Bill Gross Channels Edward Hugh on Demographics and Austrians on Malinvestment [View article]
Ed, re: "Translation: ageing populations are more dependent on export growth because of the increased aggregate savings rates and loss of aggregate demand associated with an ageing populace."
I interpret the H&V quote differently. The standard rule of thumb among demographers is that young adults tend to dissave (household formation, chid rearing, lower relative income), middle aged adults tend to save (peak income years, lower household formation and child rearing costs), and older adults tend to dissave once again (pension income, retirement asset drawdown, gifting, higher medical expenses, etc.). And data tend to undermine the belief that old age means lower AD.
The question H&V are asking, I think, is that in wealthy export dependent economies that have long relied on internal saving and external dissaving, what impact will their aging (and likely dissaving) populations have on the economic status quo?
P.S. I'd like to see more 'normal' nominal rates too, and think QE2+ would cause more distortions globally than it's worth (certainly the BOJ contributed to the asset bubbles of the past decade?). But as far as I can tell, the only way to attain higher rates without causing further deflationary effects is to follow the MMT prescription -- have the Treasury directly spend new USDs into existence. If the argument about high fiscal multipliers at the zero bound are valid, then such spending would raise expectations and sentiment, which should be reflected in higher real and nominal rates. And it would add nothing to the national (interest bearing) debt, and might even force banks to start earning their keep in the private sector again.
Deficits, Debt, and Inflation: When Smart People Are Wrong [View article]
Re the 'US directly opposed to Japan' rebuttal, I agree that fertility, immigration, and dynamism imply a slightly more favorable outlook for the US than what Japan went through. But don't dismiss the age structure evidence cited in the article, or a sectoral balances view (see David Koo or Adam Posen's work) of Japan's experience. Both of those factors are eerily similar for the US, with about a ten year lag.
Thanks, I wasn't aware of that. Sounds like they just reopened it this past weekend (finance.yahoo.com/news...). Will be interesting to see what happens to KSC volumes in coming Railfax reports.
Misunderstanding Modern Monetary Theory [View article]
"A payroll tax holiday is just a giveaway. Employers aren't refraining from hiring because they don't have cash. They're refraining from hiring because they don't have orders. The multinationals that are posting strong results are generating them overseas. A payroll tax holiday for new hires won't generate much hiring that wouldn't have happened anyway, but will subsidize all that activity."
This is NOT about employers, but about existing income earners. Payroll taxes are a transfer. If the Treasury funds those transfers with new cash instead of with tax collections, that should be stimulative of domestic demand, domestic saving, and domestic balance sheet repair. That is no more of a "giveaway" than unemployment benefits, financial sector bailouts, or income and cap gains tax cuts. It's not about employers, but about households.
"And it's insidious. When the economy turns around the pressure from business will be on to extend the holiday, and we all know congress will probably oblige it. That will in effect de-fund our social safety net, which I submit is the underlying intent of the originators of the payroll tax holiday idea in the first place. "
See the first part of my response above. If Treasury is funding those transfers via newly created USDs (or more conventionally, via borrowed savings, as long as it can do so -- and a 3% yield on 10Y USTs suggests that it can do whatever it chooses) then there is no "de-funding" of the social safety net.
The glaring misconception about fiscal issues (and monetary) is that the govt must borrow from the private sector. The govt need only supply an appropriate (neither too inflationary or too deflationary) amount of money to the private sector. For most of the past 100 years it's done so via the judgement of private debtors and creditors. But it could just as readily do so via direct spending, as a payroll tax holiday might require.
But after re-reading your post, I suspect you assumed I was talking about a Schumer-Hatch type approach (which I agree is less than optimal) than what, for example, Warren Mosler and David Frum have each proposed.
Misunderstanding Modern Monetary Theory [View article]
MMT and interest-on-reserves proponents exist in two very different theoretical camps. "Modern Monetary Theory" does not refer to mainstream neo-classical or neo-Keynesian monetary economics, so the term "modern" might be a little confusing (though judging by an earlier post, you're aware of this). For anyone else, MMT by other names is neo-chartalism or post-Keynesianism. Very different schools of thought.
Are you saying all these schools of thought would (or will) "destroy this country"? Assuming that were true, what alternative(s) wouldn't?
