It was Ian Smith who declared UDI in 1965. By the time of the Lancaster House agreement (an agreement that Rhodesia only signed because their economy was on the verge of collapsing), Rhodesia had been fighting a war for over a decade and been sanctioned by virtually every country in the world. Their sole route of trade was with South Africa, who naturally cut trade links after ZANU won the 1980 elections. Britain then officially granted Zimbabwe it's independence. The first Prime Minister, Robert Mugabe, has been reported to have been a Marxist, Leninist, Maoist, (he wasn't, which is why Zimbabwe didn't become a Marxist state) which naturally dissuaded investment from western Europe and the US. I don't see how any country could have thrived under those circumstances. Edit. The land reforms were a mistake from an economic point of view (as well as other points of view). The farm owners were the people best qualified to manage the farms profitably. The land didn't generally go to the farm workers though. In 1979, ZANU had over 25,000 armed guerillas, ZAPU had 20,000. These people had been promised land reform. Did I mention that they were armed? It was a stark choice between a certain civil war or a probable economic collapse. I'm not a Mugabe apologist BTW, He certainly made mistakes. He became more authoritarian the longer he ruled, and maybe he would be remembered more positively if he'd just served one term and retired.
Totally agree @skasteve6528. Mugabe was elected in the elections following the Lancaster House Agreement, UDI was under the Smith Government that caused sanctions to be applied.
Erm... you expect a liberated nation to continue dealing with people who segregated their land for generations? How on earth are racist militant farmers going to help a liberated black nation to prosper and thrive? The land reform was inevitable, none of the farmers wanted to contribute toward Zimbabwe. These are people who trained dogs to attack children, their attitude toward the locals was abhorrent. Obvious that Europeans memory of the barbarism of colonialism is rather delicate, to say the least. The failure of Zimbabwe was solely due to the illegal sanctions put upon it as various wealthy individuals in the UK claimed land there and wanted it back so they could sell flowers to Tesco while the people starve.
Mugabe refused to let private corporations take over state provision. Mugabe had been lauded by the West as the future but he didn’t cooperate commercially. This shows what “freedom” really means to the Western establishment, particularly the USA.
Unilateral Independence from the UK was declared by the Rhodesian government in 1965, not by the Zimbabwean government in 1980. Rhodesia was punished by sanctions. The new black government of the renamed state had international support from its inception and wasn't until fairly recently.
There was a civil war and the UK helped negotiate the terms of it ending. My dad was at the negotiations in 1979. His then boss Lord Powell said to him that Mugabe was the right man for the job, which was true then, but obviously he clung onto power for too long and ended up trashing the economy.
@@lambd01d I don't think anyone thinks robert mugabe was ever the right man for the job, he was a raging nutcase communist who got his funding from north korea
Thank you for this Richard. Every time someone raises Venezuela, Zimbabwe or Germany post World War I, in what is usually a throw away one line comment to try and discredit Modern Monetary Theory, I will point them to this video. A brilliant explanation of what really caused their hyperinflation.
If you are interested in the realities of the hyperinflation hyperventilators, the ZimWeiArg types, do a search on "Clint Ballinger hyperinflation", lots of good info on the site for those newer to MMT.
@@helenheenan3447 if you are interested in learning more about the hyperinflation hyperventilators favourites, ZimWeiArg etc clint Ballinger has written a lot of interesting analysis on "The Myth of Hyperinflation". Also, Phil Armstrong and Warren Mosler have joint authored a paper specifically on Weimar.
Three examples of where MMT has been adopted and then rather soon after the country collapses. OK let us accept that in each case it could be the "something else" that was the downfall of the country. The examples are over the past 90 years, so in that whole 90 year period, with the nearly 200 countries in the world, can you or Richard show us a few examples of where MMT has been applied and set the country on a long-term course of prosperity? I specify long-term because there are lots of examples of boom and bust policies that work short term but then fail big time. I am fairly sure that it such economic miracle has occurred we would have heard about it, but I am honestly not aware of any example.
@@OneAndOnlyMepoliticians abuse our fiat currency on behalf of the already wealthy. It’s politicians that cause the harm by selling out to the greedy! This only happens because we don’t have a true democracy. Political parties are not by their very nature democratic because they force MPs to vote against their constituents and in most cases they are forced to vote in favour of their corporate donors. There by selling our democracy to the highest bidders. This is not democracy and it amounts to financial abuse of the public by abusing our sovereign currency. MMT doesn’t harm people Politicians do!
@@OneAndOnlyMe politicians have the power to implement policies that are influenced by that greed and insecurity therefore politicians do harm people.
MMT is all fine until you realise you have to spend all that you gained plus a bit more on repaying the debt you have created. Then you have to start cutting healthcare, education and benefits to pay the debt. That rather harms people - most people call that "Reality".
The case put forward about excess money printing in Zimbabwe and the Weimar republic by Richard Murphy is not correct. It ignores the fact that excessive expenditure funded by government was the real fact of the cause of massive hyperinflation. Take the actual figures into account of those money expansions which were increasing the face value on the currency by hundreds of thousands percent when the real reduction in output of the economy was a 20% per year drop not some tens of or hundreds of thousands of percent per year. That thinking that underlies Richard's belief is devoid of any reasonable sense of proportion and therefore irrational.
Spot on! If what Richard says worked then borrowing and spending would result in a spiral of growth and prosperity rather than (as we have) stagnation and debt. We get a long ramble on why these countries who borrowed and pissed away did not go bust because they borrowed and pissed away. But there is never an example of borrowing and booming.
To me the MMT sequence of events looks more like this: 1) There's an economic catastrophe that destroys the tax base. (Outside forces for Weimar, self-inflicted for Venezuela and Zimbabwe with their inept socialist policies and rampant government corruption). 2) Government won't reduce expenditure to match their reduced ability to levy taxes. 3) Excess government money being pumped into a reduced economy leads to inflation which further damages the economy. 4) Rinse and repeat until complete economic collapse.
There is a parallel here with the western world as well. MMT proponents make a similar mistake that these socialists do, that all human capital is equal. Thinking that the every unemployed individual is yearning and capable of being a productive member of society is well…
"The world turned against them" So, in short, MMT is still at the mercy of the global economic system, something that no single country can control or change.
...as the example of the Western Roman Empire demonstrates. They had been steadily debasing their currency for 150 years... which worked fine until 476AD... At which point, the Barbarians trashed Rome.
Lets see what would happen in Venezuela if it didn't have crippling sanctions passed by the west and it's reserves stolen by the banks. By the way, it was Ian Smith who declared unilateral independance. Mugabe was voted in by the people but was punished for his socialist land reform.
They still aren’t producing oil though. I understand that not being able to sell on the market is bad but they have a massive competency crisis as well. Human capital leaves when the future is uncertain. You put too much emphasis on policy.
@@fredfredrickson5436 where you you think Naphthalene comes from Fred? Besides this my amazement is mostly around the idea of why people fled and do not wish to return to Venezuela, not about the sanctions themselves. Do you ever wonder why the massive sanctions imposed on Russia didn’t have nearly the same effect? Not only did their energy industry survive, their economy is thriving.
The theory presented here seems ro be that MMT works unless your economy is isolated by sanctions. However, the examples here seem a bit selective. For example, he didn't include Argentina. Also, something similar to the conditions he describes could arise in modern western economies if we get cut off - e.g. by a trade war.
Correct. It was declared mid 60's by Smith. The country was fully recognised when Mugabe won the free election and then proceeded to drive the country into the ground through political violence and corruption.
