It is about MMT, Modern Monetary Theory. That is a different way to understand economy. The important points of the documentary was the next:
- The issuer of money is the state
- Money is a tool to create wealth
- Tax is used to regulate the system. Tax was imposed at the beginning of history as a force to the population to start using money system. Taxes is a cost for the population to participate in the economy.
- Government debt is not bad, is the opposite, it is a surplus. When a country creates money, it put it in the system. With taxes you receive the money back, and you should be 0. Money is a tool with two faces, one possitive and one negative. Debt, in MMT, is understood as money that the goverment lent, that did not receive, that means that it is in the private sector. So we can understand that having national debt, means also that money have not being returned, so wealth is in the private sector, that is something possitive. MMT is a huge fan of having national debt.
- The problem, and the limitation of this system, is inflation. Issuing more money creates inflation, making the money less valuable. The best tool against inflation is to stimate correctly that capabilities of the economy/socieaty. Injecting too much money would create inflate. The money that is injected in the system, needs to be returned back.
- The best way to describe the economy is the next picture. Understood as economy as the goverment in the center, that is issuing money to the different parts of the economy, that is moving money around the system, until it returns back to the government.
- The role of the bank is similar as the government, but with lent money from the system. It has is internal rule of “money that goes out of the system, needs to come back into the system”. They need to have external controlling organisms that track that they are not creating money from anywhere.
- It talked about how China lend money to US. That is external debt. And it is explained in the next way. US buys resources to china, more than china do it whit us. For that reason US have more dolars than chiniese money in china. So China can lend money to US, but basically that is giving back money that was issued by US from the first time. So, external debt, can be seen as US buying more assets from china, that in the other way arround.
- It talked about the WWII. After the great depression in US, they started the war and they neeeded money. What they did was to print a lot of money. So how they controlled the inflation? They do it by asking the population to not waste the money, and keep it saved. Because that irregular ammount of money that was injected, would not do good to a economy that is not capable to support that money. But, asking the population to save money, and spending it wisely, could make the inflation to not explode. Their tools were war bonds, rationing, growing economy.
- The part I still dont undestand is that, they refer very often to the next situation. When money is received back to the state, as taxes, that money needs to be destroyed. And…. I dont understand that honestly. Why it needs to be destroyed, and not injected again to the system.