Introductory Video on Fiat Money

J.D. Alt has put together an accessible video explaining fiat money, intended for a general audience. (Hat tip to jrbarch in the comments.) For additional background, comments and links see J.D’s post at New Economic Perspectives.

Note: Content-wise the video is very good apart from a minor quibble. (See the first comment.)

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One thought on “Introductory Video on Fiat Money

  1. The content of the video is very good apart from a small slip. Andrew John Miles on twitter has pointed out a brief section in which it is suggested that public debt issuance is for the purpose of inflation control. This is not really the MMT position. There is little difference, in terms of inflation, whether the Fed chooses to issue interest-bearing bonds or instead pays interest at its target rate on reserves. A bondholder who wishes to spend can always trade bonds for cash in order to spend, so bond issuance does not prevent spending. It is more that a bondholder has chosen not to spend and so is looking for an interest-bearing saving vehicle. The purposes of bond issuance have been (i) as a means of targeting the short-term rate of interest (which can instead be done by paying interest on reserves) and (ii) as a saving vehicle for non-government.

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