Misunderstanding Modern Monetary Theory [View article]
First, MMT is a theory, not a method, and many different suggested policy methods have come out of it. Some would carry a high degree of agency risk (eg, pork). But agency risks arise whenever one person or organization has power over another's, and those situations are certainly not restricted to just one sector of political economy. Think Madoff or LTCM, for example.
Some of the proposed designs for one of the central MMT proposals -- federal govt as employer of last resort -- do a great deal to eliminate agency risk, while doing far more to attain full employment than private sector credit creation and transfer payments can do.
And how would a payroll tax holiday possibly be considered pork?
Economic Thoughts on the Midterm Elections [View article]
I posted this piece because, ironically, I too am concerned that the federal govt is going to play the over-appropriator -- not the over-appropriator of real resources, as it has sometimes been, but of money. The govt is the only provider of money (today, via the actions of the "quasi" public/private federal reserve).
Given the deflationary forces I listed in my comment above, if the federal govt does NOT spend sufficiently, it will drive more of the private sector into bankruptcy. That might have a rabbit hole feel to it, but it's a factual description of how fiscal and monetary policy interact. Spending cuts and adherence to PAYGO -- the GOP's newfound religion -- would indeed be a form of appropriation. And while we were able to absorb some austerity during the Gingrich-Dole years (domestically that is - Asia, Russia, and others were not!), I think it would have much worse effects on us today.
Economic Thoughts on the Midterm Elections [View article]
"While it may be true that a GOP takeover of the Congress won't turn the economy around, it's hard to see how it could make things worse."
Perhaps. It depends on (1) what the underlying economic fundamentals really are and (2) what the policy outcomes would be. I'm a raging Independent, and really don't have a dog in this political fight. Just want policymakers to do what's best.
Our take is that a household balance sheet recession + business and household pessimism + negative shifts in age structure are all going to be deflationary. As any good supply sider knows, that implies a shortage of USDs. Given that the Fed is constrained by zero, the obvious remedy is concerted deficit spending -- hopefully in ways that are most conducive to actual investment and growth. Getting policy "right" will not easy, but the underlying reality looks pretty simple to us.
And please note, I am not opposed at all to "supply side" tax cuts. But their effect would be less potent if the spending cut folks get their way. Not opposed to cutting wasteful spending either -- but cutting aggregate spending when private sector credit creation is moribund is not a good idea.
Misunderstanding Modern Monetary Theory [View article]
Technically you're right, but the distinction is not as material as you might think. The Treasury accepts Fed notes in settlement of taxes and other financial claims on the private sector, and lets the Fed worry about money creation and destruction via its interactions with the financial system. So in the end we're really talking about two forms of Treasury obligations, one interest bearing, the other not.
There are a few proponents (eg Kucinich, Michael Hudson, Stephen Zarlenga) of bringing money creation and central bank operations under more direct control of the Treasury. Some people think that's a recipe for disaster (bankers clearly did around 1909-1913). Perhaps it would be, but it is possible that such a system could be designed and implemented well (and keep in mind the US has redesigned its monetary system more than once!). Arguments that it would be a more just and equitable arrangement are hard to refute -- but only as long as they're sincere about avoiding inflation. Most MMT'ers clearly favor full employment over low inflation, so that is an undeniable risk. But their idea of an employer-of-last-resort function might be an effective way to mitigate that, and similar ideas have originated on the right, eg, Ned Phelps' book Rewarding Work.
Misunderstanding Modern Monetary Theory [View article]
Will monetization of debt always and everywhere lead to massive inflation? In my absurd example, maybe, but that was just to make a point. But in situations like the current one, I doubt it. In fact, it's essentially what we're doing, via primary dealers and federal reserve member banks now! We can all point to episodes where this kind of thing was inflationary. But we tend to ignore the counter examples, Japan being the most recent.
I like to think about this in a framework like the pure credit economy Wicksell articulated a century ago. Think in terms of various Taylor rules -- Charles Weise came up with an interesting one that incorporated sentiment via, eg, high yield spreads, and I saw an interesting one on SA not too long ago -- many of them imply that a negative overnight rate would be optimal, anywhere from low single digits to negative 9 or 10%. Wicksell would argue that as long as the central bank rate is above this (and that's a heck of a spread from 0.25% to -4%!!!) this would lead to a cumulative process of deflation. To the extent that nominal financial commitments are not indexed to such an outcome, there would be an intensifying deflationary spiral, until some much lower equilibrium is reached (think Great Depression).
