Wait…Another McDonald’s Image? Two weeks in a row?
Well, yeah. But unlike last week, where old Ronald was just there as a cameo and McDonald’s could have been easily replaced by KFC, Burger King, Dunkin’, Aunt Annies, Krispy Kreme, or even Timmie’s as all are a major presence in the fine dining landscape of Bangkok (though none have the star power of Ronald), this week The Golden Arches are in the center ring.
You also notice that my click-bait image immediately set your mind to humming the “two all-beef patties, special sauce, yada, yada” jingle that is now some fifty-two years old. That social currency coupled with what would normally be an off-putting post title, is what drew you in.
It may take a village but it sure as hell doesn’t take an algorithm.
So here you are. Now, on with the story. But first…
What the fuck is Modern Monetary Theory?
You read my mind.
Longtime readers will know of my contention that money is nothing, which substitutes nicely into the Dire Straits song of similar title. You can try this at home. Money is merely an agreement on value that can be, and is currently, represented by nothing at all. No gold, no seashells, no silver, no copper, no nothin’. I mean, when was the last time you even wrote a check? I’ve written about ten in the last 25 years. Even if you are clinging to those stone-knives and bearskin days of yesteryear and write checks all the time, as soon as they leave your hands – via teller, ATM, or payment to another entity – they are immediately scanned, converted to digital bits, and the paper is shredded and burned contributing to global warming and the eventual drowning of many islands and coastlines. If you get paid, get a pension, or Social Security benefit, it’s all digital. If you buy a pack of gum down at the corner store, it goes on your credit card for the miles or points. Even if you, in your state of tracking paranoia, decide to go full-on cash economy, where is the value of those Benjamins you’re trying to move at the local farmers’ market? Nowhere. Cash, more than anything else we consider money, does not have anything backing it up. No system anywhere knows anything about the cash you’re using. Its value comes only from the fact that you think it’s better than all the Jewish-Space-Laser-Soros-NWO-Rothschilds-Banking-Conspiracy tracking that comes with all those other ways to spend money.
Oh, yeah. Pro Tip: Don’t bring your phone into the 7-11. That’s enough to track you back to a specific transaction. Really.
What about Crypto?
You’re kidding. Would you agree to get paid in Crypto? Trump Coin, maybe?
Right. Then fuck off.
So, money is nothing.
Back to the title, Modern Monetary Theory (MMT) is the assertion that entities which can create money don’t have to worry about running out of it because they can just create more to finance their activities, service existing debt, whatever. We saw this in action a few years ago during COVID when the US central bank – AKA: the Federal Reserve – was buying all sorts of us debt obligations to finance the various bailouts and populist payouts Trump needed to keep the economy running during the pandemic. The key thing about MMT is that this money creation is limited to entities that can create money. Because, if the hoi-polloi started printing their own sawbucks willy-nilly, it would only end in tears.
Get your Kleenex™ out.
Now, this would be all well and good except for two gotchas. 1) Most money isn’t created by the government, it’s created by agreements between non-governmental entities and, 2) All value is created by non-governmental entities.
Let’s start with 2).
Value, as we discussed a few weeks ago is a personal decision and is intimately tied to worth: the personal assessment of how that value intersects with the entity’s wants, needs, and resources. For example, right now I can buy a Big Mac Combo meal at a US McDonald’s for $8.49. That same meal in Thailand – I mean it’s just spooky how identical they taste – is only the equivalent of US$6.35. Despite the imported beef and secret sauce. Everything else is local. Even the potatoes. From the Golden Triangle to the Golden Arches, amirite?
Now, US$6.35 would normally get me two lunches, so why would I even think about spending it on one? Because, despite what MMT dictates, anyone can be a play-a, so I just went and created some money.
Oh, bullshit!
Stay with me here for another paragraph.
I get my mobile service…
What does that have to do with McDonald’s? Or MMT?
If you would stop interrupting.
I get my mobile service here on a prepaid basis. So, I top-up my account, select the best deal on mobile internet service for that month (they change all the time, so it helps to keep track) and off I go until the next month. Lather. Rinse. Repeat. I usually spend about US$10.00 per month…
WTF? Ten bucks?
Yeah. You gonna clean up that coffee you just spit on yourself?
…for the volume of data I go through. A couple months ago there was little publicized special – my typical US$10.00 data use for only US$6.00. And it would be valid for as long as I wanted to keep it. But there was a catch. I also got a US$6.00 coupon for use…
… at McDonald’s.
And this is where the money-value-worth discussion from a couple posts ago intersects with the real world. The transaction includes something, mobile internet service worth – based on many previous months’ transactions – about US$10.00 to me. I get the exact same benefit with the new deal for US$4.00 less. McDonald’s considers the transaction to be worth subsidizing it to the tune of six bucks plus whatever True/dtac – my cellular provider – charged Ronald to be the coupon partner in the deal. True/dtac is also, based upon its own analysis of the value/worth equation, coming out ahead. I don’t know what those two other entities get that’s so important to them – data, potentially creating a new customer, brand loyalty – but whatever it is, they are happy with what they’re getting.
And so am I.
I get my US$10.00 worth of internet service and I get US$6.00 worth of McDonald’s. The bonus being that McDonald’s in Thailand also sells Thai food – McPatongko or McFried Chicken with kaprao sauce and rice – so I won’t be stuck with just burgers and fries. Now all this, worth to me US$16.00, only costs me six bucks. This means, by using an interpretation of MMT and the fact that money is fungible, that I have created – for me to use however I want – US$10.00.
Part 1) from above has been discussed here at length previously. Basically, it comes down to a concept called Monetization of Debt. Debt, as you no doubt remember, is the agreement to pay an amount plus interest over time to be able to use the amount right now. That value of that agreement – not the money, not the interest, just the agreement – can be used as the source of the money for additional loans. It, of course, is not just your agreement but the agreements of everybody that the bank or lender has sold debt to. When almost everybody honors their agreement, then everything works out fine. If not-quite almost everybody honors their agreement, we get the 2008 Financial Crisis. In either case those agreements work together to create money which was not in the system before. This, once again, gets us back to the Emperor’s New Clothes scenario where, just because MMT claims to be the exclusive province of governments, doesn’t make it so.
There’s really nothing to see here. Because there’s nothing to see.
In the end…
Finally!
Shut up.
In the end, it once again comes down to rules. The rules really do apply equally – regardless of how people who don’t know how things work are always bitching and moaning about how the 1% plays by different rules. Even you can create your own money, whether it’s Free Money From Banks, flying for free instead of maxing out your Platinum Card, or merely just eating a cheeseburger off a plastic tray in the original City of Angels.
You do have to pay attention. But nothing else.
