Confusing. But so is boxing. How can a sports caster be so quick to call all those punches. It is hard to follow and a punch so quick it is hard to determine effect. In aggregate they must have some effect because one guy falls down, the other wins.
Economists debating back and forth is a game of the same nature. Too fast, too confusing, I do not even know what is being said. Taking time to study it, I still do not know what is being said. Guesses, perhaps, something is being said, I only have ideas about what it all means. It is like someone debating different ideas about the path of electricity through a TV from the pug at the wall to the picture shown on the screen. Regardless of how or what they debate, call facts, or just believe because they are convinced they are correct, the picture gets to the screen and I have a suspicion the there is some real, factual, true explanation at the bottom of which are fundamental physical factors like properties of electrical resistance and the transformation of matter and energy that make it all happen.
Economics is a social science so maybe there is no "truth" upon which it is based like the truth of physics in nature. It is only built on what we think it is. Like religion. It can be and do whatever we want.
If Economics, which I view as what money does was based on some factual physical establishment of what money is then there might be some possibility for getting a grasp of understanding on the situation. Maybe it was simpler when was gold. Good, solid, physical, measurable stuff. As long as it was 24 ct. Then it could be related to any scale of relative value. Like a universal solvent. Everything could be disolved into it.
L. Randall Wray seems to be the brightest economic bulb in the bunch with his and his fellow thinker's ideas of Modern Money Theory MMT. He writes about economic things with titles that I do not begin to understand much less the content. My brother-in-law, the microbiologist writes about his subject matter in the same fashion that mystifies me beyond the first word in the title. Money, however, should not be as hard to understand as genetics. I can make coffee in the morning without detailed knowledge of the genetics that enable me to do it.
All my genetics seem to be functioning well enough and I am not much in charge of dictating their nature and operation anyhow. I receive and spend money in much the same manner. However, when money matters do go wrong, ot could go better, I should be able to knowledgeably do something about them. At least understand them at some basic conceptual level that gives me, and every other citizen in the USA the same basic idea of how it works or should not work. Like: "Thou Shall Not Steal". But that is not true. Or: My money is mine. Or: Government debt is just like household debt. We have to balance a budget. That is not true either.
L Randall Wray, being a guiding economic light, presents his view of the big economic marshmallow. Others contest, contradict or support, in whole or part, what he says. It is like a basketball game. Baseball is much slower but if economics was baseball we would have no clue as to who is on first, or anywhere else for that matter, or even what the score is. One person would say the score is this, another would say it is that.
Recently, L Randall Wray made a statement about MMT. Joyfully I latched on to it thinking that at last here is some kind of rock upon which I can build my understanding.
No way....yet, but maybe there is hope.
L Randall kicked off with this and put the ball in play in a game against the Austrians, a competing school of thought. The old established team. He made his kickoff statement on his home ground; New Economic Perspectives. It is a blog and a very poorly structured one. The extent of its organizational structure is that the most recent blog appears at the beginning. At least the blog is searchable. His kick off statement made on his home ground blog was not called part I but subsequent parts were numbered. Each part of his 4 part series (quarters of teh game?) has comments made by supporters, opponents, cheerleaders or spectators. Then L Randall Wray does a blog entry where he responds to comments on his prior blogs as well as an excellent piece written by one of his supporters, Dan Kervick.
Dan Kervick wrote an excellent series appearing in Naked Capitalism, my favorite best blog by Yves Smith. It was a cross post from where it initially appeared in New Economic Perspectives but being on Naked Capitalism it gained comments from the crown that likes to comment on things there. Some are worthwhile. This was Dan Kervick's kickoff of his series:
Saturday, December 24, 2011
Public Money for Public Purpose: Toward the End of Plutocracy and the Triumph of Democracy
By Dan Kervick. Cross posted from New Economic PerspectivesA new year is upon us. And even before its first hour has been rung in, 2012 is already taking shape before us as a pivotal year in global politics. We can all feel the awakening under way. A revived longing for equality, shared prosperity and democratic solidarity is inspiring a vibrant new politics around the world. This new activist spirit is quickened by the keen apprehension of young people on every continent that something is very, very wrong with the present economic and political order. The rising generation, heirs to sick and damaged societies that have been unbalanced by decades of plutocratic rule and antisocial cupidity, have now begun to rouse themselves – and in the process they have rallied the moral outrage of their fellow citizens.
Dan Kervick, like L Randall Wray did not give his kickoff the title of Part I but subsequently was titled by part numbers that totaled 6 parts. Cripes! It is hard to keep track of all the parts that Wray and Randall are writing when they are spread out over a time line entry sequence in blogs!
