New York Times Does Hatchet Job on MMT

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I’m a bit late to get to an article in the New York Times that ran on one of the slowest news days of the year, last Saturday, Warren Mosler, a Deficit Lover With a Following. Since Bill Black has since issued a good kneecapping, I’ll soon turn the mike over to him, but I wanted to add some points about the approach used in this heavy-handed exercise propaganda.

The first was the framing, that of profiling Mosler, which allowed Annie Lowrey (wife of Ezra Klein who got a junket to St. Croix for this exercise) to deal only peripherally and dismissively with how MMT works, and spends more time on position MMT as unsound, “clearly on the fringe” and even worse, to the left of Keynesians, but nevertheless popular….just the way goldbuggery is. Not that she was all that generous to Mosler either: he’s a “failed Senate candidate” who lived on a “run down but jewel toned Caribbean island.”

But the more troubling part was the way it straw manned MMT, by failing to explain that its roots are operational, based on how a fiat currency works, and by repeatedly claiming its proponents deny that inflation is something to be worried about (as opposed to what they do say, which is that we are so far from having the conditions in place now to generate inflation that making it a big policy preoccupation is wrongheaded). And the Lowry article had no comment section, which would have allowed for corrections and objections (for instance, Stephanie Kelton was misquoted) in contrast with other stories by Lowrey. The failure to allow comments is even more peculiar given that the article occupied the lead position in the business section.

In one way, the article is a plus: it means MMT has gotten beyond the “first they ignore you” stage to “then they ridicule you” stage, which is progress indeed. And NC got a mention and a link.

Below are the main arguments of a post debunking the Lowrey piece by Bill Black from the New Economics Perspectives website:

Economists of nearly every flavor believe in the concept of “revealed preferences.” What matters is not what people say they will do in a hypothetical situation, but what they actually do. Their actions speak more credibly than their words. In this column I announce a related concept: “revealed biases.”

My colleagues, Randy Wray, Stephanie Kelton, and Mat Forstater, at the University of Missouri-Kansas City (UMKC) are among the leading theorists who have developed Modern Monetary Theory (MMT). MMT has been the subject of hundreds of academic papers and presentations. MMT has all the usual elements of an economic theory. It emphasizes the history of the monetary system, it provides a technically accurate description of how money is created, it distinguishes between nations with sovereign currencies and those like the Eurozone nations that have abandoned sovereign currencies, and it distinguishes among nations with sovereign currencies who remove the benefits of sovereignty by taking actions such as fixing the foreign exchange ratio or borrowing in other currencies, it allows predictions to be made that can be tested for accuracy, and it suggests which policies.

MMT has had a very good run. Its predictions have proven far more accurate than the austerians and my colleagues’ policy prescriptions have proven superior. Paul Krugman has noted that the greatest error he made in his predictions about the crisis arose from his failure to understand how vast the difference is between nations with sovereign currencies (who borrow in their own currency and employ freely floating exchange rates) and other nations. He hasn’t credited my colleagues and other MMT scholars for their insight about that point, but he has acknowledged that the MMT scholars proved correct.

MMT also has substantial support from the technical investor community. The reason is that MMT takes money seriously and relies on a technically accurate concept of money creation. These reasons are likely to strike the reader as strange – how could macroeconomics fail to take money and its creation seriously and why would it use models whose descriptions of money creation and transmission were false? (I mean “false,” not “simplifying.”) The short answer is that neoclassical economists love to (implicitly) assume critical aspects of economic life (e.g., “control fraud”) out of existence and instead make assumptions (about money, information, power, and transaction costs) that are obviously false. Doing so makes their models “work” and supports the policy advice that fits their ideological dogmas…

Critics of MMT are free to point out errors in MMT and to test its predictions. They are free to examine the historical record and to discuss how money is created in a nation with a sovereign currency. They are free to discuss how interest rates are set by a central bank in a nation with a sovereign currency. We have unguarded quotations from Bernanke and Greenspan demonstrating that they know how money is created and interest rates are set. They strongly support MMT.

What is not acceptable is what actually happens. There are minor variants on a theme – they attribute positions and beliefs to MMT scholars (and heterodox economics in general) that MMT scholars, and UMKC economists in general, do not hold. The dismissals demonstrate nothing about MMT and heterodox economics, but they reveal a great deal about the dominant biases of neoclassical economists. Their revealed biases are intense and crippling. Their dismissal of rival views is so extreme that the neoclassical scholars gleefully emphasize that they are ignorant of MMT and other heterodox scholarship such as my work on microstructure – and proud of their ignorance. Because they do not read our work, but rather wish to dismiss it as unworthy of being read they need to invent a basis for dismissing our work. Because they do not know what we believe they have no constraints on what they falsely attribute to us. Journalists love “good copy” and chose not to ask how it is logically possible for those dismissing our work to do so without reading our work. The more outrageous the comment dismissing our work, the better the journalist likes it.

The latest example of this is a column by Annie Lowrey on July 4, 2013 entitled “Warren Mosler, a Deficit Lover With a Following.” Warran Mosler is a member of the finance industry and a strong proponent of MMT. Lowrey incorrectly attributes a facially absurd quotation to Stephanie Kelton stating that MMT scholars do not publish scholarly articles. Kelton promptly corrected Lowrey.

The point I write to emphasize is related to this theme that MMT scholars are not real scholars. Lowrey quotes Mark Thoma as follows:

They deny the fact that the government use of real resources can drive the real interest rate up,’ said Mark Thoma, an economics professor and widely followed blogger who teaches at the University of Oregon. After delving into the technical details of modern monetary theory for a few minutes, he paused, then added, ‘I think it’s just nuts.’

A preliminary caution is in order – given Lowrey’s attribution of a faux quotation to Kelton we need to keep in mind the possibility that she did equal violence to Thoma. Two facts stand out if Thoma was quoted accurately. First, his “delving” into MMT consisted of “a few minutes.” What scholarly work of my colleagues on MMT did he read? What passage did he find in his “few minutes” that he concluded was “nuts?” That’s how one makes a scholarly argument about another scholar’s work. “Dr. X writes ‘[insert longer quotation here that demonstrates X’s views and the context in which X expressed.]’ X’s claim that ‘[insert key phrase from the longer quotation quoted here]’ is in error because [provide rationale here].” The reader will note that this is what I have done in critiquing Thoma’s dismissal of MMT as “just nuts.” “Just nuts” is just ad hominem.

If MMT were really “just nuts” Thoma wouldn’t have had to rely on an ad hominem attack. He would have quoted, for example, a passage from Wray’s new book discussing “the technical details” of MMT. He would then explain why Wray’s version of the technical details was wrong, with a supporting citation. It’s easy to show that people that get basic facts (“technical details”) wrong are wrong.

Thoma does not do that. He invents a claim that MMT scholars do not hold. Putting aside a technical non sequitur (discussed below), the claim Thoma invents is actually a direct, unattributed, steal from Paul Krugman. Krugman drives us to distraction because he attributes, always without quotation from any MMT scholar, a claim that no MMT scholar has ever made. The claim is that MMT scholars do not believe that the government’s consumption of real economic resources can contribute to inflation. Krugman and Thoma have never cited any MMT scholar making such a statement because the MMT scholars have not made such a statement. Wray and Kelton have repeatedly written and presented their explanation of why MMT does not predict that the government’s consumption of real economic resources cannot add to inflation. They have also explained why the proposed stimulus programs in response to the Great Recession would not lead to material inflation.

It is outrageous that Krugman and Thoma persist in spreading this false, invented claim about MMT. It is outrageous that the press accepts their assertions without any quotation from MMT scholars making such a statement. Krugman and Thoma can invent this claim and repeat it endlessly while ignoring my colleagues’ rebuttals that MMT predicts exactly the opposite. Krugman and Thoma can invent and repeat this claim, but they cannot invent non-existent quotations by MMT scholars. If journalists, or their own professional standards, ever required Krugman and Thoma to meet the most minimal standards of scholarship and fairness their inventions and false attributions about MMT scholars would cease immediately.

Thoma’s invented claim implicitly demonstrates that he does not understand a series of “technical details” – the nature of the “real interest rate,” how the Fed sets interest rates, and the relationship of interest rates to governmental spending. Wray explains these points in his response to Thoma. It is ironic that Thoma makes a series of technical errors in an attempt to dismiss MMT as “just nuts” based on invented technical errors.

The other variant in the dismissal of heterodox economics and MMT comes from Krugman’s least favorite economist, John Cochrane. Cochrane wanted to emphasize that unlike Thoma and Krugman he refused to waste even “a few minutes” of his time learning what we wrote. Cochrane explained why to the journalist who wrote a profile of our department.

