Australian dollar enters the MMT era

See the latest Australian dollar analysis here:

Macro Morning

DXY was weak last night as EUR chases the fiscal package:

Australian dollar was weak anyway:

EMs were mixed:

AUD/SPX correlation had an up day but is trending lower:

Gold was firm:

Oil too:

Dirt is crushed:

Except the red magic dirt. Anyone with that is flying:

EM stocks are stalled:

Junk is euphoric:

Bonds were bid:

Stocks stalled:

Westpac has the wrap:

Event Wrap

US weekly jobless claims rose in line with expectations at 2.1m. However, continuing claims fell to 21m from 25m (estimates were close to 26m), indicating the worst in the labour market may have passed. April durable goods orders did not fall as much as expected, the headline measure down 17.2%m/m (vs est. -19.0%m/m), and the ex-transport measure down 7.4%m/m (vs est. -15%m/m). The second take on Q1 GDP was slightly weaker (annualised -5.0%, vs est. -4.8%), although personal consumption fell 6.8% annualised (vs the expected -7.5%). Pending home sales fell 21.8%m/m in April (vs est. -17%m/m).
Kansas Fed’s manufacturing survey was less weak than expected at -19 (est. -22, prior -20), the outlook rising to -2 (prior -8).

German May (provisional) CPI was as expected at -0.1%m/m and +0.6% y/y, with harmonised slightly less weak at 0.0% m/m and +0.5%y/y (est. -0.1%m/m, +0.4%y/y).
Eurozone May economic confidence was slightly below estimates at 67.5 (est. 70.6, prior revised to 64.9 from 67.0), with services notably softer at -43.6 (est.-27.9), though industrial confidence at -27.5 (est. -26.5) was close to expectations.

Event Outlook

Australia: April private sector credit rose by 1.1% in March as firms drew down on existing lines of credit to boost liquidity ahead of the looming cash flow squeeze. This dynamic should extend into April, and Westpac is looking for a print of 0.6%. The ABS will also release the “Household Impacts of COVID-19 Survey” for 12-15 May.

New Zealand: May ANZ consumer confidence will be supported by the easing of COVID-19 restrictions.

Euro Area: M3 money supply should continue to accelerate as easing takes effect (market f/c 8.2%yr). The May CPI is expected to slip into deflation with a print of -0.1%, dragging annual price growth to 0.1%yr.

US: April wholesale inventories will continue to wind down as businesses brace for the demand shock. Personal income (market f/c -6.0%) and personal spending (market f/c -12.8%) will be hit hard in April, with further weakness ahead as job losses dampen activity. Having slipped into negative territory in March, the core PCE deflator is set for another weak print of -0.3%. To round out the day, the May Chicago PMI is poised for a marginal recovery (market f/c 40.0), and Fed Chair Powell will take part in a moderated virtual discussion (01:00 AEST).

In this bizarrely accelerated new normal, we’ve now had the boom, the bust, the stimulus, the recovery, the rotation and, if it remains true to form, next will be the bond back-up as recovery takes hold. That’s three years’ worth of market action in three months.

But is it real? Of course not. It is the great fakeflation, an entity of suspended animation in which capitalism has been bundled into a cryogenic chamber, so that markets can pretend there is a cycle. We all fear the moment that the door is opened and the stink of putrid reality gushes into our noses.

But my thoughts today wander over to the possibility that that will never happen. I have not been convinced by arguments that the Government can hold asset prices up just by choosing to. But there is another way to look at this which is perhaps more credible. Phil Lowe gave us a hint about it yesterday. Via News:

Australia’s Reserve Bank Governor Phil Lowe has warned ending the $1500 JobKeeper’s wage subsidy too early would be a “mistake” and it may need to be extended beyond September.

Breaking with the Prime Minister’s rhetoric that the scheme needs to be phased out as soon as possible, the RBA chief has warned the premature withdrawal of stimulus could damage the economy.

But he’s proposed that any extension would likely to be more targeted, for example for the tourism industry hit by international border closures, an option the Prime Minister has previously flagged.

What an absurd notion. Exactly how long are these jobs that the Government is paying people not to do still jobs? Judging by Captain Lowe, forever!

And that may be the rub. I have long argued against crashnics that see the end of fiat currency that, rather, the next evolution in our economic system is to principles and policies associated with Modern Monetary Theory (MMT). Emergency stimulus measures are almost never withdrawn so what we may instead have upon us now is the MMT era. Like most of these things, it’s not been born clean, with forethought and planning, but in crisis, mutilated by panic and interests. Yet it may still be the new normal.

