Modern Monetary Theory: Let’s Play Some Calvin Ball

Modern Monetary Theory or MMT as it is also known, is a new branch of heterodox economics that is quickly gaining popularity among the political far-left in American politics. While the theory is quite confusing in its exact specifications and rules ( Economist Paul Krugman likened it to “Calvin ball”) the basic tenets are that the assumptions of “fiat currency” and “endogenous money” are the correct macroeconomic assumptions. While these are core elements for most MMT theorists, it is important to stress that like many heterodox economic theories and “Calvin ball,” the ‘rules’ often change depending on which promoter of the Continue reading Modern Monetary Theory: Let’s Play Some Calvin Ball

Monetary Valuation

Economic value is a measurement of benefit produced by a good or service. Usually, this benefit is measured in a common currency in order to make these goods and services comparable. The theory of value is used in everyday situations without much consideration. For example when considering my preferences and constraints at the moment, I would be willing to spend $10 for a good sandwich right now. Regardless of what the actual selling price of a sandwich is, I have my own personal value for the good. When talking lunch items, I have no problem valuing these items in terms Continue reading Monetary Valuation

Paper Money

Why do people still use paper money? It’s easily lost, stolen, or destroyed, it’s a huge transmitter of disease, and it wears quickly and is a pain to replace. My mother always told me to hide a bit of cash away for emergencies. Although she means well, I feel like a bad cartoon pirate that still relies on my chest of gold every time I hoard pieces of paper. Besides, every time I “hide” money away, I end up handing it over the lady behind the counter at Memos within a week. In almost every way, electronic banking is superior Continue reading Paper Money

Prime Minister of India Bans Currency in Country

In an effort to abolish corruption and crime throughout the country, India’s Prime Minister Narendra Modi banned the largest bills on Nov. 8 from being in circulation and printed throughout the country. How would this stop corruption, you ask? A lot of crime organizations throughout Indian benefit from the country not being able to account for all of the bills in circulation. So it’s a basic thought, if India bans these bills, then they can account for the bills that are counterfeit. These rupee bills are equivalent to $8 and $15 in the dollar but bring significant more value to the Indian Continue reading Prime Minister of India Bans Currency in Country

Pennies Suck.

Pennies are useless. Actually, they are worse than useless. In a way, they are actually harmful. Why? Because they are supposed to function as money. Money is used to “facilitate the exchange of goods and services” and pennies simply aren’t valuable enough to do that. They used to, but thanks to inflation, the buying power of the penny is so small that its practically useless. When is the last time you saw a penny on the ground and actually bothered to pick it up? Never, I know. Simply put, the opportunity cost to pick up, sort and deal with pennies Continue reading Pennies Suck.

Everything You Need to Know About Bitcoin

In the past few years you’ve probably heard the term bitcoin tossed around, which is hard to grasp for most who are unfamiliar with non-tangible currency. So here’s the rundown on everything you need to know in order to understand the world of digital currency. Bitcoin is a payment system as well as a digital asset invented by someone who operates under the name “Satoshi Nakamoto”, which was released in 2009. Bitcoin is whats known as a P2P (peer to peer) system which essentially means that you can send bitcoin from your computer, tablet, smart phone or other device, to Continue reading Everything You Need to Know About Bitcoin

Big Bills = More Crime

Imagine two shady characters, making a swap over briefcases. One ends up with cocaine or something, but the other opens his briefcase to reveal $100,000 in cash. Probably happens more frequently than you think. Now imagine that the $100 bill no longer exists and they want to make the same transaction. That dude’s got to lug around five briefcases now and that’s not suspicious at all. I’m making light of the situation, but a recent study by Peter Sands of Harvard gives a good argument that terminating big denomination notes would hurt criminal activity, and have little to no negative effects Continue reading Big Bills = More Crime

The Importance of Virtual World Economics

How much would you pay for a virtual spaceship? Ten dollars? One hundred dollars? One thousand dollars? Try $10,000. Yes, for a virtual spaceship. With online gaming on the rise, what can we expect to see from games like World of Warcraft, Eve, and Second Life? Well there are big spenders, like the hot shots that own Titans in the massive interstellar reality Eve, which go for $10,000. Then there are people who have quit their day jobs to pursue a full-time career in acquiring and selling virtual items. What you have is a free market consisting of potions, laser Continue reading The Importance of Virtual World Economics

Thesis Corner: An Introduction to Bitcoin

Imagine that one day you woke up and someone told you, “Hey, these M&Ms over there have monetary value. Go ahead and buy whatever you want with them”. Okay, so M&Ms may be a bit facetious, but that scenario pretty much describes the origin of Bitcoin. If you’re a millennial like me, our trust in currency has always been anchored in the US dollar. We’ve been trained and conditioned to believe it’s worth something despite being a measly piece of paper. Now we are told these “Bitcoins” are equivalent to money too? Madness! What does this mean to money as we Continue reading Thesis Corner: An Introduction to Bitcoin

Opportunity or a Trap? The Economic Impact of Scottish Independence

The contention between Scotland and England is a historical issue and there have been calls for Scottish Independence for hundreds of years. In the past these views have been dismissed, but under Scottish Prime Minister Alex Salmond, Independence has taken a new seat in the headlines. While there are surely deep national and politic issues surrounding this topic, what would succession mean economically? Independence for Scotland would offer a buffet of options that were not available say 60, or even 20 years ago. Unexhausted rich oil reserves along the Scottish coast are a hot topic when talking about potential Scottish Continue reading Opportunity or a Trap? The Economic Impact of Scottish Independence