Cochrane speaks proudly for mainstream, also known as neoclassical, economics. Talking with me over the phone before the conference, he made clear that his condemnation was general: ‘I haven’t read their specific work. I’m busy, and I try to read what is considered interesting and valid.’ His position on heterodox economists was unambiguous: They’re kooks. ‘They are about two percent of academe and about zero percent of finance.’ He was dismissive of their prediction of the credit-bubble collapse. ‘Beware those who predict nine of the last two crashes, okay? They’re just not rigorous and don’t use modern mathematical tools. This business is a wide-open meritocracy. You have to distinguish between closed minds and a lack of quality. The perception is that this is 1969 stuff. Give me new data and new ideas.’

In 2012, without ever reading our work (because he his “busy,”), Cochrane dismisses our scholarship as unworthy of being read because he knows without reading it that it is “not rigorous,” that we are innumerate, and that our research “lack[s] quality.” We clearly lack his analytical powers to discern everything about a body of scholarship without ever even looking at it. In fact, we haven’t predicted non-existent crises. The Chicago School, however, has unsuccessfully predicted nine of the last zero cases of U.S. inflationary crises over the last quarter century.

Let’s contrast Cochrane’s dismissal of all of heterodox economics with Cochrane’s attacks on Krugman in 2009.

I like it when people disagree with me, and take time to read my work and criticize it. At worst I learn how to position it better. At best, I discover I was wrong and learn something. I send a polite thank you note.

Yes, we too like it when critics “take time to read [our] work and criticize it.” Cochrane proceeded to ridicule Krugman’s complaint that the Cochrane and his Chicago School colleagues “marginalized” their critics.

Krugman wants people to swallow his arguments whole from his authority, without demanding logic, or evidence. Those who disagree with him, alas, are pretty smart and have pretty good arguments if you bother to read them. So, he tries to discredit them with personal attacks.

This is the political sphere, not the intellectual one. Don’t argue with them, swift-boat them. Find some embarrassing quote from an old interview. Well, good luck, Paul. Let’s just not pretend this has anything to do with economics, or actual truth about how the world works or could be made a better place.

It gets worse Krugman hints at dark conspiracies, claiming “dissenters are marginalized.

Any astute reader knows that personal attacks and innuendo mean the author has run out of ideas.

Yes, “if you bother to read them,” rather than making baseless personal attacks and using innuendo. After reading Cochrane.12 and Cochrane.09 I have one question: I know that Cochrane.12 is too busy to read our work, but why is he too busy to read Cochrane.09? Or did Cochrane decide in 2012 to emulate the things he claimed in 2009 that Krugman did to him that he considered reprehensible? I invite the reader to try to evaluate whether Cochrane’s hypocrisy exceeds his self-blindness.

Cochrane, Krugman, and Thoma share the characteristic that they have not even found “some embarrassing quote from an old interview” of a MMT scholar to attack. The fact is that it is the heterodox scholars who have displayed vastly superior predictive ability that the theoclassical scholars and significantly better predictive ability than neoclassical scholars. It was our success that prompted the title of the article profiling our department:


James Galbraith has an excellent article explaining who got it right.

It is precisely the predictive success of MMT and control fraud theory that distinguishes UMKC’s work from those advocating a return to a gold standard. Proponents of that view have consistently made enormous predictive errors about imminent hyper-inflation. Lowrey’s claim that the two policies are mirror policies of the left (MMT) and right (gold) is falsified by MMT’s predictive successes contrasted to the gold standard proponents’ predictive failures. The left/right dichotomy is also false. Many MMT proponents, including Warren Mosler, are conservatives. Mosler despises banking regulators; I’m a former banking regulator.

It’s certainly good to have MMT discussed in the New York Times. We now need to have it discussed with a focus on the scholarly work and predictive successes. We need debates on the merits that focus on the ideas rather than personalities (or yachts and race cars). We look forward to having our critics quote from our scholarly works and explain what specific positions they disagree with and why. Such a debate would be a great service to the Nation and the Eurozone.

Here’s the deal – it is intellectually dishonest to create and repeat these strawman arguments based on inventing positions that one ascribes to MMT scholars that are often the opposite of MMT actual positions. We were willing to assume in the interests of comity that the initial positions falsely ascribed to MMT scholars were the product of not having read and understood the MMT scholarly literature. Krugman and Thoma had, at best, spent “a few minutes” reading MMT scholars’ work and they misinterpreted it. At this juncture, dozens of MMT proponents have written to make clear to Krugman and Thoma that they are misrepresenting the position of MMT scholars. There is no excuse for any repetition of the strawman claims.

Here are the simple rules for Thoma, Krugman, and Cochrane going forward. They are the same rules we operate under when we criticize other scholars’ work.

1. At least skim Wray’s most recent book on MMT.

2. Read at least one article on “control fraud” (or any of my six recent testimonies before Congress and the FCIC on the ongoing crisis). Alternatively, at least skim my book. George Akerlof and Paul Volcker liked it enough to provide on-line blurbs, so it would be a good investment of your time.

3. Respond with whatever critiques you have. What do you agree with and what do you disagree with? Quote specific passages from our work that you disagree with and consider material.

4. We’ll respond. We’ll all learn from the process and can work together to seek better public policies.

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  1. Ben Johannson

    The goal is to shut MMT/neo-chartalism down before government spends on poor people and we get teh soshulism.

    That’s all there is to it.

    1. YankeeFrank

      The transparent lack of actual engagement with MMT’s arguments is truly pathetic. What these stenographers and court flatterers have not grasped yet is the nature of the internet to democratize information is putting a major kink in their attempts to propagandize. They are in serious denial but who cares. Regardless of the media environment it would take time for MMT to make real inroads. The whole “thought progresses one funeral at a time” still applies to some extent. But the internet is exposing the frauds far quicker than ever before and there is an air of desperation about Krugman’s screeds and this Lowery character’s attempted drive-bys, so they definitely know something is up.

      1. NotTimothyGeithner

        It may have backfired on a certain element. There hasn’t been much stomach for more war and a demand to restore war spending. At the end of the day, no one is calling their congressman about cuts to contractors in the Washington-metro area except in that area.

        If they move to restore defense cuts, Congressman and Senators will be tossed en masse and replaced by Teabagger-types who are off the reservation, they can’t even pass that hideous “immigration” bill, because of the Baggers. When enough people recognize their is money for the NSA and not for their local schools. It doesn’t have to be a majority. If a candidate loses 10% of his base, a candidate is done. The defense industry wants to give aid to the Syrian rebels because they need contracts to make money. With rising anti-Americanism and better Russian, German, French, and Chinese products, third world countries are going to look to the open market.

        Now the Defense industry is going to rant about the jobs they have created, but so many of those jobs are in a geographically isolated area. Congress may not listen when the effects are being felt everywhere. When its one or two Congressman, they can be ignored or bought off. The defense industry is going to be in for a rude awakening in the next few years.

      2. jake chase

        Expecting the NYT not to publish propaganda is pointless. The paper has been all propaganda and advertising for at least 40 years. Such newspapers can be useful, but there is certainly no reason ever to read them

    2. Mickey Marzick in Akron, Ohio


      First, spending on “poor people” is NOT socialism so long as the the forces/means of production remain in private hands. [And I suspect your comment was with tongue in cheek…]

      Second, the proponents of MMT – Wray, Mosler et al – are firmly committed to capitalist market principles. The article implies that Mosler is a “conservative.” And my reading of Wray has not suggested he is any different. Nowhere have I seen or heard of any calls for the nationalization/utilitization of banking, etc. by Mosler or Wray.

      Third, MMT is “reformist” at best and gets us beyond the austerians. Even the ELR – employer of last resort – is not intended to crowd out or compete with the private sector although it would provide the individual unemployed an alternative to starvation wages in the private sector. That is a step in the right direction for most “progressives”… But that’s about it.

      If the goal is to get beyond capitalism to something called “soshulism” MMT is NOT it. It is not revolutionary by any stretch of the imagination. Nor have its proponents ever claimed that it was. Let’s stop kidding ourselves once and for all.

      That’s all there is to it!

      1. Carla

        For my money, MMT is descriptive, not prescriptive. It seems a good thing to understand the current reality before undertaking to change it, and MMT provides that understanding.

        But I think we need the prescriptive part: debt-free money and a fair shake for the 99 percent.

        1. Mickey Marzick in Akron, Ohio


          If by description of reality, you mean the fiat currency regime operant since the suspension of the gold standard in 1972 and floating currency regime since then, no argument here. But it has only worked because institutions and individuals have been willing to accept the dollar as a means of payment – taxes or otherwise – in which the dollar is the reserve currency. In effect a monopoly in a closed system.