What will be the outcome of this be for currencies? Traditionally it was a mix of internal, external and relative measures that determined value. In the MMT environment, if that is what it is, the answer will probably be determined by inflation. Those nations that “stimulate”, that is pay the most people to do nothing, will find themselves with greater aggregate demand, inflation and higher currencies. Those that don’t pay everyone to do nothing, with inhibited “stimulus”, higher unemployment and deflation will see lower currencies.

That means those with solid external accounts will be rewarded most with lower currencies, intensifying their imbalances. While the fiscally and monetarily profligate will be punished with higher, chasing inflation, intensifying theirs as well.

It’s the opposite of what should happen in theory but, hey, this is suspended capitalism now.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)

Comments

  1. Blottridesagain

    “It’s the opposite of what should happen in theory but, hey, this is suspended capitalism now.”
    Actually it is exactly what should (as in ‘what inevitably will) happen in modern economic theory. Modern economic theory itself is at fault.

    • Jumping jack flash

      Banks view the concept of debt and money upside down to how it really works. Debt is not an asset. Debt is not wealth. Yet we all have little choice other than to take on staggering amounts of debt to get “wealthy”.

      Banks have writren the rules and run the show for so long now that it is almost all geared towards the banks’ economic ideology.

      It all makes perfect sense if youre a bank.

  2. Breaking with the Prime Minister’s rhetoric that the scheme needs to be phased out as soon as possible, the RBA chief has warned the premature withdrawal of stimulus could damage the economy.

    If that’s true why not give everyone $100k per year so we can have strong economy? where is the difference?

    • Giving everyone $100k will give us a strong economy by the same mechanism that “lower teh rates” has given us a strong economy, mate.

      What don’t you understand? Are you dumb or something? Bad with numbers?

    • Jumping jack flash

      “Stimulus” forever. The new paradigm as required by and dictated by the banks who rule us.

      Its not stimulus if it is baked in, though.
      The “stimulus” will occur as it the level of “free” government money flowing to everyone increases, as necessary, periodically.

  3. “.. the next evolution in our economic system is to principles and policies associated with Modern Monetary Theory (MMT)…..”

    Whatever they might be!

    Which bits of the MMT column of smoke are you referring to?

    Many of the lefties (Bill Mitchell etc) (which is different to identity politics progressive) who promote MMT seem to argue that the objective of the exercise is productive economic activity rather than Debt Peddler Private Bank Ponzinomics.

    Though as I have noted for many years MMT has obvious attractions to the private bank apologists and spruikers who see MMT as way to ensure debt serfs meet their obligations / terms of bondage and keep alive the boom dream of ever inflating asset prices.

    • Blottridesagain

      MMT is simply a further promotion of the whole lower the rates, QE theory that has reduced our economy to a debt ridden hollowed out shell. So yes it will be welcomed by Bankers (and is actively promoted in those quarters)

      • Stewie GriffinMEMBER

        You’re correct Blott/Pfth this is simply the next step in the process of lower rates – MMT is simply all about ensuring that debts will continue to be serviced.

        Once upon a time our elite took the view that debt was a form of slavery, and control one person over another, and hence it should be carefully regulated. Debts should be allowed to fail, because that it how the honesty of the system should be ensured – debts that cannot be repaid and not allowed to fail, are simply a form of slavery.

        Back then the idea around ‘Money’ was that it served two purposes, to facilitate trade AND to act as an immutable value of work done. Indeed it was this second point, the immutable value of work done and the faith of its stored value, that actually made HONEST trade possible.

        Now however, our elite now dip their wicks in the ink pod of another set of cultural values who have an entirely different set of priorities. To them DEBT is the be all and end all and their attitude to it is centered around the roles of individual responsibility – if someone wants to sell themselves into slavery, then so be it. To this culture economic viewpoint, the preservation of debt and individual responsibility towards it is paramount.

        Likewise their view of money is primarily that it is transnational in purpose, they know full well that real wealth is held in real assets, like real estate. Money should serve no purpose as a store of value, as its purpose is only to facilitate commerce.

        This is the new paradigm we are operating under now – H&H is correct, the barstardised form of MMT is now here, and its purpose is simply to ensure the preservation and continued servicing of debts.

