22 Mar 2018

Murphy Magic

Contra Krugman, Krugman, Lara-Murphy Show, Shameless Self-Promotion, Tom Woods 6 Comments

Some of this may be repeats, but I haven’t posted my stuff in a while and need to catch up…

==> Ep. 49 of the Lara-Murphy Show covers Chapter 2 of our new book, The Case for IBC.

==> Ep. 50 of the Lara-Murphy Show is a bonus episode, featuring my remarks at the Yale Political Union debate on climate change. At the link, I give highlights in case you are pressed for time. (Note, the audio isn’t great, but if you give it a chance you can adapt and tell what I’m saying.)

==> A recent post at IER: “The Gas Tax Has Little to Do With Road Costs”

==> Contra Krugman ep. 129 is about tariffs (and a fun clip from Jesse Jackson).

==> Contra Krugman ep. 130 is about Robert Reich.

==> On the Tom Woods Show, I debate against MMT.

6 Responses to “Murphy Magic”

  1. Rory says:

    My prayers were answered re: Yale Political Union debate. And I’m glad you highlighted the Macy’s gift card quote from that article, which struck me as particularly asinine, frankly.

  2. Tel says:

    Something about MMT debates always drifts into weirdness.

    In terms of the question, “What would the private sector do if government didn’t issue any money?” Well, of course the private sector has not just invented one or two currencies, but it’s invented many, many different mechanisms for exchange. This idea that somehow the private sector would grind to a halt without issued fiat money is just anti-historical. There are plenty of examples of private groups using all sorts of different things as their mechanism of exchange, going right back to barter, and being perfectly successful.

    I think his history of Sumerian tokens is also wrong, for example this URL. https://en.numista.com/catalogue/pieces71507.html

    Clay Tokens:Clay tokens (chalkus) came in different shapes and sizes. These represented different objects. For example, a cone shape could have represented a bag of wheat. These tokens were placed inside clay balls that were sealed. If you were sending five goats to someone, then you would put five tokens in the clay ball. When the goat arrived, the person would open the clay ball and count the tokens to make sure the correct number of goats had arrived.

    The number of tokens began to be pressed on the outside of the clay balls.

    Progenitor of the current Monetary Agreements and the various conventional scales of weights and measures.
    In the area of Mesopotamia, the Sumerian and Elamite, made use of such objects to satisfy their needs and their intense economic activity of the fourth millennium BC

    Clearly these tokens serve an accounting purpose, but they directly correlate on a one-to-one basis with a real commodity… so they are a type of commodity money, not fiat at all.

    Sumerian government ran public grain elevators which also issued tokens, and these also are commodity backed.

    I’m disappointed that neither side in the debate mentioned that there are two sides to a government fiat… firstly they insist that you accept their money, but secondly they actively repress any alternative to their money, usually by using taxation (e.g. the IRS is now coming after Bitcoin capital gains). So part of what the MMT’ers are really saying is that if government stopped issuing any money AND they are successful in their repression of any alternative THEN you could force the economy to grind to a halt. Well, here’s a tip… if it hurts, then stop doing it.

    For example FDR not only took away the gold but he also passed laws making it illegal for Americans to have any gold, and made it illegal to make any mention of gold prices in contracts. That’s the repression that is designed to disrupt any alternative economic exchange. Anyhow, government has never completely achieved this blocking of private financial instruments, because new ones just come along (like the gift cards).

  3. Bob Roddis says:

    The main reason funny money “dollars” have value is because the use of any other form of money is treated as an exchange of property. Any increase is the “value” of such money at the time of exchange (even if it consists only of an inflation increase) is taxable gain if above the tax basis of the money unit (and for each itty bit, you must keep accurate records).

    Q-6: Does a taxpayer have gain or loss upon an exchange of virtual currency for
    other property?

    A-6: Yes. If the fair market value of property received in exchange for virtual currency
    exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable
    gain. The taxpayer has a loss if the fair market value of the property received is less
    than the adjusted basis of the virtual currency. See Publication 544, Sales and Other
    Dispositions of Assets, for information about the tax treatment of sales and exchanges,
    such as whether a loss is deductible.


    Absent these policies, one could transact in inflation-proof money and exchange it for cheap funny money at tax time.

  4. Bob Roddis says:

    TYPO: Any increase IN the “value” of such money at the time of exchange…..

  5. Mike Sandifer says:

    What am I missing about IBC? Whole life policies offer terrible rates of return. How does it make sense to purchase the policy in the first place?

  6. guest says:

    I feel like I know everything significant about MMT, thanks to this debate.

    I’m glad Bob made the point that MMT-ers aren’t informing us of anything we didn’t already know, which was the nagging thought I had after watching the Mosler debate.

    I found it interesting that the MMT-er somehow believes that Austrians are trying to avoid the crashes that MMT-ers think are caused by a drop in the fiat money supply.

    For the record:

    [Time stamped]
    Peter Schiff was Right (2006-2007 Edition)

    “You know, rather than the recession being resisted, it should really be embraced. Because the disease is all this debt-financed consumption. The cure is that we stop consuming and start saving and producing, again – and that’s a recession. And sometimes, you know, medicine tastes bad, but you’ve got to swallow it.”

    [Time stamped]
    Why You’ve Never Heard of the Great Depression of 1920 | Thomas E. Woods, Jr.

    “So we see, first of all, from this example, that the boom period – the period where he’s building the house, he’s got employment, everything looks great – that’s where the damage is done.

    “The recession period – when he realizes, “Whoa, whoa, I’m doing something unsustainable. I’m wasting resources. I’m wasting labor time.” – that’s the return to health.”

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