Sunday June 26, 2016

NPR Weekend Edition

Linda Wertheimer ? interviewing Lionel Shriver about her book, "The Mandibles"

@NPR Shriver should study more economics. The quantity theory of money is dead [link to Freeman slides] https://sipa.columbia.edu/system/files/frbny-columbiasipa-benjaminfriedman-presentation.pdf

@Shriver There is a world-wide shortage of US dollars [link to Snider articles] http://www.realclearmarkets.com/articles/2016/03/18/everywhere_you_look_theres_a_dollar_shortage_102070.html

Shriver's book reminds me of Jerry Pournelle 1970s stories predicting that the US Dollar would be worthless because of welfare and money creation. Everyone would use the Swiss Franc. The problem is that the Swiss don't want to be the world's reserve currency (actively discouraging investing with negative interest rates, for example), and the quantity theory of money is simply not true. Reagan proved deficits don't matter, and QE proves money creation doesn't matter. What matters is innovation.

If food shortages occurred in the US, grain would be rotting in silos because of capitalism's failure to allocate resources efficiently. Shriver's dystopian vision can only come true if we worship capitalism to such a degree that we want to see people starve in the midst of vast food overproduction.

The way out of Shriver's dystopia is to fund a world-wide basic income on the Fed's balance sheet, at zero cost to taxpayers. Hold challenges, public and private, to stimulate innovation and increase production efficiency and production capacity beyond what economists dream possible. Increase free education (MOOCs), because the more you know the less you need.

---

Shriver never mentions production capacity. The economic crisis she predicts is a psychological construct, not a physical necessity mandated by resource shortage. The only real shortage is of knowledge and an artificial, imposed scarcity of money.

Create public money, ensure advancing production capacity through public and private challenges to spur innovation, index to eliminate inflation, and make at least 50% of the earth's surface public so we need not fear starvation because of private sector profit-motivated hoarding of food.