So, err, MMT doesn’t know history then?

Taxes (or other forms of compulsory payment) are a good way to start up a currency from scratch, as history clearly shows. Define the unit of account. Impose tax liabilities payable in the state’s unit of account. A state that can make and enforce its tax laws can compel people to produce for the state (mercenaries, roads and other public works, crops, etc.) in order to get the “token” (state currency) that is needed to pay the tax. The imposition/enforcement of the tax is what gives the state’s otherwise (intrinsically) worthless currency value. Remember, the British government literally used to spend “tallies” (notched hazelnut sticks. Upon payment of taxes, the two sides of the stick (the “stock” and the “stub”) were matched up and the debt was paid. The sticks were then burned. Just as paper currency used to be burned once returned to the issuer. Beautiful short paper by Randy Wray covering this history.

No, other way around.

Taxes were levied, the tallies were notched, then the tallies were split. This then gave each side, payer and collector, a matchable and unalterable record of the taxes that had been paid.

They were then stored under the Houses of Parliament, it was them being burnt that burned the place down.

Tallies were a system of receipts, not debts in tax terms.

If you can’t even read Wikipedia then there might be something wrong with your economic and or historical knowledge.

5 thoughts on “So, err, MMT doesn’t know history then?”

  1. And this of course only applies to modern fiat currencies, where the “token” has no value. Currencies in the past were specie and had a value in gold or silver. Hence we had inflation when the coinage was debased in some way.

    A florin produced in the Netherlands was acceptable as payment in Florence, because it could be melted down and turned into a local florin.

  2. Words of economic wisdom from Harry Belafonte
    “Hey Mister Tally Man, tally me banana
    Daylight come and me wanna go home”

    I’m assuming he expected to go home with a receipt. And wasn’t going without it.

  3. So we can’t burn down Parliament because we don’t have tally sticks any more.
    Never mind. Soon we’ll have hydrogen. (See above.)

  4. Well, actually taxes were originally the local thugs enforcers coming around and rounding up those lazy farmers who were loafing after the harvest came and dragging them off to build Pharaoh a pyramid.

    Of course the Normans built castles the same way.

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