By J. D. Alt, author of The Architect Who Couldn’t Sing, available at Amazon.com or iBooks. Originally published at Real Progressives.
It would be a shocking scandal if it came to light that the professions of medical science had, for decades, known about an easy to treat, underlying cause of cancer—but conspired to obfuscate and suppress the information to protect their participation in a medical industry raking in hundreds of billions a year to treat the disease. Professional standings, tenures, licenses would be in tatters. Lawsuits would abound. Outrage would march on every city hospital and medical college in the nation—would it not?
Such a betrayal, of course, is not humanly possible. Right? Yet is it not the case that the professions of economics, journalism and politics are guilty of something very like this kind of betrayal? Doesn’t it strike you as odd that, for more than five decades now, the U.S. government has been issuing and spending trillions of dollars of U.S. FIAT currency, and not once has a mainstream economist, journalist, or political leader found it worthy of consideration to even try to explain—from the perspective of what economic policy is all about—what a sovereign fiat currency actually is, and how it functions? While American democracy labors under the false belief its government is broke, deeply in debt, and cannot afford to pay for a humane and effective safety net for those who the corporate economy cannot profitably employ—while tens of millions of American citizens, in other words, struggle to get enough food to eat, desperately search for affordable housing, agonize over how to obtain essential health-care, and scramble to pay for the care and education of their children—while, furthermore, the nation’s infrastructures crumble and fall into obsolescence, while we struggle to rebuild after the catastrophic storms and wild-fires of climate change, while we fail to clean up the pollution that threatens our drinking water, our breathable air, our food supplies and fisheries—while all this great struggle debilitates the American prospect like a cancer, the professions of economics, journalism, and politics obfuscate and suppress the underlying possibility of an actual cure: The understanding of what sovereign fiat-currency is and how we can use it.
There are, of course, cogent voices in the wilderness: the UMKC economists (Stephanie Kelton, Randy Wray, Pavlina Tcherneva etc.) now scattered to Stonybrook, Bard College and the Levy Economics Institute; also there’s Bill Mitchell expounding reason from the Australian hinterland; there’s Warren Mosler who, apparently, was the first human being to discover the world is using fiat money; there’s the continuous twitter conversations trying to come to grips with our malaise and why an apparent cure is being suppressed and withheld. But the mainstream voices guiding American democracy refuse to listen, refuse to even acknowledge, or discuss, the topic itself: U.S. Sovereign Fiat Money. What is it? How is it created? How do American citizens and businesses get their hands on it? Why does sovereign fiat money make it possible for us to collectively undertake and accomplish things we otherwise believe are not “affordable?”
No. The mainstream voices do not want this topic, these words, these questions on their tongues. For them, “money” is something that simply exists, and the only question is who should get to have it to spend? The government—to pursue collective goals? Corporate entrepreneurs—to generate profits? The single mom who can’t find full-time employment—to feed, house and get health-care for her family? The mainstream voices—the economists and journalists and political leaders—thrive on this question of how to divvy up the pot of “money” that America, by some inexplicable process, has been allocated to have. Staking out positions in this allocation argument is their career and sustenance. To take their argument away (by suggesting the pot of “money” is, in fact, expandable—as needed—by the direct sovereign spending of fiat-currency) threatens to leave them marginalized and irrelevant; even worse: possibly unemployed?
There are people in the mainstream voices, I’m sure, who genuinely don’t have a clue. There are many others, however, who understand all this very well—but who refuse to risk the comfortable and lucrative positions they’ve staked out in the false debate of the mainstream narrative. While these economic, journalistic, and political leaders bask in the celebrity-comfort—and pay-scale—of their argumentative positions, America’s precious democracy struggles with what it is told is its abject poverty, indebtedness, and helplessness. The magnitude of this betrayal, when you consider its consequences, is staggering.
I won’t be naming names here. But I think we should start calling them out.
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I would add to this the complete failure of the economics profession in Europe to identify properly the dangers of the creation of the Euro. I can recall from that time (mid to late 1990’s) that the arguments were highly superficial – all about increasing price transparency and maintaining a strong low inflationary environment. There was almost no willingness to burrow into the real costs of losing national sovereignty over currency issuance.
That is completely fair, but recall also that Germany’s extreme anti-inflation bias, combined with Germany also wanting to avoid moving to a more federalized structure has led it to nix all sorts of approaches that would make the Eurozone far more workable, starting with Eurobonds. Yanis Varoufakis outlined a series of fixes, the most important of which was an infrastructure bank which would provide a way of finessing state fiscal strictures. Of course, Eurocrats are perfectly happy to get creative when it comes to propping up banks and the financial markets in a pinch, but the basic operations of the Union, not so much.
That great American socialist, Richard Nixon, created revenue sharing, in which the Federal government gave money to the states to spend, with the only strings attached being anti-corruption oversight. The idea was (even before the implications of the US getting off the gold standard were understood) that the Federal government could tax and borrow more cheaply than the states, but states had a better grasp of local needs and were better positioned to operate many types of programs. Some Eurozone-wide deficits and revenue sharing would have gone a long way towards making the Eurozone a much more livable arrangement.
Thank you, Yves.
With regard to your comment about the creativity of the Eurocrats, it’s the private sector, especially banks, that has them looking wistfully at the riches and glamour on offer and how they can transition to that world.
I have worked with three such Eurocrats. One, a French woman, now sits on the executive board of my German TBTF employer. Another, a Dane, is the lead Brussels lobbyist for a big public affairs consultancy. The third, an Anglo-Canadian woman, is an MD at Goldman Sachs. All got their jobs within weeks of leaving government and having headed EU projects that involved their future employers.
In contrast, my mum, formerly in Whitehall and now in the Thames Valley, has to observe a two year recusal from such employment.
And let’s not forget the 10,000+ un-elected Euro-crats in Brussels now charged with making the laws of the land in France, Germany etc.
(Though I suppose you could argue that the equivalent 10,000 in the U.S. are equally illegitimate due to the corrupt money processes by which they purchase their positions).
And the EUR is just another ostrich-head-meets-sand-hole exercise, with nobody even aware of what a “Target 2 balance” is.
