Posts Tagged ‘Nature of Money’

Modern Money Theory is something that I’ve just come across recently. The main tenant of #MMT is that trade surpluses and deficits don’t matter if inflation is measured accurately and government’s are trusted to increase or decrease the money supply directly through equity based money creation as opposed to debt-based money creation. I encourage anyone is who is as perplexed about the nature of money as I am to check out the following post and to research Modern Money Theory further. I don’t know if it really offers all the solutions, I don’t think any system ever will, but the idea of eliminating deposit insurance and allowing private banks to fail while creating government backed banks that offer 100% reserve digital cash storage (i.e. deposited cash is stored and NOT lent out) is compelling. The idea of governments increasing or decreasing the cash supply directly via depositor accounts is counterintuitive but in the context of a system that aims for stable purchasing power (no inflation or deflation) I understand how it would work. It’s not clear to me, however, where interest rates would come into play…If the time value of money is stable how is the cost of money measured for capital investments? Anyway, check this blog out. It’s a nice change from the usual Austrian/Keynsian dialectic which is like a train without wheels and very soon going nowhere.


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