Money is a Scary Subject

November 6, 2016
Written by: John Kelly
44 Replies

The devaluation of peoples’ hard-earned money is what Australians fear most. People fear inflation. Never mind the crime rate, political corruption, nuclear wars, family violence, pestilence and the like, inflation is the king of fear factors.

So, when you tell them that a currency-issuing government is not constrained in its spending capacity, they immediately imagine this nightmare scenario where a government will just spend and spend and spend.

This is just one of the reasons why people struggle to accept Modern Monetary Theory. Fuelled by ignorance and being fed the wrong information by others who don’t know any better, they cling to old standards such as the myth that running a country is the same as running a household.

They foresee inflation going through the roof, causing all manner of pain and suffering to families, their savings and their future well-being. The word hyperinflation often sneaks into the conversation as well.

It’s an entirely false scenario, there is no reason to think that way but, that is the way of people when they are opposed to something or are gripped by the fear of the unknown.

The other great difficulty is that most economists don’t accept it either because it goes against everything they have been taught.

The problem is that few of them have been taught macro-economics as opposed to micro-economics. Most of them, while acknowledging that we live in a fiat currency world, still maintain a gold standard mindset. That is the sum of their training.

That is why it is easier for people who have not studied economics, to accept it. Their minds have not been polluted with gold standard thinking. Common sense takes over.

People in the financial markets, for example, seem to understand it quite easily. Tell them that bond sales drain reserves and they get it, they understand it.

But within the world of the economist, it takes a heterodox-economist to lead the charge, someone trained and qualified in the old ways but who has broken through that glass ceiling. Sadly, there aren’t too many of them.

Very few, if any, policy makers understand it. Senior central bankers do, of course, after all they are the ones who juggle the numbers in their computers. But will they dare explain it to the politicians? The very thought of it makes them shudder.

They too fear that once a politician realises the possibilities associated with a fiat currency, the politician will wreak havoc upon a nation’s economy, spending recklessly. It’s a sad indictment of the perceived maturity of our leaders.

Perhaps the biggest problem in explaining MMT is the language used. Trying to explain to someone that their entire thinking processes need to be turned upside down if they want to grasp it, isn’t easy.

When you hear someone say, “The federal government spends by issuing currency and can never run out,” they don’t respond by saying, “great, let’s have full employment.” They say, “For goodness sake, don’t tell our politicians, they’ll just spend like crazy. We’ll become another Zimbabwe.”

Somehow, the language has to change. We have to develop a new way of explaining MMT such that the irrational behaviour of those who should know better, can be ignored.

Engaging in a carefully considered language with simplistic clarity, a language that has factored in all the elements of disbelief and fear is a huge challenge.

It’s hard explaining that when a fiat currency is misused, inflation is a possible outcome, but that full utilisation of a nation’s resources (its people), improving our health, our education, lowering our crime rate, is a far better outcome.

It’s hard explaining that a nation is constrained only by its available resources and not by one or two percentage points of inflation. Under our present management, we can’t even achieve that.

It’s hard explaining that a currency issuing nation can always meet its commitments in its own currency, that it doesn’t need to borrow to fund its spending and can always pay for goods available in its own currency.

Why is it that the prospect of providing full employment, having a world’s best education and health system, a state of the art communications network, a respect for our natural resources and equality of opportunity for all, is restrained by ignorance?

This is the 21^st century. Those medieval superstitions that so dogged the efforts of people like Galileo and Copernicus should be behind us now. Modern Monetary Theory, like all theories, needs proper implementation to be accepted as fact.

After all, who can seriously say that the present theory of classical economics has proved itself worthy?

Money is indeed a scary subject. But it doesn’t have to be.

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Andreas BimbaNovember 6, 2016 at 2:17 pm

Yes John we are denying ourselves a much healthier economy due to false beliefs and voting for those that knowingly peddle those beliefs because they served the narrow sectional interests of the capital controlling elites.

Even the capital controlling elites are being now harmed by the political ideologies of neoliberalism and monetarism due to suppressed consumption demand.

People are not just afraid of inflation but also with finding affordable housing, enough income to meet essential expenses and unemployment and

Heterodox (@mmt_rod)November 6, 2016 at 2:48 pm

Yet neoliberals promote unrestrained private credit growth for asset speculation eg housing, until private debt suppresses aggregate demand and then leave it up to ignorant Central Bankers to cut interest rates to encourage GDP growth through more private debt.
So much for the restriction of a gold standard.

Don A KellyNovember 6, 2016 at 2:55 pm

The Wall Street Journal ran an article this week finally acknowledging that the UK government can never run out of money – which leaves no room for doubt. The journalist Jon Sindreu wrote that “Among facts that take a stubbornly long time to sink in, here’s one: Countries that borrow in their own currencies never have to default on their debt”. The author went on to say “Mainstream pundits thought the Brexit vote would see foreigners sell in large quantities. They didn’t. Exactly the opposite happened. Why? Because Britain is a developed country with liquid financial markets that issue debt in its own currency. Unlike Spain or Greece, which could certainly run out of euro’s, the U.K. can always print more pounds”.
How long does it take for Australian politicians and journalists to acknowledge that Australia is also a monetary sovereign? Meaning that the government has absolute power over its own currency. The government is the monopoly issuer of its own currency and can honour its liabilities whenever they fall due, in their own currency. They can never go bust.
How long will the Australian government persist in penalising the disadvantaged to the benefit of their Corporate bosses?

Ricardo29November 6, 2016 at 3:21 pm

This is one of the reasons I thought Greece should pull out of the EU and return to tge drachma as its own sovereign currency. Sure there is the issue of money owed to the troika but the debt was racked up under usurious terms, so just tell them to piss off.

Meanwhile in Oz, I’m not sure I want ScoMo, or MoMoMo as i call him, to learn about this, he’d just shovel more at his wealthy mates.

Matters NotNovember 6, 2016 at 3:53 pm

Yes a sovereign nation with its own fiat currency can never run out of money but the value of that currency can certainly fluctuate. Not long ago, one hundred British pounds would buy 140 euros but today the same 100 pounds will only buy 111 euros (approx.) – tipped to fall to 108 in the near future. That’s a decline in value of about 20%. Lots of Brits who retired to Spain, Portugal, France and elsewhere find that with an effective 20% cut in the value of their pensions, life becomes a whole lot tougher.

Lots of Australian who retired to Thailand see the value of their currency decline about 15% over the last few years. And that’s in a country with a military dictatorship. For those who settled in Vietnam the decline is in the order of 30%.

