Modern Monetary Theory

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Re: Modern Monetary Theory

Postby Spiro C. Thiery » Mon Nov 30, 2020 6:23 am

Elvis » 04 Sep 2020, 01:47 wrote:
thrulookingglass wrote:"One third of deaths - some 18 million people a year - are caused by poverty."

Poverty is not caused by money; poverty is a shortage of money.

Sure. A shortage of money for those in poverty. And guns don't kill people. But the more money you have, the greater your potential influence over its allocation and availability. I'm afraid this fascinating thread and the informative source material is too beyond a rube like me to ever get.
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Re: Modern Monetary Theory

Postby conniption » Mon Dec 07, 2020 1:52 am

Your Guide to the Great Monetary Reset

https://www.youtube.com/watch?v=ZwGQBR2 ... =emb_title

•Dec 4, 2020
corbettreport
SHOW NOTES AND MP3: https://www.corbettreport.com/bretton...
Do you know what it means when the Managing Director of the IMF warns of a "new Bretton Woods moment?" How about when the head of the BIS revels in the total surveillance power that digital currencies will afford the central bankers? Well, you're about to. Don't miss this info-packed edition of The Corbett Report podcast where James peels back the layers of the great currency reset onion and uncovers the New World (Monetary) Order.
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one of 2700 + comments:
Thomas Jager - 2 days ago
We do not need a cashless society but a bankless society.
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Re: Modern Monetary Theory

Postby JackRiddler » Mon Dec 07, 2020 7:08 am

Leading activists within MMT oppose this and wrote the bill introduced by Rashida Tlaib to restrict the currency proposed by Facebook and similar moves to introduce private surveillance-based currencies.
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Re: Modern Monetary Theory

Postby dada » Mon Dec 07, 2020 2:09 pm

When I read what comes out of the self-referencing and -reinforcing subculture bubble of conspiracy hobbyists, I can't help seeing how completely dominated and cowed they are by the idea of the illuminati.

The obsession frames every thought, obscures every fact and colors every opinion. The drive to conspiricize all moments takes over. But Bill Gates and friends are not the architects of the grand conspiracy that is hell-bent on stealing their precious bodily fluids. It's immersion in that subculture network which reproduces the architects of grand conspiracy inside them every day.
Both his words and manner of speech seemed at first totally unfamiliar to me, and yet somehow they stirred memories - as an actor might be stirred by the forgotten lines of some role he had played far away and long ago.
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Re: Modern Monetary Theory

Postby Elvis » Tue Jan 05, 2021 3:40 am

Spiro C. Thiery » Mon Nov 30, 2020 3:23 am wrote:
Elvis » 04 Sep 2020, 01:47 wrote:
thrulookingglass wrote:"One third of deaths - some 18 million people a year - are caused by poverty."

Poverty is not caused by money; poverty is a shortage of money.

Sure. A shortage of money for those in poverty. And guns don't kill people. But the more money you have, the greater your potential influence over its allocation and availability.


I just mean that there can be too little money to go around. There can be plenty of things to buy, but not enough money around. The only one who can really do something about that is the central government. Assuming there are enough resources for everyone to eat, work, have a roof, etc. (and I understand there are), poverty becomes a policy choice.

A policy choice that looks like this: :wallhead:

Ideally, regulations and taxes would stop people from accumulating too much money and using it to influence its allocation and availability by the government. Imagine...no billionaires. :shock:
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.” ― Joan Robinson
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Re: Modern Monetary Theory

Postby Elvis » Sat Jan 23, 2021 10:24 pm

https://www.nytimes.com/2021/01/11/upsh ... biden.html
The Most Important Thing Biden Can Learn From the Trump Economy

A “hot” economy with high deficits didn’t cause runaway inflation.

By Neil Irwin
Published Jan. 11, 2021Updated Jan. 18, 2021


For all the problems that President Trump’s disdain of elite expertise has caused over the last four years, his willingness to ignore economic orthodoxy in one crucial area has been vindicated, offering a lesson for the Biden years and beyond.

During Mr. Trump’s time in office, it has become clear that the United States economy can surpass what technocrats once thought were its limits: Specifically, the jobless rate can fall lower and government budget deficits can run higher than was once widely believed without setting off an inflationary spiral.

Some leading liberal economists warned that Mr. Trump’s deficit-financed tax cuts would create a mere “sugar high” of a short-lived boost to growth. The Congressional Budget Office forecast that economic benefits of the president’s signature tax law would be partly offset by higher interest rates that would discourage private investment.

And the Federal Reserve in 2017 and 2018 took action to prevent the economy from getting too hot — driven by models suggesting that an improving labor market would eventually cause excessive inflation.

