People call for a job guarantee. Why? Because people need income. But all income is money. And all money is debt, so all income is debt. So income is a problem.
What's wrong with that argument?
The phrase "money is debt" is what's wrong. The phrase does not mean "money is the same as debt". It means "money comes into existence through the creation of debt" or something like that. Whether that is always true is not up for consideration here. Certainly it is true sometimes.
I want a job so that I can receive money. Oh, sorry, that's too direct.
I want a job so that I can receive income, because the stuff I receive as income is money, and I want the money. So far, so good.
But now someone cries out All money is debt and that is supposed to bring the discussion to a grinding halt.
I want a job because I need the money, but all money is debt.
?? What is that supposed to mean?
At best, I have this: I want a job because I need the money. All money comes into existence through the creation of debt. Or, maybe not all money, but a lot of it. Or some of it, anyhow.
The phrase "All money is debt" is irrelevant. Stop using it.
Hi Art
ReplyDeleteTne US total credit market debt was growing at $1 Trillion every 70 days in 2007. In the last 3 years it has not grown at all.
Here is a related quote:
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If all the bank loans were paid, no one would have a bank deposit and there would not be a dollar of coin or currency in circulation. This is a staggering thought. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. When one gets a complete grasp of the picture the tragic absurdity of our hopeless position is almost incredible, but there it is. It (the banking problem) is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.
Robert H. Hemphill, credit manager of the Federal Reserve in Atlanta(1939)
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Hey Art
ReplyDeleteI understand where you are coming from I think.
I think it is necessary before we can correctly fix a system to understand the components of the system. To me, we are stuck in a paradigm which is completely incapable of fixing our financial problems, primarily because they misunderstand the fundamental nature of money. If money is thought of as a thing, like a commodity, that is valued because it is rare the things one will do to fix a financial crisis will all center around making that thing valuable again, even if real people are hurt. The thing becomes the focus. If money is understood as a relationship between a creditor/debtor then keeping these relationships healthy will be the focus.
You say "all money is debt is irrelevant". How is it irrelevant? If you mean that saying this makes govt debt and private debt sound the same.... then I agree. Much of our solutions would become clearer if we stopped equating govt debt with bank debt. If by irrelevant you mean something else though Id like to hear further.
3 years of no debt growth is too little. $1 trillion every 70 days was too much. Is there no happy medium?
ReplyDeleteGreg I think you understand where I am coming from.
ReplyDeleteNot only "money is debt" ... I also don't understand the "credit slash debt is a relationship" thing, but I usually let that go. Explaining things in terms of a relationship would only make it *more* complicated, I think.
Art,
ReplyDeleteThe way to differentiate government debt from private debt is to frame it in terms of who owes to who.
First some terminology that I will use
1) Government = community/society at large, encompassing everyone.
2) Public - everyone in the society at an individual level
in other words Government is the collective, and the Public is the individuals comprising the collective
A third player
Banks - these can be owned by the collective, or be owned by private individuals
In other words, a third and a fourth player
3) Public Banks e.g Bank of North Dakota
4) Private Banks
Government Debt - the collective owes to the individuals
Private debt - individuals owe to the bank/other individuals
Interest charged by the Public banks gets recyled into the community.
Interest charged by private banks leads to income and wealth disparities in the society.
I guess it seems like a pretty clear difference to me, in that some money you have to pay interest on, and some you don't. No?
ReplyDeleteJerry,
ReplyDeleteThat is not quite it! On one kind of debt, principal or principal and interest have to be paid (Private Debt) - On the other, taxes have to be paid.
If the Banks are publicly owned, the interest and principal goes to enrich community, while if the banks are private, it goes to enrich the owners of the bank.
The taxes, of course go back to the community.