Keith Evans
2 min readJun 2, 2021

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"Money as a scarce commodity..." etc. What these economists mean by "scarce" always eludes me."

Many make the error of lumping money and "credit" together. If bank lending is loose there is a lot of credit floating around. It spends just like normal money except that it cannot net retire itself. Without sufficient injections of public money, the people are forced to finance their own economy, rolling over debt into new debt. This only works with a continuous expansion of GDP and the first to feel any downturn is always the lower-income strata.

"The question is: what kind? I do not think it is just a "unit of measure."

Money cannot have an intrinsic value of its own or our economy would fluctuate wildly following whatever price swings result from changes in its value. It is no more valuable than a theater ticket would be without the building, stage, and seats the theater provides.

Money is how we denominate prices for a wide assortment of goods and services. It is made universal by the government's demand for its own sovereign currency in payment of tax obligations. As long as a government can collect taxes and punish non-payment it can provision itself without a revenue stream by simply creating the currency it has a monopoly in.

If you can grasp simple sectoral balance logic as applied to spreadsheet accounting and the fact that one cannot collect or borrow what doesn't yet exist you are well on your way to fully understanding MMT. The sovereign currency-issuing government never needs your dollars to enable its spending. It does need you to need its dollars and, at times, for you to have fewer of them.

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Keith Evans
Keith Evans

Written by Keith Evans

Meandering to a different drummer.

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