Me:  @JD

Excellent suggestion. KISS is always a good policy. How about:

1) Loans create deposits

2) Private banks create 97+% of loans, a virtual monopoly on credit creation

3) Even the money created by governments via the FED as deficit spending is created as debt.

4) Hence the monetary paradigm/pattern is Debt Only

5) A monopoly on both credit creation and also on the ENTIRE pattern of Debt Only, that is as the sole FORM and VEHICLE for the DISTRIBUTION of money/credit is probably

a) the stupidest,

b) most naive, (in view of the fact that money in a monetary economy is both the means of security, and the ability to deny it is the power to deny both individual survival and the continuation of commercial enterprise) and

c) blatantly contradictory fact in an alleged competitive free market economy.

6) Finding a way to place the power of money “into the many hands of the individual” in such secure abundance that there is no longer “the reserve army of the unemployed” that can be extorted and cowed, that also more abundantly benefits 99.9% of enterprise, that resolves the deepest problems of the current paradigm by literally inverting its realities of individual income scarcity, systemic austerity, balkiness and tendency toward recession or worse and finally of price and asset inflation….would seem to be the order of the day.

It immediately gives every individual a 100% raise in their purchasing power, potentially doubles the actually available business revenue for every enterprise’s goods and services. If the economy doesn’t flow freely with that reality being established I don’t know what would.

It also not only completely eliminates ant possibility of price and asset inflation, but actually accomplishes what has been considered impossible and that is it beneficially integrates price and asset deflation into profit making economic systems.

Such inversions and establishments of new realities only occur in what is called paradigm changes. In fact, to the degree of those new realities effecting virtually everyone, that is what I refer to as a mega civilizational paradigm change, the likes of which has not happened since the change from Nomadic Hunting & Gathering to Agriculture, Homesteading and Urbanization.

Mankind stands at the crossroads of its history where accumulated and generalized crises are increasingly afflicting  us. The importance of now and the pattern breakthrough nature of paradigm change are precisely what is required for our own and othewr species survival. Let us grasp onto it with post haste.

It is the single cost, price and profit summing, ending and aggregative point, and also the terminal ending and economic factor expression point in the micro-economy.

It is thus also a pivoting, inverting and potentially transforming point for monetary, financial and economic realities. In other words it is a paradigm changing power point for policy in all of those systems.

G:  And anyone who thinks the essential problem is “the monetary paradigm” should be careful throwing around the word stupid.

Me:  When all of the leading thinkers and reformers such as Modern MONETARY Theory, Keen’s showing that Minsky was right about FINANCIAL instability, Hudson’s observations of the parasitical nature of present FINANCE and the efficacy of the gifting of DEBT jubilee’s in history, Ellen Brown’s attempts at FINANCIAL structural reform with state/public BANKING and Graeber’s history of DEBT…all revolve around and point at the MONETARY and FINANCIAL paradigm of DEBT ONLY…then the Martians are probably laughing if not rolling on the floor when we intellectualize endlessly while missing the salient and most relevant point.

G:  Craig, you are lumping a large number of disparate things together. I knew Minsky was right before most people had heard of him. I had lunch with him once back in the early 90s – lot of fun.. It’s true that excess resources from a social point of view are used up in excessively large financial sectors. None of that establishes that the essential problem is that monetary creation is associated with credit creation…….

Me:  Where to begin?

“It’s true that excess resources from a social point of view are used up in excessively large financial sectors. None of that establishes that the essential problem is that monetary creation is associated with credit creation.”

Yes it does. Do you believe in competition? Then why are you not in favor of paradigmatic competition? Oh, you’re for regulatory and (perhaps) structural financial reform…apparently because you cannot or will not look at the much wider, deeper and transformationally beneficial effects of an entire pattern change.

“Moreover it is not so easy to construct and calibrate a state-driven alternative.”

Not really, so long as one is conscientious about doing thorough market analysis and consciously and ethically adhering to aspects of the concept behind the new paradigm, namely the natural philosophical concept of grace.

“If you subsidise producers of consumption goods on condition they lower or do not raise prices, you raise the real wage.”

I’m not doing that. I’m assisting retailers and consumers AT retail sale which would benefit EVERY business model, except private banking/finance of course.

“To do that successfully you need to know how much labour productivity will be rising and how much of the extra income wage-earners will save and how much spend.”

Most if not all of that is rendered irrelevant because of the fact that a directly distributive money system that has terminally dealt with the old paradigm problems of inflation, unemployment and wide spread individual monetary scarcity. You can still account all of that, but the new paradigm ENDS the paradox of thrift and greatly homogenizes the fallacy of composition.

“And are you going to abolish private banking?”