Don’t mention gold because the value of it rises and falls even more dramaticallyl. In 1980 an ounce was valued at US$2 032.76 only to fall to US$383.75 in 2001, rising to US$ 1 273.10 currently.

Yes ‘money’ and its ‘value’ is full of uncertainty.

MichaelWNovember 6, 2016 at 4:02 pm

Money is indeed scarce especially for pensioners, unemployed, underemployed and people in the workforce.

I went to a sixtieth birthday party the other week at the local pub, a place I had not been for about six years. Some of the people attending I had not seen for years. The discussion eventually moved to wages, or rather lack of.
One guy I used to work for had given up his business due to ill health and was now driving trucks casually for $25.00 per hour. This same guy was paying me $25.00 per hour back in the late 80’s. Another guy I worked with for many years is working for less now than we were receiving six years ago. And on and on it went. No pay rises, people having to negotiate their own EBA. Unable to negotiate tough, work for peanuts. Member of a union? We don’t employ union members. And on and on it went , thankfully I have been out of the workforce for six years due to unforeseen circumstances, some I am not thankful for.

All these people work in the building industry, all of them have to work until 67 years of age if capable.

So, now the coalition want a Building Union Investigation Commission ( let’s call it for what it is) Why?

As the year comes to an end our politicians must be due for a pay rise, of course they will knock it back just to lead by example.(Ha.) Seems to be the only time there is bipartisanship in Canberra.

HarquebusNovember 6, 2016 at 4:20 pm

John Kelly has outdone himself. Economic farce is his stuff of life. Fortunately, most people do not fall for his currency from nothing bullshit.
Only economists, who have no grounding in the physical sciences, could come up with something so absurd.

townsvilleblogNovember 6, 2016 at 4:26 pm

Most of we 3 million Aussies living below the poverty line fear inflation only because things are very tight on the financial frony currently, if inflation were to move in a run away manner we would have to do with 2 loaves of bread per week instead of 3. We have empathy with Australian convicts were were sentenced to Australia in the 1770s.

Matters NotNovember 6, 2016 at 4:53 pm

Here’s a clue, all currencies come from ‘nothing’. Some people like ‘shiny’ metals such as gold and silver but to do anything practical with them, you have to turn them into the local currency. Ever tried to buy an airline ticket by offering sheep, goats or pigs? All ‘valuable’ in themselves but the Airlines like the dollars and cents and that’s the only ‘currency’ they will accept in exchange of a ride on the plane.

Some people in the past liked beads, mirrors and the like. as Batman found to his pleasure.

Things only have value, if people given them value. And currently when it comes to exchanging things, including services, they seem to value dollars and cents.

Stuart Errol AndersonNovember 6, 2016 at 5:00 pm

the Analysis is too simplistic http://www.the-lighthouse.net/debunking-modern-monetary-theory-mmt-understanding-it-first/

Matters NotNovember 6, 2016 at 5:42 pm

Stuart Errol Anderson – haven’t finished the article yet. (And it will take me a few ‘reads’ to get my head around it) but it’s very, very interesting. I would like a few of the MMT experts to respond. In due course.

totaramNovember 6, 2016 at 6:21 pm

Stuart Errol Anderson: It turns out that when that piece was written, the author had not even read Randal Wray’s book and admits it in the comments. So sorry, I’m not going to wade through it. Check the comments. There are enough to tell you the criticism is flawed. It is based entirely on Warren Mosler’s book, which is for the average lay person and perhaps simplifies some issues.

John KellyNovember 6, 2016 at 6:23 pm

Stuart Errol Anderson, I read as much as I could of your link until I lost interest. Perhaps you could paraphrase the author’s argument……oops! Hang on, I got to the end and found this response which covered everything…..

“This article is so bad it does the opposite of its intention, it supports MMT!. I am new to MMT and wanted to hear someone attack it and show how it was fundamentally flawed and does not work. It quickly became clear that the author did not really understand how money works at all and just displays his own ignorance and unknowingly and most likely unwillingly lends support to MMT by the weakness of his arguments. It was a relief to read this crap and know that MMT is right after all. This is not the first such overtly critical article that I have read that ends up supporting MMT by failing to find anything wrong with it. No need to worry though the dark forces of neo-liberalism, rentiers, free lunchers, banks and the like will ensure that the present status quo will remain as it is.”

Jennifer Meyer-SmithNovember 6, 2016 at 6:23 pm

“Somehow, the language has to change. We have to develop a new way of explaining MMT such that the irrational behaviour of those who should know better, can be ignored.”

Even if the Libs could be educated to understand the wonderful facts that MMT represent, their stupidity deserves to stay stupid.

However, Labor and the Greens must not be allowed to stay ignorant or silent about MMT’s plain truths.

Labor, and I grant, the Greens must promote brave spending and brave equitable distribution of wealth based on the fact that Australia has its own sovereign currency and such social equity is available to us right now.

Andreas BimbaNovember 6, 2016 at 6:50 pm

Stuart, that article you linked to really is mediocre. It starts off giving a reasonable interpretation of MMT but every criticism of MMT presented falls off the rails as it basically assumes all the faulty neoclassical economic beliefs are indeed true and all the MMT economic beliefs are false. For example that money can’t be created even though earlier the author writes that most economists that have looked at MMT accept this.

The article is really long and such a mish mash that I pity any MMT economists trying to do a point by point response. This article is a bit like one of those pseudo science climate denialist papers that to the uninformed may look somewhat convincing but really is just confused nonsense.

totaramNovember 6, 2016 at 7:01 pm

John Kelly: Wonderful to see your restraint in the face of abuse from Harquebus. Not engaging with such persons is the best policy.

With regard to how to approach the issue of “explaining things to people”, I still feel that it might be better to allow them to think that the govt. “borrows” its own money by issuing bonds. Then point out that “borrowing” for investment is something every business engages in (including households). So there is no harm in “govt. debt” in the first instance. You may then point out that this “debt” can be extinguished rather easily. And now that the “very left wing” Wall Street Journal has published an article, as mentioned by Don Kelly above, stating clearly what the MMT crowd have been saying for decades, this will be easier to swallow, even for the brainwashed.
This may not work for everyone, but for some people this may be an easier path to achieve understanding. Different strokes for different folks, as the saying goes.