These warnings did not come true.

Before the pandemic took hold, the jobless rate was below 4 percent, inflation was low, and wages were rising at a steady clip, especially for low and middle earners. The inflation-adjusted income of the median American household rose 9 percent from 2016 to 2019.

The higher interest rates from unfunded tax cuts that had been forecast did not materialize; the C.B.O. in spring 2018 had expected the 10-year Treasury bond yield to average 3.5 percent in 2019. In fact, it averaged a mere 2.1 percent, making federal borrowing more manageable.

And the Fed cut interest rates starting in 2019 despite a very low jobless rate, implicitly accepting the premise that it had moved too aggressively with rate increases to prevent inflation that never arrived.

Mr. Trump has sent plenty of mixed signals on both deficits and interest rate policies over the years. He has intermittently promised to eliminate the national debt, even as his policies expanded it; he supported rate increases in 2015, accusing the Fed of keeping them low to help President Obama; and some of his Federal Reserve appointees were monetary hawks (though not those who managed to win Senate confirmation).

But the experience of his presidency — particularly the buoyant economy before the pandemic began — shows what is possible. It may not have been the best economy ever, as he has repeatedly claimed, but it was easily the strongest since the late 1990s, and before that you have to go back to the late 1960s to find similar conditions.

If Mr. Trump was able to ignore economic orthodoxy and achieve the best economic outcomes in years, it’s worth asking how much value that orthodoxy held to begin with.

Just maybe, does the success of Trumponomics tell us that we’ve been doing something wrong for decades?


The not-so-great moderation

To understand how deeply entrenched the centrist conventional wisdom around economic policy has been over the last generation, consider a curious incident from August 1994. Alan Blinder, the newly named vice chairman of the Federal Reserve, gave a speech at an annual symposium of central bankers in Jackson Hole, Wyo., in which he described trying to reduce unemployment as an important role for the Fed.

Some huffing and puffing ensued. There was talk in the hallways about Mr. Blinder’s focus on unemployment rather than on inflation prevention, which central bankers viewed as their main goal. It made its way into the news media, including some scathing attacks.

“Put simply, Blinder is ‘soft’ on inflation,” wrote the Newsweek columnist Robert J. Samuelson. Without adequate anti-inflation conviction, “Blinder lacks the moral or intellectual qualities needed to lead the Fed.”

“I was pilloried for suggesting that we might get below 6 percent on the unemployment rate,” Mr. Blinder, a Princeton economist, said recently.

A widespread view among economic policy elites, after the runaway inflation in the 1970s and early 1980s, was that elevated unemployment was a necessary cost of keeping prices stable. Also, that the government can’t spend much more money than it takes in without crowding out private investment — leaving the economy weaker over time — and that policymakers should act pre-emptively to ward off these risks.

That intellectual consensus lurked beneath many momentous decisions. Among them: the deficit-reduction agenda of the Bill Clinton administration; the interest rate increases of the Alan Greenspan Fed during George W. Bush’s second term; and the Obama administration’s determination, under pressure from Congress, not to increase the deficit in devising its signature health care law.


This view was shaped by a reliance on the “Phillips Curve,” which describes the relationship between the jobless rate and inflation. As applied by a generation of central bankers, it was treated as a useful guide to setting policy. If the unemployment rate went too low, the logic went, inflation was inevitable, so central bankers needed to prevent that from happening.

When Fed leaders raised interest rates in December 2015, for example, their consensus view was that the long-run unemployment rate — the goal they were ultimately seeking — was 4.9 percent.

If the job market kept improving, then-Fed Chair Janet Yellen said at the meeting where that interest rate increase was decided, “we would want to check the pace of employment growth somewhat to reduce the risk of overheating.”

Yet from spring of 2018 to the onset of the pandemic, the United States experienced a jobless rate of 4 percent or lower, with no obvious sign of inflation and many signs that less advantaged workers were able to find work. Reality turned out better than the 2015 officials thought possible.

Since the 1980s, recessions have been rarer than they were in the immediate post-World War II era, but they have been followed by long, “jobless” recoveries. Much of that time has featured weak growth in workers’ wages.

It turns out that when you try to choke off the economy whenever it is starting to get hot, American workers suffer. The Fed has been like a driver who aspires to cruise at the speed limit, but starts tapping the brakes whenever the car gets anywhere close to that limit — and therefore rarely attains it.

From 1948 to 1969, the unemployment rate was at or below 4 percent 39 percent of the time. Since 1980, that has been the case less than 8 percent of the time.