Can the Fed target a negative interest rate? Not very precisely, and it would throw money and credit markets into chaos (e.g., how do you finance money market operations? what effects would a negative overnight rate have on sentiment?). QE's an option, except that it favors an oligopoly of primary and member banks (not very democratic), and enables global carry trades (not very healthy in the long run). Can direct federal spending, ie via new money creation, help? Absolutely -- as long as it is well designed (much of ARRA and prior stimulus was not) and is not deficit constrained by conventions such as PAYGO.
Interestingly enough, under prevailing conditions, this kind of direct fiscal stimulus would make the Fed's job much easier.....it could then follow policies designed to prevent the outcomes you're worried about.
I'm sure Gregman. I like to barbeque, that's the closest I get to smoking anything these days.
I'm not sure what you mean by "taxes are already at historic lows." Are you referring to nominal revenues? Revenues-to-GDP? Marginal or effective rates? If the latter, which types of taxes are you referring to?
Whatever the case, here's the logic: household balance sheet recession + pessimism + falling economic potential due to demographics + central bank rate near zero means that the govt must spend without regard to revenue -- which our govt can do without any problem whatsoever -- up until the point where inflation becomes a concern.
The federal govt does not have to issue new Treasury debt to do this. It can simply instruct the Fed to credit bank accounts. The money you hold in your pocket or your bank account is simply another form of govt debt -- which is "called" whenever you pay your taxes, for example. If deflationary pressures are intensifying, that implies a shortage of the stuff. And a payroll tax holiday, done properly (eg, by taking PAYGO out to the woodshed and leaving it there) is a quick, effective, and relatively fair way of doing that.
The primary effect of a payroll tax holiday would be on household incomes, right? Higher income can be used to support additional consumption, pay down debt, or save (most likely to be some combination of the three). And the nice thing about it is that it avoids the agency risk that plagues other forms of stimulus spending, including energy and infrastructure projects, where funds are given to specific parties. The only 'undemocratic' aspect of a payroll tax holiday is that people who aren't on a payroll don't benefit directly. But other than that, it's an approach that Hayekian types should favor (assuming they approve of fiscal stimulus).
Here's the important point, given the economic conditions prevailing today -- the federal govt cannot give with one hand and take away with the other -- in a balance sheet recession, with crummy demographics and interest rates close to zero, the most supportive thing a sovereign govt can do is spend money into existence, ie, run monetized deficits, up until the point where they threaten to become inflationary.
Misunderstanding Modern Monetary Theory [View article]
No, he and other MMT'ers state explicitly that inflation IS the relevant and only constraint on sovereign deficits. Their point is that a sovereign issuer faces no funding or other constraints.
Think about it this way -- the Fed could buy all outstanding Treasury debt in a short period of time with enough "keystrokes" and phone calls and paperwork. The federal government would then have a debt of zero, right? Where did it go? It was replaced by a market equivalent amount of non-interest bearing debt, or money. I think that's more of a neo-classical concept than MMT'ers like, but it helped me understand what the heck they were talking about. So apart from the dislocations and other financial dynamics it would cause, the govt just paid off its interest bearing debt without extracting a single dollar in taxes from the private economy. There is no funding constraint on a sovereign issuer!
The only constraint is inflation -- if the issuance of new money exceeds the capacity of the real economy to absorb it, then anti-inflationary measures are required -- higher taxation for MMT'ers (I think more classical Keynesians like Tobin thought along these lines as well) or higher interest rates for the "neos" (neo-classicals, neo-Keynesians).
MMT raises a lot of interesting arguments around the ethics and political economy of money creation. But keeping it simple, if there is slack (deflation) in an economy, the public sector has to issue money (run deficits) to offset it. When Fed policy can do no better than push on a (broken) string, why not work the fiscal lever?
If you subscribe to the gold standard dogma, think about it this way -- under clasical gold, the gold mining industry (ignoring existing non-monetary supply and mint conventions) was the source of new units of money (gold was base money, credit transactions created bearer certificates and ledger entries etc). What was the gold inudstry doing, ideally? It was running persistent "deficits" of gold -- roughly equivalent to the growth of the real economy, at least when things went well (actual gold discoveries were far lumpier).
