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Yet
another intraday commentary here on the nature of money and the Platinum Coin solution to our debt
problems. After all, modern money is just an accounting fiction, easily
created and destroyed, taken from these and given to our powerful friends.
The more I thought about what Mr. Krugman wrote,
the more troubled about it I became.
He seems to elevate what the central bankers do to the realm of pure science,
as a purely mathematical function without resort to or consideration of
morality or moral choices. As
if.
That sounds like something one of the Austerians
might say. We have to do these terrible things, require people to make awful
sacrifices, because the economic equations compel us. It is not our fault.
And making these difficult choices is such hard work that we deserve
magnificent recompense for it, as in British MP's have asked for a 32%
pay increase.
Economics deals with a set of higher level public policy choices, and a
series of specific economic decisions and tradeoffs designed to implement
them. And not the other way around.
Our current system is upside down, where those with the money and the insider
connections make the decisions, and those who serve them in various ways
receive power and outsized rewards from those monied
interests and their institutions. It is not all that far from what Hedges'
calls inverted
totalitarianism.
Consider how badly policy and monetary choices have damaged the people of the
United States in the past twenty years, and a good part of the rest of the
world for that matter. Who can be confident that wisdom will prevail and
justice will be done when there is no serious reform, and the perpetrators
continue to write the rules for themselves. It is as though we are witnessing
the struggles of competing crime families, and not a democratic process.
I think it is a terrible canard to say that people who wish to have a stable
money supply and some confidence in its value, especially with regard to
their savings, wish to have a money supply that comes from God as some sort
of divine money.
Rather, I think the man is willfully misunderstanding and denigrating people
who are referencing the principles of equal justice and 'inalienable rights'
to freedom and property, without arbitrary confiscation by a central
authority. Money is a powerful tool as any economist should know, and it is
very dangerous when wielded badly, or by the wrong hands. The process of
money needs to be transparent, and above reproach.
And especially when the monetary authority has proven itself repeatedly to be
as ineffective, prevaricating, secretive, given to conflicts of
interest and cronyism, and self-serving as
the current crop of leadership that we have today in the Fed, Wall Street,
and the government.
It is not as though these fellows do not understand what is at stake. Today
Mr. Krugman said why he prefers the Platinum Coin
gimmick to hitting the debt ceiling.
"My
own view is that I was willing to go over the brink on the fiscal cliff, but
not here, for three reasons.
First, this is seriously risky business. The fiscal cliff would have been a
known quantity: basically, a negative Keynesian shock to the economy, which
is something we understand quite well, and
furthermore something that would have built only gradually over time. The
risks, in short, were somewhat contained.
By contrast, nobody really knows what happens if America defaults, even briefly.
The whole structure of world financial markets is built around the use of
Treasury bills as the ultimate safe asset; what happens if they lose that
status? It would certainly be an interesting experiment, but one best carried
out if you have plenty of bottled water and spare ammunition in your
basement."
Paul Krugman, Thinking About the Brink
So allowing the debt ceiling to come, which is NOT a default on debt
since interest can still be paid, which Clinton had done quite successfully as I recall, is to be feared to the point of doomsday. But using a
dodgy method of overtly monetizing the debt, which has existed as an idea on
the fringes until a month ago and has never been done before, is much less
risky and will bother nobody. Are you kidding
me?!
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