The currency of international trade has been on a lot of peoples' minds in the last few years. The hierarchy of currencies literature, the related questions of reforming the international monetary and financial system (IMFS), the effects of US monetary policy on the rest of the world (ROW). Add to that the war in Ukraine and Chinese trade-related discussion on the role of the ruble, dollar, yuan, oil and natural gas, wheat etc.
MMT
It is important to note that the proposals for a supranational currency have been made with various, disparate goals. Some are primarily interested in some aspect of commodities, others primarily or completely the supranational-currency aspect. These can overlap in several ways. The primary possibilities:
Before continuing with posts on this topic I want to note: I started these posts with a twitter comment by Nathan Tankus on replacing the dollar in international trade. That thread continues – that he foresees “a world of swap lines as alliance politics… Swap lines may seem like technocratic high politics now but it’s … Continue reading The Two Families of Global Reserve Proposals & Swap Lines
In modern states, demand for currency comes from the ongoing self-imposed liability for the currency. There is no need to pay savers in order for them to desire to hold the currency (interest on sovereign bonds issued for "deficit spending"). Any justification for doing so must rest on some other perceived benefit of paying savers.
Imagine a new democracy imposes taxes on itself; the tax-credit is then spent, taxed back, thus provisioning public goods in the process. Not all spending is taxed back, thus the public has savings of tax-credits. Why would it make sense to pay more tax-credits to those holding tax-credits? If for any reason the public decided … Continue reading When are payments to holders of the tax-credit by the state ever a useful policy?
