Kelton's Myth: Chapter 1 Impressions
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Chapter 1: Don't think of a Household
In which Kelton posits "the most pernicious" myth we must overcome is the dogmatically indoctrinated belief that a Government's finances are the same as a household, city, or State's budget.
I recognize this chapter lays groundwork. Any critiques that follow are held in tentative abeyance – I have not "concluded" them, but document gut objections. Gutting gut objections is a substantial part of reading this book.
As the writing exercise goes, I will try to limit chapter reviews to 1000 words. A forced economy, one might say? Applying an arbitrary spending cap on my words? Can I abide, and what kind of deficit will I rack up at your expense? Maybe deficits don't matter.
The Keltonian Revolution:
This first 25 pages elicit an eerily familiar trepidation in me.
At 18 I believed (give or take) that "The Bible was God's word, and the Catholic Church was the One True Faith™." But logical inconsistencies and tangible real-world evidence enticed me to consider alternatives I'd always been told to avoid. "What IF it's just a book? What IF the Church is simply a human political organization, weaving a narrative to establish and preserve power? What IF not everything the Church does is perfect and devoted to my betterment and salvation?"
When I allowed myself to consider un-Catholic possibilities, and read from the "what if" perspective, rather than from the "This is what IS true, and anything that says different is demon sperm temptation," I was free to draw conclusions. I could determine, for myself, that "1+1+1 = 3", rather than "1+1+1 = eggplant" as the Church taught.
Kelton's readers – whether they be "religious" as I was, or merely "patriotic," "conservative," or somehow "tribal" as every human is to some degree – will have to face her request for a similar perspectival inversion. It's a big, scary ask. They will have to overcome overwhelming urges — to run for the familiar comfort deep economic indoctrination, or to avoid the work required to rethink a new paradigm. But nothing worthwhile comes without risk, and brighter futures live only where we get past our "Better to stay with the devil you know" logic, and strike out to improve the devil.
In reading chapter 1, I feel like I am looking at an optical illusion on the internet: "Look at these seven upside down paper plates. Look at the third one, and they'll turn over." Or, looking at the picture of a field of what appears to be rectangles, the caption says "This is a picture of 16 circles can you see them?"
Once you change the way you look at them it is true: the other image IS there, and it is difficult to go back to seeing it the other way.
This is true, to bring us back to my original trepidation. What happens to us when we retrain ourselves to UNSEE all the things we have been trained to consider normal? Do fish suddenly understand water? Do Americans suddenly understand structural racism marinates every aspect of the society? Do people fearful of hell and an afterlife suddenly start living better here, now for those they love in this life?
Getting over the fear of changing perspective is precisely the mountain Kelton has to drag her readers over, and we'll see if she understands this as …
Page 31: Goddammit! She writes that critics of Modern Monetary Theory (MMT) talk about it as an "auto-stereogram," the two dimensional pictures which, when you change how you look at them, reveal a three-dimensional object.
She DOES know!
Again, I will slog on to chapter 2 and beyond, because I know that it was my willingness to challenge the orthodoxies of my Catholic upbringing which opened my mind to much broader horizons.
Is the Church happy I agreed to challenge its orthodoxies? About as happy as a nation with Monetary Sovereignty would be if I (and a few million of my closest friends) suddenly began doing all business in BitCoin. Which is to say, "Not thrilled."
The powers that be do not like to see people opting out of their power. More on that, below.
Let's take a quick gander at a few "myths" Kelton introduces and needs us to reconsider.
STAB vs. TABS
The old model of government monetary policy is mnemonically described at (TAB)S – Taxes and Borrowing Precede Spending. TABS is rhetorically, and pejoratively, linked to Margaret Thatcher. No government action can happen until we've taxed people to pay for it.
Kelton argues we need to invert to S(TAB) – Spending, (i.e. printing money and giving it to people who PRODUCE WHAT THE GOVERNMENT WANTS (my emphasis, her quote)), precedes taxing and borrowing. It is the act of printing and giving money to people that makes them taxable.
Gut reaction: I am leery of the idea of "what the government wants" sounding like a centralized economy, but I can temper that fear by remembering that (at the best of times) ours is a REPRESENTATIVE government "of, by and for the people," so "government" must respond to the desires of the people. <snork> Excuse me, milk shot out my nose at my attempt to retain THIS myth, so I can stay with Kelton's effort to disabuse me of "The Deficit Myth."
Monetary Sovereignty
Sovereign ISSUERS of currency are different from USERS of currency. Issuers can simply make more money. Print it at the mint, or flip a bit in a computer system. If you're the sovereign issuer, that money exists to be given to people, who will then trade it for goods and services.
Kelton presents a variety of analogs – a Mafioso who hands out chits; a father who "pays" his kids in business cards, which he "taxes" and of course, our Government.
But what makes any of these issuers' money valuable? Ultimately, the THREAT that the issuer can punish you mightily if you run afoul of its currency system. Cement Shoes, Grounding, 30 Years in the Pen for Tax Evasion. Whatever. I find the lack of discussion about this aspect of monetary function surprising. It ignores the "invisible hand" … which is neither invisible, nor a hand. "Tawk amongst yourselves." There is always an enforcement mechanism.
