This Is How Money Works (Video)

Watch this video. The “gold standard” ended a long time ago. Since then economies work in a more “modern” way. Hence “Modern Monetary Theory” – MMT.

Countries no longer round up gold to “pay for” things. They decide on priorities and issue currency – “spend” – as an exchange medium. They impose taxes to both soak up excess currency and rebalance the distribution of wealth.

The currency that is “spent” into the economy and not taxed back out is still unfortunately called a “deficit” and the total over the years is unfortunately called “debt.” This is the legacy of ancient times and the use of gold. (This should be called “National Money” instead of National Debt.)

If a country offers bonds (T-Bills in the US) that is a place for wealthy people to store excess cash. Countries can choose to pay interest on them. This is not “borrowing.”