Home > Uncategorized > The central message of MMT

The central message of MMT

from Asad Zaman

The central message of MMT is that once the illusion of gold is removed from the picture, money is valued because everybody has confidence in it. This confidence can be safely created by sovereign authority. The King, or the state, can create any amount of money, without limits. There is no issue of sustainability of deficit. Creation of money has powerful effects on the economy, and printing too much money would definitely cause inflation, so it would never be advisable to freely print money. But the state does have the power to do so, and the state will never have to “pay back” for money it created today. The focus should shift from the wrong question of how the government can generate revenue to finance its spending, to the right question of what are the effects of money creation by the sovereign state? By analyzing the impact of money creation on employment, inflation, debt, we can figure out the right amount to create. The conventional idea of “neutrality of money” embodied in Real Business Cycles and DSGE models is a major obstacle in the path asking the right questions, because these theories say that the quantity of money does not matter.

https://weapedagogy.wordpress.com/2019/05/29/monetization-maturity-tranformation-and-mmt/

  1. July 5, 2019 at 12:58 am

    Thank you, Dr. Zaman!

  2. Ikonoclast
    July 5, 2019 at 5:52 am

    I agree that the quantity and velocity of money do matter. Other characteristics of modern money also matter. Changes matter, meaning increases and decreases in quantities, and accelerations and decelerations in velocity. Relativities and locations matter, meaning where money is channeled or is not channeled. Preferential treatments matter. The money of some is treated preferentially over that of others despite it being denominated in the same currency. Large lumps of money are treated preferentially over small lumps of money (in addition to flat charges affecting small monies relatively more). The rich can get better interest rates and often have basic charges on accounts and transactions waived. The rich can get tax holidays and corporate welfare (which is a greater part of government expenditures than unemployment benefits in many Western countries).

    Income earned from different sources gets different treatments. In Australia, there is a glaring unequal treatment of income earned from wages and income earned as profit that goes beyond “negative gearing” and other subsidies to investors. There are business deductions available for income earned from investment but almost no deductions allowed for income earned from wages (personal effort). Of course many of these institutional and financial law (and customary) regulations are not features of modern money simpliciter but they are part of the overall social construction of money and its use for preferential treatment and generation of greater inequalities in our overall system. Another glaring issue is the set of inflexibilities governing the price of labor in developed countries. It is far harder for a worker to raise the price of his/her labor than for a producer, wholesaler or retailer to raise the prices and their goods and services. Claims of competitive markets ring hollow in relation to monopoly, duoply, oligopoly and cartel behavior.

    The pretenses that markets are free and money is neutral rank right up there as prime myths of the current system along with the claims that a government budget is like a household budget that government budget surpluses are always good no matter what the state of the economy.

    There is an easy proof that money cannot be neutral in an economic system. Money has a number of functions. One of those functions is as information. According to information theory, information is a pattern which can influence the formation and transformations of other patterns. In a complex system anything which influences the formation and transformations of other patterns, often patterns of quantities and qualities in the system, clearly cannot be neutral with respect to the system’s functioning and state(s). It would be an entirely unscientific and unempirical absurdity to claim so.

  3. Craig
    July 5, 2019 at 7:49 am

    The new paradigm of Monetary Gifting and the 50% discount/rebate policy expose the quantity theory of money as fallacious. An enforced system of monetary scarcity that makes decisions to inflate prices seem like the rational and inevitable thing to do is the cause of inflation, not money itself. Universally beneficial price deflation created by the 50% discount/rebate policy benefits all agents (except private finance and its monopolistic paradigm of Debt Only) and puts the lie to “monetary inflation”.

    The velocity of money’s circulation means nothing except to show that money AS IN BUSINESS REVENUE must increasingly turn over in order for profit making enterprise to survive in the high cost world of technologically advanced capital intensive economies, and as we see velocity is decreasing which is bad news for enterprise. Employment participation rates are also falling and with AI due to supercharge that decline enterprise’s only strategy can be to reduce labor costs and so the conundrum of the present paradigm remains unresolved and unresolvable….unless of course the policies of Monetary Gifting is strategically and intelligently integrated into the economy.

