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buswolley writes:
"Is the United States or the EU really too poor to afford to build the things each needs to maintain prosperous nations? Modern Monetary Theory (MMT) posits that America is not too poor in real resources to do the things it needs to do, and now proponents of the theory have adapted the rules of the classic board game Monopoly to demonstrate their case. For those that do not know what modern monetary theory is about, a suitable primer on the topic might be Warren Mosler's Seven Deadly Innocent Frauds of Economy Policy or Diagrams and Dollars, either as a book on Amazon or on-line for free at NewEconomicsPerspectives.org.
While the Modern Monetary Theory perspective tends to elicit disbelief and even rage, I think it is important for any scientist and geek to weigh the evidence carefully, and by doing so understand better about how and why money is created and destroyed."
(Score: 1) by GeriatricGentleman on Saturday March 01 2014, @10:11PM
I don't know a whole lot of economic theory - just enough to get into trouble really. But I read the discussion thread on the main link (I know, I read TFA) and there is quite a bit of comment on fractional reserve banking and how government doesn't really create the money and you've brought it up here.
I think this is a little disingenuous. The government controls the amount of fractional reserve created by mandating the percentage the banks are required to keep and by not being completely retarded (despite what might seem to be evidence to contrary, there are some smart people making financial recommendations within government). So they know when they issue $50 it means they have created $5,000. I recall some news article on the back of the GFC that the deposit ratio my countries banks had to keep was changing (umm, from 0.1 to 0.2? (eek - too lazy to look for a ref!)) and the flow on effects on money supply were explained. This is in an article to the general public, so am surprised to see this argument come up on a site full of smarter people than me.
However, there are different mechanisms used in different countries for controlling money supply, I have studied a few, forgotten most of what I learned and am more than happy to have my ignorance exposed and be corrected. But I don't think fractional reserve banking is a gaping rent in the description of the Monopolis economy.
(Score: 2) by maxwell demon on Sunday March 02 2014, @09:12AM
There is a difference between issuing the money and controlling the amount of money issues. Anyway, the most important issue is the interest. That changes the game completely because it ultimately enforces that the total amount of debt is larger than the total amount of money.
The Tao of math: The numbers you can count are not the real numbers.