recovery, or that such recovery is possible at all.
Since programs like Social Security will also not be sustainable in the long run, the only question is whether to restore them to the people as they’re liquidated by the end of growth, or for the elites to liquidate them and steal them for their own benefit. It’s always been true that whatever the limits of resources, scarcity has always been the result of artificial, system-imposed political choices. The very basis of capitalism is artificially-generated scarcity. That’ll remain true post-Peak, for as long as the system of false scarcity prevails. The pensions of the oil surplus are not sustainable in the long run, but they do exist in the shorter run. Their mode of winding down can be done in a way fully for the benefit of the people. This can alleviate the energy transition civilization must undergo post-Peak. That’s also why we should institute Single Payer. Not because it’s long-run sustainable, but because in the medium run it would be a constructive use of the diminishing oil surplus. (I used the term “sustainable” in this paragraph, but see below for why going forward we shouldn’t use it in this context.)
Post Peak Oil, for many years to come, it will still be a question of the scarcity of necessities, which the political system will always try to drive ahead of the energy scarcity itself, vs. the winding down of luxuries. Political choices will largely dictate this. The elites will try to maintain their luxuries and impose total scarcity upon the people. The people should focus on winding down luxuries in favor of preserving as much material necessity as possible. The very existence of the elites is, of course, the most bloated, wasteful, parasitic, obscene luxury.
Permanent mass unemployment is now a structural imperative under the framework of continued neoliberalism. The political normalization of it has been the main political task of the Obama administration. As difficult as it will be for the system, this is the only way to minimize their political risks. Our task is to maximize their political risks.
So we need our own strategy for political and policy advocacy for cheap oil’s end times. It’s not easy to formulate – one seems to have to constantly switch back and forth between those discussions and advocacies which are conscious of Peak Oil, and advocacies which don’t know about it or pretend it doesn’t exist. The same is true of exponential debt/growth itself, which was also unsustainable even uncoupled from Peak Oil, since capitalism’s very capacity for real growth has long since been exhausted. All sectors are mature or nearly mature, and the profit rate should fall to nearly nothing according to their own textbooks.
It seems that we face two hierarchies of ideas/facts:
1. Awareness of Peak Oil – awareness of the end of exponential debt – the business as usual (BAU) mindset.
2. Political and economic transformation – reformism – denial, passivity, defeatism, selling out.
We recognize:
A. Cheap fossil fuel, and therefore this level of energy consumption, is unsustainable. So the only fully valid political awareness is Peak Oil awareness.
B. Exponential debt is in itself unsustainable, on account of the structure of capitalism itself.
C. Reformism cannot work, because of corporatism’s war of attrition, and often because of A and B.
D. For all three of these reasons, transformation is the only political alternative to neo-feudalism and restored serfdom.
Nevertheless, some reformist ideas, although not forever sustainable in themselves, can be sustained for some length of time during the transformation. We can picture a transition period where a full employment program, Single Payer, and the still-intact (non-austeritized) Social Security are still operating, as a temporary bridge to the post-oil civilization.
So that’s the first reason we must fight for them: To construct that bridge.
The second reason is that neoliberalism, like all forms of fascism, and like growth itself, must keep moving forward, “winning”, destroying. As I mentioned above, its political existence depends upon normalizing mass unemployment. We must deny them the reality and just as important the political semblance of victory in this. That’s one example of a severe political blow we can strike.
Then there’s the fact that for the moment it seems the true post-oil positive democracy sounds so different juxtaposed with the corporate reality. To the casual observer it sounds like a Utopia. The most important work to be done here is democratic education. We must somehow revive and propagate the ideas of true democracy, since no one in the schools or media is going to do it. Quite the contrary. So the policy bridge is also a psychological bridge. So we make such policy demands also as part of the movement psychology within which the real transformative action takes place. (All political action exists within a psychological framework.)
It’s a tremendous leap from soil to soil, across a seemingly uncanny abyss. That’s true physically, where it comes to energy, transportation, social and economic infrastructure, and it’s true psychologically. So both of these needs must be served by one span across the abyss. Then we can feel fully liberated to embark upon the bridge as if every aspect of it were sustainable.
Consider this by Zizek:

