I just watched the documentary ‘Finding the Money’ and found it interesting. However I don’t understand economics enough to fully grasphow MMT is a revolutionary way to look at money compared to the traditional theory of money.
In: Economics
The difference is fiat currency versus commodity currency.
Fiat is what we use now. It has no intrinsic value and only has the value that society gives it, and so is highly dependent on the economic activity of the money’s issuing country.
Commodity currency was what we used to use. It was money that represented as legal tender a certain amount of a commodity—gold. So $1 used to be like a voucher for a certain amount of gold, and this was more dependent on the value of gold within the global economy.
Beyond this, someone else will have to explain, but the gist I understand is that MMT = magic money, value is socially determined; commodity money = money represents an actual physical commodity with its own value.
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