What is Modern Money?

The term ‘modern’ in Modern Monetary Theory (MMT) has a double meaning. On one level, ‘modern money’ is a literary reference to Keynes’ A Treatise on Money in which he suggests that the money of modern states has been chartal for at least four thousand years (see, for example, footnote 13 on page 10 of this paper by Randall Wray). On another level, the ‘modern’ in Modern Monetary Theory can be used to denote the period since the breakdown of Bretton Woods in 1971 (see, for instance, this post by Bill Mitchell that distinguishes the gold standard and Bretton Woods eras with the more recent resumption in many countries of sovereign fiat currencies). It is this second sense of the term ‘modern’ that is relevant in the present context.

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