Central Crankers

Some of the most dangerous man-children in existence

(The Mandalorian is the good guy here, the Evil Empire is the Central Banking official. In case you were wondering.)

I will debate anyone who thinks our top monetary system officials and neolib politicians are not more dangerous than nukes. They have been the direct cause of more death and poverty than any bomb ever exploded. And the stats are not even close. But how many of you journalists know this? Who is regularly and relentlessly reporting on this horrific austerity? Maybe we all just became immune to it, like children watching the Star Wars Skeleton Crew series, where gold metal is considered the only viable accounting records? You are all children! Friggin’ grow up! Pirate stories and treasure hunts for relatively useless element No. 79 are nice for 9 year olds.¹

Today, a note I wrote to my brother in response to what he read from our Reserve Bank officials. They think they finally grok MMT. But they do not. And in the worst possible way. Small consolation, they at least said one of the quiet parts out loud: NZ government cannot ever run out of the NZ dollar. The rest though, they fumble like a weedy dweeb nerd passed a Rugby ball, with butter all over his fingers, one inch from the try line and fails.

I’ll paste some text here, then if you think you need some hints about how to talk about these issues with family & friends who will listen, I will offer a few talking point tips below to finish. Add whatever appropriate outrage sauce you need in liberal amounts.

Here was the article, and my friend’s comment (my remarks in emoji):

www.rnz.co.nz/news/top/561626/where-does-money-come-from-are-home-loans-actually-fake

Note Shamubeel Eaqub kinda said the quiet part out loud.

“The Reserve Bank has infinite power to create money,” Eaqub said.✅

But then reverted to the orthodoxy, “And even though the Reserve Bank created the money to buy the existing bonds from investors, the government still has to pay it back, which is what we are seeing at the moment.”❌🤮

And then takes a third tack “The way we have set up the system, we can print money if we want to do but we understand that printing an unlimited sum of money would destroy confidence in the monetary system which can then lead to the kind of Banana Republic issues we've seen in other places like Zimbabwe.” ❌🤧🤡🥸

Though I think he is pretty right about this, “Everything about money is about confidence, a belief system. It's a way for us to pool our confidence in each other and money is the medium of that exchange.”🧐❌

Still it seems like Susan Edmonds and Shamubeel Eaqub might both be open to a true understanding of money, but would they be brace enough to actually preach it publicly?✅

I want to highlight the last ❌ there. Money is not a medium of exchange. Many MMT’ers cave-in and say it does have this function. I am a bit of an MMT purist here, so you can say non-standard MMT. What happens in the monetary system when goods are bought and sold is dictated by the central bank payments clearing operations. Software. Numbers get changed in accounts. That is all. There is no flow of anything physical except electrons down wires (not currency units). There is zero real “exchange.” Think I am being too pedantic? Well, maybe so. But this matters.

The concept of the currency scorepoints as “medium of exchange” promotes “gold is money” thinking (shifting the commodity around), and so I am bitterly opposed. So I deliberately seek ways to reject the concept of the state currency as a medium of exchange. It is just a scorekeeping system. This is the legal reality, it is not “theory” it is reality, and it is the way we should all think about “money”. Records of credits and debits. I mean heck, this “Extreme MMT” stance is pretty darn based goodness if you ask me, far better than the inflammatory leftiepol rhetoric of “Defund the Police” and “Degrowth”.

See the arrows? The Central Bank (CB) operations are not a “flow”. There is no “medium of exchange”. This decrepit concept is false consciousness and needs to be intellectually destroyed (politely if possible, me being the hypocrite!). It is a manner of speaking. Once people grok MMT, then sure, we can talk “as if” something was flowing as a shorthand, but we know nothing is flowing.

However, like those inflammatory slogans, I think my Extremist MMT!™ stance should perhaps be kept “within house”. Everyone can find their own idiotic way to alienate normies. I am not in favour of it (of alienating normies). So even if you agree with me, please use the purist MMT stance with caution. You will know who in your life can bear to hear it.

My Reading

Yes, I hope they are open (Susan Edmonds, Shamubeel Eaqub and the rest).

But… yeah Bro, there is a lot of coded neoliberal talk there. Sure, people need confidence in the system. But who lacks confidence the tax man will take? No one I know. It sounds like they probably looked-up neoliberal biased ChatGPT to get their understanding of the monetary system.

And “we need to pay it off.” My goodness (and other 𝖈𝖚𝖘𝖘 𝖜𝖔𝖗𝖉𝖘 not fit to print), that is hilarious. Does he even know this is done every month with a computer entry when a bond matures? The ignorance of our so-called top experts is astounding.

I have to suppose they do know (otherwise I risk being rude in insulting their intelligence), but like a fake-religion of olde, they want the public to remain ignorant because they have no understanding of what really happened in the Weimar or Zimbabwe. (Guess I cannot help insulting their intelligence.🤣) Or again, are faking it and deliberately wish to misinform the public and propagate mass ignorance. They are like man-children, running our damn central bank. They still have a neoclassical/monetarist view of the inflation boogeyman... or again, maybe not, but desire the public to remain ignorant anyway, which would translate to ongoing class war, if they are not ignorant then it could not be any other motive, right?

