In the last day or so, several economists and commentators have emphasized the significance for democracy of the way in which society constructs its money. I have stressed previously that Modern Monetary Theory (MMT) makes clear the democratic potential of societies in which the government is the monopoly issuer of its own flexible exchange-rate fiat currency. This possibility of a more democratized money stands in stark contrast to the preferred course of neo-liberal policymakers who, if they get their way, as they did for example with the design of the European Monetary Union, deny governments an exchange-rate policy, a monetary policy, and effectively a fiscal policy in that it is put in a straitjacket, legitimated by dodgy economic theory such as ricardian equivalence. When their monstrous neo-liberal design goes wrong, they then seek to reinforce these antidemocratic measures by replacing elected politicians with technocrats, as we are now beginning to see in the case of some European countries.
This point is brought out very clearly by Post Keynesian economist Steve Keen in an interview on the finance show, Capital Account:
A similar point, from the perspective of MMT, is made by Bill Black in his latest post at New Economic Perspectives:
John Carney, though primarily addressing another aspect of the debate over MMT, also touches on the implications of currency sovereignty for democracy in a post at CNBC:
With MMT gaining greater exposure, new readers are being attracted to the various blogs involved in discussing the approach. With this in mind, I thought it would also be worth drawing attention to a post on the topic by Dan Kervick that was made available earlier this year. It was originally presented as a six-part series, but has been combined into one long post:
The topic has also been one of my preoccupations here at heteconomist. For example: