One of my problems with MMT is that I am afraid would be a contributor to greenhouse gas emissions,
If the use of the fiat currency is directed toward added resource consumption you have real concerns to be worried about. This is why a Green New Deal must accompany any expanded fiscal policy along with targeted taxation that funnels consumer spending into carbon-neutral products. Issuing complete tax abatement for co-operating corporations with heavy penalties for non-compliance would be a big help. Government should pick winners and losers in some cases. Green energy already employs more people than fossil fuels, but neoliberal Dems are too afraid of upsetting donors to take credit and use it as political ammunition.
Specifically, I worry about it weakening the dollar’s role as the international currency of choice — reserve currency.
Firstly, I don’t think acting on the reality of our monetary system to better the lives of Americans and help alleviate global warming would in any way endanger our currency’s position. If anything will put that position at risk it will be our continued use of sanctions as a weapon in forever resource wars. We simply can’t continue these wars and make any progress toward stopping global warming and the leadership of other nations fully understand this and are beginning to push back. The US military, were it a separate country, would be the 8th or 9th largest single user of fossil fuel.
After Nixon removed us from the Bretton-Woods agreement little changed for our currency beyond a temporary dip in some financial markets as investors always avoid any unproven risk. There was simply no other economy that could provide the confidence the US dollar provided and things kept on keeping on. Having a free currency exchange in our Federal Reserve system to clear payments is the real attraction of the dollar, not Treasury bonds. Bonds haven’t been a funding operation since ’34 and rates are completely controlled by the Fed and Treasury sharing a balance sheet, making any amount of bond purchases possible for the Fed without cost to Treasury.
There is really no potential harm from losing the currency’s reserve status that all other countries don’t deal with every day. The upper limit to cost increases will be what we can manufacture goods for here, bringing back the jobs lost to overseas, and the threatening nation losing those jobs. Considering, in spite of the unreasonable fear of inflation generated by neoclassical economists, our current problem appears to be deflation, which is good for investors but terrible for a consumption-based economy, and eventually hurts everyone. A healthy rate of inflation, normally considered to be slightly more than bond rates, keeps money productive in the economy as long as rent-seeking is penalized.
I am afraid that excessive debt will weaken the dollar.
Sans a gold reserve to defend, debt is entirely a misnomer created by applying gold standard, or household budget, logic to a fiat currency. The monopoly issuer of the sovereign fiat currency cannot involuntarily fail to pay any obligation denominated in its own currency. It is also the price setter for the economy as long as resources exist in the private sector to realize the purpose of spending. Other than attracting investors away from rent-seeking, paying interest on excess reserves created by deficit spending and swapped for bonds has no functional purpose. As debt service continues to add to income inequality we should consider ending bond issues entirely, perhaps paying a small return on excess reserves or setting a permanent near-zero rate.
Monetary policy is mostly ineffectual as a control on our economy and only produces misery for the unemployed without sufficient offset spending from automatic stabilizers. If the government is going to continue to use workers as inflation control they owe it to the people to become the employer of last resort. Congress cannot continue to abdicate its Constitutional mandate to tax and create the currency “for the common welfare” to the Fed. This is cowardly and invites corruption from deep-pocket investors looking to protect their fortunes from taxation.
That is a problem because any American climate change policy will need to first focus on setting a good example ourselves (a Green New Deal) and diplomacy. The next phase of our climate change policy needs to be to use our wealth/trade policy to affect/bully other nations into following a similar policy.
You’re kidding, right? Even China is ahead of us in mitigating climate change. In the last decade, we have moved backward, not forward and most of the world has, at least, officially acknowledged the crisis. Even with a Green New Deal being proposed by Bernie and others, we will lag behind for decades. Even Norway, much more dependent upon oil revenue than the US, just shut off exploration and all subsidies to fossil fuels. Germany is considering laws to mandate all new vehicles be electric.
Solar and wind energy production is now cheaper to build than it is to maintain fossil fuel plants. The only thing keeping us from moving to renewable energy right now is the fact that fossil fuel companies are in so many portfolios of municipal, college, and retirement funds that they are too big to fail, if one denies the truth about our monetary system. Some companies even moved the value of in-ground resources to their shareholder equity to bump up share prices and bonuses. Fearing this kind of blackmail is totally unnecessary considering that we can afford to simply buy up all existing reserves without incurring inflation and start from scratch with the government controlling the transition.
