Tuesday, December 13, 2011

Modern Monetary Theory in England 1,000 years ago?

There is some dispute as to EXACTLY what Modern Monetary Theory (MMT) consists of. But I’ll assume it’s the idea that in a monetarily sovereign country the government / central bank machine can simply create money and spend it into the economy as appropriate (and do the reverse if inflation looms).

This idea seems to have been in operation in England in the 1,100s. See 5 minutes into this video clip:

This piece of history also supports Chartalism. Chartalism (if I’ve got this right) is the idea that the state’s money derives its value and dominance from the fact that the state imposes taxes, which are payable only in the state’s money. Thus private sector entities HAVE TO get hold of the state’s money in order to pay taxes.


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