By: Steven Sklar
Macroeconomics has remained substantially unchanged since 1971 when gold and the dollar were uncoupled. Whether this pivotal change in the early 1970s was the end of economic sanity or the beginning of a great era of prosperity is a matter of opinion. In any case, half a century later, change is upon us.
There isn’t an economist breathing who doesn’t agree that the one-two punch of the 2008 mortgage crisis and the COVID-19 pandemic have rocked, if not cracked, the foundations of conventional economics. These momentous events have opened the canopy for new ideas.
Four transformative ideas are now putting economic theology through its paces: Land Value Taxation (LVT), Modern Monetary Theory (MMT), Universal Basic Income (UBI), and Bitcoin (BTC).
Not only are these four emergent theories mutually supporting, they are interdependent. MMT cannot be successful without LVT and a UBI. Rental value capture is needed to effectively remove damaging liquidity from inflationary economies and a UBI is the optimal way to inject economic stimulus. As a global reserve currency, BTC is ideal for settling international accounts plus its high stock to flow ratio makes it an alternative to inflation-prown fiat currencies. MMT explains how central banks around the world have behaved for decades, treating taxation and spending as unrelated. LVT explains how to avoid damping the productive economy and how to prevent QE from quickly capitalizing into the purchase price of land and resources. The two theories work in lockstep.
Catastrophic events and disruptive technologies often upset the status quo, re-order the power structure, and change social mores. The decline of the dollar as global reserve currency and the corresponding decline of US military, manufacturing, and financial power has thrown the world into flux, the outcome unknown.
What was a slow relinquishing of superiority, the pandemic and global financial crisis have accelerated. MMT is challenging neoliberalism, LVT insists on universal usufruct, UBI aims to make poverty history, and BTC mocks central banks. A century could become a decade.
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