I'm pro-MMT, not hiding.

From the article, that you obviously didn't bother to read:

"Drought and heat continued to hurt the wheat harvest in July in Canada, the world’s biggest supplier of durum wheat, months after a harsh winter hit the Russian crop. Grain shipments from Western Canadian port terminal elevators tumbled 41% in the third week of August from a year-ago, according to a Quorum Corp. report. European crop quality was also hurt by heavy rains over the summer."

It seems that we better apply some lessons from MMT for a fast transition to green energy soon.

For anyone interested in learning more about MMT :

https://www.youtube.com/watch?v=WS9nP-BKa3M

(Presidential Lecture Series: Stephanie Kelton, video)

For anyone else wondering about MMT, fascinating: https://www.investopedia.com/modern-monetary-theory-mmt-4588...

So basically, the way I understand it, money is just a means of getting people to do work.

All of this work/activity is for fiat currency what gold was in the gold standard.

So the ceiling is much higher, but there's still a ceiling - go too high and your currency is in trouble.

Also manage the removal of money properly - too much tax and people are in trouble, which leads to your currency being in trouble.

Can it ever recover if people lose trust in it? Since that's a major part of what's keeping such a system going.

> So basically, the way I understand it, money is just a means of getting people to do work.

More like get (or enable) people to trade with one another.

> So the ceiling is much higher, but there's still a ceiling - go too high and your currency is in trouble.

I think this is the problem with MMT as it doesn't give an answer to what should you use to store wealth. Money should not be used to store wealth (that's not its goal) but to make a transaction possible between two counter-parties.

> Can it ever recover if people lose trust in it? Since that's a major part of what's keeping such a system going.

You shouldn't really care. Think if we can develop a system where one could work and exchange value in one currency, and store value in another currency. The first currency should disappear as soon as the transaction ends, and should appear as soon as there is a need to transact. The second currency gives a society IOU to give you a transaction in the first currency in the future.

Not sure how to do it, really.

>>Can it ever recover if people lose trust in it? Since that's a major part of what's keeping such a system going.

This is the most important thing MMT supporters seem to ignore. Fiat money is a confidence game and all the theories will be pointless if people lose trust in the money.

A government only accept its currency to pay taxes -> you have to pay taxes -> you need the currency even if you lose trust in it.

It's the power of raising taxes what gives money its value.

"Variations of the modern-money narrative are found repeatedly throughout history. The levying of monetary ­taxes to create waged labor was “a nearly universal experience throughout Africa” in the colonial era, explains economist Randall Wray. Hut taxes, coupled with extreme violence and racial segregation, forced unwilling migrant laborers into the gold and diamond mines of South Africa. Bernard Magubane, an anthropologist, described the purpose of these taxes as being to “increase the economic pressure on the African peasants” to force them into waged work."

from: https://thenewinquiry.com/the-world-according-to-modern-mone...

OK that makes sense. But what about everything else besides taxes? If people don't trust a currency, they can begrudgingly use it to pay taxes.

What about food, fuel, clothes, etc? Taxes on everything will only go so far, at some point people will just trade all that illegally, on black markets, using different currencies.

Actually, I think that's the case in some countries today and the Soviet Union had a similar situation, people practically bartered, ignoring the state.

Maybe the most important lesson of MMT is that public debt, deficits and all those things that so frequently are at the center of the public debate are irrelevant compared to what's really important: real resources.

It doesn't matter if you have a big or small public debt (in your own currency), what's important is the real things in the economy.

If people is, for instance, using dollars instead of the currency of the country, it's, probably, because your country depend totally on imports (in the worst cases for basic things like food or energy).

If that's the case, the first steep to solve it, it's to recognize the problem. If you don't recognize the problem, you will finish addressing virtual problems like deficits or public debts instead of real resources constrains. Those are very difficult problems to address, but it will be even more difficult if you don't understand them.

The mainstream advice to development is: open your economy to competition, reduce deficits and public debt. The result of that is the impossibility of an agricultural, infrastructure or industrial policy that solve the real resources problem.

> It's the power of raising taxes what gives money its value.

People can convert their BTC to USD at their obligation day and then your currency is only worth what % you collect in taxes. I don't think taxation will be the model for MMT, and only when you separate taxation, investment (storage of wealth) and daily transactions that you can get a healthy working system.