    MMT, like Keen’s disequilibrium theory and Hudson’s financial parasitism are all aligned with the new paradigm in opposing austerity and financial dominance, it’s just that they do not fully visualize the new paradigm and how its policies change it into abundance and freedom.

  4. Mike Hall
    July 5, 2019 at 8:26 am

    “.. The central message of MMT is that once the illusion of gold is removed from the picture, money is valued because everybody has confidence in it. This confidence can be safely created by sovereign authority. .. ”

    Well, no, that statement royally misses the ‘central message’ of MMT concerning what gives (fiat) money ‘value’.
    MMT founders all state that it is the power of the sovereign authority to levy taxes, which can only be paid in it’s sovereign currency and nothing else, which gives money its value.

    And that this principle has been know for centuries, even if more recently studiously air brushed from economics education, as it was the means chosen to have native populations adopt invading colonists money, in Africa, and elsewhere.

    Why do supposedly trained economists still use such nebulous, meaningless, terms as ‘confidence’?

  5. July 5, 2019 at 10:47 am

    Taxation is what creates confidence that money will be acceptable – it is confidence which is basic. There can exist (and have existed) economies without taxation, but operating with sovereign money. But taxation, without confidence, will cause collapse of currency. Again there exist real example of this.

    • July 5, 2019 at 1:33 pm

      Dear Asad, “money is valued because everybody has confidence in it” really is a key insight though I would suggest to go one step further. If you think about it you’ll see that this other statement of yours points to the deep reason underneath the confidence in money itself: “Taxation is what creates confidence that money will be acceptable”. It means that there is something, an institution, backing this confidence in money (here: taxation). Therefore, the confidence in money is derived from the trust or confidence in the institution(s) backing / issuing / “guaranteeing” the value of money.

      What’s even better, this principle applies to all kinds of money and yields very interesting implications for inflation, for example: if the government loses the power to tax due to a war, poor economic performance of the economy, strikes, monopolies, you name it, taxation will not longer serve as a creator of confidence. Loss of confidence in the institution will then lead to loss of money value and hence to inflation. (I have dedicated an extended section on this issue in my book: https://www.routledge.com/Uncertainty-and-Economics-A-Paradigmatic-Perspective-1st-Edition/Muller-Kademann/p/book/9780367076030 ).
      Best, Christian

      • Craig
        July 5, 2019 at 6:16 pm

        “if the government loses the power to tax due to a war, poor economic performance of the economy, strikes, monopolies, you name it, taxation will not longer serve as a creator of confidence. Loss of confidence in the institution will then lead to loss of money value and hence to inflation.”

        Correct. And these are also some of the reasons why hyperinflations are so rare. The biggest reason hyperinflations occur is because private central banks at the behest of oligarchies leverage up speculators who short the currency which is the point where bad inflation goes hyper. Consult Zarlenga “The Lost Science of Money” pgs 580-587 for the history of the Weimar hyperinflation. All the more reason why it is essential to end the money creating power of private banks and instead have a publicly administered national banking system firmly and ethically guided by the various aspects of the natural philosophical concept of grace….because greed can easily lead to oligarchies and even sedition.

  6. July 5, 2019 at 11:39 am

    It is certainly apparent that expanding the money supply in the late 20th & early 21st Centuries by allowing banks to create vast amounts of private sector debt has changed the way financialised economies function. The near collapse of the global banking sector doesn’t seem to have changed our direction at all.

    Household debt in the UK is hovering around 87% of GDP and steadily rising (in 1970 and 1980 it was just 30%).

    The Greenspan revolution was to expand the money supply without pushing inflation up. It was called the “end of boom and bust”… until Sept 2007.

    What is all too clear is that the people in charge of the money supply at present are dangerous lunatics.

  7. Joe Polito
    July 5, 2019 at 6:59 pm

    Asad your analysis is quite illuminating in this commentary and the link you provide. My understanding is that MMT does not object to private bank created money. In this post it would seem you are being more consistent with the sovereign money movement – similar to sentimentents and discussion in an post several years old with Steve Zarlenga – https://rwer.wordpress.com/2014/09/14/we-may-predict-the-death-of-physical-currency-bills-and-coins/ Having said that I agree with some top economists that ultimately there is little difference between the two groups.

