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> Real-World Economics Review > “This may all sound far-fetched, but the idea has been developed in some detail by a Norwegian academic, Trond Andresen”
“This may all sound far-fetched, but the idea has been developed in some detail by a Norwegian academic, Trond Andresen”
The conservative UK newspaper The Telegraph has featured an article “How to end boom and bust: make cash illegal” about Trond Andresen’s RWER paper “Improved macroeconomic control with electronic money and modern monetary theory”. It has already attracted over 3,000 comments.
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The comments on the article are, I hope you noticed almost all negative. And the paranoia and mistrust of government control is palpable in many of the comments. I don’t see how these fears can be overcome to move in the direction suggested by the article.
And a concern I have relates to the claim that the changes proposed would do away with currency manipulation and robberies. This is in my view simply the height of naivete. Hackers will hack, to manipulate and steal. That will be expensive and difficult to prevent or catch the perpetrators after the acts.
Mr. Andresen may be no more Fascist than the bizarrely hapless Iowa State Fair Board for all I know, but make no mistake, this is a Fascist step to further remove fundamental power and rights and freedom from the citizens (not to mention an obnoxiously epic failure to grok or go near what is actually wrong in our economies) – and we in the working class know it. Boy Howdy do we know it. Last year the State Fair planners tried to outlaw cash at our Fair and force people to use their “special official” money instead – a proposal they had worked on for who knows how long and all but solidified. That lasted for about five minutes once the public was told what they were going to be subjected to. The outraged backlash was immediate, no holds barred rejection and the planners reversed course so fast it was hilarious to watch.
It’s interesting to watch the Fascists float their trial balloons – and remember “may you live in interesting times” is a curse. I don’t know about Europe, but if this “outlaw cash” move ever gets pushed for real in the usa , it’ll be precisely because the Fascists are fully aware it’ll bring out the gun owners enmasse, it’ll start real civil war in 3,2,1… and obviously they’d only do it if they are prepared to fight that physical war against the people.
Have a re-think, Mr. Andresen. You’re in bed with the wrong people with the wrong ideas.
I’ll be watching for this “your cash is to become illegal” signal that the shooting war is ON.
MV=PT formula relies on fallacy that amount of spending depends on amount of money in the economy. Formula relies on logic that because money is wealth to its holder, more money there is more nominal spending there is.
But the fallacy is that money is only one form of wealth out of whole plethora of forms of wealth. And in whatever form your wealth is it is not too difficult to trade it for money for spending purposes. When people consider how much they can afford to spend they take account of their whole financial situation, not just amount of their monetary holdings.
It’s an accounting identity, employ and resources : the money changing hands is equal to the price of the goods being traded against that money …
Correct Hepion. And businesses must do the same. The classic illustration of the velocity of money is flawed in that it does not recognize that if businesses spend money as if it is individual income instead of business revenue it abstracts out the reality of business expenses/the costing system of commerce which is the unavoidable reality every business faces. Hence if a business spends $100 of revenue as if it was income and has a 5% margin that means that the business then has to obtain $195 more dollars in business revenue in order to get back to even. The velocity of money is an irrelevant metric and fallacious if it claims to add additional individual purchasing power to the money system. 99.9% of economists miss this mostly because most have not run businesses and so have not had to deal with cost accounting and its realities and conventions. Understanding the effects of those conventions (all costs must go into price) is the key to understanding the most basic and most missed problem of the economic system. Only recently have such theoretical luminaries like Steve Keen recognized the importance of accounting, but they still are not looking WITHIN double entry bookkeeping at its subset of cost accounting which is where the economy’s deepest problem reveals itself.