Endogenous nature of the money system is a correct observation…of what the problem with it is. But it doesn’t progress us any. It’s exactly like the Austrian/Libertarian correct observation about the economy that “There ain’t no free lunch!” …it’s the problem…not the solution. And the path forward for both sides of the economic debate is to recognize that making any financial services an integral part of the process that terminally ends at retail sale…and then making money creation an exogenous public utility….because the former is the new economic paradigm and the latter….is its solution.

…neither capitalism nor socialism, but rather Profit Making Direct Distributism. I’ve said this for at least several years now. It’s the complete integration of the truths, workabilities, applicabilities and highest ethical considerations of those apparently opposing systems and a thirdness greater oneness which is the signature of paradigm change.

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Define a new paradigm: A new pattern that applies throughout the entire area of endeavor/body of knowledge it is applied to.

Become conscious of what the current/old paradigm is.

Become aware that all new paradigms have been conceptual inversions,  are oppositional in nature to the old paradigm, are resolutions of the deepest and most chronic problems in the old paradigm and so accomplish much more of what contending forces/perspectives themselves were able to….and finally is an actual thirdness/greater oneness…not simply a reform of either of the opposing perspectives, i.e. something actually new.

Understand that everything adapts to the new paradigm, not the other way around. The reason this is true is because a new paradigm is an absolutely obvious new truth, temporal progression and survival factor for humanity. These are also why any new and  all policy and regulation must conceptually align with the new paradigm.

Conceptual alignment is the key to creating and implementing new policies and altering old. This is simply logic.

This is the new economic-thrift paradigm, and Finance currently violates it both paradigmatically and economically/thriftwise.  The money system is currently endogenous and yet completely uneconomical from a thrift point of view so far as the business model of Finance is concerned. The difference between the financial costs of a 5% mark up profit/fee for service and a 30 year loan of 5% is vast.  On a $200k 30 year home loan it is the difference between $10,000 and $386,511.57 and the difference in monthly payment between a 5% loan rate and a 0% one is $1074 and $556….so from an economic/thrift point of view….it’s totally stupid.

Hence the solution is inclusion of Finance within the process that ends at retail sale as a simple mark up/fee for financial services business model, and then making the actual money creating function of finance an exogenous public utility that is self funded.

Me:  First off I advocate much greater money creation and I agree that MMT has the mechanics of money creation correct. I’m also for MMT’s primary insight, which most MMTers apparently aren’t actually aware of, which is that the money system could be entirely distributive. However, their thinking that significant inflation will not return, especially if/when the present mountainous governmental and private indebtedness is largely reduced, is overly hopeful because inflation has little or nothing to do with increasing the money supply and almost everything to do with the fact that human free will/action to inflate will  always remain a strong motivation for enterprise in profit making systems…..unless you craft monetary policy that is strategically implemented at a specific place and time in the economy where both aggregation of costs and consumer inflation is expressed…and then that policy must be so significantly monetarily potent that no enterprise can opt out of it.

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stf:  “However, their thinking that significant inflation will not return,”
Um, they definitely did not say that. They just noted that it’s overemphasized relative to historical significance.

“inflation has little or nothing to do with increasing the money supply”
to that MMTers would say “duh”

“and almost everything to do with the fact that human free will/action will always remain a strong motivation for enterprise in profit making systems”
well, add that to the list of nominees for most vague and completely useless statements of the year.

Me:  Aren’t there ad hominem and courtesy rules here?

MMT, like Keen’s disequilibrium/instability hypothesis and Michael Hudson’s Financial parasitism are all the leading edge research. The only thing they lack is the conciseness and clarity that comes from recognition of both the current and the new monetary paradigm. When they do recognize them is when they will be able to unite with each other and with other paradigm perceivers in a social movement that can herd the entire political apparatus toward monetary and economic sanity.

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Anon:  Still banging the old ‘all cost must be in price, all the time, no exceptions’ drum, eh Steve? That concept was obsolete in Keyenes day, in any variant.

Me:  No, not at all. You can keep charging less than your costs….right up to the point of going bankrupt. And with ponzi finance and a lot of accounting legerdemain that can be quite a while.

And when the system becomes inherently ponzi, as it has been since before Keynes, because continual debt build up is necessary to avoid recession/depression as Steve Keen has re-discovered and also because the only systemic monetary paradigm allowed is Debt which even at 0% interest eventually overwhelms the ability to service debt….then you no longer actually have a legitimate system, just a con where Finance “owns the joint” and everyone has to “lie, cheat and steal” as Michael Hudson so aptly describes it.

…and so any such business models must become retail mark up and/or fee for service models only and any actual credit/money must be Created, Controlled and Distributed only By Public Institutions or Authorities.  This of course would enable them to take advantage of the Discount/Rebate Policy that all other retail business models are entitled to.

Why? Because retail sale is the end of the private economic/productive process and also where costs and prices are terminally summed. Hence any additional costs post retail sale are a fundamental violation of the sanctity of the private retail/economic function and promise of summation of costs and prices. 

Any other administrative/governmental charges are, appropriately,  fee for service.

Finally, a public credit/monetary authority would be the only creator, controller and distributor of the actual credit for any note, and its mandate to establish and distribute the new paradigm policies of both the universal dividend and discount/rebate  monies would also apply to such note. Thus any such note, in the individual’s interest, could/would also be discounted 50% as well.   Example:

Consumer agrees to purchase a $213k home from home builder including 6% real estate fees plus governmental services of $1000.  The note of $213k is created and $13k is paid to cover the remaining real estate and governmental fees as well as the $200k to the home builder. The note is discounted 50% to $106.5k and at 0% for 10 years the consumer has a monthly payment of $888. All businesses are made whole and the entire process remains within the parameters of retail sale including the monetary authority’s retail discount on the note. No fees are charged by the monetary authority whose costs  are entirely funded….by itself as are all governmental services.

The 50% Discount/Rebate at Retail Sale.

Simple three person model proves its power on the entire economic and monetary system

Person 1 is the retail merchant who gives a 50% discount to his best competitive price to person 2 the consumer. Person 3 is the monetary authority that rebates the entire amount discounted to the consumer back to the retail merchant.

Everyone’s purchasing power is immediately doubled, hence every business model within the entire economic/productive system can dramatically increase their volume of sales and hence their profits and yet there is not only no inflation, but almost unbelievably price deflation is painlessly and beneficially integrated into profit making systems.

Finally and most importantly Finance/Banking’s monopolistic and dominating paradigm of Debt Only is ended by the new paradigm of Direct and Reciprocal Monetary Gifting. How and why? Because retail sale is both the appropriate and terminal end of the entire economic/productive process and also the summing point of all costs and so total prices for any item or service. Hence a fully rebated discount at that point still enables the merchant to be whole on their overheads and margins of profit, and the price reduction/increase in individual purchasing power adds a new systemic paradigm where only debt and only its related derivatives were allowed before.

Why? Because they are solutions number one. Number two they integrate the truths and best aspects of all parties involved and number three they are consequently comprehensive and transformational solutions whose aligned policies accomplish far, far more of the stated goals of those opposing parties’ separate agendas.

Integrate, Perceive, Focus and Follow Through on Paradigms.

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