In a recent Wall Street Journal article (5/10/2023) titled “Why We Swear To Tell The Truth”, Fay Vincent quotes the witness’s oath.
Do you swear to tell the truth, the whole truth, and nothing but the truth, so help you God? The oath taker replies, “I do.”
There are truths (veritas) of testimony and cumulative verifications (veritas) of economic laws. Verification rests in the isomorphism of the pattern of the mathematical expression and pattern of correlations in the data.
In the current negotiations in Congress regarding a debt limit, the swindle called “inflation” is a significant issue.
… the prime cause of inflation is ignorance. The principles and laws of the normative macroeconomic dynamics of surplus and basic expansion, and surplus and basic incomes are not understood by academe, not formulated in establishment textbooks, not taught by academe to influential persons….. [CWL 15, 82]
Politicians must place the whole truth above personal glory; they must not make a Faustian bargain with their leaders and voters. Consider the following:
Money is a dummy invented by humans to enable divided exchange. Money is a promise of trust between people. But, simple as money’s functional purposes may seem, the determinations of how much money to create through the credit function is not well understood. There are natural limits to the supply of money, though the menace of so-called Modern Monetary Theory’s unconstrained printing of money would violate these limits and swindle the relatively vulnerable populace.
… money is an instrument invented to fulfill a definite task; it is not the ultimate master of the situation. One has to place first human society which is served by the economic process, and second the economic process which is to be served by money. Accordingly money has to conform to the objective exigencies of the economic process, and not vice versa. (CWL 21, 101)
… real analysis (is) identifying money with what money buys. … If you want to treat money that doesn’t make a difference, you can have a beautiful liberal monetary theory. But it doesn’t say the way the thing works. [CWL 21, Editors’ Introduction, xxviii quoting Lonergan]
Once the possibility of an unbalanced budget is established, the precedent can be invoked to persuade politicians to carry on other wars: wars on illiteracy, on poverty, on ill health, on unemployment, on insecurity. Where the profit motive does not prove efficacious, the state must intervene. … the increasing volume of transactions requires a larger money supply, and the central bank can be persuaded to meet the demand. … it appears to be less evident that a vicious circle of ever more demands for a larger money supply with no increase in real income is inflationary … In any case there has emerged in fact if not in name the welfare state. … Its mechanism is rather strikingly similar to that of the favorable balance of foreign trade. The debt once owed by colonies to richer countries now is replaced by the national debt. … now the long overdue basic expansion is doled out to one’s fellow countrymen under the haughty name of welfare. [CWL 15, 85-86]
First, unwittingly out of ignorance, more recently as necessitated by a pandemic, and most recently out of continuing ignorance, some nations, including the U.S., have wandered into the ultimate menace to the financial system, the spending without constraint blessed and recommended by unscientific, so-called Modern Monetary Theory. (Click here and here and here and here) Modern Monetary Theory – so called – is contaminated by human psychology; and the systematic result of MMT’s unconstrained printing of money, unjustified by corresponding, correlative, concomitant production of goods and services, is rampant inflation in prices for a) goods and services and/or b) financial assets.
The implementation of Modern Monetary Theory sows a disaster systematically destined to happen. In its unchecked extreme of printing money unconstrained by relation to the real flow of goods, and services, it tends toward rampant inflation and toward torturing of the flows of the financial system, so as to bring about a) the severe impairment of the financial system, and b) social chaos. The longer MMT’s unconstrained printing and irresponsible borrowing last, the greater would be the intractability of ultimate problems.
An unbalanced budget is intrinsically inflationary, and, unless offset, the inflation lingers until all the free money is absorbed through the several tiers of operative incomes and expenditures and, ultimately, by the secondary markets, until I’/(I’+I”) and I”/(I’+I”) match the requirements of the phase of the process of production and exchange. And, it must be noted and emphasized, the absorption process has relative winners and relative losers.; it leaves the relatively invulnerable populace relatively richer and the relatively vulnerable populace relatively poorer. Inflation is a swindle.
