Hai! My name is Cliff--"Fiscal" Cliff, dey calls me.
I is heer to tell you about teh foolish tings dat hoomins say when dey tawk about munny.
Us cats don't eben USE munny, so we no haz to say foolish stuff.
But teh hoomins dat feed us sumtimes say dey haz no munny and can't feed us!
Bodhi is Siameez, so he's berry, berry smart and he studied at teh Universitee of Catifurnia and lurned to speek purrfeck English so you can unnerstan him.
So if you wanna lurn teh real troof about munny, just slink past dat orange dawg chasin his tail and meet Bodhi
Hello. My name is Bodhi, and as Cliff said, I studied at the University of Catifurnia and earned a PHD (Pooties Hate Dumbbells) degree. I learned to speak and write perfect English to communicate better with humans because they aren't that bright and don't understand cat language very well.
And they invented this crazy stuff called money and they started Economics to keep track of the crazy stuff and make it work even crazier. So I'm devoting my lives' work to straightening out the humans' misguided and convoluted thinking, which is more twisted than that orange hound you saw above.
As I said, humans aren't very bright, but some are brighter than others. The smart ones realize that money is not a physical thing, like cat poop, for example, but is instead a concept, an abstraction.
How do we know it’s not a physical thing? Well, many humans think money is metal coins or paper bills that they carry around. Some of them think that gold, or silver, is the only real money. Often they think that Ceiling Cat actually made the world in just seven days. We call them literal-minded humans. They don’t do abstract thinking very well—or maybe they just resist learning new stuff, like old dogs.
Money has always been a name for a transaction between people, a social relationship. It can’t be a physical thing
because there aren’t enough physical things in the world compared to the unlimited number of human transactions that can occur. You’ve heard the saying that every cat has three names? Some poet wrote that, but think of the limitations that imposes. Why can’t a cat have an infinite number of names—why just three? Names are not physical things, so there can be an endless number of names for any cat. Putting an arbitrary limit on names is like what the old fogies in Congress do when they impose a debt ceiling on government investment. Money is non-physical, like names, so it could be created in unlimited quantities.
Now, of course government is not going to create money without end, and Congress will see to it that it doesn’t. Congress’ job is to budget certain amounts of money to various projects so as to control the size of those projects, because some projects are good and some are bad. Building nuclear bombs is bad, building homes for homeless cats is good.
Debt Ceiling Cat
Too often Congress doesn’t budget enough money for good stuff because the old fogies think, or pretend to think, that money is limited. Maybe they think it’s still tied to gold in storage, or
more likely they think the government operates like their own households do, having to gather income before it can be spent, and that would mean that the government must tax them to pay for its projects. They don’t want to build homeless cat shelters and they resent paying taxes to do it.
They may not realize that the government really doesn’t have to collect taxes for income; the government can create money on its own because it is the creator of money, and everyone else is the user of that money.
Anyway, it should be obvious that money has many forms: coins, paper bills, plastic cards, computer entries (re-arranged electrons), and so on. Did you ever try to buy tuna in a store that would accept only cash—no checks or credit cards? Did you wonder why? Maybe they didn’t have a point-of-sale machine, maybe they were afraid of bad checks—no money in the buyer’s bank account. Or maybe they felt that metal coins were real money (the metal having real value) and that paper money could be exchanged upon demand for gold from the treasury. They probably hadn’t read the inscription on the paper money recently; it doesn’t mention gold because the U.S. went off the gold standard in 1971.
They had to stop basing the economy on gold. There isn’t enough gold in the world to buy tuna for all the cats, or even to buy food and clothes and stuff for all the humans. There were getting to be more cats and humans every year, but there is only a limited amount of gold in the world. Or silver.
So now the U.S. and many other countries have “fiat money.” “Fiat” is Latin for “let it be done”. They can create as much money as is needed without counting how much gold they have in storage. Of course they don’t want to go overboard and create too much money, so Congress limits how much they can create and spend. A big problem is that old fogies in Congress, like old dogs, haven’t learned that the money the government creates is potentially unlimited and can be budgeted to meet all the nation’s real and urgent needs (such as providing food and shelter for all the starving, homeless cats.)