In the domain of socio-economic relations, our era perceives itself as the age of maturity in which humanity has abandoned the old millenarian utopian dreams and accepted the constraints of reality—read: capitalist socio-economic reality—with all its impossibilities. The commandment you cannot is its mot d’ordre: you cannot engage in large collective acts, which necessarily end in totalitarian terror; you cannot cling to the old welfare state, it makes you non-competitive and leads to economic crisis; you cannot isolate yourself from the global market, without falling prey to the spectre of North Korean juche. In its ideological version, ecology also adds its own list of impossibilities, so-called threshold values—no more than two degrees of global warming—based on ‘expert opinions’.
It is crucial to distinguish here between two impossibilities: the impossible-real of a social antagonism, and the ‘impossibility’ on which the predominant ideological field focuses. Impossibility is here redoubled, it serves as a mask of itself: that is, the ideological function of the second impossibility is to obfuscate the real of the first. Today, the ruling ideology endeavours to make us accept the ‘impossibility’ of radical change, of abolishing capitalism, of a democracy not reduced to a corrupt parliamentary game, in order to render invisible the impossible-real of the antagonism that cuts across capitalist societies. This real is ‘impossible’ in the sense that it is the impossible of the existing social order, its constitutive antagonism; which is not to imply that this impossible-real cannot be directly dealt with, or radically transformed.

It’s clear that we have no idea what’s possible until we try it, while all such assertions of impossibility are lies told by those who want to inter humanity forever. It is in fact the kleptocracy which is truly impossible: morally, rationally, in practice.
So all our advocacy and demands shall exist on a triple track: Peak Oil awareness; the Bridge; non-Peak populism. Since most people still dream of reform, we need to speak to that while the educational work is conducted toward looking fully at the future and the truth. So my proposal is to bridge these two, which are not mutually exclusive but may sometimes be in tension. For example, when I’ve advocated Single Payer I’ve said things like “we need it as we enter the post-oil age”, or just left energy issues out of it. For wherever we discuss policy I recommend verbiage like that, rather than ever conceding, “it’s not sustainable in the long run”. That’s too easily misunderstood or twisted. “We need it as we enter the post-oil age” is both true and open-ended in terms of what it really means. It’s inclusive rather than exclusive. It’s a way of talking about Peak Oil and other resource limits, and advocating policy in accordance, while maintaining a positive, affirmative tone.
So here’s the basic situation:
1. We don’t expect the government to do anything good, and don’t advocate sitting around waiting for good government. We should take direct relocalization action in every way possible as quickly as possible.
That’s why, for example, I advocate the bottom-up debt jubilee and organized land redemption, rather than festering obediently for a real HAMP, for the government and banks to graciously do principal writedowns and allow bankruptcy cramdowns (to give “reform” examples which are at the outer limits of acceptable media discourse).
2. But we can also agree in principle that such reforms would be good. We agree for the benefit of those who still believe in these reforms, even as we suggest to that audience that reform is in fact impossible, and anything the system claims it’s doing in that direction will always be a scam.
3. There’s also some defensive political fights we have to undertake. Where it comes to net neutrality and civil liberties there’s no substitute for directed political pressure on the system.
And while I think we’ll have to directly fight for our Food Sovereignty on the ground, and the fight won’t work short of mass defiance and resistance, here too there’s evidence that political pressure can have some effect. The system’s united front on this and some other issues isn’t as solid as where it comes to the banks.
I’ll conclude by giving a few examples of the likely long-term reality, vs. the medium-term bridge possibility, vs. normal political demands which are free to us regardless of resource realities, since they don’t contradict them.
I mentioned Single Payer as a possible bridge, as well as a policy which is manifestly true given existing politics. People claim to be worried about deficits? Single Payer would save vast sums over the status quo, while Obama-Republicare will cost even more than the status quo.
Social Security is the ultimate bridge, and given existing politics it’s perfectly solvent. That there’s any SS “crisis” is a pure Big Lie. Speaking generally, it’s always morally and practically correct to reject any and all “austerity”. Total Austerity for the Criminals, Not One Cent More From the People.
As for the money itself, I just wrote a post which describes a money creation bridge, while my earlier money posts (parts one and two) describe the right policy from any point of view.
The right food policy is clear. You want better food safety? Decentralized production and more sustainable, non-industrial agricultural practices are the answer. Ban CAFOs and GMOs, which are proven threats to public health. You’re worried about how to feed the world? Organic methods consistently produce higher yield per acre than any industrial practice, including GMOs. How can we reinvigorate the economy? Food relocalization. Those are all mainstream reform questions, and all receive their true answer.
And when people who understand energy issues ask, “How will we feed ourselves once fossil fueled agriculture is no longer sustainable?”, what’s the answer? Decentralized production. Organic production, which we’ll now realize is really just normal production as history always knew it.
So whether it’s normal politics, the bridge, or full Peak awareness, the food answer is the same: Food Sovereignty and relocalization of production and distribution. That’s the most scalable policy truth of all.
We can see how for all these things the reformist position merges nicely with the bridge position. There’s no inconsistencies.
I hope these notes help toward the goal of developing a policy strategy for the movement going forward. I think the basic concepts and method are broadly useful, and are based on both physical and political truth. This can help toward our moral imperative to liberate ourselves and embrace our human destiny as a positive democracy. 