        “Please sir, without the income stream your MMT will provide, my debt chains will weaken and the walls to my prison crumble.”

        • 🏑Astro alert🏑
          The point about money serving two purposes is an important one. Most don’t understand it.

          Some do understand and proceed to deliberately obfuscate, to advance particular agendas.

          • Stewie GriffinMEMBER

            CSW believes in Honest Trade and that to be used as money it is essential that BOTH elements of the traditional understanding of money be preserved – facilitation of trade AND store of Value.

            MMT will be both the end of the fiat monetary system and the herald of bloody revolution.

            Those with an agenda have already seen it implemented.

          • Jumping jack flash

            Agree completely.
            At the heart of all the complicated words is a simple, fundamental concept that anyone can understand.
            They don’t want anyone to understand what is happening until it makes no difference whether everyone knows or not.

            If the goal is infinite [nonproductive] debt,and I believe it is, then there are just a handful of basic rules that must be met for it to happen.

          • Jumping jack flash

            Krugman obviously is a banker because he forgot about the interest. They tend to have a blind spot for it.

            If debt is used for spending on anything that doesnt produce extra money to pay the interest with then the interest must be found and taken from some other income producing activity.

            Not to be confused by the treachery that is capital gains – or the inflation caused by using debt to buy big things.

        • DominicMEMBER

          It’s not so much that the powers that be wish to keep us enslaved as the fact that debt is the very underpinning of the monetary system – and the powers that be have a vested interest in keeping the fiat money system going as long as they can. MMT is just another milestone on the road to the system’s inevitable demise.

    • SweeperMEMBER

      My understanding of MMT based on numerous back and forths with its members:
      MMT is whatever its critics say it isn’t. MMT is impossible to define. MMT is policy prescription / isn’t policy prescription depending on audience. MMT is “operational reality” even when operators (CB governors, Finance ministers) say it isn’t how they operate. MMT is the kernel of truth all mainstream economics somehow missed. If I say MMT is x it is really y, if I say for argument sakes it is y it is really z. MMT is based on reality – excluding legal and distributional reality.

      • Brilliant. I call them nutters, they don’t seem to like it for some reason.

      • The Traveling Wilbur

        If property = theft then MMT ≠ theft.
        If inflation and debt are related then MMT introduces debt without adversely affecting inflation.
        If magic puddings are mentioned then MMT keeps the size of the pudding and the number of serves it can provide unchanged but allows for an infinite number of shiny coins wrapped in baking paper to be pulled from the pudding over time.

        Are also all things such members would say.

        The bit I can’t figure out is whether this MMT codswallop is NOT being bought hook line and sinker by voters (unlike free trade is good for you, for example) because the voters are too canny or because MMT is the first proposition in history to be wheeled out that’s so dumb even voters won’t fall for it (and this holds despite the mass lashings of self-interest associated with MMT for most voters whose swing votes are being chased by those pushing it).

        • SweeperMEMBER

          It’s because voters live in reality. And know what % of their wealth they hold in currency and if you told them they had to swap all their assets for $50 bills and stick it in their wallet and never spend it even say when a > 0% risk free return is available they would look at you funny.

        • GlendaFMEMBER

          ‘MMT is the first proposition in history to be wheeled out that’s so dumb even voters won’t fall for it’
          I think that even those at the weekend BBQ like to ‘understand’ and be able to debate what’s going on with their country’s economy.
          If its either too simple(?) or too complex, or just can’t be explained sufficiently it will be viewed with suspicion. From what I’m reading here its not able to be explained at all to the average person, including me.
          However, at the end of the day, if its a straight choice between falling of the cliff or keeping the ponzi going, I know which the general populous wil choose, understanding or no understanding…

      • The Traveling Wilbur

        And of course, thanks to CV-19, we have the new MMT slogan:

        Don’t be like Iceland.

        In 2008 Iceland’s banks collapsed, wiping out 50,000 people’s savings, plunging Icelanders into debt and putting 25% of homeowners into mortgage default. Iceland’s financial failure forced its government to resign, and caused citizens to re-evaluate the merits of lavish spending, borrowing, consuming and speculating.
        Meltdown Iceland – The Economist
        https://www.economist.com/media/pdf/meltdown-iceland-boyes-e.pdf

        Because reevaluating debt and spending and making populations better off is bad m’kay?

        • Jumping jack flash

          oh, its just the worst.