He's a fascist whose job was to allow American finance to eat up all the agricultural land, and buy businesses for pennies on the pound. Argentina is absolutely finished which is why he was hailed as a humanist by western media.
The main difference I see between economists regarding MMT is the extent to which it can be leveraged, not the validity of the concept. Oddly, the people challenging it usually support a concept of austerity which has zero supporting evidence of efficacy, and in fact large amounts of evidence to the contrary.
@@martinsingfield I'm guessing you work in finance. ". . .MMT is much more likely to lead to higher inflation. . .". Could you explain how this happens please.
@@martinsingfield "Monetary financing of Government expenditure involves creating State money (aka external money), which in turn leads to a increase in monetary (aggregate) demand." Why?
I am someone who has been challenging MMT on very different grounds. MMT proponents might understand some things about the monetary system but they are clueless about the real world economy.
This is what the wider world is trying to do to Russia with sanctions, but Russia has made allies with China. With Iran in Africa, so they are able to trade. The sanctions have not hurt the country as much as the world wanted it to do.
Don't believe it, Russia never tells the truth but the truth is their economy is in a far worse state today than it was 3 years ago and a large portion of the blame for that is sanctions.
I agree with this explanation, but I’d like to take a step further and ask: what if those who benefit from the current system actively operate to prevent any alternative taking place?
Venezuela 🇻🇪 subjected to sanctions and US political interferance. Weimar as you correctly say was already an economic basket case and had to pay reperations in the victors currency.
This is all really interesting. Am learning a lot about something I knew really nothing about except that having little money makes life very hard, and watching UK crumble around me.
Doesn't undermine. The fact remains that the political and economic circumstances were not comparable to the UK or other countries similar to ours. In this instance, the historic details detract.
@@davidmcculloch8490The point I wanted to make is that mistakes made when presenting an argument give opponents an opportunity to dismiss it out of hand.
Mugabe was corrupt from the day he took over Zimbabwe and money printing was not the only problem that country created.Near the end of his dictatorship he had to reinstate the farmers he stole from to replace the tribes he appointed to feed the country.The Mugabe government did not have a clue how to run the factories,mines or farms stolen from the white owners.A wee bit similar to the nationalisation we copped here after WW2.
The idea is widespread that the Weimar Republic collapsed because of hyperinflation. That's flat-out wrong. The Weimar government ended the inflationary spiral by switching to the Rentenmark and the country was relatively stable and prosperous, considering it had just lost a war, until the effects of the global financial crash of 1929 made themselves felt.
the inflation was great benefit to the corporations as their debts, in real terms , became very small. The savings of the Middle Class were wiped out. That paved the way for the Nazis. The corporations wanted the Nazis in power because they would control the unions and socialists/communists. The workers could be distracted by some state handouts and an enemy to blame for all the ills-the Treaty and the Jews.
Not sure your recollections of what happened in Zimbabwe are quite right. Robert Mugabe was elected President after it gained it's independence, in 1980, only after 15 years of an insurgency to overthrow the white minority Govt that had declared UDI from Britain in 1965,. That UDI sparked an international sanctions regime and international isolation. No, Mugabe run his country into the ground and turned it into an international pariah through other means.
@@martinsingfield MMT is a lens with which to understand the monetary system. It doesn't dictate anything. Sounds like you need to do a bit of reading before trying to throw around opinions. Equilibrium is a dullard's fallacy.
I have read that currently there are two economies i) the financial economy - example equities ii) the real economy - example goods and services that the average citizen engages with. In addition I have read that the problem with the current version of MMT is that government generated fiscal stimulus is only entering the financial economy and is raising asset prices while the real economy is not receiving the benefit of this stimulus and is struggling. This misdirected stimulus might be as a result of a function outside of the MMT machine but even if it is not it should be rectified as soon as possible as it is damaging the support for MMT.
These policies are not following MMT principles as they are not using the deficit to create more stuff rather helping the private sector will do that, which they fail to do a lot as crazy financial instrument turn profit faster then making stuff (including services that people actually want) also they unwilling to Tax as much as is needed to get rid of excess money that is doing very little of use and mostly just raising prices. It seem we have MMT for the rich and Monetarism for the poor.
Let’s not forget the malicious sanctions from the west which caused the pain in countries such as Zimbabwe and Cuba etc. but the chickens are now coming home to roost.
Your condition of having an internationally traded currency basically means that other countries must have faith in your currency. If you depend upon imported food and manufactures then printing money to a greater value than the wealth within the country will lead to a devaluation of the currency and consequently cause inflation. So a country cannot just print money willy nilly and there is a limit on how much money can be printed.
It’s not “the world” that turns its back on the unfortunate (left voting) citizens, it’s the USA and it’s client states. The crushing suffering of ordinary citizens in Venezuelan is the direct result of US sanctions applied because the citizens had the effrontery to elect a government not slavishly obedient to the USA. Similarly in Zimbabwe, along with too rushed Africanisation of agricultural exports.
Weimar currency collapsed largely due to the private Reischbank printing large quantities of the German mark to be borrowed/short selled by International Currency speculators.
Richard, I have a question. Let's imagine the UK decides to start running the things on the basis of an MMT understanding of the economy. An announcement is made to that effect. The media & markets whip up a panic (think the Truss situation on steroids) during which the value of Sterling crashes. This falling of the exchange rate pushes up the cost of imports, local prices and wages begin to rise in response starting an inflationary cycle. The exchange rate declines further in response to these worsening conditions and so starts the decent into hyperinflation. In this video you say that MMT onlyt applies if you have have: 1) A government that is strong and respected 2) The currency in question must be acceptable for international trade But given the scenario above these 2 things would be called into question would they not? There is no binary true/false position in either of these factors - they are only represented by weakening or strenghtening currency. So the question would be - do you agree there is a point where if the currency exchange rate drops low enough MMT would no longer apply? In other words MMT is a good description until international confidence in the currency/government is lost. But the trouble is if a government mentions they are basing their decisions on MMT this can trigger the exact conditions that make MMT invalid - not because MMT as a description is wrong but because it's 'scary' enough to the consensus view that it justifies irrational panic. This is a very nebulous and grey line over which it is easy to cross. Shrill media stories and speculation on international markets could easily take a UK government from "everythings cool, we are MMT'ing" to "oh dear, now we have hyperinflation".
Zimbabwe did not declare UDI in 1980 - that was the year that it became independent and internationally recognised. Rhodesia declared UDI in 1965 and was under sanctions.
As always very clearly explained. I have wondered whether MMT disagreed with the idea that the sum value of all goods and services equals the value of the money in circulation. Hopefully I gave that correctly. I vaguely thought this was connected to Says Law. I am still not entirely certain but after watching this feel the answer is the two do not necessarily contradict one another.
The UDI of Rhodesia was made by apartheid leader Ian Smith in 1965, making the white settler regime independent of the UK. The UK recognised Zimbabwe's transition after the fall of that regime and accepted Zimbabwe as an independent state in the Lancaster House Agreement of 1979. I'm not sticking up for Mugabe here, just trying to get the facts right vis-a-vis Zimbabwe and the international community - it was not considered a rogue state in the 1980s, but fully accepted by the UK and its allies. More importantly it had full IMF/World Bank backing during that period.
@@IDK64 In the 1960s-70s Rhodesia was one of two independent states on the African continent governed by a white minority of European descent and culture, the other being South Africa. Voting qualifications by property and education qualifications, without regard to race. Whites ended up with the majority of Assembly seats with Whites attaining 50 out of 66 seats. Blacks would only attain 16 out of the 66 seats in the Rhodesian Parliament. This is de facto apartheid - though the voting qualifications were property-educational based, not race based, guess who had the property and the education? The property/education bar to voting rights is exactly like the segregated southern states of the US 1865-1964, aka Jim Crow. Apartheid pure and simple.
