A Comfortable Betrayal


This essay was first posted at https://www.realprogressivesusa.com/

It would be a shocking scandal if it came to light that the professions of medical science had, for decades, known about an easy to treat, underlying cause of cancer—but conspired to obfuscate and suppress the information to protect their participation in a medical industry raking in hundreds of billions a year to treat the disease. Professional standings, tenures, licenses would be in tatters. Lawsuits would abound. Outrage would march on every city hospital and medical college in the nation—would it not?

Such a betrayal, of course, is not humanly possible. Right? Yet is it not the case that the professions of economics, journalism and politics are guilty of something very like this kind of betrayal? Doesn’t it strike you as odd that, for more than five decades now, the U.S. government has been issuing and spending trillions of dollars of U.S. FIAT currency, and not once has a mainstream economist, journalist, or political leader found it worthy of consideration to even try to explain—from the perspective of what economic policy is all about—what a sovereign fiat currency actually is, and how it functions? While American democracy labors under the false belief its government is broke, deeply in debt, and cannot afford to pay for a humane and effective safety net for those who the corporate economy cannot profitably employ—while tens of millions of American citizens, in other words, struggle to get enough food to eat, desperately search for affordable housing, agonize over how to obtain essential health-care, and scramble to pay for the care and education of their children—while, furthermore, the nation’s infrastructures crumble and fall into obsolescence, while we struggle to rebuild after the catastrophic storms and wild-fires of climate change, while we fail to clean up the pollution that threatens our drinking water, our breathable air, our food supplies and fisheries—while all this great struggle debilitates the American prospect like a cancer, the professions of economics, journalism, and politics obfuscate and suppress the underlying possibility of an actual cure: The understanding of what sovereign fiat-currency is and how we can use it.

There are, of course, cogent voices in the wilderness: the UMKC economists (Stephanie Kelton, Randy Wray, Pavlina Tcherneva etc.) now scattered to Stonybrook, Bard College and the Levy Economics Institute; also there’s Bill Mitchell expounding reason from the Australian hinterland; there’s Warren Mosler who, apparently, was the first human being to discover the world is using fiat money; there’s the continuous twitter conversations trying to come to grips with our malaise and why an apparent cure is being suppressed and withheld. But the mainstream voices guiding American democracy refuse to listen, refuse to even acknowledge, or discuss, the topic itself: U.S. Sovereign Fiat Money. What is it? How is it created? How do American citizens and businesses get their hands on it? Why does sovereign fiat money make it possible for us to collectively undertake and accomplish things we otherwise believe are not “affordable?”

No. The mainstream voices do not want this topic, these words, these questions on their tongues. For them, “money” is something that simply exists, and the only question is who should get to have it to spend? The government—to pursue collective goals? Corporate entrepreneurs—to generate profits? The single mom who can’t find full-time employment—to feed, house and get health-care for her family? The mainstream voices—the economists and journalists and political leaders—thrive on this question of how to divvy up the pot of “money” that America, by some inexplicable process, has been allocated to have. Staking out positions in this allocation argument is their career and sustenance. To take their argument away (by suggesting the pot of “money” is, in fact, expandable—as needed—by the direct sovereign spending of fiat-currency) threatens to leave them marginalized and irrelevant; even worse: possibly unemployed?

There are people in the mainstream voices, I’m sure, who genuinely don’t have a clue. There are many others, however, who understand all this very well—but who refuse to risk the comfortable and lucrative positions they’ve staked out in the false debate of the mainstream narrative. While these economic, journalistic, and political leaders bask in the celebrity-comfort—and pay-scale—of their argumentative positions, America’s precious democracy struggles with what it is told is its abject poverty, indebtedness, and helplessness. The magnitude of this betrayal, when you consider its consequences, is staggering.

I won’t be naming names here. But I think we should start calling them out.

8 Responses to A Comfortable Betrayal

  1. Thank you J D, it is not before time that this messsage needs to be spread, not only in the US, but on a worldwide basis.
    I think it was Warren Mosler who said, “Anyone who doesn’t understand the difference between monetary sovereignty and monetary non-sovereignty, doesn’t understand economics”. Australia applied it back in 1911 when they created the Commonwealth Bank of Australia as the Government owned people’s bank, largely from the persistence of your compatriot, King O’Malley, who became an Australian politician. The Bank was effectively destroyed in 1923 by the Tory Government of Stanley Bruce, but the Bank got us through WWl without horrendous debt. Ellen Brown has just published and excellent article on China’s financial system, “Why China Is Running Circles Around America”, which is based on China’s control and use of their money supply for the betterment of the nation.

