Sunday, June 23, 2019

Matt Usselmann - Minibots increase liquidity, but how about unemployment?

Italy's new Minibot currency sounds a bit like MMT to me. Intriguing!

The Italians are proposing to use new printed notes (minibots) to pay back all the arrears the state has accumulated in the past. These unpaid bills from the Italian state to the private sector amount to Euro 53 billion, about 3% of GDP. Minibots will provide liquidity and alternative notes, but will not solve Italian unemployment (10.2%) unless the concept is expanded.
Minibot means huge interest saving for Italian state
Instead of increasing the deficit further, by issuing more interest bearing treasury bills or government bonds, the Italians propose to print minibots instead. That saves the government up to 3% interest a year (Euro 1.6bn a year on Euro 53bn). That is an enormous advantage, as much interest goes to foreign investors and is lost to the Italian economy.
Minibots will look and feel like money and can be used to pay tax liabilities. Acceptance in the private sector is voluntary, as only the Euro is legal tender.
Radical Economic Thought


Joe said...

Why not just call it the Lyra and make it the currency with which taxes are paid?

Ralph Musgrave said...

I agree with Joe: i.e. "minibots" are just a local currency for Italy (or whichever country) which (in the case of Italy) makes them the same as the Lira.

Local currencies aren't a bad idea: there's not much wrong with Ithaca hours (in the US) or Lewis pounds in the UK, which a local currency used in the town of Lewis.

The downside of local currencies is that they delay the ideal solution for an area with excess unemployment: i.e. if someone in Ithaca, Lewis or Italy can earn a living working just for the local currency, that cuts the incentive to move to another area or get employment which is fully competitive with other areas in Europe (in the case of Italy).

Critical Tinkerer said...

Local currency reduces incentive to move away where their life will be less miserable. so, Letting people being hurt while you can help is your idea of upside since it increases incentives to move to "better" place?

You just presented banality of evil thinking since there is some imagined justification for letting people being hurt.
'Yeah, lets hurt people more to create upside of them recovering from hurt'.
Your evil justifications, Ralph, do not let you comprehend MMT in the right way.
And yes, you can easily become an evil person with all justifications driving you.

Joe said...

I was being sarcastic, I meant just leave the euro and bring back the Lyra.