An Alternative To Complete Freedom To Inflate Prices

L:  I see that most, if not all, of the comments assume that in our fiat money system taxes are used by the government to pay its expenses. Those who assume this are dead wrong. You have to understand MMT and fiat money to realize that NONE of the government’s income pays for ANYTHING. It all is credited to the payees’ liability accounts and then it disappears from the government’s asset account as it goes back into the void from which all fiat money originates. Likewise, the principal and interest paid to lenders and bondholders is created on the spot from thin air, and the phony government liability account balance is simply decreased accordingly by computer keystrokes.

FACT: The government creates NEW fiat money to pay ALL its expenses–including any payment of principal and interest on the “national debt”. NOTE: There would be only bond interest to pay if the Federal Reserve system had not been established. The banksters really pulled off a heist with that arrangement.

Taxes simply suck from M1; they act to diminish the money supply and cause redistribution of wealth (to the benefit of the rich).

Me:  MMT certainly has the mechanics of fiat money correct, and as it recognizes that government deficits are necessary it also is onto the most basic problem of modern economies, namely insufficient aggregate INDIVIDUAL demand THAT IS REALISTICALLY AND ACTUALLY AVAILABLE TO LIQUIDATE A COST-PRICE.

This scarcity is at the base of every other problem in the economy and certain other fallacies like additional money in the economy being the operant reason for “monetary” inflation make it appear as if there is no alternative but austerity.

The problem for MMT and other heterodox economists need to resolve is their adherence to this fallacy. Instead they fall back on liberal orthodoxies on inflation like “automatic stabilizers” and even more off mark conservatives fall back on “inflation will not occur if aggregate demand does not exceed production.”

The actual cause of “monetary” inflation is….there is absolutely no impediment or rational ALTERNATIVE to commercial decision makers, already being afflicted by a scarcity of individual demand, to raising their prices, especially when they see additional demand coming into the economy.

So, if you created a policy alternative that simultaneously increased individual incomes and integrated price deflation into profit making economic systems implemented at the TERMINAL expression point for any and all forms of inflation….you could kill the two birds of individual monetary scarcity and chronic inflation with one stone….and create the thirdness greater oneness of increased individual monetary freedom, monetary abundance for all enterprise and systemic economic free flowingness.

And of course if one then doesn’t have to worry about inflation (or with unemployment with a sufficient universal dividend being paired with a discount/rebate policy as above) then, except for a smallish percentage to establish governmental sovereignty, we could eliminate both income taxation and transfer taxes that everyone pays….and concentrate on directly funding government on all levels….based on and aligned with the concept of grace as in the ultimate rationality of combining the truths in opposites instead of the stupidities and arrogance of obsessive partisan politics.

L:  Craig, I really don’t understand what you are trying to say are problems with MMT from the beginning of your reply to the very end. The understandability seems to get worse as the word count increases. I have no idea what the last paragraph is about.

Me:  The problem with MMT and the rest of heterodoxy is they aren’t looking directly at the infrastructure of all commerce, i.e. double entry bookkeeping, the fact that it and the pricing and money systems are all digital in nature and that hence a digital policy of equal amounts of discount and rebate at the point of sale throughout the entirety of the economic process and also at retail sale would resolve the individual monetary scarcity, systemic monetary austerity and any possibility of price inflation. Instead they get caught up in the complexities and abstractions ABOUT the economy, and they also do not perceive that “monetary” inflation is a misnomer and a fallacy. Now as I said I agree with them about fiat money mechanics….it’s just that they and others are not looking in the place that if integratively researched could result in the policies that will bolster their theories, resolve the deepest and most chronic problems of modern economies and if done so in sufficient abundance elevates those policies to paradigm changing level.

The last paragraph shows how not thinking integratively and paradigmatically insures that economists do not understand the “knock on” benefits of doing so. After all paradigms fit seamlessly within the vast majority of current structures but simultaneously transform them.

L:  MMT is not concerned with microeconomics. It is concerned with macroeconomics only. You seem to be saying that if it doesn’t get into microeconomics it is not valid. Is that what you are saying?