Unemployment: Our Beef With Art Laffer's WSJ Editorial [View article]
"Limited assessment," nice. I didn't say there's no disenchanment (interesting news about backlash against Ballmer signing on to the billionaire giveaway pledge, for example). I just asked why, if fiat money is so wicked, there haven't been revolts against it in the UK, Japan, and US long before now. And let's not forget that there was popular political revolt -- nearly half the electorate -- against the gold standard in the 1890s. I too could produce a long list of things that have improved since the advent of 'funny money,' but for either of us to claim that they are directly attributable to fiat vs commodity linked money would be foolish.
Looking past that, there's probably some stuff we could agree on. For example, I'm OK with this: "The system is set up to enrich the financial houses on both the front end and the back end of the booms, and to screw the taxpayer. It is a set-it-and-forget-it system that moves wealth from the pockets of those who create wealth thru work - the wage earner - into the pockets of those in the financial houses." Empirical research backs you up - the financial sector has been a rent sucking machine for decades. But financial crises have occurred under both fiat and commodity systems, so that's clearly not the determining factor.
And while I'm sure I won't dissuade you of anything, you made a couple of points that are puzzling enough to address:
"You say our military power is linked to the reliability of our money. There is so much economic turmoil related to what is being done to our money that unless Congress acts in the next few days, our military will run out of money at the end of this month. This means that our young people in harm's way, and those who support them, won't get paid. This situation is a reflection of the declining reliability of our money."
Then you agree that deflation would also undermine reliability of our money? Not sure a gold standard is the right prescription then.
"Blaming war on a low money supply is disingenuous. War is waged for many reasons, the most prevalent ones being access to commodities, consolidation of power, and ideology."
Help me out here -- how does a low money supply under a metallic monetary standard not meet the criteria of "access to commodities"? What do you think the Spanish were doing in the New World, for example? Or the Dutch in South Africa? Or prospectors in California and Alaska? Or countless other examples?
Bill Gross Channels Edward Hugh on Demographics and Austrians on Malinvestment [View article]
I interpret the H&V quote differently. The standard rule of thumb among demographers is that young adults tend to dissave (household formation, chid rearing, lower relative income), middle aged adults tend to save (peak income years, lower household formation and child rearing costs), and older adults tend to dissave once again (pension income, retirement asset drawdown, gifting, higher medical expenses, etc.). And data tend to undermine the belief that old age means lower AD.
The question H&V are asking, I think, is that in wealthy export dependent economies that have long relied on internal saving and external dissaving, what impact will their aging (and likely dissaving) populations have on the economic status quo?
P.S. I'd like to see more 'normal' nominal rates too, and think QE2+ would cause more distortions globally than it's worth (certainly the BOJ contributed to the asset bubbles of the past decade?). But as far as I can tell, the only way to attain higher rates without causing further deflationary effects is to follow the MMT prescription -- have the Treasury directly spend new USDs into existence. If the argument about high fiscal multipliers at the zero bound are valid, then such spending would raise expectations and sentiment, which should be reflected in higher real and nominal rates. And it would add nothing to the national (interest bearing) debt, and might even force banks to start earning their keep in the private sector again.
Deficits, Debt, and Inflation: When Smart People Are Wrong [View article]
A Look at Business Conditions [View article]
Misunderstanding Modern Monetary Theory [View article]
This is NOT about employers, but about existing income earners. Payroll taxes are a transfer. If the Treasury funds those transfers with new cash instead of with tax collections, that should be stimulative of domestic demand, domestic saving, and domestic balance sheet repair. That is no more of a "giveaway" than unemployment benefits, financial sector bailouts, or income and cap gains tax cuts. It's not about employers, but about households.
If you thought I meant employers, then we're probably in agreement: symmetrycapital.net/in.../
"And it's insidious. When the economy turns around the pressure from business will be on to extend the holiday, and we all know congress will probably oblige it. That will in effect de-fund our social safety net, which I submit is the underlying intent of the originators of the payroll tax holiday idea in the first place. "
See the first part of my response above. If Treasury is funding those transfers via newly created USDs (or more conventionally, via borrowed savings, as long as it can do so -- and a 3% yield on 10Y USTs suggests that it can do whatever it chooses) then there is no "de-funding" of the social safety net.
The glaring misconception about fiscal issues (and monetary) is that the govt must borrow from the private sector. The govt need only supply an appropriate (neither too inflationary or too deflationary) amount of money to the private sector. For most of the past 100 years it's done so via the judgement of private debtors and creditors. But it could just as readily do so via direct spending, as a payroll tax holiday might require.
