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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
- Veröffentlichungsjahr: 2023
Money is mysterious. We love it, we hate it, but few people can tell you what the heck it really is. Wouldn't it be good to get out of the fog? This book will help you understand both the way money works and how to leverage its power. The authors take you on an illuminating journey from your piggy bank to the Federal Reserve with no pesky jargon or complex math. Once you see money clearly, life will never be the same. You'll know what really goes on in banks and what the cash in your wallet represents. You'll know how government really spends and why it can't run out of money. You'll know what money can actually do -- and how we can make it work for us.
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CONTENTS
Cover
Title Page
Copyright
Introduction
Chapter 1. Money: An Introduction
Chapter 2. Money: An Origins Story
Chapter 3. Money: The Story of Redemption
Chapter 4. Currency: The Government’s Money
Chapter 5. Can Government Run Out of Currency?
Chapter 6. Anyone Can Create Money?
Chapter 7. Private Bank Money
Chapter 8. The Central Bank’s Money: Lender of Last Resort
Chapter 9. Central Bank Money: Government Finance
Chapter 10. Government’s Debt is Our Asset
Chapter 11. Money as Scorekeeping
Chapter 12. Rise of the Winners-Take-All Economy
Chapter 13. The Way Forward: We Take Care of Our Own
Index
End User License Agreement
Guide
Cover
Table of Contents
Title Page
Copyright
Introduction
Begin Reading
Index
End User License Agreement
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Money for Beginners
L. RANDALL WRAY
Illustrated by Heske van Doornen
polity
Copyright © Larry Randall Wray and Heske van Doornen 2023
The right of Larry Randall Wray and Heske van Doornen to be identified as Authors of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.
First published in 2023 by Polity Press
Polity Press65 Bridge StreetCambridge CB2 1UR, UK
Polity Press111 River StreetHoboken, NJ 07030, USA
All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.
ISBN-13: 978-1-5095-5462-1
A catalogue record for this book is available from the British Library.
Library of Congress Control Number: 2022946154
The publisher has used its best endeavours to ensure that the URLs for external websites referred to in this book are correct and active at the time of going to press.However, the publisher has no responsibility for the websites and can make no guarantee that a site will remain live or that the content is or will remain appropriate.
Every effort has been made to trace all copyright holders, but if any have been overlooked the publisher will be pleased to include any necessary credits in any subsequent reprint or edition.
For further information on Polity, visit our website:politybooks.com
Introduction
Money makes the world go ’round, but thinking about it can be overwhelming. You probably sense that almost every issue starts and ends with money. Too much, too little, too cheap, too dear. It is hard to get your mind around the topic of money. You use it every day, but you may not feel as if you really know much about it. Where does it come from? Is Uncle Sam going to run out? Are you going to run out? What the heck is money, anyway? It is a mystery.
This book will help you to answer those questions for yourself. What you’re going to find after reading this book is that money isn’t so complicated after all. You’ll see how both banks and the government create money. You’ll understand the relation between government spending and taxation. You’ll be able to identify the true constraints we face in trying to tackle our nation’s problems and which ones are bogus.
After reading this book, you’ll know more about money than most politicians do. That’s a guarantee. They won’t be able to bamboozle you anymore. You’ll easily spot their mistakes. The most common error is to confuse the finances of a household with the finances of our nation’s government. After reading this book you will understand that Uncle Sam’s budget is different from ours: he can’t run out of money. And that is a good thing! He can always afford to help us when we need it.
You will also understand what money is, where it comes from, and how banks operate. You will know how our nation’s central bank – the Federal Reserve – works with both private banks and the US Treasury to keep our financial system safe. Most importantly, your understanding of money will help prepare you to tackle the challenges we face in coming years.
One of the biggest stumbling blocks to reform is the question: “How are you going to pay for it?” Where will Uncle Sam find the money to repair the nation’s infrastructure? To move to sustainable energy? To pay for Social Security’s retirees? To reduce unemployment and poverty? To prepare students for our rapidly changing world?
After reading this book, you will have an answer to the “pay for” question.
The purpose of this book is not to take on those policy issues themselves but, rather, to build an understanding of how we can use our financial system to tackle today’s problems as well as those of the future.
One final note: we have purposely kept this book short, simple, and uncomplicated by leaving out footnotes and references. For those who want more details, including references for the arguments made, please see the companion volume: Making Money Work for Us: How MMT Can Transform America, by L. Randall Wray (Cambridge: Polity, 2022).
1Money: An Introduction
Money is a complex topic. It is fascinating. It is scary. We’ll make it a bit less complicated.
Let’s begin with the story of money: What can you do with it, what is it, and where does it come from? You probably use it every day, so that’s a good place to start.
Someone hands you some cash. What are you going to do with it?
You can save it! To buy a house. To go to college. For retirement.
More likely, you’ll spend it – at least, most of it. We need money to keep us adequately fed, clothed, and sheltered. We work so that we can get paid in money and purchase many of the necessities of life. Except for those at the tippy-top of the income distribution, we spend most of the money we receive.
Of course, you can run out of it. Spend too much and you are called a spendthrift. Strangely, a spendthrift is the opposite of one who is thrifty: spendthrifts spend themselves into poverty. That is, without money.
Save too much, and you are a Scrooge – despised as a miser who hates Christmas.
It is hard to find the right balance between thrifty and spendthrifty!
Carried to the extreme, hoarding money is recognized as a neurosis.
The miser who cannot part with his gold coins is like the baby holding on to feces: according to Sigmund Freud, those who hoard money are the same type who hoarded their poop as babies.
But, of course, we need money. John Maynard Keynes, the father of macroeconomics, says it provides us with the means to live wisely, agreeably, and well. But he likens the love of money to a semi-criminal and pathological neurosis.
Businesses borrow money from banks to hire workers and pay them wages. Workers deposit their wages in banks and gradually draw down deposits as they pay bills and buy groceries.
Sales by businesses move those deposits to their own accounts, allowing them to pay down their loans from the banks.
Today, more and more of those transactions take place electronically – through “keystrokes” on computers.
Some say we’ll soon have nothing but “digital money.” For many, that is perplexing. How can we get by without money that we can touch, put in our pocket, and toss into the air to choose whether to kick or receive the football?
What the heck is a virtual currency that doesn’t exist? Is Bitcoin money, and is it our future?
Money can be scary. When I wrote my 1998 book, titled Understanding Modern Money, I was warned that “It will scare the heck out of everybody.” They were right. It did.
Let’s try to make it a bit less frightening.
In the next chapter we’ll investigate money’s “genesis” – that is, its origins story – to see if that sheds light on its “nature,” just as the Bible’s Genesis shed light on the nature of humankind’s “original sin.”
2Money: An Origins Story
Let’s take a look at what we use today: metal coins, paper bills, checks, plastic cards, and digital transactions. Quite a variety! What do they all have in common? They keep track of something.
And that something is … Debt.
Money began with people trying to keep track of how much they owed someone else.
Let’s begin with cash – paper notes (currency) and coins. You know that the paper dollar is green, with George Washington on the front, signed by the US Treasurer and the Secretary of the Treasury.
On the back it says IN GOD WE TRUST, with a picture of an eye on top of a pyramid, as well as some Latin words. That’s a bit strange. On further inspection, you’ll notice it says “This note is legal tender for all debts, public and private.” Whatever that means! (We’ll see later.)
The quarter also has a picture of dear old George, also trusts in God, and has an eagle or a symbol from one of the fifty states on the reverse side.
