Week 0 Blog

Hello! My name is Isaac Wald and I am a senior at BASIS Independent Brooklyn. I am working on a project related to Modern Monetary Theory (shortened to MMT) and population degrowth. I will be studying the efficacy of approaching high level government policy decisions under the lens of MMT. While I do not think I can fully explain MMT in this brief intro I will make my best attempt to ensure that you can follow along. 

Modern Monetary Theory reframes our understanding of how sovereign currency issuing states operate rather. You can think about it in three core principles:

1. A sovereign issuer of currency cannot default on payments, our government has a monopoly on American dollars.
2. A sovereign issuer of currency spends before it collects taxes. Its spending is not limited by taxes rather by macroeconomic inflationary effects 
3. A government deficit has a 1:1 correlation with private sector (households and corporations) surplus, this means public debt creates private wealth.

My project will focus on the application of that understanding of the government’s monetary ability to adapt to population degrowth. Population crises are approaching in almost every developed nation. This is a natural trend as birth rates decline in correlation with wealth and education. When populations begin to decline there is probable economic struggle due to issues with dependency and a skills shortage. If our government hopes to solve these problems, refocusing our government with an understanding of MMT, could help to greatly reduce the problems caused by a shrinking population. Increasing government spending will help to manage these issues, by maintaining per capita wealth and economic sustainability even as it appears on overall figures that the economy is shrinking. The government can help to create a path forward for modern economies dealing with an unseen problem. 

To study this I will be working with Professor Bill Mitchell of the University of Newcastle, New South Wales, Australia. Professor Mitchell is one of the preeminent scholars in Modern Monetary Theory, he has been teaching MMT for decades and he will advise me on my project. Additionally, I will be using statistics published by the Bureau of Labor Statistics to substantiate the claims in my paper. The government provides full access to extensive research which can be used to back up my claims. If you would like to read a full copy of my project you can see that here. 

Thank you for reading, I will keep you updated on my progress each week on this blog.