December 4, 2010

Let’s Take Back Our Money


Our goal should be total relocalized control of money. The optimal amount of centralized (“federal”*) currency and taxes is zero. Even at this early stage we should look to pioneering projects like the Brixton pound (which can be used to pay local taxes). (We also ought to think in terms of economic relocalization in the form of co-ops. This would have many advantages which I’ll discuss in future posts, but the one I want to mention here is the possibility of bringing as much diversification and exchange as possible under the rubric of cooperative share schemes, so that the parasitic central structure would have trouble getting after us even through trying to tax barter.)
[* Going forward I’ll probably be using political relocalization terms like federation and federated more often, in addition to referring to the Orwellian name “federal government”. I hope context will make the difference clear enough, and at any rate I’ll try to avoid using the term federal itself except to refer to the kleptocracy, even though that’s unfair to the term. And a reminder, I hope the (vast) difference between democrat and Democrat is always clear.]
Before I get to my affirmative ideas on money reclamation, let me quickly dispose of some negation, what I’m not really advocating.
As I wrote in my MMT posts (parts one and two), I do want the knowledge to spread, that in principle deficit spending is unconstrained and beneficial where the economy is depressed. There Is No Deficit Problem. It’s a fiscal terrorist lie.
We know for a fact that no one among the elites who claims to care about the deficit or the debt actually does. The Bailout, the wars, the Pentagon budget, Big Ag subsidies, and corporate welfare in general, all prove this. No one thinks the government spends too much as such. (We know that corporatist spending does destroy the real economy by stealing real wealth from the productive people and further enriching and empowering the criminal parasites.)
Therefore, we know that all deficit terrorism, all calls for “fiscal responsibility” and spending cuts, all “austerity”, is nothing but a criminal LIE on the part of politicians, media hacks, and academic prostitutes.
But I’m not in fact calling for more deficit spending from the kleptocracy. It’s clear that any new spending this government undertakes will only be for further corporate welfare, police state expansion, and power aggrandizement. Obama’s corporatist “stimulus”, just a bailout by other means, proves that. (The fact that “stimulus” money was used by the TSA for the pork/police state purpose of buying totalitarian scanners from a connected crony corporation, in direct defiance of the will of Congress itself, which explicitly voted against allocating funds for the scanners, should be taken as the definitive characterization of Obama’s “stimulus”, and of what any kleptocracy spending will be like.)
I do say that we must resist all new taxes or increased taxes on the non-rich. These mean nothing but robbery. Every cent extracted from us, through for example a VAT, would simply be handed over to the banksters and to the likes of Chertoff-connected scanner contractors. Anyone who advocates a VAT or anything like it is simply advocating corporate robbery.
And I do say that we must draw a line against any further cuts to any public interest spending. If anyone sincerely thinks cuts are necessary, there are trillions in worthless bailout, war, and corporate welfare spending to cut. So there’s the only answer we ever need give. Anyone whose “deficit” plan is not 100% corporate welfare cuts and increased taxes on the rich is manifestly a liar and a criminal.
The watchword is clear:
The deficit and the debt are not a problem while there’s still unemployment. Absolutely refuse to even discuss public spending cuts.
No Taxes for the Non-Rich.
Total Austerity for the Criminals, Not One Cent More From the People.
So there’s the basic negative strategy for how the people should regard the central kleptocracy.
Affirmatively, we must take back our money sovereignty. Money is nothing but a unit of account among participants in a real economy, and is based on their productive activities. No one but the participants themselves has a right to create or exchange it. Money creation is a core feature of the people’s sovereignty. If a legitimate government existed, by definition it would directly issue money based upon the productivity of the real economy, toward the goal of the overall distributed health of this economy, and of the productive society at large. No “finance sector” would or could exist at all in a legitimate system.
So it follows that for a government to abdicate the money creation power to private banks, in the form of “the Fed”, is to abdicate sovereignty itself, and to become illegitimate. We know the Fed serves no legitimate purpose. The only reason it exists is to give the bankster racket its main rent extraction point, and indeed to enable the bank rackets to exist at all. Abolish the Fed, take back the money creation, and we abolish the banksters. Similarly, shadow banking serves only destructive, larcenous purposes and has no right to exist by any measure. So as political demands I support calling for the abolition of the Fed, repeal of the CFMA, and the reinstatement of one big bucket law.
Not that I expect the kleptocracy to actually do any such thing, but the Fed may be the most politic target, and the call to End the Fed may be a good wedge behind which to push the rest of the anti-bank, anti-“austerity”, and affirmative money sovereignty ideas.
The basic principle and practice of money distribution including credit must be that the community lends to itself, on collateral of future productivity. One existing blueprint for this, alas never put into practice, was Charles Macune’s sub-treasury idea. As described in Lawrence Goodwyn’s The Populist Moment:

