Mitchell: A hedge against uncertainty using money as a bridge across time

Great, timely post by Bill Mitchell today at billyblog.

Bill fillets some moron Chicago economist in the post but that imo is just a literary vehicle in a great post explaining how when the authorities of civil government implement a monetary economy, the direct result is unemployment.  Must reading for folks both new to MMT and those who have been otherwise read into it for a while.

Bill also addresses the concept of saving that is facilitated in a monetary economy, and identifies that agents operating in a monetary economy have an ability to "hedge against uncertainty using money as a bridge across time"; this is a BIG THOUGHT (for me anyway).

Bill writes: "Clearly by imposing a tax on households in terms of currency units the government immediately creates a demand for its currency", which I've been able to see and understand intuitively for a while, but some others have questioned whether the demand that is created by the tax is alone enough to perpetuate the use of the currency over the long term.  This concept of an agent's ability to hedge against uncertainty by saving a currency may be the operative force that perpetuates the use of the currency over the long term as agents seek to transact and profit in the currency in order to fund the said agent's hedge against uncertainty.

I've read before where some have described the savings process as agents simply desiring to "accumulate claims" and could never buy this explanation, especially as applied to the external sector it has seemed in fact extremely irrational to me.  But when I view the concept of savings as a hedge against uncertainty, even the concept of savings by the external sector starts to make more sense for me.

All of these corporations and even foreign governments, building huge multi-trillion dollar hedges against uncertainty.  As uncertainty will never go away, perhaps never will these out-sized and accumulating hedge positions aka "savings".

UPDATE 2/22/12:  In Bill's post for today: "Latest EU Bailout will not end the uncertainty."  We can see here how these morons continue to actually cause the same uncertainty that they so zealously desire to hedge against through their continued monetary savings.  Take solace in the fact that you are not they.