As for what politicians might do, if they understand how this works, spending recklessly etc.:
1) We will cross this bridge when we come to it. Some of them will deny that this is how it works because it will destroy everything they have been saying. I must admit though that their ability to execute the back-flip is legendary.
2) The simple test for when govt. should stop/reduce spending is when inflation reaches above the level considered “safe”(suitably defined), provided there is “full employment” (suitably defined).

Heterodox: Too true. Neo-liberalism mantra does not allow fiscal policy incentives by govt., so what can central bankers do? On top of that, simple accounting tells us that the more the govt. attempts to “repair the budget”, the harder it is for the private sector to pay down its debt. And so it goes…

HarquebusNovember 6, 2016 at 7:04 pm

I read the article linked by Stuart Errol Anderson and the comments and had no trouble understanding it. It does not surprise me that John Kelly lost interest. I will also say that, I have also read many articles posted here including those by that idiot Bill Mitchell and I still say that all fiat currencies are nonsense and will eventually fail as they always do.

Physics trumps economic ideology every time.

Search criteria: modern monetary theory false

Cheers.

Jennifer Meyer-SmithNovember 6, 2016 at 7:12 pm

If physics trumps economic ideology Harquebus, why aren’t you providing arguments of HOW to explain to neoliberal privateers that rampant growth and trade defeat our environment, climate and essentially us?

RossleighNovember 6, 2016 at 9:02 pm

Harquebus: When you say all fiat currencies fail, can you list at least ten that have? And don’t just post a link, that’s just lazy.

JohnBNovember 6, 2016 at 9:47 pm

It is rather ironic that while the most widely feared economic threat is inflation (a fear reinforced daily by neocon scare merchants demonising govt. deficit spending) it is deflation (likely induced by lack of govt. deficit spending) that will most likely bankrupt many investors.

Fear of deflation should be top of the list for heavily indebted Australian citizens; when asset prices fall one’s debt level remains unchanged – negative equity can quickly result, loan interest rate increases due increased lender risk can also follow.
Inflation is kind to debt, deflation is a veritable poison.

Almost universally a cognitive disconnect exists between citizens fear of inflation while simultaneously pursuing investment in speculative real estate reliant on capital gain to produce a profit on the investment.
It seems that the desire to become more wealthy through asset appreciation easily outweighs the fear of contributing to inflationary pressures.

John KellyNovember 6, 2016 at 10:02 pm

Rossleigh: We have asked Harquebus that many times. He has never delivered.

Matters NotNovember 6, 2016 at 10:25 pm

Of most interest to me in this thread is the reaction to the link provided by Stuart Errol Anderson. Here’s a ‘selection’ (and only a selection) of worrying ‘dismissals’:

. So sorry, I’m not going to wade through it.

read as much as I could of your link until I lost interest.

The article is really long and such a mish mash that I pity any MMT economists trying to do a point by point response. This article is a bit like one of those pseudo science climate denialist papers that to the uninformed may look somewhat convincing but really is just confused nonsense

To an ‘outsider’ all your criticisms are at a high level of generality and (most importantly) at a very low level of specificity. After all, the author concedes that MMT has much to offer but questions the ‘detail’. And perhaps, more importantly, challenges the meaning(s) given to that detail. He builds a case for alternative ‘meaning’ attribution. In short, he accepts certain ‘facts’ but challenges the supposed ‘implications’ of same.

To dismiss off hand the claims made – re the detail – is problematic, intellectually speaking. Is there any chance some of the ‘experts’ could take the time to ‘tear apart’ these claims bit by bit and in so doing build credibility for the ‘theory’ or should we all just stand back and believe?

HarquebusNovember 6, 2016 at 10:39 pm

Rossleigh
What do want me to do, copy and paste? Who’s too lazy to follow link? See John Kelly’s previous ~~bullshit~~ article. The link is there.

Show me one fiat currency not currently in use that hasn’t failed. That is a question I have put here many times and is still not answered.

Jennifer.
“HOW to explain to neoliberal privateers”
A good question. Do you know any neoliberal privateers? I don’t. If you do and intend to argue with one, I will help you.
My arguments against growth are delivered to politicians and journalists inboxes.

Growth is a regular subject. Here is an example.

Jobs and growth

My email address is at the bottom of the page. I am hoping that you will join a few others here at theAIMN and allow me to add you to my list.

Cheers.

Matters NotNovember 6, 2016 at 10:52 pm

Show me one fiat currency not currently in use that hasn’t failed

one fiat currency not currently in use that hasn’t failed. Really? Surely, an impossible endeavour? A logical impossibility? Hilarious.

I think it says a lot about your claimed ‘logical thinking’.

HarquebusNovember 6, 2016 at 11:00 pm

Matters Not.
You nailed it and described the absurdity of fiat currencies beautifully.
Well done.

Matters NotNovember 6, 2016 at 11:06 pm

I have no control over the ‘meaning(s)’ given to my comments.

For that I am thankful because it’s always an ongoing worry.

FFS, from some one who believes that ‘shiny’ metals have ‘inherent’ value.

HarquebusNovember 6, 2016 at 11:28 pm

Matters Not
Perhaps I should have included “only you don’t realize it.” but, I was foolish and credited you with more intelligence.
BTW: Shiny metals that were used as currency thousands of years ago are still in use today and still have value.
Cheers.

Matters NotNovember 6, 2016 at 11:39 pm

Copper and brass coins were also valuable years ago.

As was ‘virginity’. And still so in certain cultures. And likely to be in the foreseeable future.

I devalued mine years ago.

I just don’t know where this bullshit leads. Please explain?

As for ‘crediting intelligence’. …

Look above.

Peter FNovember 7, 2016 at 6:37 am

@Heterodox (@mmt_rod) ‘Yet neoliberals promote unrestrained private credit growth for asset speculation eg housing’. Yes, this is true – but this private debt carries interest paid to banks. Now, ….I wonder if there is a link . . . . . . .?

RezblahNovember 7, 2016 at 9:06 am

Hey harquebus, the only economic farce that’s being perpetrated around here is the neo liberal bullshit that’s been trickling down on you for the last 30 years. If the bleeding obvious results of this economic atrocity aren’t obvious to you, try googling for the truth, the IMF and the world banks assessments of their own failed policies might be a good place to start

Greed will trump ‘physics’ for as long as we let it

HarquebusNovember 7, 2016 at 9:32 am

Matters Not
I am glad that we are on speaking terms again. No one cracks me up like you do.
It is impossible to name one fiat currency not currently in use that hasn’t failed because, they all have. I can’t explain it any simpler than that.