  8. July 5, 2019 at 9:38 pm

    A few thoughts and questions from a non-economist who has read a bit of L. Randall Wray and been listening to the public speeches given by Stephanie Kelton, formerly the Chair of the Economics Department at the very heterdox Univ. of Missouri at KC, home to Wray at one time, and Bill Black, and Michael Hudson. (And former advisor to Bernie Sanders, and chief Dem economist on the Senate Banking Committee)

    I think “confidence” does matter in the end, especially if government is able to run large deficits; it is less important than it once was under the rigid gold standard, but still, in a competitive globalized economy a serious lack of confidence by the private sector can lead to trouble, and we can all ask ourselves why that hasn’t happened under Reagan and Bush II and Trump growing deficits. Kelton maintains that the existing budget process and understanding in the right and center of the two parties works out to the same rigidities as the gold standard, deep threatening troughs perhaps excepted, like 2009, but still limiting scope and effective response.

    Something missing in the commentators above: both Kelton and Wray stress that inflation must be taken seriously, but it is not related to the size of the governmental debt or deficit, but rather grounded on the demand for physical resources: the amount of good and raw materials available, and the amount of human labor. Supply and demand problems. This is a real question for Green New Deal backers like myself: given the two big good numbers of low unemployment and low inflation, how much slack will there be for inflation if we create a job guarantee program and a new minimum wage of $15 per hour? Well, I think there is a pool of labor not currently counted, and it will be in the millions from five sources: former drug patients, former prisoners, early retirement people, especially men, those thoroughly in the underground economy…and those counted as working who have two few hours or too many jobs. As to resource shortages from the amitious Green New Deal Resolution outlines: don’t forget, most of the proposals will close out fossil fuel usage and transfer its new surplus labor from welding pipelines to welding wind turbines, elevated solar farms and perhaps, a revival of rail and certainly, charging stations for electric cars. And retrofitting all those buildings. Housing shortage? Rural Red State American has millions of abandoned and substandard occupied structures, awaiting updates and future occupancy. Less money for raw materials for new buildings goes into the rehab of standing ones.

    Those who have toted up the scariest figure of $92 trillion in costs for the Green New Deal out of the gate vastly underestimate two things: its core programs of the job guarantee and single payer health insurance will have vast savings, as will the Green New Deal goal of rehabbing all existing structures for energy modernization, weatherization…in fact the savings were so substantial to current energy bills for urban buildings that Wall Street, circa 2009, was considering creating derivatives to market with the profit coming from the banks splitting the energy $$ savings with the property owners.

    Would one of the MMT chief advocates please give the public a run through, in medium detail, on how the current budget process in Washington would change? It can’t work very well now, because how do we get the deficits if all the proposed programs must pay for themselves as scored by the OMB? Of course, and please correct me if I’m wrong, the Repub. Right tax cuts are paid for in theory, filling in for the programs they can never fully cut over on the social democratic remainders, but then as the fiscal year drags on, the money of course does not come in…or much less than “figured” and the deficit grows. As MMT rightly point out however, the tax cuts or expenditures by the fed. gov’t do register as money in the private sector accounts – businesses and households. Well gov’t expenditures, do; the tax cuts? Probably not, since checks aren’t written, and payments coming in are less…

    Now, however, I come to the most poorly explained part, IMHO, whether the private sector, the large banks and shadow banking systems, can create money on their own. I lean towards saying they can, not pure money but “qualified money,” and still do, via the leverage ratio to reserves, the ability to issue credit cards under varying terms and household justifying resources, and the ability to credit debt instruments like the notorious mortgage backed securities…which carried more attractive interest rates than the fed was offering on its bonds and other instruments…and certainly on our laughable savings accounts. All these debt instruments can serve as collateral somewhere, right? MMT has an answer for each of my postulates here…they downplay the money creation role of reserves/leverage ratios, credit cards, and yes, turn the role of federal Treasury instruments, bonds and notes, upside down: they’re used to manage the overnight interest rates, not pay for government spending or control inflation…

