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Comment by slowhand09 | Hacker News Reader

MMT basically says "its ok, we can just print more money". How did that work for Venuzuela? Lets see... 1.00 US Dollar = 3,615,588.83 Venezuelan Bolívares. The 6 inch thick stack of currency required to buy a roll of toilet paper would be more efficient than the toilet paper. Printing more money just devalues the work product of everyone before that. Republican attitudes about tax? Surely you jest.

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Except this is the exact opposite of what MMT says? Since MMT is such a boogeyman nowadays and people on the internet can't agree on a single definition, lets take the wikipedia article explaining it (2 seconds of research you didn't do before posting).

https://en.wikipedia.org/wiki/Modern_monetary_theory

"Is limited in its money creation and purchases only by inflation, which accelerates once the real resources (labour, capital and natural resources) of the economy are utilized at full employment"

The whole point of MMT is simply that the painting is not the item, and money is not value, money is a representation of value and that it's inherently worthless. IE, if you suddenly taxed away 50% of everyone's dollars and cut all dollar-denominated debt by 50%, literally nothing would change except that people would need to get used to new prices being half of what they were.

What MMT says is that printing and taxing are just wealth distribution under the assumption that humans are rational and can adjust to new prices quickly. The issue and all complications are

1. Rebasing all forms of currency including weird things like dollar denominated debt, sovereign reserves, stocks etc is hard.

2. Human's aren't rational and will be mad if you suddenly halve the value of their dollar even if in real terms nothing has changed for them b/c government handouts or whatever.

MMT works well, if exporters want to swap their real assets (commodities, food, chips, metals, labor) with US dollars (nominal). No one wants to export their real stuff to Venezuela unless the latter pays in US dollars.

Don't know why you're being down voted, it's widely accepted that it only really works for currencies that are reserve currency status. It could also work if you were entirely self-sufficient with no exports/imports. All on the proviso that humans are quick to react to inflation, using perfect information, which we're not and which we don't have.

It works for all currencies. Some currencies have higher savings rates than other currencies.

The problem is calling that saving 'debt' and then catastrophising about it.

IIUC, it works for all currencies that are coupled to the economic and political policy making process. It does not work when the currency value is controlled to any significant degree by parties outside that process. These are sometimes called "sovereign currencies", and US dollar is one example thereof.

Most countries are not self-sufficient and do export/import and many countries are not able to issue debt in their own currencies.

So what? You can only import what you can export. In a floating system that swaps the currencies around just fine.

Draw it out and do the balance sheets. Local importers end up paying the local currency costs of exporters.

That's not what MMT basically says.

MMT is more like: "printing money is not limited by the things you think it is".

MMT is more about the fact that money isn't some alien artifact but is created by a government that needs to credibly demonstrate that the money it issued is needed for tax payments.

If that credibility is lost, for example, by creating more money than it intends to tax, then you will see inflation.

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