Daily Archives: April 9, 2020

Standard Money Theory and the Coronavirus

New Economic Perspectives has the post Standard Money Theory and the Coronavirus.

It might seem, as we observe the U.S. government “instantly” generating $2 trillion new dollars for direct payments and grants to people and businesses, that the coronavirus pandemic has shed a new light on the authenticity (and necessity) of modern money theory (MMT)

Maybe this explanation will hit home for those who have had trouble accepting the reality that Modern Money Theory describes.

As a multi-degree holding electrical engineer, I have learned quite a bit of physics that my non-science friends and relatives just cannot mentally accept. So I am used to people not being able to accept what is physically true. No matter how obvious the concept seems to me to be, it is so frustrating that people I know are just unable to accept some ideas that are so simple to describe. That inability to comprehend is one of the facts I have learned to accept no matter how hard it is for me to accept. So I get it when the shoe is on my foot.

Here are two examples.

I once tried to explain some of Newton’s laws of motion to my sister.

An object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.

In her experience everything stopped eventually because of friction. I said, imagine a situation where there was no friction. She could not imagine it.

I once tried to explain to my father how the sound of the crack of a whip was produced.

The crack a whip makes is produced when a section of the whip moves faster than the speed of sound creating a small sonic boom.

My father could not conceive of breaking the sound barrier unless you were flying. I pointed out that the speed of sound in air was about 767 miles per hour. Rocket sleds on rails were capable of moving faster than that. To my father, that made no difference. You could not break the sound barrier while still connected to the earth.