But voila, deus ex machina! Greek two-year yields are lower than 2-yr USTs! So there it is. The explanation for that is very simple: there is no such thing as “Greece” any more. It’s merely another rump appendage useful to billionaire bankers in Frankfurt and Paris for rent extraction.
Thats very true and I recall an unspoken assumption (which I have to say to my embarrassment that I shared), was that a technocratic currency run mostly by Germans and other north Europeans would be run competently and in most peoples interest.
I think it was actually Paul Krugman who pointed out that the inevitable consequence of the Euro’s design and Europes economic structures would be a flood of cheap money for lending in weaker parts of the zone, and this is precisely what happened. Most economists dismissed these concerns as just short term issues that would all balance out in the end.
There was cogent dissent;
https://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-all-that
And warning from other sides as well:
Milton Friedman
Peter Garber
Gerard Lyons
Yes just apply a steady state solution. Hammers and nails.
Like expecting Lake Itasca to balance the Gulf of Mexico while the Mississippi continues to flow just one direction.
Thank you, PK.
I wrote my masters dissertation on central bank independence from 1994 – 5, so followed EMU closely.
You are right to call out the economics profession for their failure over EMU. This said, in that period, real experts were being eased out of debate and off the air waves in favour of the media and think tank hacks and whores we see daily now.
I remember programmes like Panorama, World In Action, This Week, TV Eye and Weekend World having academics engaging in vigorous debate, unencumbered by time, sound bites and identity politics.
In those days, a professional economist, e.g. Peter Jay, would be the BBC’s economics editor and be able to cover the debate widely, not, as now, a friend of Robert Peston and who ticks two or three boxes on the identity politics checklist.
The comment applies equally to other affairs, especially international.
Oh, crikey, I’m glad it’s not just me that forlornly recalls what was probably the Golden Age of British TV. I remember a strand on Channel 4 called “Diverse Reports” which had a seemingly anything-goes approach to its editorial policy but had a solid thread of covering social issues. It was like a mash up of Manhattan Cable 1990 vintage with cuttings from the Socialist Worker. With Mao’s wife as artistic consultant.
Now we have Kamal Ahmed who is only marginally less of a big business PR whore than his predecessor. And that’s only because he’s too dim to remember his lines and can’t grasp how the Autocue works.
Sometimes I flick from Fox, to Bloomberg, to CNBC, to the BBC and think to myself why were we not just handed a box of crayons and told to sit in a corner and play nicely — and promised if we’re really good, we can have a fairy cake with our tea. I’m secretly hoping that the ‘leccy does give out due to the cold weather spell demand and at least we all get to have a break from it all for a day or two. Creeping hypothermia would be a pleasant palliative by comparison.
Thank you, Clive.
It’s amazing and very sad how the British MSM has deteriorated in quality. The BBC World Service held on longer than the Home Service, but it’s appalling now. One example of that decline in the quality of the World Service is the regular appearance of Chelsea Clinton as health and aid expert (sic). Another is how Russians and Africans are shouted at by Tim Sebastian and Stephen Sackur, but the pair are deferential when dealing with the Gates and Clinton families.
I miss Iain Purdon.
They new crop sound like owners of convenience shops.
Bowdlerized Broadcasting Service.
My recollection as an economics undergrad in the 1990s was that economists generally judged that the Eurozone fell far short of being an optimal currency area, so its creation was politics trumping economics.
Thank you Jason.
Mine, too, although I read law as an undergrad.
Further to Olivier and Skip Intro, both are correct. The likes of Roland Vaubel and Will Hutton gave cover.
But the Euro was never an economic project: like everything EU-related it is first and foremost political. So what does it matter what the economics profession (or anyone, really) thinks or says?
The economists played the role of the medieval church, flagellating the powerless, fellating the powerful. Their soothing lies provided cover for a brutal program aimed transparently at rolling back the welfare state and entrenching the power of finance.
Thank you for that priceless (to hark back to Yves’ piece on the costs imposed by capitalism) image, Skip Intro: “flagellating the powerless, fellating the powerful.”
It’s what we do.
“flagellating the powerless, fellating the powerful.”
Priceless !
This is exactly why I use the term – creative class – writers.
While this is very much an economist’s blog, the creation of the Euro was very much a political issue. Oversimplifying one explanation, the thinking was along the lines of increasing common/shared economic outcomes among EU member states to avoid the next pan-European military conflict, the cost of any ensuing fallout would potentially outstrip any economic hardship during the transition a ‘stable’ Euro. No one wanted a United States of Europe so they went for the Euro instead.
It’s easy to understate how much WWI and WWII weighed on the psyche of an older generation of EU decision makers at the time, especially how the economic fallout of WWI very much contributed to WWII and the level of austerity affecting Europe after WWII.
Of course, the law of unintended consequences and all that brings us to where we are today.
MMT is coming. The veil is fully lifted. This horrible tax cut for the 1%; the military budget; going after the social safety net. Only the willfully blind will continue to accept the economic malfeasance this country (and particularly its poor and disenfranchised) have been subjected to for decades. I’ve been a big fan of “calling them out” (Krugman/Summers et al) since I started my Neo-Chartalist voyage. Totally here for it.
All that is required for a system to collapse is one generation to lose faith in its legitimacy. That has happened. Everyone who has started school in the last 10 years has lived in a post-bust environment in which the very idea of equality was laughed at. They’ve seen soldiers lose their houses while people like Mnuchin get filthy rich. Now we wait for them to come of age.
Since Baby Boomers generally have no conscience, I do not expect many bandwagoners from the ranks of the olds once it starts to turn; I expect them to sic the armored police on people. Maybe once enough of you shuffle off we can build a society we can all be proud of, not just the high-born and well-connected few. One can dream.
There’s incredible number of “willfully blind”. Anytime I meet someone who starts giving me an earful about how Trump’s agenda is so awful and how it’s ashamed the United States can afford tax cuts for the wealthy but not healthcare, infrastructure spending etc I usually attempt to broach the MMT topic. I haven’t found one person yet willing to ditch the false “government as a household” monetary paradigm. I’m either called a liar or conspiracy theorist, or they just keep blathering on about how checkbooks have to be balanced and debts must eventually be paid. The cognitive dissonance is too much for people, plus the Pete Peterson deficit hawks have total full-spectrum political and media dominance.
