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"There’s a lot to unpack here. First, Werner claims that banks are special due to their ability to create money out of thin air. Second, Werner claims that the

"There’s a lot to unpack here. First, Werner claims that banks are special due to their ability to create money out of thin air. Second, Werner claims that the first claim is proven conclusively with empirical evidence. Werner’s second claim is patently false, because the ”evidence” he presents in his paper only describes banks’ ability to create money out of thin air — he presents no evidence for non-bank entities’ inability to create money out of thin air. Thus, he presents no evidence that banks possess an ability non-banks do not possess. And yet, he claims to have done the opposite." This is awful semantic gaming to "prove" that a false claim was made. If the definition of "money" is fuzzy and there are different kinds of money, if "bank IOUs" and "private IOUs" are materially and legally different from one another, then the strongest interpretation of Werner's words must be taken: He is talking about the sets of money that do not include IOUs from random private entities. Clearly, banks are special in this regard and the amount of bank-created money on the money supply is enormous, whereas the impact of private IOUs is so minor that we can disregard it.

baobabKoodaa 6y ago
It sounds like you are referring to "claim one", not "claim two". I noted in the article that Werner is (only) technically correct on claim 1, essentially due to the reasons you described. Claim two is about presenting empirical evidence for claim one. You might think that empirical evidence is not needed. That's fine. It still was not presented, so claiming to have presented it was a false statement.
- gridlockd 6y ago
  You ask for empirical evidence that "private entities have the inability to create money out of thin air", but this rests on a definition of "money". You brought up the example of a private IOU (the Poker Site). If we remove the distinction between private IOUs and bank IOUs, indeed you would have an example of a private entity creating money out of thin air, for a more loose definition of money. However, as we established, removing this distinction is unwarranted, bank IOUs are treated quite differently both legally and materially. If we maintain the distinction between private IOUs and bank IOUs, then your example becomes simply irrelevant. Any IOUs that may be issued by private entities that are materially and legally different from bank IOUs have no bearing on Werner's claims. I believe the empirical evidence for private non-bank entities not being able to create bank IOUs is that they're not banks. Am I missing something?
  - baobabKoodaa 6y ago
    > I believe the empirical evidence for private non-bank entities not being able to create bank IOUs is that they're not banks. Am I missing something? That's not what "empirical evidence" means. Empirical evidence is something we observe in the world. If we set a definition "all murder is illegal" and then we conclude "legal murders do not exist", do we have "empirical evidence" that legal murders can not exist? Of course not. We can conclude the claim is true by definition. That's not empirical evidence. > You ask for empirical evidence ... I never asked for empirical evidence for non-banks' inability to create money out of thin air. Werner claimed to have empirical evidence for this, and I merely pointed out that he does not have empirical evidence for this, contrary to his claim. If Werner had instead said "due to accounting conventions, we declare banks' IOUs to be money and non banks' IOUs to not be money", I wouldn't have any problem with that.
    - gridlockd 6y ago
      > That's not what "empirical evidence" means. Empirical evidence is something we observe in the world. If we set a definition "all murder is illegal" and then we conclude "legal murders do not exist", do we have "empirical evidence" that legal murders can not exist? Of course not. Hmm, you're right... > We can conclude the claim is true by definition. ...which means we don't even need any empirical evidence to say that banks are different and unique from non-bank entities! > I never asked for empirical evidence for non-banks' inability to create money out of thin air. Werner claimed to have empirical evidence for this. No, he doesn't. He claims that he has empirical evidence for banks creating money out of thin air, nothing more. > If Werner had instead said "due to accounting conventions, we declare banks' IOUs to be money and non banks' IOUs to not be money", I wouldn't have any problem with that. Doesn't that go without saying, considering that non-bank IOUs, such as poker website deposits, aren't considered part of the money supply under pretty much any definition?
      - baobabKoodaa 6y ago
        > ...which means we don't even need any empirical evidence to say that banks are different and unique from non-bank entities! That's correct, and I said so in the article. I said that (although there is no empirical evidence) the underlying claim is true on a technicality. >> Werner claimed to have empirical evidence for this. > No, he doesn't. He claims that he has empirical evidence for banks creating money out of thin air, nothing more. Here is a direct quote from Werner's paper: "We now know, based on empirical evidence, why banks are different, indeed unique … and different from both non-bank financial institutions and corporations: it is because they can individually create money out of nothing." When Werner claims to have empirical evidence that banks possess a unique ability to create money out of nothing, he is technically making 4 claims: 1. Banks possess said ability 2. Non-banks do not possess said ability 3. Empirical evidence shown for claim 1 4. Empirical evidence shown for claim 2 Claim 4 ("empirical evidence shown for claim 2") is patently false.

