The Legs of Pegs

Currency pegging runs deep.

This week I critique Bill Mitchell’s initial framing of monetary systems on a recent Macro and Cheese podcast episode #308 . I’ll say this is not pendantry. Once you start trying to be friends with dumb-dumb marxists by saying a State currency can be a commodity, or has ever been a commodity, you feed the right-wing trolls who want to return to a gold standard. Which is not gold currency, it is a currency peg. Big difference. Let’s not even feed these trolls.

Although Bill doesn’t know me from Adam, I am Internet pals with Grumbine and appreciate his efforts at Real Progressive more than any other podcast or public education platform in the world. So there’s that. If I fire at them it is intended as constructive criticism. I am not even angry with Bill. Just depressed.

I also fully realize in the court of leftiepol public opinion I am probably the bad guy here. No one wants to know the state currency is a simple public monopoly and has never in all history been a “commodity currency”. No one on the marxist left wants to know the K. Marx analysis of “falling rate of profit” is a myth. Although, one Socialist youtuber got it right, in agreement, when I pointed this out: The real falling rate of profit is simply ecological pressure. So yeah, Capitalism eventually leads to declining rate of growth of profit in real terms. That’s not even controversial. It does not mean profits reverse. It does not mean nominal profits won’t increase forever. It means the rate of accumulation of real profit slows. The rich still get richer, forever, if we do not actively dismantle the injustices and energy sapping excesses of rapacious capitalism. If we do dismantle the excesses of capitalism the rich may still get forever richer. Fixing the ecological crises can, under some scenarios (dystopian), enhance the power of the rich.

There is no historical materialist law that dictates it will happen justly without active agitation and pressure on governments to change policy. But if the ecological systems are stressed enough, that social pressure is inevitable, or we die. The logic Bro “out” is to bite the bullet: “Yeah, w̶e̶ ̶w̶i̶l̶l̶ ̶a̶l̶l̶ some of you’s will die.” lol.

I am not even being “edgy” here. I am merely being highly autistic, since that’s what I am. I am not out to generate clicks and Likes or Followers. So take all that I write at face value and assess it for yourself. If it is a useful alternative framing to fake “MMT Marxism” then that’s good. It does not detract one iota from Bill’s more important messaging:

the working class get their lives needlessly ruined under capitalist modes of production.

That’s just fact.

As I’ve written before, you do not have to be an ideological socialist or marxist or right-wing edge lord to know capitalism is an unjust system and has to go!

Nope, Money has Never Been Commodity

This is a tad too simplistic, but I define a commodity as something that gets consumed or degraded for use in production. Gold is a commodity because when used in production it very slowly disintegrates. The time scale is so slow that it looks like a mere intermediate. But you cannot run space technology radiation shielding without microscopic loss of gold atoms, and without limiting use of gold for other technology. Such properties never apply to a unit of account.

Mere semantics you say? I say not. By the end of this essay I hope you realize that it is class warfare against the working class to frame the State monetary systems as ever having been “commodity money”. There is no such thing! Money is always an I.O.U of the issuer.

I wrote this comment:

@10:00 what’s happened with Bill? You never concede a false principle. State money has never been commodity money. Not even in Marx’s day. It has always functioned as a tax credit (generalizing the meaning of “tax” sufficiently, but not so much that stealing and plundering gold is a “tax” lol). I guess he is trying to simplify things so a dumb-dumb marxist can listen without having an aneurysm? The distinction is clear: what does the state currency redeem for? It was never for gold. On paper the currencies at some times could be swapped for gold certificates, and sometimes bullion. But what the currency exchanges for does not define the currency. What defines the unit of account is what the issuer ultimately promises to redeem. When they run out of gold they stop redeeming for gold and always continue redeeming for tax liabilities, if not they have ceased being the government. The tax driven currency has always been the ultimate.
      You can say there have been eras where a commodity peg has been used. But that is very far from being a literal “commodity money”. On a peg what you look at is still the scorepoints in your bank account, not a pile of gold.

I think I know what Bill is trying to do, or part of it. There is a need to get marxist-socialists fully on board with MMT. If for no other reason they tend to be much nicer kinder people than the right-wing MAGA commie crowd${}^\dagger$. So you don’t want to piss them off by telling them K. Marx was an idiot about monetary operations. I have no such qualms though, I don’t think any band of marxist-socialists is going to overthrow Neoliberal capitalism, though they may certainly help in the effort — once they understand basic monetary macroeconomics.

