Hoard of Plenty

Cache of Deprivation

Let’s enjoy a little fairy story. It’s the same story that everybody in the U.S. is taught about our economy. You’ll recognize it instantly since its about a hundred years old and it goes something like this:

Dad goes to work and brings home a paycheck. That paycheck represents dollars which the family uses to buy necessities. They set some dollars aside since, at year end they’ll need to pay taxes. The taxes are paid so that the federal government will be able to provide services. Everything our government does requires money which it gets from our taxes.

Dollars are the outgrowth of profitable American business. Companies use dollars to buy goods which they use to create other goods which they sell to consumers who buy them using money they made working for a company. That is the private economy.

The government has expenses like buildings, research labs and government employees. The government pays these expenses from the tax dollars it receives from the tax payers. Without sufficient taxes, the government will go broke and so, the government has to spend only as much as it brings in. Unfortunately, the government is in deficit. It either needs to raise taxes (which would cripple the economy) or stop spending as much as it does (which puts the government’s house in order). That is the public economy.

The private economy supports the public economy which provides services to the private economy.

You’ve heard that story before in patronizing explanations from the kinds of economists who have been popular since their initial success with the Nixon administration and their elevation to a priesthood under Reagan. They are economists influenced by the Chicago School of Economics.

Austerity For the Poor, Plenty For the Rich

I was schooled on John Maynard Keynes, an early Twentieth Century economist who claimed that a fair proportion of money had to be in the hands of the people if an economy was going to function well. The government could get money into their hands in a number of ways including burying hundred pound notes all over England and inviting people to find them (an actual paraphrase of an illuminating suggestion by Baron Keynes). He was responsible for advising the U.K. government shortly after World War II and demonstrated that a reasonable distribution of the simple British Pound was entirely sufficient to fund a decent rail system and the National Health Service. Keynes was all about getting money into the hands of the people; but Milton Friedman, of the Chicago School, was very worried about the government “running out of money” (at least that was his excuse). He advised President Nixon and Ronald Reagan and drove the current policies of low taxes and the poor are on their own. Austerity was the rule and the poor, impoverished government would go broke if it didn’t get the lower classes to pay up.

So the people were paying taxes into the government coffers and without that support, there would be no way to pay out the fees of the wasteful entitlement programs that are bleeding our poor, needy government dry. The problem is that austerity always applies to the average citizen; but, rivers of money flow to incompetent banks and the military. Reagan’s “welfare queen” could drain our communal accounts dry; but, a billion or so for a new conventional tank is no problem at all.

The government’s treatment of the average citizen is clearly an austere Friedmanesque, Chicago School approach; but, its treatment of the privileged looks a lot more Keynesian. Ordinary citizens are told that every dime wasted on child poverty has to be accounted for against incoming taxes; but banks, when the bubble they inflated finally bursts, are easily rescued. Keynes said that if we put money into the hands of the people, the economy will prosper. Friedman made it clear that if money is put in the hands of average people it will lead to inflation; but, the reason for this inflation is Friedman’s own recommended tax policy.

Greedflation

Friedman would explain that moneyed consumers in the marketplace will “bid up” the prices of goods as competing companies discover that the market will “bear” higher prices. In other words, the Chicago School teaches that consumers are essentially responsible for inflation because they were willing to pay the higher prices.

In 2022 and 2023 Congress, under the Biden administration, distributed money (as Keynes would suggest) to lots of struggling Americans. Shortly thereafter, inflation rose just like the old economists said it would. Since everyone got that money all at once, it was easy to identify the source of that inflation: companies making record profits raised their prices even higher simply to pad their already generous bottom line. No consumers were willing to pay the higher prices, as though they had engaged in an equitable negotiation with the suppliers. They paid the higher prices because they had no other option. This has been referred to by the apt term greedflation. Without a reasonable Federal tax policy, that kind of Bidenomic support for the lower and middle classes will likely trigger inflation. Nonetheless, that wasn’t the excuse provided for why the government couldn’t help those millions of people. Nope, the reason provided was the same in Reagan’s time as it is now: The government simply doesn’t have the money.

So where does the money come from for the military and the banks?

Money, of course, isn’t a magical emergent principle of commerce. All dollars originate with the federal government. The dollars are made available and registered in Federal Reserve computers. If the government keeps those dollars and doesn’t spend them, then no dollars will be available for private industry. So, let’s balance the budget by allowing the government to spend that money in the private sector as long as it always taxes back all of that money at the end of the year. In that case, the federal budget will be balanced, but, of course, there will be no money remaining in the private economy because the government assured that what it spent, it got back in taxes. The federal budget balances and the private economy is bankrupt.

Money is present in the economy because the federal government buys goods and services from the private economy and makes money available to banks for loans into the private economy. The federal government’s constant “deficit” is private industry’s working capital. If the government has no deficit, the economy has no money. So why doesn’t the government just give money to everyone?