In L Randall Wray's comments on the comments on what he wrote to the Austrians he discusses not only the responses to what he wrote but commented on what Dan Kervick had written:
"I will respond to comments on my blog and also to comments on Dan Kervick’s excellent piece on MMT (part one—if I have any comments for part two I will post them after I get time to read the post and comments)."
This seems to be getting to the rather ridiculous of who said what to whom about what and not only that but what they meant, may have meant, think they meant but perhaps did not say but can be inferred by the school of thought they belong to, or at least what I think they should be saying or meaning.........The point is: I have to go through all this sorting out of things said just to try to figure out who is on first base or even where first base is where it was at some part of the discussions in parts I thru IV or VI depending on whose discussion and associated comments are the focus point of the current discussion.
There is a pony somewhere under all of this pile of stuff. It is certainly not being made easy to find by any reasonable structural mapping! Maybe that is what keeps the wannabe uneducated, unknowing players out of the game nd out of the club. I really would like to understand all this and I am struggling to do so.
Dan Kervick is more my kind of guy. A philosopher. Maybe that should be a prerequiset to being an economist. I wrote to L Randall Wray once but he never responded. He seems to be a guy that only talks to others from the different elite schools of thought. Sometimes he writes stuff I get something from but Dan Kervick does it more often.
Dan Kervick also believes in real money. L Randall Wray discusses Dan's view here contrasing with his own view:
Let me close with a comment on Dan’s excellent blog on the front page. I agree with almost everything. But readers of the MMP will have noticed one deviation.
I argue that government currency as well as treasuries (bonds) are indeed debts, IOUs denominated in the state money of account. Dan wants to argue they are not debts. I understand the “framing” issue. People are scared to death of debts. It sounds much more user friendly if we can deny our government is in debt. Of course, by identity, if it is in debt we nongovernment types are in credit. The clock at Times Square is a credit or wealth clock, not a debt clock. Don’t think of the elephant and all that. Agreed.
But I’m afraid it is a big misleading and confuses our understanding of what debt is all about.
Dan Kervick responds in his comment about what Randall Wray said:
I love this question of whether the money issued by the government is a liability of the government, because my background is in philosophy. Philosophers love to discuss the nature of things, and this is a question about the nature of money, debt and credit. I defend the idea that the money issued by government is not a liability of government, and Randy Wray defends the claim that it is a liability of government. And Randy has the great A. Mitchell Innes on his side.
After thousands of words about money, IOU's accounting and liabilities Dan Kervick finally concludes with his thoughts:
But I personally think, and believe the MMT economists tend to agree with this, that there is also a major role for the government spending its money into the economy which is debt-free issuance.
Cripes Again! It is like trying to follow a guy with the ball running all over the field being chased by everyone else, not being entirely sure whose side the chasers are on, they do not even know, and finally crossing the goal line. Crossing the line but not with any certitude of anything in the score really changing!
Where, or where is that rock that I seek, that fixed point upon which to stand and apply the lever that will move the earth? No place! All I can say is that I think, (and what do I know?) that Dan Kervick, like me, would say that money: What money is, is a thing that the government brings into existence, spends into the economy and until it taxes it out of the economy it exists forever in the economy. What money does in the economy may be related to debit and credit exchanges as well as a medium of exchange for goods and services. Every single piece or unit of money once it is created or "born" into the system, however we choose to give it specific as well as unique identity like my serialization scheme, every unique unit of money once born lives forever. Taxes might only put it into temporary suspense to be reintroduced to the system as required into the future as an alternative to creating "new" money to be born fresh as a baby into the system.
That is one long whole sentence from beginning to the ending period that violates the length rule that prohibits run on sentences. It is totally outside the rules and I am so proud of it that I will flagrantly say it again as big and bold as I wish to say it. screw the rules:
Every single piece or unit of money once it is created or "born" into the system, however we choose to give it specific as well as unique identity like my serialization scheme, every unique unit of money once born lives forever and taxes only put it into temporary suspense to be reintroduced to the system as required into the future as an alternative to creating "new" money to be born fresh as a baby into the system.
That is the way to establish what money is. Do that and maybe you economists can figure out what money does. All you have to do is follow each unique unit of money if you want to do micro or aggregates of uniquely serialized units of money if you want to do macro.
I say: Mark the money by numbering every money unit to identify what it is then follow it see what money naturally does. At least what it does in the "un-natural" conceptual system we call out economic system and, then seeing its dysfunctions, redesign the system to make it work better for us.
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