or maybe it’s issued against the creditworthiness of the issuer. That last one may look like thin air, but it isn’t thin air, because a real existential asset, creditworthiness, is reduced by the issuance.
The US dollar is issued against the government’s ability to levy and collect taxes, end of story. You need a remedial course in MMT.
That isn’t to say that it justifies unlimited currency creation beyond what the economy is capable of, only that it is the real resources and available labor that is limiting, not the money. The concept that the currency represents some “thing” that is tangible and its value is tied to that thing goes against the basic premise of MMT.
You keep coming back to “creditworthiness” and appear hung up on some imaginary need for an issuer of a sovereign fiat currency to “obtain” currency from some source, or to justify creating currency on the ability to sell debt. You are missing an important part of the picture, and that is that such an issuer never “needs” to sell debt to spend or obtain its own currency back via any mechanism involving third parties. Prior spending has no bearing on future spending as long as some existing or potential resource exists that the currency is deployed to purchase.
If the market for bread includes 8 buyers and the manufacturers are capable of producing 10 loaves, adding more buyers doesn’t inflate the price of bread until the 11th buyer enters the picture or potential production is reduced. The market will adjust output to its maximum before raising the price.
You harp on the fact that monetary sovereigns cannot run out of money, but you ignore the obvious fact (see Zimbabwe) that they damn sure can run out of credit.
Zimbabwe, after an extensive and disruptive war, decided to reward its military with all of the nation’s farmland. The soldiers knew nothing about farming and the nation ended up importing almost all of its food with little productive capacity to offset the imports with exports. Comparing its situation to the United States is more than a reach.
As regards foreign Treasury holdings, they obviously exist in preference to something else. If Treasuries become unreliable, that money goes elsewhere. I think it goes to real estate (if we allow it, which we shouldn’t). Where do you think it goes?
Treasuries cannot become unreliable. They will always pay out exactly what they promise as long as we don’t do a bunch of stupid stuff, such as sanctions or stop payments on debt service. Even assuming that we someday have difficulty selling our debt we can still spend as needed, only without the unnecessary step of issuing bonds. The monopoly issuer of US dollars never needs to “get” dollars. I agree that foreign interests shouldn’t be allowed to purchase real estate or interest in US corporations.