          Imagine if there was no debt, or rather if there was no nonproductive debt.
          Productive debt used to extend and increase productivity is quite ok. Risky, but ok.

          Imagine if enormous quantities of nonproductive debt weren’t required to purchase all the essential items, and instead, after a few weeks, months, possibly even a year of saving a sensible amount of money out a sensible wage could buy all these things outright.

          The banks would have no control! Interest rate manipulation would do nothing! There would be no need for QE!
          It’d be total chaos!!!

      • If thats your understanding of MMT,…then clearly you dont have an understanding of MMT. In fact a perusal of the comments on this article only goes to underline that assessment. To be clear MMT DOES NOT advocate “getting paid to do nothing”…the complete opposite is true, and has a deeper understanding of inflation and money that is demonstrated in the comments listed here. After spending so long to educating people on the monetary system it is incredibly frustrating to see how little progress has been made. But we will not give up and although good to see some acknowledgement is being made to MMT thinking, very sad to see how little is still understood.

      • drsmithyMEMBER

        To be fair, the typical scenario usually looks something like:

        “MMT says A, B and C.”

        “Oh, so what you’re saying is that MMT means X, Y and Z.”

        “No, MMT does not mean X, Y and Z.”

  4. Goldstandard1MEMBER

    I still think a nationalised investment bank is a great idea which is being introduced in parliment at the next sitting.
    Takes the power away from the private banks and gives a funding source for genuinely ‘good for the country’ investment and infrastructure. We can’t go on like this waiting for “the big one” which we are probably in now, so we we need to have things in place to come out of it stronger.

    • Will the bank’s charter be broad enough to enable it to fund strategically important rowing clubs and gold clubs? How about yacht clubs?

        • GeordieMEMBER

          It is a fair point but it is also a false dichotomy painted as black and white. To pretend you have to go with Option B (pointing out a single possible compromise) or stick with the status quo, Option A (pretending it is fit for purpose), is not really worth discussion. In reality the choices are a sea of grey, and Option A and B are certainly not end members.

          While I have very little trust in the current government running the printing press, and would likely have a similar level of trust should the opposition win an election and form government, the idea of using money creation to directly fund initiatives for the benefit of the country is a very sound proposition.

          If it were to be implemented in an independent, apolitical manner, we could drive productive projects that may be otherwise unpalatable for private backing, through to completion. The concept shouldn’t be limited to infrastructure, but have departments for education, agriculture, energy, etc. which in the end all come back to one key element: R&D. In order to succeed as a nation as well as looking after our population, we need to be the creators rather than the importers of technology in all forms.

    • Jumping jack flash

      Its probably a couple of decades away before the country becomes a bank with a government attached to it.

      Taxes make their way to the bank and the bank pays us all with debt. All through the “government” middle-man.

      • this country as of today is four banks with a government attached to it … so three mergers and we’ll be there

  5. Jumping jack flash

    “capitalism has been bundled into a cryogenic chamber, so that markets can pretend there is a cycle.”

    Yes the fake economy where the inputs, risk, and outputs are all completely controlled by the banks using their debt.

    The parasite becomes the host..?

    • GlendaFMEMBER

      Is this modern day slavery? We all have to spend so much to provide basic shelter that we have to borrow more than we can actually afford on our stagnant wages, pay it of until we die (if we’re lucky!) and can’t get off that mouse wheel, ever! Don’t stop, don’t get sick, don’t think that maybe life wasn’t meant to be this way….is there something more….who’s controlling our lives?

  6. Jim's Central Banking

    If only people could have predicted rates at zero and QE would break captialism and that debt persistently growing faster than wages might cause a few problems.

      • Blottridesagain

        I likes the Howard Marks quote (original author unclear)
        ‘Capitalism without bankruptcy is like Catholicism without hell’
        Hell was sure used to keep us in line as little teckers.

    • Jumping jack flash

      Gee… whoever could have realised that interest rate manipulation was an economic taboo… just every central banker and economist and accountant that existed before Greenspan.

  7. happy valleyMEMBER

    Distressing day for my brother and his wife – AJ is switching off his radio mic, so they are going to have to do much of their own thinking for the time being instead of relying on the bias and contempt spoon fed to them by AJ. Still, thankfully for them, AJ is going to be doing more Sky after Dark, so they will be able to get even more of their RWNJ fodder from that source.

    • BaldbadgerMEMBER

      Be happy for Alan. He’ll now be able to spend more time with his wife and kids.