${}^\dagger$We desperately need nice kind people in leftiepol spaces, who are not bashing the garden variety working class stiff over the head with pseudo-woke carry-on. Intersectionality is good: there is no decent social justice without working class justice.

I had to add this:

BTW, I regard the proper tax driven currency story as the proper and true story, and the truth matters. So you can placate an aggressive marxist/socialist as much as you like by discussing commodity pegs, I have no problem with that, but you are anti-socialist and anti-worker if you peddle the false narrative of a pure commodity currency.
      Even in small localities, or feudal cliques, where people literally transported metals or grains or whatever around to intermediate trading of goods, it was still not a commodity currency. It was a fancy poker chip. Everyone understood the debt/credit relation, which is a scorepoint accounting unit relation.

Don’t make up white lies to placate lefties, you do not need to. If they are good, honest kind people they’ll sooner rather than later grok MMT. If they are not honest and wise then there’s no point fibbing to them to make them happier about MMT. Realpolitik notwithstanding.

This is also why the TYT network pivot to the alt-right is not going to help. They may gain some right-wing rich funders, and help propagate a pseudo class conscious plebian right-wing sympathy for the working class, and Bernie-crat style politics. A lot on the right-wing favour Medicare For All, for instance. But as long as they think they need to get the currency to “pay for” it off the billionaires they will fail in their ultimate efforts to actually get such policy through the government.

The government representatives (I no longer call them “leaders” since that’s just plain false) will not vote to pass higher government investment if they think they have to tax the rich to pay for it. You need to tell these assholes whom the unwashed masses keep voting into office that the increased government spending will make rich people richer (in nominal terms, but it’s ok to leave that bit out!). You need to tell the lefties and pseudo-woke liberals that increased government spending will also make poor people richer too, and in real terms if not (sadly) also in nominal terms.

Then we can start getting to work on reducing the excess purchasing power the billionaire and investor class have and are not using. We do not need to tax it all off them, but just motivate them to spend the rets of the scorepoints. “If you do not spend, we will tax.” How? By running ever higher government deficits to fill the spending gap (the evidence for which is unemployment). The Seventh of the 7 Deadly Innocent Frauds: increased deficits today means higher taxes tomorrow. Myth being that this is a bad thing, when the fact is that it is a good thing.

Do we need to mention the time is short on “getting to work” on this? Because when it is over the work is not yet done. When that heavy lifting is done we can get to work starting to avoid ecological catastrophes and the like. And avoid people blaming “MMT” on the shut down of the AMOC.

Let me be clear. “Capitalism” is not “money & markets”". Money & markets are good things. Capitalism qua Marx is the class relation were a few people are bosses who do not work to eat, and the majority are wage slaves who need to beg for employment to eat.

Expanded public sector services and a Job Guarantee (totally different things) eliminate Capitalism qua Marx. We do not have to do anything else to destroy capitalism. If the State stands always ready to hire you for public purpose at a decent living wage, then you are no longer begging for private sector employment, and you’ve undone Capitalism.

A relatively painless procedure that the physician need not even issue a sticking plaster for.

You can still work for a boss if you like, many will, but it is now more voluntary. The private firm has to make things pretty nice for you to hire you out of the public sector during your 9am to 5pm. Although, if public services are expanded, non-bullshit, then it is probably 11am to 3pm. The more people honestly working the less hours any one person needs to work.

There may still be all sorts of other injustices here and there, like racism and gender discrimination and disability discrimination, but let’s deal with those as well! It is not “let’s deal with them later.”

I die a little inside every time I see some youtube Influencer ranting about the threat of an AI Singularity. Like that is the very least of the problems I see, it’s a fake problem.

One professional thinking person guy was even thinking (if you can call it that) the real threat is from dumbing people down. Again… that’s the least of my worries. If you want an Ai to do all your trickier cognitive work for you, then you should get Ai to do all your harder cognitive work for you, that leaves you free to do more useful kinetic things like take care of young and elderly people who can’t do the muscle work of changing their own clothes and things like that. If you truly need an Ai to tell you how to make up a fresh bed, then it is only you who are doomed, not human civilization. Don’t watch so many scifi dystopia movies. Or if you do, understand the meaning of “Cautionary Tale”. It is a Tale.

What I wrote to that un-Thinking philosopher person was that the true challenge is spiritual struggle, not nerdy intellectual struggle.

Besides, have you ever tried dumbing down an actual nerd? It’s like trying to flatten a balloon without popping it. If an Ai can solve a puzzle, the nerd will still try to solve it unless it is a brute force hack. And we (society) are all that much better and resilient for this redundancy in puzzle solvers.