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Modern Monetary Theory - Discussion

  • 04-09-2021 1:37pm
    Registered Users Posts: 7,548 ✭✭✭ 54and56

    Hi all,

    I've been reading a few articles on MMT and whilst I can see (but not necessarily agree with) some of the logic there are a couple of questions I have that I haven't seen discussed or addressed:-

    1. Is it possible to predict at what point a sovereign FIAT currency will lose user confidence as a store of value? It seems fairly basic to me that if the amount of a FIAT currency in circulation, even the US$, gets to a certain volume holders will lose confidence in its ability to retain value / purchasing power. I guess the MMT retort to this is that the government has to ensure it pays attention to inflation and stop spending / printing new money if it looks like inflation is getting too high but is that it?
    2. Can the Euro ever be considered an independent sovereign currency as currently constructed or can that only be true if the countries using the Euro agree to form a federation similar to how the states in the US are aligned under the federal government and thus the MMT conditions for currency sovereignty are met i.e. only borrow in Euro, no constraint on the ability to print Euro's and never peg the Euro to another currency or gold etc?

    I'd like to see what others here who are pro or con MMT think about the above and where MMT is heading etc.