New Zealander Bijou Smith is a longtime friend of Steve and the podcast. His story, in brief: “I was a physicist. I love physics, theoretical physics, but when I learned a bit about economics—I was always interested in economics from a sort of dynamical systems analysis perspective. It's kind of interesting mathematics. Even the neoclassical stuff is interesting for a little while until you realize it's a joke. But then when I heard about MMT, a lot of the pieces clicked into placed and it's like, wow, this is really the struggle.” MMT is a bell that can’t be unrung.

Steve and Bijou talk of popular concern about the petrodollar, and how economic illiteracy distorts its importance. The role of the US dollar in global political economy is poorly understood without the insights of MMT.

Smith criticizes the false psychology that views currency as a finite resource and is locked into the image of fixed exchange rates. He argues that this creates mental models that are not true but are still played out as if they are. He distinguishes between false conceptions of dollar hegemony and the very real struggles that countries face when they are indebted to the IMF and believe the imposition of austerity is the only way out.

The discussion looks at the way foreign exchange rates affect and do not affect national economies. Smith explains that this process does not have anything to do with confidence in a particular currency. It is a market-making activity.

Those who follow us know that Steve has long been searching for a way to bring the understanding of MMT to the left. This episode is a continuation of that journey.

Bijou Smith has lectured and taught general physics, magnetohydrodynamics, undergrad mathematics, statistics and IT. He now devotes most of his time to independent research in theoretical physics and studying implications of Modern Monetary Theory. Check out his blog, Ohanga Pai, at bijou.substack.com

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