Ideally, money would be constant in exchange value. We emphasize that Inflation and deflation are swindles.
… the dummy must be constant in exchange value, so that equal quantities continue to exchange, in the general case, for equal quantities of goods and services. The alternative to constant value in the dummy is the alternative of inflation and deflation. Of these famous twins, inflation swindles those with cash to enrich those with property or debts, while deflation swindles those with property or debts to enrich those with cash; in addition to the swindle each of these twins has his own way of torturing the dynamic flows; deflation gives producers a steady stream of losses; inflation yields a steady stream of gains to give production a drug-like stimulus. [CWL 21, 37-38]
See Modern Monetary Theory is Backwards. Click here
The Diagram of Rates of Flow accounts for inflation and deflation.
More positively, the channels account for booms and slumps, for inflation and deflation, for changed rates of profit, for the attraction found in a favorable balance of trade, the relief given by deficit spending, and the variant provided by multinational corporations and their opposition to the welfare state. [CWL 15, 17]
It is now necessary to state the necessary and sufficient condition of constancy or variation in the exchange value of the dummy. To this end we compare two flows of the circulation: the real flow of property, goods, and services, and the dummy flow being given and taken in exchange for the real flow….Accordingly, the necessary and sufficient condition of constant value in the dummy lies in its concomitant variation with the real flow. (CWL 21, 38-39)
A condition of circuit acceleration was seen in Section 15 to include the keeping in step of basic outlay, basic income, and basic expenditure, and on the other hand, the keeping in step of surplus outlay, surplus income, and surplus expenditure. Any of these rates may begin to vary independently of the others, and adjustment of the others may lag. But any systematic divergence brings automatic correctives to work. (CWL 15, 144)
The automatic correctives are in the form of stresses and strains, internal to the process, of a) price changes versus quantity changes, b) circuit against circuit, c) relatively invulnerable units of enterprise against relative vulnerable units of enterprise, and d) relatively invulnerable recipients of income against relatively vulnerable recipients of income. The stresses and strains work their way through the income tiers creating winners and losers and through persons and units of enterprise in the supply-and-sale chains which constitute the current, purely dynamic economic process. In the booms and slumps there are winners and losers; and there are swindles. Moral considerations enter in.
Fay Vincent re Why We Swear To Tell The Truth (WSJ 5/11/2023)
Fay Vincent faces the culture of dishonesty squarely. Mr. Vincent has a moral code. Here are some brief quotes from his article:
The oath taker replies, “I do,” and legal duties attach to what follows. … the essence is that the witness will attest openly to the duty of being truthful… “
“The old fashioned belief is that lying is wrong morally. The oath invokes the pain of legal penalties. It also reflects the moral code of the Decalogue.”
“I never doubted the essential wisdom that permitted me to be trusting of others while not betraying their trust in return. “
“… nothing can replace the comfort of negotiating with someone whose word you trust.”
“And there is not better satisfaction than the pride one feels after achieving a result without regretting the means employed in the process.”
