DTM ez da berria
MMT Is Not New
Warren Mosler discussing the historical roots of Modern Money Theory, which is mostly a re-discovery of old ideas. Some previous thinkers include Georg Friedrich Knapp, Alfred Mitchell-Innes, Beardsley Ruml, Marriner Eccles, and Hyman Minsky.
The Gold Standard Mostly Ended in 1933-34
Warren Mosler, father of Modern Monetary Theory, on with Steve Grumbine of Real Progressives, discussing the gold standard. Although sometimes the dates of 1971 or 1973 (when the Bretton-Woods system fell apart) for the end of the gold standard, Mosler argues here that 1933-34, when the US suspended domestic convertibility into gold, is the better date to use. Though a strict convertibility regime would limit domestic policy (see here: https://youtu.be/3OJFjzckZYM?list=PLZ…), the US was able to mostly ignore these kinds of considerations because it faced very limited demand to convert dollars to gold.
The Purpose Of Money Is To Provision Government (or, “How To Turn Litter Into Money”)
Warren Mosler, one of the founders of Modern Monetary Theory, on what the logical purpose of money is. This is not to say that it doesn’t achieve other ends as well, but rather that as a point of logic it is a solution to the problem of how to provision government.
“How To Turn Litter Into Money” demonstrates the mechanism by which acceptance (or “acceptation”) of money can be driven by the power standing behind the issuing authority. This contrast with the general public perception that so-called “fiat money” is accepted only because the government says so.
Txina eta AEBko zorra
Aren’t We Financial Slaves To China?!?!
Warren Mosler on what it means that China buys our debt. China accumulates dollars at their Federal Reserve account because we run a trade deficit with them, so they get dollars when we buy stuff. They could sit on these dollars and do nothing, but they’d prefer to earn interest, so they purchase US Treasury bonds which are essentially savings accounts at the Fed.
These bonds are constantly maturing, and we are constantly paying them back, billions of dollars a week, by transferring the dollars from their savings account back to their reserve account. That’s it. We benefit enormously from this situation: we get real goods and services out of Chinese labor instead of American labor, and they only end up with numbers on an account statement.
If China decided they didn’t want to hold dollar-denominated assets anymore, then they could spend the dollars to buy stuff. If they buy real stuff, then that pushes up American employment. If they buy other currencies, then this could put downward pressure on the dollar’s exchange rate, which would cause our exporters to hire more people.