Potpourri
==> Robert Bryce has a nice obit on Freeman Dyson.
==> Linked from Bryce, here is Dyson’s 2007 essay on his heretical thoughts.
==> Piketty drops the mask…
==> Tyler Cowen gives us another hint that he’s a closet Austrian.
==> Everybody hates market prices in a pandemic, even conservatives.
==> The Fed has eliminated reserve requirements (last section).
Mathematical Challenges to Darwin’s Theory of Evolution
I don’t remember who recommended this, but it’s very good if you give it a chance. I think the discussion does a good job of distinguishing what the Intelligent Design folks are saying. Also notice how much a senior fellow of the Discovery Institute is allowed to challenge ID itself–does this look like a cult?
Bob Murphy Show Twin Spin
BMS ep. 107 is a re-broadcast of Max Sklar’s interview of me on his own podcast, “The Local Maximum.” Our focus was Mises’ distinction between class and case probability, but we touched on some pretty deep issues that might interest the geekier of you.
BMS ep. 108 is my analysis of the Brian Williams’ Bloomberg blunder. I make some of the obvious points, but I took it deeper than the usual commentary.
Sumner vs. Murphy
In a cosmic coincidence, on Monday Scott Sumner released an essay via Mercatus talking about the effectiveness of monetary policy in preventing recessions, particularly if the Fed implements his idea of level targeting NGDP.
On Tuesday, my next installment in the “Understanding Money Mechanics” series ran, this one offering a summary and critique of Sumner’s Market Monetarism.
BMS ep 106: Why Intelligent Design (ID) Will Be the Public Choice of the Natural Sciences
Oh boy, this one ruffled some feathers. I mention Gene Callahan and Steve Landsburg in the second half.
Bob Murphy Show ep. 104: Tough Questions for Libertarians
I don’t think I posted this here on the blog yet–anyway, see if any of these prick your conscience.
Bernie Jackson on a Flaw with MMT Analogies
Or rather, why Warren Mosler’s analogies don’t do what Mosler thinks. (For context see my interview with Warren.) Bernie Jackson emailed me (and said I could reproduce) the following:
MMT’s referee & ticket analogies fail on their own terms and illustrate the MMT flaw!
Bob,
When the referee puts points on the board, the points DO come from somewhere: actual events on the field. If referees arbitrarily put up points whenever they want, the fans will object and eventually stop watching the game. Referees are bound by rules as much as all other players in the game: when a touchdown is scored on the field, that FIRST creates an “asset,” a thing valued within the context of the game, against which the referee is THEN able to issue six points on the board. Not five, not seven. When the ensuing extra point (or go-for-two) is scored, another asset is created, and the referee again credits the board with exactly that number of points. There is indeed a FIXED SUPPLY of points at the referee’s disposal, and the referee is only a messenger, with ZERO power to create or destroy those points. Even if many fans are hoping for a touchdown, they will be disappointed in the referee’s putting six more points on the board UNLESS an actual touchdown is scored to back up the value of those points.
When a stadium sells tickets for an upcoming game (and note that they SELL them in exchange for other assets; they don’t “hand them out” or “give them away”), those tickets are not issued out of thin air, not at all! FIRST, an asset had to be created, called a football league, and a football team, and a stadium in which to play, and a marketing complex in which fans learn to care about any of that, and only THEN can tickets be printed up. The value of those tickets is backed by the real assets that make it possible for a fan to experience the game–and not just watch the game all by himself, but to watch it with a large, enthusiastic crowd and all the pageantry. The league and team executives created those assets, and only later can they print up tickets, just as paper money is issued to represent gold or other assets already acquired.
If we were to print tickets to a fictional game, some people might mistakenly buy them, because they were fooled into thinking there would be a game to attend, but as soon as enough people found out, the jig would be up. So no, you cannot just print up tickets and “hand them out” to create any sort of wealth, and if you were to hand them out, it would not “enable spending” in any productive, non-imaginary way (try “spending” your ticket to a game that isn’t really taking place).
If referees were to put fake scores on the board, to make a dull game more exciting, or to fulfill a complex mathematical model optimizing the number of fans still in their seats at the end of the game, the jig would likewise be up, as soon as fans discovered the ruse. This ruse would not be possible in football but would be in a game of technical measurements and hard statistical analysis. Imagine if football became so complex that every play were reviewed by instant replay, and fans never knew for sure the outcome until the referee emerged from the hood. When nay-saying sports analysts exposed that the statistics of points awarded had no correlation to happenings on the field, the jig would be up.
A regime of issuing tickets and marking points could last indefinitely if those tickets and points were backed by real assets (real games to attend and real athletic achievements on the field), but if the tickets and points were issued out of thin air, the regime would inevitably collapse.
So, those two classic MMT analogies are perfect. On their own terms, they illustrate that paper money has no value of its own and will ultimately collapse if not issued against a real asset.
—
This all struck me while listening to your episode 24, your commentary on an earlier interview with Warren Mosler. I had heard you discuss MMT a few other times, but I don’t think I heard these flaws exposed quite this explicitly. I hope that contributes a little something to the debate!
Thanks for all the episodes,
Bernie Jackson
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