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> Think of Modern Money Theory as this crazy theory that challenges our intuition but actually makes sense if you really understand it. How does one get to the

> Think of Modern Money Theory as this crazy theory that challenges our intuition but actually makes sense if you really understand it. How does one get to the point of understanding it?

csomar 6y ago
Two things changed my view about MMT and money: 1- The way we "print" money is by issuing credit. That seems safe since it is credit and not actual "money printing" but as soon as that credit expire, you need to re-issue it again. So it's the same thing as printing in the longer run. If you want to reduce the money supply, you stop issuing credits. In MMT, you add taxes and this has the same effect. 2- By having an interest rate and issuing credit, money becomes a commodity. This is wrong as people should not ask banks so that they can make transactions. Money should be available to anyone who wants to make a transaction. Notice that I use the word available and not free. MMT is not about giving people money for free, but about making it available for anyone. There is a whole class of people that built fortunes just by sitting on money. Working people had to pay these other people and for what?
- primrose 6y ago
  "Working people had to pay these other people and for what?" The productive capacity this money enabled. Except instead of the gov doing it 1000 miles away, they had skin in the game, took risks and monitored the situation to ensure success.
  - csomar 6y ago
    I'm specifically talking about government bonds, since these have 0 risks. If risk is correlated to yield, these should have no more than 0% interest rate.
- Proven 6y ago
  One does not simply "issue credit" without any backing. Three hundred years ago it was a crime to issue banknotes not readily redeemable in hard money and now it's suddenly a matter of convenience. CTRL+P and there you go ("It's nothing, just $3 trillion in new credit to get us thru this Covid19 thing!") > If you want to reduce the money supply, you stop issuing credits. Who gets to decide that and why would they reduce the supply? To create credit out of nothing is theft. Having the power to decide, would they ever reduce it? Have you seen any indication that the Fed wants to introduce real interest rates? > 2- By having an interest rate and issuing credit, money becomes a commodity Yes, that's how it's supposed to be, because it can be exchanged for other commodities and services such as labor. Why would a laborer want to give the politicians the right to print worthless digital or paper currency that can be used it to pay for labor? Would you like to be paid in such a currency? > This is wrong as people should not ask banks so that they can make transactions. Money should be available to anyone who wants to make a transaction. You don't need to ask a bank to make a transaction. You can barter or exchange labor for a product or service. You can also exchange labor for a cryptocurrency or paper money and make millions of transactions every day, without anyone's permission. > MMT is not about giving people money for free, but about making it available for anyone. Sure, let's do it!

> Think of Modern Money Theory as this crazy theory that challenges our intuition but actually makes sense if you really understand it. How does one get to the point of understanding it?

csomar 6y ago

Two things changed my view about MMT and money: 1- The way we "print" money is by issuing credit. That seems safe since it is credit and not actual "money printing" but as soon as that credit expire, you need to re-issue it again. So it's the same thing as printing in the longer run. If you want to reduce the money supply, you stop issuing credits. In MMT, you add taxes and this has the same effect. 2- By having an interest rate and issuing credit, money becomes a commodity. This is wrong as people should not ask banks so that they can make transactions. Money should be available to anyone who wants to make a transaction. Notice that I use the word available and not free. MMT is not about giving people money for free, but about making it available for anyone. There is a whole class of people that built fortunes just by sitting on money. Working people had to pay these other people and for what?

primrose 6y ago
"Working people had to pay these other people and for what?" The productive capacity this money enabled. Except instead of the gov doing it 1000 miles away, they had skin in the game, took risks and monitored the situation to ensure success.
- csomar 6y ago
  I'm specifically talking about government bonds, since these have 0 risks. If risk is correlated to yield, these should have no more than 0% interest rate.
Proven 6y ago
One does not simply "issue credit" without any backing. Three hundred years ago it was a crime to issue banknotes not readily redeemable in hard money and now it's suddenly a matter of convenience. CTRL+P and there you go ("It's nothing, just $3 trillion in new credit to get us thru this Covid19 thing!") > If you want to reduce the money supply, you stop issuing credits. Who gets to decide that and why would they reduce the supply? To create credit out of nothing is theft. Having the power to decide, would they ever reduce it? Have you seen any indication that the Fed wants to introduce real interest rates? > 2- By having an interest rate and issuing credit, money becomes a commodity Yes, that's how it's supposed to be, because it can be exchanged for other commodities and services such as labor. Why would a laborer want to give the politicians the right to print worthless digital or paper currency that can be used it to pay for labor? Would you like to be paid in such a currency? > This is wrong as people should not ask banks so that they can make transactions. Money should be available to anyone who wants to make a transaction. You don't need to ask a bank to make a transaction. You can barter or exchange labor for a product or service. You can also exchange labor for a cryptocurrency or paper money and make millions of transactions every day, without anyone's permission. > MMT is not about giving people money for free, but about making it available for anyone. Sure, let's do it!