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Apr 03 2020

Forget Everything You Know About Money

Of course it’s about MMT.

Ok, so this is a new source, and not a Nobel Prize winning Economist or former Secretary of Labor so I’ve had to review a sampling of material and while I’m not in 100% agreement it’s no worse than Samuelson (with whom I’m also not in 100% agreement nor any of the previously mentioned sources) and he has a very reassuring Aussie accent that makes everything seem more credible.

As far as I can discern at the moment you don’t need to exercise more than the ordinary amount of skepticism.

Part of it is perspective. The United States has the luxury of being the World’s Reserve Currency and there are no proximate rivals. Oh sure, Euros and Rials and Yuan, oh my! As is correctly explained, the primary value of currency is it can be exchanged for goods and services and the US$ is practically universally accepted and no one else is even close.

So it sucks to be paid in AU$ (of course it means Australia, Austria uses the Euro and before that Reichsmarks) or CA$ (How ’bout a Beer, eh?) unless the exchange rates are good which points up an important frequently overlooked aspect of Modern Monetary Theory (though he does get the Tax thing right), that internal Inflation for local Economic Inputs (or you can call them Resources) is meaningless from a Macroeconomic standpoint. Inflation is meaningful if you are competing for External Resources.

Again, World’s Reserve Currency. Mohammed bin Salman is not going to refuse to cut a deal, especially at these prices and the whole point is to make Fracking unprofitable- we’re also the World’s Largest Oil Producer (Yup, bigger than the House of Saud by 3 Million Barrels in 2019).

Of course if it costs more than $20 to get out of the ground you can’t make any money.