Through [Macune’s] sub-treasury system, the federal government would underwrite the cooperatives by issuing greenbacks to provide credit for the farmer’s crops, creating the basis of a more flexible national currency in the process; the necessary marketing and purchasing facilities would be achieved through government-owned warehouses, or “sub-treasuries”, and through federal sub-treasury certificates paid to the farmer for his produce – credit which would remove furnishing merchants, commercial banks, and chattel mortgage companies from American agriculture. The sub-treasury “certificates” would be government-issued greenbacks, “full legal tender for all debts, public and private”…

In principle, this can be done at the local, state, or federal level. But I think it’s a lost cause to do more than state the possibilities for federal money creation. We should focus more practical work at the state level, where public banking is an idea on the rise.

North Dakota broke new ground nearly a century ago, but the true potential of publicly-owned banks remains to be explored. Nearly all of our money today is created by banks when they extend loans. We the people have given away our sovereign money-creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. If we were to take that power back, we could generate the credit we need to underwrite a whole cornucopia of projects that we don’t even consider because we think we lack the “money.” We have the labor and we have the materials; we just lack the “liquidity” necessary to put them together to create products and services.

North Dakota provides proof of principle: State-level public banking works. Banks have been proposed in California, Washington, Michigan, Illinois, Vermont, and elsewhere.
This could be a big decentralizing step. The basic idea as it exists is for the state to lend for productive purposes within the state’s real economy. This could easily be ramified into something like a state subtreasury system.
From there the possibilities roll out to distant vistas. Perhaps the next step, or better yet a concurrent one, would be for the state to issue its own currency for use within the statewide co-op, certainly for state and local taxes. This could dovetail with a state breaking Wall Street at least within its borders by calling upon the people to Jubilate In Place: stop paying their mortgages, stay in the house, keep paying property taxes. Such an economy could largely sustain itself, and encourage collaborative efforts in other states.
This is to envision steps toward decentralization, anti-corporate liberation, relocalization. Of course the road from centralized kleptocracy and corporate tyranny to full relocalization and democracy is a long one.

