I do love the critics of full reserve. They put one
argument after another all of them quite clearly flawed or hopeless.
The latest such (published in the last 24 hours)
comes from Randall Wray.
In an otherwise very good article about MMT, he says:
“In the developed nations we have thoroughly
monetized the economies. Much (maybe most) of our economic activity requires
money, and we need specialized institutions that can issue widely accepted
monetary IOUs to enable that activity to get underway. While our governments
are large, they are not big enough to provide all the monetary IOUs we need….”
Now that contradicts the claim rightly made by
Randy and dozens of MMTers namely that there is NO LIMIT to the amount of money
that government can print and spend. Robert Mugabe illustrated that point, didn’t
he?
Next, Randy says, “I cannot see any possibility of
running a modern, monetized, capitalist economy without private financial
institutions that create the monetary IOUs needed to initiate economic
activity.”
Now why is privately created money needed in order
to “initiate economic activity”? If I want to start producing widgets, clearly
I need enough money to buy a widget factory complete with widget making
machines. If I have enough government produced money, I can fire ahead. And if
my customers have enough government money, they can buy my widgets. And if I
don’t have enough cash to buy the factory, but someone else has a pile of
government money and will lend it to me, then again, I can fire ahead.
In short, privately produced money is just not
necessary.
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