@@Hoots_Maguireyou are distorting the definition of a word to serve a political agenda. Apartheid is a word specific to SA, it is a word that they came up with to describe their own policies. You are a clown and a fool and there can’t be de-facto Apartheid
If China is selling US bonds and increasing commodities purchases, alongside the fact that the 'BRICS' countries are considering a commodity-backed currency, is the dollar still a reliable currency to trade and preserve wealth in? It's the most sought after currency as it's the world reserve currency (although it's purely backed by debt issuance). As all other major currencies are derivatives of the dollar (also only backed by debt issuance) are they good currencies to trade and invest in? In this context where do Argentina and Russia sit? Both are resource-rich countries with terrible currencies. Can MMT apply to these countries?
QUESTION: What about Iran now? Iran has sanctions imposed against it, although it seems to be selling drones to Russia, and I presume is selling oil by the 'back door.' It has a horrible repressive goverenment and there is massive unrest in the population, with a possibility of an armed uprising/civil war. How is it doing economically?
Mugabe did not declare UDI - Ian Smith did - he declared independence from the UK. In '80 negations lead to the new government that ended UDI and Zimbabwe became an independent country
MMT is, or seems to be, a theory in the scientific sense. It's really that the word has other shades of every day use. If those senses, you could say that, say, The General Theory of Relatively was more of an explanation than a theory.
Does this mean that MMT can only work effectively if the government apply tax rises correctly and fairly? In the UK, Sunak borrowed approximately, £850 billion. If that isn't taxed back from the wealthy, the middle and working classes are swallowed up by tax rises, and inflation. The younger generation can't buy houses, and the landlord generation still continue to ensure their wealth by pushing rents up. With a debt that large, can Labour actually borrow anything to repair the economic damage left by the tories? It seems a fine line between allowing the expenditure, and being able to tax it back. Can MMT only work in a situation where the wealthiest can't hide their wealth through tax loopholes, offshore tax havens and accountants?
My understanding is that MMT doesn't DO anything. It is just an explanation of how the economy works. The idea is that a growing economy requires more liquidity - money in circulation - which is controlled by the difference between the expenditure of the government and amount of tax it reclaims. Ideally, the burden of tax should fall on those who can afford it - usually the top 10% of earners as well as on those with accumulated wealth (capital). The huge amount of money injected into the economy in COVID as well as the quantitative easing from the 2008 financial collapse has not significantly increased money in circulation because some it replaced the money that workers would have earned but didn't and the rest ended up boosting the profits of some essential businesses many of which used the excess to buy back shares to increase control and increase dividends which would have largely been used to acquire capital. There is in fact no reason why Labour shouldn't spend money on improving services and supporting businesses that are likely to provide more employment as a proportion of that spending will come back in normal taxes from the extra employment and VAT from the extra spending and inflation can be controlled by leaving only sufficient excess in the economy to maintain growth. Hope that makes sense. It's taken me a while to get my head round it!
The BRICS common currency in development are free from these limitations and not pegged to the USD or Euro. It also doesn’t replace domestic currency or soverign central banks ability to adjust rates as needed. Venezuela's exclution from the global financial systems and sanctions had much more to do with the hyper inflation they suffered than oil price fluctuations. Quite different from Zimbabwe or Argentina (not mentioned).
So for MMT to work, ten conditions (by my count) have to be fulfilled. Talk about a cop-out! Ten reasons to say 'it was not really MMT'. Perhaps you should become a politician? You have all the right excuses...
A well managed economy will succeed, MMT could be used as one part of a much bigger picture. But other theories could be just as valid, depending upon conditions. The problem usually lies with economists who only believe in one solution for any situation.
Governments shouldn’t “print” money. They should only “print” money they can collect in taxation. It is actors in the economy which print money, e.g. banks lending money, stock market appreciation, etc.
Thanks for the video! A few notes on Zimbabwe: 1) Zim (at the time Rhodesia) was sanctioned up to its ears during the Bush War. These sanctions continued for some significant time after that (I believe some are still in place today). You're not wrong that it was under sanctions in the '80s, but they didn't start in the 80s and Zim was already suffering - evidence: look at the conditions and subsequent protests which lead to the Gukurahundi Massacres in 1983-87. 2) The official line on the seizure of farmland was that it was going to be given to the farmhands. In reality, the farmhands were usually expelled (or killed, along with the farmer) as well. Small parcels of land were given to the War Vets (of the Bush War) who did most of the seizing, with the balance (the majority) being given to government ministers and their cronies. Corruption in Zimbabwe; who would ever have expected that! These ministers/cronies obviously didn't know how to run commercial farms (especially in a country which regularly suffers from drought and other challenging conditions) and so that was a major part of why agricultural production collapsed like it did. Most people miss the collapse of production in key national sectors when it comes to all 3 of the examples you mentioned, but it's nigh-on impossible to understand the subsequent hyperinflation without those events.
Beginner question: Are there any other currencies except for USD, GBP, EUR and YEN that are accepted for international trade? I thought most countries need dollars to trade internationally. If that's the case, can't we say MMT applies to a handful of rich countries?
This is the first of these videos of which I've felt seriously critical. The depiction of what happened to Weimar Germany accords far too much credence to Keynes's prediction in "The Economic Consequences of the Peace" and pays far too little attention to what actually happened, which is quite a complex story. It has to be remembered, in particular, that there was always scope for rescheduling reparations payments and negotiating them downward, with assistance from the international community. The key was the Wall Street Crash of 1929, not the terms of the Versailles Treaty.
@@chrisbirmingham5132 I did read something about American loans to Germany been canceled and immediate repayment demanded due to America's lack of liquid currency and the gold standard. I must look into that again.
Interesting. Thanks for the explanation. I have a question about China. Seems that China is turning its back on the world. It is kicking out companies. It restricts imports. Other countries are raising tariffs against China. What does MMT says will happen there?? China is suffering DEFLATION, not hyperinflation. BUT -- can that turn around, and become hyper-inflation there?? Thanks.
Why are we here? surely not to live in pain n fear as J Lennon once said.... Gotta be a better way and these Man made systems for the benefit of a few surely need a radical overhaul. 🤔
Thanks for the explanation. Please, could you give a counterexample to inflation as a purely monetary phenomenon? I mean there must be cases where countries have printed or created too much money and that has not led to hyperinflation. I think pointing out it would give robustness to MMT. Also, what do they mean by too much money? Too much money respect to what?
Totally wrong to blame the USA, even in part, for Venezuela. The currency collapsed a decade before any sanctions. The US was until then their only full price customer
arguably the countries that conspired to make Zimbabwe and Venezuela fail understood and applied the principles of MMT. Or perhaps not ‘the countries’ but individuals key to those actions.
So money only has value because of the taxes you have to pay for the government. What happens when too many people work for the government. The private sector can't generate enough tax revenue to fund it, that's where we are heading.
MMT appears to be correct in that the real economy and the monetary system have become completely detached under the current system. The problem I see is that none of the serious MMT proponents seem at all interested in talking about the real economy. It makes sense that growing the money supply is fine from a deficit perspective but they seem to take for granted that there are all of these “idle resources” lying around to be utilized. I am not convinced that this part is true because I work in the real economy and it doesn’t make any sense.
