Monday, December 3, 2012

Randy Wray — A Meme for Money, Part 1: Introduction


I assume that most people here are here because they are interested in MMT and therefore keep up on the major MMT blogs, so I only link to posts on those in cases that I deem must-reads. After completing his latest book, Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems, Randy Wray is beginning a new series on framing money that qualifies as a must-read. Comment here or there. You are welcome to post your comment at both.

New Economic Perspectives
A Meme for Money, Part 1: Introduction
L. Randall Wray | Professor of Economics, UMKC

Of course, I am very pleased with this, since I have been harping on framing for a long time and citing cognitive science about it. As Joe Firestone and others have, too. We need a compelling narrative to deliver the compelling reasoning.

11 comments:

Matt Franko said...

Revealing comment from "Jen" over there:

"People will not believe that something comes from nothing. It seems miraculous to believe otherwise or against the laws of nature...."

Per Aristotle, "our currency comes NOT from nature, but from law..."

As an authoritarian, "from law" is NOT "from nothing". The law is very important (to me anyway).

Libertarians and libertarians are going to have a massive revelation before this can be over...

rsp,

John Zelnicker said...

Tom -- I am pleased and encouraged by Randy's change of focus. There has been a lot of discussion here about the difficulties in getting the framing right to communicate the MMT story. The addition of one of the academic developers of the theory to the task of developing a compelling story is a definite plus.

He made a comment in his post about the moral objections to the idea of gov't spending by keystroke. And I think he may be on to something there. I also see a moral objection arising to the idea of even theoretically unlimited money issuance. Another one is the idea that the Congresscritters will go crazy if there aren't overriding legal and moral limits to spending. They can't be trusted with a potentially bottomless purse.

I have seen reports of the cognitive research you refer to and was struck by the fact that there seems to be quite a demarcation between the workings of the progressive mind versus the conservative mind. The conservative mind, it seems, responds most strongly to authoritarian and moral arguments, while the progressive mind is open to change based on to facts and empirical evidence. But, I think, a good moral argument can also have good effects on progressives.

Over the last 30 or so years there has been a major change in the cultural morality of the US, as I see it. The shift has been from a focus on public welfare and the common good to the rugged individualism of the Wild West. The result has been to start blaming the disadvantaged for their disadvantage. I'm not Christian, but I keep thinking about the Sermon on the Mount and wondering what happened to all these devout Christians.

I blame Ronald Reagan for a big part of this change with his "government bad, business good" dichotomy. Gov't used to be seen as the provider of the public goods and the supporter of the poor and helpless. After Reagan and his acolytes got going gov't became Lucifer.

In the end, I think it will be some kind of moral argument that finally is the key to the vast majority coming to understand the benefits and the public welfare that is achievable with a fiat currency (if the real resources are available).

katie said...

Tom,

Thanks for the heads up. Linking to other sources is one of the big reasons I log onto MNE.

I didn't realize you prioritize :)

Stop it.

Thanks again,
Katie

Matt Franko said...

Now this from Michael H. at a new post over there:

"Without the acknowledgement of our own nature as open, energy-seeking systems, and of our economies as sharing this characteristic as open systems, governments and societies more generally will be caught in a “low level equilibrium trap” with regard to economic policy. "

I would point out again that Aristotle made a specific statement that our currency system is NOT based on nature (even our own nature), but rather, this system is based on LAW...

Perhaps this "energy analogy" that Michael has come up with can work with some but it is a bit indirect and abstract ...

rsp,

jrbarch said...

Hi Matt - I think Erwin Schroedinger’s intuition was at least pointing in the right direction?

All ‘systems’ are recycled.

From the dust of a universe, a universe is born.

The Energy that drives this is known as the great ‘Breath’. Something that always Was, Is, and Will Be. (From nothing, only nothing can come)….

When Breath enters a ‘system’ then existence is possible; when it leaves, the system is recycled. While it pulses, certain laws are evident within the system.

One list I know of is from Dwahl Kuhl (A Treatise on Cosmic Fire – A.A.Bailey). Law of Economy, Attraction, Synthesis in the Cosmos; Law of vibration, cohesion, disintegration, magnetic control, fixation, love, sacrifice and death (restitution) in the system.

The microcosmic energy unit man is subject to these macro Laws: human ‘laws’ are child’s play in this context.

