Tag Archives: money

Bank Dollars & Sovereign Spending

By J.D. Alt

Why do so many people—including the authors of most economics textbooks—believe the U.S. banking system creates the U.S. dollars we earn and spend and pay our taxes with? It’s because the U.S. banking system does, in fact, “issue” the great majority of the dollars we use—by making loans to businesses and citizens which are not backed by “real” dollars the banks have on deposit. What everyone overlooks, however (for reasons not entirely clear) is the fact that these new loan dollars are “made real” by the U.S. government’s solemn promise to convert them at any time, on demand, into actual, “real”, sovereign U.S. dollars. The U.S. government is able to make this promise because, by law, it can issue the necessary actual dollars by fiat (by simply “declaring” the dollars into existence.) A lot of people (again for reasons not entirely clear) don’t like to hear that last part. But it’s simply a fact of life: the cash dollar bills you get from an ATM machine are not printed up (created) by the banks—they are printed (or created electronically as needed) ONLY by the U.S. sovereign government.

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The Sinking of Norfolk

By J.D. Alt

How would Thomas Piketty propose to save the city of Norfolk, Virginia? He teaches us, ad-nauseum, that what the U.S. collective state has to spend on such things as sea walls, flood gates, elevating infrastructure and roadways, buying-out property owners so they can relocate to higher ground, etc., etc., is limited to the number of tax dollars that can be collected from U.S. citizens—as if the collective state itself were like a club, and if the clubhouse needs repairing, the club members must first pay a special assessment of dues—or, alternatively, the club can borrow dollars from the supply of Capital owned by the wealthiest  1% of its membership, or (as a creative alternative) the rebuilding effort could be structured in such a way that the newly elevated Norfolk would pay rent to the one percent in perpetuity for the privilege of living above sea-level.

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Of art and money, Bitcoins and Damien Hirst

By Glenn Stehle

Money and art, in the minds of some, are now one and the same.

Izabella Kaminska, for example, recently asserted that art is “the sophisticated man’s Bitcoin.” It is the “safe store-of-value” which “art aspires to that is our intended meaning,” she avers.  “Think sophisticated man’s Bitcoin rather than asset class outright.”

Kaminska goes on to elaborate that much art

is being ‘mined’ purely to satisfy the demand for ‘safe-ish’ assets in a liquidity saturated world. Safe assets, which we should add, are often held in bonded warehouses in places like Geneva, outside of the reach of tax authorities, and which later become a type of bearer security in their own right as the depository receipts which allow redemption of the assets begin to circle amongst the wealthy as their own type of non-taxable currency.

Much of the value of art, according to Kaminska, is just like that of Bitcoins.  It depends on the “the Emperor’s New Clothes effect.  “If we  –  art dealers, collectors, writers and experts – all agree a particular work has value,” she asserts, “it surely does, irrespective of its costs of production, utility and purpose.”

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Money is not true wealth (Part IV: The United States)

By Glenn Stehle

[Part 1] [Part 2] [Part 3] [Part 4]

Even a small-time gang of hoodlums has its own melodramatic ideology and pathological romanticism.  Human nature demands that vile matters be haloed by an over-compensatory mystique in order to silence one’s conscience and to deceive consciousness and critical faculties, whether one’s own or those of others.

If such a ponerogenic union could be stripped of its ideology, nothing would remain except psychological and moral pathology, naked and unattractive.

–ANDREW M. LOBACZEWSKI, Political Ponerology

Capitalism is “the astonishing belief that the nastiest motives of the nastiest men somehow or other work for the best results in the best of all possible worlds.”

JOHN MAYNARD KEYNES, Attributed by Sir George Schuster, Christianity and human relations in industry

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Money is not true wealth (Part III – The British Empire and its demise: 1815-1945)

By Glenn Stehle

[Part 1] [Part 2] [Part 3] [Part 4]

Once rationalism raised the intellectual stakes, Catholics could not go on playing by older, more relaxed rules:  if formal rigor were the order of the day in physics and ethics, theology must follow suit….

