But if the economy were a computer program, debt would seem like a big hack. There’s no absolute guarantee that debt can be collected.
I can see how mathematicians would dislike an entity that lacks absolute guarantees, but it seems like a quite normal attribute to encounter in the real world.
We can be in a situation where “no one has enough money”—the great depression was a time when there were too few jobs and too much work left undone.
That’s mostly accurate, but it leaves out an important step in the causal chain: the “too little money” meant that the wages which workers were accustomed to getting became too high. For reasons that are likely related to bargaining strategies, workers wouldn’t accept (or sometimes weren’t allowed to accept) wages that gave them fewer dollars, even when those fewer dollars bought them more goods than they were accustomed to.
In other words, there’s a path for the value of money to re-adjust, but there’s enough opposition to it that most economists have given up on it.
The scarcity problem would not exist if money could be reliably manufactured through debt. … So it seems like we want to facilitate negative bank accounts “as much as possible, but not too much”?
I’m unclear what “facilitate” is doing here. “Negative bank accounts” is one way to describe a solution, but deflation meant that pretty much everyone preferred a positive bank account to “borrow and invest”.
Central banks know how to manufacture money. The main problems are figuring out the right amounts, and ensuring that central banks create those amounts.
I can see how mathematicians would dislike an entity that lacks absolute guarantees, but it seems like a quite normal attribute to encounter in the real world.
I think the main point here is that debt has different quality then ‘normal money’. Debt doesn’t exist in M0 and only exist for other forms of money then M0. Going from M0 to M1 and M2 is the hack that allows for negative money.
I can see how mathematicians would dislike an entity that lacks absolute guarantees, but it seems like a quite normal attribute to encounter in the real world.
That’s mostly accurate, but it leaves out an important step in the causal chain: the “too little money” meant that the wages which workers were accustomed to getting became too high. For reasons that are likely related to bargaining strategies, workers wouldn’t accept (or sometimes weren’t allowed to accept) wages that gave them fewer dollars, even when those fewer dollars bought them more goods than they were accustomed to.
In other words, there’s a path for the value of money to re-adjust, but there’s enough opposition to it that most economists have given up on it.
I’m unclear what “facilitate” is doing here. “Negative bank accounts” is one way to describe a solution, but deflation meant that pretty much everyone preferred a positive bank account to “borrow and invest”.
Central banks know how to manufacture money. The main problems are figuring out the right amounts, and ensuring that central banks create those amounts.
I think the main point here is that debt has different quality then ‘normal money’. Debt doesn’t exist in M0 and only exist for other forms of money then M0. Going from M0 to M1 and M2 is the hack that allows for negative money.