Blog-Reference and Blog-Reference
Lars Syll summarizes “In modern times legal currencies are totally based on fiat. Currencies no longer have intrinsic value (as gold and silver). What gives them value is basically the simple fact that you have to pay your taxes with them. That also enables governments to run a kind of monopoly business where it never can run out of money. A fortiori, spending becomes the prime mover and taxing and borrowing is degraded to following acts. If we have a depression, the solution, then, is not austerity. It is spending. Budget deficits are not the major problem since fiat money means that governments can always make more of them.”
That much is, of course, true: Wicksell envisaged a pure fiat money system run by the central bank (= Giro system). This does not mean, though, that he was in any way a promoter of MMT’s claims or policies.
Wicksell certainly did not subscribe to patently false MMT propositions as:
- the value of money depends on taxation,#2
- the Central Bank is the State’s department for arbitrary money creation,
- deficit-spending/money-creation is the cure for all economic and social problems,#3
- public debt does not matter.#4
#1 Going beyond Wicksell, Keynes, and MMT
#2 The creation and value of money and near-monies
#3 MMT is ALWAYS a bad deal for the 99-percenters
#4 Deficits matter for distribution
#5 Reconstructing the Quantity Theory
Related 'How Wicksell and the rest got inflation/deflation wrong' and 'Wicksell’s misplaced critique of mathematics' and 'Stephanie Kelton’s legendary Plain-Sight-Ink-Trick' and 'The clock runs down on economics' and 'The sectoral balances obfuscation: stupidity or corruption?' and 'Criminals and the monetary order' and 'The state of MMT? Stone-dead!'. For the full-spectrum refutation of MMT see cross-references MMT.