    And this never talked about attribute of value/money creation. Local, county, city governments in the West, certainly in the US, have the powers of land-use, zoning powers.
    If I am a private sector developer and own 100 urban acres with current zoning of one house per acre, and the newly elected city council all of whom I donated to generously, passes a new zoning standard for my property locations (we can disguise it better than that, can’t we?!) that allows me to build 100 units per acre, the value has gone up maybe 50-100 times, and my loaning bank will recognize that once I prove it’s the law and can stay out of jail. Why is that not local-private money/wealth creation triggered by a non-federal gov’t actor – out of the power of the Treasury and Fed? And who is going to tell me, after Trump, that urban real estate in London, NY, SF, LA, Hong Kong and Tokyo, and China now, is not a huge factor in markets, liquidity and solvency? Always dynamic, by the way, most of the pressure towards expansion of what can be built: how high, how dense, how “outward” bound the city limits…

    I’d better stop now. I like the boldness of MMT, and the fact it started out not by theory or models, but according to Wray, by observing what Central Banks and Treasury Departments in the West have been doing, especially since we went off the gold standard in August of 1971. MMT must work very hard to get a wider hearing, full public debates with its contemptuous critics like Paul Krugman, Larry Summers and Ken Rogoff. Even Martin Wolf treats it better, but won’t buy it for a full course.

    Fire away. There is much ground to be covered, and gaps closed.

  9. Yok
    July 6, 2019 at 4:41 pm

    MMT People would never say “money printing.” They would say keystrokes at a computer.

    • July 6, 2019 at 5:36 pm

      Yes, I think you are right. The keystrokes create deposits in bank accounts of citizens or the private banks, creating reserves or debits depending on the nature of the transactions. Because much of the interior processes between the Treasury, the Federal Reserve and private banks (should I write Private Banks?) is detailed and wonky, sometimes, it seems to me, to be deliberately so convoluted to disguise the realities that MMT is trying to uncover and make the basis of its theories/foundations. And to hide the fact that there is a large gap between the budgets Congress writes and the flows which actually occur, the gap between tax revenue and governmental expenditures.

      A weakness in MMT of what I have read from Wray and heard from Kelton in her public lectures, is the nature of the transactions between purely private sector partners: businesses and their private banks. I’m rereading Wray’s “primer,” and he basically says the Fed and Treasury accommodate to allow the private sector banks to achieve the reserves and balances they prefer…is money creation part of that accommodation?

      Come on MMTers, help us out here.

      • Yok
        July 13, 2019 at 3:40 am

        GracchiBrothers. Read Tymoigne’s “Money and Banking.” It’s at NEP. I’m confused by your statement, quoting, “the Fed and Treasury accomodate to allow the private sector banks to achieve the reserves and balances they prefer….” Your question “is money creation part of that accommodation?” I believe you have the situation reversed: first the government creates and spends; that creates a problem – excess reserves that will knock the Fed off the target overnight rate; through taxes and bond sales the excess reserves are removed from the bank balances. Alternatively when banks go on a credit binge, or when the Fed adjusts rates, the government doesn’t have to issue currency; the Fed can sell bonds, right now they have a huge amount, to allow the banks to have the appropriate reserves to achieve the desired overnight rate. The Fed buys or sells bonds to achieve the desired rate. If the banks themselves don’t have the reserves, they sell a few bonds. Hope I helped.

      • July 16, 2019 at 3:52 am

        Hang on Yok, not ignoring your comment and will have two citations for you from the “primer” shortly on private sector reserves and preferences.

      • July 16, 2019 at 2:04 pm

        Ok here we go on the Central Bank/Treasury disposition towards controlling private banks level of reserves.

        From L. Randall Wray’s “Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems,” 2012 paperback edition published by Palgrave MacMillan. From Chapter Three, The Domestic Monetary System: Banking and Central Banking, page 97, under topic 3.5 “Exogenous interest rates and quantitative easing”:

        “MMT shares with the ‘endogenous money’ or ‘horizonatlaist’ approaches the view that the central bank cannot control the money supply or the bank reserves. Instead the central bank must accommodate the demand for reserves (however, as noted below, things changed with QE). …”

        On the next page, 98, we get into what this means in the wake of the GFC and QE: “But in the aftermath of the global financial crisis, the Fed adopted a near zero interest rate target (like Japan) so it could leave excess reserves in the system and pay 25 basis points on them. In that case, no matter how many excess reserves banks hold, the market rate remains near 25 basis points…”

        Wray notes in the next paragraph that although the Central Bank doesn’t have to worry, under these conditions about excess reserves, it cannot leave the private banks short of reserves.