November 23, 2010

Guns, Butter, and Bonuses (MMT, Money, and Deficits) Part 2


In part 1 I discussed some of the core lies of neoliberalism: That money creation is based on deposits; that we need the banks in order to create money; that money creation without risking runaway inflation is constrained by anything other than the capacity utilization of the economy; that under today’s Depression circumstances America faces any “deficit problem” at all other than the political one created by the criminals who are looking for a pretext to steal yet more trillions under the rubric of “austerity”.
Modern Monetary Theory (MMT), the latest incarnation of a much older idea once called producerism, greenbackerism, chartalism, and other names, teaches these truths. So in these senses MMT is objectively subversive of the particular status quo which afflicts us today. It means the banks have no legitimacy and shouldn’t exist at all.
Money creation is a sovereign power of the people, and a core responsibility of government if we’re to have a government at all. Whether done directly by the government or through the middleman of the banks, money creation is done out of thin air, simply by crediting the account of a loan or payment recipient. The right way to create money is to gauge the money supply to the productive capacity of the real economy. If there’s capacity underutilization, the government should engage in deficit spending to fill the gap, until it has done enough to stimulate the full productive capacity and full employment. This is MMT’s prescription, according to many of the MMTers I’ve read.
The most direct, efficient, rational, and productive way to do this is for government to directly issue money, directly credit accounts.
Contrary to popular propaganda, the banks don’t create money as a multiple of deposits, but simply create it out of thin air. They do this not for the sake of economic health, but for their privatized rent-seeking. They want nothing but control of money in order to steal as much of every transaction as possible. The banks tax economic activity at least as much as the government does, but bank taxation is far more destructive in principle. Government taxation, although usually excessive and tyrannical in practice*, can in principle be measured and used for the sake of rearranging wealth so that economic well-being and productivity is maximized. But bank taxation is never anything other than purely greedy, purely destructive, and never has any measure other than how much they can get away with stealing. That’s what the financialization of the economy is, the attachment of a permanent financial parasite to the real productive activity of a people. This parasite does nothing but suck ever larger amounts of our life blood, steadily weakening us and even achieving motor control over our actions.
[*Today we have terminal kleptocracy, and this government, itself a creature of the banks, will never tax for any purpose other than to help the banks and corporations steal. So I’m certainly not calling for this particular government to tax more. On the contrary I say we must reject and resist all new or extended taxes on the non-rich.
In this discussion I only want to establish the principle that, as a matter of reformist philosophy, for the government to resume the full money creation and taxation power from the banks would be a progressive step.
But in the end we must get rid of centralized government as well.] 
Once the banks have financialized the economy, they believe in and demand rampant deficit spending, but they want it detached from all real production. Under financialization, the currency becomes mere funny money for bankster gambling and speculation, while all losses and destructive effects are socialized on the productive people.
Toward this end, the bankster-bought government has alienated its sovereign currency and its sovereign power. Thanks to the government’s corruption and abdication, the banks create money, not for socially and economically productive ends, but for destructive profiteering.
But the government could just as easily reclaim its money sovereignty and directly issue the money, and do so toward the goal of a healthy, productive real economy. We wouldn’t need the big banks to exist at all, and could be rid of them. There would be no threat of destructive inflation from this money issuance so long as there’s major capacity overhang and unemployment in the economy, as there is today.
Meanwhile the banks encourage unhealthy corporatist deficit spending (A2 = C, in my terminology from part 1, instead of the healthy A1 = B), and neo-austerity-mongers like Krugman embark upon their own bait and switch, wanting to surreptitiously switch in A2 for the A1 they previously advocated, and the C for the B. But they face two prospects of change: The possibility of having to capitulate to deflation at some point; and the possibility that the old greenbacker idea, in today’s MMT form, will get more and more traction.
As a contingency plan, they’ve started floating trial balloons for a restored gold standard. This is an old bankster trick. In the short run, it’s standard political misdirection. In the 19th century they used to call it “sound money” and “honest money”, and this does have a surface plausibility.
In the long run, any metal standard is always used to artificially constrict the money supply among participants in the real economy, in order to force them into debt. Whether it’s a time of real inflation or real deflation, the gold standard is used the same way, as a depressant and control over the non-finance sectors, and especially the non-rich. In our circumstance, as deflation definitively sets in, a gold standard would be used by the banksters to accelerate it beyond its natural pace, in order to more effectively impose debt indenture and strangulation. A gold standard would simply be austerity by other means.
So there’s more evidence that the true reform solution, if we’re to continue with a centralized economy at all, is that:
1. The government should directly issue greenbacks;
2. toward economically productive goals.
No “finance sector” necessary.
So the reformist MMT idea is an attempted end run around the criminal hoarding of social wealth on the part of the banks and corporations. The call for direct government issuance, including deficit spending when the economy is depressed, would be an attempt to bring the circulating supply of money in line with the economy’s productive capacity and counteract the intentional withholding of money from the economy by rent-seeking criminals who hoard that money (all stolen), and who do so in order to prop up those same rents.
There are various proposals which mean in effect crediting the accounts of the unemployed. Right there we can already see a structural weakness in the concept, since it seems to assume the continuance of bank accounts. Well, maybe it could refer only to local banks, credit unions, state banks. (I’m going to expand on a few of these ideas in an upcoming post on state banking.) The proposals could be called partial refunds of our money the banks stole through the Bailout.
While I’m not calling for such a program myself, let me stress that Washington already does “credit the bank accounts” of the unemployed. It’s just that these particular unemployed are the parasites of the FIRE sector, Pentagon sector, Big Ag, and all the rest of the corporate welfare recipients who do no work at all, who only destroy. Meanwhile to give money directly to the nominal unemployed would in fact be giving the money to productive workers who are unemployed only because those same banks intentionally destroyed their jobs.
This is in fact what MMTers advocate. Here’s a typical proposal from Marshall Auerback:

What we desperately need to do is to increase our deficit by several percentage points of GDP and offer public sector jobs to all those who want one. Government as Employer of Last Resort is one idea I have been pushing (along with Randy Wray, Bill Mitchell and a host of other people). As I said in an earlier post,

The U.S. Government can proceed directly to zero unemployment by hiring all of the labor that cannot find private sector employment. Furthermore, by fixing the wage paid under this ELR program at a level that does not disrupt existing labor markets, i.e., a wage level close to the existing minimum wage, substantive price stability can be expected. Other benefits could be provided, including vacation and sick leave, and contributions to Social Security and, most importantly, health care benefits, providing scope for a bottom up reform of the current patchwork health care system……

At any rate, what we desperately need to do is to increase our deficit by several percentage points of GDP and offer public sector jobs to all those who want one. We thus have to aim to ensure public spending fills the gap left by non-government saving (a consolidated position combining the private domestic and foreign sectors) and keeps aggregate demand growing at such a rate that it provides scope for the private savings desires to be realised without compromising our public purpose goal to ensure there is sustained full employment and inclusive income distribution outcomes.

But by far the majority of the unemployed workers could be offered a minimum wage job to work on community and environmental care projects for as long as they desired. I would suggest we also raise the minimum wage so that everyone has access to decent housing and health care etc. But the ELR scheme would only be offering a wage to workers who have no market bid for their services by definition. It will give them a job, some income security, will add to aggregate demand and help stimulate a broader recovery and, in itself, will not be inflationary.

