THE SHIFT: Understanding and Using America’s Fiat Money


New Economic Perspectives has the article THE SHIFT: Understanding and Using America’s Fiat Money.

President Obama proposed a Universal Pre-school Day Care program in his 2013 State of the Union Address. He then effectively killed it—pre-SHIFT—by explaining that his program would “cost” tax-payers ten billion dollars a year. But now, post-SHIFT, we don’t have to explain things that way anymore. Now, we explain it like this: Our democratically elected sovereign government is going to issue and spend its Federal Reserve Promissory Notes to pay American citizens to establish, staff, and operate the pre-school education centers American families—and American preschoolers—desperately need. It doesn’t “cost” anybody anything. The American citizens are going to get paid for building and operating something they need to have—provided, of course, they’re willing to be paid with the government’s Promissory Notes.

Generally, I buy the story this article is selling, but I don’t want this story to be oversold.

With regard to the final paragraph as excerpted above, I have this cautionary note.

“The American citizens are going to get paid for building and operating something they need to have—provided, of course, they’re willing to be paid with the government’s Promissory Notes.”

You mean provided, of course, they’re willing to be paid the amount of Promissory Notes that the government will pay for these services.

If the government makes too many promissory notes, people may expect huge amounts of them as payment for their services. When all those promissory notes that have been made by the government come out from under the mattresses of the oligarchs who have not been spending them, then there may be a real problem. The government may find it politically impossible to take enough of those promissory notes out of circulation fast enough to keep up the value of the ones remaining in circulation.

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