Printing some responses from readers to my post from yesterday about the slippery politics of MMT. From TPM Reader MO …
What we have now is a fiat currency pretending it’s still on a gold standard. That is, we have a financial system designed around using the natural scarcity of commodity commodity money, but we’ve abandoned commodity money. oddly, we persist in acting like money is in natural limited supply, and we can only get more of it by taking taxes, say.
The money we have is basically a bet on future productivity and stability. it’s a social compact. That’s really all it is: faith in the United States of America. And of course there’s nothing at all trivial about that faith. It motivated people to fight and die. Or emigrate, of take a chance on businesses, or work towards their own self advancement. The US has tangible physical assets and resources, it’s an extraordinary human accomplishment. But the united States itself is as Anderson says an “imagined community, and the money we use is nothing but a symbol of that community.
So why can’t we fund a welfare state by paying people in printed money? Heath care is a bet on the stability and productivity of our citizens: health care returns benefits in the form of that very same productivity. The money is not scarce. The danger, the obvious danger, is inflation, but as mentioned taxes effectively extinguish money and can be used to prevent inflation.
I wrote a history [relevant topic in economics from major academic publisher]. I only mention to suggest that this isn’t an ill-considered claim. Why do we still act as if money is a naturally scarce commodity, when we know it isn’t?