I’m going to abolish private money creation by private banks. As I’ve said before intermediation of priorly created and saved money and profits that have been priorly garnered from the actually productive process would be allowed as investment is a legitimate financial business model. However, the non-profit national bank will not loan funds to anyone or any enterprise that could or would be immediately aggregated and used for speculative purposes by private investment firms. Relatively smallish individual loans for speculative investment, depending upon its stated purpose may actually be funded, but not for any ethically rancid things like hardcore pornography or wildly de-stabilizing nonsense like derivatives or synthetic derivatives etc.

“A state monopoly bank that lent out workers’ deposits would still generate additional deposits as its loans were spent.

Would not be allowed as per above.

“Looks as if you would need exchange controls too.”

Why would a start up or even a failed business that can correct its business plan want to borrow at interest from abroad when it could do so at 0% here? And if a smallish amount percentage-wise were allowed it probably wouldn’t be a problem anyway. Dare say it would be severely scrutinized.

“But the absence of a cost of capital was one of the reasons for inefficiency and waste in the Soviet system.”

I don’t think that was the actual reason. It was mostly corruption, idiot ideology and lack of awareness of how to implement the better new paradigm.

“Investment has an opportunity cost in foregone consumption spending and that should carry a price. A state bank would not normally make interest free loans.”

Old paradigm thinking.

“The tendency to speculative excess.in capitalist finance can be counteracted by appropriate regulation as long as the state is not captured by financial interests. More of investment can be managed in the public sector, as Minsky argued. Distributional issues can be tackled in various ways including tax and transfer. In attempting to solve a range of problems with a single magical solution, ignoring all the practical difficulties, I don’t think you serve the cause of reform.”

Impermanent and generally shallow reformist ideology and old paradigm thinking that hasn’t yet cognited on the concept behind the new paradigm and the significance of a high percentage discount/rebate monetary policy at retail sale.

Uncertainty ye shall always have with you, however it helps to understand and abide by the following:

The willingness and ability to mentally integrate the truths in seeming opposites, i.e. wisdom,

The willingness and ability to focus on and observe the present and recognize and decipher solutions from such, i.e. the pragmatic aspect of wisdom,

The willingness and ability to perceive essences and their significance, i.e. the paradigmatic perception of wisdom and

The willingness and ability to recognize the wisdom of always maintaining an ethic of integration in one’s thinking and investigations, i.e. the wisdom of wisdom.

“It’s the monetary and financial paradigm, stupid”.

Me:   With the new monetary paradigm freeing us from the capabilities of export platforms, inflation and fear of unemployment we could rapidly re-industrialize in the most efficient and ecologically sane way possible and/or in the medium term begin to off planet production.

The effects of a mega paradigm change are both immediate and vast.

E:  That begs the question of exactly what new monetary paradigm? In addition, no monetary paradigm can fix all our economic problems. It is quite false to think that money and market decisions alone can order our economy ethically, efficiently or sustainably. Money, finance and market decisions are made on the fallacious and imperfect assigning of relative values in an non-objective and nominal monetary unit. More to the point, money rewards are made more in relation to power, guile and hierarchy status than in relation to the social or ecological value of outputs. Our economic decisions going forward must be made on scientific and ethical considerations. Money, if we continue to use it, would simply be used to enable implementation of the decisions taken.

A truly evolved democratic socialist society would evolve beyond the need for money. An alternative would exist in terms of “permissions to consume”. The market as “distributed intelligence” could be replaced by socialized planning aided by data collection and AI. Such planning is far more feasible with modern computing systems provided we use real counts of real things, real goals measurable by scientifically objective criteria and manage the whole according democratic and socialist ethical principles. To fail to see this at this juncture in history is to be as blind as those at the end of the Ancien Régime who wanted to retain that system and lacked the imagination to consider any new system (or failed to see that a new system was overtaking them anyway.

A number of current “virtues” must be inverted, if we are to survive as a species. Thrifty use of resources must replace greed and watse. Conspicuous frugality must replace conspicuous consumption. Encouragement of economic growth and over-consumption must replaced by a steady state, circular economy and sustainable consumption.

Me:   “That begs the question of exactly what new monetary paradigm?”

The one that resolves all of the major and deepest macro-economic problems that all the heterodox economists agree NEED to be resolved and that I have enumerated here many times, and ends the current monopoly status monetary paradigm of Debt Only.

Steve Keen includes in virtually every one of his videos these days a graph that shows that whenever the rate of increase of credit dips the economy goes into recession…and yet the level of private debt has become so high that it has become un-serviceable…..and yet the current monopoly paradigm remains untouched Hence we are stuck between the proverbial rock and a hard place. The new paradigm of Monetary Gifting intelligently and insightfully implemented breaks up the current monopoly one and resolves the economy’s major problems….if one actually looks at what its policies do….as opposed to merely intellectualizing about the problems and ignoring the policy solutions.