Economists have referred to the period from the early 1980s through the 2008 financial crisis as “the great moderation,” because recessions were rare and mild. But with more years of hindsight, that period looks less like a success.

“There’s nothing particularly moderate or particularly great about the great moderation,” said Larry Summers, the Harvard economist and former Treasury secretary.

In effect, the last four years at the Fed have made clear both how much things have changed and how much they needed to. Ms. Yellen (now President-elect Biden’s Treasury secretary nominee) started the first of a series of interest rate increases in late 2015, and the current chair, Jerome Powell, continued them.

But the logic kept breaking down. Inflation kept coming in below the 2 percent target the central bank aims for, even as the jobless rate kept falling. It’s not terribly clear what was necessary about the rate increases, as President Trump’s harangues against Mr. Powell expressed vividly. Arguably, they reflected a reliance on old economic models and the same inflation-fighting muscle memory that caused the backlash against Mr. Blinder a quarter-century earlier.

Mr. Trump violated decades of precedent under which presidents don’t jawbone the Fed, which seeks to maintain political independence. But that didn’t make him wrong about interest rates.


Macro or micro?

On March 18, 2019, a group of Mr. Trump’s economic advisers gathered in the Oval Office to show him the annual “Economic Report of the President,” a 700-page document that amounts to an official statement of the administration’s economic achievements, analysis and goals.

He was particularly excited about one page of charts, said Casey Mulligan, one of the advisers. They showed that the economy had created far more jobs and had a much lower jobless rate than the C.B.O. had projected just before the 2016 election. The president called in Dan Scavino, his social media director, and fired off a tweet about the results.

A central question for Mr. Biden will be: To what degree is the Trump-era economic success a result of policies that liberals disagree with, to what degree is it a result of policies that Mr. Biden might embrace, and to what degree is it just luck?

Mr. Mulligan and other allies of the president emphasize the role of deregulating major industries and lowering taxes on business investment — microeconomic strategies — as crucial to the economy’s success.

“The forecasts systematically overpredicted the Obama economy every year, and throughout the Trump administration, they underpredicted,” said Mr. Mulligan, an economics professor at the University of Chicago. “What nobody in the intelligentsia was paying attention to was the regulations that were holding us back.”

The Biden administration and Democratic Congress will view more aggressive regulation as a core goal, aimed at preventing corporate misbehavior, protecting the environment, and more. Indeed, left-leaning economists would argue that the very policies Mr. Mulligan credits with the boom are the least durable parts of the Trump-era expansion.

“It is true that the corporate giveaway aspect of the policies, cutting taxes and scaling back regulation and so forth, coincided with an unequal prosperity that lasted longer prior to Covid than I would have guessed it would,” said Mr. Summers, a prominent proponent of the “sugar high” theory of the Trump economy. “But I don’t think it had any particularly strong foundation in terms of increasing productivity or capital investment.”

If you believe Mr. Mulligan and other Trump allies, the macroeconomic lessons of the Trump years — those having to do with things like deficits, inflation and interest rates — won’t be enough for the Biden administration to recreate the 2019 economy. In this view, the microeconomic details of how the president has governed will be crucial, and the policies that Mr. Biden has advocated — in areas as varied as tighter restrictions on carbon emissions and more aggressive regulation of banks — will prove counterproductive to the cause.


Lessons for the next administration

The people who will shape economic policy in the new administration seem eager to push for a post-pandemic economic surge reflecting the (macroeconomic) lessons of the last four years.

Ms. Yellen has a background as a labor economist, and in the 1990s, as a Fed official, she urged Mr. Greenspan to raise rates pre-emptively based on the inflation risks that the Phillips Curve predicted. At that fateful meeting to increase rates in 2015, she raised an intriguing possibility. If inflation were to remain persistently low, she said, “a more radical rethinking of the economy’s productive potential would surely be in order.”

That radical rethinking is now very much underway — including by Ms. Yellen.

“Allowing the labor market to run hot could bring substantial benefits,” Ms. Yellen said in a speech at the Brookings Institution in 2019. She said that a high-pressure economy — one where unemployment is low and employers have to compete for workers — improves upward mobility. She added: “We’re seeing that in the current expansion. Those who are least advantaged in the labor market — those with less education and minorities — are experiencing the largest gains in wages and declines in unemployment.”

Mr. Powell, who will lead the Fed for roughly the first year of Mr. Biden’s term and then will be either reappointed or replaced in February 2022, has also become a vocal enthusiast for avoiding these mistakes of the past.


In the strong pre-pandemic labor market, he said in an August speech on the Fed’s new policy framework, “many who had been left behind for too long were finding jobs, benefiting their families and communities, and increasing the productive capacity of our economy.”