          What happens when this is no longer the case? The dollar loses its reserve status [monopoly] and/or these same institutions and individuals are no longer willing to accept the dollar as a means of payment or begin converting to another currency in a global system that is open to such opportunities? Capital flight? Hasn’t the very globalization/financialization witnessed since 1972 undermined the fundamental tenets of MMT? It is no longer a closed system… and I don’t foresee the emergence of a global currency with a global central bank creating “earthlings” soon. If the EURO is any indication, we have a ways to go.

          As for your prescription, debt-free money is an oxymoron isn’t it? Why even have money at all? What would we pay taxes with? The timid rats in Congress or swine raised in stock pens on Wall Street? MMT may be a step forward as you contend, but it’s not about to take us to debt-free money soon.

          1. F. Beard

            As for your prescription, debt-free money is an oxymoron isn’t it? Mickey Marzick in Akron, Ohio

            Not if one knows what a balance sheet is. Ever seen one? A balance sheet has Assets on the left and Equity and Liabilities on the right.

            Now, it’s true that money can be issued as a Liability and thus be a debt but it can also be issued as Equity with NO debt.

            Common stock is an example of debt-free money. But I guess some people would rather not “share”, especially when a government-backed credit cartel allows them to steal by purchasing power dilution instead?

      2. Joe Firestone

        I blog at the UMKC MMT web site, and cross-post here occasionally, at Correntewire, and other sites. I know the principal figures in MMT and correspond with them frequently. My view is that there are substantial variations among them when it comes to commitment to “capitalist market principles.” Some are social democrats, some prefer “smaller government” in some sense of that term. Some do think that the best solution for the big banks is the Swedish “socialist” solution, while others just believe in much tighter regulation. Still others believe that the Fed ought to be within the Treasury Department.

        What all MMTers agree upon is neoliberalism is bankrupt ideology and that there is nothing to its absolute commitment to the innate superiority of “capitalist free markets.” MMTers clearly don’t believe that free markets are either self-correcting or stable, and view this as a myth of neo-liberalism and austrian economics.

        So MMTers clearly believe in mixed economies and advocate policies consistent with such a belief. They also believe that Government economic policy should be about maximizing public purpose.

        Where that end is best served by public programs, they are for those. Where that end is best served by private profit making organizations they are for those. More generally, I think MMTers are pretty agnostic about Government intervention in the economy, and care about the impact of that intervention, but not about the label used to describe the overall economy experiencing that intervention.

        1. F. Beard

          and that there is nothing to its absolute commitment to the innate superiority of “capitalist free markets.” Joe F

          Are ye as blind as the neo-liberals are? What is “free market” about government deposit insurance and a legal tender lender of last resort? What is “free market” about cb open market purchases?

          ans: NOTHING!

          And contrary to many MMT advocates debt-free money does exist – common stock is one example.

          But at least you, Joe, attack sovereign borrowing along with Bill Mitchell.

          1. hunkerdown

            Scare quotes are quotation marks placed around a word or phrase to imply that it may not signify its apparent meaning or that it is not necessarily the way the quoting person would express its concept. Thus, the quotes are used to establish a use–mention distinction, in a similar way as verbally prefixing a phrase with “so-called”. When referred to as “scare quotes”, the quotation marks are suggested to imply skepticism or disagreement with the quoted terminology.

            -“Scare quotes“, Wikipedia.

            1. F. Beard

              Thanks for the lesson. Typically, I use “so-called” to indicate scare quotes and quote marks alone when I’m just quoting someone or to draw attention to an expression as in “so-called” above.

              But I do fear I overuse quotation marks sometimes. Further correction is welcomed (at least in principle :) ).

        2. davidgmills

          Since MMTers are so broad in their scope, perhaps that is why I can’t seem to get a grip on what the movement is about. Perhaps you have explained it better than most. No obvious orthodoxy by its proponents.

          But you are the only one on New Economic Perspectives who frequently brings up debt free money, which is what most of us want. To me there are two kinds of fiat money: (1) private, based on an ancient receipt system (receipt by a goldsmith for gold deposited in a vault which quickly evolved into a system of fraudulent receipts), and (2)governmental, a coupon type system used for the payment of taxes, which is far more difficult to fraudulently game. The first is debt money and the second is debt-free.

    3. MMT_fan

      Along that line of thought, if MMT were to approach the tipping point of political acceptance, would the Fed/Congress just change the system (such as a currency union or fixed exchange rate regime) so that the prescriptions of MMT would no longer be easy to implement in the US?

      I’m begining to think that from the perspectives of those who profit from the current monetary and fiscal arrangement, MMT could be interpred as a hack of the system.

      1. washunate


        You think the government doesn’t operate under MMT?

        Dick ‘Reagan proved deficits don’t matter’ Cheney would like a word with you at his private bunker…

  2. Conscience of a Conservative

    Read the article last week. First it never struck me when reading the article that MMT was properly defined. The closest they get to an obvious eplanation was in the paragraph below, where they color the definition with phrases like “head spin”(of course they also say he’s fringe, and then seem to suggest MMT is cultish :

    Still, even for those with some knowledge of economics, the tenets of the modern monetary theory can make your head spin. The government does not tax its citizens to pay for federal spending. It taxes them to ensure they use the dollar and to help to regulate demand. Since the government prints the dollar, it can never run out of money and it need never balance its budget, not even to prevent the crowding out of private investment when the economy is humming along.

    I wonder if the Times’ reporting on Mosler was colored by Krugman being at the paper?

    1. YankeeFrank

      She also tried her best to make Mosler sound like a failure, which is kind of hard to do if you have to travel to the Virgin Islands to interview him on his sailboat.

    2. David Lentini

      Good for you! :-) I read the title and lede and then moved on, fully expecting the piece to be a hatchet job. (Of course as a regular NC reader, I’ve read a lot about MMT already.)

      As for the Times, I dropped my subscription this year for the same reasons I dropped my subscription to the Wall Street Journal after Murdoch bought it—The quality of the journalism has sunk so low, and the bias in favor of the VSPs, Wall Street, and status quo so great, that it’s just another propaganda rag. Although Krugman can still provide some good commentary, he shows either a strong academica parochialism in favor of his quai-Keynesianism or he is playing the editor’s game in order to keep his position on the paper.

      And so, we’re in the journalistic wilderness, which is why NC is so important.

    3. F. Beard

      not even to prevent the crowding out of private investment when the economy is humming along. CoC

      Actually, it is the government-backed counterfeiting cartel, the banking system, that crowds out the ability of the monetary sovereign to deficit spend without price inflation. Ever think of that?

      MMT needs to address this, otherwise it is just another way to save the counterfeiters from themselves by, in this case, providing the necessary interest in aggregate for the debt they drive the population into.

      As for the private sector, let it develop its own money forms, apart from fiat and for private debts ONLY, that do not steal purchasing power via government privileges.

  3. Beppo

    Someone wrote a really good article somewhere, maybe jacobin? a few years ago about how a media environment full of young ‘pundits’ was a terrible thing. Let me summarize horribly: Because a pundit is basically someone who accepts summaries of what things are from various experts and then speaks authoritatively based on this. And as versatile this makes you at cocktail party conversation, it’s a horrible thing. Because it leads to a very easy squashing of any alternative in the public mind.

    Anyway, as she’s Ezra Klein’s wife and thinking in very Ezra Kleinish ways, I would apply the derisive label of young pundit thinking.

    1. David Lentini

      Pundits are basically side-show barkers and hucksters. Sadly, the U.S. media (and increasingly the global media) decided back in the ’70s to replace real reporting with so-called experts, called “pundits”, who would tell us what to think.

      Of Course, in areas like political science and econmics, there is often little basis for calling anyone an “expert”, since there is no reliable body of knowledge over which to claim expertise. The idea of “Kremlin experts”, who could only read the Soviet press and talk to expatriots, and so really just guess at what was going on in Red Square, is a case in point. (And did anyone notice how they all becase “Middle East” experts when the Soviet Union collapsed?)

      It’s just amazing how our professoriate is just another branch of our industrial and governmental propaganda organ.

      1. bob

        They gave it a new house review. Bump it over to the real estate section and it makes much more sense.

        Long story short, no granite counter tops. No sale.

    1. Hedgley Funder

      Where’s the brown shirt? Just kidding. What a charming metro sexual. I just love my neighbors, no one is going to stick a gun in their faces to get them out of their property, nor drone strike them or toss them into the pokey for narcotics.