Best law we could have for ourselves is: ‘do nothing to harm another human being’. Lying, cheating, manipulating, murder and deprivation all harm other human beings. No other laws would be necessary after that would they?

You cannot fix a ‘system’ that is an expression of yourself without changing yourself!

Erik Jochem said...

I'm very grateful to Randy, Mike and all the others for promoting MMT on the internet and trying to get the message through. It really sometimes makes my day reading their lines. What often strikes me though is that MMT apparently is the key to a door nobody wants to open in the first place. Public debate in the US is lead along microeconomics (private profit) and nobody's interested in the functioning of the economy as a whole anymore. The government is perceived as just another private player that must adjust to the rule. In this political landscape the prerogative to be the issuer of the currency is perceived rather as presenting an unfair advantage than as a potential benefit for society. But of course this landscape is not a natural one, but one that has been formed intentionally by those who earn their living (and more) from capital and not from wages. So or MMT can show that full employment ecc. lies in the interest of capital owners too or it has to turn against these interests and become really political. Bill Mitchell of course is very political in a way as he comments on the follies of the politics of the day. But is it really folly when Warren Buffet proposes the 3 % fiscal barrier for the US-budget ? Shouldn’t he and his friends have a financial interest in doing so or at least think they have ? It’s here where MMT must attack or throw the key out of the window.

Matt Franko said...

Erik,

You point out an interesting contradiction...

Your statement here (to me): "But of course this landscape is not a natural one, but one that has been formed intentionally by those who earn their living (and more) from capital and not from wages."

Is not confirmed by your statement here: "But is it really folly when Warren Buffet proposes the 3 % fiscal barrier for the US-budget ? Shouldn’t he and his friends have a financial interest in doing so or at least think they have ? "

to attempt to answer your question, "no" imo, they do NOT have a financial interest in doing so, and persons like Buffett they see themselves as "taking one for the team" here on taxes (insert patriotic background music here)... and on the deficit of 3% he is just trying to improperly apply a business technique ("manage to margin") on govt policy... the botton line HAS to be that Buffet thinks the 'govt needs the money' which is FALSE.


This is an IMPORTANT distinction to fully understand in order for development of truly effective messaging.

If they are being duplicitous, then you would develop messaging to expose/attack that fact... If they are morons, then you would want to develop messaging to expose that fact...

Or maybe there is a bit of both and the messaging needs to be developed with this in view.

I dont see how you could expose them as duplicitous without EVIDENCE beyond hearsay... it just becomes "he said, she said"... like it has been and you get nowhere.

Exposing them as morons is easy... but can be viewed as brutal...

rsp,

Chewitup said...

You could also argue that Buffett fully realizes that the deficit is needed to fund savings. And it is Buffett and the rest of the FIRE sector that plays with and profits from those savings accounts.
His 3% figure was just a number he threw out there because it sounded reasonable.
I think Randy has to come up with a meme that both progressives and conservatives can embrace. But the fly in the ointment is those in Congress are only interested in themselves and their careers and their attendance at the proper cocktail parties in DC. The may declare themselves to be affiliated one way or the other, but we know their affiliation is with those contributing to their campaign war chests.
So the FIRE sector controls Congress and we know their preferences on entitlement spending.
Randy's (and Warren's) message has to resonate with those who vote. Getting the message out to the teeming masses is where the heavy lifting is. Let's do this.

Tom Hickey said...

You could also argue that Buffett fully realizes that the deficit is needed to fund savings. And it is Buffett and the rest of the FIRE sector that plays with and profits from those savings accounts.
His 3% figure was just a number he threw out there because it sounded reasonable.


LIkely correct, IMHO.

paul said...

"the deficit is needed to fund savings"

A deficit is needed to fund net savings. which is an increase in NFA.

Savings can increase as long as someone else is willing to dis-save or take on debt, although savings accrued this way nets to zero.

Posted to preempt the usual suspects.

Erik Jochem said...

Matt,

the political landscape I describe is set out here: http://unctad.org/en/PublicationsLibrary/presspb2012d2_en.pdf
Chances are that MMT will go unheard in a society where un-employment is seen as a trump in the game to increase profits with the capital side. Budget brakes play no minor role in keeping full-employment at bay.