Modern Money, The Good, The Bad, and The Ugly

Bottom line, most people in our society, including our elected officials, talk about the economy in terms that are flat out wrong.

Hence, this blog.

It is my (however small) contribution to helping people understand how economies based on fiat currencies actually work so we can tell when others, and our elected officials, say stuff that just ain’t so.

This idea that we should describe the economy as it actually works, rather than how we believe it should work, is called Modern Monetary Theory.

For the record, I hate that name. I hate that name because, for many people, it implies two things:

  • This is new (as in modern)
  • This is “just” a theory, rather than an operational description

Neither of those is true.

With this blog, I’m working to help make it so anyone can understand.

The list of articles (and future articles) is:

How Did a Non-Economist Get So Interested in Macroeconomics?

The short answer is once you see how Modern Money works, what Modern Monetary Theory describes, you can’t unsee it. Then you find yourself wishing you could help others see it too.

If everyone understood this, we collectively would make better decisions. Because we would be dealing with reality and not fictional models of reality.

I fell into this rabbit hole after hearing bits and pieces over the course of two years, then watching a video on YouTube during which I had a Eureka moment.

The stuff I had heard over time was:

  • The US is monetarily sovereign, which means the US Treasury is the monopoly issuer of US dollars.
  • It is not possible for the US to default on its national debt. There are two reasons for this:
    • The US national debt is denominated in US dollars.
    • The US Treasury creates US dollars as needed, and as such can never be forced to default.
  • Some nations and territories are in debt trouble because their debt is denominated in a currency which they do not control. Greece and Italy must pay Euros. Venezuela and Puerto Rico must pay US dollars.

The video in question is at the bottom of the blog post...

The Basics of How Modern Economies Work

It’s an hour and 21 minutes long, but if you want to understand how modern economies work, it helps to understand why money was created in the first place about 6.000 years ago, and how it worked.

As he described this in the video, all the bits, and pieces I had heard suddenly snapped together into a cohesive framework. I came to understand that:

  • Money today works just like it did when it was first invented about 6,000 years ago.
  • What we call The National Debt isn’t even debt. Seriously.

It seems one of the reasons we describe it wrong is we use incorrect vocabulary in describing it. I mean, if it’s not debt, why do we call it debt? And isn’t that misleading? Spoiler: It is.

While it may be a boring academic subject, when the economy is managed wrong because it’s understood wrong, people suffer needlessly.

To understand this better, please read…

The Basics of How Modern Economies Work

…and if you have time, please watch the video. I suspect you’ll be glad you did.

Facebook Comments