It has been said that the (US) central bank, the Federal Reserve System, can simply create money by creating bank reserves on its balance sheet. It does this by buying long-term US government bonds from banks; this is called quantitative easing (QE). Purchases are recorded as new reserves on the seller’s account. This unlimited creation of money is the basis of Modern Monetary Theory (MMT), the idea that governments can never go bankrupt; they can simply create more money when needed.
Modern Mineral Resource Theory (MMRT) evolved from Modern Monetary Theory, so a brief excursion into MMT will help in understanding MMRT.
Many, if not most, of those who believe in free market capitalism also believe in the efficient market hypothesis. This means that the supply and demand for goods and services always seek to be in balance, so that, for example, if there is excess demand for a good or service, let’s say the public wants to buy more electric cars than are available, then the price of electric cars will rise until it is profitable for manufacturers to increase supply.
The efficient market hypothesis assumes that there are infinite quantities of goods and services available, and that the only constraint to their supply is a price high enough to allow their production to be profitable. Excess demand leading to higher prices is the motivating factor for increased supply, and there is no limit to this supply otherwise.
Modern monetary theory holds that money, itself, is a commodity whose “price” is determined by supply and demand. Modern monetary theorists (MM), however, do not believe in efficient market theory. They believe that excess money stimulates demand in all areas and automatically increases the supply of all desired items.
Confused MM theorists must believe, therefore, as a necessity that there can be no limit to supply as long as there is enough money (commodity) available. I call this caveat modern mineral resource theory.
This is the terrible mistake that is destroying the economies of the “free world” by its application to the current crisis, climate change.
MMRT is the reason the green energy revolution will fail to improve or protect lives and, in fact, will cause a resurgence of poverty.
The total mineral resources available to mankind are those whose deposits are physically accessible and exist at grades (concentrations) high enough for advanced mining and chemical engineering to extract, separate, purify and manufacture. in end-user forms that are widely affordable for mass production.
To be widely affordable for the mass production of consumer goods, the total amount of capital needed to create them must be reasonable and not interfere, through its allocation, with the standard of living of the society for which the goods are intended. Like any other “commodity”, capital is not infinitely available.
A good example of the failure of MMRT is lithium, which is already too expensive to bear, and in too short a supply accessible, to enable the transformation of personal, commercial and freight transportation from fossil fuel use to electricity. exclusive use of battery electric powertrains (BEV).
Modern mineral resource theory argues that the demand for BEV will cause the supply of lithium to increase to meet that demand. This is not true, and the MMRT, which argues that the supply of natural mineral resources is infinite, if the price is right, is false.