Alan Greenspan and the Ownership Divide

The recent passing of Alan Greenspan triggered a moment or two of reflection regarding his position on the Just Third Way of Economic Personalism, particularly the recommended monetary reforms which have been covered at some length on this blog.  Principally (at least so far as this discussion is concerned) this involves the realization — an integral feature of binary economics — that savings (essential for new capital investment) — can and do consist of both past reductions in consumption and future increases in production.

That Krazy Keynesian Math II, the Quantity Theory of Money

In the previous posting on this subject, we looked at the shaky moral foundation of Keynesian theory.  This consists of Keynes’s own assertion that his system would only work if we lie to ourselves for at least a century.  We also looked at the somewhat distorted and distorting concept of productivity as understood in economics and public policy.  In contrast, we posed Louis Kelso’s concept of productiveness, the free market-determined value each factor contributes to the overall production process.

Why Economists Reject Binary Economics, V: “Perceived Policy Risks and Inflation Concerns”

The four previous postings on this subject — why so-called mainstream economists reject Binary Economics — we have looked at 1) Lack of Empirical and Econometric Support, 2) Heterodox and Non-Conventional Framework, 3) Criticism of Core Concepts, Particularly “Productiveness”, and 4) Negative Reception by Prominent Economists.  This last, the “negative reception” by prominent economists, is possibly the weakest reason given.

Muddling Through to Servility

 The election of Pope Leo XIV has aroused renewed interest in “Catholic” social teaching . . . which is not “Catholic,” but “catholic” with a small c, as it is based on the natural law common to every human being.  Unfortunately, there is a flaw in how these teachings have been presented.  This is not a flaw in the teachings, mind you, but in how they are applied, which is a mistake anybody, even a pope or president, can make.

Inflation and Job Creation

Under the hegemony of Keynesian economics, the global economy must be inflationary.  Why?  Because . . . well, because, that’s why.  Which, of course, is not an answer — but it makes more sense than the actual Keynesian answer.  It all lies in how you define inflation.  You see, the different schools define inflation differently, and not entirely consistently.

How Much Money?

One of the problems with the global monetary system is the so-called experts are never able to decide how much money to create so that there is low inflation, high employment, low prices, and high wages . . . and you get the idea.  The experts argue endlessly about everything except what they’re really concerned about: how to get the money they want and prevent everyone else from getting it.

What is “Inflation”?

’Way back in the Stone Age, someone once asked a politician or a judge . . . or it could have been the person ahead of them in line at the supermarket . . . to define pornography.  The answer was something along the lines of the individual couldn’t define it, but he knew it when he saw it.

Hijacking Financial Reform

 In the previous posting on this subject, we noted that as the “free land” of the 1862 Homestead Act ran out, the concentration of wealth accelerated.  This, however, is pretty much built in to the assumption that new capital formation can only be financed by cutting consumption below what is produced.

Resolving the Economic Dilemma

 As we saw in the previous posting on this subject, the popular notion of finance — embodied in all three mainstream schools of economics (Keynesian, Monetarist/Chicago, and Austrian) — is that it is essential to cut consumption and accumulate money savings in order to finance new capital formation.  This, however, leads to a paradox that Dr. Harold Glenn Moulton of the Brookings Institution called “the Economic Dilemma.”

The First Problem Principle of MMT

Italy is once again making political and economic waves, with much of the trouble stemming from the Euro.  The currency question is now becoming one that decides the fate of nations.  Ironically, all of this was avoidable had the Euro been established and maintained in a manner consistent with sound monetary theory.

Reserve Currency, III: Money Manipulation

As we saw in the previous posting in this series, the invention of “currency” — “current money” of a recognized and standard value in an economy — was a great boon to progress.  The idea that money, defined as “all things transferred in commerce,” could have a standard unit of measure meant that people could make plans for the future more easily and with more confidence that a project would have the anticipated results.

Money Creation for Dumbos

We don’t really mean what we say in the heading of this blog posting.  First, we couldn’t use “for Dummies,” because that one was already taken.  Second, our readers aren’t dummies.  Third, our readers aren’t flying elephants, either.  Come to think of it, “Money Creation Made Easy” might have been a better heading, except that money creation isn’t easy.  It is, however, quite simple.

