In my last post, one commenter, Anon, had this queston "The ability to create money is far too much concentrated power to be in the hands of the government or the elite that control the government.....I'd like to hear from MMT theorists how to control the genie once it's out of the bottle rather than how to get the genie out".
Since we know the genie is already out(it was let out by the Western powers during the 1930's depression, and by the US in 1971), we should start focusing more on what macroprudential controls should be in place to ensure politicians or central bankers do not abuse this power. On the international front, Nations of the international comunity could also enforce this discipline on one another via having international trade payment agremeements, like this IMF Articles of Agreement Article VIII, Section 4 as pointed out by Ramanan. Convertibility of foreign-held balances.
I found it an interesting clause. I think the IMF agreement authors understood the fiat nature of money, printed at will or necessity by the various trading nation-states. That’s why they had to put that clause in there. They likely foresaw that some nations in future might overexport and oversave in another's currency, while some would over-consume and over-issue their own currency. The clause ensured that nations always keep a reserve of its trading nation partners' currencies so that they could pay for their own imports later on with partner nation's own currency. Minding this clause should have prevented the unbelievably skewed global trade imbalance we now have.
The US completely ignored the threat of being asked to convert its debt in its trade partners’ currencies. Although, to be fair, why would it when the world knew it issued the global default currency. It probably also knew that no nation on earth will cut off its nose to spite its face, and demand payment that it knows the US cannot and will never be able to pay. (Pay for counterparty nation's dollar holdings with counterparty's own currency).
But now that several economists have been calling for the world to shift to a new global default currency (preferably one based on special drawing rights), perhaps we could end the world-wide fetish for hoarding US dollar, and we could finally see this clause acting as a useful macroprudential control on fiat, as a means, at least, of funding continuous trade deficits.