Money used to be a reward for value creation. Today, money is used to create value.
Since leaving the gold standard, money has essentially been backed by faith in the issuing government. This would be the preface to now-fashionable Modern Monetary Theory. No longer having to fear the shortage of gold, governments are free to print the money needed to fully employ their available resources. In other words, MMT views currency as a public good rather than a medium of exchange.
Sofia Blikstad is an analyst at Arcane Research.
In 2008, Bitcoin was created in response to this very concept. Fundamentally different but joint in their controversy, both ideas have re-entered the mainstream conversation as we enter the post-pandemic world. At the moment, there is no consensus on either.
The fiscal response to the COVID-19 pandemic comes with unprecedented costs. The European Central Bank’s (ECB) balance sheet expansion – up €2.42 trillion since the beginning of 2020 – has been remarkable compared with its roughly €1 trillion response in 2008-2009. Interest rates remain at all-time lows, while debt levels have reached all-time highs.
See also: Michael Casey – Why Quantitative Easing Is Here to Stay
During 2020, the joint budget deficits of European Area governments soared to 11.6% of GDP in Q2,