# Understanding Money Mechanics  ## Metadata - Author: [[Robert Murphy]] - Full Title: Understanding Money Mechanics - Category: #books ## Highlights - (or less liquid) ([Location 166](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=166)) - Note: Example of necessary information to the point. - one giant diamond is more valuable than five smaller diamonds ([Location 183](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=183)) - Note: Is this really true? - were money. ([Location 185](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=185)) - Note: Used as… - redeemed for money, ([Location 223](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=223)) - deposits by increasing loans and investments ([Location 241](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=241)) - Note: This phrase needs significant clarification. - exchange them for metallic money. ([Location 248](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=248)) - Note: Not money until after the exchange. - make loans ([Location 249](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=249)) - Note: Not make loans, buy notes. - type of deposit applicable to money; ([Location 266](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=266)) - Note: Better to say a money commodity. - commodity-based money ([Location 317](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=317)) - Note: All money is commodity based, even when the commodity is information. - $20 Double Eagle gold coin containing 0.9675 troy ounces of gold. ([Location 344](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=344)) - Note: Actually this measure of gold defined the dollar. It was not a price. - not so much exchange rates as they were various units of weight of gold, ([Location 396](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=396)) - Treasury Notes ([Location 423](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=423)) - Note: Not money. - printing unbacked fiat money doesn’t actually give the government access to extra tanks, bombers, and artillery; ([Location 506](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=506)) - Note: Well phrased. - transfer of purchasing power from their peoples would be cloaked in rising prices that could be blamed on speculators, trade unions, profiteers, and other villains, ([Location 512](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=512)) - influencing interest rates and providing credit ([Location 522](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=522)) - Federal Reserve was forced to raise interest rates and massively contract credit, ([Location 543](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=543)) - Note: Rising rate and monetary contraction cannot happen separately. - reserve asset ([Location 581](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=581)) - Note: Needs an explanation. - Federal Reserve monetary inflation ([Location 588](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=588)) - Note: ‘Federal Reserve monetary inflation..” this seems to imply that the Fed expands money. - the label does not mean ([Location 679](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=679)) - Note: What does it mean. - Banking Act of 1935 also served to make the Fed more autonomous from the federal government. ([Location 756](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=756)) - The Banking Act of 1935 ([Location 776](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=776)) - creating the [Federal Open Market Committee’s] FOMC’s modern structure.… ([Location 776](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=776)) - The act authorized the Board to set reserve requirements and interest rates for deposits at member banks. ([Location 781](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=781)) - The seven members of the Board of Governors are always on the FOMC, ([Location 814](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=814)) - standard claims of “tight money” after the stock market crash of 1929.) ([Location 865](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=865)) - Note: Interest rates do not indicate “tight” or “loose” money. - commercial banks extend new loans. ([Location 889](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=889)) - Note: I would now describe this as buying notes. - causal relationship between bank reserves and new deposits. ([Location 893](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=893)) - a standard definition of money is that it’s a medium of exchange that is (nearly) universally accepted in trade among a given community of people. ([Location 895](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=895)) - claims on money. ([Location 896](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=896)) - Note: The claims themselves act as money. And, they are not claims on “money.” They are claims on the commodity used as money. - gold is money, ([Location 898](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=898)) - Note: Gold used as money. - “universally accepted ([Location 900](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=900)) - Monetary Base: ([Location 905](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=905)) - Note: Is this really money? - money “in reserve” ([Location 907](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=907)) - Note: Banks don’t keep “money” in reserve. They keep R$ in their reserve accounts, which cannot be used as money. - M1 does not include commercial bank reserves, ([Location 916](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=916)) - dollar value ([Location 923](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=923)) - $200,000 house ([Location 927](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=927)) - $200,000 in stocks, ([Location 927](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=927)) - traveler’s checks ([Location 934](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=934)) - Note: I don’t believe travelers checks can be considered money. - fiat money; there is nothing “backing up” the US dollar. ([Location 940](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=940)) - the coins back into their own checking accounts ([Location 967](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=967)) - Note: Misnomer. - commodity