Who/what is it? It is "the holder of power."
Page 28; re: The US Mint, printing and handing out money to whoever it favors: Just as the mafia Don (whose favors can be called in under threat), the Mint maintains value by virtue of the US enforcing physical dominance. Pay your taxes, or else.
It seems that the government only can maintain its Fiat currency by claiming ownership over the people, and control over the money. In this way the populace becomes energy, flow, cattle for those people executing government policies of war an empire overseas. Those people turn around and tell us to get back to work in a COVID infected meat packing plant, or school, because without our consent, THEIR money is weakened around the world. That is, they have worked the system so that WE work, nay slave, to enable their priorities.
In a democracy, the power is that the people have delegated their power to the government, so it's like we're in a very large mutually agreed upon game. I can see that if we all agree to play, and if the power of the Government is exercised for ALL people, then the idea that the government can print more money is just an agreement that all the people say, "Yeah, let's do XYZ with our society." In that best of all possible worlds, Kelton's argument seems correct. We are in charge of imagining a society as we would like to have it.
But what happens if the people printing the money say that certain elements of society won't be allowed to play by the same rules? Structural racism. Preference for corporations over citizens. Preference for inherited, or investment wealth over labor. All people MUST be in the same game for Kelton's theories to function, and it's pretty obvious there are factions in this world who exempt themselves from the game whenever they feel like it.
It is not rocket surgery. Kelton is writing about modifying the locus of power: Who writes the rules of the game, and who do "they" think are allowed to play.
We NEED to deal with this invisible element: The people running the game. This is the same quandary that perplexed vassals and serfs.
Money only works if everyone buys in to the authority of the governance. "Corruption" is the act of attempting to establish relations and power outside of the purview of the authority, or not paying debts… i.e. reneging on promises. Monetary and societal systems fall when those who previously consented to play the game and profit from it, use their acquired power to stop playing, causing those left in the game to be screwed by the leaders/powerful, who are (I remind you) ostensibly working FOR the people, in America.
It seems the only way to prevent this is to prevent the accumulation of power… in the individual or in the state? I bet no one has thought about THAT before. /s (Have you seen the internet push to "normalize" the use of "/s" after a sarcastic statement, since sarcasm is undetectable to some (whether genetically, or because of culture/linquistic background) and sarcasm causes ENDLESS misunderstanding? It could take off)
Barter and Stored Value:
Traditional understanding of how money works is that it is an abstracted representation of stored labor. I'm already raising my word-count debt ceiling, so I'll leave this to your discovery, but in my "Gut Reaction" I think her presentation argues to abandon the myth, without addressing the reality that behind every currency that goes beyond barter, there is an agreed upon enforcer of the value. A power holder.
And a society that "agrees" to delegate its powers to representative systems … like, say, individuals giving up the right to beat people to take what they want, and instead to have a central bank and common, abstract currency with which to beat people up and take what they want… that society needs to make sure it stays on top of the delegated power-holders, that they do not over reach. It sounds a lot like tri-partite, checks and balances, representative democracy to me.
Again, I caution the reader tempted to say, "NO, you're getting it all wrong!!" : I am on Chapter one, reading skeptically. Holding the theses advanced in abeyance; not rejecting anything, yet. I'm in deep sympathy with Kelton's project, but seeking any sign that her solution is in some way more, or different than a doctrinal schism manageable by "religious" reformation, or if it requires a "Hundred Years War."
Verbal Gymnastics
"Spare us the theatrics and the verbal gymnastics.
We break wiseguys just like matchsticks."
— Declan McManus (aka Elvis Costello) on "The Loved Ones."
I cannot escape the sense that, in the end, economics is war by different means, and that the benefits of currency redound to the brutal enforcer. Benefits spreading widely to all citizens can only happen if there is a just, representative, brutal enforcer putting a stop to individual brutal enforcers – i.e. a regulatory state, criminalizing and preventing certain predatory Capitalist behaviors. But in our system, the benevolent enforcer has been hijacked by the predators.
Please, don't take my reticence here as disagreement with Kelton. I believe we must apply arbitrary limits to what can be done economically, lest we be left with "the rule of law" being reduced to "Take Always. Apologize never. And Possession is 9/10ths of the law." How do we reign that in and simultaneously prevent what the Capitalists fear: establishing an overweaning, equally corrupt, Socialist state that is as brutal as the unfettered capitalist slave trader model?
But we must NOT be tempted, unless totally cynical, to fall for the "better the devil you know" logic of keeping a brutal, corrupt system in place JUST because our opponents are weaving a narrative that says, "This is the one true economic faith, and all thoughts to the contrary are like lying, tempting snakes in the Garden of Eden."
In other words, discussion of how economics "should be" is a word-salad shadow of a violent struggle, subsumed beneath a word game.
Life is nothing if not an arena of people developing rhetorical palaces designed to gather a constituency and entice its members to act in defense of the palace. These palaces are established to prevent the alternative: war. Physical violence. Taking resources, or (as the case might justify) RE-taking them from those who stole, but told us they were doing God's Will, fulfilling Manifest Destiny, and were divinely or genetically entitled to their position.
