The title of this blog was a question posed to me recently, a question I want to elaborate on for a broader audience than a one-to-one conversation. Not in the least because I have never publicly covered the subject. For the uninitiated, Modern Monetary Theory “is a macroeconomic theory that describes and analyses modern economies in which the national currency is fiat money, established and created by a sovereign government,” according to Wikipedia.
Breaking it down
That all sounds splendid if you can get past the declaration of “Modern,” a proclamation that reeks of the opposite when it must be declared, and given its invention in the early 1900s proves entirely to be the opposite. Moreover, the use of the word “Modern” ought to suggest its modernity at any moment in time, and thus infers intrinsic dynamic relativity it can’t substantiate either.
The word “Theory” I have a problem with, too, in this context, since a theory is the consequence of a composition of principles designed to yield a certain objective in the exploitation of a system that uses said theory (read this explanation). The theory, in the words of Albert Einstein, determining what can be discovered. I have yet to hear what the discovery derived from the definition of said monetary theory is.
So, of the three words used in the definition, one remains standing. To wit, in the words of Nobel Prize winner Richard Feynman;
Everyone names everything wrong. — Richard Feynman
The use of a definition without clear separation of causal and consequential dependencies leads to grave depravity of reason in determining its intended effectiveness, a depravity much more serious than a mere linguistic crucifixion. It is very common for humanity to come up with definitions of manmade constructs that are not universally understood, in either or all specificity of definition, cause, and consequence. The confusion of which many economists make a handsome career.
What I like about the concept of “The Modern Monetary Theory” is that it embraces a plurality of sovereignty, by which the governments of individual countries can modulate the value of their currencies. Akin to the hierarchies innate to nature, we depend on for survival and thus aligned with principles bound to survive the test of time better. Now, however, in an increasingly interdependent world, duly challenged by the excessive valuations of the dollar, making it harder for certain countries to float their “boats”.
Moreover, the implementation of a sovereign monetary policy is perhaps the best way to stave off any attempted totalitarian absolutism of globalization, a single model for the world that has historically been proven wrong and rejected at every turn, and fails to embrace the world’s plurality. We must globally embrace more granularity of freedom, not less — the main reason why I am vehemently against the forcible homogenization induced by the Eurozone.
For many reasons, I am also a staunch opponent of cryptocurrencies, of which now over one-hundred exist. A cryptocurrency in which, for one, the distribution of trust in the currency is evenly distributed, and in violation of the rules of an evolutionary meritocracy to which we are all bound. Expect the bottom to fall out of that mess, after many opportunists will ride it like the stock market. The question is not if, but when.
Rebel Without A Cause
The much higher-order problem with our monetary policies is they are, in their current form, rebels without an evolutionary cause. And that an increase in wealth, suggested by those policies, does nothing to strengthen human renewal to prolong our existence on earth. In fact, a monetary policy without attachment to evolutionary principles causes, by all accounts, the accelerated attrition of the renewable excellence and enduring lifespan of humanity.
Meaning, modernity can only be assigned to a policy that embraces our evolutionary objectives, dynamically. A policy by which the assignment of trust in merit remunerated by money yields not a modern vile-maxim of pillage-and-plunder, but drives the interest of our collective excellence by virtue of our individual contributions. No monetary policy we have defined to date achieves such an objective.
Hence, despite anyone’s views on the meaning of Modern Monetary Theory, we must all come to terms with how this monetary policy, and its complicated voodoo, does not do what humanity needs.