Monthly Archives: July 2010

Under a modern fiat monetary system: 1) The total amount of money is not constrained by some fixed amount of gold. Instead, it is constrained by the total output of the national economy. There should be enough money in circulation … Continue reading →

First, under a fiat monetary system, “state money” has no intrinsic value. It is non-convertible which means that you can take a $AUD (Australian Dollar) coin to the government and in return you will get a $AUD coin back. There … Continue reading →

To understand how the modern monetary economy operates we need to take a step  into national accounting. First, a modern monetary system has three essential features: A floating exchange rate, which frees monetary policy from the need to defend foreign … Continue reading →

Between 1870 and 1914, there was a global fixed exchange rate. Currencies were linked to gold, meaning that the value of a local currency was fixed at a set exchange rate to gold ounces. This was known as the gold … Continue reading →

This is a blog that will explain how the modern monetary “fiat” system works.  We will endeavour to explain the mechanics of modern money.  This will not be based on theory but fact.  Make no mistake about it that this … Continue reading →