  4. craazyman

    Wow. St. Croix is still run down? I went there in the 80s and it was a little run down but in a good way. You knew you were out of new yaaaawk big time. Ran into some rasta dude in the back woods with his house on stilts and a little kid running around the yard. I think he was growing corn.

    F-aaaaa-K, what a hilarity. What kind of math does this dude want to see? It probably has nothing to do with money. How could it? He wouldn’t know and wouldn’t know why either. Faaaak, what sport, following these bozos and their monthly nonsense. money velocity? hahah ahhaaahahahah. What a concept! You imagine something like a little ball and then you pretend it flies around with a ‘velocity”. Maybe the only thing flying around is your confusion hahahahahah

    Too bad you can’t make money listening to what any of these folks say. That would almost make it worthwhile But as long as their’s Youtube . . . not quite.

    1. Joe Firestone

      Ezra’s a deficit dove in a Krugmanesque vein. So he probably does prefer MMT to the gold bugs, and wishes MMT had equivalent influence, so the middle of the Overton Window would be where Krugman and Klein are now.

  5. spooz

    Not allowing comments makes for more effective propaganda delivery. The fact that the New York Times still produces some good journalism allows them to get away with slipping in propaganda without too much notice.

  6. The Dork of Cork.

    Well they continue to ignore greenbackers which is no doubt a mark of distinction amongst that community.

    Instead their focus turns on MMT people who continue to believe in working with private credit banks which produce the state backed currency via their double entry games.

    Its obvious MMT is their last perhaps least favoured choice if they want to continue their extraction games using perhaps a more sustainable rate of extraction.

    The strange nature of the financial power is seen to good effect in this video.

  7. Moneta

    I don’t have an issue with the fact that MMT explains how our current monetary system works. My issue is with the fact that it is failing many of us, so why would I believe that putting it on steroids would necessarily improve the majority’s situation?

    It does not deal with important variables such as human nature and allocation/misallocation of capital. IMO, it would make it worse. However, I don’t believe other economic models are much better either as they usually only incorporate a few variables at a time and stretch them to the max, usually for a generation, until we are forced to look for another model.

    Austerity is not going to work and we will be forced to print money again. Therefore, I am confident MMT and its ensuing malinvestment will go on.

    Do I think there is a better solution out there? Probably not. But then again, the cacophony is deafening out there so it’s hard to focus on anything.

    Too much entropy. The law of unintended consequences has taken over.

    1. pot, meet kettle

      Slow down, breathe, and read the post again.

      “MMT and its ensuing malinvestment”

      MMT prescribes malinvestment? Where did you read that?

      1. Moneta

        That’s the point. That is a feature of MMT that is not addressed properly. Who gets to decide how much to print and what to fund?

        Since we’ve already witnessed huge misallocation, why would it get better with more printing? Furthermore, who is going to do all this printing… the same old players as now, those who have already gotten everything wrong?

        1. pot, meet kettle

          Describing is different from prescribing. Focus on that point first.

          Before you attempt to prescribe, you should be able to describe.

          1. Moneta

            Since the argument is that MMT is a reflection of how our money system currently works and that we keep on getting bubble after bubble, I assumed it was evident that capital and resources in this model are already being misallocated.

            I did not think I had to write a dissertation to make this point. I still maintain that MMT does not effectively deal with the misallocation of capital and resources.

            1. pot, meet kettle

              “I did not think I had to write a dissertation to make this point.”

              Yes, you do. There are other people that have. That’s a summed up “point” of this post. You can’t just dismiss MMT with bad straw man arguments.

              It’s also very evident that you don’t understand the meaning of “theory”.

              How does newton’s theory of gravity “deal with” the “misallocation” of height?

              Does it do so “effectively”?

                1. pot, meet kettle

                  If I understand your question correctly, the two choices, “in practice” and “in theory” are not mutually exclusive.

                  You have to have a theory before you can “practice” it.

                2. craazyman

                  Only in practice — for banksters when they need cash like when Goldmint Stacks became a bank to get Fed handouts — but not in theory since that would be socialism.


            2. Joe Firestone

              Define “effectively deal with the misallocation of resources.” Apart from MMT descriptions of how the system works. It has prescriptions as well. Why do you think that policies recommended by Warren Mosler, Randy Wray, Bill Mitchell, Stephanie Kelton, Marshall Auerback, Scott Fullwiler, Rob Parenteau, Bill Black, and Pavlina Tcherneva would continue the misallocation of resources we’re seeing? Do you know the policies they advocate?

          2. Moneta

            I never said that MMT prescribes it. I just think it does not effectively deal with it.

            Maybe someone could explain to us skeptics how it will fix malinvestment going forward.

            I think that is THE issue with MMT.

            1. alapaka

              No replies to the valid points you raise. Only fluff about writing style etc…

              yawn – wake me when you get a serious answer.




              1. pot, meet kettle

                We’ll have a certified Serious Person® construct a narrative and have it back in two hours. If we don’t get it back to you on time, you’ll get your money back. You can also yell at the counter person when you arrive. We know how much you enjoy that.

              2. F. Beard

                The short answer is co-existing government and true private money supplies. Government money would be legal tender* for government debts ONLY and private money could ONLY be used for private debts. Of course true private money supplies REQUIRES that all privileges for the banks be abolished as a minimum**.

                The above would abolish the stealth inflation tax so that ONLY government and its payees would necessarily suffer if the monetary sovereign overspent relative to taxation. Similarly, only individual private money issuers would necessarily suffer if they over-issued relative to the goods and services they provided.

                *But could be used voluntary for private debts too.

                ** Restitution with new fiat for the entire population, at least until all deposits are 100% covered by reserves, is required too since unjust but legal debt is a form of government privilege too.

            2. Lambert Strether

              Here, let me help you: Maybe someone could explain to us skeptics how it will make my pony all sparkly going forward.

              * * *

              Category error: You’re asking MMT to do something no “Theory” can do. MMT goes so far as to say that money should be created for “public purpose” (which is a rather, er, revolutionary proposition.) But who is “the public”? The same people who decide whether investment is “mal” or not. (Clearly, our own MOTU regard themselves as “the public” and from where they sit the investment is A-OK.)

              “Philosophers have hitherto only interpreted the world in various ways…” and that’s not a negligible task, unless you think that, say, the oxygen vs. phlogiston question is still open.

              “… the point is to change it.” And that’s down to the entire body politic, and redefining “the public” is, I think, a key task. And in seeking change, would you rather have them armed with real understanding of how and why money is created, or not?

            3. Calgacus

              Moneta – MMT directly addresses the misallocation of capital. The core policy, the JG is aimed at the most spectacular and enormous misallocation, that dwarfs all others and causes most of the rest, directly or indirectly. Unemployment. The systematic and entirely irrational prevention of ready, willing and able human beings from contributing their capital – their labor to society, and from consuming the fruits of this labor.

              Lambert:But who is “the public”? The same people who decide whether investment is “mal” or not. Beautifully said.

              Moneta:Who gets to decide how much to print and what to fund? The people themselves as much as possible according to most JG designs, and their elected representatives. Note Lambert’s very insightful remarks.

              1. washunate

                JG is not an answer, though. It assumes that the problem is monetary theory, when that is not the case. Our leaders are all MMTers. They believe in spending government money on people they want to help.

                They just define who they want to help more narrowly.

                JG can only work when we have leaders with a broader sense of public purpose. And when we have that, we won’t need JG. (that’s also why social insurance is superior to actively managed programs – they are significantly more robust in the face of poor management than are programs like JG).

                A low wage JG system is essentially indentured servitude, and a high wage JG system is a radically different social contract, one where the government would directly employ tens of millions of workers.

                The government can’t even prevent torture and sexual assault and other problems among its existing personnel, never mind being responsible for managing many more.

                1. Calgacus


                  JG can only work when we have leaders with a broader sense of public purpose. And when we have that, we won’t need JG. No. A monetary economy without a JG, without full employment, is by that token run insanely.

                  (that’s also why social insurance is superior to actively managed programs – they are significantly more robust in the face of poor management than are programs like JG). No, they are much less robust, because they are inflationary, while employment, full employment, the JG is not. Just put a 12 year old child in charge of the JG. It would be hard to spend worse, more crazily than the great minds of the public & private sector do nowadays.

                  A low wage JG system is essentially indentured servitude Indentured servitude is usually better than death by starvation. But the MMT JG is not a low wage proposal, but a living wage.

                  and a high wage JG system is a radically different social contract, one where the government would directly employ tens of millions of workers. No, it isn’t. It is just a return to the WPA, to the peak of the postwar prosperity, far sounder, more productive, swifter scientific, technological and social progress. There were no additional tens of millions forever employed by government then. And it would not be a bad thing if the JG would employ tens of millions!

