Currency Value Interpreted as the Reciprocal of the MELT — Peter Cooper

An implementation of MMT’s proposed job guarantee would, in effect, formalize a ‘labor-power standard’ in which labor-power serves as the ‘money commodity’. The policy-administered job-guarantee wage would define a fixed (though policy-adjustable) rate at which simple labor-power is convertible into the currency, on demand. In the absence of a job guarantee – the norm today – the currency lacks a nominal anchor, as Modern Monetary Theorists repeatedly emphasize. This leads to the highly unsatisfactory (and usually tacit) resort by policymakers to a buffer stock of the unemployed (or ‘reserve army of labor’). In a fiat monetary system permitting market exchange, either a buffer stock of the unemployed or a buffer stock of the employed (made possible by the job guarantee) is necessary to contain variations in the value of the currency within tolerable limits....

heteconomist
Currency Value Interpreted as the Reciprocal of the MELT
Peter Cooper

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