Chris Mayer — The Real Reason the U.S. Dollar Has Value

Chris Mayer is an Austrian-Libertarian who has seen the light about MMT's monetary economics.

While he is essentially correct, MMT economists say that taxation creates demand for the currency, which gives it spending power since those with liabilities imposed by government that the government requires its currency to satisfy must obtain the currency to do so. Government satisfies this demand by spending or lending. The prices that the government is willing to pay, e.g., as interest on its currency (own rate) and for goods and services it purchases in order to transfer private resources to public use, determine the value of the currency. Since government is the sole provider of its currency, it is the currency monopolist and can set the prices it chooses, as well as the tax rate to regulate demand.

Daily Reckoning
The Real Reason the U.S. Dollar Has Value
Chris Mayer

(h/t Warren Mosler at The Center of the Universe)