        From Chapter 4, “Fiscal Operations in a Nation that issues its own Currency,” page 125:

        “In the financial crisis, bank demand for excess reserves grew considerably, and the US Fed learned to accommodate that demand. While some commentators were perplexed that Fed ‘pumping’ of ‘liquidity’ (the creation of massive excess reserves through quantitative easing) did not encourage bank lending, it has always been true that bank lending decisions are not restrained by (or even liked to) the quantity of reserves held.”

        I added the second comment to indicate that Wray is generalizing, in matters of bank reserves, beyond the circumstances which developed in the wake of the GFC. His assertions here to lead directly into the broader discussion of the private banks ability to create “money,” excess liquidity and loans beyond the central bank targets. It’s not easy going, and this is some of the most controversial terrain. Does it mean that Wray feels it was just the criminal nature of the lending with mortgage backed securities that was the problem, the underwriting, and not the excess of private reserves in the shadow banking system, if there was any? In that sense, the Fed let the private sector follow their preferences and it led to disaster; how would MMT’s world view have changed that? Tougher enforcement only?

  10. David Harold Chester
    July 10, 2019 at 1:57 pm

    Most of the money in the social system is that which is in continuous circulation. Only a relatively small proportion of it is being created and simultaneously being withdrawn (and destroyed). In both cases it is the rates not the sums themselves that are part of our system, and these rates are what we should be considering. Can somebody support the figures for this proportion of money (rate of creation minus destruction rate), compared to circulation rate. It would greatly help us to concentrate our minds on what is really significant here.

  11. Ken Zimmerman
    July 12, 2019 at 8:36 am

    If Asad’s description of MMT is accurate, MMT remains ahistorical and non-relative. Many scientists believe the three greatest changes in the history of modern science are: 1) relativity; 2) quantum theory; and, 3) chaos theory. I tend to agree with this assessment. While MMT seems to force standard economics into some tight corners, MMT still suffers from the same malady as this standard economics. It does not incorporate relativity, quantum theory, or chaos theory. For example, does the amount of money matter? In some places and times, yes. In other places and times, no. Each time and place is its own truth, with many facts and explanations to back up that truth. How these appear to someone not within that time and place creates another truth, with facts and explanations attached. Which includes guides as to how to interpret and use the alien time and place. Since most of these interactions are complex, there is no fixed pattern. The relationships never repeat exactly. They are not periodic. But humans, using their experiences can and do judge whether a pattern in one set of relationships is “similar enough” to a pattern in another set of relationship to conclude that understandings gained in one will be useful in the other. Humans do this daily. But this feat, which encompasses relativity, quantum theory, and chaos theory is, apparently beyond the scope of both standard and MMT economics.

    • Robert Locke
      July 12, 2019 at 12:57 pm

      Relativity, Ken, how can these discussions relate to the economic world in which very intelligent people earn a living. Every time I start reading an article by these scientists, my eyes glaze over, as I fight to retain consciousness. When I don’t understand the science I ask, why should I struggle to learn it, when I know it will not be relevant to the real world. I don’t have time to waste on mastering such complexities; it would be like learning astrology.

      • Ken Zimmerman
        July 12, 2019 at 1:18 pm

        Robert, you don’t have to master such complexities. You and everyone on the planet who is not an economist (and some others who pal around too much with economists) uses them everyday. Actually, as economics education demonstrates much socialization is required to train economists not to use them. Of course, the folks don’t use all the formal names. But they all have, from their own experiences an intuitive understanding and ability to apply relativity, quantum theory, and chaos theory. They are how things work. If you’re not wearing blinders, you see them everyday.

      • Robert Locke
        July 13, 2019 at 10:12 am

        Don’t ‘know what you’re talking about, Ken. You throw these collective nouns around like A DRUNKEN MARINE.