But after re-reading your post, I suspect you assumed I was talking about a Schumer-Hatch type approach (which I agree is less than optimal) than what, for example, Warren Mosler and David Frum have each proposed.
Misunderstanding Modern Monetary Theory [View article]
Are you saying all these schools of thought would (or will) "destroy this country"? Assuming that were true, what alternative(s) wouldn't?
Misunderstanding Modern Monetary Theory [View article]
Misunderstanding Modern Monetary Theory [View article]
Some of the proposed designs for one of the central MMT proposals -- federal govt as employer of last resort -- do a great deal to eliminate agency risk, while doing far more to attain full employment than private sector credit creation and transfer payments can do.
And how would a payroll tax holiday possibly be considered pork?
Economic Thoughts on the Midterm Elections [View article]
Given the deflationary forces I listed in my comment above, if the federal govt does NOT spend sufficiently, it will drive more of the private sector into bankruptcy. That might have a rabbit hole feel to it, but it's a factual description of how fiscal and monetary policy interact. Spending cuts and adherence to PAYGO -- the GOP's newfound religion -- would indeed be a form of appropriation. And while we were able to absorb some austerity during the Gingrich-Dole years (domestically that is - Asia, Russia, and others were not!), I think it would have much worse effects on us today.
Economic Thoughts on the Midterm Elections [View article]
Perhaps. It depends on (1) what the underlying economic fundamentals really are and (2) what the policy outcomes would be. I'm a raging Independent, and really don't have a dog in this political fight. Just want policymakers to do what's best.
Our take is that a household balance sheet recession + business and household pessimism + negative shifts in age structure are all going to be deflationary. As any good supply sider knows, that implies a shortage of USDs. Given that the Fed is constrained by zero, the obvious remedy is concerted deficit spending -- hopefully in ways that are most conducive to actual investment and growth. Getting policy "right" will not easy, but the underlying reality looks pretty simple to us.
And please note, I am not opposed at all to "supply side" tax cuts. But their effect would be less potent if the spending cut folks get their way. Not opposed to cutting wasteful spending either -- but cutting aggregate spending when private sector credit creation is moribund is not a good idea.
Misunderstanding Modern Monetary Theory [View article]
There are a few proponents (eg Kucinich, Michael Hudson, Stephen Zarlenga) of bringing money creation and central bank operations under more direct control of the Treasury. Some people think that's a recipe for disaster (bankers clearly did around 1909-1913). Perhaps it would be, but it is possible that such a system could be designed and implemented well (and keep in mind the US has redesigned its monetary system more than once!). Arguments that it would be a more just and equitable arrangement are hard to refute -- but only as long as they're sincere about avoiding inflation. Most MMT'ers clearly favor full employment over low inflation, so that is an undeniable risk. But their idea of an employer-of-last-resort function might be an effective way to mitigate that, and similar ideas have originated on the right, eg, Ned Phelps' book Rewarding Work.
Misunderstanding Modern Monetary Theory [View article]
I like to think about this in a framework like the pure credit economy Wicksell articulated a century ago. Think in terms of various Taylor rules -- Charles Weise came up with an interesting one that incorporated sentiment via, eg, high yield spreads, and I saw an interesting one on SA not too long ago -- many of them imply that a negative overnight rate would be optimal, anywhere from low single digits to negative 9 or 10%. Wicksell would argue that as long as the central bank rate is above this (and that's a heck of a spread from 0.25% to -4%!!!) this would lead to a cumulative process of deflation. To the extent that nominal financial commitments are not indexed to such an outcome, there would be an intensifying deflationary spiral, until some much lower equilibrium is reached (think Great Depression).
Can the Fed target a negative interest rate? Not very precisely, and it would throw money and credit markets into chaos (e.g., how do you finance money market operations? what effects would a negative overnight rate have on sentiment?). QE's an option, except that it favors an oligopoly of primary and member banks (not very democratic), and enables global carry trades (not very healthy in the long run). Can direct federal spending, ie via new money creation, help? Absolutely -- as long as it is well designed (much of ARRA and prior stimulus was not) and is not deficit constrained by conventions such as PAYGO.
Interestingly enough, under prevailing conditions, this kind of direct fiscal stimulus would make the Fed's job much easier.....it could then follow policies designed to prevent the outcomes you're worried about.
