Sun Money | 141 comments (141 topical, 0 editorial, 0 hidden)

Fiat money does not promise resources on demand, or that they'll be cheap.

It does promise that it will always be possible to mobilize existing idle resources, and that it will be impossible for people to issue mnetary claims in excess of available money.

That's more than any commodity money can deliver.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sun Jun 22nd, 2014 at 02:16:36 PM EST
[ Parent ]

Re: Yes and No (none / 1)

If some resource (say, energy or water) would become an obvious bottleneck for "civilized" living, "indespensible" technology, or just survival, wouldn't that resourse become de facto hard currency? How long would that bottleneck be masked by monetary overflow or scarcity?

by das monde on Thu Jun 26th, 2014 at 01:45:04 PM EST
[ Parent ]

Re: Yes and No (4.00 / 2)

If some resource (say, energy or water) would become an obvious bottleneck for "civilized" living, "indespensible" technology, or just survival, wouldn't that resourse become de facto hard currency?

That is the Austrian position (Misean regression).

The Austrian position is wrong.

What makes currency currency is that contracts and tax liabilities are enforced in terms of the currency.

Money is not a store of value. Money is a tool of contract enforcement. The state of scarcity or abundance has the next best thing to nothing to do with the rules for contract enforcement.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jun 26th, 2014 at 06:13:41 PM EST
[ Parent ]

Re: Yes and No (none / 0)

Contracts do not exist in an abstract paradise. If their implementation is the unconditional priority regardless of real world limits (particularly, in resources) you soon have some austerity, factual opression in whatever dressing. Thus, what's your prefered endgame when the contracts, exponential obligations meet definite limits of the physical reality?

by das monde on Fri Jun 27th, 2014 at 09:00:47 AM EST
[ Parent ]

Re: Yes and No (none / 0)

Bankruptcy is a beautiful alternative to debtors prison. In the US they have an even more helpful solution, called Chapter 11.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Jun 27th, 2014 at 10:12:46 AM EST
[ Parent ]

Re: Yes and No (none / 0)

This is the problem that inflation solves for you.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jun 27th, 2014 at 06:07:15 PM EST
[ Parent ]

Re: Yes and No (none / 1)

..wouldn't that resourse become de facto hard currency?

No. Money is not some natural product of human society. If the monetary economy breaks down and can't deliver live essentials it won't necessarily be replaced with a new one of the same kind. It's just as likely that money would loose all meaning in face of rationing. Or in the face of collapse of society.

by generic on Fri Jun 27th, 2014 at 10:28:00 AM EST
[ Parent ]

Re: Yes and No (none / 1)

At least until some kind of state would re-emerge, even if it is, say, crude warlordism. As soon as the rulers want the taxes paid with money, and starts issuing money, the monetary economy returns.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Jun 27th, 2014 at 10:48:07 AM EST
[ Parent ]

Re: Yes and No (none / 0)

But once the value of bottleneck resources exceeds the practical value of monetary debts, the investor class will change their preference. That's perhaps the super-Minsky moment of hyper-inflations, narowly monopolized resources, society (as we know it) collapse.

by das monde on Tue Jul 1st, 2014 at 06:20:35 AM EST
[ Parent ]

Re: Yes and No (none / 0)

That's what we had in the 1970s (stagflation). Now we're having deflation because hard-money ideology has solidified.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Jul 1st, 2014 at 06:33:06 AM EST
[ Parent ]

Re: Yes and No (none / 0)

I rather believe that stagflation was there to discredit Keynes - rather than an example of a resource wall.

By now, the ideology evolved to "a systematically organized body of knowledge" of how to keep the monetary control dominant (for as long as possible, at least).

by das monde on Tue Jul 1st, 2014 at 07:07:14 AM EST
[ Parent ]

Re: Yes and No (4.00 / 2)

Stagflation was a real economic phenomenon, it wasn't "made to happen". And it was indeed seized upon by monetarists to discredit Keynes. And Austriand and Ordoliberals latched on to monetarism because they agreed with the policy prescription of the monetarists (in the 1970s environment, monetary contraction). And then what had happened was rationalised and blended with pre-Keynesian economic thought, and since 2007 monetarists have found to their horror that the actual political power rests with the Austrians. Now the policy prescription on which Keynesians and monetarists agree is one of monetary expansion, with disagreement on whether fiscal stimulus in necessary or just not harmful. But the common-sense conservative hard-money view hasn't been discredited yet. Austerity is just being tweaked around the edges. And here we are.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Jul 1st, 2014 at 07:22:09 AM EST
[ Parent ]

Re: Yes and No (none / 0)

Forcing a rentier portfolio shift to production and distribution of a bottleneck resource cannot (in and of itself) cause hyperinflation.

And having rentier portfolios shift toward actually useful work would be a good thing.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Jul 1st, 2014 at 06:35:40 AM EST
[ Parent ]

Re: Yes and No (none / 0)

We would talk then of resource capture by the same rentiers, rather than useful investment.

by das monde on Tue Jul 1st, 2014 at 06:43:56 AM EST
[ Parent ]

Re: Yes and No (none / 1)

Contrary to what you seem to believe, the real world contains very few Bond-villains with white cats in volcano islands who habitually crash major industrial supply chains for shit and giggles.

Usually, they do it for money, and there's no percentage in cornering the market unless you plan to actually sell the product at some point.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Jul 1st, 2014 at 06:51:01 AM EST
[ Parent ]

Re: Yes and No (none / 0)

We are not in the tight resources hold yet (even in the 70s). For James Bond to have the same lifestyle then, the good guys would be resource "protectors".

by das monde on Tue Jul 1st, 2014 at 06:58:40 AM EST
[ Parent ]

Re: Yes and No (none / 1)

If some resource (say, energy or water) would become an obvious bottleneck for "civilized" living, "indespensible" technology, or just survival, wouldn't that resourse become de facto hard currency?

No, it would become very expensive, and subject to rationing.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sat Jun 28th, 2014 at 02:23:38 PM EST
[ Parent ]

Sun Money | 141 comments (141 topical, 0 editorial, 0 hidden)

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