tag:blogger.com,1999:blog-2277215496195926573.post4098123725482752396..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: A slight mistake by David Graeber and others.Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2277215496195926573.post-23504857624365703182015-12-09T01:14:43.800-08:002015-12-09T01:14:43.800-08:00I agree that “money” is very ambiguous word, but I...I agree that “money” is very ambiguous word, but I don’t think Graeber and me are using the word in a different sense. On reflection, I think the weaknesses in my above article are as follows.<br /><br />First, the whole idea that it’s necessary for anyone to go into debt in order for the private bank system to create money is nonsense, and for reasons I set out here:<br /><br />http://ralphanomics.blogspot.co.uk/2015/02/without-debt-thered-be-no-money.html<br /><br />I should have mentioned that flaw in the whole “debt is needed for there to be money” idea. And that’s the basic flaw in Graeber’s article I think.<br /><br />Second, my inclusion of SME trade debts was a bit of a cheat.<br /><br />Reason is that one definition of money is “a debt which is easily transferable” and there’s no way trade debts can be made so easily transferable that they constitute money. Trade debts are easy to transfer in the sense of selling them (at a discount), but those debts THEMSELVES are hard to use in lieu of more conventional forms of money.<br /><br />All in all, the fact that total debts vastly exceed the amount of money needed makes Graeber’s argument look a bit silly, but that’s not as important as the above first point. I.e. my “total debts including SME trade debts” point is a bit of a red herring I reckon.<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-18507073065808897932015-12-08T09:59:11.547-08:002015-12-08T09:59:11.547-08:00Ralph> The flaw in that argument is that the to...Ralph> The flaw in that argument is that the total amount of debt VASTLY exceeds the amount of money needed to make the economy work.<br /><br />Couldn't it be that Graeber (in his article) and you (in your comment) are using a notoriously ambiguous word ("money") with very different meanings? It's often difficult to follow an author's logic if one doesn't step into the author's shoes by understanding the words as the author intended.<br /><br />In the context of Graeber's article, money is IOU is debt and all debt is money, roughly equivalent to what is shown as "broad money" in the BoE text that he discusses, while you refer in your comment to money as "the stuff in circulation" in its strict technical meaning of M1 or M2?<br />erikdesonvillehttps://www.blogger.com/profile/03768276748717698836noreply@blogger.com