                  Getting rid of unemployment forever, with no bad consequences is very, very easy. The only real obstacle is that enough people need to follow careful, rational, rigorous, sound arguments, which have been made and used for centuries, which the MMTers have just polished and made even tighter than ever before, to very high standards, exceeding much of the physical sciences IMHO.

                  Instantly coming up with such huge numbers as a matter of course indicates not following the economics, not doing the accounting correctly. So many unconsciously make the heroic and usually false, but familiar through incessant propaganda, implicit assumptions of modern mainstream “economics” and instantly and unconsciously dismiss common sense, natural, numerate, Keynesian, MMT economics.

                  A living wage JG – say $15/hour plus benefits would probably usually employ something like 5-10 million people in the USA, according to MMT academics, IIRC. The average size of the JG pool should be less than the usual number of unemployed. It would be less inflationary than the current policy of unemployment = wealth and lives destroyed by work prevention.

                  It is a total and very easy win-win. Not doing insane things like imposing involuntary unemployment, amputating your own limbs, giving yourself tapeworms, or capitalists extracting an ever increasing fraction of surplus usually are.

            4. john kissinger

              WWII had the virtue that it created millions of jobs and put billions of dollars into the private sector that were (finally) sufficient to jump start the private sector following GD. Other than the side effect of winning the war, it was a total waste of resources. Far better, of course, to have built bridges and highways in the US than bombing them in Europe, but that option was not on the table.

              In this case, as in the aftermath of GD, the private sector has insufficient private sector demand; any pretext to push jobs and cash (demand) into the private sector while that side of the economy continues deleveraging is both useful and necessary. Better, of course, to spend the money on infrastructure than, say, another war in the mideast, but any spending, including purchasing bank toxic assets, is useful to get the private sector back to sustainable footing.

              The corollary, of course, is that reduced spending, whether by cutting unemployment benefits or the sequester, is extremely harmful to the private sector and IMO will push the economy into recession. Furthermore, record public sector deficits have occurred precisely at the time of record corporate profits… assuming this is no coincidence, we will see corporate profits drop like a rock over the next few quarters.

        2. washunate

          Yep, that is exactly the problem. There is a subgroup of MMTers advocating political discourse that (more) government deficit spending will solve problems…without explaining who gets to decide how to spend the money.

          1. reslez

            Yes, clearly MMT needs to solve the problem of human nature for it to be considered a viable theory.


            1. washunate

              The MMTers who claim that net deficit spending will solve leadership problems absolutely have to solve human nature.

              We face a management crisis, not a monetary crisis.

            2. washunate

              P.S. I’m a big believer in sarcasm. It has a way of revealing truth quite succinctly.

              I wholly agree with your point – human nature is the problem. MMT doesn’t need to solve human nature to be a valuable monetary insight. It’s when some of its proponents wish to propose political solutions, to claim that MMT can solve social problems, that this becomes essential. It is the political part of political economy that is plaguing our nation (and Western liberalism more generally). It’s the difference between a car person proposing a more efficient engine and proposing that the government give everyone a car. The former is technical while the latter is political.

              That is perhaps the critique that most infuriates some of the MMTers – MMT isn’t wrong; rather, it is largely irrelevant. The problem is wealth concentration, not unemployment. People lack income, not jobs. Restoring the rule of law and Constitutional governance involves cutting a lot of government spending. Our political class have been implementing MMT for years – they just define who they want to help with government money more narrowly.

              1. Lambert Strether

                Oh, now I understand. It’s not human nature that MMT has to solve. MMT has to solve what the political class can’t. Needless to say, this is a category error, on the order of “Why can’t this bicycle paint my house?”

                1. Paul Tioxon

                  A hooker walks into a bar and sits down with the first guy she sees.

                  “I’ll do anything… anything for $100!” she whispers into his ear.

                  “Fine, here’s your $100, now go paint my house and tell my wife I’m still at the bar”.

    2. E. Gerry Spaulding

      While I agreee that MMT does not solve the mal-investment problem in terms of where and how that investment decides to use our resources, that would, of necessity, be true of any reform to the money system in a free enterprise economy.

      The only near-solution to such a problem would be where the depositors in a free enterprise banking system can actually determine the lending/investment policies of the banks where the depositors’ money is held.

      This is partially accomplished with cooperative and credit union banking.

      As to the options available to achieve greater monetary ‘democracy’, so to speak, as where depositors actually control investment, we would need to move towards a more equity-based, rather than debt-based system.

      Only when banks must invest real depositors’ money in their projects, rather than creating their monetary asset investment media, can more democracy be brought to money, and thus WTP have a chance at a turn-around of the debt-based, private banking mal-investment paradigm.

  8. The Dork of Cork.

    The current problem is one of scale.
    The banking systems which control countries decided to scale up for one final push post 1980~……..

    Immense wealth claims was indeed centralized & concentrated but at the cost of total world net wealth destroyed which may be a success from a Anglo perspective via the Volcker like policy of controlled destruction of the world economy.

    Some MMT types favour a further scaling up of the eurosystem using the US of fucking A nightmare for example and some favour a reduction of banking systems via a return to the nation state model of control.
    But it remains bankers all the way down.

  9. Klassy!

    I like the way the UMKC econ department is presented as some sort of pet project of Mosler’s. The implicit assumption is that other institutions’ econ departments are bastions of academic freedom.

  10. commentarius

    i even hate calling lowrey’s work a hatchet job b/c the phrase elevates the article to a level of seriousness (even by hatchet-job standards) that it never achieves. she’s just another one of those young, good-looking wannabe tv talking heads whose ivy league privilege has conferred on her a good job with a big megaphone. she’s not putting out a hatchet job on mmt–she doesn’t know enough to do that. she’s just reflecting/repeating the conventional wisdom of her ruling class patrons/sponsors through snide and dismissive rhetoric in an eccentric-billionaire-has-eccentric-ideas piece of shit journalism.

    now, it is in the nyt, so maybe that’s enough to elevate it to a hatchet job. but lowrey just isn’t qualified to offer any kind of serious commentary–my problem is with the system that creates people like her more than with her or this one piece (which is so unserious on the face of it that it will probably work to advance mmt ideas to a larger audience).

  11. joe bongiovanni

    While I totally agree that the article was an extremely inaccurate and self-serving diatribe against MMT, Yves is correct that it’s another notch up for MMT getting beyond the “First, they ignore you” stage of development.
    But, having gotten there, I point out that the “look” at MMT flounders dramatically with Mosler’s equally inaccurate and self-serving assertion that the IRS shreds cash tax payments, as his false offering of proof that taxes do not, or the more Kelton-ish, CAN not, pay for government services.

    “”Critics of MMT are free to point out errors in MMT……They are free to examine the historical record.””

    As such, the historical record is that the IRS does not shred cash tax payments and, to the contrary, under very strict rules forwards them to Treasury, where they CAN, and do, pay for government services.

    Why does MMT alienate the taxpaying middle-class in this manner?

    Sorry for the play, but that is one of MMT’s unnecessary and pretty deadly, if innocent, frauds. Easily corrected.

    1. Joe Firestone

      How about the Citation to the WaPo wonkblog article on MMT by Dylan Matthews? You’d think that a reading list citing an article on “What is MMT?” would provide a link to something written by one of the MMT authorities, not by a Journo who is junior to Annie Lowery’s husband at the wonkblog.

      1. Klassy!

        Oh boy. I didn’t notice that one and just read it. I don’t think Canada and Australia are the greatest examples to make the case for the wisdom of running surpluses in light of the bubbly nature of their housing markets.

  12. skippy

    Once you utter a thing, you can not undo it, NYT uttered MMT.

    skippy… although… Mosler should have realized the signage and what it portends… so close to a particular part of his anatomy… in the cover shot… the only question is… who’s being the cheeky one[???].

    1. Paul Tioxon

      An invading army can be resisted, an invading idea can not.

      From the wisdom of Fernando Saenz Vergara.

  13. F. Lynx Pardinus

    “After delving into the technical details of modern monetary theory for a few minutes, he paused”

    I understood this to mean that Thoma talked about MMT in detail with the NYTimes author for a few minutes (the NYTimes author chose to omit the contents of that discussion from the article–not Thoma’s fault), not that Thoma only studied MMT for a few minutes.

    1. reslez

      I interpreted this the same way. But frankly if Thoma actually studied MMT for as long as a few minutes I would be deeply surprised.

  14. Chris Maukonen

    Frankley Ives..having read a bit about MMT, my impression of it is that it’s simply more snake oil to justify the continuation of our unjust, greed based capitalistic system.