In the Library of the Convent of Ste. Geneviève, near the Pantheon in Paris, is a manuscript entitled  Traité de l’autôrité et de la réception du concile de Trente en France.  It describes the struggle, after the Council of Trent, to uproot the “pernicious heresies and errors” of Protestantism, and paints a revealing picture of the intellectual position of the Catholic Church in early 18th-century France….  [I]ts final pages show how far the demand for “undeniable foundations” had made its way into Catholic theology by 1725.  Looking back, the author credits the Council with anachronistic motives, which are intelligible only if already, in the 1570s, it could invoke the principles of a philosophical rationalism that was invented in the 1630s.  The ambition of the Counter-Reformation, it tells us, was “to prove invincibly our most fundamental belief.”

–STEPHEN TOULMIN,  Cosmopolis:  The Hidden Agenda of Modernity

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Why Understanding Fiat Currency Matters For Scientists: We Are Being Pitted Against Public Health

Cross posted from MikeTheMadBiologist.com

Because we’re being played off against food stamps by Republican congressmen:

We’re only asking for a 5 percent decrease [in SNAP] in a time of budgetary crisis, where this is being put up against funding the NIH for basic medical research, this is against putting money into defense.

But this is stupid, since it assumes the federal government can run out of money. It can’t, since it’s a currency issuer. Let’s work through a couple of thought experiments. First, the Mars rover (boldface added):

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The Dilemma of the Cooperative Gene

By J.D. Alt

In the simplest terms, at some level the efforts of human society are being directed by the interaction of two genetic predispositions. The first predisposition views society as a loose-knit group of individuals or family units who are competing with each other for scarce resources. The weave of the social agreements that knits these individuals together is for the purpose of establishing and protecting private property rights. Property (the scarce resources) is acquired through competition, and once acquired its ownership is recorded and protected by the judicial and police powers established by the social agreements (the “State”.) In essence, the State has no other purpose.

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Was money created to overcome barter?

By Reynold F. Nesiba
Professor of Economics
Augustana College – Sioux Falls, South Dakota

This past May, marked the one hundredth anniversary of A. Mitchell Innes’s (1913) publication of a paper titled, “What is Money?” in The Banking Law Journal.  In it, this British diplomat, then living in the US, reviewed the history and usage of money and its forms in credit and coinage.  On both historical and logical grounds, he asserts that the “modern science of political economy” rests on a series of assumptions regarding money and credit that are “false.”  One of the most important of these assumptions is the belief that “under primitive conditions men lived and live by barter.”  Who should we blame for this false assumption?  According to Innes, it is Adam Smith (1776), the father of economics, who in turn rests his arguments on the words of Homer, Aristotle, and those writing about their travels to the New World.

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Money is not true wealth (Part II – The Dutch Republic 1477-1806 and revolution in the Netherlands 1747-1848)

By Glenn Stehle

[Part 1] [Part 2] [Part 3] [Part 4]

The richest eschews a vain parade of wealth

And entertains the poor with friendship and with care

…Where the farmer so rich…the sailor so beloved

The humblest servant as merry as his master

–SIMON STIJL, Rise and Flourishing of the United Netherlands (his description of the Dutch Republic in the 3rd quarter of 18th century)

Every nation has its national mythology, and the Netherlands is no exception.  As Simon Schama points out, many Dutch still see “themselves frozen in the attitudes of Hals’ guild deacons and de Hooch’s interiors, a maritime community of God-fearing burghers dwelling in piety and liberty” (Simon Schama, Patriots and Liberators:  Revolution in the Netherlands 1780-1813).  The rub, however, is this, and again the Dutch prove no exception to the rule:  national mythologies are unfailingly more fiction than fact.

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Money and Morality

By Brian Werner

Notions of money, debt and morality have a long history together (see Graeber and Atwood).  Money and the desire for it is usually connected with greed and immorality like in the often paraphrased “The love of money is the root of all evil” from the New Testament book 1 Timothy.  But what if a better understanding of what money is can help our country to be moral?

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