Or even worse the old fogies know this but pretend we’re still limited by stored gold because to admit otherwise would upset the status quo and make life uncomfortable for the deep-pocketed humans who lobby and control them.
When someone says that money is limited, they are trying to hoard as much money as they can, and that means they are causing you, who have little money, to have less stuff than they have: you can’t have enough good medical care, enough food, clothing, good housing, or joy in life. They are keeping those things away from you and driving joy from your life because they want all the joy themselves. But because they are sociopaths, they are incapable of experiencing real joy, but they want to get “high” from knowing they are keeping joy away from you.
These people are the financiers, the bankers; but remember that not all financiers are sociopaths. You probably have good friends who are bankers and they are nice people. Yes, most people in finance are nice. But it’s the sociopaths in finance who set the rules and the tone for the “industry”. Only about 2% of people are sociopaths, but occupations like finance attract a higher proportion of them because it is an occupation that allows them to control many others with little effort and brings big monetary rewards so they can achieve their joyless highs.
These people have too much power over money. That really smart guy David Graeber warns us about
the arbitrary and utterly non-democratically accountable power of the IMF, central bankers, EU trade bureaucrats, ratings agencies, hedge fund managers, and all those guys who completely trashed the world economy in 2008, who we had to bail out (since lord knows they don't have to pay their debts) and have now decided the rest of the world will have to be picking through garbage cans for the next few years to pay for their earlier spate of "irrationally exuberant" behavior.What is to be done about these power-hungry creeps who play casino capitalism with the world's money? David Graeber says:
The only way to restore something that actually resembles democracy would be to recognize that money is debt and debt is in fact a set of social arrangements, that the cards can and are reshuffled regularly (ask AIG), and that the fact that most Americans live their lives as debt peons, many working horrible jobs they would never accept in a free society because of terror of what would happen to their families if the repo man shows up, is not unavoidable or just, but the product of the fact that some people have the political power to whisk money in and out of existence, and other people don't and are told that morality is a matter of always paying their debts.So to recap, the federal government issues money. It creates the money that the citizens use to buy cat food, catnip mice, houses, clothes, and all the other necessities. The citizens use the money, but can’t create it themselves. That is called counterfeiting. So not only the citizens but also companies, corporations, cities, counties, states are users of the money the federal government issues. They must get their money from other sources, like business profits, wages, taxes, government grants and loans. So they must have budgets that balance; they have to be careful to bring in enough income to match the amounts they must spend.
The federal government, though, can create enough money to cover its needs; that is, if the old fogies in Congress will allow it. But the old fogies act as if the federal government is a household that cannot overspend its income and must have a balanced budget. So the old fogies enact a budget limit on the investments (spending) the government needs to make to help people who are hurting in recessionary times. It even limits investments that government must urgently make to deal with climate change and energy crises.
And besides the old fogies in Congress, there are the bankers and financiers who can create problems for everybody by playing the world's financial "markets" as if they were gambling in a casino. And what's more, they and the fogies in Congress trade notes and even bribes to protect the undemocratic power of the banking class. All these things happen while the average citizen is totally unaware because he is constantly told that money is coins and bills and there aren't enough of them to go around.
Well, there are some smart people who understand how money and economics really work. Their viewpoint is called Modern Money Theory (or Modern Monetary Theory; MMT) and many of them teach at the University of Missouri, Kansas City. Some of them blog on Daily Kos, usually under the group Money and Public Purpose. If you follow that group you will find links to loads of information, more than I can tell you in this short diary.
Paul Krugman, the famous economist, is a smart guy. He knows a lot about money and really wants to make life better for less fortunate people and cats. However, he hasn't yet fully embraced the truths of MMT, though he seems very close to doing so. Since he has cats as consultants, it may be only a matter of time until he finds enlightenment.
So to learn more, you can start by following Money and Public Purpose on Daily Kos. Other people and the cats are counting on you to be well-informed so you can vote and pressure the dumb or greedy people out of their positions of power.
That's all for now. Thanks for reading, and remember Money and Public Purpose is your MAPP to progressive economics.
Bodhi the cat.