As Auerback says, many of his colleagues support similar ideas. While I reject the specifics*, it’s good that the basic idea is spreading. It’s a cognitive rebellion against the structural bank paradigm itself, and against the deficit terrorist “austerity” propaganda and policy demands.
[*What’s wrong with specific MMT-related job creation programs:
1. They still want this job creation within the capitalist framework, and explicitly don’t want to create living wage jobs. (Edit: Cf. comments below for more on this. My critique here may not apply to every proposal.)
2. Nor are the jobs supposed to compete with the inefficient, uncompetitive private sector. So these proposals want the worst of capitalism in every aspect, the structural inefficiency and incompetence as well as the exploitation of the worker.
3. No doubt in practice the disbursement and administration would be corporatized. We saw how Obama’s idea of “job creation” is employer tax credits, i.e. another useless, expensive corporate toll booth. No other job creation program under corporate circumstances is likely to be executed any differently.
4. What these proposals really want to do is deliver a modest direct payment, but because they think it would be more politically palatable, they want to launder it through degrading makework. But I don’t think even the politics would work out that way. Nobody seems willing to learn, you can’t appease neoliberalism. Anything you try to do, good or meager, will be equally demonized. So why not demand the good, instead of a program which looks like real-life version of a caricature from a conservative polemic?
If you want a job creation program, go for the jugular, and do it with pride. Let it be real work at a real wage. Compete directly with the inefficient private sector, and proclaim that competition as a selling point, not a matter for fear and shame the way these guys seem to think it is. One can never win politically through timidity and appeasement. The best chance is always to seek to compel respect through an honest, frontal assault.]
In the end this is will all still be academic if it takes the current political parameters as given. For there to be effective fiscal policy change presupposes a general, radical political transformation. I think MMT can be part of the mix of transformative ideas, but is doomed to be relegated to arcana if its advocates see themselves as mere “reformers within the system”, and maybe not even that.
Here’s how I see things. My moral derivation from MMT (which I’m not claiming is part of MMT, but which I do claim morally and rationally follows from it) is that since money in itself has value only on account of government fiat (because government will accept it for tax purposes), therefore it follows that money can never legitimately serve as a “store of value”.
It can count as “property” only where it’s actually circulating or fermenting as a truly productive investment. Only then is it participating in the public life of the society which gives it life in the first place.
Money being hoarded, antisocial money, money as a store of value, in effect has no right to exist at all, and should be restituted to its proper owner to be put to its proper use. “Store of value” represents unproductive, parasitic hoarding of the public resource. Resources must be used productively in order to confer legitimacy of possession upon the possessor. One is a participant in the economy to the extent he is an agent of the velocity of useful, constructive activity (not mere “velocity of money”). One who’s not such a participant has no valid claim on society’s resources. That includes all rentier parasites. Hoarded “property” is nothing but stagnation, rot.
Hoarded wealth is both useless and pathological. Since all wealth is produced by people working together, even if we agreed to channel more of it through some hands than others, this could be fair and efficient only if the intent were to give them greater opportunity to enjoy the wealth only through the act of recirculating it, spending it in the real economy.
But for someone so blessed to instead hoard and financialize is a double-cross. It’s breaking the deal which distributed that wealth in the first place. (As for the “investment” justification, history has empirically proven that beyond a modicum, concentrated wealth is not productively invested but is used for unproductive, destructive speculation and gambling. In the same vein, corporations which aren’t producing but merely hoarding, as so many are today, have no right to be “taking profits” at all. By definition any such extractions are just looting. Under today’s post-capitalist conditions, the forms of capitalism are no longer valid. They’re worthless and worse than worthless. Pernicious.)
This is the basic critique of idle, useless “property”: Since all value is a cooperative endeavor, and the only rationale for allowing property rights would be to increase the cooperative value and happiness, therefore as individuals and groups we have a legitimate right to useful possession, but none to stagnant hoarded “property”. We should apply this to money, purging the “store of value” concept.
So that’s why I say sitting on wealth, relegating it to unproductivity, is useless in any practical sense, and has no moral validity because it abrogates the social contract under which it was unequally distributed in the first place. Only constructive velocity can justify inequality of distribution. (Again, wealth is cooperatively generated in the first place. Even the greatest thinker still stands on the shoulders of his predecessors, and on the education society provided him. And he then depends upon the resources of nature and the work of many others to bring his ideas to fruition.)
In all this I’m referring to large wealth concentrations. I’m not referring to attempts at saving on the part of the non-rich under this system, where people are forced by circumstances to try to save for the hardships of the future, since we have no adequate social support system or safety net. The neoliberal barbarians of today want to do away with civilization itself.
But in a human community there would never be any need or justification for unproductive hoarding. Useful possession is the measure of legitimate possession. MMT supports this with its proposition that since money is created only by the government, and only as an economic lubricant of the productivity of the people, money as a “store of value”, that is the hoarding of it, has no rational or moral legitimacy.
So getting back to MMT’s accounting identity, here’s the course of action to render things morally and rationally valid: The government can run a deficit in order to stimulate the depressed real economy (this depression being accounted for by the “surplus” hoarded by the banks and corporations), so its production recovers from the vandalism inflicted upon it by the banks, and counteracts their depressive criminal assaults which destroy jobs and relegate resources to uselessness. The government could even redeem its sovereignty and smash the criminals, restituting this stolen “private surplus” and restoring it to the productive people who are its true owners. In all this, there would be no practical reason nor moral right for the big banks to exist.
In the course of this restitution the economy’s productive potential could be focused on the transformation from the fossil fuel based “growth” economy to the post-oil steady-state economy.
Once this was done, there would no longer be a need for a government deficit, or for a centralized government at all. This could be retired as the now fully employed, fully productive steady state economy rationally and prosperously proceeds.
These ideas will become more and more apparent as the criminal disease metastasizes. For now the point here is to be aware of these facts:
1. Government will spend on anything it wants. (And so long as the economy is depressed, it can spend as much as it wants without fear of triggering inflation.) The elites, whether aware of the real nature of money or not, all implicitly agree that deficits don’t matter. Their actions prove this.
2. But the elites tell the lie that spending is constrained in order to justify cutting public interest spending and raising taxes on the non-rich.
This conjunction of 1. and 2.  explains the obvious, grotesque contradiction of a government hemorrhaging borrowed money and deficit spending on bailouts, wars, and corporate welfare at the same time it calls for “austerity”. (This juxtaposition is so patently idiotic and obscene that I don’t understand why just by itself it doesn’t trigger a revolution. Is it really possible to be so dense and/or compliant that one can’t see the manifest bad faith, indeed total criminality, of such a government?)
3. For now we can’t do much about 1., but we can expose the lie upon which 2. is based. That’s the mission of MMT.

