Modern Monetary Theory discussion

[Patine]

Those were all before global electronic economies and nuclear weapons. Anyway it doesn't really matter that much to me as by the time anything does change I'll be dead. And no I don't mean climate change, I mean american being dethroned.

Global electronics makes these changes faster and more rapid - including ones toward collapse and power shifts. Nuclear weapons are not a guarantee of an apex position when 8 other nations have them, three others have bases for viable nuclear programs that could be revived at any time, and one of other 8 has significantly MORE nuclear weapons. Thus, that's an irrelevant factor. The oil industry is not eternal - it's end is foreseeable, and the U.S. Government, lobbied (read, bribed) by big oil corporations, is dragging it's on preparing for such an eventuality and setting a new, viable, renewable power source framework. Food (and water) sources are threatened for everyone by climate change. The sharp shift in American demographics from the haves to the have not's will cause much more demand to re-evaluated and restructure how the U.S. economy works. All of the above elements will eventually lead to a massive cut-back in U.S. military power - almost to a "Ron Paul defensive militia," due to the sheer unsustainability of anything bigger because of the resource atrophies I've stated above. And none of this requires being beaten in a war. There! Your "Eternal Hegemony," debunked! But since long-term thinking with any clarity is so discouraged nowadays, I guess most wouldn't think of this scenario, at all...

 

[amadeus]

Once the US stopped issuing or redeeming gold certificates in 1933 (officially, earlier in practice), The gold reserves bore no necessary relation to the dollar.

The U.S. continued to redeem them, but just to foreign governments.

It's a chart of spot gold price against something not well-defined. The chart is designed to mislead (and sell gold).

Wouldn’t that only be true after 1971, when Nixon closed the gold window and took the U.S. off the international gold standard? The whole reason it was closed in the first place was the exhausting reserves of American gold, was it not?

 

[Naskra]

The U.S. continued to redeem them, but just to foreign governments

Federal reserve notes are not gold certificates. The US promised to pay out gold for dollars to foreign central banks. The promise was not kept. When deGaulle said "show me the money" (1965), the writing was on the wall for Bretton Woods.

Wouldn’t that only be true after 1971, when Nixon closed the gold window and took the U.S. off the international gold standard? The whole reason it was closed in the first place was the exhausting reserves of American gold, was it not?

There was no international gold standard after 1914.

 

[amadeus]

Federal reserve notes are not gold certificates. The US promised to pay out gold for dollars to foreign central banks. The promise was not kept. When deGaulle said "show me the money" (1965), the writing was on the wall for Bretton Woods.

And? They were redeemed in gold for that rough 40 year period between FDR’s gold confiscation and the end of Bretton Woods.

There was no international gold standard after 1914.

I would say the gold standard was certainly diminished when the redeemable dollars per ounce was raised from around $20 to $35, but I’m talking about it from a purely historical and factual perspective, and the facts are the U.S. had a gold standard until the 1971 Nixon shock.

 

[El_Machinae]

I brought this all up to test the idea that the dollar wasn't strong during the Great Depression

 

[El_Machinae]

Something that's occurring to me when I look at various currency failures. Without damaging liberty, how does MMT regain acceptance of its currency if it starts to slide? Once it becomes an inconvenience for people, people will stop using it. And reduced acceptance could start a spiral. What does a country do to halt that slide?

 

[Patine]

Something that's occurring to me when I look at various currency failures. Without damaging liberty, how does MMT regain acceptance of its currency if it starts to slide? Once it becomes an inconvenience for people, people will stop using it. And reduced acceptance could start a spiral. What does a country do to halt that slide?

What level of "liberty" are referring to? The Transitional Constitutionalism of Government from Absolutism? The Enlightenment level that is the bedrock of most Western Governments today? The Randian/Libertarian level? Or the level where everyone has near-allodial rights to their land and other property, regulatory agencies are non-existent, defense is by voluntary, self-created militias, you pay a toll for every stretch of highway, waterway, street, or sidewalk you cross to it's owner, and only a skeletal "Night Watchman State," exists otherwise? Just for clarity.