There are a videos from Mises and Maloney in this link for your entertainment. Enjoy.
“In 1964 it was worth $0.25. Today, it’s worth a whole lot more. That’s because it is a magical quarter. The magic is that it maintains its purchasing power no matter how many dollars our government prints.”

Money

Rezblah
I am aware of the things you state.
Bankers are psychopathic destroyers and thieves.

Cheers.

stephentardrewNovember 7, 2016 at 10:56 am

Great post John I will keep on supporting and reposting your articles in the hope some will understand.

In the mean time I try to explain what I can to others.

We must be doggedly determined as I think a coherent an accessible narrative is beginning to emerge and this article is a step in that direction.

Thanks once again mate.

RezblahNovember 7, 2016 at 11:04 am

Indeed Harquebus, if 2008 doesn’t convince you of this then nothing will I’m afraid

Society does its best to eliminate sociopaths and psychopaths, yet they seem to congregate and flourish in our business and political bodies

History is littered with the sociopathic and psychological powerful few who have held the generally peace loving many to ransom to the detriment of humanity for millennia, with their pathetic personal empire building. (Oh boo hoo, it’s too hard to get along with each other, let’s kill each other instead)

I often wonder if the cure for cancer (amongst other diseases) was blown out of the brain of a soldier on one of the countless battlefields of the past 100 years

If we worked together we could have escaped our little Petri dish here on planet earth and at least accessed the virtually unlimited resources of the solar system. Instead we’ll continue to bicker over what’s here, driving ourselves to and over the brink of military, economic and ecological disaster, led by our pathological few

Lead on!

Andreas BimbaNovember 7, 2016 at 11:09 am

Peter F. I can think of a link between neoliberal political ideology and the interest received by banks from huge levels of private debt.

Two of Australia’s most powerful lobby groups are banking/financial services and property developers/sellers. These groups fund and lobby the Liberal Party. Little Johnny Howard and Australia’s worst ever treasurer Peter Costello put in place the negative gearing and 50% CGT concessions as well as allowing unrestrained investment by foreigners (Chinese predominately) or their proxies into Australian real estate.

Neoliberal lite of course just rubber stamps all neoliberal ideology as they also receive funds from the same lobbyists and are rightly terrified of the corrupt corporate mass media.

This builds the property investment real estate bubble and drags along the unfortunate owner occupied home buyers along for the ride.

Now mortgage repayments for investment properties and owner occupied dwellings are about $80 billion per year. What would this figure be without the real estate bubble? If properties were instead valued at half what they currently are then mortgage payments should be less than half the current level. A mortgage repayment windfall of about $40 billion per annum therefore acrues to the banks for a few hundred thousand dollars worth of lobbying.

Crony capitalism is much more profitable than productive capitalism.

Peter FNovember 7, 2016 at 11:23 am

@Andreas Bimba: Yes

HarquebusNovember 7, 2016 at 11:38 am

Rezblah
Not much convincing needed. I agree with most of what you say.
It takes a lot of energy to get into space. That’s why we won’t be going there for any major endeavors.
Cheers.

Arthur TarryNovember 7, 2016 at 12:43 pm

I have read many of John’s articles about fiat currency. I’m not an economist (merely a research scientist in life sciences) so I am merely somebody who tries to understand ideas and concepts. My ongoing concern with John’s concept is that we are a trading nation, and the perceived value of our A$ is judged by the state of our national budget, the price we sell our commodities and other tradables at, inflation, all of which (and others) contribute to the perceived value of the A$. If you unsustainably print money then its value will go down relative to other currencies, and this will have economic ramifications.

Andreas BimbaNovember 7, 2016 at 1:19 pm

Arthur, the MMT economists do not propose irresponsible spending, only sufficient spending to ensure involuntary unemployment and underemployment are close to zero. This is not inflationary as unused economic capacity is utilised. With neligible inflation the value of the $A will not depreciate by much for Australians. In fact controlling the size of fiscal deficits is a very effective way of controlling inflation.

Our currencies value in relation to foreign currencies is determined by our current account deficit or surplus.

With a well run economy with low or zero unemployment we should be able to manufacture or produce more of what we currently import and provide our own capital for our own economic development. A more stable currency is therefore possible.

totaramNovember 7, 2016 at 4:54 pm

MattersNot: I did say in my response to S.E. Anderson, “check the comments” (to the article supposedly debunking MMT. Did you check the comments? Here is one. Why do I need to repeat what the guy has said?

Pedro says:
April 25, 2014 at 4:43 am
Hi Erik,

You clearly investigated mmt with the intention of writing a “debunking” article. As such, this piece is riddled with confirmation bias.

I won’t refute all of your points but just a few key ones:

1) The fed, can effectively set whatever rate it wants on national debt via the Feds open market operations. Consequently, we run zero risk of going into default a la Greece et al. Case in point, Japan, another fiat country, has been able to run up its national debt to over 250% while maintaining rock bottom rates. How would you account for this seeming paradox?

In the same vein, the notion that there will ever be a shortage of demand for t bills/notes/bonds is hard to imagine. The primary dealers and the fed routinely cooperate with one another. It’s hard to imagine the primary dealers refusing to buy a new issue when the fed guaramtees their immediate re purchase.

2) You harp on mmt conflating the fed and the treasury. This is just wrong. A quick browse through the mmt literature will show otherwise.

3) MMT Is very concerned with inflation. It supports deficits when the economy has much excess capacity (as measured in industrial output and unemployment/underemployment). Then, when conditions improve cut back.

I suggest you read L. Randall Wray’s “a primer on modern money theory.” Then, come back and write anger “debunking” piece.

(the spelling mistakes are from the original)

With these kinds of simple errors and misconceptions in the article, already pointed out by others, why would I bother to go through it?

totaramNovember 7, 2016 at 7:27 pm

Arthur Tarry:

” If you unsustainably print money then its value will go down relative to other currencies, and this will have economic ramifications.”

As a scientist, you should be aware that you have assumed something that justifies your conclusion. What is “unsustainable printing of money”. Can you define it it please?

Matters NotNovember 7, 2016 at 8:29 pm

totaram, yes I have read the comments. Indeed I found some to be quite useful and informative. But they do raise other questions – particularly about international currency movements and the like.

Re basic MMT, this one in particular has valuable ‘explanatory’ value. Simple diagrams and all that.

http://neweconomicperspectives.org/2014/01/diagrams-dollars-modern-money-illustrated-part-1.html

Needless to say I will read further, with a particular emphasis on the ‘critics’ because it might explain why MMT is still far outside the ‘mainstream’ political and economic common sense.

