Yes, very true. Bonds aren’t required to create revenue, or alternatively, spending isn’t revenue constrained when you have a currency or any other form of social credit. Any form of accepted money or credit can be spent directly.
MMT generally describes money and fiat as being unique, but I like think about the similarities between fiat and other financial assets, and not just the differences. In this sense, I consider an accepted fiat currency to be a unique form of credit. Unlike other forms of credit, it is intrinsically built into our social and legal system, so that people automatically accept it. If fiat money is valid, it will be recognized domestically by any business or individual in that economy.
Bonds are currently how we account for the discrepency between revenue and spending, but as you pointed out, there’s no reason we have to do that. That quote was intended to highlight why interest rates aren’t competitive. The only reason rates are competitive, is because there are natural built limitations in how much resources are available for allocation, and equally important, there are limitations to the total amount of wealth we can create and accumulate as individuals. Public endeavors ideally creates “commons” wealth, which instead of taking away from other forms of wealth in a zero sum fashion, like speculators bidding on exclusive rights to land, it creates additional wealth, both increasing the wealth of everyone surrounding that through positive externalities, and also extending the absolute upper limit on wealth the private sector can create, because they can now spend less time and effort intermediating zero sum activities, which allows them to find other niche forms of wealth in a richer ecosystem. Because you aren’t taking away resources, overall, there would still be no reason to compete on rate of return, even if you didn’t have a boundless well of social credit embedded into your role as a currency issuer in defining the legalistic notion of what constitutes valid payment. Basically, the main reason gov’t doesn’t have to compete on interest rates, is because its currency is accepted de facto, and legally binding payment for contracts(and taxes, taxes are part of a social contract) etc. But the secondary reason they don’t have to compete on rates, is because it is not a zero sum decision, so you can simply create new money, instead of trying to jockey for existing money or scarce resources. The first reason only applies to government, but the second reason is insightful, because it shows all of us can find activities that aren’t competitive or zero sum, and can thus be worthwhile and be financed with any rate of “return”, because they don’t inherently detract from or take away from other forms of wealth or opportunity.
Glad to have you still reading and commenting, and hope things are going well!
