Poll: Currency choice

Discussion in 'Currencies' started by mmm....shiney!, Feb 26, 2020.

?

In which type of currency do you have greater confidence?

Poll closed Mar 18, 2020.
  1. A government issued monopoly currency.

    14 vote(s)
    63.6%
  2. Privately issued competing currencies

    8 vote(s)
    36.4%
  1. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    19,594
    Likes Received:
    2,796
    Trophy Points:
    113
    Location:
    昆士蘭
    It's probably just a semantic argument. Governments enact legislation that gives them the authority to issue currency via central banks and tax ie control the supply of public and private surplus/deficits in the market. Governments don't require the consent of any one to do this it is instituted by force. A private currency would require the consent of consumers, it would be entirely voluntary.

    From my reading CBs are addressing the issue because FB's Libra has put the wind up them. The thought that private entities can issue currencies that enable individuals to transact with each other using a medium that is free of inflation and the machinations of central planning policies (which means central bankers become redundant), and that individual may have a preference for such currencies is challenging the authority of the State.

    That is one form of private currency. Businesses could also issue their own credit notes, of course they would have to be reputable and have some form of collateral as backing for the currency.
     
  2. Jislizard

    Jislizard Well-Known Member Silver Stacker

    Joined:
    Apr 7, 2011
    Messages:
    7,800
    Likes Received:
    562
    Trophy Points:
    113
    Location:
    Australia
    I think the Liberty Dollar already tried it and it did not end well for them, but that was back in 2007, before the current conversations about Cryptos were in full swing.
     
  3. willrocks

    willrocks Well-Known Member Silver Stacker

    Joined:
    May 10, 2012
    Messages:
    6,657
    Likes Received:
    1,974
    Trophy Points:
    113
    Hasn’t privately issued currencies already been tried in the 1800s in the form of private bank notes?

    Even now Wikipedia states “Today, there are over four thousand privately issued currencies in more than 35 countries.”

    The bigger issue is whether there’ll ever be a global currency. And whether it will be fiat or privately created crypto.
     
    mmm....shiney! likes this.
  4. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    19,594
    Likes Received:
    2,796
    Trophy Points:
    113
    Location:
    昆士蘭
    If MMT becomes the dominant economic paradigm then there is very little chance of a single world currency.
     
  5. SilverDJ

    SilverDJ Well-Known Member

    Joined:
    Nov 1, 2014
    Messages:
    4,037
    Likes Received:
    1,251
    Trophy Points:
    113
    Location:
    Australia
    Both have demonstrated their ability to decline and collapse, confidence isn't high in either of them.
     
    mmm....shiney! likes this.
  6. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    19,594
    Likes Received:
    2,796
    Trophy Points:
    113
    Location:
    昆士蘭
    Currencies should be like businesses. Open to the fluctuations of a free market. This goes for collapses as well. The more prone a currency is to potential collapse, the less likely consumers will embrace it. And vice versa.
     
  7. willrocks

    willrocks Well-Known Member Silver Stacker

    Joined:
    May 10, 2012
    Messages:
    6,657
    Likes Received:
    1,974
    Trophy Points:
    113
    You mean communism?
     
  8. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    19,594
    Likes Received:
    2,796
    Trophy Points:
    113
    Location:
    昆士蘭
    No.
     
  9. willrocks

    willrocks Well-Known Member Silver Stacker

    Joined:
    May 10, 2012
    Messages:
    6,657
    Likes Received:
    1,974
    Trophy Points:
    113
    MMT is basically communism.
     
  10. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    19,594
    Likes Received:
    2,796
    Trophy Points:
    113
    Location:
    昆士蘭
    No.

    MMT recognises the role that private capital plays in an economy. Communism doesn't.

    MMT advocates that the function of the State is to manage the economy between periods that build public surplus/private deficits and public deficits/private surpluses. Communism doesn't.

    MMT states correctly that only independent sovereign nations can achieve this. As an example Japan can do it, but Germany can't because the Germans have sacrificed their economic independence to an external body.
     
    Last edited: Mar 4, 2020
  11. willrocks

    willrocks Well-Known Member Silver Stacker

    Joined:
    May 10, 2012
    Messages:
    6,657
    Likes Received:
    1,974
    Trophy Points:
    113
    MMT advocates unfettered spending on social and welfare programs. It also advocates the spending won’t cause inflation. Similar to communism.
     
