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I disagree that dollars today derive their value from US taxes because the vast majority of dollars are never taxed. The world private sector prefers dollars for settlement, probably because the dollar supply is easily expanded (Eurodollars are outside the Fed’s control).
Comment by Robert Mitchell— 8 February, 2019 #
Anthropologists and historians have actually described instances going back to Babalonian times of where some king or emperor introduces a form of money at the same time as accouncing that taxes must be paid using that currency, else you get punished. That’s a big incentive to get hold of the currency. And that certainly gets the new currency estabilished.
But I agree that ONCE IT’S ESTABLISHED, it would be an uphill struggle to replace it with anything else. I.e. as I think you suggest, US dollars and other national currencies now have a momentum all of their own.
Comment by ralph47— 8 February, 2019 #
I agree with the last part of your post. As to the first part, I note that Mehrling has a different take:
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“In my reading of history (Boyer-Xambeu, Braudel, Tilly), money has arisen from two different sources, one public and one private. The systems erected from these origins–in both cases more or less deliberate constructions by collectivities, albeit different collectivities–developed for a long time separately, but at a certain stage merged into the hybrid that we see today. Instead of king’s money and merchant’s money, with an exchange rate between them that fluctuates over time, we have state money and bank money that trade at par. […] Both issue money, but it is important to keep in mind the two underlying origins, and their separate logics — Tilly emphasizes coercion (taxes) by the state, and exploitation (profits) by the city […]”
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MMT dogmatically ignores the essential hybridity that Mehrling describes, which appears to have always existed.
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http://www.perrymehrling.com/2018/12/where-is-politics-in-the-money-view/
Comment by Robert Mitchell— 9 February, 2019 #
“MMT dogmatically ignores …”
No, they don’t. Hence the emphasis on fiscal policy.
People may pretend that a Central Bank can control the money supply through interest rates, but everybody knows it never works.
Comment by Mel— 9 February, 2019 #
I think the advent of the shadow sector has complicated things, per se Blacks observations in Calif where a sub prime lender operating as a bank gets pinched and does a phoenix by becoming a broker [unregulated]. Which at the end of the day uses the shadow sector to back door the funds through the traditional banking system. This complicates the taxation perspective, but then again what was once the domain of the C-corps become a cottage industry for all and sundry too … cough legally minimize taxation – TJN does a yeomans job here. Thank you John Birch Society et al.
Aside in a recent conversation I neglected to respond in time and would ask if your aware of the black box nodes to store financial information in as a store of information or last resort restore point.
Cheers
Comment by skippy— 8 February, 2019 #
“the black box nodes to store financial information in as a store of information or last resort restore point.”
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Never have heard of this, go on …
Comment by Robert Mitchell— 9 February, 2019 #
I wonder why MMT exponents and followers continue to place such importance of the utility of public money on tax payment when legal tender which is a more general concept is necessary and sufficient to take care of this issue. it is time that they move on….
Comment by Panayotis Economopoulos, MA, PhD— 8 February, 2019 #
History I would offer.
Comment by skippy— 9 February, 2019 #