Honestly bro. There is a strong case for disobedience to this present form of government, they are not legitimate.

Some Discourse Points

1. The problem for NZ is the opposite of Weimar and Zimbabwe. We are grossly under-utilizing our economic capacity, and in horrendously regressive ways (failure to invest in sustainable energy and energy conservation). We have massive household debt among the working class. The only agency that can eliminate this debt, and invest in renewables without financial hazard, is the monopoly currency issuer, the government.

2. Weimar and Zimbabwe inflation was not a money printing cause. The cause was real goods supply crash. One case due to crippling foreign imposed war reparations (which Keynes warned about, no one listened, and which the hyperinflation vanished completely once the reparations were removed); and the other due to farming collapse from agricultural incompetence. In neither case was printing currency the cause. The printing of currency was the effect — if not for increasing money supply, people would have died due to inability to pay the rising price. In fact, the same is true of all hyperinflation events in recorded history. Government deficit spending has never been the cause of hyperinflation, but is always the effect, with good reason.

3. Reversing cause & effect is a major intellectual nuclear bomb. It kills good policy. Do not do it! Understand the monetary system dynamics (see here).

4. These neolib central bankers have absolutely no clue about the damage of unemployment compared to inflation. There is no comparison. In fact, mild inflation is a good thing — provided the cause is a growing lowest real wage. Unemployment is never good.

5. The real losses and social pathologies due to unemployment today exceed the real costs of all wars in human history. Do these policy officials even know an inkling of this? If they do not, then their ignorance is killing us.

6. The ignorance will kill millions in the future because this half-baked-MMT-dimly-aware stupidity is still austerity, and is hindering government investments in renewables today, and that is what we truly cannot afford. The monetarist high priests at the RBNZ and NZ-Tsy may be saying some quiet parts out loud, but they are still promulgating fake-monetarist pseudo-religion. (It is really anti-religion, of course, anti-The Good.)

7. The government pays off the debt every month when the bonds mature. The way the central bankers talk about it you’d think there is some moral hazard to this computer operation. They are man-children, these so-called “experts”.

8. NZ Government does not need to issue a single bond anyway, it is pro-inflationary (by design) and serves no purpose other than maintaining a positive (but pointless) interest rate floor and basic income — but only for people who already have money, and in proportion to how much money they already have. It is obscene class warfare.

9. Pension funds do not need the bond market. Government can always pay decent pension when payments are due. Period. No one really even needs a retirement savings account. Backwards government policy (including failure to well-regulate monopolies) is what motivates all the needless savings desires.

10. The Savings are not all that anti-inflationary really. If people need to buy, they will buy, if the goods are available. These days only the lucky few get to save more than their income. You can call them rentiers. Even most oligarch firm mark-ups are not inflationary, they are just mark-ups. It takes Oil cartel mark-ups to produce significant inflation (continual upwards adjustment in the price level). Why? Because energy commodities are at the base of all prices, so if government does not subsidize the energy producers then the latter get to influence the price level (this is government policy, government failing to subsidize is a policy choice, it is a failure to correct the effect of the monopolist warping the fair market price). (There are other ways to stabilize the price level, not just subsidy. For example, buffer stocks, taxes, rationing [can sometimes be good, depends], fines, and other regulatory measures. Tariffs are never necessary.)

11. Even then, no Oil Cartel has ever continually marked-up. So it is typically one-time re-gauging, it is not inflation, there is no financial hazard. The wise domestic government response should be to re-gauge by increasing the lowest wage rate (and only the lowest wage rate, plus pensions and social welfare payments). (This technical point may fly over the head of normies, so use with care. But I’ve always thought it important to try to explain.)

12. What justifies higher pensions today is the real goods produced by our workers yesterday. Full employment (non-🅱𝘂𝓵🅛🅂𝖍𝗶🅃 work) justifies higher pensions, not savings accounts. Savings accounts promote the opposite of full employment and prosperity², but especially if it is the government that is doing the savings of Its own scorepoints (aka running a fiscal surplus, i.e., deleting the money supply of the private sector).

If you can think of a more creative way to get these same points across to people, do let me know. Even better, if you record a video of someone’s lightbulb turning on, I will re-post and share! Educational success stories in macroeconomics are far more important than my mathematical physics rants.

1. Though, not my nine year olds. I steered my daughters well away from “gold is money” pirate stories. Childrens stories can be pretty damn insidiously evil in design. Are they going to know the gold treasure was not money? Or will this leave upon their psyche permanent psychological monetarist scars?

2. See Paradox of Thrift. Your savings may enhance your prosperity, but macroeconomically it is a drop in overall prosperity. “Saving is good and virtuous” is a libertarian individualistic mindset myth. The reality is that one person’s spending is another’s income.