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Comment by RobertoG | Hacker News Reader

I'm pro-MMT, not hiding.

From the article, that you obviously didn't bother to read:

"Drought and heat continued to hurt the wheat harvest in July in Canada, the world’s biggest supplier of durum wheat, months after a harsh winter hit the Russian crop. Grain shipments from Western Canadian port terminal elevators tumbled 41% in the third week of August from a year-ago, according to a Quorum Corp. report. European crop quality was also hurt by heavy rains over the summer."

It seems that we better apply some lessons from MMT for a fast transition to green energy soon.

For anyone interested in learning more about MMT :

https://www.youtube.com/watch?v=WS9nP-BKa3M

(Presidential Lecture Series: Stephanie Kelton, video)

View on HN

For anyone else wondering about MMT, fascinating: https://www.investopedia.com/modern-monetary-theory-mmt-4588...

So basically, the way I understand it, money is just a means of getting people to do work.

All of this work/activity is for fiat currency what gold was in the gold standard.

So the ceiling is much higher, but there's still a ceiling - go too high and your currency is in trouble.

Also manage the removal of money properly - too much tax and people are in trouble, which leads to your currency being in trouble.

Can it ever recover if people lose trust in it? Since that's a major part of what's keeping such a system going.

>>Can it ever recover if people lose trust in it? Since that's a major part of what's keeping such a system going.

This is the most important thing MMT supporters seem to ignore. Fiat money is a confidence game and all the theories will be pointless if people lose trust in the money.

A government only accept its currency to pay taxes -> you have to pay taxes -> you need the currency even if you lose trust in it.

It's the power of raising taxes what gives money its value.

"Variations of the modern-money narrative are found repeatedly throughout history. The levying of monetary taxes to create waged labor was “a nearly universal experience throughout Africa” in the colonial era, explains economist Randall Wray. Hut taxes, coupled with extreme violence and racial segregation, forced unwilling migrant laborers into the gold and diamond mines of South Africa. Bernard Magubane, an anthropologist, described the purpose of these taxes as being to “increase the economic pressure on the African peasants” to force them into waged work."

from: https://thenewinquiry.com/the-world-according-to-modern-mone...

OK that makes sense. But what about everything else besides taxes? If people don't trust a currency, they can begrudgingly use it to pay taxes.

What about food, fuel, clothes, etc? Taxes on everything will only go so far, at some point people will just trade all that illegally, on black markets, using different currencies.

Actually, I think that's the case in some countries today and the Soviet Union had a similar situation, people practically bartered, ignoring the state.

Maybe the most important lesson of MMT is that public debt, deficits and all those things that so frequently are at the center of the public debate are irrelevant compared to what's really important: real resources.

It doesn't matter if you have a big or small public debt (in your own currency), what's important is the real things in the economy.

If people is, for instance, using dollars instead of the currency of the country, it's, probably, because your country depend totally on imports (in the worst cases for basic things like food or energy).

If that's the case, the first steep to solve it, it's to recognize the problem. If you don't recognize the problem, you will finish addressing virtual problems like deficits or public debts instead of real resources constrains. Those are very difficult problems to address, but it will be even more difficult if you don't understand them.

The mainstream advice to development is: open your economy to competition, reduce deficits and public debt. The result of that is the impossibility of an agricultural, infrastructure or industrial policy that solve the real resources problem.

Our tax system largely functions on trust and voluntary compliance. Once citizens lose faith in their fiat currency they're more likely to cheat on their taxes or just refuse to pay.

> It's the power of raising taxes what gives money its value.

People can convert their BTC to USD at their obligation day and then your currency is only worth what % you collect in taxes. I don't think taxation will be the model for MMT, and only when you separate taxation, investment (storage of wealth) and daily transactions that you can get a healthy working system.

Do you have any historical example where people lose trust in it and it didn't recover?

If "changed/rebuilt/replaced" counts as recovered (and I guess it does), then no.

In the end, there will always be a government and people will need to trade.

> So basically, the way I understand it, money is just a means of getting people to do work.

More like get (or enable) people to trade with one another.

> So the ceiling is much higher, but there's still a ceiling - go too high and your currency is in trouble.

I think this is the problem with MMT as it doesn't give an answer to what should you use to store wealth. Money should not be used to store wealth (that's not its goal) but to make a transaction possible between two counter-parties.

> Can it ever recover if people lose trust in it? Since that's a major part of what's keeping such a system going.

You shouldn't really care. Think if we can develop a system where one could work and exchange value in one currency, and store value in another currency. The first currency should disappear as soon as the transaction ends, and should appear as soon as there is a need to transact. The second currency gives a society IOU to give you a transaction in the first currency in the future.

Not sure how to do it, really.

I'm also pro-MMT and Stephanie is one of my favorite's. I don't think the current events are going to help as people will not understand the difference between a supply choc and a monetary base increase. It doesn't help that some politicians will try to use MMT to pay out for other stuff rather than use it for what it is. It also doesn't help that MMT is still loosely defined.

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