Sent: Friday, December 22, 2017 1:01 PM
Subject: A bizarre economic theory
Hello Prof Block, I’ve recently run across an acquaintance who follows “Modern Monetary Theory”. While most of what he writes in the internet forum I’m part of can be easily enough dealt with, he has come up with a claim that while I know is bizarre, I’m at a loss as to how to proceed. He claims “all money comes from the government” as his foundational premise. As a result, he believes taxation exists only to soak money out of the private sector when there is too much money there. Obviously the correct amount of money is a subjective claim, and the value of money is determined by quantity of money and quantity of goods and services and the ability to redeem said goods and services using the money. But all money comes from the government? To me this look like “prison normal”, where conditions have been abnormal for so long people have become accustomed to the abnormal conditions and assume they are normal. We have had fiat currency for so long people imagine it is some sort of magical creation of the government. What would you say to the premise that “all money comes from the government”?
Dear J: I would say that your acquaintance should read this essay: Rothbard, Murray N. 1963, 1985, 1990. What Has Government Done to Our Money? Auburn, AL.: Mises Institute; http://www.mises.org/rothbard/rothmoney.pdf
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