The entire USG is a monopoly.
Are you familiar with Austrian Economic theory?
I think you are the one that isnt recognizing the monopoly…
read much of the literature and discussed it over the years.
A monopolist is ‘price setter’
He sets price and lets quantity adjust. Yes, he can set q and let price adjust, but most monopolists don’t do it that way as it’s too chaotic and counter productive.
A monopolist sets 2 rates.
how his thing exchanges for itself, called the own rate by Marshall way back. This is called the interest rate for a currency.
how his thing exchanges for other goods and services. This is what we tend to refer to as the ‘price level’
The funds to pay taxes can ulitimately only come from govt spending (and/or govt lending).
And any dollar denominated net financial assets can only come from govt spending more than it taxes.
This includes bank reserves that can only come from the govt, hence the channel for the govt setting the fed funds rate.
With monopoly, it’s not a ‘choice’ between letting the market set the rate and the govt setting the rate.
This is the starting point for monetary operations. It’s not about austrian or keynesian or any other theory or philosophy.
Monetary operations are what they are.
how so?
something i said or wrote?
I’m sorta surprised that you could read about and discuss it, and still hold some of these views you have.
Your definition of a monopoly seems ad hoc in order to suit your particular focus on money.
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So you already knew in advance what our critques would be?
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Why were you not able to reply to our critiques in a manner that we would get it?
For instance, I think you have been refuted.
“Your definition of a monopoly seems ad hoc in order to suit your particular focus on money.”
Specifics, thanks.
I’ve pretty much heard your critiques or something close over the years.
What specifically has been refuted?
That taxing lowers prices.
That the govt doesnt spend money it collects in taxes.
That tax money spent by the govt does not raise prices.
That no exists until the govt goes into debt first.
That an essential element of understanding an economy is hidden in book keeping and accounting principles.
All Keynesian assumptions, such a slack of aggregate demand being the ultimate cause of recessions.
We discussed this at great length already in this and other threads. Have not the energy to repeat it all,
A monopolist is not a price setter. Prices are set at the time of exchange and are dependent on supply AND demand. A monopolist is able to control supply, not demand.
That taxing lowers prices.
I thought we agree that at the extreme with no taxes at all prices are infinite- no amount of that currency will buy anything?
And that what taxes do is lower aggregate demand, as they take dollars away from us?
That the govt doesnt spend money it collects in taxes.
Just semantic here, best I can tell.
Yes, govt. spending exceeds taxation, and the more they tax the more they tend to spend.
But that’s talking past my point, which is entirely different.
My point is that govt spending is not operationally constrained by revenues. In other words, when Bernanke gave the banks those hundreds of billions he didn’t first check with the IRS to see if they had the funds for him to spend, and he didn’t call the likes of China to arrange a loan. He simply spent the funds in question the same way all federal spending takes place- the Fed credits a member bank account.
This is an important distinction from what you are saying, as the President and everyone in Congress agrees the Federal Govt. is constrained by revenues, can be the next Greece and be forced to cut spending because its cut off by markets, etc. when there is no such thing.
That tax money spent by the govt does not raise prices.
Taxing reduces aggregate demand and is a deflationary bias (that’s different from saying it directly reduces prices).
Govt. spending adds to aggregate demand and is an inflationary bias which can and often does directly raise prices.
So I think we agree here too?
That no exists until the govt goes into debt first.
I know it’s a type but not enough here for me to know your point here.
That an essential element of understanding an economy is hidden in book keeping and accounting principles.
The US dollar is an accounting system imposed on the economy by the govt.
I don’t see that as ‘hidden’ ?
And, for example, if our govt taxed $2 trillion and didn’t spend anything the economy would collapse, no matter what the private sector tried to do.
Is that an accounting principle?
Not sure if you mean a specific accounting principle?
All Keynesian assumptions, such a slack of aggregate demand being the ultimate cause of recessions.
We define recessions as negative GDP growth adjusted for CPI (which gets called ‘inflation’). This can happen with high aggregate demand.
It’s unemployment that’s a sign of insufficient aggregate demand, not necessarily recessions. And, again, that’s because unemployment is defined as people actively looking for work paid in US dollars.
We discussed this at great length already in this and other threads. Have not the energy to repeat it all,
ok, sorry, thought I’d addressed most of those satisfactorily. seems not.
Warren,
We are talking past each other. I truly think it’s hopeless for now.
Let me ask a different q altogether. What flaw did you see in Austrian Economics that led you to reject it?
So a public electric utility monopoly can’t/doesn’t set the price of a kw and let quantity float?
Or the public water monopoly?
Or the public subway system?
They all have to set price as a ‘political’ decision and then change price if they don’t like the results.
No way to set the quantity of electricity and let consumers bid for that quantity, for example, without extreme chaos?
Warren, the only reason the utility can set that price, is because they have exclusive control of supply. They aren’t subject to competition. As soon as a competitor emerges, the supply is no longer in their control.
Monopoly has always been a position of political privilege, it’s an exclusionary power for everyone else in the marketplace.
If you compete with a monopoly, the state will send some very nice men in suits to beat the living daylights out of you and take all of your property.
It’s a great racket.
Right, exactly my point with regards to the state’s currency!
the state, or its designated agents, has exclusive control of both ‘nominal’ supply and ‘nominal’ demand.
tax liabilities control the nominal demand- it’s how much the economy needs to be in compliance.
and state spending/lending is the only source of the dollars the state demands for payment of taxes.
the US dollar itself is a state run spreadsheet that functions as a state run monopoly
I said supply, not demand. You’re assuming too much. It’s the foundation of your “theories” but that’s what we generally reject. You place too little understanding on the role of money in a market economy and too much on taxation and bookkeeping. Or at least those are the charges as I understand them. I’ll be honest, there are dozens of guys like you with pet economic and political theories that come here to discuss, promote or defend them.
At the end of the day, I haven’t seen anything remotely interesting, particularly from the Amerophiles, those folks obsessed with the American monetary system to the exclusion of all others. Economic laws are not country or time period specific.
so you are saying funds to pay US dollar taxes to the US govt can come from somewhere other than the US govt itself (or its designated agents)?
if so, please give an example, thanks.
Warren, what I am saying is in my post. The people who obsess about the USG and its tax and currency system are missing the big picture.
I’ve read your post, thanks.
Please give me an example of dollar used to pay taxes originating from anywhere other than US govt spending and/or lending.
That’s the essense of monopoly- single supplier of something.
The big picture includes the rules and regulations imposed by govt.
The US dollar is one of those ‘rules and regulations imposed by govt’ type of thing that matters a lot.
Here is something interesting. This is a blog entry from a MMT economist:
Lerner outlined three fundamental rules of functional finance in his 1941 (and later 1951) works.
The government shall maintain a reasonable level of demand at all times. If there is too little spending and, thus, excessive unemployment, the government shall reduce taxes or increase its own spending. If there is too much spending, the government shall prevent inflation by reducing its own expenditures or by increasing taxes.
By borrowing money when it wishes to raise the rate of interest, and by lending money or repaying debt when it wishes to lower the rate of interest, the government shall maintain that rate of interest that induces the optimum amount of investment.
If either of the first two rules conflicts with the principles of ‘sound finance’, balancing the budget, or limiting the national debt, so much the worse for these principles. The government press shall print any money that may be needed to carry out rules 1 and 2.