Dylan Lawrence Moore

Open with insults and close with recommending reading. I will make reading this source my priority before aught else.

Nima Mahjour and I interviewed Warren Mosler again specifically to talk about how the US Government makes money and how Congress, the US Treasury, the Federal Reserve, and "primary bond dealers" interact to make this happen. Also, the Federal Reserve isn't a private entity. At all. In the least little bit. Warren relates his experience of owning a bank and being a member of the Federal Reserve (a requirement to own a bank). Members get 6% on their "stock", but all the rest of the Federal Reserve's profit goes straight to the US Treasury. STEPS: 1. Congress tells the Treasury to spend a certain amount of money on <whatever>. 2. The US Treasury, which doesn't have the money, begins a bond auction which is only available to primary dealers. (The bonds are created out the nothing.) In order to be a primary dealer, you are required to purchase a certain amount of market share in the treasury auctions. 3. The primary dealers sometimes don't have the reserves handy to purchase their market share of the bonds, so the Federal Reserve does a buy-back agreement with the primary dealers. In this agreement, the Federal Reserve exchanges reserves with the primary dealers' bonds (the reserves are created out of nothing), with the agreement that the dealers will buy back those bonds in the near-future (like, next day). 4. The primary dealers use the reserves they got from the Federal Reserve to buy the bonds from the Treasury. 5. The Treasury can then spend its reserves on <whatever>. The steps are clunky and anachronistic (Warren explains why in the video), but the point is: in the end the Treasury ends up with the reserves created by the Federal Reserve that it needs for its deficit spending. "Primary dealers" have been created as bureaucratic middlemen because Congress has decided that the Treasury can't simply have its own overdraft account with the Fed (probably mostly due to economic illiteracy and the banking lobby which makes bazillions off of trading treasury bonds), but they don't add anything to the sum effect of the interaction. Important point: AT NO POINT are tax dollars used for deficit spending. Federal taxes do not fund federal spending. #LearnMMT

Your pics aren't working. Net savings is what's left over after you cancel out the borrowing of the private sector, minus whatever money has been sent to the foreign sector. Private sector money has to be paid back, where it cancels itself out. Government deficit spending does not, as the government creates the money out of nothing and does not need it back in order to spend. Sorry, the only nonsense there is you not addressing what I wrote.

I agree. That's why I'm posting this stuff here. It's true on all levels that banks are money extension arms of the government. The Fed is a government institution. Yea it has some "private characteristics", but it exists by statute and is able to operate within the parameters given to it by Congress. "Private" banks require government license to do what they do and to be members of the Fed. So all players can create money through such expansion... with government permission. It's correct that S=I is bullshit. MMTers don't claim that S=I. A budget deficit or a current account surplus are necessary for net private saving, not all saving. And we've never said national income and GDP are equal, so... strawman.

What's your plan of action for fighting back, then?

Have you thought about escaping to another country and starting over? Preferably 3rd world where you could simply bribe your way into legal residency?

A take on dealing with sophists that I'm guessing you haven't heard before. What a sophists two primary weapons are, how they use them, and how to deal with them effectively.

Can someone tell me why it's important that the USD is the world's reserve currency? So what if oil gets traded in yuan? What's important is what a country saves in, not what they trade in. Video also mentions that yuan will be convertible for gold. Again, can anyone find me a source for this? I haven't been able to find one.

Fight with people and let them know that the interaction can be reasonable any time that they allow it, and the only reason you're fighting is because of self-defense. They keep starting it. Stop starting it and we can have a discussion.

Luckily, Starbucks coffee is burnt due to corporate policy (it's the only way to make the coffee flavor consistent), so I never go there anyway. The coffee sucks. Nothing to boycott!

Act like they're the ones being the assholes. People who cannot reason will generally side with whoever is alpha. Identify your main opponents in the room and assume the moral high ground when you speak. If you spend your time backpedaling and answer every little question people throw at you, they just assume you don't know what you're talking about, otherwise your behavior would be different.

Anyone got an actual source that China is backing its currency with gold? Everyone keeps talking about it and I can't find one.

Taxation is what gives the US dollar value.