      • Ken Zimmerman
        July 13, 2019 at 11:12 am

        Robert, which collective nouns are those? And, I don’t drink.

      • Robert Locke
        July 13, 2019 at 5:47 pm

        all of them that one hears endlessly: socialism, communism, capitalism, nomotheism; its a particular vice of social scientists, orthodoxy, heterodoxy. You know this; if the contexts are not clear neither are the collective nouns.

      • Ken Zimmerman
        July 14, 2019 at 12:21 am

        Robert, I agree. Human language is contextual. The significance of the language is worked out in use. Some is institutionalized, but even this must be interpreted from one situation to the next. But still humans must use language in the effort to communicate. As one of my professors put it, humans make sense of the world together. Language is part of that.

  12. lobdillj
    July 13, 2019 at 1:36 pm

    Delightful discussion! I question whether quantum theory is understood, either intuitively or through some more reliable and time tested methodology. When giants such as Stephen Hawking say, “When I hear about Schrodinger’s cat I reach for my gun.” (See the book Quantum Enigma, p 143) it should not be claimed that quantum theory is “understood”. Bell’s inequality fails to explain WHY quantum mechanics works. The fact that it does work has been proven, not explained.

    It seems to me that the eternal question, “An interesting idea, but how are we going to pay for it?” belies a misunderstanding of government spending in a fiat economy. Government spending does not create debt except by arbitrary (and rentier-serving) definition.

    • Ken Zimmerman
      July 14, 2019 at 12:34 pm

      Lobdillj, no one fully understands quantum reality. And that follows from quantum theory. Any reality is always slipping from one perspective to another, changing as humans create and interact with this and that set of facts. This changing is not predictable. And it does not emerge from the same sources or times twice. It is often patterned but not periodic. Anthropologists are likely to handle this reality better than other social scientists, especially economists. Anthropologists study just such complex, non-periodic, and non-locational reality. It’s their work. The results of that work demonstrate, in my view that human existence is expressed in quantum theory. Human societies and cultures are quantum. From what I see of economists’ work and writings, their expectations have no place for such complexity, non-linearity, and location shifting. I’m not certain “works” is a term that properly describes quantum mechanics. I’d prefer reveals. Quantum mechanics reveals the common life of humans. Physicists just borrowed it to reveal the life of the sub-atomic.

      • Robert Locke
        July 14, 2019 at 4:40 pm

        What I can’t understand is why it is so important in these discussions to map natural science on to nonscientific situations, like Walras mapped Newtonian physics onto neoclassical economics or Ken maps quantum physics onto economics. I have thought mapping was a dangerous game, ever since somebody pointed out to me that it was a mistake to map decision theory onto the second law of thermodynamics. Is the reputation of natural science so great that we can only find security through this mapping. What about mapping economics onto the behavior patterns of Nietsche’s Dionysian man. (see my discussion in the introduction of The Entrepreneurial Shift, Cambridge UP, 2004)

      • Ken Zimmerman
        July 14, 2019 at 11:05 pm

        Robert, I’m not mapping natural science on to nonscientific situations. I’m simply attempting to point out that humans create “nonscientific” and “scientific” seams in the flow of experience for their purposes. Where one begins and the other ends is also a human invention. The existence that humans experience is quantum – uncertain, chaotic, non-linear. Humans create culture and build societies to overcome, at least for a time all of those. Humans never succeed entirely, and eventually each culture fails and each society crashes. It’s certainly possible that humans, somewhere, at some time would create a society (economy included) around Nietzsche’s Dionysian person, or Mayans’ religious sacrifice, or steam-powered technology. Sapiens is a flexible and imaginative species.

      • Robert Locke
        July 15, 2019 at 6:39 am

        Don’t be so smug about instructing us Ken. You are giving penetrating glimpses into the obvious. And information available long ago, your views on quantum, for example, I read in Capra’s 1982 book. That book sent H Thomas Johnson back to study physics in the 1980s in a quest to understand organizations.