“It is hard to overstate the benefits of sustaining a strong labor market,” he said, and the central bank’s new policy language “reflects our view that a robust job market can be sustained without causing an outbreak of inflation.”

In recent years, the C.B.O., which plays a crucial role forecasting the fiscal and economic effects of different policies, has re-examined its view of future interest rates in ways that have lowered the projected cost of public debt.

In early 2017 when Mr. Trump took office, for example, the C.B.O. projected that by 2020 the government would need to pay at a 3.2 percent rate to borrow money for a decade. The actual rate is now just over 1 percent, even after a surge over the past week. While that reflects the pandemic-induced downturn, even at the start of 2020 the rate was 2 percent. The C.B.O.’s most recent forecast is that it will remain below 3 percent through 2029.

President-elect Biden has embraced these lessons in shaping his agenda, as he made clear in a news conference Friday where he confirmed that his plans will add up to trillions of dollars when one includes both pandemic response money and longer-term plans.

“With interest rates as low as they are,” Mr. Biden said, “every major economist thinks we should be investing in deficit spending to generate economic growth.”

One of the big plot twists of this era is that Mr. Biden’s plan to make the American economy great again seems to rest on applying the macroeconomic lessons of the Trump era.
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.” ― Joan Robinson
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Re: Modern Monetary Theory

Postby Elvis » Sat Jan 23, 2021 10:36 pm

Except for the parts about "interest rates being low" (the government sets the rate), this is refreshing:


https://www.washingtonpost.com/opinions ... ng-go-big/

A hidden reason that Joe Biden is trying to go big


[...]many Democrats have lived through what happened when former president Barack Obama inherited another major economic crisis from another Republican president.

Obama opted for a stimulus that fell short of what was needed. Putting aside why that happened, what everyone now knows is that it was a serious mistake. Democrats lost the House in 2010 and spent the remainder of Obama’s presidency locked in brutal fiscal trench warfare with a GOP determined to starve the recovery with austerity to cripple his presidency under the guise of fake concerns about spending and deficits.

[...] Democrats have to be feeling extra-burned by the fact that the GOP pivoted so abruptly from voicing phony deficit concerns under a Democratic president to not caring about them anymore under a Republican.

[...]the makeup of the Senate Democratic caucus is different. During the Obama years you had centrist old-liners chairing key committees, like Max Baucus of Montana (finance), Kent Conrad of North Dakota (budget) and Christopher J. Dodd of Connecticut (banking).

Expected to chair those respective committees in the new Senate are Ron Wyden of Oregon, Sanders, and Sherrod Brown of Ohio. All are far more progressive than those previous Democratic chairs.

[...] Wyden told me in a statement. “We cannot let a popular recovery agenda get derailed by fiscal fearmongering that we know is unjustified and phony.” “Committee chairs are going to be aggressive, and want to get things done,” Wyden said. “Overall, I think the dynamics have changed a lot since 2009.”



Fake, unjustified and phony. :partydance:
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Re: Modern Monetary Theory

Postby Elvis » Sat Jan 23, 2021 10:39 pm

From The Deficit Myth by Stephanie Kelton: one Congressman's visceral reaction to being advised that everything he knew about government finance was wrong:

Deficit Myth ch8-01.jpg


Deficit Myth ch8-02.jpg


Deficit Myth ch8-03.jpg


Deficit Myth ch8-04.jpg


Deficit Myth ch8-05.jpg
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Re: Modern Monetary Theory

Postby Elvis » Sat Jan 23, 2021 10:46 pm

kids austerity politics.jpg
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Re: Modern Monetary Theory

Postby stickdog99 » Mon Jan 25, 2021 5:12 pm

dada » 07 Dec 2020 18:09 wrote:When I read what comes out of the self-referencing and -reinforcing subculture bubble of conspiracy hobbyists, I can't help seeing how completely dominated and cowed they are by the idea of the illuminati.

The obsession frames every thought, obscures every fact and colors every opinion. The drive to conspiricize all moments takes over. But Bill Gates and friends are not the architects of the grand conspiracy that is hell-bent on stealing their precious bodily fluids. It's immersion in that subculture network which reproduces the architects of grand conspiracy inside them every day.


And when one liberates one's mind from thinking that oligarchs seek to control things to their own benefit as you have, what new avenues for positive change open up for you and every other non-oligarch like you?
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Re: Modern Monetary Theory

Postby dada » Mon Jan 25, 2021 10:39 pm

Who said anything about positive change? I'm not promising anything. I'm not trying to convert you. Liberate your mind, don't liberate your mind. There are no new avenues.