In the same way I forgo the use of my money when I stick it into a savings account. I have to put it into my checking account before I can write a check or swipe a debit card. Unless they turn around and buy back treasuries. Remember, they were holding treasuries in the first place because they weren't using the money. If the Fed turns around and gives them reserves a little early because the Fed offers them a little higher interest rate, does that mean they're going to turn around and spend it everywhere?

I'm not entirely sure what "other things being equal" means, but I think you mean if the underwriting requirements and regulations don't change. Well, they do. Other things aren't equal. Underwriting standards vary wildly and they act as the gatekeeper for people getting credit.

Seeing as we're not in free market, I'm not sure why you're bringing this up. Banks have money-issuing power via government license per the Federal Reserve Act. Yes the principal disappears when a loan is paid back and the bank keeps the interest as profit, but where did that money come from to pay the bank its interest that it gets to keep? It cannot be from another bank(s), because the asset and liability aspects of the principal are a zero sum game; they cancel each other out. All that would be left over is interest owed. The way the system works now, is this "extra money" (technical term: net private sector savings) comes from the government, because the money they create only gets canceled out when they collect it as taxes. The central bank is a government institution. It has the ability to choose interest rates, but only within the confines of policy dictated to it by Congress. Furthermore, any interest rate chosen by the central bank other than 0% is absurd. Interbank lending markets naturally fall to the federal interest rate. That is to say, if the Fed has rates set at 3%, then that acts as a floor rate for banks to lend reserves to each other, because there would be no point in lending under 3% to another bank when you can just get it risk-free at the Fed for 3%. What this means is that anything other than 0% is a manipulation by the government. Talking about whether "Money is free" regarding banks doesn't make any sense. What limits banks abilities to make loans isn't the interest rate, it's underwriting standards. This whole thing about the money supply increasing when the Fed lowers interest rates is a myth. What limits it is ready and able borrowers who come to the bank asking for money, the "able" part there being the important point. If banks are unwilling to extend credit to people, it doesn't matter if the interest rates are low, no one gets any credit (like right after 2008). For example, me and my business partner just applied for a credit card for our business. We really didn't give a rip about what the interest rate is, because we need a credit line for our business in case we need to pay for expenses up front and wait for a paycheck. We just wanted the card. What determined whether we got it was whether the bank was willing to give it to us, not what the interest rate was. Inflation hasn't really happened because QE doesn't increase the money supply. It just swaps bonds for reserves, both of which are money. It's the equivalent of the bank moving its money at the Fed from a savings account to a checking account.

The dollar has value because it's taxed, not because of gold or petroleum. It gives you access to the US economy. The same is for any other country that doesn't peg it's currency to anything. What's important is what countries save in, not what they trade for oil. To say that China wants to devalue the US dollar is to say they want to destroy their own assets--they hold a TON of US bonds. That wouldn't make any sense.

If you identify someone being a sophist with you, don't be reasonable in return. You lose by default. I break down why in this video:

Recently on Freedomain Radio, Stefan Molyneux interviewed Mike Maloney about the imminent collapse of the US dollar. Maloney predicted that within a year or two, we should see the US dollar collapse and a global financial crisis that will make the 2008 crisis seem like a joke. His evidence for this the "artificially low interest rates" being pushed by the Federal Reserve, and the inevitable bubble that must pop from the Fed allowing money into the financial system too cheaply. These predictions are based on absolute economic illiteracy on the side of Mike Maloney, and Stefan's agreement shows economic illiteracy from his side as well. In this video, Dylan Moore of the Volitional Science Network and Nima Mahjour of economicsjunkie.com go break down point by point the inaccuracies of the FDR video and why the US dollar isn't showing any signs of collapse. Some of the points covered: 1. Why the Federal Reserve is NOT a private bank The Federal Reserve Anyone who has read The Creature from Jekyll Island by G. Edward Griffin or spoken with any fan of Ron Paul, they will likely let you know that the Federal Reserve is a private bank owned by private individuals that are paid private profits from the interest paid on national debt by taxpayers. This is simply false. The Federal Reserve is designed like a corporation, and member banks are required to own stock in the Fed in order to be a member (or a bank at all), however 98% of the profits earned by the Fed go straight to the US Treasury. That's ninety-eight percent. I don't know of any private organizations that give 98% of their profits straight to the federal government. 2. Why the Fed DOES NOT "print money". In an earlier article I wrote about how Quantitative Easing is Not Money Printing that details this. This is a general confusion about the fiscal function that the Federal Reserve plays in exchanging reserves (i.e. cash) for bonds. When the Federal Reserve engages in quantitative easing and purchases treasury bonds for reserves it created out of nowhere, it is a mistake to consider this "printing money". The difference between a reserve and a treasury bond is matter of interest paid, similar to a checking and savings account at a bank. A checking account pays no or little interest, and a savings account does pay interest. Likewise, reserves pay little or no interest, and treasury bonds do. The proper way to think about reserves and treasury bonds is that they're both money. They are readily exchangeable for the other, the only difference being the interest rate paid. So when the Fed engages in Quantitative Easing, all they're doing is money large amounts of money from savings to checking accounts. It's not printing money, and it's not going to cause hyperinflation. In fact, it's so benign, one has to wonder what the hell the Fed thinks it's going to accomplish by doing it. 3. Why interest rates are not a useful metric for predicting economic stability or lack thereof. The classical/Austrian viewpoint behind interest rates is that, due to the fractional reserve nature of lending (which is another myth), when the Fed lowers interest rates, it makes access to money cheaper and creates a bubble. This is known as the "business cycle". Thus lowering interest rates is supposed to encourage economic growth. In reality, interest rates have very little to do with how much money enters the economic system. Loans are made when banks encounter ready and able borrowers, not when they have a certain amount of reserves available (more on this below). The useful predictor of economic health is net private sector savings, which is the total amount of money left over to the private sector after all the financial assets and liabilities have been summed up. More details about this are gone over in the video. 4. Why the Fed can only "push" interest rates UP, not down The interest rate chosen by the Fed has nothing to do with market forces. It is an arbitrary policy decision. Because the interbank lending rate for reserves uses the Fed rate as a "floor", the interbank lending market on reserves would naturally fall to 0%. Thus if the Fed gets out of the way and let's the "market forces" do their job, the rate would actually be ZERO. Thus the Fed can only manipulate the rates upward, not downward. 5. The myth of fractional reserve banking Fractional reserve banking is simply something that doesn't exist. Loans are made when banks encounter ready and able borrowers, not when they have a certain amount of reserves available (more on this below). There is no banker that sits around looking at a computer screen to keep track of how much money in reserves the bank has in order to make loans. The actual causality is backwards. The bank makes loans--and of course, these "loans" are money created out of nowhere, a power it is granted by license of the federal government--and THEN finds reserves to meet regulatory requirements. These reserves can be found by depositors, and if there are not enough deposits, the bank simply goes to the interbank lending market to find the reserves it needs to meet requirements. As a matter of last resort, the every bank has an account at the Federal Reserve which they can draw from in order to meet their reserve requirements. Thus there is never a shortage of reserves for banks to meet their reserve requirements, and thus the reserves act in no way as a bottle neck for making loans, which is why lowering interest rates doesn't do much to affect banks lending capacity. 6. The myth of the barter theory of money There is no historical evidence of any size economy relying on a system of barter. All evidence, both historical and modern day study of tribal societies, points to a state origin of money. The implications of this are not academic. The general story taught by the Austrian camp is that societies created money by discovering the most barter-able item in their community, which eventually became precious metals like gold and silver due to their function utility being useful as money (they don't rust, they're malleable, easily dividable, interchangeable, etc.). At some point, someone came along calling themselves the King or the chief or the state with a group of thugs or soldiers and demanded this currency as tax payments, then used this money to do public sector activities, mainly feeding their soldiers and keeping them in fighting condition. The real story looks more like this: societies used systems of credit to keep track of resources ("I did you a favor last time, so you do me a favor this time"), and at one point the tribal leader had the great idea to demand taxes in arbitrary units that only he can create. This causes his subjects to become unemployed, as they need to do something to get these arbitrary units (I'll call them "tax tokens") in order to pay their taxes. This is diabolically brilliant. Instead of the King haven't to use his soldiers to take things by force, his subjects (the "private sector") are now willing to bring him goods and services in exchange for his arbitrary tax tokens. Why this is important: What this means, is that if the King or the state doesn't create the tax tokens, then there is no money in the system to work with. Nima and I explore the implications of this further in the video. 7. Why the Fed is not causing inflation As was pointed out above, because the Fed isn't actually "printing money", it follows they can't be expanding the money supply that would be required to cause the inflation. 8. Why the evidence points to US dollar NOT CRASHING Economic crashes are set off by a drop in net private sector savings. Every single US crash (6 depressions and 1 recession) were preceded by federal government surpluses, which caused the net private sector savings to drop to levels that required the private sector to become indebted to itself, which eventually has to be paid back. At some point it cannot be paid back, and the private money extension institutions snap back like a rubber band.