We know this from our recent experience: if we print money and give it to ordinary struggling families, they will use that money in the public marketplace to finally acquire those goods they have been needing but could not afford. Those transactions will naturally lead capitalists to raise prices so they can get a piece of that sweet sweet money pie. With taxes on corporations and the wealthy so low, most of that would end up in the pockets of the top C-level executives. That money, after a transaction or two, ends up sequestered and hoarded by the upper class. Hoarding, in the form of stocks and bonds and giant ships, does not lead to inflation. Buying necessities does. Why is this?

If we print money and hand it to powerful defense contractors and banks, a fairly small percentage of the money ends up in the pockets of ordinary people. The defense contractors route much of the money to wealthy executives and use the rest to build products that have only one use and yield value only in the most abstract manner — they blow up. The banks usually receive the money as part of a rescue mission after a bollixed get-rich-quick scheme. Much of the rescue is routed to the rich executives and the rest is poured into the hole that was dug by the latest failed arbitrage venture.

As noted above, money that is printed and stashed in private hoards is not inflationary. If ordinary people can easily buy all of the things that they need, the price of those things must, of course, be raised to the limit of what the latest market will bear. Capitalists will see to this, if given the opportunity. For this reason, the average citizen’s access to money needs to be restricted so as to avoid tempting capitalists.

Command Authority

So we see how the proponents of the Chicago School painted themselves into a corner. By advocating lower taxes and the reduction of government interference in business and commerce, the claim that funds could not be provided to the consumer became a necessity. Under Chicago School philosophy, the capitalist class became a fundamentally unstable component of the economy. The ability to monopolize a market and to raise prices at will, as long as money was there for buying, meant that any consumer good fortune would be immediately swallowed up by greedflation.

The Chicago School provides no practical method whereby the average person and the wealthy can prosper together.

In fact, the average consumer must be used as a control valve on the excesses of the wealthy. In engineering, we refer to the ability to regulate an element of a system as command authority. In other words, if some component of a complex system must be controlled in order to maintain the stability of that system, we must provide ourselves sufficient command authority over that component. Considering the economy as an engineered system, control of the wealth component has been isolated to the point that only by suppressing labor and the lower classes can the wealthy be kept in check.

In other words, since the wealthy and powerful are not regulated in any direct way, they must be controlled indirectly by assuring that consumers do not have enough money to tempt them to raise prices. The control system is fundamentally flawed because the wealthy and powerful are allowed free reign over the control of money. The wealthy can shoot themselves into space on a lark while the average worker struggles to find child care. The fact that this entire system requires correction is only recently being recognized as a worthy project.

In this system, money is no longer a medium of exchange, but is instead a commodity which may be acquired and frozen in place as cash, gold, stock, private art and expensive trinkets. Once frozen, it is hidden from the average consumer. Such a limited commodity as money may be frozen indefinitely by the wealthy and the powerful. That frozen commodity is no longer available to the general public. To quote UAW president Shawn Fain, “Every billionaire is a policy failure.” A billionaire is a hoarder of the money commodity that all workers need to merely survive. If money is a commodity, we must exert significantly improved command authority over its use.

Is Money a Commodity?

Even those enlightened monetary theorists who advocate a more Keynesian approach are not confronting the current need to fundamentally redesign the entire system. I was recently watching a Bloomberg Business video called Everything You Want to Know About Modern Monetary Theory with L. Randall Wray, a modern monetary theorist. Wray’s understanding of the role of monetary policy in economics is, in my view, second to none; but, he avoids going into the details of a fully functional economy in most public interviews. I assume that he is confronted with enough push back to steer clear of the deeply controversial components that arise from Modern Monetary Theory (MMT).

In that interview, they talk about full use of our labor and the unique power of the government to spend money as needed to assure that the economy reaches its full potential. In Wray’s view, unemployment is a public choice. In other words, people are unemployed because the government has accepted the myth of austerity as a subterfuge to assure a small and wealthy governing class.

On that point, there is sufficient corroborating evidence in the form of European and Scandiwegian countries that are exploiting monetary policy effectively in order to serve the whole society. The problem lies in applying those policies to a nation that glorifies power and wealth to the detriment of all else. Wray clearly states that the federal government could and should serve as an employer of last resort. The federal government has all needed resources to provide employment to every citizen wanting a job (that’s most citizens). Such a job pool would serve as competition to private enterprise driving a living wage as an expected good and distributing money more uniformly across all classes.

There are, as I see it, two missing components in Wray’s public argument. These missing components do not impeach his claims but they are necessary components to the success of Wray’s proposed enterprise. I suggest that they are these:

1. The jobs provided must be truly innovative and productive. They must be crafted to produce true value.
2. The hoarding of money must be made impractical.

Without those two components, an equitable economy is not possible.

Meaningful Work

Keynes’ public declarations sometimes seemed to be rather blasé regarding how the money distributed to the masses would be used. MMT insists that the money is best provided as worthwhile employment. The federal injection of money into the economy must serve an important purpose: it must be an investment in new and useful resources which will yield a return to the economy in the form of real value.