 

[Estebonrober]

Something that's occurring to me when I look at various currency failures. Without damaging liberty, how does MMT regain acceptance of its currency if it starts to slide? Once it becomes an inconvenience for people, people will stop using it. And reduced acceptance could start a spiral. What does a country do to halt that slide?

My understanding is if you start to have inflation problems with MMT you pull currency out of the market to slow down inflation. If it looses acceptance then you are probably to far behind to fix it

 

[El_Machinae]

Yeah, I get that. But how? I'm actually pretty skeptical that a fiat currency will retain its ability to be controlled once there are any significant savings in that currency. Right now, we mainly express savings in a variety of assets, only one of which is the dollar itself.

Patine: insert your own definition. People answering the question already have a model of liberty that they're applying when discussing the solution to the problem. Also, WTH? How long did you take to compose a paragraph that has to be ignored in order to continue the discussion?

 

[yung.carl.jung]

Mostly. What's going to upend it? US has plenty of oil and food production, a huge military budget, a huge nuclear arsenal, the biggest stock exchange.

Do you think the US is somehow self sustainable in food production? That's absurd. What, are you going to have Californians eat literally nothing but almonds? You do realize where the food for most of American cattle (actually, meat) production comes from, right? Those distant echoes called rainforests, now Soybean and Corn plateaus? It takes very, very little to upset global food production.

It would already be enough when there is a massive scale death of bees or other pollinators. Which will inevitably happen given the effect of even the smallest temperature changes on insects and insect reproduction. Without pollination you can say goodbye to most crops, especially those that Americans rely upon. It only takes a minor upset in an ecosystem to have terrifying results w/r/t food production.

 

[Estebonrober]

Yeah, I get that. But how? I'm actually pretty skeptical that a fiat currency will retain its ability to be controlled once there are any significant savings in that currency. Right now, we mainly express savings in a variety of assets, only one of which is the dollar itself.

Patine: insert your own definition. People answering the question already have a model of liberty that they're applying when discussing the solution to the problem. Also, WTH? How long did you take to compose a paragraph that has to be ignored in order to continue the discussion?

Taxes fundamentally but also reverse QE tactics? like literally pulling currency out of ledgers? I'm a medicine and physics guy really economic theory is not my forte.

 

[Commodore]

Do you think the US is somehow self sustainable in food production? That's absurd. What, are you going to have Californians eat literally nothing but almonds? You do realize where the food for most of American cattle (actually, meat) production comes from, right? Those distant echoes called rainforests, now Soybean and Corn plateaus? It takes very, very little to upset global food production

You think the US can't produce enough soybeans and corn to maintain our cattle? We get our cattle feed from elsewhere because it's cheaper, not because we are incapable of producing it ourselves. You also have to remember we export a lot of the food we produce. So if we had to, we could instead keep all that food for ourselves instead of feeding the world.

 

[innonimatu]

Do you think the US is somehow self sustainable in food production? That's absurd. What, are you going to have Californians eat literally nothing but almonds? You do realize where the food for most of American cattle (actually, meat) production comes from, right? Those distant echoes called rainforests, now Soybean and Corn plateaus? It takes very, very little to upset global food production.

The US is absolutely capable of producing all the food it needs and a lot more over that. In fact it has been doing this for nearly two centuries now. Soybeans from south America are competition for the US exports of soybeans, not inputs into the US. World trade is currently so ridiculous that the US is exporting alfalfa to feed arabian cows!

The good news is that food production has been increasing all over the world, the rest of the world does not depend on imports from the US in bad years as it did several times in the past.

 

[Patine]

The US is absolutely capable of producing all the food it needs and a lot more over that. In fact it has been doing this for nearly two centuries now. Soybeans from south America are competition for the US exports of soybeans, not inputs into the US.

What happens when the morning coffee dries up?