Nigeria recently declared that it will use the Naira for international trade, and for oil export transactions. Can it do that?? Where will other nations get the Naira to buy Nigeria's oil, or other export products??
It's like the theory of evolution. Most people agree it's factual, but the use of the word theory can suggest it can be falsified. Therefore it's misleading, and gives people an excuse to deny it.
So Richard, how does MMT explain the mechanism of inflation? The monetarists think it is caused by simply printing too much money relative to production. The Keynesian believe in inflationary spirals, demand-pull inflation, cost-push inflation, and inflation expectations. The monetarists have been the dominant economic religion for about 50 years and their version of MMT is called Reaganomics. You might know it as neo liberalism in England. The monetarist version of MMT was used to fund military expenditures and tax breaks for the rich. The latest version is more Keynesian in nature applied to all gov spending. Even dare I say it, funding social spending. Isn't that where the controversy really is? What is good for the goose in the commons is not good for the gander.
Venezuela - persecution and intrigue from Washington, its proxies in Europe. Zimbabwe - the long impact of imperialism, and sustained intrigue post-Empire Weimar - it would be interesting to look at this history in the context of Washington/London driving Fascism in Germany* (key text in this area * Conjouring Hitler)
Zimbabwe has had 40 years to sort itself out. It is well endowed with natural resources. The same goes for South Africa. Blaming imperialism is an excuse that will no longer wash.
@@physiocrat7143 France has continued to control the Economies of various nations it once held as colonies - dictating how investments are made etc; whilst the 'deals' created at the time of the end of Apartheid gifted huge advantage to corporations - esp. in mining and mineral wealth. Your analysis is wrong. See also, Washington's use of the the World Bank, IMF and so on, to utilise economics to control/break various states. Read Klein's 'Shock Doctrine' book for a reasonable introduction to this topic. And of course, Washington, like London before it, has adopted hard power at various points in time, including assassinations of numerous leaders who wouldn't follow DC dictate.
I am not an economist. Can you answer please these questions. Is cryptocurrency a threat ? With the rise of China's economic power, is it's currency a threat to the dollar ?
The PRC's currency should ideally be seen as an alternative to the dollar, in an increasingly multi-polar world. However, the US sees it as a rival/competitor.
I have just returned from Zimbabwe. The Government, is corrupt and dysfunctional, and has just launched a new currency (the ZiG, which is already inflating and no one uses it. There is a large and vibrant informal economy, using the USD. No one pays taxes, things sort of work and people get by. Where the formal economy has failed, the informal economy has taken-up the slack. For example, the police are paid in the pretty worthless ZiG, but operate a system of informal “road tolls”, payable in USD.
I live next to Zimbabwe in South Africa and your history of the situation is at best badly researched and at worst purposefully wrong so that it can fit the narrative of why MMT is not the problem. Zim was the bread basket of Africa and one of the strongest economies up until the late 90s. With Mugabe's farm policy and money printing in the early 2000s he crushed the economy. I would also like to point out that until this point and post this Mugabes party had strong support by his people and a strong central bank.
The fiat currencies of the world were adopted in early 1970's and all are in slow motion hyperinflation. All have lost at least 97% of their value, and the GBP has lost 99%. There is no sign that any fiat currency will stop losing value. Whatever the reasoning, this is not a good outlook for populations and deters saving, and promotes wild speculation in search of returns that will exceed the decay of the currency.
@@markwelch3564 So are you saying we should not save to buy something, or save for times when we can't earn? The whole idea of money is that we can trade, but defer our purchase until what we want/need becomes available at a price we can accept. Making money not worth saving is contrary to why money was used in the first place, which is why fiat currencies have always failed in the past.
You can't have economic growth without devaluing the currency as a matter of logic. If your impulse is to freeze the money supply, freeze the economy, and freeze personal savings, it could be a sign you are dead ;-) My old dad used to say, (personal) energy is not like a bank. You can't save it. The more you expend, the more you get. Economics and life seem to work similarly. If you want to stay fit, you have to expend energy. If you simply try to save energy, you end up slowly dying
@@WarrenPeaceOG The currency does not need to devalue if new creation is broadly in line with increased productivity. What we have is too much currency creation and a steady move towards zero, which is not sustainable, and not healthy. Keeping fit and expending energy requires dedication and the correct amount and type of food/nutrients - too much food, and of the wrong sort, will make you fat, unhealthy, and finish you off more quickly.
To opponents of MMT, the culprit is always a reckless government. But in 2008 the private banking system did just what the govts. are accused of. They issued money in excess of ability to pay back,
Good lord!! I’m listening to your (rather excellent) teaching on economics… I never thought I’d see the day.
It was Ian Smith who declared UDI in 1965. By the time of the Lancaster House agreement (an agreement that Rhodesia only signed because their economy was on the verge of collapsing), Rhodesia had been fighting a war for over a decade and been sanctioned by virtually every country in the world. Their sole route of trade was with South Africa, who naturally cut trade links after ZANU won the 1980 elections. Britain then officially granted Zimbabwe it's independence. The first Prime Minister, Robert Mugabe, has been reported to have been a Marxist, Leninist, Maoist, (he wasn't, which is why Zimbabwe didn't become a Marxist state) which naturally dissuaded investment from western Europe and the US.
I don't see how any country could have thrived under those circumstances.
Edit. The land reforms were a mistake from an economic point of view (as well as other points of view). The farm owners were the people best qualified to manage the farms profitably. The land didn't generally go to the farm workers though. In 1979, ZANU had over 25,000 armed guerillas, ZAPU had 20,000. These people had been promised land reform. Did I mention that they were armed? It was a stark choice between a certain civil war or a probable economic collapse.
I'm not a Mugabe apologist BTW, He certainly made mistakes. He became more authoritarian the longer he ruled, and maybe he would be remembered more positively if he'd just served one term and retired.
Totally agree @skasteve6528. Mugabe was elected in the elections following the Lancaster House Agreement, UDI was under the Smith Government that caused sanctions to be applied.
Erm... you expect a liberated nation to continue dealing with people who segregated their land for generations? How on earth are racist militant farmers going to help a liberated black nation to prosper and thrive?
The land reform was inevitable, none of the farmers wanted to contribute toward Zimbabwe. These are people who trained dogs to attack children, their attitude toward the locals was abhorrent. Obvious that Europeans memory of the barbarism of colonialism is rather delicate, to say the least.
The failure of Zimbabwe was solely due to the illegal sanctions put upon it as various wealthy individuals in the UK claimed land there and wanted it back so they could sell flowers to Tesco while the people starve.
@@Goldlion973 You nailed it!
Mugabe refused to let private corporations take over state provision. Mugabe had been lauded by the West as the future but he didn’t cooperate commercially.
This shows what “freedom” really means to the Western establishment, particularly the USA.
Correct, UDI was pre-Mugabe
Excellent and insightful commentary as always, thank you Richard.
Always find these talks extremely illuminating. Thank you.
Unilateral Independence from the UK was declared by the Rhodesian government in 1965, not by the Zimbabwean government in 1980.
Rhodesia was punished by sanctions. The new black government of the renamed state had international support from its inception and wasn't until fairly recently.
There was a civil war and the UK helped negotiate the terms of it ending. My dad was at the negotiations in 1979. His then boss Lord Powell said to him that Mugabe was the right man for the job, which was true then, but obviously he clung onto power for too long and ended up trashing the economy.
@@lambd01d I don't think anyone thinks robert mugabe was ever the right man for the job, he was a raging nutcase communist who got his funding from north korea
Thank you for this Richard. Every time someone raises Venezuela, Zimbabwe or Germany post World War I, in what is usually a throw away one line comment to try and discredit Modern Monetary Theory, I will point them to this video. A brilliant explanation of what really caused their hyperinflation.