Me: Nope. The scarcity ratio of TOTAL individual incomes to TOTAL costs/prices is an aggregate one, thus macro-economic. I AM talking about how we can most insightfully and intelligently integrate the most basic infrastructure of the micro-economy, double entry bookkeeping and its digital nature so as to create policies that resolve modern economies’ most basic problems and do so with sufficient amounts of the new paradigm of monetary gifting….to make it a genuine paradigm change.

Just play out the two policies of a universal dividend and a 50% discount/rebate at point of sale as they would occur in the temporal universe with the three agents involved, a monetary authority mandated to distribute the monies of the policies, an enterprise and the enterprise’s consumer and you’ll see just how beneficial they will be for the latter two.

We can actually look at the effects of these policies and herd pols in the direction of their implementation or we can figure-figure with theorizing forever and a day, hobby horse less effective policies and hope that we don’t have another 10 years of stagnation, another financial crisis from the continuing build up of individual debt or stumble or be manipulated into a war or something stupid, destructive and unethical like that.

Progressives had better look at these policies and recognize how they accomplish economic democracy in spades and make the system flow freely….or some less orthodox conservative economist will recognize how good it will be for the business community to have twice as much purchasing power available to purchase their products or services and reduce prices by half as well and yet still get their best competitive price with the rebate.

It’s my observation from 10 years of posting about these matters that progressives are only slightly less orthodox than conservatives, but that conservatives are better at recognizing when something is beneficial to their agenda and are willing to go for it as a result. So unless liberals want to have egg on their faces for the umpteenth time….they’d best be open to policies that are truly innovative, integrative and beneficial to all agents except perhaps the illegitimate business model of private banking.

 

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My Philosophy

Grace as in love in action, grace as in the free gift of the cosmos, of consciousness itself and of monetary gifting in the economic system, and grace as in the true freedom that can only be found and experienced within the beatific chains of ethics.

My Economics

Research and theory-wise I’m in probably 99% agreement with Steve Keen’s mathematical and iconoclastic critique of DSGE and his abstract re-discovery of Douglas’s cost accounting insight. I admire Michael Hudson’s parasitical critique of modern Finance. Policy form and cost accounting perspective-wise I’m in complete agreement with C. H. Douglas.

I’ve also recognized that while the economy is incredibly complex the way to cut through that complexity is to utilize the empirical infrastructure of double entry bookkeeping and its subset cost accounting for data upon which calculus can be applied to decipher modern technologically advanced capital intensive economy’s two most chronic problems, scarcity of available individual incomes and inflation, which consequently gives us the ratio that desribes not only these two problems but enlightens its inherent individual monetary scarcity and cost inflationary nature.

While learning theoretically from both Keen and Hudson and about policy from Douglas, what I have done is philosophically and integratively extended and innovated Douglas’s policies in a way that elevates them to the level of paradigm change.

Grace Is….

….the concept behind the new monetary and economic paradigm, behind every historic paradigm change, being synonymous with self awareness-consciousness itself the force behind the entire history and evolutionary thrust of humanity and being the largely unperceived natural state of the cosmos will be the key to the way out of our current “unresolvable” problems and the way home to a new natural philosophy and spirituality.

Posted To Ellen Brown’s Forum 08/18/2018

China already is closer to being a public banking system than we are. If it also adopted the policies of Wisdomics-Gracenomics and consequently democratized the distribution of money while ending inflation and integrating price deflation into profit making systems….they would be even farther systemically ahead of us and so entirely prosperous that we would have to adapt the same policies to prevent “withering away”. They could even call it Wisdomics-Gracenomics with Chinese characteristics, I wouldn’t care. The EU could do the same.

It would be up to us to push for the same here of course…so that an idiot pol like Trump couldn’t demagogue the situation into something going to economic or military war over.

Paradigms New and Old RWER Blog 08/18/2018

Me:  Math is fine, thinking/theorizing is fine….especially if they are also accompanied by an awareness of the nature and signatures of paradigms and paradigm changes.

Here are the primary reasons why economists cannot seem to get beyond math and theorizing and do not/cannot see the new paradigm.

Macro-economics is only a recent discipline unconsciously designed to obscure and prevent solutions rather than solve them because:

1) The financialization of capitalism has been continual for its entire history and its coalescence was well under way before macro-economics came into being.

