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Modern Monetary Theory (MMT) aka Moronic Monetary Theory – section (b)
This video is a follow on from the previous video dealing with MMT. If you haven’t seen that video, I would recommend you doing so before watching this one.
Let’s pick up where we left off …
Point number four – Monetizing the debt
Currency creation on the scale that has been occurring would be baffling and beggar belief entirely if it weren’t for the consideration that Central Banks and Governments are, in my opinion, doing this deliberately. It’s aways tricky to talk about intentions because, as it stands, I can not prove anything, but as far as I’m concerned, their intentions are to monetize the debt. And the future will either prove me wrong or right. So be it. I fully accept that.
If anyone listening doesn’t understand what I mean when I say monetize the debt, it means inflate the debt away. To put this in plainer terms, it means that they intend to destroy the purchasing power of the currency. If they destroy the purchasing power of the currency to such an extent that the currency becomes virtually worthless, then we enter the realms of hyperinflation. Relatively recent, real-world examples of currencies which have undergone hyperinflation are Zimbabwe and Venezuela. In these instances where the price of a loaf of bread is say, 1 million Zimbabwean Dollars, or Venezuelan Bolivar, how much would a lawnmower be? How much would a car be? And how much would a house be? And then, more to the point, how much would a National Debt be?
Valuing something, valuing anything, when you really start to consider it, is not really a straightforward matter. As a general rule, we value things, or rather ascribe a worth to something, in terms of a currency. For example, we say a lawnmower is worth 150 Dollars.
But, valuations become somewhat difficult in an inflationary environment, and even more so in an hyperinflationary environment. Indeed, valuations get all kinds of crazy in a hyperinflationary environment - the figures that we would be dealing with become absurd to the point of being meaningless.
Suffice to say, if the currency itself is depreciating at such a rate, how do we actually value something? How do we ascribe worth? Is a lawnmower worth three or four Queen conch shells? And who decides a Queen Conch shell is worth anything at all?
This, I hope, describes the ramifications of monetizing the debt in real world terms.
The people in charge of the Central Banking System are “banking on” all this … to use a very appropriate phase. So, I think that their aim is to increase inflation and then turn it into hyperinflation. While this might be catastrophic for ordinary people, their plan is to make it through to the other side of the hyperinflationary situation and still be in control and then establish another monetary system which … just so happens to suit them similarly to the previous one.
Point number five - MMT & Credit card analogy
Advocates of MMT believe that Central Banks can create enormous amounts of currency and that Governments can increase the National Debt - all without consequence, or even without much concern. The Governments are then put into a position where they are able to spend all that they desire.
To put this situation in everyday terms, MMT would advocate the Central Banks giving Governments a Platinum credit card with no limit set on it and no real need to repay the amount loaned out.
Most people, if given a Platinum credit card without limit, would probably jump for joy and rush to the nearest store to buy whatever they could. Only a select few would hold back, being somewhat suspicious about this situation. And they would be right to be wary. Just because you have a Platinum credit card with no limit on it, doesn’t mean that you should necessarily use it.
Credit cards can be regarded simply as a payment system - a means of paying for products. And, if they are used wisely, then credit cards can be very useful. But credit cards are not just a payment system. They are more than this.
Having a credit card can also be regarded as having a debt facility - an ability to get into debt. This debt will obviously have to repaid at some point. If you’re wealthy, you can repay the debt without problem. But, if you’re not wealthy, you’re probably going to struggle to repay the debt. And for many people who can ill-afford it, credit card debt can be a real problem.
Maybe I’m wrong in saying this, but they are called Credit Cards because the banks are extending a line of credit to the customer.
Debit cards enable people to pay for goods by debiting the funds directly from their accounts. By contrast, Credit cards encourage people to spend currency that they don’t have.
For those who can’t actually afford it, having a credit card creates an illusion of wealth. Some might consider people who rack up debts on credit cards as foolish, but a kinder interpretation is that they have just been duped.
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