3/21/2019 0 Comments
I'm going to keep this conversation fairly simple, because most of us are not economists. We're simply trying to make sure the bills are paid, there is food on the table and the lights are kept on.
There is a fairly robust conversation going on in the US about a different approach to how our country uses money. The conversation is between how our government usually operates and how it should operate going forward, facing massive challenges. This new consideration is called Modern Monetary Theory. In a simple, short understanding, MMT is the idea that since the US prints it's own money, it should develop an approach to put more money in the system to deal with the challenges ahead. That's what the US Treasury Department was designed for in the first place as a currency issuer ---- to issue currency to put into the system (currency users) to make the system work better. It would be like using money more like a utility that helps everything else to work. Think of it as Chet's Ice Cream company. I invent a special Chet ice cream that my supply chain enjoys.
I am the issuer of the ice cream. My supply chain is the user of the ice cream.
Suddenly, there is more demand for my ice cream. My responsibility to my company is to make more ice cream, which produces more revenue that can be used to help me make more ice cream, give to the family in need down the street, keep the streets clean and generally make life better for everyone. In an MMT system, it is the government's responsibility to make sure there is plenty of liquidity in the system, in spite of the debt, to make sure demands are met, thus producing more tax revenues. The debt part may seem counter-intuitive to many of you, but remember -- the Treasury Department was not originally created to run like our household (currency user). It was designed to function uniquely like something else (the currency issuer). Somewhere along the way, we forgot that.
Here are some of the formidable demands we're facing over the next few years that a Modern Monetary Theory approach could work effectively.
Climate Change. Decades of inaction on climate change has led us to the need for a massive program like the Green New Deal. Of course, we could say we cant afford it. This would be the result...
Reparations. 400 years of systemic denial and racism has created a crisis of collapse inside of the African American community. In the Road to Zero Wealth report, without some level of government intervention, African American communities will have zero wealth in a few years, which will create a disastrous future for everyone.
Automation Unemployment. We could be staring at 30 - 40 % unemployment in the next decade due to the continued march of automation. A massive job guarantee program through MMT could be the answer. Our inability to create a coherent collective approach to this challenge is only making it worse...
I'm not saying that an MMT approach is the only approach that could solve the massive challenges we're facing . What I am suggesting is that if you're going to deal with challenges of scale, make sure you have the right tools. Business as usual is a recipe for disaster.
Chet W. Sisk is an author and one of the world's leading Social Futurists. He is also expert on the current world paradigm shift. Find out more about him and the LEAD Global Team at www.leadtheshift.com or you can write him directly at firstname.lastname@example.org