Liberate your mind. What am I, Tim Leary?
Both his words and manner of speech seemed at first totally unfamiliar to me, and yet somehow they stirred memories - as an actor might be stirred by the forgotten lines of some role he had played far away and long ago.
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Re: Modern Monetary Theory

Postby JackRiddler » Tue Jan 26, 2021 6:21 am

dada » Mon Dec 07, 2020 1:09 pm wrote:When I read what comes out of the self-referencing and -reinforcing subculture bubble of conspiracy hobbyists, I can't help seeing how completely dominated and cowed they are by the idea of the illuminati.

The obsession frames every thought, obscures every fact and colors every opinion. The drive to conspiricize all moments takes over. But Bill Gates and friends are not the architects of the grand conspiracy that is hell-bent on stealing their precious bodily fluids. It's immersion in that subculture network which reproduces the architects of grand conspiracy inside them every day.


Simple question: Is this process of "immersion in" a "subcultural network" that "reproduces the architects of grand conspiracy inside them every day," which you identify within the subculture of those at the economic bottom with the "drive to conspiricize all moments" not also operating far more decisively among "Bill Gates and friends," so that they reproduce themselves as "the architects of grand conspiracy" every day? Do they not, by directing large real chunks of the world over short periods, each within his (her) bubble, enter into the belief they own and direct this world, and by believing and acting as if they do and working with each other, render themselves and their networks into a near-simulation of this coordinated "illuminati," this capitalist global ruling class? Regardless of their relative powerlessness in some grand scheme of universe and infinite time (or even in the far more microscopic scales of planets and continents and oceans, and centuries, decades, lifetimes) are they not, by virtue of position and power to decide things on a scope unimaginable to mere conspiracizers hoping to model their activity from the bottom, most definitively immersed in a hermetic subcultural network that renders them inevitably into thinking and acting as such a class, or at least as groups that imagine themselves as such a class?

.
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Most important article

Postby JackRiddler » Tue Jan 26, 2021 6:30 am

Everyone read this. I've never seen it stated so concisely.

(Interesting URL - Trump and his taxes do not occur as examples, obvious though they are to the URL writer.)


www.currentaffairs.org ❧ Current Affairs

The Nature of Money
Calculating a poor person’s wealth is a science. For a rich person, it’s an incredibly abstract art.


M.K. Anderson
filed 23 January 2021 in ECONOMICS
https://www.currentaffairs.org/2021/01/ ... e-of-money


Even as the pandemic and financial crisis introduce us to new and grotesque ways to suffer, it seems as if the rich have been spared the worst of it. Their net worth has increased by $637,000,000,000 while poor friends of mine beg for rent money on social media. It can feel as if there are two economies, one for us and another for the rich. This is wrong, however. There is only one economy. The difference between how the wealthy and the working classes experience the same world is not just in the amount of money we have and what that can buy—it’s built into the nature of money, as I learned when I was studying to become an accountant.

The first two classes in an accounting major outline a handful of extremely basic equations, standard forms (like the balance sheet and the statement of cash flows), and the theoretical underpinnings of accounting. They are considered “washout” courses—ones so difficult a significant number of people drop the major—and it’s not because of the math. Accounting requires no more than middle school algebra. If you want to know why it’s so difficult, here is one of the very first thought problems I was presented with in one of my classes:

A hospital bought a painting to decorate its office from a then-unknown painter in the late 1800s for a dollar. Since acquiring it, its painter became very famous. The art would now sell for millions at auction. How do you record the value of the painting?

There are multiple answers. For internal figures (called managerial accounting), the painting is worth whatever management would find most useful at any given time. How that’s done, and what figures are recorded there, is unregulated. On the other hand, when preparing numbers for people outside the company, there are rules. For tax reporting purposes, the hospital (with some exceptions) needs to have it assessed and recorded at fair market value. Fair market value is a different figure—usually a more conservative one—than what you’d expect the painting to fetch at auction. For the purpose of enticing investors or seeking a loan, there’s yet another answer: it depends on what the hospital plans to do with the painting in the near future. If they’re willing to sell it in the next year or two (especially to repay a debt) then they should report it at fair market value. But if they wouldn’t part with it under any circumstances, it should be recorded at the price it was acquired for—a dollar. The painting is worth a lot of money, but if they’re not planning to make use of that value, then they can’t treat it as a resource.

To summarize, there are two correct ways to record the value of the painting, either “fair market” or “acquisition” value (i.e. the original purchase price), and neither of them are what the painting would actually “be worth” in the conventional sense. Which value the accountant chooses depends not on anything objective, but on what the business plans to do with the painting.

