TranscendentalEmpire , 1 month ago

They’re very much printing money, meanwhile the demand for US bonds globally is in fact dropping.

Lol, I mean money is being printed in the literal sense. But, it’s still backed by securities.

As far as bond demand goes, it tends to dip and surge in popularity based on its yield.

There’s absolutely nothing preventing Russia from backing its currency with securities as well. In fact, Russia is in a much better position to do so because they’ve been stockpiling gold.

Securities are only valuable if the buyer believes they will be paid out once they have matured. Russia could start borrowing and utilizing securities, but they don’t exactly have a wide market to borrow from. Basically they’d have to borrow from China or maybe India, and those two likely wouldn’t be interested in gold reserves.

Gold isn’t a currency or even like a currency, it’s value declines the more it moves. It’s not exactly the best thing to back securities with, it’s more geared for purchasing when you have currency instabilities. More than likely they would have to back their securities with interest in oil/natural gass. However, that wouldn’t really help their problems too much, as that’s how they find their National Wealth Fund.

mean the fact that it can is literally the premise behind MMT.

Borrowing money is not the same as “printing money”.

very nature of currency is that it’s just a social contract. What actually matters is whether the country is able to allocate its productive forces effectively.

Yes, currency is a social contract, one that’s based on trust. How that currency performs and what it represents can influence that trust. Currency is not completely insulated from material realities, and the gap between the stated worth of the currency and the material realities of the country that determine that worth can determine how people outside the country will value it.

What actually matters is whether the country is able to allocate its productive forces effectively. As long as a country can continue to produce the things people need then the economy will be fine.

I mean… That’s a neat theory, but it kinda is easily disputed by nearly all economic collapses of the 19th century and onwards. If this is true, then did the Soviet Union’s economy explode simply due to an inability to allocate productive forces accordingly?

Has there been an economic collapse outside of a major war that was caused simply by a country losing its production capacity?