Economics is primarily a way of thinking about the world that uncovers the true mechanisms and processes behind, and helps us understand, what we can all observe. This is a forever thread collecting my #econthread tweets. #PerBylundthreads
If #money is only the unit of account administered by the State, as some claim, and is not a/the medium of exchange, then market actors cannot reasonably "lose faith" in it as money. There can be no hyperinflation. It is also unclear what a flight into assets could possibly mean.
What's fascinating about this view is not its reconceptualization of money but how it takes a preferred normative idea of it, not an economic function, and forces the analysis into this new frame--and therefore disqualifies centuries of insightful scholarship and understanding.
Certainly, proponents will claim that the idea better describes monetary praxis (primarily policy) in the present. Whether or not this is true, why should such radical temporal bias be the basis of an analysis--and the rejection of previous, more generally applicable, analyses?
Imagine a community that over time has come to adopt a medium of exchange, which allows them to trade much more easily for the goods they want.
Then imagine someone suggesting they create more of that medium (but not more goods), claiming it would make them all richer.
#inflation
Eager to become rich, they double the money supply. After heated discussion about who gets the 'cash', they decide that the poor should get more.
Upon getting the new cash, people rush to buy the goods they couldn't afford before. It results in a shortage of goods; prices soar.
With the higher prices fewer people who can afford the goods they previously could buy on their salaries. The additional cash? Many of them have already spent it. The frustration grows and people start demanding that they again increase the money supply to alleviate the problem.
People's belief in data as a source of knowledge needs to be addressed. It is rarely more than faith backed up by scientism and fundamental misunderstandings of science/the scientific process. There are no data that can "speak" for themselves and data are rarely "objective."
The social sciences study a complex process emergent from actions based on actors' interpretations, understandings, and valuations. Much of the social world consists of unobservables, but even "objective" data that actors take into account are interpreted and thus subjective.
The natural sciences are generally much simpler than the social ditto because they study the world without human agency. This makes for a "cleaner" world that can (typically) be studied using experiments, tests of hypotheses, etc. and that produce largely reproducible results.
There is deep confusion about money in the bitcoin camp. On the one hand, evangelists are right that a money is better if it is not controlled by a singular entity (with interests of its own) and exists in limited quantity or is difficult to create (resists arbitrary inflation).
OTOH, they often misunderstand the definition of money--the commonly used medium of exchange--and its implications, which is clear from how they refer to bitcoin as a "decentralized" money. That claim doesn't make sense. What they mean is decentralized control over the currency.
Money, and what makes something money, is its adoption as medium of exchange. It's necessarily a bottom-up process; you cannot conceivably force people to adopt a medium of exchange. It's ultimately based on people's choice to use it. Hyperinflation shows even governments cannot.
Since I got my first faculty position in 2012, students' knowledge has plummeted (from a not-great level). Few nowadays have heard of Robinson Crusoe, know why there was a wall in Berlin, or can read or write well. This is not the students' failure. It's a failure of instruction.
But students also have a fair amount of false knowledge: they have learned (been taught) things that simply aren't true. This is strikingly obvious in my field #economics, but also in #history and other fields of study. This isn't a failure of instruction; it's outright sabotage.
To teach the students, I've no choice but to spend class time to help them 1) fill in the gaps in their knowledge and 2) reeducate them to clear out false beliefs. This necessarily lowers the level of their college education. They will graduate knowing less than previous cohorts.
The nonsense of MMT
This thread intends to be a continuously expanding selection of claims that proponents of #MMT have made in supposed support of their dogma based in economic illiteracy. Paraphrased and quoted. twitter.com/i/web/status/1…
Money supply doesn't affect prices, because prices are in money but set by supply and demand. #nonsense
Entrepreneurs cannot make profits unless the government first spends the money they earn into existence. Thus, government spending is necessary for there to be an economy. #nonsense