Re: Minnesota Transportation Act a Horrible Idea
Again, you (and jtf and FB) are just repeating our standard economic theory. I know it well. I’ve probably had more of it than most on this site. But I’ve learned that much of what I was taught and used to believe is bunk. I’m not saying what you all are saying is completely wrong, but I’m suggesting neither should you automatically think it’s completely right because somebody got a nobel prize for saying it. What I’ve tried to do in several of my recent posts (in other threads) has been to suggest it might be prudent to question the theory we’ve been taught rather than reciting it with 100% confidence that it’s true, as if we’re Moses reading the 10 commandments. In case people haven’t noticed, much of economic theory has been proven wrong throughout this crisis, even dangerous in that it helps the financial elite get away with what they’re doing. See Steve Keen’s (aussie economist) attempt to blow up neoclassical theory because it assumes away debt and risk and irrationality. In the very early 20th century we still had theories that incorporated debt…that changed…hmm…wonder why.
[quote]However, you seem to argue that problems like price inflation are only a flaw with a debt based system and this is just not true.[/quote]
No I didn’t argue that. “Only” is an important word. I’m simply asking people to wonder about a theory they’ve learned that assumes away debt, risk, irrationality, skewed curves, etc. The theory is based on those assumptions. Since those assumptions don’t reflect reality, much of theory naturally won’t either. Assuming debt away and talking about things like supply and demand without understanding it is just as bad as derivatives engineers assuming they can build debt instruments with no risk.
[quote]MTA would be inflationary because it would create money that is exchangable for Federal Reserve Notes. By doing this the people of Minnesota might gain infrastructure but at the expense of my (and everyone elses) purchasing power.[/quote]
I know theory says that. But I no longer accept it at face value. Might be true. Might not. I think what destroys the purchasing power is the banking industry’s having positive interest spreads to collect more money…and if govt printed more they’d no doubt expand their spreads to collect the extra money. That is what has systemic effect on purchasing power and macro level prices. I don’t agree with all the theory I had bored into my head that a few extra FRNs in Minneapolis makes my eggs more expensive in Seattle. It takes the banking industry to do that.