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OpEdNews Op Eds    H3'ed 1/14/15

What if the Public Understood How Money Works?

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Defense also raises the questions of "good wars." I'm not a pacifist. I'm very happy that the Allies defeated the Axis in World War II. One of the great truths of fighting wars of survival like World War II is that national leaders discover MMT even if the priestly class of economists yammers on about the terror of deficits and sovereign debt. No UK leader would respond to a German invasion by saying: "Sadly, we're 'out of money' because we're already running a deficit and our sovereign debt to GDP ratio is high -- so I've ordered our troops to lay down their arms and surrender."

Notice the lack of a financial footnote in Winston Churchill's famous speech on June 4, 1040 to the House of Commons about the military disaster in France, the hard-won miracle of Dunkirk, and the prospect of a German invasion.

"The British Empire and the French Republic, linked together in their cause and in their need, will defend to the death their native soil, aiding each other like good comrades to the utmost of their strength. Even though large tracts of Europe and many old and famous States have fallen or may fall into the grip of the Gestapo and all the odious apparatus of Nazi rule, we shall not flag or fail. We shall go on to the end, we shall fight in France, we shall fight on the seas and oceans, we shall fight with growing confidence and growing strength in the air, we shall defend our Island, whatever the cost may be, we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender, and even if, which I do not for a moment believe, this Island or a large part of it were subjugated and starving, then our Empire beyond the seas, armed and guarded by the British Fleet, would carry on the struggle, until, in God's good time, the New World, with all its power and might, steps forth to the rescue and the liberation of the old."

His entire speech says not a word about financial constraints. His speech is filled with discussions of real resources, particularly limitations in those resources and how the government was working urgently to provide the monumental increases in real resources required for national survival. There is no footnote saying "we shall never surrender"* (*"until we 'run out of money'"). Nations with sovereign currencies faced with threats to survival discover within hours that their problem is not "running out of money" but running out of bullets. If they have lead they can make bullets. The next thing that nations discover is that real resource constraints do start binding as they mobilize for a war of survival -- it can make sense to have people volunteer their pots and pans -- to beat plowshares into swords.

The Fear of Knowledge

Prometheus' tales inherently include the Gods' fear that regular people will learn the secrets of the Gods and priests -- and that the result will be chaos. In one variant Zeus retaliates for Prometheus' efforts to help humans by sending Pandora. Her box is not the key in some variants of this tale -- the key is sending women. Women, of course, make men's lives a living hell. This anti-female message played out again in the story of Eve, the snake, and the apple (symbolizing knowledge). Mary Shelley portrayed Frankenstein (the doctor, not the revived kind-of monster) as "The Modern Prometheus." So, how many people wish we had never been "cursed" with knowledge (and women)? Right, this is why I find it bizarre for libertarians to freak out about the public learning the reality of money.

Worstall: It is "Intensely Dangerous" to my "Liberty and Freedom" to Cut Unemployment

I'll leave you with Worstall's admission that his real fear is that people would make different choices, such as full employment with price stability, if they learned the truth about money.

"And given that I tend to believe that there's vast areas of life (not to mention quaint concepts like liberty and freedom) that work best in the absence of government MMT is a theory that I particularly don't like. That I think is intensely dangerous in fact: even though I'm perfectly willing to accept many of the economic points they're making"."

Yes, he actually wants to ensure that the governments not work effectively on behalf of their citizens, that tens of millions of people suffer in gratuitous Great Depressions, because he thinks ending their misery is "intensely dangerous" to his "liberty and freedom" even though he concedes that the stimulus would also help him personally by speeding the economic recovery. He is the very model of the Libertarian Looney. Again, his real concern is that if people learned that governments could use their potential for the citizens instead of for the CEOs by providing full employment the citizenry would respond to that success by voting to cause democratic governments to address other societal needs. Some of us still favor "quaint concepts" like candor, transparency, democracy, and the golden rule -- and disfavor secular priests' secrets.

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William K Black , J.D., Ph.D. is Associate Professor of Law and Economics at the University of Missouri-Kansas City. Bill Black has testified before the Senate Agricultural Committee on the regulation of financial derivatives and House (more...)
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