June 25, 2009

I'm in the NYT, talking about money.

Or should I say on the NYT?


Ann Althouse said...

It's mostly Doug, of course. But you can see me listen to him! (And ask a teensy question.)

traditionalguy said...

And the award for Best Supporting Actress on a Blog goes to La Althouse filmed entirely on location from her front porch.

Richard Dolan said...

Rushkoff's comments were a bit confused, mixing up 'currency', 'money' and 'medium of exchange;' and whatever his point may have been (other than a little historical digression) was hard to figure out.

I don't know where he got his idea that forms of exchange other than gov't-issued currency have been outlawed or banned. You can accept anything you want in exchange for whatever you have to trade -- baseball cards for a Porsche, if you like. Most people just prefer the efficiency of gov't-issued currency -- legal tender for all debts, public and private, as it says on each bill -- or, in larger transactions, debits and credits in depositary institutions.

He also laments the disappearance of 'local currencies.' He must have missed today's news cycle, with word that California is about to issue script (because it's run out of the more normal form of money).

In all events, multiple currencies have always been the way of the world and remain so today. But most have concluded that the transaction costs of going from one currency to another add little of value (while creating plenty of opportunity for rent-seeking currency arbitrageurs to suck value out of the system). Avoiding such transaction costs on a continent-wide market was always a strength of the dollar that the Europeans envied, until they decided to invent their own. But a unified currency requires unified control over it. No problem in the US, but the Europeans have been less adept at that part of the game.

It was also charming, in its oddball way, to see the financial system being discussed as if a routine retail transaction were the paradigm. Currency in circulation is the least significant aspect of 'money' today.

At bottom, the idea of 'money' is based on mutual trust -- that the supply will be controlled, that it will retain its value, that it will be accepted in exchange for goods or services that the holder wants. When trust evaporates, so does the value of money. The German hyperinflation of the '20s is the classic case in point. Russkoff's chatter about the imagined motivations of governments and politicians leaves out all of those essentials.

What was his point, exactly?

traditionalguy said...

Richard...His point was that agreeing to outlawing non-government approved money is the power that we have given away when we entrusted our government to regulate the currency. The Secret Service does not agree that anyone can issue worthless money. Only the Democrats and Obama have the power to issue worthless money. The courts are the enforcers of the money monopoly every day.

AJ Lynch said...

"What was his point, exactly?"

He was proving most journalists lack even rudimentary knowledge and can not "fake it" when discussing basic economics.

traditionalguy said...

Richard..What is the significant aspect of money to you today? We divide "property" into three categories: (1) real property, and (2) personalty, and (3) choses in action. The money we use is a Chose in Action. That action ultimately comes when a king's Court (which controls an official band of volent armed men) orders action. In other words all money is backed by the State's monopoly on violence (Kings). Doug was telling a much suppressed truth that when people are at peace and in harmony they can do without the violent men. For example Christians are told not to sue each other.Instead, the trades and exchanges in such a community can be in any form agreed to and cut out the violent men's skim charged for protection from those same violent men. So we should at a minimum demand that we keep the checks and balances inside our Government by a division of powers and free honest elections. But the violent men have recently decided to just print any money needed to buy the votes and then there are no checks and balances left (except internecine fights inside the small gang of violent men over who gets the most stolen money). Unless we stop this soon,the Gulag will come next for losing insiders and all outsiders! That's why Roushton's book is so interesting today.

Richard Dolan said...

T/g: "What is the significant aspect of money to you today?"

The measure of money known as M3, which correlates best to how business is conducted in the financial centers. M1 (currency in circulation) and even M2 (currency plus demand deposits) misses more than it catches. To focus on M3 you need to understand the difference between the normal banking system (what everyone links of as a 'bank' and 'deposits') and the multiple 'shadow' banking systems that have arisen. Those are the systems whereby many major players in the financial/capital markets have been trading based on repo agreements and other monetized assets - the many kinds of securitized obligations that took the place of money. The Fed doesn't even track the size of the 'shadow' banking systems. Years ago, when it tried to, it just got information from a dozen or so institutions, and ignored all the rest. A econ profesor at Yale who's been trying to track it, estimates that its size (annual transactions) is about $12-14 trillion, which exceeds that of the normal banking system by quite a bit.

The 'shadow' banking system is the locus where the meltdown beginning in Aug '07 started and from which it spread.

T/g: "The Secret Service does not agree that anyone can issue worthless money."

If by money you mean currency, yes. No one can issue oounterfeit currency; only govt's can issue worthless currency. But anyone can issue an IOU (in whatever form, with the possible exception of an unregistered security) and use it as a medium of exchange, assuming the other party to the transaction is willing to take it. The Secret Service won't bother you, and as long as there's no fraud or the like involved, neither will the Gov't generally.

I didn't follow your second comment, which may have been intended in part as a parody of Rushkoff.

rcocean said...

Rushkoff's point about the origin of centralized currency is that it was not started to make every one richer but to maintain centralized control over the economy.

It also allowed small numbers of well connected people to own the best houses, eat the best meals - to be rich - without doing any productive work.

Also, the emphasis on Money (abstract and centralized) helps disconnect people from economic reality.

