Argentina has formally announced it won't join the BRICS bloc of developing economies. Friday's announcement is just the latest in a dramatic shift in economic policy triggered by Argentina’s new far-right President Javier Milei.
It’s the euro even a good idea? Convenient for tourism and trade sure, but according to MMT it hamstrings a countries ability to invest in it’s economy and makes government loans fraught.
I didn’t say they can’t, I said it was fraught. A better phrasing is “can cause issues a non-euro country does not have.” This quote explains what I mean:
So, in the eurozone a national (federal) government cannot run out of money as long as:
tax revenues are high enough to bring the Treasury account back to zero or
bond revenues are high enough to bring the Treasury account back to zero or
tax and bond revenues together are high enough to bring the Treasury account back to zero.
This means that a eurozone national government does not run out of money until it has exhausted its tax revenues and bond revenues
The United States, Great Britain, Japan, and every other fiat currency country don’t have this problem. They are incapable of running out of money. They are capable of making so much money it is completely debased like Weighmar Germany or Zimbabwe. However, those cases are rare and extreme. As long as they ensure the supply of goods people want to buy us sufficient they can spend as much as they want. This enables them to pay off their debts on a whim (if they want to collapse the safest store for money that investors use to outweigh risks).
It just makes it harder to take on debt if you don’t control your own currency as a sovereign state. EU countries are a political union but not a clear fiscal union, with their own treasuries but also the ECB calling the shots and it means that member states can have sanctions imposed on them, like Greece for example.
It’s the euro even a good idea? Convenient for tourism and trade sure, but according to MMT it hamstrings a countries ability to invest in it’s economy and makes government loans fraught.
Uh? Who said EU countries can’t contract loans or invest in its economy?
I didn’t say they can’t, I said it was fraught. A better phrasing is “can cause issues a non-euro country does not have.” This quote explains what I mean:
The United States, Great Britain, Japan, and every other fiat currency country don’t have this problem. They are incapable of running out of money. They are capable of making so much money it is completely debased like Weighmar Germany or Zimbabwe. However, those cases are rare and extreme. As long as they ensure the supply of goods people want to buy us sufficient they can spend as much as they want. This enables them to pay off their debts on a whim (if they want to collapse the safest store for money that investors use to outweigh risks).
Sources:
The Deficit Myth I’d give you page numbers but I listened to the audiobook https://www.intereconomics.eu/contents/year/2022/number/2/article/modern-monetary-theory-the-right-compass-for-decision-making.html
He literally said it’s the MMT. Lmgtfy: https://www.investopedia.com/modern-monetary-theory-mmt-4588060 and it doesn’t even say that companies can’t get loans.
It just makes it harder to take on debt if you don’t control your own currency as a sovereign state. EU countries are a political union but not a clear fiscal union, with their own treasuries but also the ECB calling the shots and it means that member states can have sanctions imposed on them, like Greece for example.