HarquebusNovember 8, 2016 at 11:42 am

“Academic inbreeding has led to dysfunctional theories.”
http://www.forbes.com/sites/johntharvey/2016/10/31/five-reasons-you-should-blame-economics/

Pingback: Money is a Scary Subject | THE VIEW FROM MY GARDEN

Red Wine PleaseDecember 25, 2016 at 2:57 am

It’s becoming more clear, at least to me, that the main problems with economic discussions, and the replies demonstrate it, are the following. The author states one of these.

> Incorrect and different understanding of how the economy actually works, including banking, money creation, bank lending, interest rates, time, irrationality, and buyer/seller interdependencies, leads to false models and faulty arguments.

> Normative rather than descriptive arguments cloud out civil discussion. (“All govt is evil. Fed Reserve and Treasury are semi or full govt entities. Therefore, Fed Reserve and Treasury are evil. No argument can be developed to justify or explain their existence. End of discussion.”)

> Fallacy of Composition: Simple economic models at the individual (microecon) are inadequate to describe what happens at the group (macroecon). The macro economy is complex and chaotic. Optimizing at the individual level leads to un-optimization of the group.

(The macro economy is like a human body. Imagine your doctor prescribing medicine for high blood pressure without understanding the interrelationships and differences between where the pressure is being measured and other areas of your body. Or, not understanding the effects to your health from blood pressure reducing medicine with other medicines you are taking. Only a macro understanding of the human body and medicines can ensure a proper diagnosis and prescription for you.)

> Whether or not a group should optimize at the group level, like regulating the commons, is a political decision based upon understanding macroeconomics. Incorrect understanding of macroeconomics can lead to incorrect political decisions.

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Andreas BimbaNovember 6, 2016 at 2:17 pm

Yes John we are denying ourselves a much healthier economy due to false beliefs and voting for those that knowingly peddle those beliefs because they served the narrow sectional interests of the capital controlling elites.

Even the capital controlling elites are being now harmed by the political ideologies of neoliberalism and monetarism due to suppressed consumption demand.

People are not just afraid of inflation but also with finding affordable housing, enough income to meet essential expenses and unemployment and
Heterodox (@mmt_rod)November 6, 2016 at 2:48 pm

Yet neoliberals promote unrestrained private credit growth for asset speculation eg housing, until private debt suppresses aggregate demand and then leave it up to ignorant Central Bankers to cut interest rates to encourage GDP growth through more private debt.
So much for the restriction of a gold standard.
Don A KellyNovember 6, 2016 at 2:55 pm

The Wall Street Journal ran an article this week finally acknowledging that the UK government can never run out of money – which leaves no room for doubt. The journalist Jon Sindreu wrote that “Among facts that take a stubbornly long time to sink in, here’s one: Countries that borrow in their own currencies never have to default on their debt”. The author went on to say “Mainstream pundits thought the Brexit vote would see foreigners sell in large quantities. They didn’t. Exactly the opposite happened. Why? Because Britain is a developed country with liquid financial markets that issue debt in its own currency. Unlike Spain or Greece, which could certainly run out of euro’s, the U.K. can always print more pounds”.
How long does it take for Australian politicians and journalists to acknowledge that Australia is also a monetary sovereign? Meaning that the government has absolute power over its own currency. The government is the monopoly issuer of its own currency and can honour its liabilities whenever they fall due, in their own currency. They can never go bust.
How long will the Australian government persist in penalising the disadvantaged to the benefit of their Corporate bosses?
Ricardo29November 6, 2016 at 3:21 pm

This is one of the reasons I thought Greece should pull out of the EU and return to tge drachma as its own sovereign currency. Sure there is the issue of money owed to the troika but the debt was racked up under usurious terms, so just tell them to piss off.

Meanwhile in Oz, I’m not sure I want ScoMo, or MoMoMo as i call him, to learn about this, he’d just shovel more at his wealthy mates.
Matters NotNovember 6, 2016 at 3:53 pm

Yes a sovereign nation with its own fiat currency can never run out of money but the value of that currency can certainly fluctuate. Not long ago, one hundred British pounds would buy 140 euros but today the same 100 pounds will only buy 111 euros (approx.) – tipped to fall to 108 in the near future. That’s a decline in value of about 20%. Lots of Brits who retired to Spain, Portugal, France and elsewhere find that with an effective 20% cut in the value of their pensions, life becomes a whole lot tougher.

Lots of Australian who retired to Thailand see the value of their currency decline about 15% over the last few years. And that’s in a country with a military dictatorship. For those who settled in Vietnam the decline is in the order of 30%.

Don’t mention gold because the value of it rises and falls even more dramaticallyl. In 1980 an ounce was valued at US$2 032.76 only to fall to US$383.75 in 2001, rising to US$ 1 273.10 currently.

Yes ‘money’ and its ‘value’ is full of uncertainty.
MichaelWNovember 6, 2016 at 4:02 pm

Money is indeed scarce especially for pensioners, unemployed, underemployed and people in the workforce.

I went to a sixtieth birthday party the other week at the local pub, a place I had not been for about six years. Some of the people attending I had not seen for years. The discussion eventually moved to wages, or rather lack of.
One guy I used to work for had given up his business due to ill health and was now driving trucks casually for $25.00 per hour. This same guy was paying me $25.00 per hour back in the late 80’s. Another guy I worked with for many years is working for less now than we were receiving six years ago. And on and on it went. No pay rises, people having to negotiate their own EBA. Unable to negotiate tough, work for peanuts. Member of a union? We don’t employ union members. And on and on it went , thankfully I have been out of the workforce for six years due to unforeseen circumstances, some I am not thankful for.

All these people work in the building industry, all of them have to work until 67 years of age if capable.

So, now the coalition want a Building Union Investigation Commission ( let’s call it for what it is) Why?

