Posted To Stephanie Kelton’s Substack Nesletter 02/27/2023

KV: One trouble with most economics, including this analysis, is the tendency to look at one factor at a time. As Herb Simon and Oliver Williamson explain, that is due to limited rationality, but it still means that we don’t get the whole picture. This demand side analysis looks at one part of increased income, while ignoring that existing owners of bonds paying lower interest rates have capital losses (and the tendancy for the values of equities to fall when the Fed increases rates). But more importantly, it ignores supply side effects entirely. For example, increasing interest rates decreases the willingness for housing developers to build new housing at a time when increases in the price of housing are the most significant component of current inflation. This can’t help decrease inflation, which at the current time appears to be more supply side driven. That said, it is still important to note the correctness of Prof. Mosler’s point.

Me: Yes, but that doesn’t mean we necessarily need more complex analysis. What we really need is to identify the key applied concept, that is, the current monetary and financial paradigm, and then using the signatures of all historical paradigm changes discover the new paradigm concept and its applications.

I’m not here to slam anybody’s valid research and stated reforms, only to promote a pattern change, ney a mega-paradigm change in this case, because being an entire pattern change, it will include all of the goals of those reforms that align with the new concept.

K: I have no disagreement that we need new paradigms, but that doesn’t mean we don’t need to understand the complexities of the facts.

Me: Completely agree. Studying and identifying the complexities helps to focus on the current problematic operant concept like MMT and the other reformers I’ve refered to here have done.

But the irony is the key to perceiving paradigms is simplicity as paradigms, like wisdom insights, are single concepts that are deep simplicities.

So we have Modern MONETARY Theory. We have Steve Keen saying its all about “money, debt and banking” We have UBI. We have Public Banking. That’s why I have said the current paradigm is Debt as in burden to repay ONLY. The word ONLY designates the paradigm as a monopoly concept.

We know from history that past new paradigms have always been in complete conceptual opposition to the current one. That’s why Direct and Reciprocal Monetary Gifting is the new concept. We also know that they invert current problematic temporal universe realities and destroy orthodoxies surrounding the current paradigm. That’s why a 50% Discount/Rebate policy at retail sale is the breakthrough exact applied expression of the new concept because it changes the temporal universe reality of erosive inflation into beneficial price and asset deflation, and destroys the orthodoxy of the quantity theory of money.


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