by This article was tweeted by Stephanie Kelton and fits in well with my own theories with how MMT works, which I have printed here before.I would like to add, that money does not create wealth, work does. I can create wealth by growing potatoes in my back garden, or some fruit, or by making things in my shed, or just by offering my labour. But what if there is not enough money in society because people don't want to take out anymore loans, or the banks don't want to lend to poor people, or because there is too much in debt in society, then transactions between people may become difficult as bartering is very cumbersome and inefficient?So, there's plenty of wealth, but not enough money, and the gold standard would make things worse by making money even more scarce. Then, what's the solution:
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I would like to add, that money does not create wealth, work does. I can create wealth by growing potatoes in my back garden, or some fruit, or by making things in my shed, or just by offering my labour. But what if there is not enough money in society because people don't want to take out anymore loans, or the banks don't want to lend to poor people, or because there is too much in debt in society, then transactions between people may become difficult as bartering is very cumbersome and inefficient?
So, there's plenty of wealth, but not enough money, and the gold standard would make things worse by making money even more scarce. Then, what's the solution: one is for the government to inject money into the system, and one way to do this would be for the government to create the money and spend it on government services. Then the wages of the public staff would filter out into the private sector enabling more work to be done.
The private sector would then expand and employ more staff who will do the work which pays for the public services. Therefore, the rest of society gets and excellent deal: low cost public services because people who were idle before are now in work contributing to society. And they won't need anymore government assistance either.
It's a great deal for everyone: the capitalists who run industry will get richer, the underemployed will find work, and those already in work get low cost public services. Conservatives will come onboard.
Eventually, the government will need to tax the money it put in back out again, but with so many more people in work, the tax burden will be shared more widely.
Hutchinson and the others devised an unusual solution to the problem. They issued what is generally recognized as the first fiat currency in the Western world. The twenty-shilling notes they printed cheekily claimed that they “shall be in value equal to money” — meaning that they were equivalent to silver coin.