    1. Ben Johannson

      Warren Mosler has stated he belives MMT fully compatible with socialist political economy. Just because the theory doesn’t expressly condemn capitalism does not mean it is preferred.

  15. Moneta

    Evolution of money…

    -Barter: Limits in growth. Limits in time and space, stuck with basic necessities and lack of specialization.

    -IOUs: Limits in growth. Limits in space due to lack of widespread recognition.

    -National currencies pegged to gold, no taxes, no deficits: Limits in growth. Limits in collective infra and services as well as specialization. Huge incentive to cheat peg.

    -National currencies pegged to gold, taxes, no deficits: Limits in growth. Government limited to tax spending. Huge incentive to cheat peg and increase taxes. Potential for misallocation of capital amplifies here but limited by taxes.

    -National currencies, flexible exchange rates, taxes, no deficits: Limits growth. Government limited to tax spending. Huge incentive to find ways to deficit spend and increase taxes. Even more potential for misallocation of capital.

    -National currencies, flexible exchange rates, taxes, deficits: No limits to growth but huge incentive to reduce taxes and increase deficits to meet population’s whims. Since most of population does not understand money creation, it loses control over its true levels of industry. Therefore, huge potential to completely misallocate resources and capital unless the rules are very well defined.


    -National currencies, flexible exchange rates, no taxes, deficits: No limits to growth but even more opportunity to accelerate misallocation of resources and capital unless the rules are very well defined.


    Looking at this evolution, it is hard to believe we will opt to go backwards. However, to move forwards, we will have to fund research to determine what is efficient capital and resource allocation and then, we will have to implement and monitor structures that protect us against ourselves.

    It calls for a paradigm shift… and we are still far from it.

    1. Yalt

      If your history of the evolution of money begins with “barter” you’ve got a lot of work to do.

        1. Lambert Strether

          There would be no point in any case, at least without substantial revision; it starts from a premise that’s demonstrably false, an ahistorical fairy tale, though propagated in every neo-liberal economics textbook and introductory class

          1. Moneta

            Well, if I have to go back to school to learn how to tie my shoe laces we are in even more trouble than I thought.

    2. F. Beard

      It calls for a paradigm shift… and we are still far from it. Moneta

      The basis for ethical and thus stable money creation is co-existing government and private money supplies as implied by Matthew 22:16-22 (“Render to Caesar …”).

      Government is force and the private sector is or should be voluntary cooperation. It isn’t possible for them to ethically use a government enforced monopoly money supply for both private and government debts.

    3. Mark P.

      @ Moneta —

      The line people are taking here re. barter is according to David Graeber’s book, DEBT: THE FIRST FIVE-THOUSAND YEARS.

      Graeber, an anthropologist, starts by asserting that nobody in his profession has ever found the least historical evidence — all evidence is to the contrary, indeed — that money arose out of a barter economy a la Adam Smith’s formulation, which essentially serves only as a foundational myth for the economists’ profession.

      To be very reductive, it’s all credit, debt and gift economies all the way down, according to Graeber. (The anthropologists do find inter-tribal barter.)

      You should read Graeber’s book. Even if you find that you think he’s wrong — and it’s not at all clear that Graeber is — it’s a significant piece of work that’s going to exert a continuing influence. (As you see from folks’ adherence to Graeber’s line here.)

      1. Lambert Strether

        AFAIK, although Graeber’s book is by no means perfect — DeLong, albeit a bit too joyfully, and others poked holes in one chapter (14?) — there are discussions that are truly excellent, even revelatory, and the discussion of the neo-liberal origin myth for money, barter, is one such, and isn’t under assault either by polemicist or scholars.

      2. Moneta

        I did not put dates or a time line. The list is by level of complexity and potential growth. Maybe I should have made a complex flow chart to account for every permutation and sub-system. ;-)

        When my economics profs talked about barter, I assumed it was used to explain a concept and never got the impression it was part of a history class. Just like bank reserves… when I was taught that banks could only lend out 90% of deposits, I assumed it was different in real life but it was a simplification used to help understand the concept of the multiplier.


        But thanks for the title. I read a lot and I am always looking for new ideas.

  16. Alejandro

    Attribution is a favored tool of propagandists-it tills the soil for ad hominem and dismissal. Their “logic” implies that if (s) he previously said/did something “outrageous” then anything that (s) he thinks/says/does are at the very least suspect. Powerful ideas don’t always come from saints.

  17. Siggy

    MMT is an interesting theory and a useable explanation as to who and how money is created. When a government simply prints money to repay a debt, it has de facto defaulted on that debt. It has also started the engine of inflation, that is to say the pernicious depreciation of the money instrument’s purchasing power. That’s the big rub with MMT.

    That fine golf shirt made of long fiber Egyptian cotton that once cost $18.95 doesn’t seem to be available and its replacement now costs $65.00 and more. I am retired and my income is no longer growing all the while my capital base is declining. I hope I die before the money runs out. The Bernanke, however, is hell bent to make me destitute with his cockamamie QE.

      1. washunate

        Are you honestly suggesting that prices in the real economy are driven by median wages? That average workers can live a comfortable middle class lifestyle augmented by productivity growth each year?

        1. Yves Smith Post author

          They did until the corporations started keeping the benefit of all the productivity gains. That chart has been all over the Web and we’ve reproduced it a few times. The problem is lack of labor bargaining power. And that was by design. That was not a natural evolution. Reagan deciding to break the air traffic controllers’ union was the sign that the officialdom and government were fully behind union busting.

          We moved from an economic paradigm that saw rising worker wages as key to economic health to one that justified rising income disparity and concentration of wealth by invoking “free markets” as a magic “might makes right” incantation. Workers had the fact that they were getting the short end of the stick masked by asset bubbles and rising consumer debt level, which for a while allowed them to increase their living standards in the face of stagnant incomes.

          1. washunate

            Agreed 100%

            That’s why I get so concerned when people talk about inflation and unemployment in the same breath today. It’s like, where have they been for the last quarter century (plus)?

            Rising prices with stagnant wages is the whole point of public policy today. Without it, there’s nothing to loot.

    1. F. Beard

      When a government simply prints money to repay a debt, it has de facto defaulted on that debt. Siggy

      No it hasn’t. Since sovereign debt is just another form of fiat (but one that pays interest) the economy has ALREADY taken any inflation hit resulting from its issue. So swapping new fiat for sovereign debt should not result in any additional price inflation. It might instead result in price deflation because of the interest not paid.

      But since the monetary sovereign has no need to borrow in the first place, sovereign debt is a form of welfare for the rich and should be abolished regardless of whether it produces price inflation or price deflation; the government has options to deal with either.

      1. Lambert Strether

        “ut since the monetary sovereign has no need to borrow in the first place, sovereign debt is a form of welfare for the rich and should be abolished regardless of whether it produces price inflation or price deflation.”


      2. JohnB

        Great reply. Captures the faults/unfairness of national debt, while partially revealing the insight, that it is only as inflationary as fiat would have been.

        Is there somewhere I can read more specifically about this precise issue? (relating to inflation from national debt, vs from money creation)

        I have a fair understanding how debt is still a (slightly less liquid) form of currency itself, but could really do with a good article eloquently explaining this in more depth/detail.

        1. F. Beard

          Thanks! But tell the choir they should read the Bible, including the Old Testament, themselves!

          But it occurs to me that the reason sovereign debt is no less price inflationary than fiat even if sovereign debt can’t be spent at the grocery store is that the banks should always be willing to buy sovereign debt in exchange for new credit. Why not? (Unless sovereign debt can’t be used for inter-bank lending?) But new credit is new purchasing power so price inflation is not avoided. Well, one could say that creating new fiat creates new reserves and sovereign debt doesn’t so that the former could cause more price inflation via credit expansion than the later. Maybe.

          I’d like to see a definitive argument myself. Maybe Bill Mitchell has one since he calls sovereign borrowing “corporate welfare.”

  18. Banger

    I know relatively little about MMT but the NYT and the inheritors of what we once called the “eastern establishment elite” or the American intellectual establishment is that it is merely a department of the Imperial Court nothing less nothing more. This is a deep tragedy that may be one of the handful of issues that really count in our world.

    So whenever opposing views come up they are derided and never, ever engaged. People who do not follow the orthodox Washington consensus are crazy, deluded, conspiracy theorists, and so on.

    To even look to the NYT or any mainstream outlet for anything other than tidbits of information is an utter wast of time.

  19. Lambert Strether

    Annie Lowrey is to Ezra Klein as Andrea Mitchell is to Alan Greenspan; I had forgotten that relationship when I read the article. How nice for both of them! Incest is nicest, isn’t it?

