Gee’s Reviews > The Power of Money: How Ideas about Money Shaped the Modern World > Status Update

People still believe in bachi: if you suffer a misfortune, you check first to see what you may have done wrong. It is part of the tradition of Buddhist philosophy shared by many Eastern peoples: ‘actions have consequences’.

It is worth pausing for a moment to register this: ‘what is money is determined by the workings of the economy’. Money is not always and everywhere the same thing. The economy has a number of different types of money: ‘everyone can create money; the problem is to get it accepted’

But in truth, what is money is determined by the workings of the economy, and usually there is a hierarchy of monies, with special money instruments for different purposes. (Minsky 1986)

Graeber is an angry anarchist, and his vision unrealistic, yet his analysis and historical insight shed  new light on our current dilemmas. 

Graeber says they invest in US bonds as a tribute owed to its power. Historically, the main buyers of US treasury bonds have been countries that are or have been under US military occupation, such as Germany and Japan. All countries other than the United States have to repay their debts on the nail or face ruin. The dollar as the dominant  global currency is rooted in military might.

According to Graeber, the usual story of money and banking is a fairy tale. T hey did not emerge naturally from voluntary cooperation and barter. Modern money emerged to finance warfare. Central banks represent the institutionalisation of the marriage between the interests of the warriors and financiers.

Yet this theory fits into the mindset of our time. It repackages Keynesian remedies in modern language—and it is no accident that this language is monetary. The world’s problems can be solved by a sufficient injection of money.

MMT attempts to repackage and resurrect the discredited Keynesian policies of the 1960s and 1970s. MMT’s assertions that (1) ‘Countries that borrow in their own currency should not worry about government deficits because they can always create money to finance their debt;’ and (2) ‘Countries that borrow in their own currency can finance as much real government spending as they want by creating money.’

how to issue, lend, and spend money come down to politics, values, and convention, whether the goal is reducing inequality or boosting entrepreneurship. Inflation can be controlled through taxation, and only becomes a problem at full employment. The state can guarantee a job to anyone who wants one, lowering unemployment and competing with the private sector for workers, raising standards and wages across the board.

Governments may spend as much as they need to in order to guarantee full employment and other social goods. A state never runs out of money. It isn’t a scarce commodity like silver or gold. Its value is determined by the difficulty of obtaining it—something that the state, as monopoly issuer, can decide.