Money creation is deliberately byzantine and obsfucated, so the process does not lend itself to easy and simple explanations. Of course it can be simplified, but at the cost of accuracy which can open yourself to more charges of “liar” or conspiracy nut. I find MMT to be a very tough sell, but hopefully I have managed to sow a few seeds of doubt in people’s minds.
Kudos to you for “calling them out”. I’m still working on my presentation and delivery.
Sadly I believe many regular Americans are emotionally invested in believing the ‘government-as-a-household, thrift/austerity as virtue myth’, because they themselves actually want to see other people suffer. These people I speak of are usually very fortunate, they’ve managed to pay their bills, and they’ve managed to squirrel away some cash for retirement and seeing others deprived, squeezed and degraded makes them feel superior. It’s sad and it’s petty, and it’s mean, but it’s what I’ve come to believe.
Dick Cheney said deficits don’t matter. A truth teller if there ever was one, just a bit ahead of his time.
Substitute the word diabetes for cancer, and the answer to the last question in the first paragraph is no. Something Upton Sinclair said a long time ago rings bells.
Where did Cheney get this idea? Read “SEVEN DEADLY INNOCENT FRAUDS OF ECONOMIC POLICY” by Warren Mosler online at
IIRC you will find it is this very short book.
Relevant from Simon Wren-Lewis today.
https://mainlymacro.blogspot.co.uk/2018/03/the-dangers-of-pluralism-in-economics.html
I generally find him useful to read.
(Here (UK – Southwest) ‘they’ are suggesting the gas might run out rather then the leccy’)
J. D. Alt: “There are many others, however, who understand all this very well—but who refuse to risk the comfortable and lucrative positions they’ve staked out…”
Two examples from personal experience:
The Pennsylvanian who came to SC to organize Progress SC said, in response to questions about MMT, that he is familiar with MMT but that Democratic campaigns can’t be run on MMT principles.
The male Democratic candidate running to unseat Republican Joe Wilson in SC said, in response to questions via his FB campaign page, that he will fight to balance the budget and reduce the deficit, and that he knows how to “reach across the aisle” and compromise.
It’s depressing.
(And btw his surrogates and some supporters have launched a relentless FB take-down – primarily in his private FB group – on his female Democratic opponent in this race. The Democratic primary is in June.)
Yes, it is clear that to the U.S. political class of all ilks, the federal budget deficit is the enemy, capable of destroying the economy and the American Way of Life (Oh my!). Even the Rooskies get treated with less disdain, though that is another talisman all must salute. To make matters even more ironic (or is it moronic?), arch-conservative, Master of the Universe, Dick Cheney once said “Reagan proved deficits don’t matter.” Go figure.
Apparently, our fiat monetary system is just fine for funding the military/industrial/congressional complex.
We’re never too destitute for that.
Well and truly enabled by the supine citizenry who apparently thinks it’s really okey-dokey that all their money goes to killing other people.
Isn’t another reason the MSM never mentions the true nature of fiat money the treasury bond charade that keeps government in hock to the wealthy while also providing them a relatively safe place to park their money between insider deals?
@BanksterBuster
March 1, 2018 at 8:34 am
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It’s true that Treasury securities provide a safe storage for money, but the government is not “in hock” to the wealthy. There is no structural need to issue such securities in the first place. The practice of matching debt issuance to the amount of deficit spending is a vestige of the gold standard days. It’s a welfare program for corporations and the wealthy.
Very true. Unfortunately that “vestige” is currently codified into law. Silly to pay interest on money we, the government, could be creating ourselves.
For every thousand who hack at the branches of a problem, one strikes at the root. – Thoreau
We have a lot of people striving to be the latter here at NC. Your comment is spot on.
Well, the author is guilty of what he accuses. Fiat money has been understood by a long line of leading economists since the 1920’s. They proposed exploiting the ability of a sovereign nation to create money without the pretense of debt for public purpose, only limited by the available human and natural resources available to society. To pretend that this is some major discovery by a string of modern economic visionaries, denies history. Before you bemoan the lack of economic literacy, read Soddy, read the Chicago Plan, then come back and tell me you understand fiat money.
Straw man. Alt is clearly discussing policy-making and mainstream economics, where deficit hawkery rules all over the world.
Not really: “There are, of course, cogent voices in the wilderness:” As if these are the only “cogent” voices. Its not a wilderness, it is deliberate obfuscation of what has been known for a century. The disconnect from history is a major problem with the message. That we can spend as needed is not some revolutionary concept – it is sound common sense.
Despite some recent coverage of the ideas, anyone preaching the MMT gospel is indeed still “a voice in the wilderness” of mainstream economic doctrine and media narratives that claim the federal deficit is somehow a burden on our children. Does he say anywhere that the voices he cites are the only ones? I don’t read that, but for some reason you are assuming that’s what he means to say.
That said, I admit that this sentence threw me off a little:
Obviously he wasn’t, as Chartalism has been a school of economic thought for longer than Mosler. But I think he is 1. writing for a mass audience that’s unfamiliar with the history of economic thought, and 2. using the word apparently to signify irony to those of us who know better. Mosler wasn’t the first person to understand and discuss fiat currency, but detractors like to make out like this is all some new-fangled theory Warren came up with last week.
I’m 95% sure that Alt is familiar with the historical precedents of MMT, and I assume that he’s not mentioning them here because talking about dead economists is a sure way to lose readers. That’s my take.
I appreciate your comments but I believe your presumption that “talking about dead economists is a sure way to lose readers” is a misguided basis for a strategy. MMT does present itself as a “new fangled” concept which is a turnoff for the average person who is resistant to change and will question, ‘If this is so obvious, why hasn’t it been done before?’. The answer, of course is that it has been done before which begs the question, why has it been abandoned? Instead of hand wringing over why the mainstream just doesn’t get it, one could instead point to the forces which buried the concept in the 1930’s and 1950’s – a sure way to grab the attention of readers.
Alt also doesn’t point to the current international movement to establish sovereign fiat money creation as opposed the system we have today, bank-money creation.
For many “average” people, especially those with some economic knowledge, MMT is simply incomprehensible; an idea similar to encountering an alien life form.