"It's our money! I earned it, I spend it!", "Taxation is theft!" (But notice, "acquisition by theft" never is theft. A chin scratcher, there.), "Government is the problem!" (Reagan), "There is no government money, only taxpayer money."(Thatcher), "Do you want a government thinking it knows what to do with your money better than you?", "Makers and Takers", "Elites think you're stupid!", "Welfare Queens", "Law and Order."
The reality is that we (You, me, and Kelton) are up against a rhetorical juggernaut – time tested, fear approved. As tired and selectively used as Scripture, to beat down revolution and maintain a passive flock.
What is Kelton's response? Let's look at one example from page 34.
"New forms of taxation are all important levers to enable the government to achieve a more sustainable of distribution of income and wealth."
Is this what traditional monetary people recoil against, with the rhetoric of "Government isn't supposed to pick winners and losers" logic? Arriving at the concept of "sustainable" requires one to arrive at the concept of "appropriate." "Best." Beauty is in the eye of the beholder. Function depends on the specifier's desire.
This will always be the tension between those who say government cannot dictate what is best, and then those same people USE government force to fund their projects, dictating what is best for THEM. The innate Ayn Randian individualist's tendency to drive economies to personally beneficial ends. And that, in turn, inevitably drives those people getting screwed, killed, enslaved and not getting their share to start a booming "entrepreneurial" market in guillotines.
One sentence later Kelton is using the term "excessive speculation." Again, what is excessive? It depends on those making the rules defining it, and enforcing it, and stopping others from undermining it by refusing to participate in the game. "Excessive" is as definable as "undue burden," the "reasonable man," or "sincere religious belief." We are in the realm of pure politics, and "pure" politics is the brute force assertion that I can take from you and you can't stop me, and I can enforce this. That is also the force behind "monetary sovereignty." I'm inventing a game, and you have NO choice but to play by the rules of the game which I can change at a moment's notice, stealing your stored value.
Kelton is doing yeoman's* work in attempting to establish an alternative lexicon, verily… a "scripture" of sorts, that "progressives," or "human beings with a sense of societal decency" can leverage for the next 40 or fifty years. Perhaps she is laying the tracks (to stretch and mix metaphors) upon which the pendulum can ride smoothly in the opposite direction someday — once it changes direction. Will it change direction as the result of human reason and sense, or more traditionally in reaction to the usual guillotines, revolutions and the irresistible demand of the poor and abused that "Enough is enough!"
Hers is necessary work, but until we get our constituency on board with the project and develop the "on message" juggernaut equivalent of the predators, we're doomed.
(*I'd have said "yeoperson's work," but found myself cluttering an argument with necessary, but distracting lexical adjustments that can get in the way of a passionate reader's willingness to continue. Hmmm… a metaphor for what dogs (or cats, to be inclusive) our ability to establish a useful rhetorical "canon" to counter the Conservative juggernaut? /S)
Duh.
The argument boils down to seeing that everything we do is a game, and the government has the position to rewrite the rules of the game if it so chooses. The only question remains, do those in power rewrite the rules to favor everyone or only favor their personal interests?
Kelton argues that the government should use its capacity to manufacture money in support of the enforcing "authority." WE, the PEOPLE. Run the printing press for the people.
That idea will only function if the people WANT to create a society that prioritizes public service, and baseline social systems over banking and financial systems, profit, military and a Darwinistic kill-or-be-killed game of "King of the Hill" or "King of the biggest accumulated money pile."
I can get on board this game metaphor.
At root, Kelton points to a corrupt system that benefits a few, and calls for a Democratic/Representative redefinition of what society, and the rules of economics can be, if only all the people pull together for what they want. We can DEFINE the nation we want. Yes. That is the principle of democracy and self-governance. It is ostensibly the system we already live under, and which in "our" unwillingness to act as the benevolent enforcer over corruption and power, has delivered us to this pit of predatory capitalism.
I await specifics in subsequent chapters on how we can — other than by organizing over the long term and insisting that the economy deliver a baseline standard of living to all — change the status quo. It requires new scripture, new acolytes, and a warrior zeal to proselytize and spread the faith over all objections. Just like Christianity did.
And THAT all turned out great. /s
At base, the high school cheer comes to mind: "You've got to want it, to win it, and we want it more." Do we? Are enough of us really fighting, and WILLING to fight to loosen the Robber Baron grip upon us? Are enough of us willing to face the discomfort of examining and discarding indoctrination, to define and create a better future, nation, economy and society?
Addendum: Finally, allow me to scratch a pedant's itch: I almost stopped reading when, late in the chapter, Kelton says she started researching her theory in earnest. "I poured over" the literature, she writes rather than "pored." I'll blame the editor and keep reading the remaining chapters.
Chapter 2 soon.
Republican Response: "Once again, these speak and spend liberals are throwing around your valuable time. Elect ME to write the Chapter Two review, and we'll slash preening, and "gut" metaphors, to get to the point quickly. We'll "Drain the Dictionary" and "Throttle the Thesaurus". It's YOUR attention to spend, not the Gubmint's!"
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