November 20, 2010

Guns, Butter, and Bonuses (Money, Deficits, And MMT) 1 of 2

Filed under: Corporatism, Globalization, Sovereignty and Constitution — Tags: , — Russ @ 3:33 am


As we sink into economic depression, everywhere we hear the deficit and public debt crisis alarms summoning us to cut spending, raise taxes (on the non-rich, while those for the rich are cut further), “sacrifice”. This sacrifice is never to be undertaken by those who have already monopolized the vast majority of the wealth of the country. The top 1% of the rich hoard one third of America’s wealth. The top 10% has extracted two thirds. Yet all the calls for “austerity” fall on the lower cohorts, and the lower on the wealth and income scale one is, the more onerous the burden. This is as clear as class war and civil war can get short of the actual shooting.
The question, as in every other case where then non-rich act against their own interests, is why are so many people going along with this scam that there’s such a thing as a “deficit problem”? It’s manifest that no one among the elites actually believes this. Everyone, without exception, of whatever nominal politics, implicitly agrees that this government, sovereign in its own currency, spending in a Depression economy, can spend as much as it wants, at will.
The Bailout, the wars, the Pentagon’s obscene budget, Big Ag subsidies, corporate welfare in general, prove this.
So the only question is, will the government spend at will to further enrich and empower the parasites and criminals, or will it spend to help the productive people?
The only, indirect way in which deficit spending destroys the real economy is that corporatist government spending further empowers the criminals to steal yet more real wealth from the productive people, and it imposes the opportunity cost of spending foregone which could have benefited the people as we sink into an economic Depression.
It’s not really an opportunity cost, though, since that implies a trade-off had to be made. The government could easily spend on guns, bank bonuses, and butter. It could loot on behalf of the corporations at the same time that it spends to restore to the people (“trickles back down”) some of the wealth which was stolen from them. But the spending on guns and bonuses and the refusal to spend on butter are all part of the same class war strategy. As is the whole deficit terrorist line of propaganda.
MMT educators stress the accounting identity involved here. In a closed system where the government runs a sovereign currency, a government deficit or surplus has to equal the private sector surplus or deficit. Adding globalization spreads the accounts among many governments and national private sectors, but the globe itself is still closed. (Indeed viewing globalization as a de facto One World Government in terms of MMT can help highlight the class unity of the global elites and the vicious war they wage on all the world’s peoples.)
The best MMT resources include Naked Capitalism, Warren Mosler, Corrente, Kansas City, and the Billy Blog.
So here’s the right way to look at this identity: If we let the public sector = A, and the private sector equal B, and any surplus on one side must be matched by a deficit on the other side, by accounting identity we have A = B. The real question isn’t the “is A sustainable?” of the deficit alarmists. It’s very clear that every single elite and flack, no exceptions, implicitly claims that deficits in A are no problem at all where A is corporatist spending and B is corporate hoarding and the ratholes of the rich. It’s only to the extent that A still includes any public interest spending whatsoever that they suddenly go into deficit shock mode.
So let’s join this battle but make the terms explicit. Everyone agrees deficits are no problem, and only tactically tells lies in a particular situation (where they want to impose “austerity”). So clearly there are actually two kinds of A = B. There’s A2 as corporatist spending, with the surpluses of B made up of corporate hoarding (let’s call that C); and there’s A1 as public interest spending, where the B surplus could eventually become savings on the part of the people.
So the question becomes, given that we all act as if A is unlimited, will we let the criminals continue to make the identity be A2 = C, or will we compel the restoration of some legitimacy and rule of law by forcing it back toward A1 = B?
So activists can leave aside the “is A sustainable?” question as moot. Instead we say, “for whatever A, and no matter what the posterity of A, the real fight is to smash the A2 = C paradigm, and compel the A1 = B.” That’s given the current political circumstance. As I’ll get to in part 2, the real goal is a healthy economy where the velocity of money would be such that A and B would always be close to equal, with the decentralized money supply always just a little out front of productive capacity, which would always be fully engaged.
