Source: Ludwig von Mises Institute
by Joshua Mawhorter
“A unit of account allows us to evaluate and compare the exchange-values of heterogeneous goods by expressing those values in a common monetary unit. But for that common denominator to be meaningful, the monetary unit must itself be grounded in determinate exchange-ratios and purchasing power. Otherwise, we are attempting to express the values of other goods in terms of a unit whose own exchange-value is undefined. These realities bolster the Menger-Mises monetary theory and reveal a profound problem with chartalism, the state theory of money, and Modern Monetary Theory (MMT). This article examines a problem that would arise on the theoretical first day of chartalism: What is the referent of a newly-created fiat monetary unit? Is it market-given or politically-determined? How can a definition-less fiat-token acquire determinate exchange-value and function as a meaningful unit of account in the first place?” (09/04/26)
https://mises.org/mises-wire/mmt-and-price-controls-never-happened