If you are interested in the realities of the hyperinflation hyperventilators, the ZimWeiArg types, do a search on "Clint Ballinger hyperinflation", lots of good info on the site for those newer to MMT.
@@blackbulldog4897 Can't reach his site... do you have a link?
@@helenheenan3447 Thanks Helen
@@helenheenan3447 if you are interested in learning more about the hyperinflation hyperventilators favourites, ZimWeiArg etc clint Ballinger has written a lot of interesting analysis on "The Myth of Hyperinflation".
Also, Phil Armstrong and Warren Mosler have joint authored a paper specifically on Weimar.
Three examples of where MMT has been adopted and then rather soon after the country collapses.
OK let us accept that in each case it could be the "something else" that was the downfall of the country.
The examples are over the past 90 years, so in that whole 90 year period, with the nearly 200 countries in the world, can you or Richard show us a few examples of where MMT has been applied and set the country on a long-term course of prosperity?
I specify long-term because there are lots of examples of boom and bust policies that work short term but then fail big time.
I am fairly sure that it such economic miracle has occurred we would have heard about it, but I am honestly not aware of any example.
MMT doesn’t harm people
Politicians do!
Politicians don't harm people. Greed and insecurity harms people.
@@OneAndOnlyMepoliticians abuse our fiat currency on behalf of the already wealthy.
It’s politicians that cause the harm by selling out to the greedy! This only happens because we don’t have a true democracy. Political parties are not by their very nature democratic because they force
MPs to vote against their constituents and in most cases they are forced to vote in favour of their corporate donors.
There by selling our democracy to the highest bidders. This is not democracy and it amounts to financial abuse of the public by abusing our sovereign currency.
MMT doesn’t harm people
Politicians do!
@@OneAndOnlyMe ...or to put a finer point on it, people harm people.
@@OneAndOnlyMe politicians have the power to implement policies that are influenced by that greed and insecurity therefore politicians do harm people.
MMT is all fine until you realise you have to spend all that you gained plus a bit more on repaying the debt you have created. Then you have to start cutting healthcare, education and benefits to pay the debt. That rather harms people - most people call that "Reality".
Thank you, very educational Richard
The case put forward about excess money printing in Zimbabwe and the Weimar republic by Richard Murphy is not correct. It ignores the fact that excessive expenditure funded by government was the real fact of the cause of massive hyperinflation. Take the actual figures into account of those money expansions which were increasing the face value on the currency by hundreds of thousands percent when the real reduction in output of the economy was a 20% per year drop not some tens of or hundreds of thousands of percent per year.
That thinking that underlies Richard's belief is devoid of any reasonable sense of proportion and therefore irrational.
Spot on! If what Richard says worked then borrowing and spending would result in a spiral of growth and prosperity rather than (as we have) stagnation and debt.
We get a long ramble on why these countries who borrowed and pissed away did not go bust because they borrowed and pissed away. But there is never an example of borrowing and booming.
To me the MMT sequence of events looks more like this:
1) There's an economic catastrophe that destroys the tax base. (Outside forces for Weimar, self-inflicted for Venezuela and Zimbabwe with their inept socialist policies and rampant government corruption).
2) Government won't reduce expenditure to match their reduced ability to levy taxes.
3) Excess government money being pumped into a reduced economy leads to inflation which further damages the economy.
4) Rinse and repeat until complete economic collapse.
There is a parallel here with the western world as well. MMT proponents make a similar mistake that these socialists do, that all human capital is equal. Thinking that the every unemployed individual is yearning and capable of being a productive member of society is well…
Correct. This guy is a nut job like all leftists
Exactly. Doesn’t really matter what monetary system you use if the government controls it.
yep that is basically what happens. massive deficits financed through printing money. which is exactly what MMT people advocate for.
@@againstthestate 😂
Interesting article 👍 👏
"The world turned against them"
So, in short, MMT is still at the mercy of the global economic system, something that no single country can control or change.
the US TRY'S TOO
...as the example of the Western Roman Empire demonstrates. They had been steadily debasing their currency for 150 years... which worked fine until 476AD...
At which point, the Barbarians trashed Rome.
Some countries have more control than others, Venezuela was too incompetent though.
Another wonderful youtuber. Thank you for keeping the videos short and precise! Now I have so much knowledge to look forward to watch
Lets see what would happen in Venezuela if it didn't have crippling sanctions passed by the west and it's reserves stolen by the banks. By the way, it was Ian Smith who declared unilateral independance. Mugabe was voted in by the people but was punished for his socialist land reform.
Mostly. No way was Mugabe a Socialist, though. The land reform was a bribe to militias who might otherwise turn against him.
100% correct. People who doubt that USA deliberately destroys socialist controlled countries should go to CIAs own website.
They still aren’t producing oil though. I understand that not being able to sell on the market is bad but they have a massive competency crisis as well. Human capital leaves when the future is uncertain. You put too much emphasis on policy.
@@fredfredrickson5436 amazing that you believe this.
@@fredfredrickson5436 where you you think Naphthalene comes from Fred? Besides this my amazement is mostly around the idea of why people fled and do not wish to return to Venezuela, not about the sanctions themselves.
Do you ever wonder why the massive sanctions imposed on Russia didn’t have nearly the same effect? Not only did their energy industry survive, their economy is thriving.
The theory presented here seems ro be that MMT works unless your economy is isolated by sanctions.
However, the examples here seem a bit selective. For example, he didn't include Argentina.
Also, something similar to the conditions he describes could arise in modern western economies if we get cut off - e.g. by a trade war.
You could have done a bit of research on Zimbabwe's history, it was Ian Smith that declared unilateral independence in Rhodesia in 1965.
I thought UDI was declared by Ian Smith when the country was called Rhodesia ?
Correct. It was declared mid 60's by Smith. The country was fully recognised when Mugabe won the free election and then proceeded to drive the country into the ground through political violence and corruption.
Richard, it would interesting to discuss Argentina and its current hyper-austerity solution to its woes.
He's a fascist whose job was to allow American finance to eat up all the agricultural land, and buy businesses for pennies on the pound. Argentina is absolutely finished which is why he was hailed as a humanist by western media.
@@helenheenan3447 javier melei.
Im sure they'll find some reason why Argentina somehow failed their made-up criteria for success, so it doesn't count 🤣
Also, Hungary had hyperinflation.
The main difference I see between economists regarding MMT is the extent to which it can be leveraged, not the validity of the concept. Oddly, the people challenging it usually support a concept of austerity which has zero supporting evidence of efficacy, and in fact large amounts of evidence to the contrary.
BOOOOOOOMMMM!! Exactly this. It goes against the neoliberal agenda.
Parallels with Corporate Media > one gets farther in career saying the 'right' things.
@@martinsingfield I'm guessing you work in finance. ". . .MMT is much more likely to lead to higher inflation. . .". Could you explain how this happens please.
@@martinsingfield "Monetary financing of Government expenditure involves creating State money (aka external money), which in turn leads to a increase in monetary (aggregate) demand." Why?
I am someone who has been challenging MMT on very different grounds. MMT proponents might understand some things about the monetary system but they are clueless about the real world economy.
Thank you. I'm beginning to get a handle on this financial world.
I love your videos Richard, thank you for making them
Totally cogent analysis. Brilliant.
This is what the wider world is trying to do to Russia with sanctions, but Russia has made allies with China. With Iran in Africa, so they are able to trade. The sanctions have not hurt the country as much as the world wanted it to do.