Legal Counterfeiting

The late Paul Samuelson once quoted the late Irving Fisher regarding the monetary policies of the late John Maynard Keynes to the effect that what developed into Keynesian “Modern Monetary Theory” is, in reality, nothing more than “legal counterfeiting.”  While it is unusual to find so many defunct economists in agreement on this point, there is another that is even more remarkable:

Distributist Economist Erratum Three

Yesterday we looked at the notions of a distributist economist whom we’ve been calling “Tom Steele” and his associate, “Joe Wide,” regarding their assumption of absolute certainty of future events (future cash flows) and the existence of an ideal value of something that completely removes the opinion of the buyer and the seller as to the utility of what is exchanged in a transaction.  In short, Wide and Steele take a “Platonic” view of the universe that assumes that ideas have an existence independent of the human mind, when the real world is Aristotelian.

Is Capital Limited?

As some of you may have noticed, we put the blog on “autopilot” for two days last week to attend the annual ESOP Association conference in Washington, DC . . . which was really handy, since we’re in Arlington.  It would have been handier if the Metro system was in good shape and operating in a more . . . user-friendly fashion, but at least we attended some very interesting and even informative sessions.

More of the Same

No sooner had we explained that the whole idea of “debt free money” is an oxymoron than we got a response patiently explaining that we just don’t understand what we’re talking about.  Not that we were in any way annoyed.  Every question like this — even the same question repeated endlessly — gives us a chance to restate what we’ve been saying all along.  After all, if the questioners can ask the same thing over and over without first reading the answers we’ve given before, we can simply say what we’ve said before.  You never know.  Someone might actually read it this time.  Anyway —

Reforming the System

We do get the most interesting comments on occasion, especially from people who have only skimmed through what we’ve written or just glanced at the title or the conclusion.  That seems to be the source . . . excuse me, sourse, of the following comment we got a week or so ago in response to a piece on the role of the central bank in economic development (spelling and punctuation unchanged):

The Opium of Public Debt

After last week’s stock market gyrations caused — according to the experts — by events in China and alleged events in North Korea, other experts are predicting that 2016 will be “A Year of Sovereign Defaults.”  According to Carmen Reinhart, Professor of the International Financial System at Harvard University's Kennedy School of Government, “As 2016 begins, there are clear signs of serious debt/default squalls on the horizon. We can already see the first white-capped waves.”

Chicken Little Economics

The financial world is in an absolute panic, the economic mavens are freaking out, politicians are starting to wonder if they should start looking for honest work . . . until they remember that their financial and economic policies have ensured that there won’t be any jobs waiting for them.  What to do, what to do?  And (for us normal people) what the heck is going on, anyway?  What is causing all the fuss?

Almost Desperate Enough for a Good Idea

Lawmakers are starting to panic in light of the refusal of the financial markets to obey the media's premature hints about the end of the financial crisis. They are starting to listen to just about everything except common sense. If things get much worse, they might even be willing to listen to that (i.e., read this blog).

A CNN report on October 21 on CNNMoney.com ("Ideas for 2nd Stimulus Cover Broad Swath," Jeanne Sahadi) stated, "The drumbeat for lawmakers to do more to boost the economy is growing louder. And the chances have increased that Congress could pass a second stimulus package during its lameduck session following the presidential election."

Unfortunately, those in power are still stuck in the Keynesian paradigm. This limits the choices to tax-and-spend, or print-and-spend. They are ignoring the possibility of creating money through a properly regulated banking system for productive purposes, thereby putting currently wasted resources, excess capacity, and idle people back to work doing something worthwhile.

What is a "properly regulated banking system"? A system that embodies structural "checks and balances" (i.e., what an accountant would call "internal controls"), policed first by the industry itself, and then by the State when self-policing fails to maintain separation of function and democratic access to money and credit.

Our "Capital Homesteading" proposal would, in part:

• Use the Federal Reserve (the central bank of the United States) to finance all future capital formation through the private sector.

• Amend the definition of "qualified industrial, commercial, and agricultural paper" to include an extended term of the loan and a requirement that paper does not qualify for discounting unless extended through expanded ownership mechanisms, such as Capital Homestead Accounts, Homeowners' Equity Corporations, Community Investment Corporations, Consumer Stock Ownership Plans, Employee Stock Ownership Plans, and similar vehicles.

• Abolish the Open Market Committee and prohibit the Federal Reserve from future dealing in government bonds, whether primary or secondary.

• Abolish fractional reserve banking and mandate a 100% reserve requirement for all commercial banks.

• Prohibit State ownership of productive assets of any kind, or from owning shares in financial institutions.

Specifics about Capital Homesteading can be found in the book, Capital Homesteading for Every Citizen. An examination of the monetary theory underlying Capital Homesteading can be found in "A New Look at Prices and Money."

With lawmakers running around and stating that they are willing to try anything, it's probably about time that they decided to try something that will actually work.

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