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Comment by RobertoG | Hacker News Reader

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...

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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.

> 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.

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.

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