This example breaks the kind of people who find an accounting major attractive. We’re creatures who love objectivity and order, and accounting is not that.

The thought experiment about the painting isn’t a weird edge case—it’s a typical day on the job. I used to audit natural gas companies, and there are many whose distribution systems are bringing in tens of millions of dollars a quarter, yet their infrastructure is worth zero dollars. The first time I saw a company claiming to literally be worthless, I brought it to my boss because I swore it couldn’t be right. He said, “depreciation,” and I toddled off back to my desk.

We record the wear and tear infrastructure goes through as depreciation—we slowly reduce its value, in other words—and we do that in a standardized way. Usually this involves an evenly allocated reduction of value per year over the expected life of the asset—for example, if a new oil pipeline is expected to last 10 years, we might subtract 10 percent each year until it’s worth nothing. For other industries or assets, the rate of depreciation might be based on the number of units produced—the more widgets are made, the less the widget stamping machine is worth. The different models are used so we can compare companies apples-to-apples. We do this regardless of whether their infrastructure is still functioning or not. This isn’t a mistake: it is the right way to record the value for the purpose of comparison to other companies and for taxes.

But if I worked for that same company and wanted to sell it to a buyer, the considerations would be totally different. For example, depreciation for tax purposes is usually accelerated faster than actual wear and tear. A car with a 15 year life, for tax purposes, has to be depreciated over five years. This is the government encouraging companies to build and buy more for political reasons. Depreciation is an expense that is deducted from income to arrive at taxable profit, and so accelerating it is effectively a tax break—but one only companies that rapidly build and expand can reliably use. However, that same infrastructure, when being assessed for sale, is often worth more money than even its depreciated value. When buying or selling infrastructure, businesses take into account how much cash that infrastructure is generating regardless of its age. These differing considerations change the numbers on the page.

Therefore, a business infrastructure’s value may swing millions of dollars based on the market and the needs of a business. A 1992 Geo Metro’s value will not. That giant fluctuation is characteristic of assets which make money (like an oil pipeline or intellectual property) and assets which store value (like fine art or some kinds of real estate). The same holds true for the portfolios of rich people. The wealthy who depend primarily on their assets to sustain them (rather than wages) will have many, many large assets, and their entire net worth will swing millions of dollars simply based on their plans for the coming year.

Accounting is less of a science and more of a language with grammar, vocabulary, and ideological underpinnings. Recording something with a number, especially one with decimal places, gives a false sense of precision and objectivity to what is being quantified. Even in the “hard sciences,” which also use numbers with decimal places and high degrees of certainty, there is a subjectivity. A human being chooses what to count and what the criteria is for counting it for an intended audience. That influences what number makes it onto the page. Accounting as a field is perhaps more aware of this subjectivity than most disciplines that work with numbers. Business accounting’s grammar is set by an organization called the Financial Accounting Standards Board (FASB), which regularly publishes guidance on how to present figures for public consumption. Those standards evolve as part of an ongoing process of polling the industry and holding open discussions, along with formal appeals.

In short, accounting is an ever-evolving language that records the day-to-day workings of a life or a business. It is designed to describe the flow of assets, assess it, and make arguments about what should be done. It’s not objective because it can’t be. All I can do as an accountant is be clear about the purpose of why I am presenting specific numbers, what assumptions I am making, which set of accounting standards I’m using, and how closely I hew to those standards.

What Money Reveals (and What It Obscures)
We know shockingly little about the mega rich. Lists like the Forbes 400 are the only available resources we have on who is wealthy because governments don’t really track individual wealth, and the wealthy themselves don’t advertise. The first Forbes 400 was an immense feat of journalism, digging through public property records in order to compile estimates. But roughly half of wealth is either privately held or in cash—not a matter of public record, and so unavailable to journalists. Even the public record is easy to evade. The rich routinely use shell corporations and trusts and elaborate tax evasion schemes. We gained a small window into that complex web of financial entities the wealthy use to evade taxes through the Panama Papers. That leak, which comprised millions of documents, detailed many billions of dollars of schemes (legal and not) from only one law firm. One estimate says about eight percent of the world’s wealth is in offshore tax havens, and 80 percent is untaxed. Because of the sheer complexity of where the wealthy keep their money and how it’s accounted for, it can be literally impossible for a rich person to quantify what they themselves are worth. The richest person on earth may have no idea they are the richest person on earth. The wealthier someone is, the more the relationship between value and currency breaks down, and so the title “wealthiest person on earth” may actually be meaningless.