money—in ([Location 977](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=977)) - fiat money—the ([Location 985](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=985)) - Note: Gold can act as fiat money. - check written on the Federal Reserve. ([Location 993](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=993)) - an influx of newly deposited base money sitting in the vaults of the commercial banks allows for new lending by the banks. ([Location 1002](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1002)) - Note: Not totally accurate. - new (base) money, ([Location 1008](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1008)) - Note: Reserve dollars, not “base” money. - base money ([Location 1017](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1017)) - Note: If this “base” money resides at the Fed, the bank cannot lend it. - (implicit) interest rates ([Location 1129](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1129)) - Note: What the hell does that mean? - Basel Committee on Bank Supervision (BCBS) in 1974, ([Location 1142](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1142)) - capital-to-risk-weighted-assets ratio of at least 8 percent. ([Location 1146](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1146)) - Tier 1 capital includes common shareholder equity, ([Location 1147](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1147)) - Tier 2 capital includes hybrid instruments, some of which—such as subordinated debt—mix characteristics of equity and debt. ([Location 1149](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1149)) - These are different from reserve requirements, ([Location 1160](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1160)) - Note: No connection. - the Federal Reserve debits the amount held by other banks (such as Bank of America, Citibank, etc.) in their accounts with the Federal Reserve and credits the corresponding amount to the account held by Acme. ([Location 1165](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1165)) - Note: This is incorrect because The Fed cannot credit the account of a bank customer. My bad. Acme is a bank. - Acme’s account with the Federal Reserve. ([Location 1168](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1168)) - Note: Acme cannot have an account with The Fed. Also, my bad. - The traditional 10% reserve requirement—which ([Location 1175](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1175)) - Acme would be allowed to lend out to new borrowers. ([Location 1178](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1178)) - Note: Banks do not lend reserves. - asset values. ([Location 1185](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1185)) - Note: Careful with the use of “value.” - which commercial banks can then advance loans to their own customers. ([Location 1222](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1222)) - Tags: [[blue]] - push down market interest rates. ([Location 1236](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1236)) - Note: Maybe. - they made new loans, ([Location 1249](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1249)) - Note: It is not loans; it is deposit liabilities. - target for the federal funds rate. ([Location 1258](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1258)) - Note: The effectiveness of this target is questionable. - sellers of financial assets in exchange for their property. ([Location 1273](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1273)) - Note: The effect of selling (or buying) is different with different sellers/buyers. - the fact that when the Fed cut or raised interest rates ([Location 1283](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1283)) - Note: AGAIN, The Fed cannot raise or lower rates. - the federal funds rate had hit rock-bottom by late 2008, ([Location 1301](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1301)) - Note: Look at the level of excess reserves at that time. Why would a bank pay for reserves when it did n need them. - established a “floor” under the fed funds rate ([Location 1313](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1313)) - the present author.) ([Location 1328](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1328)) - extraordinary increase in the power of the Federal Reserve. ([Location 1415](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1415)) - Note: Real or imagined? - from March 4, 2020, through March 3, 2021, the Fed increased its assets from $4.2 trillion to $7.6 trillion, an incredible one-year jump of $3.3 trillion (or 78 percent). ([Location 1472](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1472)) - target ([Location 1493](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1493)) - Tags: [[orange]] - the U.S. dollar liquidity ([Location 1497](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1497)) - swap line arrangements. ([Location 1497](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1497)) - monetary policy in an ample reserves regime. ([Location 1505](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1505)) - Note: They simply made official what Ben Bernanke had already done during the 2008 crisis. - help to support lending to households and businesses. ([Location 1508](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1508)) - Note: Already done. - the original reserve requirements were not binding at the time of the change. ([Location 1512](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1512)) - Note: What does this mean? - the level of required reserves rose dramatically—quintupling ([Location 1514](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1514)) - Note: Because depositors kept far less in time deposits. - freer rein to make loans down ([Location 1534](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1534)) - Note: “Loans are still subject to capital requirements and credit risk assessment. - “Money Stock Measures,” will recognize savings deposits as a type of transaction account, ([Location 1538](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1538)) - obscure the large increase in US Treasury and foreign bank deposits ([Location 1558](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1558)) - consistent over the longer run with the Federal Reserve’s