  8. What a distorted market has been created. Yesterday asked a trusted client for a quote on a job. When I got it I rang and told him it was so low he could not do a quality job for that price. He replied “no problem, if I quoted any higher I would lose Job Keeper and am making far more from that than from your work. Happy to take the lower price”. Am I the only one who thinks this is delusional?

    • GlendaFMEMBER

      Make hay while the sun shines…..that’s what everyone is being forced to do, integrity aside, you do what you have to do to not be worse off.

    • A double dose of delusion. Once he has qualified for JobKeeper by cooking the books (yes, there are specific rules about that, but you know, have a go and all) then it doesn’t matter if future turnover increases you still get it. If you’re going to fort the system at least do it properly.

    • Knuckles McGintyMEMBER

      Why would they lose JobKeeper if they have already declared their turnover reduction and are in receipt of JobKeeper. I understand the subsequent monthly declarations for the two fortnights in each month are ‘statistical’ and have no bearing on eligibility.

  9. It’s confirmed that AUD is following SPX
    I thought it may link back to DXY

    If Equities get sold off, looks like Eur up like March, you’ll see a big sell off in AUDEUR

    AUD is following S&P 500, that’s it.

    • Blottridesagain

      The chart is headed AUD SPX index but the nominated chart lines are ASX SPX – looks more asx spx?

      • AUD v S&P 500 in US is the correlation

        ASX is on drugs, I have no idea what’s going on there,my feeling is that all the people that used to go to CROWN CASINO, now closed have opened an online acc

        This is going to end well

          • DingwallMEMBER

            From the comments section, this struck me

            On Australia 🇦🇺 Day this year before covid started. I went camping with 6 families. Each family had a $50k 4wd. And a caravan worth between $40k- 65k. All borrowed from there house mortgages. Then around the campfire they were talking about $4k coffee machines!!! That’s when I worked out this country is in big trouble!

            I always wonder when driving around how many higher-end 4 wheel drives, BMW’s, Audi’s etc were bought with borrowed money.

          • The only overtime involved to pay for that madness is the MMT lunatics working 24/7 to keep them in the pathetic lifestyles they’re accustomed to. Debt don’t matter.

          • Jumping jack flash

            “I always wonder when driving around how many higher-end 4 wheel drives, BMW’s, Audi’s etc were bought with borrowed money.”

            All of them.
            Even if the owner of the vehicles were lucky enough to have 100K+ on hand, and were willing to use it to buy a 4WD, what portion of that money is actually someone else’s debt that the poor rube who handed to them is now desperately repaying, plus the interest, every week?

          • drsmithyMEMBER

            A $4k coffee machine strikes me as much more of an outrageous luxury than a $50k 4WD or Caravan, assuming camping is something you spend a decent amount of time doing.

  10. Super Phoenix

    “Those nations that “stimulate”, that is pay the most people to do nothing, will find themselves with greater aggregate demand, inflation and higher currencies. Those that don’t pay everyone to do nothing, with inhibited “stimulus”, higher unemployment and deflation will see lower currencies.”

    Huh? It should be the opposite.

    inflation = lower currencies
    deflation = higher currencies

      • And NOT using MMT either…that’s NOT what it advocates or teaches. Its good to see MMT finally getting acknowledged, but very disappointing to see its key concepts so poorly articulated or understood.

        • Blottridesagain

          Please read Sweeper’s comments above!!!! We’ve been all over this MMT BS for4 years without ever getting rational answer for anything.
          Also please read the comments from
          March 8 2019 is a pretty good example and it is comprehensive
          https://www.macrobusiness.com.au/2019/03/mmt-new-black/

          Then actually ANSWER all the objections and questions raised. “MMT is wonderful” and “you don’t understand that a government cannot run out of money” are not sufficient answers.
          The only part of what MMT revived that is worthwhile is sectoral analysis – except they just abandon it as soon as the facts in that regard don’t suit their argument at the time. Sectoral analysis was fundamental to the study of economics 50 off years ago. There is ‘Modern’ about monetary and fiscal discipline – especially when that is disciplined by the limitations of real resources – a reality MMT vehemently denies exists. Imports are good and beneficial to an economy!!!!! i.e. foreign debt is brilliant – let’s have some more while at the same time we sell to foreigners, including the Chinese, any asset we have that is of any value whatsoever.

  11. mikef179MEMBER

    So what does MMT mean in actual terms of what the government/RBA is going to do? Is it simply endless (and increasing) monetization of debt and spending by government?