For this post, I want to discuss further the reformist nature of MMT and its explicit prescriptions. It’s reformist because it’s based on continued large-scale taxation in the sovereign currency administered by a central government. It recognizes that under our status quo the private banks create money out of thin air, at best in anticipation of deposits. They do not lend multiples of existing deposits, the way the popular misconception has it. MMT states the politically incorrect obvious: Governments could do the same exact thing, and do it far more efficiently. The banks produce nothing but merely erect a toll booth and drag a chain across the river. The government could directly produce the same fiat money the banks do, but wipe out all the middlemen, purge all the rents, and render the money creation and distribution far more rational, efficient, and fair.
We see how apologists for the banksters have no problem with the most profligate spending out of thin air on every kind of bailout and bonus and boondoggle, as long as the money creation out of thin air is channeled through the banks. But they throw a fiscal conservative fit over any spending which might benefit the people. So here the fact that private banks create money out of thin air is a dirty little secret everyone agrees to keep quiet, and no one sees as dangerous. But it’s a scandal if someone suggests the government sovereign in its own currency can do the same thing based on actual economic production.
MMTers just want to do as Alinsky said, “make them live up to their own rules”. The government can freely and openly act according to the exact same principles and practices which it and the banks currently act upon surreptitiously. The difference being that actual stimulus could possibly help reform and restore the productive economy, while bailouts, war, the Pentagon, and all other forms of corporate welfare are purely destructive spending, just cannibalizing what’s left of the principal. The banks don’t manage the money supply toward economic health and a fair distribution. They manage it only toward stealing as much as possible. Pure robbery.
The is antithetical to the standard view that the elite parasites create wealth. The fact is that the productive people create ALL wealth, and a legitimate government would create money to reflect that. A legitimate government would do so for the benefit of productivity and prosperity. This means the money supply should always reflect the capacity of the real economy, and should especially be a vector reflecting productive potential.
An anti-sovereign rogue government, on the other hand, alienates its money sovereignty to banks and even to globalization cadres. It does so for the benefit of parasites and criminals, to put money creation and management in their hands. In this case the criminals hijack the natural fiat money creation to financialize the economy, and/or to artificially restrict the money supply, as in the case of a gold standard (more on that in Part 2).
The truth is:
1. Money is created out of thin air. This creation may or may not be based on the productive capacity of the real economy. The money may or may not be deployed for the benefit of the real economy, as opposed to thrown down rent-extraction ratholes while the real economy depresses and dies. So there’s two kinds of accounting identities, the legitimate, benevolent A1 = B, and the hijacked, destructive A2 = C.
2. There’s no natural limit on rational, effective A1 deficit spending so long as there’s capacity underutilization and unemployment.
3. We do in fact have profligate thin-air money creation and rampant deficit spending, but it’s irrational and ineffective spending. It’s simply the government embezzling from the people and acting as corporate bagman, conveying the loot to private racketeers.
The fact that all this spending is taking place with little objection from the “fiscal conservatives” proves that all their fear-mongering about Social Security and other social spending is a lie.
4. So the rational, moral, and practical course of action is to end ALL corporate welfare and instead create the money and spend it on a real jobs program and a real infrastructure transition to the post-oil age. That’s MMT-style reformism.
The fact that the fiscal terrorists in the media and think tanks get everything exactly backwards proves their malevolent agenda. They’re enemies of the people.
In Part 2 I’ll discuss that further, and explore the real possibilities of this reform agenda.