 

[innonimatu]

Coffee is actually a plant that can grow in a wide range of latitudes. It could be grown commercially in the US. If it had to.

People believe exaggeratedly in global inter-dependencies. Yes there are global supply chains, and historical ridiculously low stocks being kept. But this is not a necessity or inevitability. Current technology has allowed for discovery exploration of resources once unknown or nonviable. The famous "limits on growth" paper from the 1970s was proven utterly wrong. The US is a net exporter of oil and refined products 20 years after it was declared dependent on arabian oil. Attempts by china to leverage market monopoly over rare earths only managed to get new mines ongoing outside China. Etc.
Countries, not just larger like the US but even medium-sized, are far more able to sustain themselves with their own resources or trade limited to a few partners than the globalization speech has been leading people to believe.

 

[Patine]

Coffee is actually a plant that can grow in a wide range of latitudes. It could be grown commercially in the US. If it had to.

But the supply and quality would be suboptimal. And citrus and pineapple cropland would then suffer. This self-sufficiency is mostly theoretical. And it wouldn't enjoy the support of the American electorate, for whom "patriotic economic nationalism and self-sufficiency" is an abstract concept outside their everyday sphere and is just a regime of unnecessary deprival. A U.S. Government trying to institute such a paradigm, even with long-term benefits in mind, would lose the next election under a Hoover or Carter landslide defeat.

 

[innonimatu]

You'd be surprised, I think. Quality is subjective, there are plenty of people willing to argue that german and even british (!) wines are top quality. And those were marginal areas for vines, if at all. My own small country produces, just to give you three examples, sugar cane, coffee and tea, all crops associated with more equatorial latitudes, and those small operations easily sell all their - more expensive - production on the arguments/advertisement that it is local, or better controlled, or simply unspecified "higher quality". The barrier to growing those businesses is simply cost. Absent cheaper alternatives from trade they'd expand and supply the market and a not much higher cost than the imported products.

The recent-ish large expansion of global trade was done on the basis of small differences of costs. And sometimes just because of bad business logic where the pursuit of profit didn't even have anything to do with unit costs but with exploiting subsidies, announcing metrics for the stock trade (smaller payroll!) arbitraging, etc. Not because of need.

 

[amadeus]

This self-sufficiency is mostly theoretical.

Isn’t this largely a theoretical discussion?

I don’t know of anyone here arguing for increased agricultural trade barriers. I’m certainly on the side that would kill off a lot of the subsidies for things like corn sugar and ethanol production. Even if we paid farmers not to grow crops it would be better than the money we waste now.

 

[yung.carl.jung]

You think the US can't produce enough soybeans and corn to maintain our cattle? We get our cattle feed from elsewhere because it's cheaper, not because we are incapable of producing it ourselves. You also have to remember we export a lot of the food we produce. So if we had to, we could instead keep all that food for ourselves instead of feeding the world.

The US is absolutely capable of producing all the food it needs and a lot more over that. In fact it has been doing this for nearly two centuries now. Soybeans from south America are competition for the US exports of soybeans, not inputs into the US. World trade is currently so ridiculous that the US is exporting alfalfa to feed arabian cows!

The good news is that food production has been increasing all over the world, the rest of the world does not depend on imports from the US in bad years as it did several times in the past.

the point was that you can't grow without pollination, not that the US couldn't theoretically produce enough soy to feed their livestock. Also, almost all large-scale agriculture is heavily reliant on fossil fuels, which simply won't be available in due time.

 

[innonimatu]

Stealing a quote from an arab: the oil ago won't end for lack of oil, any more than the stone age ended for lack of stone. Decline of oil use won't be sudden, it'll just be replaced slowly for energy uses. Very slowly.
And would that humans could wipe out insects just like that. We'd have gotten rid of malaria and other nasty diseases globally long ago. But insects reproduce very fast. There is a decline in bees, almost certainly due to pesticides, and it will take near-disaster to stop it. But they'll recover.