  2. You’re exactly right that it borders on criminal that economists and politicians have been so confused and/or complicit with vested interests and private finance to deny/obscure the mechanics of sovereign money. Now all MMT needs to supercharge the significance of same is to recognize the incredibly powerful effects of tying monetary policy directly to the point of retail sale with a discount/rebate policy. This recognition is not just some data point, it is a summing point and ending point for total costs and so total prices for every consumer product or service including all capital costs. Pair that insight with the fact that both the pricing system and the money system are both digital and a 50% discount to consumers at that point that is rebated back to the merchant giving it by a monetary authority specifically mandated to do so and you’ve immediately doubled everyone’s potential purchasing power, created the possibility of enterprise to double their sales, eliminated the possibility of price and mortgage asset inflation and done what has been considered impossible, namely the integration of price deflation painlessly and beneficially into profit making systems. This single policy would so stabilize the economy and make for a great employment and investment climate that it would be recognized as a virtual paradigm change in economics and money systems, and in fact it would dramatize the very expression of the new paradigm of direct and reciprocal monetary gifting.

  3. Oddly enough, Marcia Angell, former New England Journal of Medicine editor, biochemist Colin Campbell, and Dr. John McDougall have been saying exactly this about the medical profession, too. The toxicity of conventional medicine is rampant.

  4. David Harold Chester

    This writer is greatly exaggerating about fiat currency. It has been the subject of many articles and discussions and is currently included in the MMT works being commonly exchanged.

  5. Don’t know whether I’m imagining it or not, but it feels like the steam has been taken out of the MMT movement over the last number of years?

    If the movement isn’t enjoying mainstream success right now, then there should at least remain a persistent and unified effort, to improve knowledge of this topic among students in college campuses – and I’m not just talking about the handful of places that MMT advocates teach, I mean ALL college campuses, in the US and Europe.

    There does exist a generation of students, who are amenable to learning about this kind of topic, and who’ve adopted a vocabulary critical of NeoLiberalism and the status quo in (macro)economics – yet who will still have to overcome the (frankly, very significant) cognitive dissonance that MMT produces.

    They’re the crowd to focus on, if there isn’t any mainstream success happening right now. They’re the group of people with the greatest amount of potential for actually being interested in this topic at all, without their eyes just glazing over – and who are likely going to be the critical future component, for helping reach that theoretical ~15% or so point of criticality in public awareness, before something actually takes off and can have a chance of becoming mainstream.

    The problem is this though: This would really be helped by having access to fuckloads of money, and through being able to develop and fund your own international think-tank network – to actually begin to lobby and have influence on a wider scale, within academia.

    That’s how the NeoLiberal status quo took over. That’s probably what it’s going to take to pull it apart, as well. Simply having the right ideas, and the right academic/technical knowledge probably won’t cut it when it comes to a relatively opaque topic like this – you need a bit of Machiavelli and ethically dubious political tactics, to actually make a real political difference – and you need to play the long game, because a topic as opaque as this doesn’t have much chance of going ‘viral’ and gaining quick mainstream acceptance (don’t expect another Trillion Dollar Coin meme – which was primarily mocking of the idea, in the first place…).

  6. Unfortunately you’re exactly correct. As I see it, the powers that be, don’t believe in, or trust democracy; an informed public would just make them that much more difficult to manipulate and control. Hey, if you can’t figure it out for yourself, then you shouldn’t be informed – you would just create chaos by your ignorant understanding and application. If you do figure it out, you have a chance to join the elites.

  7. I would add Ellen Brown and the Public Banking Institute to the list of enlightened expositors of public “money.” Even without challenging or revamping the mistaken but prevailing concept of public debt as a pure and simple burden, the public can obtain the benefits of money creation simply by opening public banks, and by otherwise issuing public credit, all under well established practices. Note that most of even the official operative money supply (M1) is not cash or other so-called fiat money, but credit money, created as accounting entries by banks.

  8. Ben Bernanke speaks to the issue of spending money vs debt or taxes in his Brookings blog. He calls it “helicopter money” as it was referred to originally by Friedman. The US has and still does spend sovereign or helicopter money. In 2016 about 400M$ of helicopter money was spent from minted quarters. The RFC, a national bank of the kind advocated by Ellen Brown, during the 40s and early 50s spent loads of helicopter money on the war effort, producing a very vibrant economy. That economy and how it was accomplished did not go unnoticed. China has duplicated the same type of economy and has three RFC type national banks. They are the largest banks in the world as was the RFC in its time. We still have a few remnants of the RFC, the Import/Export Bank, Fannie Mae and the SBA.