Deficit Owls | Government Is Money Monopolist, Therefore It Sets The Price @deficitowls5296 | Uploaded April 2017 | Updated October 2024, 13 minutes ago.
Warren Mosler, on with Steve Grumbine of Real Progressives, discussing the source of the price level, which is made very explicit in Modern Monetary Theory (MMT). The currency is a simple public monopoly. Because the government issues the currency under monopoly conditions, the normal rules of monopoly apply: the government is necessarily the price setter.
Suppose a new government was creating a new currency, and declared that every citizen owed a tax of 10 coins per month. What would be the value of these coins? The answer is, whatever the government says you have to do in order to get the coins. If the government declares it will pay 1 coin per hour, then the coins will be worth 1 hour of labor, and everybody will work for the government for 10 hours per month in order to get the coins they need to pay the tax. Or, if the government said it would pay 10 coins per hour, then one coin will be worth 1/10 of an hour's worth of labor, and everybody will work for 1 hour per month for the government in order to get the coins they need to pay the tax.
(And clearly, the government must spend the coins by hiring the people BEFORE those people become able to pay the tax, because otherwise they wouldn't have any coins.)
Read an MMT research article on the source of the price level: modernmoneynetwork.org/sites/default/files/biblio/Pavlina_2007.pdf
Watch the whole video here: youtube.com/watch?v=1RJP52bwmcw
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Warren Mosler, on with Steve Grumbine of Real Progressives, discussing the source of the price level, which is made very explicit in Modern Monetary Theory (MMT). The currency is a simple public monopoly. Because the government issues the currency under monopoly conditions, the normal rules of monopoly apply: the government is necessarily the price setter.
Suppose a new government was creating a new currency, and declared that every citizen owed a tax of 10 coins per month. What would be the value of these coins? The answer is, whatever the government says you have to do in order to get the coins. If the government declares it will pay 1 coin per hour, then the coins will be worth 1 hour of labor, and everybody will work for the government for 10 hours per month in order to get the coins they need to pay the tax. Or, if the government said it would pay 10 coins per hour, then one coin will be worth 1/10 of an hour's worth of labor, and everybody will work for 1 hour per month for the government in order to get the coins they need to pay the tax.
(And clearly, the government must spend the coins by hiring the people BEFORE those people become able to pay the tax, because otherwise they wouldn't have any coins.)
Read an MMT research article on the source of the price level: modernmoneynetwork.org/sites/default/files/biblio/Pavlina_2007.pdf
Watch the whole video here: youtube.com/watch?v=1RJP52bwmcw
Follow Deficit Owls on Facebook and Twitter:
facebook.com/DeficitOwls
twitter.com/DeficitOwls
And follow our sister page, Modern Money Memes:
facebook.com/ModernMoneyMeme
twitter.com/ModernMoneyMeme