As the year comes to an end our politicians must be due for a pay rise, of course they will knock it back just to lead by example.(Ha.) Seems to be the only time there is bipartisanship in Canberra.
HarquebusNovember 6, 2016 at 4:20 pm

John Kelly has outdone himself. Economic farce is his stuff of life. Fortunately, most people do not fall for his currency from nothing bullshit.
Only economists, who have no grounding in the physical sciences, could come up with something so absurd.
townsvilleblogNovember 6, 2016 at 4:26 pm

Most of we 3 million Aussies living below the poverty line fear inflation only because things are very tight on the financial frony currently, if inflation were to move in a run away manner we would have to do with 2 loaves of bread per week instead of 3. We have empathy with Australian convicts were were sentenced to Australia in the 1770s.
Matters NotNovember 6, 2016 at 4:53 pm

Here’s a clue, all currencies come from ‘nothing’. Some people like ‘shiny’ metals such as gold and silver but to do anything practical with them, you have to turn them into the local currency. Ever tried to buy an airline ticket by offering sheep, goats or pigs? All ‘valuable’ in themselves but the Airlines like the dollars and cents and that’s the only ‘currency’ they will accept in exchange of a ride on the plane.

Some people in the past liked beads, mirrors and the like. as Batman found to his pleasure.

Things only have value, if people given them value. And currently when it comes to exchanging things, including services, they seem to value dollars and cents.
Stuart Errol AndersonNovember 6, 2016 at 5:00 pm

the Analysis is too simplistic http://www.the-lighthouse.net/debunking-modern-monetary-theory-mmt-understanding-it-first/
Matters NotNovember 6, 2016 at 5:42 pm

Stuart Errol Anderson – haven’t finished the article yet. (And it will take me a few ‘reads’ to get my head around it) but it’s very, very interesting. I would like a few of the MMT experts to respond. In due course.
totaramNovember 6, 2016 at 6:21 pm

Stuart Errol Anderson: It turns out that when that piece was written, the author had not even read Randal Wray’s book and admits it in the comments. So sorry, I’m not going to wade through it. Check the comments. There are enough to tell you the criticism is flawed. It is based entirely on Warren Mosler’s book, which is for the average lay person and perhaps simplifies some issues.
John KellyNovember 6, 2016 at 6:23 pm

Stuart Errol Anderson, I read as much as I could of your link until I lost interest. Perhaps you could paraphrase the author’s argument……oops! Hang on, I got to the end and found this response which covered everything…..

“This article is so bad it does the opposite of its intention, it supports MMT!. I am new to MMT and wanted to hear someone attack it and show how it was fundamentally flawed and does not work. It quickly became clear that the author did not really understand how money works at all and just displays his own ignorance and unknowingly and most likely unwillingly lends support to MMT by the weakness of his arguments. It was a relief to read this crap and know that MMT is right after all. This is not the first such overtly critical article that I have read that ends up supporting MMT by failing to find anything wrong with it. No need to worry though the dark forces of neo-liberalism, rentiers, free lunchers, banks and the like will ensure that the present status quo will remain as it is.”
Jennifer Meyer-SmithNovember 6, 2016 at 6:23 pm

“Somehow, the language has to change. We have to develop a new way of explaining MMT such that the irrational behaviour of those who should know better, can be ignored.”

Even if the Libs could be educated to understand the wonderful facts that MMT represent, their stupidity deserves to stay stupid.

However, Labor and the Greens must not be allowed to stay ignorant or silent about MMT’s plain truths.

Labor, and I grant, the Greens must promote brave spending and brave equitable distribution of wealth based on the fact that Australia has its own sovereign currency and such social equity is available to us right now.
Andreas BimbaNovember 6, 2016 at 6:50 pm

Stuart, that article you linked to really is mediocre. It starts off giving a reasonable interpretation of MMT but every criticism of MMT presented falls off the rails as it basically assumes all the faulty neoclassical economic beliefs are indeed true and all the MMT economic beliefs are false. For example that money can’t be created even though earlier the author writes that most economists that have looked at MMT accept this.

The article is really long and such a mish mash that I pity any MMT economists trying to do a point by point response. This article is a bit like one of those pseudo science climate denialist papers that to the uninformed may look somewhat convincing but really is just confused nonsense.
totaramNovember 6, 2016 at 7:01 pm

John Kelly: Wonderful to see your restraint in the face of abuse from Harquebus. Not engaging with such persons is the best policy.

With regard to how to approach the issue of “explaining things to people”, I still feel that it might be better to allow them to think that the govt. “borrows” its own money by issuing bonds. Then point out that “borrowing” for investment is something every business engages in (including households). So there is no harm in “govt. debt” in the first instance. You may then point out that this “debt” can be extinguished rather easily. And now that the “very left wing” Wall Street Journal has published an article, as mentioned by Don Kelly above, stating clearly what the MMT crowd have been saying for decades, this will be easier to swallow, even for the brainwashed.
This may not work for everyone, but for some people this may be an easier path to achieve understanding. Different strokes for different folks, as the saying goes.

As for what politicians might do, if they understand how this works, spending recklessly etc.:
1) We will cross this bridge when we come to it. Some of them will deny that this is how it works because it will destroy everything they have been saying. I must admit though that their ability to execute the back-flip is legendary.
2) The simple test for when govt. should stop/reduce spending is when inflation reaches above the level considered “safe”(suitably defined), provided there is “full employment” (suitably defined).

Heterodox: Too true. Neo-liberalism mantra does not allow fiscal policy incentives by govt., so what can central bankers do? On top of that, simple accounting tells us that the more the govt. attempts to “repair the budget”, the harder it is for the private sector to pay down its debt. And so it goes…
HarquebusNovember 6, 2016 at 7:04 pm

I read the article linked by Stuart Errol Anderson and the comments and had no trouble understanding it. It does not surprise me that John Kelly lost interest. I will also say that, I have also read many articles posted here including those by that idiot Bill Mitchell and I still say that all fiat currencies are nonsense and will eventually fail as they always do.

Physics trumps economic ideology every time.

Search criteria: modern monetary theory false

Cheers.
Jennifer Meyer-SmithNovember 6, 2016 at 7:12 pm

If physics trumps economic ideology Harquebus, why aren’t you providing arguments of HOW to explain to neoliberal privateers that rampant growth and trade defeat our environment, climate and essentially us?
RossleighNovember 6, 2016 at 9:02 pm

Harquebus: When you say all fiat currencies fail, can you list at least ten that have? And don’t just post a link, that’s just lazy.
JohnBNovember 6, 2016 at 9:47 pm

It is rather ironic that while the most widely feared economic threat is inflation (a fear reinforced daily by neocon scare merchants demonising govt. deficit spending) it is deflation (likely induced by lack of govt. deficit spending) that will most likely bankrupt many investors.

Fear of deflation should be top of the list for heavily indebted Australian citizens; when asset prices fall one’s debt level remains unchanged – negative equity can quickly result, loan interest rate increases due increased lender risk can also follow.
Inflation is kind to debt, deflation is a veritable poison.

