The modern monetary thoery is one of the most popular alternatives for the economic and monetary world we are living in. But what is it and is it really new?
The idea is that central banks are no longer issuing the currency but politicians do so.
A benefit of this is that you can hold the politicians accountable for what they do.
One of the benefits, in the eye of the supporters, is that you can’t go bankrupt. You can simply issue new money.
So is something new? NO, it is not. It happened before.
One of the problems with this theory is that politicians can easy make a currency worthless. Yes, central banks are doing this also. But I have a little bit more confidence in a banker than in a (drunk) politician.
I referred to Zimbabwe and Germany after World War I. When they did this it was to pay off government debt or other creditors.
This is also why I’m not a supporter of the modern monetary theory. After all, is it giving complete control over the currency to politicians? All politicians are really good at is wasting money. So when they control the money there is no more holding back.
Unfortunately, are people not looking at history to understand the future. It seems to be the case that most people love to make the same mistakes. But I’m not one of them. Are you?