"Positive Money" a Debt Crisis Solution?

tensordyne said:
Oh man, having to read Tippit is like having to hear nails scratch across your skull as your face is shoved into a chalk-board.
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Careful!

Make comments like that about Tippit and you run the risk that SCRUT will nominate your post for the Language Award. :jaw-dropp
 
Francesca R said:
I acknowledge you at least reading through it again, which is good (thanks). You've fairly accurately represented two of those positions, but not the others. This is a problem with trying to paraphrase rather than quote.

"It is irrelevant whether governments can print money or have to borrow it" (these questions are irrelevent to the argument for fractional versus full reserve lending, not irrelevant to everything), "Only base money is real money." (never said) and "Bank loans are backed by deposits, not the borrower's promissory note (nor the collateral that the borrower might have pledged to back up the promissory note)" (not said), and that "Banks lend money that has been deposited. They don't lend from their reserves" is semantic to the economic effects of fractional reserve lending.

I think the moral issue is the central one to most argument about this, and meeting the needs of the public is a moral issue.

Fans of full reserve banking believe (wrongly IMO) that they are asserting a moral right to prevent certain transactions from occurring, which they probably believe are a net harm to the public interest, and which they frequently also confuse/conflate with government transactions (of course nothing in higher-velocity-money (EG MZM) multiplication is an act of the government or the central bank).

Advocates of fractional reserve lending believe that the moral right for voluntary transactions between private agents to occur (as in all forms of leverage, derivatives and forward purchases/sales) generally supersedes the desire to circumscribe them (and those who desire this should have a high burden of proof to show net damage), and that credit multiplication is an age-old innovation that permeates the financial system and is practised approximately everywhere because it provides substantial benefit to the public interest.

To boil it down simply to the ethics of freedom/liberty, full reserve lending is assuredly on the authoritarian side of fractional. This is generally not acknowledged by its supporters, who IMO cloak their position as being in some way anti-authority (state, banks) but who fail to convince on this. That alone is a stong count against it in my view, before getting to the matter of social benefit versus damage, in which it fails further.
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Interesting post.

Do you not think that the moral question is not simply one of education and culture.

If we are educated in a culture were the primary reason for wealth creation is to care for that, which cannot on their own create wealth (animals, plants, soil, water, environment, children, elderly, disabled, sick) then no matter which system we use RB, FRB, MMT etc etc the choice will always boil down to how can we optimise this type of wealth creation?
There is no consensus as to why we need wealth creation and in fact many argue now against wealth creation (economic growth). The various monetary systems are simply politically promoted by those that will benefit from them the most for their own reasons. And of course the winner of this political battle is not necessarily the system which objectively benefits the most people, but the one that gets promoted the most.
 
The type of monetary system we have is both a moral issue as well as a mathematical stability issue. The current system of FRB and corporate governance does not seem to be stable or sound. The incentives in the financial world are not in line with long-term stability (Herman Minsky).

Oh well. There are so many alternatives out there being discussed. I think perhaps what is needed is to see what is in common between the various alternative monetary policy movements. I do not see why any one of them necessarily has to be the policy to follow.
 
!Kaggen said:
If we are educated in a culture were the primary reason for wealth creation is to care for that, which cannot on their own create wealth (animals, plants, soil, water, environment, children, elderly, disabled, sick)
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I'm not sure that is the primary or over-arching reason for wealth creation. Consider that wealth comes into existence whenever consumption is deferred/sacrificed (income is saved) and whenever capital goods are acquired (this normally requires the deferral of present consumption too). The primary purpose is to be able to consume in the future without the requirement of labour input at the time. Also the primary purpose could be seen in the context that almost all forms of production (income or consumption goods generation) requires capital as an input alongside labour, once you get beyond hunting/gathering--hence to obtain the capital you need first to delay consumption/create wealth.

no matter which system we use RB, FRB, MMT etc etc the choice will always boil down to how can we optimise this type of wealth creation?
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"Optimise" does not necessarily mean maximise to a moral being. Seen in the light that optimisation can include the exercise of optimal ethics in the creation of wealth, I would agree.

There is no consensus as to why we need wealth creation and in fact many argue now against wealth creation (economic growth).
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I think there is am overwhelming consensus that wealth creation is a necessary goal for any beyond-subsistence society. It is not synonymous with growth in economic output, because wealth has to be created to replace depreciated/scrapped capital assets just to keep output the same (in a beyond-subsistence economy). But if you mean net increase in capital stock, I think that this too is desired by consensus in societies that have become accustomed to pursuing a net increase in living standard. Economic output per head may be a crude proxy for living standard, but to the extent that these are aligned, it is necessary for the former to grow if the latter is to improve. And for the former to grow, one requires one or more of (i) an increase in the input of labour per person (working harder/longer), (ii) capital deepening (an increase in capital employed per person) or (iii) a technological gain in productivity that exogenously increases the output derived from a unit of labour or a unit of capital. (i) is, well, hard, and (ii) and (iii) require the creation of more capital.

The various monetary systems are simply politically promoted by those that will benefit from them the most for their own reasons. And of course the winner of this political battle is not necessarily the system which objectively benefits the most people, but the one that gets promoted the most.
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That's one, rather slanted, view of governance, where policy is controlled by a special-interest elite who can fool/coerce enough of the people enough of the time. Another is that the monetary system put in place accords with society's collective morals and wishes in respect of economic efficiency. The truth will probably be somewhere between them.
 
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