Personally, I agree. I have read, watched and listened to MMT concepts for several years. Other than the basic premise that the government need not limit spending to “balance a budget”, the terminology, logic flow and goals are difficult to digest. Guess I’m just below average.
I take it your from the group espousing the positive money theory.
I was an MMT enthusiast but kept an open mind – I realized monetary reform was needed instead. If you follow Joe Firestone you’ll see that MMT is a moving target. MMT is enamored with how the current system works but downplays the need to address the fundamental systemic flaws. So yes, I believe the entire money system needs to be overhauled as do many movements around the world – its not just Positive Money:
https://www.sovereignmoney.eu/monetary-reform-in-politics/?rq=vollgeld
I am a do something person.
I sent a copy of Wray’s book to the new Chairman of the Fed.
Please send a copy to your senators and representatives.
And have friends and fami.y FOLLOW UP.
Has (whoever) read our present of the MMT book?
Fiat currency?
Ed Vieira made a presentation to the Rotary Club of New York in early 2003 that discussed fiat currency. His presentation was memorialized in writing under the title “Trashing the Constitution: How Misconstruction of the Monetary Powers and Disabilities Subverted the Founding Fathers’ Intent.” A google search of that title pulls it up quickly. A short read, really, of not more than 20, or so, minutes.
This discussion is, per usual, excellent, and I am grateful to NC for keeping this issue of budget constraints vs MMT in front of us. But what I never see is an analysis of what those who benefit from current arrangements and mythologies would lose if suddenly the economics profession or, more importantly, our political masters ever started thinking straight about fiat currency. It’s all fine and good to imagine a better world run by intelligent sensible people, but in this world you really need to know what the powers of the status quo think they have to fear from change and what they actually have to fear. You can’t fight the forces of reaction by thinking they don’t exist or that there are never any justifications for their concerns.
@Norm
March 1, 2018 at 9:24 am
——
What they actually have to fear is a loss of power and profit, generally.
One example: If we instituted a Job Guarantee at a living wage, private employers would no longer be able to threaten workers with being fired if they didn’t continue to accept poor working conditions and low wages. They would also have to raise their pay scales to keep their employees from leaving for the JG work. Of course, this would increase aggregate demand tremendously and ultimately their profits, but most business owners are too short-sighted to see this.
There are many other things we could do such as Medicare-for-All, a real social safety net for those who can’t take a JG job or find one on the private sector, and free college education. If you just think about all the ways that the wealthy have for extracting economic rents from our economy, those are the things that could be changed with the judicious use of fiat currency and that would decrease the power of the elites.
They will fight that to the end.
“but most business owners are too short-sighted to see this.”
I think this needs to be qualified. Of course some are short sighted. However, many simply would not care about any increase in profits if it came at the cost of empowering working people. Walmart is a perfect example of Corporate values: better to just shut a shop, take the loses than concede a millimeter of power to workers.
Its a bit of a misnomer to refer to “fiat currency” in this context. It is completely understood and taught in schools that we have fiat currency – which really refers to it not being backed by gold or silver. What Alt is really referring to is what is called “sovereign money” – that is fiat money that is created by government as opposed the system we have today, fiat money created by commercial banks. Virtually all money used in circulation originates as a bank loan (other than coins and bills we have in our wallets). The Fed is required to respond to this initial creation of money by supplying the reserves to back up that money after the fact.
What monetary reformers here and around the world are trying to do is change the laws in favor of restoring that function back to the government. While this is a threat to the current banking industry who gets to profit from the interest and fees collected on the money they create, there are models which show that the result will actually be a more robust banking system and an economy not susceptible to the instability we see over and over. Of course, We the People will benefit first since that money that we create will be first spent on the needs of society, public purpose.
I have observed that many people who have to work to get money, that is, exchange actual labor power and time or actual goods for it, are quite disturbed when they learn the facts of contemporary money creation and destruction — that billions of dollars, which for them would represent a huge amount of labor or stuff, is simply flicked in and out of existence by powerful, rather secretive agencies. So they throw off the ideas and go back to talking about ‘hard cash’, ‘hard money’, and so on, because for many of them it is hard, their lives given up to crap jobs. The media, who feature propaganda and ignorance anyway, are the last organizations who are going to teach anyone anything anyway. They are certainly not going to try to make anyone hear anything they don’t want to hear.
Yep – its up to us.
The Political Obstacles to Achieving Full Employment
Thank you! Amazing how people deny this sort of thing has been around for a very long time…
And on the economics profession:
Blacklisted Economics Professor Found Dead: NC Publishes His Last Letter Naked Capitalism
I’m not sure an “analysis” is required, is it? Instead of money being created initially for public purpose, banks create money and profit from the fees and interest collected. Bank-money pours into segments of the economy where it is not needed and overflows into the financial sector – hence the current market bubble. Human nature is at work, call it greed if you want, but its the system that metastasizes and kills the host.
Let’s not forget that the EU was designed specifically to be a neoliberal institution, and a European fiat currency was deliberately taken off the table. Journalist Greg Palast, managed to interview one of the architects of the EU, Robert Mundell, who confirms this. “The imposition of the euro had one true goal: To end the European welfare state. For Mundell and the politicians who seized on his currency concept, the euro itself would be the vector infecting the European body politic with supply-side Reaganomics. Mundell saw a euro’d Europe as free of trade unions and government regulations; a Europe in which the votes of parliaments were meaningless. Each Eurozone nation, unable to control neither the value of its own currency, nor its own budget, nor its own fiscal policy, could only compete for business by slashing regulations and taxes. Mundell said, “[The euro] puts monetary policy out of the reach of politicians… Without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.”
@Camelotkidd
March 1, 2018 at 9:53 am
——
Exactly.
The story I heard was that Mundell was angry that he had to use a union plumber and follow the local building codes at his villa in Italy.
Palast always has a story.
But it does fit what is actually happenimg
Since the MSM won’t touch it, it falls to us mopes to spread the word about MMT. Here’s my introduction to MMT (a work-in-progress). Please share it if you think it’s helpful.
This looks very good. The instant denial in the headlines over the fallacies is necessary, even though many other writers forget to do it.
