The Chicken and Egg of Money Creation

December 7, 2020 at 12:10 pm

Which came first — the pro­duc­tive work or the pay­ment? That depends great­ly on the sce­nario. You reim­burse the chef after they cook your meal. A home con­trac­tor might get half of the money before start­ing work and the other half upon com­ple­tion. Hourly wages are for the time spent before the pay­check, not in advance.

Here’s an eas­i­er sce­nario. Which came first — the dol­lar or the income tax? The American dol­lar came into exis­tence on April 2, 1792 with pas­sage of the Coinage Act of 1792 by the 2nd United States Congress. A short lived income tax dur­ing the American Civil War last­ed from 1861 to 1872. Our mod­ern incar­na­tion of income taxes began in 1913 with the rat­i­fi­ca­tion of the Sixteenth Amendment. Similar pay­roll taxes did­n’t appear until 1934 with the cre­ation of Social Security by Franklin D. Roosevelt.

Modern Monetary Theory appears to be new eco­nom­ic thoughts grap­pling with a dif­fer­ent answer to the fun­da­men­tal nature of what comes first when talk­ing money. The fol­low­ing pod­cast from Slate Money is a good wake up call for dis­pelling some of the fact-myths that have formed in our cur­rent eco­nom­ic systems.

Professor Stephanie Kelton joins Slate Money to talk Modern Monetary Theory. June 20, 2020

Money has no value and what­ev­er value we want all at the same time. We for­get that because it has num­bers print­ed on it. One dol­lar can get you a soda out of a vend­ing machine or a tooth from under your kid’s pil­low. No value and infi­nite value all at the same time. Money is just a medi­um of exchange and can be what­ev­er we want it to be. If we can agree on some values.

1867 Days

November 24, 2020 at 3:20 pm

267 weeks. 61 months. 5 years. Those num­bers all rep­re­sent the same thing. How long it’s been since I last post­ed on this here blog thingy. That sure is a long time and begs the ques­tion — why now? That prob­a­bly has to do with a string of things I’ve read recently.

  • “Don’t like to write, but like hav­ing writ­ten. Hate the effort of dri­ving pen from line to line” Frank Norris via kottke.org
  • “Purpose is an essen­tial ele­ment of you.“
    Chadwick Boseman via brenebrown.com
  • “One lit­tle blog post is noth­ing on its own, but pub­lish a thou­sand blog posts over a decade, and it turns into your life’s work.” Austin Kleon
  • “There will always be too much to do – and this real­i­sa­tion is lib­er­at­ing.” Oliver Burkeman
  • “I decid­ed I need­ed to start writ­ing things down.” kottke.org first post

Going fur­ther, the words that keep ring­ing in my ear — and I hope to exor­cise through this lit­tle dia­tribe come from the fol­low­ing quote pub­lished fifty years ago.

“We must do away with the absolute­ly spe­cious notion that every­body has to earn a liv­ing. It is a fact today that one in ten thou­sand of us can make a tech­no­log­i­cal break­through capa­ble of sup­port­ing all the rest. The youth of today are absolute­ly right in rec­og­niz­ing this non­sense of earn­ing a liv­ing. We keep invent­ing jobs because of this false idea that every­body has to be employed at some kind of drudgery because, accord­ing to Malthusian-Darwinian the­o­ry, he must jus­ti­fy his right to exist. So we have inspec­tors of inspec­tors and peo­ple mak­ing instru­ments for inspec­tors to inspect inspec­tors. The true busi­ness of peo­ple should be to go back to school and think about what­ev­er it was they were think­ing about before some­body came along and told them they had to earn a living.”

Richard Buckminster Fuller
“The New York Magazine Environmental Teach-In” by Elizabeth Barlow in New York Magazine (30 March 1970), p. 30

A human being had that thought in 1970. Here it is the year 2020 and so many still think a per­son is only worth their pro­duc­tiv­i­ty. That value is only mea­sured in what you can cre­ate or do for oth­ers. That your efforts must be quan­ti­fied through cur­ren­cy or com­fort or con­ve­nience. That life is a zero-sum game. That progress requires growth and pos­i­tive year-over-year bal­ance sheets.

Why can’t progress sim­ply be zero? You replace all the things you extract in order to live. You erase your impacts so they don’t con­tin­u­al­ly build up as debt to future gen­er­a­tions. Hell, you quit exter­nal­iz­ing costs and trans­fer­ring them to liv­ing, breath­ing peo­ple cur­rent­ly on the other side of the plan­et or even right down the road. Accept that more isn’t always the answer because some­times it’s the problem.

Consider this a warn­ing that more word vomit sim­i­lar to the above might come spew­ing out. Or it might not. I’m still swirling in the do less/do more conun­drum of jus­ti­fy­ing my exis­tence by doing things vs. sim­ply being.