      • Ken Zimmerman
        July 15, 2019 at 7:37 am

        Robert, did not intend to come off as smug. You made a statement that in my view is not revealing. I simply wanted to offer an alternative I consider revealing. As to Capra, I’ve never paid much attention to these physical scientists, particularly physicists who get all philosophical. I do follow many scientists who examine the history and social studies of science. Reflexivity is a good thing, I think.

      • Robert Locke
        July 15, 2019 at 3:52 pm

        You are probably right, Ken. My wife told me today, when I complained about younger people not paying any attention to my comments, that they never did pay much attention to them in the past, so nothing has changed.

      • July 16, 2019 at 10:06 pm

        Tim Berners-Lee, in “Weaving the Web”, tells of his building a machine called Tangle to separate out the possible meaning of phrases. I quote, Ken:

        “I tested Tangle by putting in the phrase ‘How much wood would a woodchuck chuck?’ The machine thought for a bit encoded my phrase in what was a very complex, tangled data structure. But when I asked it to regurgitate what it had encoded, it would follow through all the nodes and output again, ‘How much wood would a woodchuck chuck? I was feeling pretty confident, to I tried it on ‘How much wood would a woodchuck chuck if a woodchuck could chuck wood?’ It thought got a while, encoded it, and when I asked it to decode, it replied: ‘How much wood would a woodchuck chuck if a woodchuck chuck if a wood chuck chuck chuck would would chuck chuck chuck …” and it went on forever. The mess was so horribly difficult to debug that I never touched it again”.

        A couple of hundred pages on, before his Appendix outlining his proposal on how to go about managing a CERN information system with problems remarkably similar to those of an economy [NOTE WHAT I AM SAYING] he argued:

        “A society that could advance with intercreativity and group intuition rather than conflict as the basic mechanism would be a major change”.

        A Metamorphosis, he termed this in 1999. I was saying all that by 1982, applying SSADM with the generality of Berners-Lee’s nodes and arrows. Sadly, it is not just Ken who, believing only in themselves, would rather argue with than learn from others.

      • Ken Zimmerman
        July 17, 2019 at 2:41 am

        Dave had not heard of SSADM before your posting. So, researched it a bit. From what I’ve found, many seem to believe Agile software development is better. Since with it requirements and solutions evolve through the collaborative effort of self-organizing and cross-functional teams and their customer(s)/end user(s). Agile focuses on adaptive planning, evolutionary development, early delivery, and continual improvement, and it encourages rapid and flexible response to change.

        This sounds like Actor-Network-Theory (ANT) which focuses on all networks, self-organized and externally organized. Unlike other approaches to networks, ANT contends networks contain not only people, but objects and organizations. These are collectively referred to as actors, or sometimes actants. ANT calls this feature of networks heterogenous. A network containing many dissimilar elements. These coincident networks include both people parts and technical parts. The human and technical are treated as inseparable and equal by ANT. When buying produce from a supermarket, for example, the actor-network involved would include the purchaser and the cashier, as well as the cash register, the money and the produce involved. It also includes other, less obvious objects, such as the clothes the purchaser wears, without which they would most likely not be served. The task of trying to identify all of the heterogeneous elements in an actor-network like this can be difficult and is ultimately up to the discretion of the researcher. This is known as the problem of selection.

        Actor-network theory claims that any actor, whether person, object (including computer software, hardware, and technical standards), or organization, is equally important to a social network. As such, societal order is an effect caused by an actor network running smoothly. This order begins to break down when certain actors are removed. For example, the removal of telephones, banks or the president may all result in significant breakdowns in social order. Even the removal of less obvious parts of an actor network may result in the breakdown of the network. For example, the signage for the supermarket in the above example. Or, something focused on by behavioral economists, the arrangement of items inside the supermarket.

  13. Craig
    July 17, 2019 at 11:53 pm

    The problem is not the monetary system alone or as a whole, it is the paradigm of the monetary system. Specifically the rigidly exclusionary and monopolistic nature of the present paradigm of Debt Only. 

    MMT deals somewhat with the monetary scarcity that characterizes the current monetary system and paradigm, but it does not effectively/terminatedly deal with it mostly because it fails to see the exact nature/concept of the new paradigm and the specific point in the economic/productive process that an equally specific monetary policy can effect, that is, a new monetary, financial and economic paradigm.

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