2) Private Banking/Finance enables the virtual monopolization of the means of survival for individuals and enterprise, and also enforces upon them its paradigm of Debt Only for the form and vehicle for the distribution of money.

3) As retail sale is the terminal end of the legitimate economic/actually productive process and Finance/money creation is increasingly post retail sale it is a parasite upon the rest of the legitimate economy.

4) Economists attempting to be dutiful scientists tend to ignore and/or reject concepts that even remotely reflect spirituality even though philosophically such concepts can be stripped of any supernatural or religious bias, and so they lack a clear and relevant philosophical concept of grace as in gifting/the free gift which, being in logical/conceptual opposition to the current paradigm of Debt/Burden Only, tends to obscure the new paradigm of Monetary Gifting.

5) Finally economic thought still adheres to a prejudice for employment even though technology has reduced the need for human effort and AI is more and more intrusively destroying both aggregate demand and the need for the input of human employment. There is nothing inherently wrong with employment as an economic factor of course and it still has a long way to go, though an ever decreasingly operant one, but positively acculturating leisure as in self chosen attentive purposeful activity is the healthy and intelligent route forward for economic systems and for humanity.

Paradigm perception and paradigm changes are deep and transformative events both mentally-conceptually and temporally, and thus require such fundamental openness and deep and incisive examination.

DT:  Good try, Craig, but where you say “unconsciously designed” you look to me like one of the “muddled students”.

Though I don’t agree with Craig’s (5) it is at (3) I seem him going wrong: still stuck in the same emprical paradigm as Frank, stil seeing exchange at moments in time as the be-all and end-all of economics. That surely is ‘micro’ rather than ‘macro’ economics.

Me:  I’m the one advocating the natural philosophical concept of grace….and also stuck in an empirical paradigm? No, I’m for the thorough integration of both empiricism and philosophy…and the thirdness greater oneness that such thorough integration of truths, workbilities, applicabilities and highest ethical considerations would create.

When one refers to the duality of TOTAL costs/prices in ratio to TOTAL actually available individual incomes they are talking about aggregates which is what macro-economics is about.

Economics is stuck in the figure-figure of gathering data and formalizing theory. It isn’t “into” perceiving paradigms old or new and hence by definition is shallow analysis. Even guys like Steve Keen whose brilliant de-bunking of DSGE and unconscious re-affirmation of Douglas’s monetary insight talks about paradigm change….but he doesn’t study historical paradigm changes to derive their signatures so as to recognize what a new one would be characterized by. Let’s talk about and study paradigms and paradigm changes here. It would be extremely enlightening.

A paradigm change is the ultimate radical human change, mentally and temporally. As our mental state and the temporal universe are opposites it is by definition an ultimate integrative event. Such a radical change is by definition temporally deep and mentally extraordinary. How much more radical a monetary change can you get than one from scarcity to abundance and from the monopolistic power of private finance to identification as an illegitimate economic business model?

To think paradigmatic-ally you have to dare to think in terms of opposites and inversions. Otherwise you’re only doing the legitimate but less integrative actions of gathering data or theorizing.

PP:  Any discussion where money is a stock is accounting, not economics. So saying we have or don’t have enough money is household accounting, or it’s business. Economics is about the flow of value and money in society as a whole. So if the flow works right people generate and exchange value, and as if by magic we have money to pay for it. If there’s no money, because it’s tied up or stuck in someone’s pocket, that’s a flow problem not an amount problem.

Me:  “Any discussion where money is a stock is accounting, not economics.”

The ratio of total costs/prices to total individual incomes as a moment to moment flow is a basic and insightful integration of accounting and economics.

“Economics is about the flow of value and money in society as a whole.”

Actually its most basically about the flow of costs/prices and money in society in totality/as a whole.

“If there’s no money, because it’s tied up or stuck in someone’s pocket, that’s a flow problem not an amount problem.”

As the above costs/prices to individual income ratio is true as a continuing and inherent flow enlightened by doing the calculus/mathematics of flow on the cost accounting data the resulting scarcity ratio is both an amount and a flow problem.

When in doubt integrate…and keep on integrating.