In a previous blurb, we said the following re Fay Vincent:
Time out from macroeconomics. In the Wall Street Journal of Monday 9/23/19 Fay Vincent, former Commissioner of Major League Baseball, wrote an op-ed piece now praising two of his teachers from long ago. If memory serves, Mr. Vincent wrote another op-ed piece around last Father’s Day praising his father. I do not personally know Fay Vincent. I have never met him, though I have noticed him occasionally around Harwich, MA. Over the years, without paying much attention, I have picked up bits and pieces of Mr. Vincent’s career and principled personal life. Just as Mr. Vincent sees fit to thank those who had a strong and positive influence on him, so I see fit to thank Mr. Vincent for having a sporadic, positive, even strong, influence on my life. Mr. Vincent has always had his head on straight and his heart in the right place. Thank you Mr. Vincent for being Fay Vincent. The world needs more men like you. [#37]
Further re truth:
No less than scientific language, symbolic language intends a truth yet can be wrong. … … things have only one way of being, but humans do not have only one way of knowing. One who knows scientifically knows universally; but this universality does not belong to things (as if universals subsisted) but to the scientific way of knowing. One who apprehends and speaks symbolically is using a way of knowing that is full of vivid imagery and feeling, but nevertheless by reflecting one can distinguish between what are to be attributed to the things themselves and what are to be ascribed to this way of knowing. (CWL 11, 381)
So we are brought to the profound disillusionment of modern man and to the focal point of his horror. … the fact of advance and the evidence of power are not guarantees of truth, … The real issue, then, is truth. (CWL 3, 549/572-73)
The real issue, then, is truth. Though it has concerned us all along, it will not be amiss to bring together at least the main points made on different occasions and in different chapters. Accordingly, we distinguish
- the criterion of truth,
- the definition of truth,
- the ontology of truth,
- truth in expression,
- the appropriation of truth, and
- the truth of interpretation. (CWL 3, 549/572-73)
The proximate criterion of truth is reflective grasp of the virtually unconditioned … The remote criterion (of truth) is the proper unfolding of the detached and disinterested desire to know. In negative terms this proper unfolding is the absence of interference from other desires that inhibit or reinforce and in either case distort the guidance given by the pure desire. (CWL 3, 549-550)
Essentially, then, because the content of judgment is unconditioned, it is independent of the judging subject. Essentially, again, rational consciousness is what issues in a product that is independent of itself. Such is the meaning of absolute objectivity, and from it there follows a public or common terrain through which different subjects can and do communicate and agree. (CWL 3, 549-50)
The remote criterion (of truth) is the proper unfolding of the detached and disinterested desire to know. In negative terms this proper unfolding is the absence of interference from other desires that inhibit or reinforce and in either case distort the guidance given by the pure desire. (CWL 3, 550)
The ground of absolute objectivity is the virtually unconditioned that is grasped by reflective understanding and posited in judgment. The formally unconditioned, which has no conditions at all, stands outside the interlocked field of conditioning and conditioned; it is intrinsically absolute. The virtually unconditioned stands within that field; it has conditions; it itself is among the conditions of other instances of the conditioned; still its conditions are fulfilled; it is a de facto absolute. ¶ Because the content of the judgment is an absolute, it is withdrawn from relativity to the subject that utters it, the place in which he utters it, the time at which he utters it. Caesar’s crossing of the Rubicon was a contingent event occurring at a particular place and time. But a true affirmation of that event is an eternal, immutable, definitive validity. For if it is true that he did cross, then no one whatever at any place or time can truly deny that he did. ¶ Again, … ¶ It is important not to confuse the absolute objectivity of any correct judgment with the invariance proper to the expression of universal judgments. Both universal and particular judgments, if correct, are absolutely objective. But the former are expressed invariantly because the expression is independent of variations in spatio-temporal reference frames, while the latter are expressed relatively because their expression does not enjoy such independence. …(CWL 3, 377-9)
Paraphrasing
So we are brought to the profound disillusionment of modern man and to the focal point of his horror. … the fact of advance and the evidence of power are not guarantees of verification, … The real issue, then, is verification. (CWL 3, 549/572-73)
More positively, the channels account for booms and slumps, for inflation and deflation, for changed rates of profit, for the attraction found in a favorable balance of trade, the relief given by deficit spending, and the variant provided by multinational corporations and their opposition to the welfare state. [CWL 15, 17]
It is now necessary to state the necessary and sufficient condition of constancy or variation in the exchange value of the dummy. To this end we compare two flows of the circulation: the real flow of property, goods, and services, and the dummy flow being given and taken in exchange for the real flow….Accordingly, the necessary and sufficient condition of constant value in the dummy lies in its concomitant variation with the real flow. (CWL 21, 38-39)
A condition of circuit acceleration was seen in Section 15 to include the keeping in step of basic outlay, basic income, and basic expenditure, and on the other hand, the keeping in step of surplus outlay, surplus income, and surplus expenditure. Any of these rates may begin to vary independently of the others, and adjustment of the others may lag. But any systematic divergence brings automatic correctives to work. (CWL 15, 144)
The automatic correctives do not resemble the movements of a stretched or compressed coiled spring but are rather in the corrective form of stresses and strains, internal to the process, of a) prices versus quantities, b) circuit against circuit, c) relatively invulnerable units of enterprise against relative vulnerable units of enterprise, and d) relatively invulnerable recipients of income against relatively vulnerable recipients of income. The stresses and strains reverberate through the income tiers creating winners and losers and through the units of enterprise in the supply-and-sale chains constituting the production-for-sale economic process. In the booms and slumps there are winners and losers; and there are swindles. Moral considerations enter in.
