Currency Value, Inflation, and Income Distribution

An earlier post discusses the way in which Modern Monetary Theorists conceptualize the value of the currency. In this context, ‘value of the currency’ refers to the currency’s domestic value, not its exchange rate. This value is defined in MMT as whatever must be done to obtain a unit of the currency. It can be defined in terms of minimum-wage or ‘simple’ labor time. A minimum wage of $10 would imply that it takes 6 minutes of simple labor time, or its equivalent, to obtain a dollar, expressed as 6 minutes/dollar or 0.1hrs/dollar. The present post considers the connection between currency value, inflation, and distribution.

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