Sunday, March 28, 2021

The Problem with Money Supply Growth: A Comment on Jordan Peterson Thinking

Jordon Peterson

As I have said before, Jordan Peterson has done heroic work in the battle against social justice warriors, the cancel culture and wokism, however, his weak spot continues to be economics.

As I have explained in a podcast, A Plea to Dr. Jordan Peterson: Please Stop Promoting Marxism, although he speaks out against Marxism, he also considers the Pareto principle a serious problem with the natural structure of society. This is wrong (listen to the podcast). But it is also at the core of Marxism. Thus, while he attacks Marxism, he supports its fundamental premise (though Peterson is even worse because he expands the "Pareto problem" beyond capitalism to all of society).

He claims that because of the Pareto natural law, that under capitalism, like Marx's claim, great wealth will only accumulate to a few, that thus the masses will eventually rise up against this unbalanced structure.

Now, what is particularly ironic about this thinking is that the one thing the cultural-Marxists of the Frankfurt School understood correctly is that the proletariat is never going to overthrow the capitalist system because under capitalism the proletariat is getting fat and happy also. So in a sense, the cultural Frankfurt School thinking on this (limited) point is much more sound than that of Peterson.

Indeed, the Frankfurt School adopted a cultural attack on Western Civilization because they understood the attack to overthrow capitalism on economic grounds wasn't going to occur. By Peterson thinking such a class uprising on economic grounds could occur, he is more of a fundamental Marxist than even  Antonio Gramsci and Herbert Marcuse.

I raise this point, again, because Peterson now is delving into the arena of monetary theory and it is obvious his understanding of economics is limited on both an empirical level and theoretical level.

I, stop for a minute here, to emphasize again that Peterson has done heroic work in the social sciences went it comes to identifying problems with wokism, etc., but it is another story when it comes to economics.

He just put out this tweet:

First, he apparently isn't aware of how much the money supply has increased over the last 12 months:

The growth in the last 12-months has been more like 27% than 32% but yes, Jordan, the United States money supply has increased by a massive amount in the last 12-months, by more than $4 trillion on an initial base of $15. 5 trillion.

The idea that the quality of production somehow could counter this when a large portion of the economy was in lockdown does not quite fit, but further, even if there was a period of powerful gains in productivity, the question must be asked: Why increase the money supply under these conditions?

And this gets to the heart of the failure of Peterson's understanding of money supply creation out of thin air. A major problem with money supply growth is that the growth always enters the economy in certain sectors. This distorts the economy in favor of those sectors and is at the heart of the business cycle. This distortion must ultimately result in the bust phase of the distorted boom phase, or hyperinflation must occur.

Peterson does not appear to be aware of any of this. I recommend he read: Austrian School Business Cycle Theory by Murray Rothbard for an understanding of the entirety of the problem with central bank money printing.



  1. Apparently, he realizes his deficiency of economic understanding. He's looking for an Austrian to interview. I think you would be perfect.

  2. "He claims that because of the Pareto natural law, that under capitalism, like Marx's claim, great wealth will only accumulate to a few, that thus the masses will eventually rise up against this unbalanced structure"
    Except JBP has never claimed that revolutions are inherently part of capitalism, or that the accumulation of wealth *will* lead to them. He has explicitly said the Pareto principle applies to all systems and that it *can* cause problems.
    As with most criticisms of Peterson, this relies on the author ignoring what Peterson actually said and responding to a related but different claim instead.

    1. You need to listen to the video I reference in the first post he specifically states that the masses will get unruly because of the Pareto "problem."

      This is in direct contradiction to the cultural Marxists who understood that the masses were provided too many goods and services to enter into revolution.