Wednesday, March 31, 2021

Hard Money, Soft Money, and Economic Ontologies

 V. Ramanan gave my thinking quite a boost when he posted his comments on a recent critique of "neochartalism by Costas Lapavitsas and Nicol├ís Aguila at the Developing Economics blog titled Monetary Policy Is Ultimately Based On A Theory Of Money: A Marxist Critique Of MMT." 

Ramanan's contribution to my thinking revolved around the idea that the international acceptance of currencies does not fit into a soft currency framework. This realization fits perfectly with my earlier thinking that society functions systematically with the private economy operating under a hard, Physical Money constraint at the same time that the government sector acts out a soft, Ethereal Money existence. As both Ramanan and C.L. with N.A. point out, international trade also functions systematically under a Physical Money constraint.

It turns out that this realization is an important part of building a better understanding of the effects we might expect as MMT style fiscal policies come to be practiced more vigorously around the world.