How Monetary Systems Actually Break

[Joe Leote]

This video explains how currencies are destroyed by unstable political systems and/or the collapse of real economic production:

How Monetary Systems Actually Break (And Why Most Don’t)

Joe

[William Meyer]

Wow that ai being used to good effect there.  I remember a couple years back asking ai to draw me the vaults of the banks of england, amsterdam and hamburg in their reapective primes and it showed me the same exact image 3 times, lol.

Definitely presents the mmt perspective well.  

Questions: doesnt spending on dumb things erode trust?  Doesnt a policy of big spending guarantee that there will be much spending on dumb things?  On Japan, how much does strongly positive NIIP from previous strong export years creating a positive balance of payments allow them to borrow only in yen?  Considering the trade balance is now negative and they are coasting on dividends received from prior investment, doesnt that suggest Japan will soon have to tighten their belts?

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[Joe Leote]

I don't know what wise spending and tax policy would be in a complex world of political-economic forces. I recall in the late 1980s when Japan had at least seven of the largest ten banks in the world. My theory of Japan is that the government became the financial intermediary of last resort after the collapse of the massive financial sector bubble. Japan has an aging population and public infrastructure that no longer has to continue to grow exponentially. There may be an investment boom in automation to keep productivity high, and to help repair and maintain its massive infrastructure, while facing a shortage of workers. Some experts argue that China could become a stagnant economy akin to Japan. When population is growing there are many young folks and fewer elderly. The banks create credit for the young families who are in debt and typically the older owners of investment capital accumulate financial savings via owning the debt of governments and banks. I think governments tend to become public financial intermediaries in mature no growth economies. Investors hold the debt of the government and public spending is used to solve political problems that can't be solved by market forces and/or bankruptcy policy.

Joe

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