Cryptocurrencies on a Collision Course with Bernie Sanders’ Modern Monetary Theory

Modern Monetary Theory (MMT), or post-Keynesian, is the idea that, because the state has a monopoly on currency production, it should use fiscal policy to achieve full employment. Concerns over inflation would be countered with higher taxes, bond issuances, and other policy measures to remove excess money from the system. The fundamental basis of MMT is that the government, especially the United States, cannot default on its own debt. Therefore, it should do everything in its power to expand this money pool for the social good while also removing excess money, if possible.

Remember Gold?

The core argument behind MMT is that money is a feature created by law, rather than based on something tangible — like gold. Surely, in today’s day and age, it does feel that way, with floating exchange rates dictating the value of currencies. Ever since the end of the Bretton Woods system in 1971, gold has no longer been the basis of our money. One can easily see why MMT’s popularity is on the rise because currencies today have no fundamental value — but is this sustainable?

Bitcoin: An Alternative to Modern Monetary Theory

MMT has boomed in popularity, thanks to Bernie Sanders, his ilk, and the fundamental problems of today’s capitalism — namely: part-time work, stagnant wages, and low labor participation rates in the United States and across the globe. For MMT supporters, the government should dictate fiscal policy to correct these shortfalls. However, with the emergence of Bitcoin (BTC), we now have an entirely new concept of money. Not only is Bitcoin capped at 21,000,000 coins, but it is not issued by any nation-state. In this way, it is the first-ever issuance of money that’s not state-backed. Instead, it is backed by an altogether different consensus system through its proof-of-work model. If the choice is between MMT and Bitcoin, then the choice is really between government-sponsored currency and decentralized currency. More importantly, would governments even allow Bitcoin to supersede their own state currencies? [bctt tweet=”If the choice is between MMT and Bitcoin, then the choice is really between government-sponsored currency and decentralized currency. ” username=”beincrypto”] It seems that Bitcoin is on a collision course with the very essence of how we see money in the post-Bretton Woods economy we currently live in. However, Bitcoin is even more radical than gold — it brings forth an entirely new idea of currency without state actors. Therefore, the choice is clear: do we want MMT and to lay our trust in the state to fight inflation, or do we instead wish for a radical new approach with Bitcoin, the first currency ever not to be issued by a state? Do you believe the economic questions in the coming debate will be between MMT and non-state issued cryptocurrencies? Let us know your thoughts below.