#48 Rohan Grey: #MintTheCoin
Christian and Patricia talk to lawyer and Modern Money Network President Rohan Grey about the Automatic Boost to Communities act to Mint The Coin.
Show Notes
Full legislative text of the #ABCAct to #MintTheCoin: https://tlaib.house.gov/sites/tlaib.house.gov/files/ABCAct.pdf
Read the #MintTheCoin press release.
Follow the story on Twitter.
Follow Rohan on Twitter.
Info on Christian’s MMT show.
Transcript for Opening Monologue
At the beginning there, you heard our guest this week, lawyer and president of the Modern Money Network Rohan Grey – and in a moment we’re going to be talking to Rohan about something he’s been working on with US congresswoman Rashida Tlaib and her staff, and it’s a piece of legislation called the Automatic Boost to Communities act, or the ABC act to Mint The Coin. We’ll come to the coin in a minute, but let’s start with what the coin is going to be spent on.
In an effort to stem the economic devastation caused by the coronavirus pandemic, when passed into law, the ABC act will immediately provide a $2,000 payment, followed by recurring $1,000 monthly payments to every person in the US until one year after the end of the pandemic crisis is declared. These payments will be delivered via pre-paid debit cards, to make sure everybody in the US gets the payments, regardless of their immigration or housing situation, or whether or not they have a bank account.
Now, given that there are more than 300 million people living in the US, that’s a lot of money, and that brings us onto one of our favourite topics here at the MMT podcast, which is: How will the government pay for such a thing? Where will they find the money? Will the US government have to borrow dollars from say China?
No, because these payments will be funded directly by the US Treasury, so no debt issuance is needed, and the treasury will be funded by minting two one trillion dollar coins – and more as necessary.
If you’re new to MMT you might think that governments have to take money off people in the private sector, in the form of taxes, in order to spend that money out again – but that’s not how modern money systems work. When you’re a government that controls the issuance of your own currency, the way you spend money is by telling your central bank to credit the bank accounts of the recipients of the new spending using computer keystrokes. You just change bank balances on a spreadsheet at the central bank in an upward direction. This is how all monetarily sovereign governments spend. That would include the US, the UK, Japan, Canada, and Australia.
You may also have heard of government bonds, or gilts, t-bills, treasury securities… and you may have the impression that governments need to sell these things in order to get dollars or pounds or yen from people who already have them in order to be able to spend. Again, that’s not how modern money systems work. Governments that issue their own currency create new dollars, pounds or yen every time they spend. And I mean every time they spend, not just on special occasions. Governments that control their own currency sell bonds for different reasons, and for more information on that you can listen to our episodes 30 and 31 with Dr Steven Hail – and that’s where we also talk about primary dealers and the secondary market, which comes up a little bit in this conversation with Rohan.
So back to the $1 trillion coin. Can it really be that simple? Can you just mint a coin, and tell everybody it’s worth a trillion dollars, and now you have a trillion dollars? Well, for a monetarily sovereign government, yes it is that simple, but before you rush off and mint your own coins, you need to know that money is a creature of states and laws. And one of those laws is against counterfeiting.
The whole point of having a fiat currency when you’re the issuer of that currency is to be able to spend it in order to provision the public sector, whether it’s to employ nurses, or soldiers, or teachers – or whether it’s to support lost incomes in a time of crisis, like today. And to be able to spend it, the issuer of a currency needs to make sure they’re the only ones who can issue it, hence the harsh penalties for counterfeiting – and the issuer also needs to make sure you don’t start using something else for currency, and they do this by demanding taxes be paid in the thing that it alone is allowed to issue. This is why, where I am in the UK, taxes paid to central government are payable only in pounds sterling and not gold or seashells. This ensures a permanent demand for pounds which allows the UK government to spend their otherwise worthless pieces of paper. And you can listen to our first three episodes for more information on how this works.
So we’re going to hear more from Rohan about the ABC act and the coin in a moment – I’ve linked to the full legislative text of it in the show notes, and also to several places that you can go to for more information on how the act will work.
If this is your first time hearing about how modern money systems work, your head’s probably filling with ideas about what a population that understands this stuff could pressure its politicians to do, and that’ll probably give way to anger at the thought of the lives lost because your political class told you that your country had run out of money. And in fact the fiscal vultures are already circling, and floating their opinion pieces about needing to make so-called tough choices (tough for you, not for them, obviously) after the crisis.
So thanks as ever to you guys for listening and learning and getting the word out about MMT. If you’re able to, you can support the show for as little as a dollar a month, which really helps keep the show going, there’s a link to how you can do that in the show notes (don’t be put of by the pricing in dollars if you’re not in the US, it’s still pretty simple, the Patreon site figures out currency conversion for wherever you are in the world).
But as I’ve said before, the really valuable thing as I see it, is your time spent understanding MMT, and it really helps us when you recommend us to other people – spreading the word from the grassroots is how I think culture changes so we really appreciate all you’re doing on that front.
Before we dive in, I should just point out that this conversation was recorded a few weeks ago on the 27th March 2020 – inevitably events regarding the pandemic have developed, but everything to do with the #MintTheCoin initiative is still very much alive and kicking at the time of putting this episode out.
So thanks again for listening, here we go!