I feel like this one is kind of a miss? A bit of revisionism to say that money has no relation at all with value. Marx is clear about this… gold is money because it has value. This is true simultaneously with money as a symbol detaching from its material form and the value relation. This symbolic form can only exist after mediation as value.
It’s like saying: the airplane does not interact with gravity because it does not fall to the ground. No — gravity is essential to the mechanism of flight.
MMT isn’t strictly against bond issuance. Money itself is debt, the cash in your wallet is Government debt, money in your bank is debt of the bank which it promises to be fully convertible to Government debt whether using reserves or cash withdrawal.
Money has to be created (“printed”) first before it’s taxed back.
When the Government sells bonds when it runs deficits, people need to have Government money in the first place to buy the said bonds (since Government only accepts their money). This money must have come from previous Government or bank money creation. This is why MMTers say bond issuance is more about monetary policy than fiscal.
Only a Government fiscal deficit (assuming no external sector) can create net financial assets in the domestic non-Government sector.
The limits of “money creation” are real, not financial, that’s what functional finance is about.
MMT doesn’t say following functional finance will make every poor third world country rich. However, the current sound finance framework and focus on arbitrary financial ratios have resulted in nearly all third world countries having high un/underemployment, way below capacity. Many third world Governments actually think they NEED foreign investments to mobilize domestic resources, when in reality foreign investments should be to get foreign expertise, currency and technology.
When foreign investors invest, they bring in foreign currencies for which the central bank or commercial banks provide local currencies for. This creates external demand for domestic currency.
This allows the country to import more but can also create dependencies especially with Portfolio investment ie allowing foreigners to buy liquid domestic financial assets like shares and not less liquid real assets like plant and machinery. Even with FDI, flows can stop quickly which will depreciate the exchange rate and force an adjustment in trade.
Whether a country should run trade surpluses to obtain foreign currencies and stabilize the exchange rate, increase demand for currency abroad should be based on whether it improves the country materially, not on whether it lowers fiscal deficits or local currency Government debt.