statutory mandate. ([Location 1565](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1565)) - Note: Why? - key innovations ([Location 1579](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1579)) - tools to support the economy. ([Location 1582](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1582)) - Note: By manufacturing what exactly? - “Why study Austrian economics?,” the present author answers that only the Austrian approach—with ([Location 1641](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1641)) - commodity money, fiat money, and credit money. ([Location 1655](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1655)) - fiat money had ever been in use. ([Location 1663](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1663)) - Note: I believe what Mises meant was that money used by fiat must first exist as a commodity. - commodity credit and circulation credit: ([Location 1667](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1667)) - the first group the name Commodity Credit … is suggested, for the second the name Circulation Credit… ([Location 1677](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1677)) - total reserves of actual money ([Location 1689](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1689)) - lending out deposits ([Location 1693](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1693)) - Note: Misleading use of term. - the issuance of new loans using deposits that the depositors still think are in their checking accounts. ([Location 1697](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1697)) - Note: This terminology I believe confuses people. The bank loans nothing. It buys a note (claim) for future money in exchange for giving the seller a claim on current money. - In order to move the greater volume of loans, the banks have to cut interest rates, but this reduction isn’t due to a genuine shift in household saving or preferences. ([Location 1713](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1713)) - Note: Could all be rephrased to be more clear and concise. - cheap credit, ([Location 1745](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1745)) - Note: He uses the term “cheap money,” which has no meaning. Cheap or dear are subjective terms. - more specific terms “monetary inflation” and “price inflation.”) ([Location 1798](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1798)) - Note: Good. - inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. ([Location 1812](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1812)) - Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. ([Location 1815](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1815)) - consumer prices ([Location 1830](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1830)) - Note: Term has no meaning. No such thing as “consumer” prices. - “average price” of goods ([Location 1873](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1873)) - unit ([Location 1874](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1874)) - units ([Location 1874](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1874)) - Cantillon effect. ([Location 1897](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1897)) - no automatic connection between money and consumer prices: ([Location 1906](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=1906)) - the “monetary base” consists of paper currency and member banks’ deposits at the Fed. ([Location 2097](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2097)) - Federal Reserve has absolute control over the monetary base; ([Location 2097](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2097)) - Note: Oh? - Ron Paul testified before the House Financial Services Committee,3 arguing that federal subsidies to housing, through such entities as Fannie Mae and Freddie Mac, were merely setting the country up for a housing crash. ([Location 2126](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2126)) - mortgage guarantors ([Location 2135](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2135)) - Note: I don’t believe he mentioned this earlier. - with which commercial banks can then advance loans to their own customers. ([Location 2159](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2159)) - Note: Banks don’t make loans with reserves. - setting the price of reserves—that is, interest rates. ([Location 2178](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2178)) - banks can lend out their reserves. Reserves can only be lent between banks, since consumers cannot have access to reserves accounts at the [central bank]” ([Location 2186](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2186)) - Acme’s outstanding deposits. ([Location 2215](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2215)) - Note: Liabilities. - commercial bank can “lend out its reserves.” ([Location 2224](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2224)) - Note: They don’t lend reserves. They stop being reserves when handed to the customer. - lends out some of its reserves. ([Location 2231](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2231)) - Note: Reserves (even currency) do not play the same role as inventory. - grant a new loan simply by crediting a new checking account for a borrower. ([Location 2234](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2234)) - Note: They are not granting a loan. They pay the “borrower” by creating a claim on the bank. - the banking system as a whole can’t create new reserves. ([Location 2241](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2241)) - Note: Borrowing and creating reserves are separate processes. - target federal funds rate. ([Location 2280](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2280)) - Note: Remember this is an overnight loan. And, it only covers shortages for individual banks. - actual money ([Location 2365](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2365)) - hiking the interest rate paid on reserves, ([Location 2410](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2410)) - Note: This would have little or no effect on market interest rates. - When trying to understand commercial bank loan activity from late 2008 onward, the Fed’s new policy is definitely an important consideration. ([Location 2410](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2410)) - Note: Why? - funneled into new loans. ([Location 2418](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2418)) - Note: Reserves don’t get “funneled” into loans. - We can’t explain the lack of high CPI inflation by claiming there was no new money held by the public, because this simply isn’t true. ([Location 2431](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2431)) - Note: It takes time for money to work it way through the economy and effect CPI. - well-established meaning among economists, to refer to the doctrines based on the labor theory of value ([Location 2510](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2510)) - negative saving—are ([Location 2539](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2539)) - economy produced nothing but hammers and no new nails, ([Location 2584](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2584)) - Note: Is this supposed to represent the structure of production? It does not. - nominal gross domestic product ([Location 2623](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2623)) - “liquidity trap” ([Location 2644](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2644)) - even though the Fed expanded the monetary base by some 20 percent from 1929–33,3 a broader measure of money—M2—had nonetheless declined by a third over this period. ([Location 2651](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2651)) - Friedman argued that high interest rates were not necessarily a sign of tight money, either. ([Location 2656](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2656)) - misleading to judge monetary policy by interest rates. ([Location 2660](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2660)) - doubled the monetary base—all ([Location 2675](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2675)) - Note: Murphy seems to have a fascination with the “monetary base.” This may explain some of his confusion. - monetary policy ([Location 2684](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2684)) - Note: The problem is the existence of a monetary policy. - growth rate really did fall ([Location 2742](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2742)) - Note: Is there confusion between growth rates and growth? Refer to page 235. I believe Friedman argued that M2 actually declined. - collapse in M2 growth—then ([Location 2743](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2743)) - Note: Not a collapse it growth rate but a collapse in quantity. - short-term interest rates will typically be pushed below their “natural” levels, ([Location 2812](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2812)) - Note: Nobody knows what those rates should be. - trillions of new dollars in base money ([Location 2816](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2816)) - unbacked digital currency ([Location 2880](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2880)) - We hope our analogy gives a decent first pass in explaining how Bitcoin works. ([Location 2903](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2903)) - Note: No. - universally accepted in a given community. ([Location 2974](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2974)) - applied it to the valuation of money ([Location 2990](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2990)) - Note: They did not “apply” subjective value to money. All economic value derives from subjective preferences. - exchange value ([Location 2993](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2993)) - Note: No such thing. - market value—or ([Location 2994](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=2994)) - Note: Again, no such thing. - regression theorem. ([Location 3013](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3013)) - emergence of money from a state of direct exchange ([Location 3015](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3015)) - Kelton’s book, The Deficit Myth. ([Location 3087](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3087)) - “Magical Monetary Theory” ([Location 3100](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3100)) - finding the money ([Location 3107](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3107)) - monetary sovereignty. ([Location 3114](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3114)) - It’s not revenue but (price) inflation that limits the government’s spending capacity. ([Location 3150](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3150)) - Suppose that prices would have fallen in the absence of government money-printing. ([Location 3169](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3169)) - Note: What makes prices, in general, fall? - US Treasury instructs its bank, the Federal Reserve, ([Location 3221](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3221)) - Note: Not the way it works now. - if my overdraft isn’t too large, ([Location 3234](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3234)) - Note: This comment just distracts from the point. - how taxes give money its value. ([Location 3279](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3279)) - chartalism, ([Location 3286](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3286)) - Mosler argues that the government funds the taxpayers! ([Location 3293](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3293)) - MMT story at best only explains why a currency has a nonzero value; ([Location 3303](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3303)) - MMTers apparently don’t know the simple difference between money and debt. ([Location 3311](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3311)) - While others may refer to it as a debt clock, it’s really a US dollar savings clock. ([Location 3315](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3315)) - Printing new money doesn’t make the community richer—at ([Location 3349](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3349)) - Note: Finally getting to the important point. - federal funds rate, which then becomes the base rate for every other interest rate in the economy. ([Location 3354](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3354)) - involuntary unemployment. ([Location 3356](https://readwise.io/to_kindle?action=open&asin=B09NMKNS7T&location=3356))