Don't believe it, Russia never tells the truth but the truth is their economy is in a far worse state today than it was 3 years ago and a large portion of the blame for that is sanctions.
Iran in Africa?
Also Russia has most essentials locally made, they can take a bigger economic beating.
Great explanations!
I agree with this explanation, but I’d like to take a step further and ask: what if those who benefit from the current system actively operate to prevent any alternative taking place?
Turkey 🇹🇷 seems to knock noughts off their currency periodically, and the locals love $ and £s
Venezuela 🇻🇪 subjected to sanctions and US political interferance. Weimar as you correctly say was already an economic basket case and had to pay reperations in the victors currency.
This is all really interesting. Am learning a lot about something I knew really nothing about except that having little money makes life very hard, and watching UK crumble around me.
What about Argentina?
What about whataboutism?
I'm afraid that your mistakes about the history of Zimbabwe rather undermine the credibility of your argument, even though it may well be valid.
Doesn't undermine. The fact remains that the political and economic circumstances were not comparable to the UK or other countries similar to ours. In this instance, the historic details detract.
@@davidmcculloch8490The point I wanted to make is that mistakes made when presenting an argument give opponents an opportunity to dismiss it out of hand.
Mugabe was corrupt from the day he took over Zimbabwe and money printing was not the only problem that country created.Near the end of his dictatorship he had to reinstate the farmers he stole from to replace the tribes he appointed to feed the country.The Mugabe government did not have a clue how to run the factories,mines or farms stolen from the white owners.A wee bit similar to the nationalisation we copped here after WW2.
Robert Mugabe did not declare UDI, Ian Smith did. Get your facts right.
The idea is widespread that the Weimar Republic collapsed because of hyperinflation. That's flat-out wrong. The Weimar government ended the inflationary spiral by switching to the Rentenmark and the country was relatively stable and prosperous, considering it had just lost a war, until the effects of the global financial crash of 1929 made themselves felt.
the inflation was great benefit to the corporations as their debts, in real terms , became very small. The savings of the Middle Class were wiped out. That paved the way for the Nazis. The corporations wanted the Nazis in power because they would control the unions and socialists/communists. The workers could be distracted by some state handouts and an enemy to blame for all the ills-the Treaty and the Jews.
An excellent explanation marred by the careless mistake about UDI - even though it doesn't really impact on the argument.
So, you only get success if you meet the criteria for success? I think I know that.
It's countries who can't borrow in their own currency that are screwed and they are the majority.
Not sure your recollections of what happened in Zimbabwe are quite right. Robert Mugabe was elected President after it gained it's independence, in 1980, only after 15 years of an insurgency to overthrow the white minority Govt that had declared UDI from Britain in 1965,. That UDI sparked an international sanctions regime and international isolation.
No, Mugabe run his country into the ground and turned it into an international pariah through other means.
And lets not forget the correct sequence of events: inflation occurred first; money was printed to meet the payment needs of the people.
@@martinsingfield MMT is a lens with which to understand the monetary system. It doesn't dictate anything. Sounds like you need to do a bit of reading before trying to throw around opinions. Equilibrium is a dullard's fallacy.
Could you talk about how Argentina's economy got to the state it's currently in
Check out the Macro N Cheese podcast episode Argentina For Sale which does a deep dive on this.
There is a ready, short answer to this --- Washington DC!
I have read that currently there are two economies i) the financial economy - example equities ii) the real economy - example goods and services that the average citizen engages with. In addition I have read that the problem with the current version of MMT is that government generated fiscal stimulus is only entering the financial economy and is raising asset prices while the real economy is not receiving the benefit of this stimulus and is struggling. This misdirected stimulus might be as a result of a function outside of the MMT machine but even if it is not it should be rectified as soon as possible as it is damaging the support for MMT.
These policies are not following MMT principles as they are not using the deficit to create more stuff rather helping the private sector will do that, which they fail to do a lot as crazy financial instrument turn profit faster then making stuff (including services that people actually want) also they unwilling to Tax as much as is needed to get rid of excess money that is doing very little of use and mostly just raising prices. It seem we have MMT for the rich and Monetarism for the poor.
UDI happened under the white government of Smith. Zimbabwean became independent legally after the Lanacaster House agreement negotiated with the UK!
MMT still suffers from the threat of inflation and debasement though, that’s a real problem.
Argentina might be added to your list?
Let’s not forget the malicious sanctions from the west which caused the pain in countries such as Zimbabwe and Cuba etc. but the chickens are now coming home to roost.
Your condition of having an internationally traded currency basically means that other countries must have faith in your currency. If you depend upon imported food and manufactures then printing money to a greater value than the wealth within the country will lead to a devaluation of the currency and consequently cause inflation. So a country cannot just print money willy nilly and there is a limit on how much money can be printed.
It’s not “the world” that turns its back on the unfortunate (left voting) citizens, it’s the USA and it’s client states. The crushing suffering of ordinary citizens in Venezuelan is the direct result of US sanctions applied because the citizens had the effrontery to elect a government not slavishly obedient to the USA. Similarly in Zimbabwe, along with too rushed Africanisation of agricultural exports.
Weimar currency collapsed largely due to the private Reischbank printing large quantities of the German mark to be borrowed/short selled by International Currency speculators.
Inflation was stopped dead by the introduction of the Rentenmark.
MMT assumes limitless supply of natural resources such as energy. That's it's main weakness.
It was Ian Smith in 1965 who did UDI, not Robert Mugabe in 1979.
Small correction. UDI was Ian Smith in 1965.
Yes, Venezuela, the Weimar Republic and Zimbabwe prove MMT is true - that is the main reason why not to introduce MMT in other countries.
Richard, I have a question.
Let's imagine the UK decides to start running the things on the basis of an MMT understanding of the economy. An announcement is made to that effect. The media & markets whip up a panic (think the Truss situation on steroids) during which the value of Sterling crashes. This falling of the exchange rate pushes up the cost of imports, local prices and wages begin to rise in response starting an inflationary cycle. The exchange rate declines further in response to these worsening conditions and so starts the decent into hyperinflation.
In this video you say that MMT onlyt applies if you have have:
1) A government that is strong and respected
2) The currency in question must be acceptable for international trade
But given the scenario above these 2 things would be called into question would they not? There is no binary true/false position in either of these factors - they are only represented by weakening or strenghtening currency. So the question would be - do you agree there is a point where if the currency exchange rate drops low enough MMT would no longer apply?
In other words MMT is a good description until international confidence in the currency/government is lost. But the trouble is if a government mentions they are basing their decisions on MMT this can trigger the exact conditions that make MMT invalid - not because MMT as a description is wrong but because it's 'scary' enough to the consensus view that it justifies irrational panic. This is a very nebulous and grey line over which it is easy to cross. Shrill media stories and speculation on international markets could easily take a UK government from "everythings cool, we are MMT'ing" to "oh dear, now we have hyperinflation".
Zimbabwe did not declare UDI in 1980 - that was the year that it became independent and internationally recognised. Rhodesia declared UDI in 1965 and was under sanctions.
As always very clearly explained. I have wondered whether MMT disagreed with the idea that the sum value of all goods and services equals the value of the money in circulation. Hopefully I gave that correctly. I vaguely thought this was connected to Says Law. I am still not entirely certain but after watching this feel the answer is the two do not necessarily contradict one another.
The UDI of Rhodesia was made by apartheid leader Ian Smith in 1965, making the white settler regime independent of the UK. The UK recognised Zimbabwe's transition after the fall of that regime and accepted Zimbabwe as an independent state in the Lancaster House Agreement of 1979.