    • To be clear NOWHERE in MMT does it say “endless spending”, literally nowhere. The core principle is on fiat currency systems (a key point), Government is NOT constrained by availability of money, but by the constraint of real resources available…as epitomised by measures such as inflation and unemployment, but there are others. The implications of this insight is the Governments can use the power of their currency to invest in the economy and build capacity to meet their policy objectives. It also inherently understands the link between natural resources and environment and economic capacity. What you have described is NOT MMT at all.

        • Then you have illustrated my point, the last post gives brief overview of what MMT does say…and YOU IGNORED IT…can only guess because you don’t want to hear it. Seems to most people here, they only want to bag MMT and focus on what it doesn’t say, rather than bothering to find out for themselves what it does say. Well done, Brilliant illustration. Thanks.

          • 🏑Astro alert🏑

            Nah, I had read what you had written. But all it said was that (paraphrasing) ”Governments can influence or control what happens in the economy, using money. They can do this subject to certain physical constraints.”

            I just didn’t think that THAT was the genius insight of MMT. …given that this has been happening since the dawn of time, and all…

            Lols.

          • drsmithyMEMBER

            I just didn’t think that THAT was the genius insight of MMT.

            I think THAT was the part where “how much gold is in the vault” isn’t a part of “physical constraints”.

      • The Traveling Wilbur

        Then spending for those projects you mention is sourced from:

        a) Debt?
        b) Savings?
        c) Doesn’t matter?

        If a) or c), does it matter if a continuing stream of projects increases the debt over decades continually without ever being paid down, let alone off.

      • mikef179MEMBER

        Not intending to bag MMT at all. I just want to find out what is actually going to happen, and try to derive what the likely consequences of it are. I’m still struggling to find that out.

        “but by the constraint of real resources available…as epitomized by measures such as inflation and unemployment, but there are others”

        But are not inflation and employment totally arbitrary measures? What numbers do you pick? And how do you calculate them? For example, is employment to be measured by the “being paid for more than 1 hour a month” measure that it currently is. The impression I get is that it is assigning more power to the government with less accountability. And you’ll be struggling to convince me that the government will properly measure that which nominally constrains it.

        • The Traveling Wilbur

          When you work out the answer for that second sentence, remind me to nominate you for a Nobel for Economics.

          Oh, wait…

          (that’s aimed at every subject mentioned above, not you btw; you’re right on the money with your comments and questions. pun intended.)

          • mikef179MEMBER

            lol, when I say “what is actually going to happen”, I mean, what levers will get pulled. What are the practical ways in which MMT will be applied. I don’t think it’s an unreasonable question to ask. I will be expecting my prize shortly 🙂

      • Of course its not endless – just like giving an alcoholic free alcohol at some point they will pass out

    • DominicMEMBER

      MMT suggests you can get something for nothing. You create money out of thin air and expect to exchange it for real goods without creating inflation or harming the economy in any way.

      It should be obvious, even to people with limited intellect, that printing money cannot create new wealth – it simply redistributes wealth. Which is why we have rapidly increasing wealth inequality at the moment. It became a thing when the Fed fired up the printers post-GFC and has gotten worse by the day. Advocates of UBI are saying, well, stop handing out all this printed money to the bankers and give it to the people instead, but you don’t solve any problems that way because inflation will simply consume the advantage you thought you’d gain by handing out printed money – meaning you quickly end up back at square one.

      The powers that be are terrified of UBI because they know that will effectively end the rort that is the existing debt-based money system, which they hold dear.

  12. MatthewMEMBER

    “What an absurd notion. Exactly how long are these jobs that the Government is paying people not to do still jobs? Judging by Captain Lowe, forever!”
    This is the absurd statement. Where does he say forever? Presumably, it would be until borders re-open again and tourism recovers. Doesn’t seem too unreasonable.

  13. SweeperMEMBER

    Dear MMTers, just because someone disagrees with MMT does not mean they don’t understand it. In fact it probably means they do understand it better than some of the junior members.

    • Super Phoenix

      Indeed.

      A fiat currency is just an artificial medium of exchange that does not have any intrinsic value. Its “value” is determined by the amount of goods and services it can purchase, so its unit value will decline with its quantity. MMT is nothing other than the Weimar solution (or the Zimbabwe solution).

      Of course, it would be impossible to understand MMT without understanding money.