Response and Rebuttal video Main points: 1. Why the Federal Reserve is NOT a private bank 2. Why the Fed DOES NOT "print money" 3. Why interest rates are not a useful metric for predicting economic stability 4. Why the Fed can only "push" interest rates UP, not down 5. The myth of fractional reserve banking 6. The myth of the barter theory of money 7. Why the Fed is not causing inflation 8. Why the evidence points to US dollar NOT CRASHING

Yao! For those of you paying attention to all the videos I've been plastering over the boards, I'm sure you've noticed that a lot of them are regarding an economics theory called Modern Monetary Theory (MMT). I was converted to this camp by Nima when he was posting here on the boards awhile back, and it sounds like absolute heresy to those who come from an Austrian economics background (which was me). Yesterday I was able to go on the Tom Woods Show to debate Bob Murphy on the subject. The debate was "formal"; that is we had opening statements and allotted amounts of time to respond to each other, and thus weren't allowed to interrupt each other. I'm not a big fan of this style of debate, because I think figuring out the truth requires a certain amount of "getting in someone's face". There was no formal resolution, but I believe I made a good case for MMT. You can listen to the podcast here: https://tomwoods.com/ep-1116-debate-bob-murphy-and-dylan-moore-on-modern-monetary-theory-mmt/ The big crux was the disagreement was the source of money: is it a commodity or an abstraction? If the rules permitted me to get in Bob's face, this would be the #1 thing I would have gotten into his face for: after he agreed that there is no constraint on government spending in a floating exchange system, near the end he repeats that "government taxes people in order to pay for bonds". By saying this, it means he didn't understand what "no constraint on government spending" means, which is one of the prime ideas behind MMT.

That's pretty mild compared to the Milo protests.

I have another conversation with Nima at economicsjunkie.com to discuss inflation and the possible causes of it. This conversation started with an error I made in a previous call regarding inflation and its relation to the money supply. One of the main points of Austrian economics is that government increasing the money supply leads to inflation, and then they usually point at the Federal Reserve trading reserves for US bonds (Quantitative Easing) and say, "There it is! Any time now!". Of course, now I know that Austrians are fundamentally wrong about the nature of the Federal Reserve (trading reserves for bonds is not printing money), so what else does the Austrian viewpoint assume that isn't accurate? Inflation is one, but it's not obvious why. Nima and I make an effort to tackle this tough subject.

Yea, I think as many people should do platforms as possible. Obviously it's not for everyone, but here's my reasoning why: Particularly in the realms of politics and philosophy, there are a lot of people who are simply not interested in the topics. However, there are people who are interested in you. You have friends and family who are going to listen to you because you're you, not because of the topic. This can get them to think about the topic and become interested in it when they otherwise never would have thought about it.