I'm not sticking up for Mugabe here, just trying to get the facts right vis-a-vis Zimbabwe and the international community - it was not considered a rogue state in the 1980s, but fully accepted by the UK and its allies. More importantly it had full IMF/World Bank backing during that period.
Ian Smith was not an Apartheid political and Rhodesia was not an Apartheid state.
@@IDK64 In the 1960s-70s Rhodesia was one of two independent states on the African continent governed by a white minority of European descent and culture, the other being South Africa. Voting qualifications by property and education qualifications, without regard to race. Whites ended up with the majority of Assembly seats with Whites attaining 50 out of 66 seats. Blacks would only attain 16 out of the 66 seats in the Rhodesian Parliament.
This is de facto apartheid - though the voting qualifications were property-educational based, not race based, guess who had the property and the education? The property/education bar to voting rights is exactly like the segregated southern states of the US 1865-1964, aka Jim Crow. Apartheid pure and simple.
@@Hoots_Maguire
And look who the unqualified enfranchised elected. They have brought disaster on their own people.
@@Hoots_Maguireyou are distorting the definition of a word to serve a political agenda. Apartheid is a word specific to SA, it is a word that they came up with to describe their own policies. You are a clown and a fool and there can’t be de-facto Apartheid
Ian Smith declared UDI not Mugabe!
If China is selling US bonds and increasing commodities purchases, alongside the fact that the 'BRICS' countries are considering a commodity-backed currency, is the dollar still a reliable currency to trade and preserve wealth in?
It's the most sought after currency as it's the world reserve currency (although it's purely backed by debt issuance). As all other major currencies are derivatives of the dollar (also only backed by debt issuance) are they good currencies to trade and invest in?
In this context where do Argentina and Russia sit? Both are resource-rich countries with terrible currencies. Can MMT apply to these countries?
Russia is one of the most sanctioned countries in the world
So what is going on with China Russia Iran forming a challenge to the USD ?
QUESTION: What about Iran now? Iran has sanctions imposed against it, although it seems to be selling drones to Russia, and I presume is selling oil by the 'back door.' It has a horrible repressive goverenment and there is massive unrest in the population, with a possibility of an armed uprising/civil war. How is it doing economically?
All 3 can be traced back to Eurocentric economic manipulation.
Mugabe did not declare UDI - Ian Smith did - he declared independence from the UK. In '80 negations lead to the new government that ended UDI and Zimbabwe became an independent country
MMT is, or seems to be, a theory in the scientific sense. It's really that the word has other shades of every day use. If those senses, you could say that, say, The General Theory of Relatively was more of an explanation than a theory.
quite
Does this mean that MMT can only work effectively if the government apply tax rises correctly and fairly?
In the UK, Sunak borrowed approximately, £850 billion. If that isn't taxed back from the wealthy, the middle and working classes are swallowed up by tax rises, and inflation. The younger generation can't buy houses, and the landlord generation still continue to ensure their wealth by pushing rents up.
With a debt that large, can Labour actually borrow anything to repair the economic damage left by the tories?
It seems a fine line between allowing the expenditure, and being able to tax it back.
Can MMT only work in a situation where the wealthiest can't hide their wealth through tax loopholes, offshore tax havens and accountants?
My understanding is that MMT doesn't DO anything. It is just an explanation of how the economy works. The idea is that a growing economy requires more liquidity - money in circulation - which is controlled by the difference between the expenditure of the government and amount of tax it reclaims. Ideally, the burden of tax should fall on those who can afford it - usually the top 10% of earners as well as on those with accumulated wealth (capital). The huge amount of money injected into the economy in COVID as well as the quantitative easing from the 2008 financial collapse has not significantly increased money in circulation because some it replaced the money that workers would have earned but didn't and the rest ended up boosting the profits of some essential businesses many of which used the excess to buy back shares to increase control and increase dividends which would have largely been used to acquire capital.
There is in fact no reason why Labour shouldn't spend money on improving services and supporting businesses that are likely to provide more employment as a proportion of that spending will come back in normal taxes from the extra employment and VAT from the extra spending and inflation can be controlled by leaving only sufficient excess in the economy to maintain growth.
Hope that makes sense. It's taken me a while to get my head round it!
The BRICS common currency in development are free from these limitations and not pegged to the USD or Euro. It also doesn’t replace domestic currency or soverign central banks ability to adjust rates as needed.
Venezuela's exclution from the global financial systems and sanctions had much more to do with the hyper inflation they suffered than oil price fluctuations. Quite different from Zimbabwe or Argentina (not mentioned).
So for MMT to work, ten conditions (by my count) have to be fulfilled. Talk about a cop-out! Ten reasons to say 'it was not really MMT'. Perhaps you should become a politician? You have all the right excuses...
Still it is the printing press that generated the hyperinflation, whatever the root cause.
A well managed economy will succeed, MMT could be used as one part of a much bigger picture. But other theories could be just as valid, depending upon conditions. The problem usually lies with economists who only believe in one solution for any situation.
argue for your limitations and sure enough they're yours [R. Bach]
I think you have hit the nail on the head
Governments shouldn’t “print” money. They should only “print” money they can collect in taxation. It is actors in the economy which print money, e.g. banks lending money, stock market appreciation, etc.
Thanks for the video!
A few notes on Zimbabwe:
1) Zim (at the time Rhodesia) was sanctioned up to its ears during the Bush War. These sanctions continued for some significant time after that (I believe some are still in place today). You're not wrong that it was under sanctions in the '80s, but they didn't start in the 80s and Zim was already suffering - evidence: look at the conditions and subsequent protests which lead to the Gukurahundi Massacres in 1983-87.
2) The official line on the seizure of farmland was that it was going to be given to the farmhands. In reality, the farmhands were usually expelled (or killed, along with the farmer) as well. Small parcels of land were given to the War Vets (of the Bush War) who did most of the seizing, with the balance (the majority) being given to government ministers and their cronies. Corruption in Zimbabwe; who would ever have expected that! These ministers/cronies obviously didn't know how to run commercial farms (especially in a country which regularly suffers from drought and other challenging conditions) and so that was a major part of why agricultural production collapsed like it did.
Most people miss the collapse of production in key national sectors when it comes to all 3 of the examples you mentioned, but it's nigh-on impossible to understand the subsequent hyperinflation without those events.
This explanation of Zimbabwe makes sense. Some farmhands could have eventually forged some management, almost never for those from out of the farm.
Beginner question: Are there any other currencies except for USD, GBP, EUR and YEN that are accepted for international trade? I thought most countries need dollars to trade internationally. If that's the case, can't we say MMT applies to a handful of rich countries?
This is the first of these videos of which I've felt seriously critical. The depiction of what happened to Weimar Germany accords far too much credence to Keynes's prediction in "The Economic Consequences of the Peace" and pays far too little attention to what actually happened, which is quite a complex story. It has to be remembered, in particular, that there was always scope for rescheduling reparations payments and negotiating them downward, with assistance from the international community. The key was the Wall Street Crash of 1929, not the terms of the Versailles Treaty.
@@chrisbirmingham5132 I did read something about American loans to Germany been canceled and immediate repayment demanded due to America's lack of liquid currency and the gold standard. I must look into that again.
the great Inflation was about 1922 . The Wall street crash 1929. How is it the key?
How about a vidio on your thoughts on UBI
Interesting. Thanks for the explanation.
I have a question about China.
Seems that China is turning its back on the world.
It is kicking out companies. It restricts imports.
