4 ms·

I was a little curious how this compares to the use of USD during the Cold War, before USSR collapse, but it's hard to compare since so much of that period was

I was a little curious how this compares to the use of USD during the Cold War, before USSR collapse, but it's hard to compare since so much of that period was under the Bretton Woods system. A long term historical perspective to the potential consequences of de-dollarization would be an interesting read.

than3 3y ago
There's a lot of garbage out there about de-dollarization. MMT for example, magical monetary thinking is more appropriate since it lacks any rationality or understanding of the fundamentals of who sets prices for produced goods.
- jjtheblunt 3y ago
  Is that what Paul Krugman in the NYT opinions section touts (and got a Nobel prize in economics for)?
  - Afforess 3y ago
    No... What led you to believe that was the case? You're way, way off. https://www.nobelprize.org/prizes/economic-sciences/2008/krugman/facts/ https://www.nobelprize.org/prizes/economic-sciences/2008/kru...
    - bediger4000 3y ago
      Krugman was a lightning rod from 2000 on, like Fauci is today. The Denver Post ran Krugman in the business section, and offered a special on line place for businessmen to sound off against him. Quite hilarious.
    - jjtheblunt 3y ago
      I didn't believe it was the case: i was asking because I didn't know. (And, thanks for the link. interesting stuff.)
      - Afforess 3y ago
        It's cute that you think you can get away with lying. You were biased and wrong. That's why. And also apparently too cowardly to admit it.
        jjtheblunt 3y ago
        I asked two questions. You pointed out the second question was a no. Try re-reading, i think you missed the "and" part.
- richardfey 3y ago
  I found this post about MMT nicely written, maybe others will enjoy reading it as well: https://stephaniekelton.substack.com/p/magical-thinking-monetary-thinking https://stephaniekelton.substack.com/p/magical-thinking-mone...
  - _siis 3y ago
    While an interesting read, there were a few problems I had with it. Specifically, it appears they didn't really do any research into what caused the Penn Railroad collapse, which was not caused by high interest rates but instead by a combination of actions which would be considered fraud today (due to conflicts of interest that would never be allowed and exceptions to financial reporting in the rail legislation). They basically couldn't raise prices due to regulation, and no bank would loan to them. The one bank that would loan to them required they have seats on the board of directors. They loaned money at high interest rates, bought up the senior bonds with the interest payments, took control of the board, loaned money to themselves (effectively), paying dividends out of debt, and then forced bankruptcy and let it all collapse in the hope of a government bailout (which they got because rail is critical to food security and energy). It also neglects stagflation but does mention Volcker, drawing the wrong conclusions of what really happened, doesn't mention the S&L debacle aside from a brief mention (which was huge as well), neglected the whipsaw effect. The biggest problem I have with it, is it neglects a lot of important factors and only focuses on policy which doesn't match up with reality and largely only what fits their narrative if you didn't know better. There was also no mention of taking the currency off the gold standard in 1971. Most importantly, they don't use any of the M2 or velocity of money data. Its available from the Fed website but it doesn't support much of what they said, and shows how expansion of the money supply drives inflation in cost push or demand pull inflation. MMT suffers from major problems. The people that subscribe to it largely only see these large sums in a very narrow context which leads to poor conclusions, and an idea that you can print money continuously into the future with no consequence. It largely was what led to quantitative easing (or money printing). Graeber has a great book on Debt, which goes into the historical examples of what happens when you debase currency like this (no matter what you call it), and there's some very interesting research in how the Economic Calculation Problem related effects can be seen as rational pricing and price discovery fail in markets denominated in unbacked fiat. The latter being most commonly known for its historic roots as an intractable problem with non-market socialist systems where the means of production are held by a single entity. The debate/problem still isn't solved 100 years later. Additionally, the people making policy can't control what people choose to buy and sell goods at. Inevitably you get shortages when they try, business sectors concentrate, points of failures are introduced, and people leave the business when its not profitable. Then you get things like the baby formula crisis where the only factory remaining is shut down for safety reasons (as a result of cost cutting) and no one can get baby food in Florida. Once sector concentration reaches a certain point, its a short step away from nationalization in furtherance of solving the shortages through greater regulation. Needless to say it doesn't work, and I'd expect at least some of that to be addressed, but it wasn't. What's covered seems misleading, and very much divorced from the reality.
- imtringued 3y ago
  I don't know why it is so popular to overload the same words with multiple meanings in pop finance until meaninglessness. When I see people criticize "MMT" they don't even talk about the same thing. If you boil down modern monetary theory to its essence it just means that the public sectors deficit is the private sectors surplus. I.e. the government doesn't receive money via taxation, it is the source of money. If people want to hold more money then it is legitimate to have a deficit within reason. This is in comparison with the loanable funds model where the government must first collect the money from the private sector and therefore deficits are bad. "Since it lacks any rationality". I agree magical monetary thinking lacks any rationality since it is a straw man. It's ok I can deal with three mutually contradicting definitions of "money printing". I can deal with two contradicting definitions by now.
throwaway4good 3y ago
Lots of financial pundits like to compare the current period with the 70es (default on gold standard, oil shock, "financial repression").