White House Misses the Mark [View article]
I'm not sure what you mean by "taxes are already at historic lows." Are you referring to nominal revenues? Revenues-to-GDP? Marginal or effective rates? If the latter, which types of taxes are you referring to?
Whatever the case, here's the logic: household balance sheet recession + pessimism + falling economic potential due to demographics + central bank rate near zero means that the govt must spend without regard to revenue -- which our govt can do without any problem whatsoever -- up until the point where inflation becomes a concern.
The federal govt does not have to issue new Treasury debt to do this. It can simply instruct the Fed to credit bank accounts. The money you hold in your pocket or your bank account is simply another form of govt debt -- which is "called" whenever you pay your taxes, for example. If deflationary pressures are intensifying, that implies a shortage of the stuff. And a payroll tax holiday, done properly (eg, by taking PAYGO out to the woodshed and leaving it there) is a quick, effective, and relatively fair way of doing that.
White House Misses the Mark [View article]
Here's the important point, given the economic conditions prevailing today -- the federal govt cannot give with one hand and take away with the other -- in a balance sheet recession, with crummy demographics and interest rates close to zero, the most supportive thing a sovereign govt can do is spend money into existence, ie, run monetized deficits, up until the point where they threaten to become inflationary.
Misunderstanding Modern Monetary Theory [View article]
Think about it this way -- the Fed could buy all outstanding Treasury debt in a short period of time with enough "keystrokes" and phone calls and paperwork. The federal government would then have a debt of zero, right? Where did it go? It was replaced by a market equivalent amount of non-interest bearing debt, or money. I think that's more of a neo-classical concept than MMT'ers like, but it helped me understand what the heck they were talking about. So apart from the dislocations and other financial dynamics it would cause, the govt just paid off its interest bearing debt without extracting a single dollar in taxes from the private economy. There is no funding constraint on a sovereign issuer!
The only constraint is inflation -- if the issuance of new money exceeds the capacity of the real economy to absorb it, then anti-inflationary measures are required -- higher taxation for MMT'ers (I think more classical Keynesians like Tobin thought along these lines as well) or higher interest rates for the "neos" (neo-classicals, neo-Keynesians).
MMT raises a lot of interesting arguments around the ethics and political economy of money creation. But keeping it simple, if there is slack (deflation) in an economy, the public sector has to issue money (run deficits) to offset it. When Fed policy can do no better than push on a (broken) string, why not work the fiscal lever?
If you subscribe to the gold standard dogma, think about it this way -- under clasical gold, the gold mining industry (ignoring existing non-monetary supply and mint conventions) was the source of new units of money (gold was base money, credit transactions created bearer certificates and ledger entries etc). What was the gold inudstry doing, ideally? It was running persistent "deficits" of gold -- roughly equivalent to the growth of the real economy, at least when things went well (actual gold discoveries were far lumpier).
Unemployment: Our Beef With Art Laffer's WSJ Editorial [View article]
Looking past that, there's probably some stuff we could agree on. For example, I'm OK with this: "The system is set up to enrich the financial houses on both the front end and the back end of the booms, and to screw the taxpayer. It is a set-it-and-forget-it system that moves wealth from the pockets of those who create wealth thru work - the wage earner - into the pockets of those in the financial houses." Empirical research backs you up - the financial sector has been a rent sucking machine for decades. But financial crises have occurred under both fiat and commodity systems, so that's clearly not the determining factor.
And while I'm sure I won't dissuade you of anything, you made a couple of points that are puzzling enough to address:
"You say our military power is linked to the reliability of our money. There is so much economic turmoil related to what is being done to our money that unless Congress acts in the next few days, our military will run out of money at the end of this month. This means that our young people in harm's way, and those who support them, won't get paid. This situation is a reflection of the declining reliability of our money."
Then you agree that deflation would also undermine reliability of our money? Not sure a gold standard is the right prescription then.
"Blaming war on a low money supply is disingenuous. War is waged for many reasons, the most prevalent ones being access to commodities, consolidation of power, and ideology."
Help me out here -- how does a low money supply under a metallic monetary standard not meet the criteria of "access to commodities"? What do you think the Spanish were doing in the New World, for example? Or the Dutch in South Africa? Or prospectors in California and Alaska? Or countless other examples?