In a Nutshell

I’ve been trying to condense the argument for why we need more money circulating, not less. This is my latest iteration.

The alternative to debt is theft. And every dollar is, in fact, a certified IOU. While it is obviously possible to incur debts without dollars, just as it is possible to enter a marriage without a certificate, since we incur debts with many more people, the certificates/tokens/memoranda make our obligations easier to remember and we can even pass them around. A civilized culture, one which does not rely on predatory theft, needs money (which we invented about 5000 years ago) and, as the network of relationships increases, it needs more. Putting artificial restrictions on how much money there is in circulation, whether by official rationing or private hoarding, is, when you come right down to it, anti-social behavior.

Why the Republican party in the U.S. has become anti-social is anybody’s guess. Perhaps crooks are like birds of a feather and, ever since Nixon, they’ve been flocking to the banner of the ‘rex.’ The culture of obedience relies on “doing what the boss wants” to get away with mischief and worse.

Leadership, it would seem, is like ownership. Not up to good.

Leadership and ownership and citizenship — each represents an obligatory relationship. Are they mutually excluding? If so, then to be civilized we must eschew leaders.

13 Responses to In a Nutshell

  1. Aahz January 8, 2013 at 10:30 pm #

    I’m sorry, I’m a bit confused by your statements. Are you saying that we’re unable to track who owes what to whom because there aren’t enough dollars floating around?

    • hannah January 9, 2013 at 11:16 am #

      There are plenty of dollars, they’re just not in the right hands.

      • BobRobertson January 9, 2013 at 3:17 pm #

        Hannah, whose hands are they in?

        • hannah January 9, 2013 at 6:11 pm #

          They’re in the accounts of financiers and speculators who produce no goods or services and don’t spend in acquiring the same.

          • BobRobertson January 10, 2013 at 8:37 am #

            Indeed, that is exactly where the “bailout” and “stimulus” funds were placed, diluting the money held by individuals (inflation).

            Sadly, that is the way with all political allocation of funds, their “friends and relations” get the money.

    • JonnyBBad January 9, 2013 at 2:28 pm #


  2. BobRobertson January 9, 2013 at 3:17 pm #

    One of the basic properties of “money” is called “fungibility”. That is, that any one unit is the same as any other unit, that fractions of a unit are equal to the same fraction, etc.

    So a paper “dollar” and 100 “cents” are identical in their function as “money”, even though they can hardly be called anything like identical physically.

    Because of this fungibility, the quantity of a currency in circulation is irrelevant. If there was only $100 in the world, rather than trillions, the denomination in common use would be one billionth or trillionth of a dollar. Or, in the opposite direction, the same gallon of gasoline takes $3.50 today what was $.35 some 40 years ago.

    It’s the same “value” even though the quantity of “currency” to achieve that value has changed.

    So changing the number of currency units doesn’t change anything, since the quantity of goods available for purchase isn’t changed thereby. It does, however, give the first users of those new currency units a chance to buy goods at the old price, before the prices have a chance to change to reflect the new number of currency units.

    • StraffordDem January 9, 2013 at 7:14 pm #

      I think what you’re getting at with price change, Bob, is that an increase in money supply causes inflation.

      I have not been able to find any peer-reviewed articles or research papers that document that increases in money supply cause inflation. Just the opposite, in fact. Professors L. Randall Wray and John Harvey, as just two examples, have written extensively about this misconception.

      Here’s an article from Forbes by Prof Harvey on the subject:

      By every account, we have been suffering from a lack of demand economic recession and slow growth period. What is lack of demand if not lack of money?

      • Aahz January 9, 2013 at 10:00 pm #

        “What is lack of demand if not lack of money?”

        Satisfaction? :D

      • BobRobertson January 10, 2013 at 8:56 am #

        “I have not been able to find any peer-reviewed articles or research papers that document that increases in money supply cause inflation.”

        This may be of service, then:

        The problem with your Forbes article is that Prof. Harvey forgets time. He makes the common error of assuming perfect knowledge, assuming static evenly rotating economics, etc etc etc. While he complains that “they forget all the assumptions made to get there!”, he himself makes gross assumptions.

        I’ll try again. When new money is created, it is given to someone. That entity spends the new money, bidding up prices (or decreasing the supply) of things that now cannot be bought by anyone else. This decrease in supply increases prices.

        For that matter even without any new money just a change in people’s preferences do exactly the same thing. More people buying iPhones will increase the price of the materials used to make iPhones.

        As the new money makes its way through the economy, prices change to reflect the new pattern. But unlike when preferences shift, the new money is not accompanied by a DECREASE in spending elsewhere. So eventually, over time, the greater supply of money compared to goods ends up creating a general rise in prices.

        The people who get the new money last, that’s you and me because we’re not political favorites, end up having to spend our old money to pay the prices that the new money has generated. Our purchasing power has gone down, the “value” of our money is decreased to compensate for the “value” gained by whoever it was who spent the new money before prices rose.

        “What is lack of demand if not lack of money?”

        The error here is the assumption that there is any lack of demand. People are doing what they always do, shifting their preference to fit their expectations.

        Left alone, some businesses always err in their guesses as to what people are going to want, and suffer losses. Some even go out of business. And the faster those corrections can be made, the sooner the resources used by those businesses can be utilized by firms who make better guesses and therefore profits.

        But that has not been allowed to happen. The bailouts, stimulus, and other games have prevented the losses and bankruptcies that would have allowed the actual demands to be met. Demand has shifted, but without the resulting correction.

        The slow growth is because of a lack of adaptation, not a lack of demand.

  3. Seth King January 11, 2013 at 8:34 pm #

    Have you looked into the peer-to-peer decentralized currency Bitcoin?

  4. Graham January 12, 2013 at 9:48 am #

    How do you propose to get more money circulating? Are you concerned about causing price inflation by circulating more money?

    The current method of doing so (via the Federal Reserve) is a very secretive top-down system where the ‘leaders/owners’ give all the new money to their banker friends.

    The method for doing so in the mid-1800s (small banks issuing their own currency that was worth less and less the further you went from a branch) had its own set of problems.

  5. my wag January 12, 2013 at 5:23 pm #


    You should investigate MMT: Modern Monetary Theory. There are a few economic blogs that present the concept in a couple of different ways. There is the concept of JG; job guaranty which would allow for no unemployment and govt control over the money supply. Others want a more conservative approach and call their concept: Monetary Realism.

    There are others but this will get you started.
    Good Luck

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