Quibble: the clause “Even if it’s just an oversight that the keepers of mainstream discourse tirelessly disseminate falsity,” had me hunting for the real verb longer than I would have liked.. “discourse”? .. no, it must be “disseminate”. Just some stuff before the real substance of the article, which is crystal clear.
Typo: “ceed their sovereignty” should read “cede …”
May you get many readers.
A detailed and generous critique is an invaluable sales tool. Stanley Dundee is about to get another reader.
Thanks, Stanley. I keep hearing that the U.S. needs other countries (China) to buy our debt. If it doesn’t happen, a catastrophe will happen. As someone who is still learning MMT, why do we need any country to buy our debt? When I try to explain to people that the U.S. doesn’t need any country to buy our debt, they look at me like I’m crazy. Then I hear the argument that the U.S. dollar will lose its reserve currency status – that’s when I get confused.
I plan to read your book – thanks.
The government can print dollars (technically now it’s just typing numbers into a computer), we absolutely do not and never will need to borrow dollars from anyone. The only constraints on that are self imposed political ones. We can also print as many bonds as we want, and a bond is just a dollar that pays interest. We could choose to default by going past the debt limit, but that would be a (stupid) choice.
A reserve currency is just a currency that many international goods are priced in, like oil and gold. To be the reserve currency the rest of the world has to be able to hold lots of it. The only way that happens is when the country that issues the currency runs a trade deficit. Since there are no other countries willing to run the massive trade deficit we are there is little chance they will take over reserve status.
Accounting 101
You can easily derive this equation from the definition of GNP and GDP:
[(S –I) – CAD] = (G -T)
For the government to run a surplus (G-T less than 0) We either need to turn our huge trade deficit (CAD less than 0) into a surplus or send the private sector into massive debt (S-I less than 0).
Which is why this graph is symmetrical. It is also why only net exporters like Norway and Germany are the only countries that can consistently run surpluses. Putting the private sector into excessive debt is how you crash an economy. Which is why every time we have tried to pay off the national debt we’ve crashed the economy.
1817-1821: U.S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U.S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U.S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U.S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U.S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U.S. Federal Debt reduced 36%. Depression began 1929.
1998-2001: U. S. Federal Debt reduced 9%. Recession began 2001.
The national debt is totally irrelevant, just go look at Japan.
One point that has been made regarding the “symmetrical” graph. It lumps things into the “private sector” that really do not belong – it is a vast over simplification but useful to make the point about the value of government investment to the private economy.
You are not alone. If you want a more understandable perspective, take a look at sovereignmoney.eu. MMT often uses the language of the current failed system, forcing the terminology to apply in places where it doesn’t make sense under a sovereign monetary system.
Very good intro.
You might want to read some Mitchell Innes for yourself that might help smooth out your what is money section.
WHAT IS MONEY?
The Credit Theory of Money
I would also think about adding sectoral balances too.
The fact is that the idea is taboo. When you start explaining that money doesn’t come from gold mines, that we can create it out of thin air, and should stop worrying about ‘where will the money come from?’, people look at you as if you had just said ‘Weinstein isn’t a bad guy after all’ or ‘did you know the Shoah never happened?’. You cannot help but feel slightly embarrassed.
As a politician, an economist, or a journalist, saying such things in public would be toxic for your reputation. You would be laughed out of the room immediately.
So yes, some people benefit from the status quo, but the issue is deeper than that.
I smell what you’re stepping in, but I don’t think it’s quite as hopeless as you make it sound. I’ve found that taking more roundabout routes to drawing people to the conclusion that our Federal budget constraint isn’t what it’s been made out to be is more effective than just stating it as fact. I usually start by talking about the weird circular way money works, use an historical example from British colonial policy or early US history that makes plain the “taxes drive money” concept, and then ease into the policy prescriptions.
Or I’ll start by talking about the paradox of thrift, explain how income equals spending by definition and that in order for us to spend less than we earn (i.e. save) without crashing the economy, someone has to spend more than they earn. Then I point out that only one entity can do that consistently: the Feds. YMMV, but I’ve moved my share of hard cases.
One of my friends and I had a real knock-down, drag-out over MMT a couple of years ago. He didn’t buy it at all, even though I gave him all my best arguments. Then we were talking a week or so later, and he started to tell me how, technically, the Feds don’t actually have to fund their spending through taxes or borrowing….so sometimes even a “failed” conversation will plant some seeds…just sayin’.
As suggested on other occasions the phrase ‘fiat currency’ leaves much to be desired as a sword to wield in argument. And the theory is not as simple to understand or explain as the tried and true tale of economics told as a family economy grown large. Besides as a recent link elaborated argumentation and the arts of rhetoric are in broad decline. Add to these difficulties the mountains of money devoted to maintaining and buying privilege and control and extending their hold across oceans and continents on a scale unimagined in any past time.
The introduction suggesting economists, politicians, and journalists are engaged in mendacity of scale similar to a hypothetical of the Medical Industrial Complex deliberately hiding a cure for cancer that they might continue enjoying the multi-billion dollar flow of profits and my initial response was to regard that hypothetical as all too possible. You don’t even need to consider profits when conjuring this hypothetical just recall the all too recent introduction of hand washing and clean surgical gowns to the medical profession where surgeons were once proud of the gore they wore on the bloody surgical aprons which they wore even as they delivered babies.
However — as much as I worry about the decline of our polity and economics and the great obstacles blocking change for the better I worry far more that we are running out of time.
Actually sovereign fiat currency is one of the simplest concepts to describe. The government creates dollars in its spending account as an asset, not a liability. We the People create that money with an obligation to no one. No debt to be repaid using the money we create – which is an absurd notion on its face.
What you do need to do, however, is to convince people that this is not a “free lunch” perpetual motion money machine. That money and its flow in the economy can’t exceed the ability of society to supply the goods, resources and human capital it is spent on.
Once upon a time we had a presidential candidate who made monetary education of the masses his number one platform plank and top policy objective. He organized a whistlestop tour of the country by train and took entire rallies to get the farmers and shopkeepers up to speed. He won.
Sorry — please tell which President you speak of. Whistle-stop tours sound 19th century to me.
William Jennings Bryant I would guess.