  12. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    19,594
    Likes Received:
    2,796
    Trophy Points:
    113
    Location:
    昆士蘭
    No.

    Some activists cite MMT as an excuse for the State to implement unfettered spending on social and welfare programs. Those advocates of MMT who know what they're talking about like Bill Mitchell for example caution that politicians are likely to misuse the fiscal power available to them on socialist style welfare programs that will do nothing to alleviate economic degradation. Mitchell points out that further net spending on social welfare programs when properly implemented should be constrained by the amount of idle capacity available.

    http://bilbo.economicoutlook.net/blog/?p=41789

    He goes on to say that in the event where the idle capacity is not available then trade-offs would have to be made. These would come from existing government programs or from the private sector. Given the current economic climate, Mitchell would likely argue against implementing policies that further reduce the private sector surplus (which doesn't exist at the moment anyway). His target would be the public surplus.

    As far as I understand, MMT advocates that inflation occurs when the government reduces its surplus and goes into deficit ie injecting cash into the economy by either lowering tax rates or spending, or both. MM theorists understand the causal link between public and private deficits/surpluses and inflation.
     
  13. willrocks

    willrocks Well-Known Member Silver Stacker

    Joined:
    May 10, 2012
    Messages:
    6,657
    Likes Received:
    1,974
    Trophy Points:
    113
    Firstly how is “idle capacity” defined. And how does it limit MMT money creation?
     
    mmm....shiney! likes this.
  14. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    19,594
    Likes Received:
    2,796
    Trophy Points:
    113
    Location:
    昆士蘭
    I would imagine it refer to funds not currently being put to use, so it probably refers to a public surplus aka budget surplus.

    If a program requires funding and can be justified on economic and social terms and if there is no idle capacity a responsible government is tasked with cutting costs in non-productive services to fund the venture rather than relying on central banks say to wield monetary policy. If extra money is required to boost private surplus and costs cannot be cut or the private sector cannot take on a greater role in meeting the demand (because they do not have a surplus) needed to boost economic growth and wealth, then a government can engage in deficit spending up until a point where it has the desired effect - which would be measured by the employment rate and the inflation rate. The government can then use taxation to control inflation and quell demand.

    Your questions are beginning to exhaust my knowledge of MMT. If they get any harder I may have to do a runner. Ive done an ugly job of explaining it. :p

    @leo25.

    I’ve called for backup. :D

    But remember, my initial comment to you was in regards to a single world currency. If the governments of the world went all MMT on us there’d be no single currency. And this could also signal the end of the Euro too.
     
  15. willrocks

    willrocks Well-Known Member Silver Stacker

    Joined:
    May 10, 2012
    Messages:
    6,657
    Likes Received:
    1,974
    Trophy Points:
    113
    But according to MMT there would never be “idle capacity”. Funds would be created as political overlords require them. Or as voters demand them.
     
  16. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    19,594
    Likes Received:
    2,796
    Trophy Points:
    113
    Location:
    昆士蘭
    Assuming I've got the definition correct then there would. There could be idle capacity in the private sector during periods of full employment for example where capitalists have funds they wish to use for productive purposes but are constrained by labour or materials shortages say, or when the government is running a budget surplus by removing funds from society but not using it for any productive purpose whilst demand for it may exist.

    Funds are only created when the government is required to provide economic stimulus because the private sector can't. It's different to the QE that central banks engage in and is supposed to be different to managing slush funds that are available on demand to politicians, corporations, lobby groups and the electorate.

    I think we've established beyond doubt that MMT is not communism at any rate.
     
  17. willrocks

    willrocks Well-Known Member Silver Stacker

    Joined:
    May 10, 2012
    Messages:
    6,657
    Likes Received:
    1,974
    Trophy Points:
    113
    Savings?
     
  18. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    19,594
    Likes Received:
    2,796
    Trophy Points:
    113
    Location:
    昆士蘭
    I reckon that could be right.
     
  19. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    19,594
    Likes Received:
    2,796
    Trophy Points:
    113
    Location:
    昆士蘭
    Bump. Government issued currency getting down to GFC lows.
     

Share This Page