Thanks for the response. These are awesome questions. One point before I get at them: You almost have it here. The government causes the problem of unemployment this way: when the government demands a tax in tokens that it issues, people need to do something in order to get those tokens. This is called unemployment. Employment being defined in this case as working for the thing which you can pay your taxes with. Now, at this point, there aren't any tax tokens in circulation. The problem isn't that getting a job is punished by taxation (that is a problem, by not the one relevant here), the problem is that you need a job to get the tokens to pay the tax at all. Further, the private sector cannot offer any jobs that pay in this tax token at all until there are tax tokens in circulation. Thus it stands to reason if the government is going to cause the problem of requiring the private sector to pay taxes, it has to give the private sector a means of acquiring tax tokens in order to do so. The federal transition job is sort of the "job of last resort" to catch the private sector if there isn't otherwise enough money in circulation. The "federal job guarantee" is actually a bit of a misunderstanding by leftist MMTers (I use it in the title specifically to be inflammatory). The purpose is NOT to guarantee a job for everyone by the government, but to catch people who fall off the economic ship because there isn't enough tax tokens in circulation and get them back into the private sector. I think by answering your questions we'll get a better understanding of this situation. I recommend watching our previous videos to address inflation. One of the strongest issues that Austrians have screwed up is the effects of inflation. Image a movie theater with 500 seats. If the theater owner sells 50 tickets, selling 51 isn't going to devalue the tickets. In fact, there won't be any devaluation of tickets until the theater is full. Now, once he says 501 tickets, there becomes a hot potato situation where someone holding a ticket isn't going to get a seat. This devalues the tickets and is our analogical equivalent to inflation. Similarly, the economy functions much like this, where instead of theater seats, there is the unemployed and underutilized capacity. These are signs that there are not enough tax tokens going around for everyone to get a seat in the economy. Until this is reached, there won't be significant inflation. Thus when we say that the FTJ should not compete with the private sector, what we mean is that by setting the wage lower than the minimum wage, if the opportunity is available to work in the private sector, people will because it pays more even at the minimum end of the spectrum. However, if there are no jobs in the private sector, slightly-less-than-minimum wage is better than nothing at all. Furthermore, if there aren't enough jobs in the private sector to employ everyone, it means there isn't enough money in the system to employ everyone. Because the FTJ utilizes the money creation power of the federal government and is applied locally, when economic times are bad (not enough tax tokens), people will move to the FTJ to get work. This will create tax tokens that will be spent into the private sector. Once the private sector is earning enough tax tokens to feel comfortable hiring people, it will do so and the people working at the FTJ will decrease, which will also decrease the amount of money being created. What's powerful about this idea is that it actually puts the money creation power more into the hands of the private sector: once the private sector feels comfortable hiring, it hires people out of the FTJ and halts the money creation. Yup. Government sucks, not denying that. However, as a temporary worker in the government, getting fired is a lot easier than a permanent employee (I saw this when I worked for the city as a seasonal worker. One of the guys I was working with did get fired for not working). The reason people would show up is to get paid. You don't get paid if you show up. As for the guarantee part, again, "federal transition job" is the proper term. Leftist MMTers use FJG because they're socialists and they love the government so much. I just used it to be inflammatory. I... don't think this is an argument. If the FTJ wage is set lower than minimum wage, then by definition it doesn't compete with the private sector. The difference between credit money and government created money is that credit money needs to be paid back. When a bank loans you $20k to buy a boat, after you pay the $20k in principal back, that money actually gets destroyed. It returns to oblivion. The bank's profit is the interest. Money that is created by the federal government doesn't need to get paid back because the government doesn't actually need it. They need SOME of it paid back to give value to the money in the first place (i.e. they need you to need it), but they don't actually need it to pay for anything. Thus federal debt IS net private sector savings. Private debt is a zero sum game, government debt isn't. Does that make sense? I'm not saying that government makes good decisions with its resources, but remember that keeping someone employed is a resource in and of itself. The private sector doesn't like to hire people who are unemployed, and getting them with something on their resume helps massively to transition them to the private sector. Furthermore, government projects can be hit and miss (often more miss than hit), but welfare is 100% miss. Thus yes, the FTJ can't be worse than welfare. Remember, the FTJ doesn't compete with the private sector. It must pay less by definition. The goal is to get people back into the private sector, and it achieves this in two ways: 1. It gets people working again and puts someone on their resume so make them more appealing for hire by the private sector. 2. It introduces more tax tokens (money) into the system so the private sector can afford to hire them in the first place. This doesn't mean government doesn't suck and mishandles resources. Again, the FTJ is analogous to a court. The government causes the problem of arresting you, so it has to provide the solution of giving you access to a court. Government provides the problem of demanding tax tokens, so it has to provide the solution of giving you access to them. This is consistent with libertarian principles. That's... kinda what I'm doing. Regarding cryptos: my opinion is that because no one understands what money is or how it actually works, crypto developers are constantly missing the point. They focus on making a coin easy to use (fast transactions, cheap fees, easy interfaces, open blockchain, whatever), but they don't address why people should be using them in the first place. If they're going to want to replace the current monetary system, they're going to need to understand how the current one works.