On the scale we workers live, money seems very precise because it is precise. For young accountants, that’s the appeal. They come into adulthood with some experience of money. A Coke costs $1.75. If they’ve ever filed taxes before arriving at school, the accounting was very straightforward. It was either correct or not correct, with an accuracy to the dollar. But all that lovely order and certainty falls apart outside the realm of small personal finance.This precision in the micro and lack of it in the macro comes down to the function of money.

The purpose of money is to establish an exchange rate between labor and finished goods. It allows capitalists—not us, we are not the primary “users” of the tool—to compare worker to worker, good to good, investment to investment, and translate between them. It does a pretty good job of describing the lives of wage earners because that’s what it’s designed to do. Our hours worked, productivity, and consumer habits are all numbers in a spreadsheet. But any attempt to turn it back on capitalists is like an amoeba trying to look at a human being with a microscope—the lens doesn’t go both ways. A poor person’s tax liability can be calculated to the cent. But when a wealthy person does their taxes, there are a number of arguments to be made about how much they own, how much they made, and how much they lost. Your net worth is a number. A capitalist’s worth is a conversation.

That difference has material outcomes. Among the capitalist class, fraud is rampant. In 2001, Enron—an energy and commodities trading company from Texas—committed fraud on such a large scale (and more importantly, so undermined the credibility of the entire industry’s figures) that it prompted a reform of accounting practices. The Sarbanes-Oxley Act greatly tightened the standards on how figures must be reported outside of a company. The “language” of accounting became more standardized. Financial statements presented to investors must now be audited by independent, outside accountants. And while these reforms seem necessary given the stakes, I can’t find firm figures either way on whether they helped at all.

I am not a fraud investigator myself, but as an auditor I was privy to how several fraud investigations turned out. Without exception, my experience is that whether law enforcement is called is a matter of how much money was stolen. Petty theft is always prosecuted. But if someone embezzles $10 million, a company tends to prefer to keep that person employed with them and treat it like a loan. Someone in a position to steal that much money has connections.

One white-collar criminal who comes to mind—I personally had some contact with him—was in a niche industry. He was a deal broker for commodities, and his customers would only deal with him. Ten million dollars is a lot of money, but in relation to his commission, it was not that much. His placement in the industry, his relationship to labor, was what made him wealthy, not merely the dollar amount of his salary and his assets. He himself didn’t work to produce a product, or really provide a service. He maintained a set of relationships with business owners (who also didn’t make anything with their own hands—they had employees for that) and acted as a gatekeeper of information about who needed what. Within the very specific parameters of his work, he was trusted. Of course his embezzlement wasn’t brought to the police. Focusing on the numbers rather than seeing their movement as descriptive of something, as pointing towards his relationships, is the same kind of mistake a dog makes when you point at the moon and he sniffs your finger.

Debt, Theft, and Other Money Problems
This gets at what David Graeber was talking about when he outlined the origin of money in his book Debt: The First 5000 Years. Before the wide use of currency for everyday transactions (which only became common in the 1800s), poor workers relied on credit almost exclusively. Credit in this sense meant “trust.” People did not directly barter (e.g. eight eggs for one shoe), they kept track of what they owed one another over time and paid as they could. These were relationships built on trust. The switch to currency-only transactions had to be imposed by state force. For example, in the very early days of industrial capitalism in England, shipyards were routinely a year or two behind on wages, so workers took tools and food and other things they could barter to pay their rent and their grocery bills. This wasn’t a sign of economic collapse—this was the economy. In order to force a switch to currency, the government criminalized taking tools and goods from the shipyards (previously it was not just legal, but precisely how compensation worked), and the shipyards instituted whippings for this now-theft. Samuel Bentham, an architect, redesigned ship yards with a new central surveillance tower to curb this new kind of theft, an idea lifted by his brother, the architect Jeremy Bentham, for the now infamous prison panopticon.

Before that, in medieval Europe, the legal penalties for defaulting on a debt were harsh and involved mutilation or death. However, they were almost never used. Debt was considered a private matter between two individuals, worked out between them in whatever units of barter and timeframes suited them. As Graeber put it, capitalism is “the story of how an economy of credit was converted into an economy of interest; of the gradual transformation of moral networks by the intrusion of the impersonal—and often vindictive—power of the state.” Relationships have always been the fundamental underpinning of money: the thing money reflects for the wealthy and destroys for the poor. In a way, the wealthy fraudster I met is a throwback to an older, kinder, more personal concept of money—one most of us will never experience.

