Yet another intraday commentary here on the nature of money and the Platinum Coin solution to our debt problems. After all, modern money is just an accounting fiction, easily created and destroyed, taken from these and given to our powerful friends.
The more I thought about what Mr. Krugman wrote, the more troubled about it I became.
He seems to elevate what the central bankers do to the realm of pure science, as a purely mathematical function without resort to or consideration of morality or moral choices. As if.
That sounds like something one of the Austerians might say. We have to do these terrible things, require people to make awful sacrifices, because the economic equations compel us. It is not our fault. And making these difficult choices is such hard work that we deserve magnificent recompense for it, as in British MP's have asked for a 32% pay increase.
Economics deals with a set of higher level public policy choices, and a series of specific economic decisions and tradeoffs designed to implement them. And not the other way around.
Our current system is upside down, where those with the money and the insider connections make the decisions, and those who serve them in various ways receive power and outsized rewards from those monied interests and their institutions. It is not all that far from what Hedges' calls inverted totalitarianism.
Consider how badly policy and monetary choices have damaged the people of the United States in the past twenty years, and a good part of the rest of the world for that matter. Who can be confident that wisdom will prevail and justice will be done when there is no serious reform, and the perpetrators continue to write the rules for themselves. It is as though we are witnessing the struggles of competing crime families, and not a democratic process.
I think it is a terrible canard to say that people who wish to have a stable money supply and some confidence in its value, especially with regard to their savings, wish to have a money supply that comes from God as some sort of divine money.
Rather, I think the man is willfully misunderstanding and denigrating people who are referencing the principles of equal justice and 'inalienable rights' to freedom and property, without arbitrary confiscation by a central authority. Money is a powerful tool as any economist should know, and it is very dangerous when wielded badly, or by the wrong hands. The process of money needs to be transparent, and above reproach.
And especially when the monetary authority has proven itself repeatedly to be as ineffective, prevaricating, secretive, given to conflicts of interest and cronyism, and self-serving as the current crop of leadership that we have today in the Fed, Wall Street, and the government.
It is not as though these fellows do not understand what is at stake. Today Mr. Krugman said why he prefers the Platinum Coin gimmick to hitting the debt ceiling.
"My own view is that I was willing to go over the brink on the fiscal cliff, but not here, for three reasons.So allowing the debt ceiling to come, which is NOT a default on debt since interest can still be paid, which Clinton had done quite successfully as I recall, is to be feared to the point of doomsday. But using a dodgy method of overtly monetizing the debt, which has existed as an idea on the fringes until a month ago and has never been done before, is much less risky and will bother nobody. Are you kidding me?!
First, this is seriously risky business. The fiscal cliff would have been a known quantity: basically, a negative Keynesian shock to the economy, which is something we understand quite well, and furthermore something that would have built only gradually over time. The risks, in short, were somewhat contained.
By contrast, nobody really knows what happens if America defaults, even briefly. The whole structure of world financial markets is built around the use of Treasury bills as the ultimate safe asset; what happens if they lose that status? It would certainly be an interesting experiment, but one best carried out if you have plenty of bottled water and spare ammunition in your basement."
Paul Krugman, Thinking About the Brink