I agree you make a simple easy to understand definition for fiat currency, but you haven’t convinced me that the phrase ‘fiat currency’ is an especially useful term for making an argument. And little turns of speech like “which is an absurd notion on its face” may work well in some environments but I would hesitate to say anything like that trying to convince a man-on-the-street that all we need to end deficit worries is a clear understanding of fiat currency. Have you tried out your argument formula with friends or members of the public? Here you preach to the choir. Those who come here come willing to hear arguments and respond with arguments.
Anyway I like your definition of fiat currency but how do you handle the questions that will come up about where and how money acquires its value? That’s where I’ve run into snags in my own limited experience attempting to discuss MMT and deficit spending and how money gets its value with people willing to discuss such matters.
There’s another little problem I run into in shaping my own understandings of matters like MMT. We are taught to trust the sage advice of talking heads, professors, and the wise and taught also to mistrust our own ability to understand matters like economics and climate change. We are taught to be laymen who must trust the wisdom of our experts. How do you deal with this undercurrent of belief which makes it hard for someone to believe they can understand something on their own especially when their understanding is different from the preponderance of expert opinion? How do you deal with the little angels resting on everyone’s shoulder and giving them a nudge whenever someone questions the pronouncements of authority? Think how your classmates responded when you saw fit to disagree with a professor. Whether you are right or wrong who looks the fool in the moment?
And although it is fun to attempt convincing other people of things like MMT and the folly of austerity — does it really matter when what we the people may think or believe or desire holds so little sway over policy. Tempus fugit.
Your argument is well put, but I suspect the actual “convincing” of people occurs on a different level anyway. Things like disappearing “the public option” or extra judicial assassinations by the executive branch or eliminating tax breaks for student debt; or outright denial of global warming, these do the convincing. They provide, at least in part, the inexplicable alchemy of pulling one’s attitude up short to be suddenly ready to see things in a different light. At that point, people are not only willing, but need to have explanations readily available that will fill voids created by the sudden shift in perspective. That said, ‘fiat currency’ is indeed a tough sell as a starter.
I think Paul Lebow makes a good argument for MMT and I agree with you that a time will come when people need to have explanations ready to fill bleak voids left after sudden shifts in perspective. I am losing hope these sudden shifts in perspective will come soon enough. And without a sudden shift in power relations they will lack sharp enough teeth. We are racing toward what promises to be a dazzlingly swift and wide-embracing collapse into the kind of chaos that swallows tired old men like me.
Google the Swiss VollGeld referendum. Things are happening. It may not pass on the first go round, but the average person there is beginning to get it.
https://www.vollgeld-initiative.ch/english/
and other international movements:
https://www.sovereignmoney.eu/monetary-reform-in-politics/?rq=vollgeld
MMT has resurrected some important concepts that have been around and actively promoted by highly respected economists since the early 1900’s. MMT’s explanations of how the current system works are opaque precisely because the current system is opaque. Their “solutions”, which attempt to incorporate the workings of the current system therefore don’t really make sense.
The approach taken by modern sovereign monetary reformers is just the opposite. First point out the absurdity of the current system. Second construct a common-sense transparent vision of how a functional monetary system should work.
Does it make sense that the government should have to borrow the money it is empowered by the constitution to create?
Does it make sense that the government has ceded that power to initiate the creation of money solely to banks?
Does it make sense that taxes should not be used to fund anything?
Does it make sense that money is not created to fund the needs of society but rather the private sector first?
I think the “average” person who, by definition possesses “common” sense understands the answers to these questions.
I usually don’t dump books or long references on people, but If you are honestly interested I would suggest going to the website of one of the leading economists in sovereign monetary theory, Dr. Joseph Huber
sovereignmoney.eu or read his latest book. Real explanations of money and even better, real solutions.
So it is AMI or positive money.
Could have just said so.
No, it’s not.
AMI and Positive Money are among a large group of international money reformers. There are slight differences among them. Huber recaptures the concepts in a more modern context.
Here’s a historical link you might find interesting:
http://faculty.chicagobooth.edu/amir.sufi/research/monetaryreform_1939.pdf
“Taxes drive the currency” is somewhat irrelevant to the main point. In fact, money can’t be spent under the current system unless authorized by the numbers in the Treasury’s accounts. These accounts are filled by taxes and borrowing. The books have to balance. MMT uses this concept in an attempt to make the point that the government is not constrained by taxes – fine. But I don’t need to go into a whole philosophical discussion to justify the ability of the government to create money needed for public purpose. Its a huge distraction at best and probably incorrect in general.
i don’t believe you. not meaning to offend you, but i disbelieve highly that the money, however it got there (taxes, borrowing) has to be in the account before it can be spent. i very seriously doubt that our vast network of military contractors are sitting around waiting to be paid until something balances out in the government’s ledger.
i think you will find that this kind of “must balance” reckoning is only made (at the federal level, at least) when it comes to cutting social spending.
The US Code requires the government to spend from accounts funded by taxes and borrowing. MMT claims that in reality, the taxes collected are effectively destroyed when the accounts are “marked down”, to use their lingo, and therefore the notion that taxes fund the government is false. The irony is that all transfers of money, other than coins and bills, are through keystrokes. A marked-down receipts account winds up marking-up a government spending account. So if the receipt account is different than the spending account its a distinction without a difference.
As far as military contractors is concerned, the government is guaranteed to get the funding over the course of the fiscal year through borrowing or taxing and its expenditures must effectively balance receipts by the end of the year. They can’t keystroke money to the contractor’s knowing that the budget will not balance in the end. As a government worker I was furloughed without pay a few years back because of this requirement. MMT claims it is an artificial limitation – from my personal “functional finance” perspective it was damn real.
i have one question for you:
who creates the interest, and what gives them power to?
in retail banking, the token is destroyed upon repayment (balances out the initial loan), the interest is kept.
in government, the taxes are taken in and paid out to employees like yourself, contractors, and holders of treasuries who are in essence receiving interest on their having “deposited” one dollar into the government’s account for it to “borrow” and use.
how is the interest created for either, and who by?
i do not know, but have a feeling that the furlough you experienced was either a temporary hold/budget snafu within one department (similar to various states having run out of funds in the past years, with the difference being that they DID have to wait for taxes), or if wider than your department, a stunt along the lines of the annual “deficit cliff/wall” thing that they keep doing every year to shellshock us all into the belief that they don’t actually have control of the money supply.
