The U.S. government “shut down” represents a serious danger
to Modern Monetary Theory, or “MMT,” as it is called. MMT, based solidly on the “Chartalism” of
Georg Friedrich Knapp through the virtual global hegemony of Keynesian
economics, relies on government creation of all money. Chartalism is based on the “currency
principle,” which in part assumes that “money” consists solely
of or represents a claim on the present value of existing wealth.
In binary economics, of course, with its reliance on the
“banking principle,” which (again in part) assumes that “money”
consists of or represents a claim on the present value of both existing and
future wealth, government money creation, while possible, is often not
legitimate as government does not create or own the wealth on which it is
issuing claims.
Contrary to the assertions of, e.g., Berle and Means, government does not create wealth. Government therefore can only issue claims
(“create money”) based on whatever wealth it has been granted by the citizens
in the form of taxes already collected.
Governments are asking for serious trouble when they create money based
on wealth that they hope to collect in the future, i.e., future tax collections — counting your chickens before
they’re hatched on a cosmic scale.
The danger to MMT in a government shut down is clear. If, as MMT assumes, only the government can
create money, then — obviously — with no medium of exchange (“money”) available,
not only government, but all economic
activity must eventually shut down. If,
however, economic activity continues without constant infusions of new government
money, the suspicion will grow that maybe all that stimulus money evidently required
by MMT wasn’t so required after all.
What if, consistent with the banking principle, ordinary
people have the power to engage in money creation by entering into and honoring
contracts based on the wealth they reasonably expect to produce by means of
their labor and capital? What if —
contrary to the assumption of Keynesian economics — Say’s Law of Markets really
does work if people can produce
wealth with both labor and capital? What
if (as Jean-Baptiste Say claimed) we don’t really purchase what others produce
with this thing called “money,” but with what we ourselves produce, and “money”
really is just the medium of exchanging wealth and not the wealth itself?
To get to the point where the penny drops, here’s what’s
been going on this week:
• Again, the big news is that a short time ago we released Freedom Under God for printing. CESJ
is now taking bulk/wholesale orders (please, no individual sales). Until December 31, 2013, the per unit price
for 10-99 copies is $16.00 (20% discount), for 100-499 copies is $14.00 (30%
discount), for 500-999 copies is $12.00 (40% discount), and for 1,000 or more
copies is $10.00 (50% discount).
Shipping is extra. Send an e-mail
to “publications [at] cesj [dot] org”
stating how many copies you want and the street address (no P. O. Boxes) where
you want them delivered. We will get
back to you with the total cost, how to pay, and estimated delivery time. All payments must be made in advance, and
orders are placed only after payment clears.
• CESJ offers a 10%
commission on the retail cover price on bulk sales of publications. If you broker a deal with, for example, a
school or civic organization that buys a publication in bulk (i.e., ten copies or more of a single
title), you receive a commission once a transaction has been completed to the
satisfaction of the customer. Thus, if
you get your club or school to purchase, say, ten cases of Freedom Under God (280 copies) or any other CESJ or UVM
publication, the organization would pay CESJ $3,920.00 (280 copies x $20 per
copy, less a 30% discount), plus shipping (the commission is calculated on the
retail cost only, not the shipping). You would receive $560.00. Send an e-mail to “publications [at] cesj [dot] org” for copies of flyers of CESJ and
UVM publications. (CESJ project
participants and UVM shareholders are not
eligible for commissions.)
• Since the U.S. government “shut down,” increasing interest
has been expressed in CESJ’s counter-proposal to “Obamacare,” the reason
usually given for the situation. Since it
is never too late to correct a mistake, it might be useful to introduce your
legislators to the Just Third Way proposal for universal healthcare
that does not rely on government funding or imposing morally repugnant choices
on people or institutions.
A shorter summary of the proposal is here.
• On Thursday, October 3, 2013, Dr. Norman G. Kurland gave
the first lecture in what could develop eventually into “Justice University.” An associate is talking with the University of
Notre Dame-Perth (which has an affiliation with the University of Notre Dame in
South Bend, Indiana) about possible similar events in the future employing
“virtual classroom” technology to span the globe. Administration officials at Georgetown
University in Washington, DC, have expressed interest in the concept. It could dramatically lower the cost of
quality education everywhere.
• Norman Kurland has had some very interesting discussions
with Mr. Bill Still, who has done a great deal of work in the history of money,
credit, and banking. Mr. Still’s
position, while based on the “currency principle” and not entirely consistent
with the “banking principle” approach embodied in binary economics, does have
many of the same goals. Future
discussions may reveal whether or not there is sufficient common ground to
achieve a workable synthesis.
• As of this morning, we have had
visitors from 66 different countries and 48 states and provinces in the United
States and Canada to this blog over the past two months. Most visitors are from
the United States, the United Kingdom, Canada, Australia, and India. The most popular
postings this past week were “The Fulton Sheen ‘Guy’,” “Aristotle on Private
Property,” “Thomas Hobbes on Private Property,” “Avoiding Monetary Meltdown,
II: Salmon P. Chase and the Greenbacks,” and “‘Long Lost’ Book by Fulton Sheen
Rediscovered.”
Those are the happenings for this week, at least that we
know about. If you have an
accomplishment that you think should be listed, send us a note about it at
mgreaney [at] cesj [dot] org, and we’ll see that it gets into the next
“issue.” If you have a short (250-400
word) comment on a specific posting, please enter your comments in the blog —
do not send them to us to post for you.
All comments are moderated anyway, so we’ll see it before it goes up.
#30#