I suspect that monetary theorists may not be aware of the large number of jobs in the private economy that serve no real purpose. At Sun Microsystems, I was actually contributing value in the form of basic components of the burgeoning Internet that now serves as the basis of most human activity. In all of my jobs following my work at Sun, I was tapping out mostly pointless code that merely added glitz to existing software in hopes of drawing in more consumers to fairly tepid and buggy products.

David Graeber, in his book Bullshit Jobs, presents many examples of jobs that serve only the purpose of providing unearned gravitas to incompetent bosses and drawing in gullible consumers. If a federal investment in our economy is to actually elevate the value of our economy for all participants, it must provide meaningful and innovative jobs. The federal government has been doing this for decades in the form of NASA and the NIH as well as many other research institutes and grants to university programs. The federal government can provide last resort employment; but, it must go into such a project with goals that directly address real problems and provide meaningful employment resolving those problems.

The federal projects may employ citizens in the task of spreading sustainable energy technology, installing vehicle charging stations, improving public transportation and building a nation-wide passenger-only railway network. We could establish a citizen identity clearinghouse which would provide all adult citizens with a passport having an elliptic curve crypto-code meaning that identity theft would become extremely difficult without direct possession of that person’s passport and PIN.

Interstate highways could be equipped with intelligent controllers that would establish communication with appropriately equipped vehicles, routing them onto Full Self Drive (FSD) lanes where all FSD vehicles could be directed to their destinations in an environment that did not depend upon unproved AI but instead upon well-established conventional control systems.

These jobs must be truly challenging and innovative and they must include as many willing citizens as possible. They must be designed to apply the full potential of those with disabilities. They must be designed to quickly incorporate newly trained participants in constructive work. Such public industries will yield far more value than, say, the modern call center (apologists pressed into service for the ill-designed product). Imagine American workers moving from telemarketing pools or online insurance scams into power network management or wind energy or space and ocean waste removal. That is not only a simple shift in jobs but a significant amplification in the actual value to the world per person per dollar. That comprises the sort of investment in industrial capacity that will yield returns well beyond higher tax revenues. Those returns will redound to every U.S. resident.

The Billionaire Problem

If U.S. tax payers are to find themselves with spare cash, that must not drive greedy corporations to steal it without consequence. That means Eisenhower-level tax and anti-trust policies. Corporations must be forbidden to acquire monopoly control of any sector of the economy. The Sherman, Clayton and Robinson-Patman acts must be modernized and applied to all industries forcing corporations to truly compete in level and well-regulated markets. A 95% top marginal tax rate should be applied at some reasonable level of total wealth. I suggest $10 million but that, of course, is open to debate. It must not be possible to hoard a billion dollars in extravagant spectacles and money commodity.

In a world where money cannot be hoarded beyond reason, money again becomes a medium of exchange. Everyone has access to it and may use it to purchase or sell real commodities which have actual use value. Corporations making windfall profits will have to direct those profits into research and development in order to avoid high corporate taxes. That research will resolve problems that the federal programs can leave to private industry.

Products must be repairable by independent repair facilities. Computers, batteries, automobiles and appliances must be constructed with third-party repair in mind. Repair shops (common in the 1960s) will return as an industry and high tech waste will be replaced by largely recyclable or reusable components. Corporations must not operate with profit as the highest goal and the only way to do that is to assure that excess profits will be taxed away, whether from the coffers of the company or the pockets of an over-paid management class.

The Meaning of Money

The U.S. government is the sole source of the U.S. dollar. It does not need to tax citizens in order to get it. Dollars are printed or produced in government computer systems and products are bought from private industry in order to put those dollars into circulation. The federal “deficit” is the money that the federal government provides to the private sector for its use in commerce and industry. The federal government cannot go broke. There is no private economy. There is no public economy. They are the same tightly bound economy.

Dollars released to foreign investors must be monitored carefully since free-range dollars (crossing our border) are actual debt which must be redeemed against the actual value that our economy produces; but, domestic dollars are not debt — they are the way the federal government enables the private economy. If our economy (public and private) yields real value enriching our quality of life and yielding technologies and systems that enrich the entire world, foreign debt is easily paid.

Money, in a well-regulated free market, is simply a medium of exchange with which consumers acquire needed goods. The federal government provides that money and can use it in any number of ways; but, the most important use is in generating value for people: people who are people 99% of the time and wise consumers when it becomes necessary. The value of people is in their ability to work and produce new value. That yields access to money with which they may celebrate the value that they produce. Money that does not produce value is merely a frozen commodity and money becomes a commodity only when it is hoarded.

Julian S. Taylor is the author of Famine in the Bullpen a book about bringing innovation back to software engineering. Available at or orderable from your local bookstore. Rediscover real browsing at your local bookstore. Also available in ebook and audio formats at Sockwood Press.