baobabKoodaa 6y ago

It sounds like you are referring to "claim one", not "claim two". I noted in the article that Werner is (only) technically correct on claim 1, essentially due to the reasons you described. Claim two is about presenting empirical evidence for claim one. You might think that empirical evidence is not needed. That's fine. It still was not presented, so claiming to have presented it was a false statement.

gridlockd 6y ago
You ask for empirical evidence that "private entities have the inability to create money out of thin air", but this rests on a definition of "money". You brought up the example of a private IOU (the Poker Site). If we remove the distinction between private IOUs and bank IOUs, indeed you would have an example of a private entity creating money out of thin air, for a more loose definition of money. However, as we established, removing this distinction is unwarranted, bank IOUs are treated quite differently both legally and materially. If we maintain the distinction between private IOUs and bank IOUs, then your example becomes simply irrelevant. Any IOUs that may be issued by private entities that are materially and legally different from bank IOUs have no bearing on Werner's claims. I believe the empirical evidence for private non-bank entities not being able to create bank IOUs is that they're not banks. Am I missing something?
- baobabKoodaa 6y ago
  > I believe the empirical evidence for private non-bank entities not being able to create bank IOUs is that they're not banks. Am I missing something? That's not what "empirical evidence" means. Empirical evidence is something we observe in the world. If we set a definition "all murder is illegal" and then we conclude "legal murders do not exist", do we have "empirical evidence" that legal murders can not exist? Of course not. We can conclude the claim is true by definition. That's not empirical evidence. > You ask for empirical evidence ... I never asked for empirical evidence for non-banks' inability to create money out of thin air. Werner claimed to have empirical evidence for this, and I merely pointed out that he does not have empirical evidence for this, contrary to his claim. If Werner had instead said "due to accounting conventions, we declare banks' IOUs to be money and non banks' IOUs to not be money", I wouldn't have any problem with that.
  - gridlockd 6y ago
    > That's not what "empirical evidence" means. Empirical evidence is something we observe in the world. If we set a definition "all murder is illegal" and then we conclude "legal murders do not exist", do we have "empirical evidence" that legal murders can not exist? Of course not. Hmm, you're right... > We can conclude the claim is true by definition. ...which means we don't even need any empirical evidence to say that banks are different and unique from non-bank entities! > I never asked for empirical evidence for non-banks' inability to create money out of thin air. Werner claimed to have empirical evidence for this. No, he doesn't. He claims that he has empirical evidence for banks creating money out of thin air, nothing more. > If Werner had instead said "due to accounting conventions, we declare banks' IOUs to be money and non banks' IOUs to not be money", I wouldn't have any problem with that. Doesn't that go without saying, considering that non-bank IOUs, such as poker website deposits, aren't considered part of the money supply under pretty much any definition?
    - baobabKoodaa 6y ago
      > ...which means we don't even need any empirical evidence to say that banks are different and unique from non-bank entities! That's correct, and I said so in the article. I said that (although there is no empirical evidence) the underlying claim is true on a technicality. >> Werner claimed to have empirical evidence for this. > No, he doesn't. He claims that he has empirical evidence for banks creating money out of thin air, nothing more. Here is a direct quote from Werner's paper: "We now know, based on empirical evidence, why banks are different, indeed unique … and different from both non-bank financial institutions and corporations: it is because they can individually create money out of nothing." When Werner claims to have empirical evidence that banks possess a unique ability to create money out of nothing, he is technically making 4 claims: 1. Banks possess said ability 2. Non-banks do not possess said ability 3. Empirical evidence shown for claim 1 4. Empirical evidence shown for claim 2 Claim 4 ("empirical evidence shown for claim 2") is patently false.