Does a monopoly paradigm of Debt Only makes sense to you? Especially in view of now chronically unserviceable levels of Debt?

“In addition, no monetary paradigm can fix all our economic problems.”

Never said it would. Only the deepest and major ones.

Money is such a facile and effective tool, and double entry bookkeeping is likewise such a good tool (although it may need some reform in certain areas and possibly even transcendence in certain instances). All of the blockchain, cryto-currency and even the AI “solutions” are just complexity rabbit holes and serve mainly to take our focus off the real problem of the monopolistic current monetary paradigm.

E:   We tend to advocate what we understand. A person understands MMT and double-entry bookkeeping, he advocates MMT and double-entry bookkeeping. A person understands how to make money on the current “free” market, she advocates the current “free” market. A person understands management theory of a certain kind, he advocates management theory of a certain kind. A person understands ordoliberalism, she advocates ordoliberalism… and so on.

Note, here “understand” means “knows the theory of” usually with little idea of how that theory would work in all the multivarious empirical situations it could encounter.

Me:   Without recognizing the single aggregative/macro-economic point in the micro-economy, that is retail sale, and the significance of the monetary, financial and economic paradigm changing effects of a high percentage discount/rebate monetary policy implemented at that point….none of the current cutting edge theories and reforms have nearly the broad, “knock on” and transformational effects as the program I’ve been posting about here for years.

And that’s the difference, no matter how much or how little one understands it, between a mere theory within the current paradigm and a genuinely new pattern change.

EZ:   Craig: To make sure we have the same view of the economy, here’s my view:

GDP is the measure of our productive economy. GDP is the sum of household, business and government spending (and likewise the income of those sectors equals that spending, because all spending is someone else’s income). Our economy depends on household spending (2/3 of GDP). That spending is limited by household income (which comes only from those three sectors). Business provides that income to the extent demand (business opportunity) exists, and government provides the rest (by way of bookkeeping entries to household bank accounts). All that’s important to the economy is maintaining this flow, and with a fiat currency (whose value, by definition, depends only on currency-users perception), there are no limits other than that perception.

The household spending portion of GDP is the FINAL sale of products & services. I’m assuming that is specifically what you’re proposing to discount & that the reimbursement will occur by crediting the vendors’ bank account upon receipt of their submission of their sales report. (The report format & timing requirements would need to be revised & the reporting fully automated (ie, paper eliminated) for the benefit of both vendors & BEA. Full automation would be especially important to ease the burden on small retailers, landlords & service providers, especially those in the household construction and maintenance sectors.)

GDP would dramatically increase, but not necessarily double (with a 50% discount), the PCE/GDP ratio would significantly increase (which I’d deem a significant improvement in manageability of the economy) & I’d expect to see a significant reduction in payday loans & some increase in personal savings. If staple goods/services constitute the major portion of GDP, inflation should not be a problem, due to competition.

The advantage over a UBI would be that the government spending flows directly into household spending (rather than some of it going into savings & investment). I expect that vendor resista/nce would be the most difficult part of selling the program, which could be overcome with a well-designed reporting/reimbursement system (mobile reporting, instant reimbursement). Political resistance could be minimized by starting with a small discount, increasing as the program proves itself. All in all, seems like a reasonable proposal.

Me:  That appears to be good detail to me. I would say however that integrating the discount/rebate monetary policy with both a universal dividend and a job guarantee is perfectly doable because of the finality of it being implemented at the terminal ending point at retail sale, and because of how those policies would enable us to completely step out of the current paradigm and implement fully direct personal and fiscal distributism. Taxation is a legitimate sovereign power and right to discourage economic vices and encourage economic virtues, but re-distributive taxation is old paradigm and unnecessary when direct fiscal distributism is made possible by the 50% Discount/Rebate policy. I see no reason to keep any unnecessary foot in the old paradigm.

DT:   Craig, I sometimes wonder if you can read! I outline the argument for credit cards as a paradigm for giving people “money” when they need it, paid for by their earning it, and you come back saying “Nobody has suggested a program nearly as comprehensive and immediately effective as my new monetary and financial paradigm”!

So you want us to give back money to those who already have too much, but not to penniless producers turned off their land so trees can be chopped down to grow stuff for beef-burgers and margerine?

It seems you have never thought about Malthus’ problem, never mind our current need for self-imposed austerity in both consumption and reproduction (i.e. overall birthrates), hence the need for local control information and global mobilisation of tree-replanters. But are you SEEING what I am saying, or as usual just LISTENING to yourself?

