Modern Monetary Theory: How it Could Answer All Of Our Economic Problems

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Modern Monetary Theory is something so simple yet so complex all at the same time, it does really involve divorcing your mind from how you personally interact with money to ultimately grasp how cash works at an economy-wide level.

A lot of supporters of the theory push it as a cure-all to any economic ailments, and you know what with the money printers firing away like they are right now we may finally get a chance to find out if they are correct, but in reality, it’s not a prescription to fix a broken economy as much as it is an insight into how modern economies work.

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Sources & Citations -

Luther, W.J., 2018. Is bitcoin intrinsically worthless?. AIER Sound Money Project Working Paper

Duffy, J. and Ochs, J., 2002. Intrinsically worthless objects as media of exchange: Experimental evidence. International Economic Review

Ritter, J.A., 1995. The transition from barter to fiat money. The American Economic Review

McCabe, K.A., 1989. Fiat money as a store of value in an experimental market. Journal of Economic Behavior & Organization

Palley, T.I., 2015. Money, fiscal policy, and interest rates: A critique of Modern Monetary Theory. Review of Political Economy

Visser, H., 1991. Modern monetary theory

Tsiang, S.C., 1989. The monetary theoretic foundation of the modern monetary approach to the balance of payments. In Finance Constraints and the Theory of Money

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[EconomicsExplained]

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See new videos early, participate in exclusive Q&As, and more!

[LetWable]

Shout out to economics explained for keeping stock video producers afloat in these dire times.

[EconomicsExplained]

Last time I was this early we had a gold standard...

[ThoughtStimulator]

If the fed were to give me an unlimited line of credit, with a 0% interest rate, I'd be happy to do my part, to stimulate the economy.

[kasendekevin]

I am a Congolese national. You spoke about my country just when I thought you would have! LIKED AN FOLLOWED!!! Our sketchy currency comes as a result of the fact that all of us Congolese always say that our country is mineral rich as if that's all it takes to build economies!!! oh and the taxes paid by the multinationals are sucked out and looted by corrupt officials!!

[emperorsblade]

I was expecting an April fool's joke but rather i got a lecture about modern monetary theory even in today am still confused.

[arbra]

To quote Remmy "They got a monetary plan and it involves a lot of toner"

[JozuaSijsling]

Just missing two important points about MMT. First, MMT was theorised based on how the world currently works, not as a proposal to change all of international economics. The author noticed that various conventional wisdoms about printing and inflation did not hold up in practice. He generalised his findings when he presented MMT. Second, the indefinite money printing proposed should always target productivity, always stimulate the broader economy and nothing else. If it does that effectively inflation won't enter into a death spiral, or so the theory goes.

Now if you ask me, the whole theory is born from primarily US' economic perspective and translates poorly to other nations, who run much higher risks of their currency taking off in the wrong direction. There's also the added danger that politicians around the world use MMT as an excuse to boost popular policies that are not beneficial to the long term productivity of their society.

[leeoswald]

"maximum prosperity" - economical crisis every 10 years

[lucasbrant]

Printing is effectively a tax though. When you print money, you increase demand for the good you're going to buy with said money, this leads to higher prices, reducing the purchase power of the people who did not get the printed money.

So basically, each time the printer goes brr, you're the one paying for it.

[khanfauji]

something about MMT just feels like its just a massive house of cards that will eventually come crashing down

[ivankenobi]

Also, being a bank sounds like a pretty good gig: you create debt by typing digits in a computer, and you get to pocket the interest for no work at all

[jordanreeseyre]

Monetary theory, the crazy quantum mechanics of economics.

[joshebarry]

Most of the channels I watch are the likes of Wendover Productions, Real Engineering, Mustard, ReallifeLore, etc. Huge channels with millions of subscribers, I hold Economics Explained in the same regard - so it always surprises me when I look and only see 321k subscribers. Seriously guys get this man more views he deserves it!!!

[AlvinJing]

The reason printing money didn't cause inflation is because the money printed was used to fill holes for big corporations and financial market. If you think stocks, bonds and houses as every day products, yes, there is inflation.

[runcandy]

Didn't change how I view money, but it just made me more nervous.

[LstEngineer]

Hyper inflation and modern monetary theory don't scare me. Paper money will always have intrinsic value. For example, I'm out of toilet paper.

[neilg]

A simple cure all to all our economic worries!! How could this go wrong?

[DrewofAnd]

Good video. I think the biggest criticism of MMT was actually left out though. MMT put in to practice essentially removes the independence of the central bank and puts politicians (rather than central bankers) in charge of the money supply.

Incentive structures in a democracy are such that politicians will continue to spend in order to get re-elected and therefore can't be trusted.

MMT would likely lead to a massive increase in the size of the state with greater and greater spending and higher and higher taxation.

For socialists, who trust in governments to make good decisions on behalf of their citizens, this may be an appealing idea.

[pushkarlakhe]

"Lenin is said to have declared that the best way to destroy the Capitalist
System was to debauch the currency. . . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
... Quote By John Maynard Keynes