Other countries are raising tariffs against China.
What does MMT says will happen there??
China is suffering DEFLATION, not hyperinflation.
BUT -- can that turn around, and become hyper-inflation there??
Thanks.
Incorrect statement about UDI by Rhodesia
Cuba, low inflation despite heavy sanctions.
Argentina, hyperinflation with no sanctions!!
Why are we here? surely not to live in pain n fear as J Lennon once said.... Gotta be a better way and these
Man made systems for the benefit of a few surely need a radical overhaul. 🤔
Enoch Powell the famous monetarist would never have let the national debt reach £3.5 trillion.
Thanks for the explanation. Please, could you give a counterexample to inflation as a purely monetary phenomenon? I mean there must be cases where countries have printed or created too much money and that has not led to hyperinflation. I think pointing out it would give robustness to MMT. Also, what do they mean by too much money? Too much money respect to what?
What would happen if Scotland declared UDI?
They would be on the bones of their arse, within 4x years ,
Totally wrong to blame the USA, even in part, for Venezuela. The currency collapsed a decade before any sanctions. The US was until then their only full price customer
arguably the countries that conspired to make Zimbabwe and Venezuela fail understood and applied the principles of MMT. Or perhaps not ‘the countries’ but individuals key to those actions.
So money only has value because of the taxes you have to pay for the government. What happens when too many people work for the government. The private sector can't generate enough tax revenue to fund it, that's where we are heading.
MMT appears to be correct in that the real economy and the monetary system have become completely detached under the current system. The problem I see is that none of the serious MMT proponents seem at all interested in talking about the real economy. It makes sense that growing the money supply is fine from a deficit perspective but they seem to take for granted that there are all of these “idle resources” lying around to be utilized. I am not convinced that this part is true because I work in the real economy and it doesn’t make any sense.
@@soulfuzz368 Your concerns are well placed and appropriate
Nigeria recently declared that it will use the Naira for international trade, and for oil export transactions.
Can it do that??
Where will other nations get the Naira to buy Nigeria's oil, or other export products??
it's fail, nobody would agree to trade in Naira
8:48 That sounds to me exactly like what a theory is. I'm not sure I get your point in saying that it's a misnomer to call it a theory.
It's like the theory of evolution. Most people agree it's factual, but the use of the word theory can suggest it can be falsified. Therefore it's misleading, and gives people an excuse to deny it.
YOUR COMMENTS ON ZIMBABWE ARE INACCURATE.
So Richard, how does MMT explain the mechanism of inflation? The monetarists think it is caused by simply printing too much money relative to production. The Keynesian believe in inflationary spirals, demand-pull inflation, cost-push inflation, and inflation expectations. The monetarists have been the dominant economic religion for about 50 years and their version of MMT is called Reaganomics. You might know it as neo liberalism in England. The monetarist version of MMT was used to fund military expenditures and tax breaks for the rich. The latest version is more Keynesian in nature applied to all gov spending. Even dare I say it, funding social spending. Isn't that where the controversy really is? What is good for the goose in the commons is not good for the gander.
Very good explanation of MMT!😊
Venezuela - persecution and intrigue from Washington, its proxies in Europe.
Zimbabwe - the long impact of imperialism, and sustained intrigue post-Empire
Weimar - it would be interesting to look at this history in the context of
Washington/London driving Fascism in Germany*
(key text in this area * Conjouring Hitler)
Zimbabwe has had 40 years to sort itself out. It is well endowed with natural resources. The same goes for South Africa. Blaming imperialism is an excuse that will no longer wash.
@@physiocrat7143 France has continued to control the Economies of various nations it once held as colonies - dictating how investments are made etc; whilst the 'deals' created at the time of the end of Apartheid gifted huge advantage to corporations - esp. in mining and mineral wealth. Your analysis is wrong. See also, Washington's use of the the World Bank, IMF and so on, to utilise economics to control/break various states. Read Klein's 'Shock Doctrine' book for a reasonable introduction to this topic. And of course, Washington, like London before it, has adopted hard power at various points in time, including assassinations of numerous leaders who wouldn't follow DC dictate.
Does MMT explain why the buying power of the dollar, the pound, and the euro weakens year after year?
Yes it does ,absolutely. The more currency you print from thin air the less purchasing power it has . Hence the state of the uk and cost of living.
I am not an economist.
Can you answer please these questions.
Is cryptocurrency a threat ?
With the rise of China's economic power, is it's currency a threat to the dollar ?
You don't need to be an economist to see that crypto is a pyramid scheme. Just use common sense.
The PRC's currency should ideally be seen as an alternative to the dollar, in an increasingly multi-polar world. However, the US sees it as a rival/competitor.
Nothing backs the concept of money up though
Taxes do - if you need to pay tax, then the currency you need to pay those taxes has value
@@markwelch3564 only in noddy land
I have just returned from Zimbabwe. The Government, is corrupt and dysfunctional, and has just launched a new currency (the ZiG, which is already inflating and no one uses it. There is a large and vibrant informal economy, using the USD. No one pays taxes, things sort of work and people get by. Where the formal economy has failed, the informal economy has taken-up the slack. For example, the police are paid in the pretty worthless ZiG, but operate a system of informal “road tolls”, payable in USD.
Finally - the excuse we've been waiting for: Give it all to the rich ... and we do not mean "finally" in any contrived sense ... at all .. promise...
What are your thoughts on Brexit
I live next to Zimbabwe in South Africa and your history of the situation is at best badly researched and at worst purposefully wrong so that it can fit the narrative of why MMT is not the problem. Zim was the bread basket of Africa and one of the strongest economies up until the late 90s. With Mugabe's farm policy and money printing in the early 2000s he crushed the economy. I would also like to point out that until this point and post this Mugabes party had strong support by his people and a strong central bank.
Let's be clear,money and currency are different.🤪
The fiat currencies of the world were adopted in early 1970's and all are in slow motion hyperinflation. All have lost at least 97% of their value, and the GBP has lost 99%. There is no sign that any fiat currency will stop losing value. Whatever the reasoning, this is not a good outlook for populations and deters saving, and promotes wild speculation in search of returns that will exceed the decay of the currency.
Smaug-piling is bad though, so discouraging that is a good thing
@@markwelch3564 So are you saying we should not save to buy something, or save for times when we can't earn? The whole idea of money is that we can trade, but defer our purchase until what we want/need becomes available at a price we can accept. Making money not worth saving is contrary to why money was used in the first place, which is why fiat currencies have always failed in the past.
You can't have economic growth without devaluing the currency as a matter of logic. If your impulse is to freeze the money supply, freeze the economy, and freeze personal savings, it could be a sign you are dead ;-) My old dad used to say, (personal) energy is not like a bank. You can't save it. The more you expend, the more you get. Economics and life seem to work similarly. If you want to stay fit, you have to expend energy. If you simply try to save energy, you end up slowly dying
@@WarrenPeaceOG The currency does not need to devalue if new creation is broadly in line with increased productivity. What we have is too much currency creation and a steady move towards zero, which is not sustainable, and not healthy. Keeping fit and expending energy requires dedication and the correct amount and type of food/nutrients - too much food, and of the wrong sort, will make you fat, unhealthy, and finish you off more quickly.
To opponents of MMT, the culprit is always a reckless government. But in 2008 the private banking system did just what the govts. are accused of. They issued money in excess of ability to pay back,
Two wrongs don't make a right.
@@ianstrong8395 it shows that excess issuing -by either sector-is the problem and MMT addresses that
@@ianstevenson3628 surly MMT also enables that.