Today, prosecution rates for white collar crime are the lowest they’ve ever been and trending downwards. Theft itself becomes a conversation, rather than just a crime, when a wealthy person does it. When one capitalist robs another, my experience is that they tend to discuss among themselves how to restore the thief to good standing without destroying anyone’s life, livelihood, or privacy. There are of course exceptions. Bernie Madoff and his $50 billion investment Ponzi scheme springs to mind. But Madoff’s position was dependent on resources and connections that turned out to be fictional. He had no realistic means to ever repay the investors he scammed (or even to return their initial investment), and so he went to prison. But for those that genuinely are well connected and do have the means to repay the people they rip off, the wealthy already have the restorative justice prison abolitionists fight for.

Petty theft, on the other hand, is prosecuted mercilessly. I find this especially strange given how much more of a problem fraud is than theft. The FBI estimates that burglary and petty theft cost Americans about $3.4 billion in property losses. White collar crime costs between $426 billion and $1.7 trillion annually. This kleptocratic culture isn’t harmless. Enron was a natural gas company whose entire business was propped up by fraud. When they were no longer able to continue to hide the extent of their debt, they both crashed that industry and spurred massive reforms in accounting practices and fraud controls. Perhaps those reforms worked, but I doubt fraud has dropped at the rate fraud prosecution has.

Personally, I wonder if the lesson companies learned was about keeping a lid on scandal rather than about curbing white collar crime. They preserve the social relations that money points to at risk to everyone else. And I guess it’s easy to see why—it seems on the surface short-sighted to protect thieves who can crash an entire economy, but the fraudsters and their wealthy connections aren’t the ones who suffer in a crash. They still have the power which underpins money, which their money merely gestures towards. The figures in a spreadsheet are shadows cast by power, and during financial crises their power preserves them. The wealthy are so completely insulated from the consequences of what they do, good or bad, it’s very hard for me to understand what motivates them at all.The future itself feels obscure. Here, the lack of imagination that makes me a good accountant makes me a poor visionary: I’m not sure what to do about money beyond believing something should be done. Depending on the study, between eight and 26 people own half of the world’s wealth, and if money isn’t a good means to describe them, then that is a failure to describe the world as it is. Marx advocated abolishing money, as do some foundational anarchists. There are also thinkers on the left (like Pierre-Joseph Proudhon and David Graeber) who believe public ownership of the means of production is more important than exactly how we account for it, and so are fine with markets and currency, albeit in forms that would be nigh unrecognizable. A full survey of left thought on money and a weighing of the pros and cons of each approach is beyond the scope of a single article. However, on the road to a better society, we will have to grapple with money as it exists. As of now, it’s a tool used to describe workers with the goal of extracting wealth and labor from them. It is an incredibly poor tool for holding the wealthy accountable, and so we will have to come up with other methods.
We meet at the borders of our being, we dream something of each others reality. - Harvey of R.I.

To Justice my maker from on high did incline:
I am by virtue of its might divine,
The highest Wisdom and the first Love.

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Re: Modern Monetary Theory

Postby dada » Tue Jan 26, 2021 10:38 am

"are they not, by virtue of position and power to decide things on a scope unimaginable to mere conspiracizers hoping to model their activity from the bottom, most definitively immersed in a hermetic subcultural network that renders them inevitably into thinking and acting as such a class, or at least as groups that imagine themselves as such a class?"

I'm seeing this as a two-part question. One, are Bill Gates and friends suffering under the same delusion as mere conspiracizers, and two, does believing in the delusion make them effectively the illuminati.

I think that a delusion is a delusion, believing in it from a position of power wouldn't make you the illuminati, just delusional. Say capitalism is a pyramid-shaped delivery truck. The driver doesn't determine the route, and the route-maker back at the office has no choice but to try to design the route that best maximizes profit. They are all replacable cogs, by virtue of the nature of the ideology they've accepted as axiomatic.
Both his words and manner of speech seemed at first totally unfamiliar to me, and yet somehow they stirred memories - as an actor might be stirred by the forgotten lines of some role he had played far away and long ago.
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Re: Modern Monetary Theory

Postby stickdog99 » Tue Jan 26, 2021 2:27 pm

dada » 26 Jan 2021 02:39 wrote:Who said anything about positive change? I'm not promising anything. I'm not trying to convert you. Liberate your mind, don't liberate your mind. There are no new avenues.

Liberate your mind. What am I, Tim Leary?


I have no idea what you think about anything other than "nefariously self-interested individual and small group human agency and control is nothing but an illusory pattern of organization supplied by the minds of those who need to exert control over their environment and are thus attracted to a certain subculture of like-minded acolytes of an omnipotent Illuminati."

And :"it's all the fault of the system."

I am just wondering what the supposed (beneficial?) endgame of such a worldview is, just as I can't help but wonder what the supposed endgame of the DC yahoos was.
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