My response to a myth of barter video.

On Friday, October 8th, I appeared on Graham Elwood’s Political Vigilante show to talk about the debt ceiling. I made the core assertion of MMT that national debt is fundamentally different than personal debt. A viewer responded with the following:

This isn’t quite right – go and watch Mike Maloney’s Hidden Secrets of Money series on YouTube. […] The fact that there really is a debt if money is ‘printed’ – and the more you print, the more worthless the already circulating money becomes, which leads to real inflation, poverty, etc, etc – that’s all real. Money has to find a home – the entire financial system is smoke and mirrors, controlled by people we’ve probably never heard of. I totally agree that things need to change, drastically….but that involves a lot more than money printing.

This post responds to one of Maloney’s videos which asserts the myth of barter is reality. It’s not.


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Disclaimer: I have studied MMT since February of 2018. I’m not an economist or academic and I don’t speak for the MMT project. The information in this post is my best understanding but I don’t assert it to be perfectly accurate. In order to ensure accuracy, you should rely on the expert sources linked throughout. If you have feedback to improve this post, please get in touch.

I watched this video by Mike Maloney: Where does money come from? Hidden Secrets of Money Ep 5. He starts off by asserting that government money originated from barter (trade). According to this theory, a new government was created to step into an existing market, providing it with a centralized and standardized form of money, called currency, in order to make that barter more efficient.

The “real money” is the things used to originally and ultimately pay for the real goods (commonly gold or silver). The government money was merely tokens representing a claim on those real-money things. History is littered with governments putting too much currency into the system, requiring more and more currency to acquire those scarce real-money things. This inevitably results in hyperinflation and ultimately the destruction of the nation.

(Generally, what Maloney calls money, MMT calls commodities. What he calls currency, MMT also calls currency, which is government-created money. Although the phrase “printing money” seems to be an exception as it refers specifically to currency.)

The above story is historically inaccurate, forming the most fundamental misunderstanding in all of money. It results in many common concerns, led by the idea that “printing money causes inflation”.

For all major economies during the past five thousand years, markets emerged from governments, not the other way around. In the modern era (“the past 4,000 years, at least”, according to Keynes), money is a token backed by the power of a government, not a scare commodity like gold. This is thoroughly documented, especially in the 2011 book by David Graeber, DEBT: The first 5,000 years.

An important and short paper that discusses the topic is Stephanie Kelton’s 1998 The Hierarchy of Money.

“Printing money always leads to hyperinflation

Maloney also strongly suggests that the Weimar Germany hyperinflation was caused by money printing. He’s wrong. (Sources: one. two, three.) For all major historical hyperinflations, the literal money printing was the final desperate step in a massive sequence of real-world (non-economic) events. Blaming hyperinflations on the final straw is ignoring the rest of the massive, often decades-long straw pile. The financial problems emerged from real-world problems, not the other way around. Here is my Activist #MMT resource post containing many sources describing the reality of major historical hyperinflations: Hyperinflation and money creation (or the final straw is the *ONLY* reason the camel’s back broke).

It’s also pretty specious and concerning for him to say that printing money was, in and of itself, a major cause of Hitler’s rise. In reality, a true major cause was how the majority were crushed during the Industrial Revolution’s Gilded Age and the Roaring twenties, and especially in the wake of the Great Depression (not being bailed out). In the words of German PhD. economist Dirk Ehnts (in his 2017 book, Modern Monetary Theory and European Macroeconomics), “Had Glass–Steagall been legislated ten years earlier, the Second World War would most likely never have happened”. Further, if the New Deal and strong banking regulations (that came as a result of the Great Depression) were already in place, then The Great Depression, Hitler, and World War II probably would all have never happened. This is according to Post Keynesian PhD. economist Assad Zaman (at around 33 minutes, 30 seconds) in his 2016 lecture (on Youtube) called MCoM Lec 01:Core MacroEconomics Concepts and Terminologies.

Maloney’s assertion that “they [The Federal Reserve] only expand the money supply, they never contract it!” Well. The population and its productivity was also expanding during this time. Were the population shrinking then, sure, the some money would likely need to be removed from certain places in the economy, as productivity and resources (like labor) diminish. Maloney’s conclusion also ignores that some government spending (some of what the government does) is terrible (lavishing the rich while millions are homeless and hungry, subsidizing fossil fuel companies who caused and continue to exacerbate the climate crisis).

How about let’s stop expanding the money supply for those terrible things and stop withholding what’s desperately needed by millions? That’s what’s needed! Not this simplistic “do less money printing”.

“Printing money causes inflation”

Finally, regarding this:

I totally agree that things need to change, drastically….but that involves a lot more than money printing.

The idea that “we must do less money printing” is a misguided way to say “the government must create less money”. This again implies that money creation by the government is inherently and always a bad thing (with the additional suggestion that the money created is totally or substantially physical bills and coins). It is impossible for the government to do anything without creating its money. All laws are funded, and all funding by the national government is and has always been money creation – without exception.

A government’s money is essentially the instructions of what needs to be done in order to implement a law: by whom, when, how, with what, and under what conditions. When it’s done, that money is given to those who did it in the form of a paycheck. Since a national government can do almost nothing without creating its money as part of the process, the idea of creating less therefore means, “the government must do less”.

Proper context

A theory cannot be separated from the motivations of those who promote it. Mike Maloney is part of the GoldSilver network, which is a “Global Leader[] in Bullion & Precious Metals Investments” and “offer[s] a wide selection of bullion products, private vault storage, global shipping, and easy payment choices.”

In other words, the author profits off understanding and predicting the value of gold, which in part benefits from the myth that gold is and has always been an inextricable characteristic of modern economic systems.


If something needs to be done, and we have the resources (including labor) ready and waiting to do it, then we can do it. For a national government with little-to-no financial constraints (like the US, UK, Australia, Canada, and Japan), creating the money to purchase resources which are known to be available, is always a safe thing to do.*

We don’t need the government to “do less”. We need it to do less bad and more good. Millions are desperate for what only the national government can provide.

*(Safe speaking in a financial sense only. Fossil fuels, for example, may be available to purchase, but doing so has some very bad real world consequences.)