I've been reading and watching videos about Modern Monetary Theory (which @davidpakman recently covered) and thinking about its implications for cryptocurrencies. My questions to others on Steemit are below. First here is my understanding of MMT and what it purports about currencies in general:
- Money = Debt. A dollar is quite literally an IOU issued by the government with the understanding that citizens will pay it back through taxes. The idea that the government needs to tax people in order to spend is flipped on its head. Instead, the government issues currency so and creates a demand for it by imposing taxes, penalties, and fees.
- Leaving out the possibility of foreign ownership of currency or debt, a government surplus means domestic private debt and vice versa. This is obvious once you accept the first point and supported by the weight of evidence and experience over the boom and bust cycles of the past.
- Government bonds drain excess reserves... I admit, this seems obvious to me but I admit I don't fully understand how this process is used to control the interest rate. Maybe someone can explain it to me.
When @davidpakman recently asked Stephanie Kelton, Professor of Public Policy and Economics at Stony Brook University, about MMT and its implications for cryptocurrencies, she admittedly didn't have much to say about the topic. I have never seen cryptocurrencies addressed by neo-chartalists otherwise.
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MMT doesn't seem to have a coherent explanation for crypto yet. Perhaps they see them behaving more as a commodity or something akin to stocks? We see the same rapid price fluctuations in gold and precious metals (albeit over longer timeframes). Since cryptocurrencies are not issued by the government and have no inherent value of their own (other than the trust people put in them), I can't believe MMT proponents see them taking over as a form of currency.
Anyone have any sources they'd like to recommend for a neo-chartalist perspective on cryptocurrencies? I'm very partial to MMT but looking for some broader context. Thank you!