    1. mpr

      Actually in his response Randall Wray didn’t disavow the position Thoma ascribes to MMT (unlike Black). Rather he defended the proposition that government spending has no effect on real interest rates.

      When I first read Thoma’s quote I thought he was being unfair to MMT, but Wray helped convince me otherwise. MMT probably does more or less hold this position, and it is more or less untenable.

      1. Joe Firestone

        If you think it’s untenable, then criticize Wray’s defense of it and show that his defense is untenable. Don’t just engage in labeling.

      2. Bill Black

        I urge you to reread Wray’s article. As Wray explains, it is ambiguous what will happen to real rates. They can easily decline, indeed become negative, as the money supply or spending increases. Thoma must know this, which is why we hope there is a glitch in the quotation. We think he meant to talk about inflation, which is why Wray explained again that MMT does not predict that increasing government spending can never increase inflation. It depends on the full circumstances. Best, Bill

        1. mpr

          Yes, so he is saying that according to MMT there is no relationship between govt spending and real rates, and semantic quibbles aside, this was exactly the spirit of Thoma’s remark.

          Now its easy to see – as I explained on RW’s blog – that *if* you assume that the Fed has perfect control of inflation and holds it constant then govt. spending does lead to higher real rates unless you’re at the zero bound.

          RW (and I guess MMT) doesn’t dispute this. What it claims (as far as I could understand RW) is that the Fed’s control of inflation is so unreliable that this relationship breaks down completely. In fact RW claimed that the Fed had no control over inflation (he compared it to them influencing the orbit of Pluto).

          I knew that MMT didn’t like monetary policy as a tool, but not that it claimed it was completely ineffectual. This is pretty far fetched.

          1. Ben Johannson

            Monetary policy is so blunt an instrument that it can be counterproductive. The little data we have indicate the effects of a policy can vary wildly depending on psychological factors. Notice that for the third time QE has failed to stimulate aggregate demand and inflation, even with an open-ended policy.

            According to standard macro textbooks, profit-maximizing firms and utility-maximizing individuals would take advantage of zero interest rates and spend; but those texts don’t take into account that a heavily indented private sector is uninterested in taking on additional liabilities at any price. Because monetary policy is by definition indirect it cannot be considered reliable because there are too many uncontrolled variables.

    2. BobS

      A couple of his readers asked about his remarks in the comment section following the link to the NY Times story on his blog. I think it’s significant he hasn’t responded- I’m left to infer that his providing the link to an article in which he certainly knows he was referenced while ignoring the opportunity to provide clarification (even now after several days) if he felt his views were misrepresented means he stands by the remarks in the original article.

  20. MaroonBulldog

    Hard maxim for anyone to live by … apparently even harder for tenured professors with Bank of Sweden Prizes …

    1. “Don’t criticize what you don’t understand.”
    2. “I learn more when I’m listening than I do when I’m speaking.”
    3. “I’m not in the habit of making a horse’s ass of myself, and I never do it deliberately.”

  21. allcoppedout

    The best ‘review’ of MMT I’ve seen in this post. MMT opens us up to the idea the ‘money’ is ours and can be taken back from the thieving banks and invested where we see fit. I see it as a start to a bolder, wider practice of more rational investment and I’m not sure it is sufficiently linked with a rationality of how we get work done and comparative advantage.

  22. ScottS

    ‘I haven’t read their specific work. I’m busy, and I try to read what is considered interesting and valid.’

    Anyone have a flashback to Asimov’s Foundation trilogy where the anthropologist is able to make conclusions about history by weighing the reputation of one (dead) anthropologist against another (dead) anthropologist, having never done any actual digging in the dirt himself?

  23. Hugh

    Come on, did anyone expect Lowrey not to be a propagandist? MMT has been around and discussed for a few years now. There is no reason and no excuse for Lowrey not to know and understand its principal tenets. So when she doesn’t, it is not a mistake, but a choice.

    MMT has both descriptive and a prescriptive side. The descriptive side can be and is, in fact, exploited by the kleptocratic classes. It is pretty much MMT for them, gold standard for us. Our to put it even more simply, the money is always there for them, and never there for us.

    One of the reasons that I developed a political and economic theory based on a resources and social purpose approach directed at the kind of society we would want for ourselves and each other is that it is immune to most of the attacks leveled against MMT. When the discussion is about money, the kleptocrats and their propagandists will always win because they can muddy the waters so. And MMT as currently formulated as a descriptive monetary theory with some prescriptivist elements really lends itself to this kind of attack. In MMT, context is very important. Out of context, it comes across as Mark Thoma says as just nuts. The problem is that MMT needs a more robust context, such as a resources and social purpose framework gives, but its practitioners trained or formed within traditional economic canons remain resistent even hostile to such changes.

    1. washunate

      Well said. I continue to be part fascinated and part horrified that Chicago school monetarism seems to have infected some otherwise leftist economic thinkers.

      Fiscal policy is what matters, not monetary policy. How the money is spent, not how much is spent.

    2. Joe Firestone

      Actually, I think Scott Fullwiler and Bill Mitchell are both doing work on resources. Scott is working on sustainability concerns right now.

    3. Moneta

      The problem is that MMT needs a more robust context, such as a resources and social purpose framework gives, but its practitioners trained or formed within traditional economic canons remain resistent even hostile to such changes.

      I agree 100%.

    4. JohnB

      Excellent point – economics after all, is all about the efficient allocation of resources, and when money becomes a hindrance to this, you are (by definition) ‘doing it wrong’.

      This I find is a powerful argument in debate, for showing the absurdity of economics today, where we are permanently wasting enormous amounts of productive potential through unemployment, when that is totally unnecessary.

      I would be interested in hearing more about theory/arguments, framed from the perspective of resources, rather than the (currently politically distorted) perspective of money?

  24. washunate

    As an added plus, the Royals beat the Yankees last night. I know, small steps. (UMKC is in KC, in case that wasn’t obvious…)

    But seriously, there is a reason that inflation specifically continues being a sticking point with MMT. There is a subgroup of people making political claims that inflation isn’t a problem, without defining what they mean by inflation.

    Of course CPI (and others) show modest inflation. That’s what they’re constructed to show. Aside from the mathematical point that even 1% inflation is inflation, the government metrics are purposefully designed to minimize the true costs of Higher Ed, Healthcare, Healthy Food, Housing, and so on to the majority of Americans dependent upon actual wages in the actual economy to maintain their standard of living (the benchmark for which should be productivity, by the way – a flat standard of living is unacceptable if productivity is rising).

    These proponents of net deficit spending at all costs also ignore the constitutionality of bad spending. Spending more money isn’t a solution because lack of spending isn’t the problem. Rather, the problem is how the money is spent, which is a management issue, not a monetary issue.

    When MMT wraps up these loose ends, it will be a much more powerful force. Until then, it’s mostly just another way of saying that a sovereign nation can print however many pieces of paper and electronic digits it wants to without nominally defaulting on its obligations. Which we have known since, like, forever.

    In the immortal words of that radical leftist Dick Cheney, Reagan proved deficits don’t matter.

    1. Moneta

      In the immortal words of that radical leftist Dick Cheney, Reagan proved deficits don’t matter…. for the 1%.

      1. washunate

        I wasn’t going to call you out specifically, but you are the primary poster I have in mind, particularly the game changing language about high value platinum coins.

        You have claimed that net deficit spending solves problems. Yet when challenged that what matters is how the money is spent, you go silent on the matter.

        Deficit spending is not sufficient. What matters is how resources are allocated. Do we spend it abusing prisoners or prosecuting war criminals? Arresting low-income drug users or rebuilding our passenger rail system? That makes all the difference in the world – the actual allocation of resources.

        Also, specifically on the inflation point, my lay read of posts like that is that they are trying to use academic discussions of factors like capacity utilization and unemployment to imply that wages drive prices without any data that shows causation. I would argue that what is notable about the Reagan-Bush era is that wages are NOT driving prices. Something ‘else’ is.

        I care about the actual prices that actual people have to pay. That’s what matters. The looting and two tiered justice system of wealth concentration cause unemployment. If we net deficit spend another $10 trillion with the same leadership, the null hypothesis is that we’re going to get the same results. The burden is on those advocating a different outcome to prove the outcome will be different.

        Given median wages:

        Healthcare is too expensive
        Housing is too expensive
        Higher education is too expensive
        Healthy food is too expensive
        Transportation is too expensive
        Telecommunications is too expensive
        Vacation is too expensive
        Sleep is too expensive
        Participating in civic activity is too expensive

        Whatever names one wants to ascribe to those trends, that’s the kind of inflation that needs to be addressed.

