Sep 21, 2019
Surely Rohan Grey is
one of the smartest guys in the world. It’s not just that he
possesses an impressive amount of knowledge. He has a unique way of
using analogies and metaphors to give shape to an idea. He
illustrates his points with references to popular films, folklore
and lyrical poets. With his experience in the realms of music,
early childhood education, political economy, and jurisprudence, he
brings Modern Monetary Theory to life in unexpected ways.
Throughout this two-part interview he frequently correlates
economics and the law by making connections and illustrating subtle
conceptual parallels.
The episode begins
where any discussion of macroeconomics should begin — talking about
money. Instead of thinking of it as a “thing,” or a store of value,
Rohan asks us to think of money as a series of relationships,
structured by law. He calls it a web of invisible filaments. The
MMT story starts with state-created money. While the original logic
had to do with tax obligations, the desire for money takes on a
life of its own. We don’t wake up thinking about wanting money to
pay taxes. We want it for all those other goods and services
we need and desire.
Steve asks Rohan to
discuss talk about the Federal Reserve, an institution often
misunderstood by even the sharpest political minds. The rest of
this episode takes us through its history and before, beginning
with the earliest years of the American colonies, when states were
developing their own economies. This was a time when local
governments were still relatively accountable to their constituents
and the democratic process was vibrant. The constitution was
designed in large part to move monetary powers from the state level
up to the federal level. In fact, Rohan says that, in contrast to
the American revolution, the creation of the US Constitution was a
counter-revolution.
There’s far too much
history to recount here. Rohan takes us through Lincoln’s creation
of greenback dollars, the Federal Reserve Act of 1913, FDR, and the
decades-long bitter political battle for supremacy between the
Department of Treasury and the Fed culminating in the Treasury-Fed
Accord of 1951.
The struggle to
create a central bank was basically a power grab by the capitalist
class. Throughout its history, the Fed has zealously guarded its
autonomy just as the Supreme Court has done; each determined to
remain unaccountable to democratic forces. Both institutions employ
the same tactic, convincing the public that they alone have the
unique expertise to deal with complex matters. Ultimately Rohan
maintains that the Federal Reserve adds no real value to the
government or the economy. Our listeners will surely
agree.
Rohan Grey is the
founder and president of the Modern Money Network, a research
scholar at the Global Institute for Sustainable Prosperity, and a
J.S.D. candidate at Cornell Law School, where his research focuses
on the law of money in the internet society.
https://modernmoneynetwork.org/
https://www.lawschool.cornell.edu/admissions/degrees/graduate-legal-studies/JSD-Student-Profiles-Rohan-Grey.cfm