I doubt he's interested in details like M1.

nansealinks said...

wow, i really like how he talks about money and grain. and the neatest thing is how i am reading about salt.

this has so much to do with diet.

you have grainshe taalks about that could spoil with mold and drive people to hallucinations if you are talking about moldy rye. but even further back then ancient rome you have salt. the value of salt came because there was no refrigeration. the only way we could become long term meat eaters/ and protein storers was to preserve meat with salt. or fish with salt.

wow, he and michael pollan should be on talking heads, that would be so so sos interesting

and how would you get a good conversation on blogging heads between two writers of varied subjects like that that are so intertwined anyway.

ps i like your hoodie, doug.

nansealinks said...

what's equally cool to discuss is the salt tax and how that was used to raise government moneys. then it mixes with grain again as protests because they started to sell unsalted bread.

I don't want to insult you ann, but i just found there could have been more thought provoking questions to help him get his different ideas across.

nansealinks said...

and a question for you, ann/

does being a blogging hea get you a free laptop with a camera?

i know you are probably not allowed to answer that in your nondisclosure agreement with them?

how about if i ask anybody from blogging heads if they paid for their laptops?

traditionalguy said...

Richard...The Secret Service would be all over you like white on rice if you issued denominated paper IOUs based upon the deposits of gold kept in your vault, even if you could prove that you have the gold. Our government is about to face that problem coming out of banks in Russia and China whom we cannot arrest and imprison as easily as a private bank operating inside a single State. So the monopoly on the medium of exchange is facing its waterloo anyway. This will not happen if we start to use our own energy resources that have been illegal to extract in any meaninful quantities for 30 years. That is also because the Shadow Money system does not want abundance but does want scarcity to protect its power of deflated money. Can you tell us who "owns" that shadow money so that we can see who runs the political system in DC today.

Ann Althouse said...

@nansealinks All I've ever gotten from Bloggingheads is the occasional book. I use my own computer, with its built-in camera.

Ann Althouse said...

And I have never signed any sort of contract with them or been given any kind of rules or limitations.

Ann Althouse said...

Needless to add, we are not paid.

nansealinks said...

thanks, ann,

so it's either for the fun of it, (for you probably like your blog) or self promotion ( good idea for somebody with different ideas like doug) or charity ( some people just have a kind soul)

i guess it is interesting to know their business model and the freedom allowed.

Beth said...

Once I stopped watching it was interesting to listen to. Does that guy ever stop moving? I got seasick watching him.

nansealinks said...

really, beth?

that's probably why he's the only blogging head that i didn't fast forward through. i love animated people like that. he's like me in that when you get excited about sharing your thoughts, you grab props and move.

there are not many people like that except maybe in the mediterranean countries when you see greeks or italian or turks raising their hands and talking with their whole bodies and not being able to sit nice.

my catholic school training of sitting nice finally wore off and i really enjoy real people like that.

Hector Owen said...

Rushkoff is talking about two things at once, there; local currency, and negative-interest money. Local currency in the form of various kinds of scrip was issued in the US during the Depression as a response to the unavailability of government money, so we have seen that recently enough. Negative-interest money is more interesting, and harder to find in the wild. Wikipedia quotes Silvio Gesell describing how it would work.

Beth said...


Lots of people in New Orleans, and all over Louisiana, talk with their hands - I love energy and motion, but this guy kept rocking in a way that I had a hard time watching. Maybe the small fixed area of the camera's focus is the problem for me.

Ann Althouse said...

"so it's either for the fun of it, (for you probably like your blog) or self promotion ( good idea for somebody with different ideas like doug) or charity ( some people just have a kind soul)."

Yes, it's very much like the blog. I enjoy connecting with people, getting new ideas and information, and figuring out what I think of things by speaking and writing. If you like to read a book, wouldn't you like to chat and debate with its author? And if you read the newspaper and magazine articles, wouldn't you like to have an hour-long conversation with an smart person about whatever interests you?

You have to also like being on camera, speaking spontaneously, and getting seen by others. It could be nerve-wracking and too risky for some people, but that's just like the way I'm not interested in sky-diving and skiing but some people are.

Also, my real job as a law professor has a component usually referred to as "public service" that includes things like this. I consider parts of the blog and of Bloggingheads to be doing my job.

nansealinks said...


that is how i drive in a car. i know some one is going to equate that with some syndrome, but i don't care. i have multiple syndromes that i embrace and refuse to put into a mold.

anyway, go for it doug. a good shoulder shimmy is something belly dancers strife for.

i have a son that tapped his legs at academic meets. once i saw a presenter of a company do the same thing and i yelled at my screen, oh no that's nick. now nick and i do the car dancing. sometimes it's fun when other people in cars point at me and they start imitating me.

nansealinks said...

don't know if the wiki page on bloggingheads tv is complete, proportionate, fair or balanced, but now i see how this has its roots in the slated web culture where i made my third or fourth presence known on the web, which actually explains to me quite a bit of how i feel about that site and why it doesn't grab me like other areas of my core interests.

my salt of the sea opinion, of course.

john said...

Ann said ...
If you like to read a book, wouldn't you like to chat and debate with its author? ... wouldn't you like to have an hour-long conversation with an smart person about whatever interests you

That so reminded me of this great Woody Allen scene,(especially at about 1:50).

nansealinks said...

actually, i usually end up talking to homeless guys in the library. well not the one who wants to warm my buns, but the ones who sit and read books while getting warm. They aren't stupid. they just ain't got a tenured career like the professors that visit the university library.