Almost universally a cognitive disconnect exists between citizens fear of inflation while simultaneously pursuing investment in speculative real estate reliant on capital gain to produce a profit on the investment.
It seems that the desire to become more wealthy through asset appreciation easily outweighs the fear of contributing to inflationary pressures.
John KellyNovember 6, 2016 at 10:02 pm

Rossleigh: We have asked Harquebus that many times. He has never delivered.
Matters NotNovember 6, 2016 at 10:25 pm

Of most interest to me in this thread is the reaction to the link provided by Stuart Errol Anderson. Here’s a ‘selection’ (and only a selection) of worrying ‘dismissals’:

. So sorry, I’m not going to wade through it.

read as much as I could of your link until I lost interest.

The article is really long and such a mish mash that I pity any MMT economists trying to do a point by point response. This article is a bit like one of those pseudo science climate denialist papers that to the uninformed may look somewhat convincing but really is just confused nonsense

To an ‘outsider’ all your criticisms are at a high level of generality and (most importantly) at a very low level of specificity. After all, the author concedes that MMT has much to offer but questions the ‘detail’. And perhaps, more importantly, challenges the meaning(s) given to that detail. He builds a case for alternative ‘meaning’ attribution. In short, he accepts certain ‘facts’ but challenges the supposed ‘implications’ of same.

To dismiss off hand the claims made – re the detail – is problematic, intellectually speaking. Is there any chance some of the ‘experts’ could take the time to ‘tear apart’ these claims bit by bit and in so doing build credibility for the ‘theory’ or should we all just stand back and believe?
HarquebusNovember 6, 2016 at 10:39 pm

Rossleigh
What do want me to do, copy and paste? Who’s too lazy to follow link? See John Kelly’s previous ~~bullshit~~ article. The link is there.

Show me one fiat currency not currently in use that hasn’t failed. That is a question I have put here many times and is still not answered.

Jennifer.
“HOW to explain to neoliberal privateers”
A good question. Do you know any neoliberal privateers? I don’t. If you do and intend to argue with one, I will help you.
My arguments against growth are delivered to politicians and journalists inboxes.

Growth is a regular subject. Here is an example.

Jobs and growth

My email address is at the bottom of the page. I am hoping that you will join a few others here at theAIMN and allow me to add you to my list.

Cheers.
Matters NotNovember 6, 2016 at 10:52 pm

Show me one fiat currency not currently in use that hasn’t failed

one fiat currency not currently in use that hasn’t failed. Really? Surely, an impossible endeavour? A logical impossibility? Hilarious.

I think it says a lot about your claimed ‘logical thinking’.
HarquebusNovember 6, 2016 at 11:00 pm

Matters Not.
You nailed it and described the absurdity of fiat currencies beautifully.
Well done.
Matters NotNovember 6, 2016 at 11:06 pm

I have no control over the ‘meaning(s)’ given to my comments.

For that I am thankful because it’s always an ongoing worry.

FFS, from some one who believes that ‘shiny’ metals have ‘inherent’ value.
HarquebusNovember 6, 2016 at 11:28 pm

Matters Not
Perhaps I should have included “only you don’t realize it.” but, I was foolish and credited you with more intelligence.
BTW: Shiny metals that were used as currency thousands of years ago are still in use today and still have value.
Cheers.
Matters NotNovember 6, 2016 at 11:39 pm

Copper and brass coins were also valuable years ago.

As was ‘virginity’. And still so in certain cultures. And likely to be in the foreseeable future.

I devalued mine years ago.

I just don’t know where this bullshit leads. Please explain?

As for ‘crediting intelligence’. …

Look above.
Peter FNovember 7, 2016 at 6:37 am

@Heterodox (@mmt_rod) ‘Yet neoliberals promote unrestrained private credit growth for asset speculation eg housing’. Yes, this is true – but this private debt carries interest paid to banks. Now, ….I wonder if there is a link . . . . . . .?
RezblahNovember 7, 2016 at 9:06 am

Hey harquebus, the only economic farce that’s being perpetrated around here is the neo liberal bullshit that’s been trickling down on you for the last 30 years. If the bleeding obvious results of this economic atrocity aren’t obvious to you, try googling for the truth, the IMF and the world banks assessments of their own failed policies might be a good place to start

Greed will trump ‘physics’ for as long as we let it
HarquebusNovember 7, 2016 at 9:32 am

Matters Not
I am glad that we are on speaking terms again. No one cracks me up like you do.
It is impossible to name one fiat currency not currently in use that hasn’t failed because, they all have. I can’t explain it any simpler than that.

There are a videos from Mises and Maloney in this link for your entertainment. Enjoy.
“In 1964 it was worth $0.25. Today, it’s worth a whole lot more. That’s because it is a magical quarter. The magic is that it maintains its purchasing power no matter how many dollars our government prints.”

Money

Rezblah
I am aware of the things you state.
Bankers are psychopathic destroyers and thieves.

Cheers.
stephentardrewNovember 7, 2016 at 10:56 am

Great post John I will keep on supporting and reposting your articles in the hope some will understand.

In the mean time I try to explain what I can to others.

We must be doggedly determined as I think a coherent an accessible narrative is beginning to emerge and this article is a step in that direction.

Thanks once again mate.
RezblahNovember 7, 2016 at 11:04 am

Indeed Harquebus, if 2008 doesn’t convince you of this then nothing will I’m afraid

Society does its best to eliminate sociopaths and psychopaths, yet they seem to congregate and flourish in our business and political bodies

History is littered with the sociopathic and psychological powerful few who have held the generally peace loving many to ransom to the detriment of humanity for millennia, with their pathetic personal empire building. (Oh boo hoo, it’s too hard to get along with each other, let’s kill each other instead)

I often wonder if the cure for cancer (amongst other diseases) was blown out of the brain of a soldier on one of the countless battlefields of the past 100 years

If we worked together we could have escaped our little Petri dish here on planet earth and at least accessed the virtually unlimited resources of the solar system. Instead we’ll continue to bicker over what’s here, driving ourselves to and over the brink of military, economic and ecological disaster, led by our pathological few

Lead on!
Andreas BimbaNovember 7, 2016 at 11:09 am

Peter F. I can think of a link between neoliberal political ideology and the interest received by banks from huge levels of private debt.

