MeisterEckhart wrote on Mar 12^th, 2024 at 1:06pm:


Wrong of course, we know a lottery win by poor people is soon gone.

What we need is universal participation in the economy, with government acting as employer of last resort. (taking into account the need to match the individual's capacity to perform useful work with the job on offer).

Try again. 

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thegreatdivide wrote on Mar 12^th, 2024 at 1:10pm:


Can you explain how a person would come to believe that an item is worthless at the same time as believing it is their only way to stay out of jail?

Also, are you aware that the very first fiat currency ever attempted ended up failing because people lost faith in it, even though it was, as you suggest, backed by the government putting people in jail if they could not pay a lump sum tax with it, as well as various other laws?

Also, are you aware that currencies can function and exist in the complete absence of laws backing them, even in the face of laws trying to prevent their use, so long as people continue to believe they have value?

freediver wrote on Mar 12^th, 2024 at 1:22pm:


No item which is desirable is worthless, and no person would come to believe that is is worthless, espcially if he is hungry...you need to rephrase that statement before we can proceed. 

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I'm aware one of the earliest forms of state-issued paper money appeared in China during the (Mongol) Yuan dynasty.

During the period (under Kublai Khan)  the government oversaw a productive economy, and paper money served well as a unit of exchange, with the absence of inflation,  because the desired resources (food etc) were always available for purchase.   

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Yes. Crypto being a good example.

thegreatdivide wrote on Mar 12^th, 2024 at 1:33pm:

And nothing sells like investigative exposes of corruption.

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I am trying to explain that you agree with me, but are too stupid to realise. These two statements are not inconsistent:

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https://en.wikipedia.org/wiki/Fiat_money

The Song Dynasty in China was the first to issue paper money, jiaozi, about the 10th century CE. Although the notes were valued at a certain exchange rate for gold, silver, or silk, conversion was never allowed in practice. The notes were initially to be redeemed after three years' service, to be replaced by new notes for a 3% service charge, but, as more of them were printed without notes being retired, inflation became evident. The government made several attempts to maintain the value of the paper money by demanding taxes partly in currency and making other laws, but the damage had been done, and the notes became disfavored.

In other words, shared belief in the value of money is an absolute requirement for it to function as money. Government backing is not, and the best way for a government to back a currency is to establish a shared belief in its value. Putting people in jail for not having it and paying taxes with it is a crude but effective example.

thegreatdivide wrote on Mar 12^th, 2024 at 1:54pm:

Misquoting people now, eh! Are you desperate much?

I said: 'If that were true, poverty could be eliminated overnight by just giving poor people lots of money' - which you reiterated not refuted.

Giving free money to the poor, regardless of good governmental book-balancing or not, does not end poverty.

freediver wrote on Mar 12^th, 2024 at 1:57pm:


The problem is you don't accept that the value of state-issued money is determined by the success of the nation's economy, hence you come up with all sorts of absurdities - to wit:

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I don't give a sh*t what "a person" will accept as payment. I accept the nation's money, the value of which is supported by the nation's productive capacity.


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So go for it: find all the people who don't accept the nation's money, and trade to your hearts' content. Just make sure you can pay governement fees, taxes, fines, utilities etc,  in the nation's money.

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Ah.. the Song, as opposed to the different outcome during the golden age of the Yuan dynasty.

The Song's mistake revealed:

"as more of them were printed without notes being retired, inflation became evident". 

There's that limit which I (and MMT economists) keep talking about, ie the resource limit: the goods must be available for purchase, to avoid inflation. 

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Wrong: government-managed retirement of excess notes in circulation must take place, to avoid inflation, as stated in the article. 

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Oh...so now the government has to establish a shared belief in its money's value.....regardless of the state of the economy and the nation's productivity; good luck with that.

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Indeed. Government should ensure everyone has access to the essentials including a job, then there is no need to jail people for not having money.

And currency-issuing governments don't need your money,  they need your labour (whether in the nation's public or private sectors).