Our tax system largely functions on trust and voluntary compliance. Once citizens lose faith in their fiat currency they're more likely to cheat on their taxes or just refuse to pay.

Do you have any historical example where people lose trust in it and it didn't recover?

If "changed/rebuilt/replaced" counts as recovered (and I guess it does), then no.

In the end, there will always be a government and people will need to trade.

I'm also pro-MMT and Stephanie is one of my favorite's. I don't think the current events are going to help as people will not understand the difference between a supply choc and a monetary base increase. It doesn't help that some politicians will try to use MMT to pay out for other stuff rather than use it for what it is. It also doesn't help that MMT is still loosely defined.

Based on the article, it seems that the rise in grain price is closely linked to difficult weather conditions across key grain farming areas.

Do you have any data to suggest that modern monetary theory is a more important factor here?

Edit: maybe that's not what you're suggesting, anyway, still curious.

In the EU it seems weather and leaving more land uncultivated. So in some ways a planned price increase by lowering production.

https://www.world-grain.com/articles/13660-usda-eu-grain-out...

The article you linked says that they had difficulty planting because of weather conditions - that doesn't seem planned, or in any way related to modern monetary theory.

With both France and the UK each projected to see a more than a 5-million-tonne reduction in their 2020-21 wheat crops, EU wheat output is forecast to fall by nearly 11 million tonnes year-on-year to 144 million tonnes due to a 700,000-hectare decrease in planted area.

That’s seems like they are removing land from production unless I understand that wrong.

I could be reading it wrong, but based on this:

> The European Union’s grain output in 2020-21 is forecast to decline by 3% over the previous year due to extremely challenging planting conditions

My understanding is that they cannot plant due to the weather conditions.

Looks like land abandonment is a growing concern https://ec.europa.eu/jrc/en/publication/eur-scientific-and-t...

There certainly was a massive late cold that too (extremely rare) impacted the Rhône banks (big fruit region in France). I don't know about Italy but we're in for a very expensive turn of year.

I'm not surprised wheat is touched too.

My only gripe is that prices usually don't come down when the original problem causing the spike went away (say one or two years after). I'd like to understand why but feel it's one of these questions I'm not going to like the answer...

Prices do frequently come down for wheat and other agricultural commodities. However those commodity prices are only loosely correlated to prices that you pay at the grocery store.

https://tradingeconomics.com/commodity/wheat

Ah, yes, good reminder, thanks. Then I have my baker to thank next time he raises prices... 'because wheat prices, you know' and never taking them down.

A Barilla box usually is about 0,8-1€ but half a kilo in Italy. There’re cheaper brands but also more expensive.

I don’t think you will find a box of 0.5kg of pasta at 0.15€ in Europe. Maybe you’re getting confused between a box (half a kilo) and a kilo of pasta.

No I meant Tunisia, which is quite close to Italy.

Oh okay but is not Europe =]

I'm not sure, but I don't think I mentioned it's in Europe. Just across the Italy.

Maybe not 0.15 and maybe not half a kilo but a whole kilo for 40p (approx 0.47 euro) is certainly cheap:

https://www.sainsburys.co.uk/gol-ui/Product/hubbards-foodsto...

Not saying that it’s equivalent quality to Barilla but it’s definitely much cheaper

Cheaper brands also in Italy are sold for 0,50-60€/kg but not the best, that are about 1,5-2€ for a kg

Barilla 1,6€ https://www.carrefour.it/p/barilla-tortiglioni-n%C2%B083-1kg...

Brand not famous 0,7€: https://www.carrefour.it/p/pasta-reggia-48.-fusilli-1-kg/800...

But the price can be very different if you want a top pasta

Barilla is good but is not the highest quality brand, it is the most famous because of ads. De Cecco is better and slightly cheaper (I checked your link), possibly because they spend less in ad campaigns (and maybe in packaging?).

Yes I agree, also Pasta Voiello is a good one (and La Molisiana), I’m using Barilla as example because it’s the most famous. Anyway other best brands ar usually on the same price as Barilla, or slightly more expensive.

Barilla box @ 500g is €1,50 - €1,60 in NL.

I'm not sure if you are aware but the majority of italians eat pasta roughly once per day, as the main course. It's definitely NOT for tight incomes only, it's for everyone. It's just incredibly tasty. Also, what makes the price is the sauce.

Pasta is subsidized in Tunisia. It won't be affected.