The bank-money “token” created by a mortgage, for instance, is created the moment the note is signed. That money is the real deal. It sits in the economy for 30 years in some cases, being “destroyed” little by little. But during that period that money is used to buy goods, pay salaries, pay taxes, doctor bills, etc. Yes, you are right, over a long time horizon that money will disappear but new mortgages keep the “bathtub” filling even though the small drain is emptying. Interest comes from the same process – other newer mortgages pay the interest on yours – its a Ponzi scheme that can go on forever until the bubble bursts and people can’t afford to pay the interest (2008).
Its true, some government workers got repaid lost wages when sufficient funds were included in the following year’s budget. But many did not. The fiscal cliff is a self-inflicted wound – but it is legal under todays fiscal rules: If there are insufficient funds in the Treasury account to pay me, I don’t get paid. We all know that with new legislation, such as the 2012 HB2990, this farce could be removed. But now its the law.
“The US Code requires the government to spend from accounts funded by taxes and borrowing”
Which Code is this?
I dare you to tell that to the military.
The confusion lies between money and resources. The real question is where will the resources come from – but people don’t understand that money is an accounting trick not a real resource.
Very true. Money is not a “trick” though. It is the record keeping system that allows resources to be transferred between those who provide the resources and those who need them.
EXCELLENT!!
This article goes directly on the top of my page here together with a collection of important MMT texts and videos. http://homosociologicus.com/neoliberalism-3
Here is my page with some of the most important texts that explain the neoliberal conspiracy, which is very well documented by the best sociologists from Foucault and Bourdieu to Mirowski. I guess that not many know that the Nobel Prize is run by the Swedish National Bank – and created to undermine social democratic economic policies. This way the Nobel Prize has been (and continues to be) a trojan horse to undermine ‘heterodox’ economics within the profession. Clearly, it has been a great success.
I am a Danish sociologist, who has been into MMT ever since I first listened to Mosler and Mitchell in the spring of 2015. In the spring of 2017, I was instrumental in having Mosler’s The Seven Deadly Sins… published in Denmark. Mosler came to Denmark and gave a lecture on three universities. We had the former Danish social democratic finance minister help us to promote the book, but of course the Nobel Prize and MIT economists also control the Danish economic profession, so almost no economist in Denmark has had anything positive to say about the book. Neoliberalism is, as you can see on the very important books collected here, one more factual conspiracy http://homosociologicus.com/great-texts—neoliberalism
I noticed the site you referenced had NakedCapitalism in its list of blog links.
Thank you for pointing to this site. It appears dense with information.
If we’re calling them out, why aren’t we naming names?
To understand money and debt creation is to understand America.
It is not clear to me who the author is referring to. Does he mean that most economists don’t understand fiat money or that most people don’t? If it is the latter, he needs to get out more. Not because I think he will discover that the common man has a firm grasp of M1, M2, and the multiplier effect, but because the Common Man is both incapable of understanding monetary theory and profoundly disinterested in it.
The average person is uneducated, unintelligent and incurious as a result. Have you ever tried to have an intellectual conversation with, say, a garbage collector or a cop? I know I sound terribly snobbish, but the reality is that you would get as far explaining fiat money to the People as you would get explaining quantum chromodynamics.
You are partially correct – but not that people are incapable of understanding “monetary theory”. The way our money system works is deliberately made unintelligible, even to people who are curious and highly intelligent. People feel powerless and just put their heads down and eek out a living, try to find happiness and avoid getting stepped on by the elephants. Its up to the radicals to raise consciousness and to let people know they are the ones with the power.
“Its up to the radicals to raise consciousness and to let people know they are the ones with the power.”
I’m game for that, convince me. I’ll listen.
First, take MMT as a data point and expand your horizons. MMT does have some inspirational things to say, but as I’ve said before, their laser focus on the the current byzantine system is a huge distraction.
He/she who holds power over the money system, rules. The US Government has always had the constitutional right to create the money it needs. That money power was ceded to the banking industry formally in the early 1900’s. The government (that’s us) gave away the right to create money for its own purposes except for a brief interval during the civil war (quashed by banking interests). It must grovel (borrow) and, if you’re a libertarian, steal your tax money to fund itself. Doesn’t this strike you as absurd?
The solution is straightforward: The government, though the guidance of an agency in the Treasury department, creates the money needed for society (education, health care, infrastructure, climate change, etc). Banks retain their important function of underwriting loans, but the banking license no longer permits them to create that money on the fly. Instead they must use either money borrowed from the Treasury or from investors lending the government-created money.
(See for instance the 2012 House Bill 2990 for details – its actually very readable and instructive.)
https://www.congress.gov/bill/112th-congress/house-bill/2990
Sorry, but that’s it. Don’t need a multi-hundred page MMT tome or primer. Hope the simplicity is not a disappointment.
Thanks for your many helpful explanations of money. I will do my best to incorporate them into the arguments I make to whomever might listen. It heartens me to that you can be such an impassioned advocate for MMT/AMI/Positive Money. As for simplicity I believe in the power of simplicity.
But “let people know they[the people, radicals] are the ones with the power” I don’t feel that I have much power, if the people have the power their power seems well under control, and those I might call radicals are scattered taking scattered action.
I know Yves disapproves of despair and resignation, but I dropped out long ago. I went to school in DC and was taught by insiders. I worked around the world at high levels dealing with the uber wealthy and political players. I learned that change is a pain in the ass because most people don’t want change. They want to live in their cozy belief systems and delusions.
Frankly, if I were to choose a cause, it would not be monetary policy. I just can’t see me inspiring a crowd to march on Jeckyll Island.
Don’t blame you. But monetary policy is probably the most fundamental, existential issue we face. I don’t care what cause turns you on – without the money power it won’t get much traction. Need to return the money power back to the people. Its not a Jekckyll Island conspiracy – its complacency that’s the problem.
https://www.marxist.com/what-is-money-part-one.htm
http://www.marxist.com/karl-marx-130-years.htm
What a terrific analogy at the introduction of this article; a cover-up of a simple cure for (some) Cancer. It made me think of the thread the other day regarding getting a progressive POV out to different, usually conservative and/or neoliberal mindsets. A very hard thing to do, btw, for the person who attempts it more than for his/her interlocutor. The intro to this article would grab anybody.