        And on one technical point, I deeply disagree:

        “Hyper-inflation is just inflation big-time!”

        I would counter that hyperinflation is unrelated to inflation. Hyperinflation is collapse – the absence of demand for the currency, the desire to exchange that currency for anything else.

        God help us if the dollar has a hyperinflationary collapse.

        1. Lambert Strether

          Typically, if one poster “calls out” another poster, that’s a serious matter, calling for actual linkage and citation of the other’s work, so third parties can see for themselves that there aren’t any tendentious distortions or straw manning. I don’t see anything like that here, though granted, Krugman doesn’t (see the post), so why should you?

        2. F. Beard

          God help us if the dollar has a hyperinflationary collapse. washunate

          It’s typically the banks and/or central banks that cause hyperinflation, is my understanding.

        3. Calgacus

          MMT does not suggest net deficit spending. This is a misinterpretation against which articles and blogs have been written, to little avail. MMT/FF says: don’t care about deficits or surpluses, about “Sound Finance”. Should one care whether the government budget number is even or odd? Why should one care any more about its sign?

          MMT says – have a healthy lifestyle. Eat when you are hungry. Don’t eat when you are not hungry. It does not say that you should go crazy when you happen to eat more than you poop – that maybe weighing your input and output is not necessarily the sanest thing. You also shouldn’t obsess about weight gain or loss or your BMI or any other gross, single, minimally meaningful measures. To mix a metaphor, worrying so much about how spending is directed is like an ER insisting on stopping all bleeding before giving a transfusion. It’s just plain nuts.

          The only sound, permanent way to solve an income/ wealth concentration problem is with a frigging job, as everybody poor, as everybody’s parents knows. I really wonder whether anybody who “thinks” different could stand up to an argument with their Mom. Mom is right. (Not to speak of Dad, whose job is then to call you a dumbass & put his foot in your rear end.)

          Both how money is spent and how much is spent matters. Obviously. It is possible to have a very healthy diet, but just eat too little. That is pretty much what happened to Europe: much more sensible spending than the USA, but decades of comparative austerity and stagnation. Result: higher European unemployment rates, lower growth compared to the USA since the end of the postwar era. While the reverse was the case before.

          If you think that only “how resources are allocated” matters, whether resources are allocated efficiently – then you are ignoring the massive and systematic destruction of resources which practically always dwarfs “efficiency” gains from supposed “wise spending”.It takes a heap of Harberger triangles to fill an Okun Gap. (& The costs of unemployment – again ) Worrying about wise spending while not spending enough is obsessivley counting paperclips – while your house is burning.

          As Bill Mitchell deftly puts it – the purpose of a monetary economy is to create unemployment. There is no mystical effect that magically counters this, that puts money in the hands of the unemployed. The truest problem is not that the rich have so much, but that the poor, the working class have so little, have less than their parents, and are being systematically deprived and robbed. Not caring about unemployment, not supporting a JG is ignoring the primary, overwhelming cause of poverty and predation.

          Claiming to oppose inflation, but supporting inflationary policies like more unemployment insurance or social insurance instead of an inflation-destroying JG makes no sense. I’m for both, for a BIG & a JG – but a BIG without a JG is a joke. If all those things are too pricey, given median wages, the answer is simple – raise (median) wages. The quickest way to do this is direct – full employment, right now, the JG, vastly increasing economic efficiency correctly measured. A complete win-win all around, with no negatives. A damn free lunch.

          1. F. Beard

            I do support a BIG but not a JG. Instead we should ensure that people have the resources needed to do work that is meaningful to them. The family farm*, for example, once kept many otherwise poor people engaged in dignified, productive labor. But what work can the poor do in apartments compared to that?

            The problem is fundamentally injustice. Fix that and unemployment fixes itself. Slavery in the form of a JG instead of reform and restitution is an insult, not a just solution.

            *Leviticus 25 ensured that the vast majority of Hebrews could not be permanently dispossessed from their family farms.

          2. washunate

            “MMT does not suggest net deficit spending”

            Exactly what I’m critiquing when some people use MMT to make political claims to that effect.

            For example:


            “So, if the Government adds less than 3% of GDP annually to the domestic private sector through deficit spending, then the private sector will be losing wealth year after year.

            Now, the important question is: when will progressives, and Americans more generally, ever learn that they must look at debt/deficit plans and projections from the viewpoint of the SFB model and ask themselves whether forcing deficits of less than 3% of GDP for a number of years is both realistic and sustainable without either a credit bubble, another recession, ending in still greater poverty or inequality, or perhaps both?”

    2. F. Beard

      Spending more money isn’t a solution because lack of spending isn’t the problem. washunate

      Pious nonsense that proves you don’t understand government-backed credit creation.

      Government money is PRECISELY what is needed – so people can payoff their debt to the counterfeiting cartel, the banks.

      But I concede that government need not spend it; it should simply give it away as restitution for theft to the entire population, including non-debtors.

  25. steelhead23

    Yves, Dr. Black, et al. – Join the club. Look, I know very little of the works of Karl Marx, but that with which I am familiar suggest the man was a very astute student of capitalism and sociology. He saw and wrote about the same mid 19th-Century social/economic woes as Charles Dickens. And yet, Dickens is revered while Marx is scorned. Perhaps it is because the Manifesto expressly wished to depose capitalists, while Dickens merely shamed them. MSM would change the frame, not just the thesis of economics. You would replace the “invisible hand” with conscious action, replacing magic with rationality. Todays mainstream macroeconomists are like those conservative Catholics who preferred to listen to incomprehensible latin and look at the back of the priest. From where I sit, the magic these folks are conjuring up seems like black magic.

    1. davidgmills

      Sounds like it too. I can think of no professional language filled with more gobblydygook. And the gobblydygook seems to have one purpose, to legitimate fraud. Calling it a science is a fraud. There is nothing in it that uses the scientific method at all.

      1. davidgmills

        Case in point re gobblydygook. Bill Black’s usage of the term “control fraud.” To most of humanity those two words together would imply stopping fraud. Yet I am pretty sure what he means is management fraud or fraud by those who are in control of a corporation’s finances.

    1. spooz

      This comment was supposed to be a reply to Jake Chase’s comment:

      “Expecting the NYT not to publish propaganda is pointless. The paper has been all propaganda and advertising for at least 40 years. Such newspapers can be useful, but there is certainly no reason ever to read them”

    2. Lambert Strether

      I know, I know… The Walmart story was good, but compared to what we face, it’s like they got a prize for trying to clean the Augean stables with a teaspoon.

      1. spooz

        I would hate to have to defend the New York Times; I’m well aware of the propaganda they put out. But I won’t refuse to read a NYT story outright and wouldn’t want to miss the rare gem like the Wal-Mart story. Also, I sometimes like to keep my propaganda detector tuned up, and see if the comments pick up on it too.

        So I decided to do a propaganda check and picked a story on a topic that interests me from the NYT website, “A Surge in Part Time Workers” and found this quote:

        “It also makes part-time jobs more attractive for workers. Say you currently have a 20-hour-a-week job with no health coverage, and that you cannot afford to buy insurance on the private market. Soon, the government will start offering you generous subsidies to buy a plan on the new health care “exchanges” – meaning, provided your income is low enough, you get an expensive benefit with taxpayers picking up most of the tab.”

        This looks like propaganda to me. Although the BLS doesn’t break out hourly wages between part time and full time employees, I’m guessing that the majority of part time workers are making less than the $15,282 poverty level, which for a 20-hour week for 50 weeks would require an employee to be paid $15.28 an hour. So instead of generous subsidies, the part time employee will be lucky if they live in a state that has generous Medicaid benefits. With an agenda to promote the ACA, information is left out to give it a little positive spin. A quick look at the comments shows most are critical of the ACA, but miss this bit of propaganda.

  26. nothing but the truth

    if MMTers have figured how the real world works (outside of economics books), they want to get prizes for it?

  27. Rich

    Maybe you need to write a book or lengthly article showing where our economy would be if we had always had a balanced budget.

    1. William C

      I imagine the US would have lost either or both of the World Wars so there would not be a US economy to worry about?

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  29. nothing but the truth

    MMT = pushing money illusion to its logical end (of fiat money).

    MMT is like a person who figures out 2+2=4 and makes a big deal about it. The whole banking system has been working without help from the economist’s textbook money multiplier BS. All bankers and financiers know this. Fiat money has no constraints at all because it is pure nothing.

    economists seem to have figured this out. and they want to get nobel prizes for it.

    the sad thing is, they probably will. another reason to get rid of the economics nobel.

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