The Wall Street Journal of 4/18/ 2019 had a column entitled “Easy Money, Bad Decisions” by James Grant reviewing Andrew H. Browning’s book, The Panic of 1819. Grant related how the government’s financing of excessive expansion with careless loans led to panic and crisis. Click here
Plus ça change, plus c’est la meme chose. The more things change, the more they stay the same. The principles and laws of borrowing and repayment remain as valid now as they were in 1819. The granting of credit simultaneously satisfies two conceptually distinct, but partly overlapping functions: 1) to bridge the short-term and long-term gaps of time between payments made and payments received, and 2) to infuse more money into the expanding system to permanently enable expeditious payments of expanded activity.
… economic developments are finite, and so no economic development will accelerate indefinitely. (CWL 15, 14)
The excellence of the exchange solution becomes even more evident when contrasted with the defects of a bureaucratic solution. The bureaucrat … (gives the people) what he thinks is good for them, and he gives it in the measure he finds possible or convenient; nor can he do otherwise, for the brains of a bureaucrat are not equal to the task of thinking of everything; only the brains of all men together can even approximate to that. … when a limited liability company has served its day, it goes to bankruptcy court; but when bureaucrats take over power, they intend to stay. … when the pressure of terrorism is needed to oil the wheels of enterprise, then the immediate effect is either an explosion or else servile degeneracy. … the exchange solution is a dynamic equilibrium resting on the equilibria of markets. … every product of the exchange economy must mate through exchange with some other product, and the ratio in which the two mate is the exchange value. The generality of this equilibrium makes it indifferent to endless complexity and endless change; for it stands on a level above all particular products and all particular modes of production. While these multiply and vary indefinitely, the general equilibrium of the exchange process continues to answer with precision the complex question, Who, among millions of persons, does what, among millions of tasks, in return for which, among millions of rewards? Nor is the dynamic solution unaccompanied by a continuous stimulus to better efforts and more delicate ingenuity. For the uniformity of prices means that the least efficient of those actually producing will at least subsist, while every step above the minimum efficiency yields a proportionately greater return.[CWL 21, 34-35]
Also, read John F. Cogan’s article in the 1/3/2021 WSJ, “Entitlements Always Grow and Grow”. Mr. Cogan is a senior fellow at Stanford University’s Hoover Institution.
In equity (the basic expansion following the surplus expansion) should be directed to raising the standard of living of the whole society. It does not. And the reason why it does not is not the reason on which simple-minded moralists insist. They blame greed. But the prime cause is ignorance. The dynamics of surplus and basic expansion, surplus and basic incomes are not understood, not formulated, not taught….. [CWL 15, 82]
… (the basic expansion following the surplus expansion) should be directed to raising the standard of living of the whole society. It does not. And the reason why it does not is not the reason on which simple-minded moralists insist. They blame greed. But the prime cause is ignorance. The dynamics of surplus and basic expansion, surplus and basic incomes are not understood, not formulated, not taught….. [CWL 15, 82]