Two of Australia’s most powerful lobby groups are banking/financial services and property developers/sellers. These groups fund and lobby the Liberal Party. Little Johnny Howard and Australia’s worst ever treasurer Peter Costello put in place the negative gearing and 50% CGT concessions as well as allowing unrestrained investment by foreigners (Chinese predominately) or their proxies into Australian real estate.

Neoliberal lite of course just rubber stamps all neoliberal ideology as they also receive funds from the same lobbyists and are rightly terrified of the corrupt corporate mass media.

This builds the property investment real estate bubble and drags along the unfortunate owner occupied home buyers along for the ride.

Now mortgage repayments for investment properties and owner occupied dwellings are about $80 billion per year. What would this figure be without the real estate bubble? If properties were instead valued at half what they currently are then mortgage payments should be less than half the current level. A mortgage repayment windfall of about $40 billion per annum therefore acrues to the banks for a few hundred thousand dollars worth of lobbying.

Crony capitalism is much more profitable than productive capitalism.
Peter FNovember 7, 2016 at 11:23 am

@Andreas Bimba: Yes
HarquebusNovember 7, 2016 at 11:38 am

Rezblah
Not much convincing needed. I agree with most of what you say.
It takes a lot of energy to get into space. That’s why we won’t be going there for any major endeavors.
Cheers.
Arthur TarryNovember 7, 2016 at 12:43 pm

I have read many of John’s articles about fiat currency. I’m not an economist (merely a research scientist in life sciences) so I am merely somebody who tries to understand ideas and concepts. My ongoing concern with John’s concept is that we are a trading nation, and the perceived value of our A$ is judged by the state of our national budget, the price we sell our commodities and other tradables at, inflation, all of which (and others) contribute to the perceived value of the A$. If you unsustainably print money then its value will go down relative to other currencies, and this will have economic ramifications.
Andreas BimbaNovember 7, 2016 at 1:19 pm

Arthur, the MMT economists do not propose irresponsible spending, only sufficient spending to ensure involuntary unemployment and underemployment are close to zero. This is not inflationary as unused economic capacity is utilised. With neligible inflation the value of the $A will not depreciate by much for Australians. In fact controlling the size of fiscal deficits is a very effective way of controlling inflation.

Our currencies value in relation to foreign currencies is determined by our current account deficit or surplus.

With a well run economy with low or zero unemployment we should be able to manufacture or produce more of what we currently import and provide our own capital for our own economic development. A more stable currency is therefore possible.
totaramNovember 7, 2016 at 4:54 pm

MattersNot: I did say in my response to S.E. Anderson, “check the comments” (to the article supposedly debunking MMT. Did you check the comments? Here is one. Why do I need to repeat what the guy has said?

Pedro says:
April 25, 2014 at 4:43 am
Hi Erik,

You clearly investigated mmt with the intention of writing a “debunking” article. As such, this piece is riddled with confirmation bias.

I won’t refute all of your points but just a few key ones:

1) The fed, can effectively set whatever rate it wants on national debt via the Feds open market operations. Consequently, we run zero risk of going into default a la Greece et al. Case in point, Japan, another fiat country, has been able to run up its national debt to over 250% while maintaining rock bottom rates. How would you account for this seeming paradox?

In the same vein, the notion that there will ever be a shortage of demand for t bills/notes/bonds is hard to imagine. The primary dealers and the fed routinely cooperate with one another. It’s hard to imagine the primary dealers refusing to buy a new issue when the fed guaramtees their immediate re purchase.

2) You harp on mmt conflating the fed and the treasury. This is just wrong. A quick browse through the mmt literature will show otherwise.

3) MMT Is very concerned with inflation. It supports deficits when the economy has much excess capacity (as measured in industrial output and unemployment/underemployment). Then, when conditions improve cut back.

I suggest you read L. Randall Wray’s “a primer on modern money theory.” Then, come back and write anger “debunking” piece.

(the spelling mistakes are from the original)

With these kinds of simple errors and misconceptions in the article, already pointed out by others, why would I bother to go through it?
totaramNovember 7, 2016 at 7:27 pm

Arthur Tarry:

” If you unsustainably print money then its value will go down relative to other currencies, and this will have economic ramifications.”

As a scientist, you should be aware that you have assumed something that justifies your conclusion. What is “unsustainable printing of money”. Can you define it it please?
Matters NotNovember 7, 2016 at 8:29 pm

totaram, yes I have read the comments. Indeed I found some to be quite useful and informative. But they do raise other questions – particularly about international currency movements and the like.

Re basic MMT, this one in particular has valuable ‘explanatory’ value. Simple diagrams and all that.

http://neweconomicperspectives.org/2014/01/diagrams-dollars-modern-money-illustrated-part-1.html

Needless to say I will read further, with a particular emphasis on the ‘critics’ because it might explain why MMT is still far outside the ‘mainstream’ political and economic common sense.
HarquebusNovember 8, 2016 at 11:42 am

“Academic inbreeding has led to dysfunctional theories.”
http://www.forbes.com/sites/johntharvey/2016/10/31/five-reasons-you-should-blame-economics/
Pingback: Money is a Scary Subject | THE VIEW FROM MY GARDEN
Red Wine PleaseDecember 25, 2016 at 2:57 am

It’s becoming more clear, at least to me, that the main problems with economic discussions, and the replies demonstrate it, are the following. The author states one of these.

> Incorrect and different understanding of how the economy actually works, including banking, money creation, bank lending, interest rates, time, irrationality, and buyer/seller interdependencies, leads to false models and faulty arguments.

> Normative rather than descriptive arguments cloud out civil discussion. (“All govt is evil. Fed Reserve and Treasury are semi or full govt entities. Therefore, Fed Reserve and Treasury are evil. No argument can be developed to justify or explain their existence. End of discussion.”)

> Fallacy of Composition: Simple economic models at the individual (microecon) are inadequate to describe what happens at the group (macroecon). The macro economy is complex and chaotic. Optimizing at the individual level leads to un-optimization of the group.

(The macro economy is like a human body. Imagine your doctor prescribing medicine for high blood pressure without understanding the interrelationships and differences between where the pressure is being measured and other areas of your body. Or, not understanding the effects to your health from blood pressure reducing medicine with other medicines you are taking. Only a macro understanding of the human body and medicines can ensure a proper diagnosis and prescription for you.)

> Whether or not a group should optimize at the group level, like regulating the commons, is a political decision based upon understanding macroeconomics. Incorrect understanding of macroeconomics can lead to incorrect political decisions.

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