Me:   Dave, a credit card is not a monetary gift, it is a DEBT….and that places you unmistakably in the private banker’s mindset and paradigm of DEBT ONLY as in a monopoly paradigm. The monopolistic onlyness, especially in supposedly COMPETITIVE free enterprise economic systems, is precisely what is problematic and wrong. Comprende?

The Adamic curse was lifted over 2000 years ago. It’s time we applied it to the economy and money system. Or does it not apply there?

Now if you’re an entrepreneur or business person and you want or need to increase your production, or a home buyer the national publicly administered non-profit banking system will be happy to create and LEND you the required funds…at o%…unless you’re a hard core pornographer or drug king pin or something….then you’ll have to go to the private financiers with someone’s already created and saved profits or incomes and they’ll intermediate your project at a rate of interest that I’m sure would be a “deal”.

“So you want us to give back money to those who already have too much,”

Of course of those who have much, much is required, but the politics of envy are largely irrelevant….and old paradigm as well.

“but not to penniless producers”

Not relevant critique. As I showed Ken, my program of a dividend and a job guarantee enables his homeless Portlander to have over $52k worth of purchasing power per year. Solidly middle class for an individual.

“turned off their land so trees can be chopped down to grow stuff for beef-burgers and margerine?”

A sovereign, and under the new paradigm’s policies an obviously benevolent government, people will not be extortable and having knowledge of their prior oppression will undoubtedly be sensitive to the caprices of commercial interests who also being under the gracious but sovereign purview of the government, will not have free reign to exploit.

“It seems you have never thought about Malthus’ problem, never mind our current need for self-imposed austerity in both consumption and reproduction (i.e. overall birthrates), hence the need for local control information and global mobilisation of tree-replanters. But are you SEEING what I am saying, or as usual just LISTENING to yourself?”

Doubling purchasing power does not equate with a doubling of commodity consumption.

Select additional subsidization of green consumer products and the enabling of funding for the mega projects necessary for ecological survival…are a primary part of my program and end the idiocy of such being “too costly” under the current financial paradigm of Debt Only.

I’m sure there’s a gracious integration of population control within ecological survival…but it won’t have any possibility of enactment unless we awaken to the new monetary and financial paradigm FIRST. The new zeitgeist is grace and the current zeitgeist is power. So maybe you should figure out what that means.

EZ:  Craig: Where can I find a definitive description of your Direct and Reciprocal Monetary Gifting proposal?

Me:  In my book on Amazon entitled: “The New Monetary Paradigm and Its Policies….Change Everything” which I’m re-writing presently for conciseness and policy emphasis. Give me a week to finish the changes.

The actions of the 50% Discount/Rebate policy at retail sale perfectly describe and express the new paradigm. All merchants opting into the policy (read all of them because to opt out is to become completely uncompetitive) agree to reduce any and all product or service prices by 50% and open an account for all sales entitled discounts. The total amount of their discounts to consumers is rebated back to them by the monetary authority whether that is a new actually publicly administered federal level monetary authority or whatever authority is mandated to fulfill the rebate, and in so doing make every merchant whole on their overheads and margins of profit.

As retail sale is the terminal ending point of the entire economic/productive process for every consumer item from a package of chewing gum to an automobile or home and is by definition also the terminal expression point for all economic and monetary factors, like inflation for instance, because it is the point where production becomes consumption. If possession is 90% of the law, then possession as in consumption at retail sale is 99.9% of economics. That means everyone’s purchasing power just got doubled at the very least (the dividend of course is additionally doubled purchasing power and enables transfer taxation elimination).

Price inflation is typically a small single digit percentage so the net percentage discount insures beneficial price deflation, and even if after the taxation discouragements and further sanctions I recommend in the new paradigm program to inhibit greedy anti-social businesses from inflating still somehow results in say 1-4% overall inflation….you just make the discount 51-54%.

Hyper-inflations never happen without several specific and disastrous circumstances happening like a prior war and the destruction of most of a nation’s productive capacity and then a compliant central bank that leverages up speculators who short the currency that initiates the actual final hyper-inflation. That plus high-tech capital intensive economic systems are costly and still competitive meaning they can’t just raise their prices arbitrarily high without losing market share. So never mind the straw man/rabbit hole of the hyperinflationistas.

The $1000/mo universal dividend, 50% discount/rebate policy and national publicly administered non-profit banking and financial system and other regulations eliminate inflation, the need for transfer taxation for welfare, unemployment insurance and social security.  The second 50% discount/rebate at the point of note signing for any and all green technologies and green consumer goods super charges the ability to purchase and necessity of finding renewable energy and resource alternatives.