Two Sets of Rules

I think my major problem with Mosler’s theories is that there are two sets of rules. The second set only applies to the the issuer of the fiat currency. It is not applicable to, for example, New York State, or Dutchess County, or the Town of Beekman, or the Arlington Central School District. Because money is not really an issue for the owner of the mint, some policy options are available to the Federal government which are not available to more local governments. More power is available to the Federal government which is not available to local governments. This is a problem if you think, as I do, that certain functions are forbidden the Federal government. This is a problem if you think, as I do, that certain functions are best performed locally.

Suppose, for example, that you are in favor of providing a free education to all citizens. If the town pays for it, then the town will need to float a bond issue, or raise taxes, or otherwise find the funds to provide the education. If the Federal government pays for it, then money’s not an issue.

If the Federal government pays for it, then control is not likely to be local.

It’s simpler if there’s just one set of rules.

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6 Responses to Two Sets of Rules

  1. Good point!

    Though I wouldn’t call it problem with the theory. Just the way it is!

    :)

  2. Will says:

    It’s a concern about the political effects of the particular economics of the theory. ;-)

  3. Scott Fullwiler says:

    Concern about political effects is legitimate, but it’s not a “theory,” it’s how the monetary system works. Nobody has yet provided evidence to the contrary, and not expected to, since accounting identities and nature of monopoly supplier of the currency are pretty clear to anyone who’s willing to look. Indeed, even mainstream literature agrees.

  4. Will says:

    There’s no insult intended in the use of the word.

  5. Jim Baird says:

    If you ever read Jane Jacob’s economics stuff, like “The Economy of Cities”, she advocated local (or at least metropolitan level) floating rate currencies. I don’t think she was completely “in paradigm”, as Warren would say, but she had a enormous intuitive grasp of economic realities…

  6. winterspeak says:

    Yes indeed, life is very different if you are a currency issuer than if you are a currency user. One set of rules, but two different positions on the board game (kind of like a “dealer” vs the “players”, or an “umpire” vs the “team”).

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