than3 3y ago

There's a lot of garbage out there about de-dollarization. MMT for example, magical monetary thinking is more appropriate since it lacks any rationality or understanding of the fundamentals of who sets prices for produced goods.

jjtheblunt 3y ago
Is that what Paul Krugman in the NYT opinions section touts (and got a Nobel prize in economics for)?
- Afforess 3y ago
  No... What led you to believe that was the case? You're way, way off. https://www.nobelprize.org/prizes/economic-sciences/2008/krugman/facts/ https://www.nobelprize.org/prizes/economic-sciences/2008/kru...
  - bediger4000 3y ago
    Krugman was a lightning rod from 2000 on, like Fauci is today. The Denver Post ran Krugman in the business section, and offered a special on line place for businessmen to sound off against him. Quite hilarious.
  - jjtheblunt 3y ago
    I didn't believe it was the case: i was asking because I didn't know. (And, thanks for the link. interesting stuff.)
    - Afforess 3y ago
      It's cute that you think you can get away with lying. You were biased and wrong. That's why. And also apparently too cowardly to admit it.
      - jjtheblunt 3y ago
        I asked two questions. You pointed out the second question was a no. Try re-reading, i think you missed the "and" part.
richardfey 3y ago
I found this post about MMT nicely written, maybe others will enjoy reading it as well: https://stephaniekelton.substack.com/p/magical-thinking-monetary-thinking https://stephaniekelton.substack.com/p/magical-thinking-mone...
- _siis 3y ago
  While an interesting read, there were a few problems I had with it. Specifically, it appears they didn't really do any research into what caused the Penn Railroad collapse, which was not caused by high interest rates but instead by a combination of actions which would be considered fraud today (due to conflicts of interest that would never be allowed and exceptions to financial reporting in the rail legislation). They basically couldn't raise prices due to regulation, and no bank would loan to them. The one bank that would loan to them required they have seats on the board of directors. They loaned money at high interest rates, bought up the senior bonds with the interest payments, took control of the board, loaned money to themselves (effectively), paying dividends out of debt, and then forced bankruptcy and let it all collapse in the hope of a government bailout (which they got because rail is critical to food security and energy). It also neglects stagflation but does mention Volcker, drawing the wrong conclusions of what really happened, doesn't mention the S&L debacle aside from a brief mention (which was huge as well), neglected the whipsaw effect. The biggest problem I have with it, is it neglects a lot of important factors and only focuses on policy which doesn't match up with reality and largely only what fits their narrative if you didn't know better. There was also no mention of taking the currency off the gold standard in 1971. Most importantly, they don't use any of the M2 or velocity of money data. Its available from the Fed website but it doesn't support much of what they said, and shows how expansion of the money supply drives inflation in cost push or demand pull inflation. MMT suffers from major problems. The people that subscribe to it largely only see these large sums in a very narrow context which leads to poor conclusions, and an idea that you can print money continuously into the future with no consequence. It largely was what led to quantitative easing (or money printing). Graeber has a great book on Debt, which goes into the historical examples of what happens when you debase currency like this (no matter what you call it), and there's some very interesting research in how the Economic Calculation Problem related effects can be seen as rational pricing and price discovery fail in markets denominated in unbacked fiat. The latter being most commonly known for its historic roots as an intractable problem with non-market socialist systems where the means of production are held by a single entity. The debate/problem still isn't solved 100 years later. Additionally, the people making policy can't control what people choose to buy and sell goods at. Inevitably you get shortages when they try, business sectors concentrate, points of failures are introduced, and people leave the business when its not profitable. Then you get things like the baby formula crisis where the only factory remaining is shut down for safety reasons (as a result of cost cutting) and no one can get baby food in Florida. Once sector concentration reaches a certain point, its a short step away from nationalization in furtherance of solving the shortages through greater regulation. Needless to say it doesn't work, and I'd expect at least some of that to be addressed, but it wasn't. What's covered seems misleading, and very much divorced from the reality.
imtringued 3y ago
I don't know why it is so popular to overload the same words with multiple meanings in pop finance until meaninglessness. When I see people criticize "MMT" they don't even talk about the same thing. If you boil down modern monetary theory to its essence it just means that the public sectors deficit is the private sectors surplus. I.e. the government doesn't receive money via taxation, it is the source of money. If people want to hold more money then it is legitimate to have a deficit within reason. This is in comparison with the loanable funds model where the government must first collect the money from the private sector and therefore deficits are bad. "Since it lacks any rationality". I agree magical monetary thinking lacks any rationality since it is a straw man. It's ok I can deal with three mutually contradicting definitions of "money printing". I can deal with two contradicting definitions by now.

throwaway4good 3y ago

Lots of financial pundits like to compare the current period with the 70es (default on gold standard, oil shock, "financial repression").