It also made me think of one of Gaius Publius’ articles on climate change where he describes Miami going full under water as one of the few preconditions that would actually wake people up to the threat of global warming (subsequent to that article, one has to scratch one’s head at the collective ability to ignore what happened in Houston, Puerto Rico and so on last fall, so Gaius may want to revise that article – but his image, also at the start of his article, was still powerful).
If the attempted audience is the supposedly liberal upper middle class (hard core neoliberals – doctors lawyers, etc. – even when they pay lip service – to themselves – to the social safety net for instance), then the suggestions made in this comment section are excellent. If it’s the Homer Simpsons (that would include me to an embarrassing extent), the intro of this post is excellent, but whoever it falls to to expand on the details needs to use equally clear non technical explanations. Perhaps the most successful, would be someone like Sanders going around incessantly driving home the same thumb nail sketch message over and over.
The idea of the federal deficit being like home economics (the image of mom and dad and the cute little piggy bank being the limit for them AND the government), “We can’t owe more than we’ve got”, is ingrained like a 30 year old three pack a day smoking habit. I say this, but at the same time, things are changing. There is a sort of waking up going on that is reminiscent of what happened with Vietnam, only it is being suppressed with far more powerful, technically advanced, and coordinated forces than back in the late sixties, early seventies. The exact nodes and incidents of this waking up, however, seem harder to trace or explain than the alchemy of lead being transformed to gold.
“What this war has demonstrated is that private capitalism, that is, an economic system in which land, factories, mines and transport are owned privately and operated solely for profit—does not work. It cannot deliver the goods. This fact had been known to millions of people for years past, but nothing ever came of it, because there was no real urge from below to alter the system, and those at the top had trained themselves to be impenetrably stupid on just this point.”
-George Orwell. That’s Georgie in 1941 in The Lion and The Unicorn, talking about the difficulty of trying to get ordinary people to have a political reaction–any reaction–to the cold front of war approaching and likely to destroy everything about Britain once it reached the place.
“In the face of terrifying dangers and golden political opportunities people just keep on keeping on in a sort of twilight sleep in which they are conscious of nothing but the daily round of work, family life, darts at the pub, exercise of the dog, bringing home the supper, beer, etc, etc.”
The problem of getting people to have a sensible political reaction even when faced with their own self-destruction is not a new one. After all, we live by this monster, our ‘machine’, which we created, this gated-community that by now takes up most of the earth, with its self-elected gatekeepers who tell us how this world works, hence how stupid we are and what we need to learn and do when we enter, when allowed. This means anyone getting this far has spent their lives following those rules.
We are those who have worked hard to fit their thinking in with, or under, or on top of, or within the thinking of others. People will keep on keeping on with their ‘centralised’ thinking until it stops working. We have to work to ensure that if and when that happens the planet that the ‘world’ takes place on is not already destroyed.
I appreciate JD Alt and those he mentioned keeping MMT and the nature of sovereign fiat money in the public policy conversation. Ceding monetary policy to Wall Street, the central bankers, and their media minions has proven to be very costly politically, economically and socially. JD Alt’s title to his post is not overly strong IMO.
WRT to today’s central bankers and their supposedly innovative “Quantitative Easing-Zero Interest Rate” policy, there are some telling related boom-bust lessons from the policy trajectory of John Law and his Banque Royale French central bank almost exactly 300 years ago, as discussed by historian Edward Chancellor. Considered along with the work of economist Hyman Minsky, I suspect we will soon enough have another opportunity to “Never let a good crisis go to waste”.
https://www.breakingviews.com/columns/chancellor-lessons-from-the-mississippi-bubble/
There is no real “monetary policy” – Fed has no control over the amount of money in the economy. As long as banks are the money creators, Minsky’s predictions will rule.
The government sets the price and the market the quantity, now if you have dramas with the contractual responsibility which under pin quantity I suggest you go back and reconcile the Chicago plan authors other views.
Blaming poorly underwritten and collateralize contracts is not an issue intrinsic of fiat.
The Fed freely admits that it has no impact on quantity.
That is not addressing the core of the comment as it only reinforces what I have pointed out to quantify my closing and what agency enabled it.
Sorry, don’t follow. What is the core argument?
Re: the Chicago Plan. Remember that plan was conceived in the context of a perceived gold standard and the depression. The core of the plan, that the government should control the quantity of money directly, still stands and has been modernized to suit a very different economy than existed in the 1930’s.
Punch line…
“Latvia’s third largest lender, ABLV, is to be closed down. On February 24th, 2018, the European Central Bank announced that ABLV was “failing or likely to fail in accordance with the Single Resolution Mechanism Regulation.”
“The bank run was triggered by the U.S. Treasury. On February 13, 2018, the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a notice accusing ABLV of money laundering. ABLV was promptly denied U.S. dollar funding. Simultaneously, depositors rushed to remove their money. Less than a week later, to prevent the bank’s disorderly collapse, the Latvian regulator and the ECB froze all payments”
“But ABLV would have died anyway. Even had there not been a bank run, the bank would not have survived the action that the U.S. Treasury proposed to take against it. FinCEN’s notice says that it intends “to prohibit the opening or maintaining of a correspondent account in the United States for, or on behalf of, ABLV Bank, AS.” This is the fifth and most severe of the “special measures” provided for under Section 113 of the Patriot Act. It can only be imposed with the agreement of the Secretary of State, the Attorney General, and the Chairman of the Board of Governors of the Federal Reserve System, and after very careful consideration of the consequences for the United States.”
..you mean the US Treasury can actually shut down a bank by threatening to cut off USD funding!? Even a foreign bank?
Banks create their own “private fiat” and are the centre of the “monetary system” – ?????
Your point?
I thought that someone that comes from the positive money group [or other such nomenclature] would understand the ramifications with regard to core concepts like private – public fiat.
Clearly this puts the view that banks have somehow superseded or taken control of issuing sovereign fiat in the form of private fiat.
Just so things don’t get muddled I’m quite informed about the various opinions of the AMI group and like minded.
Again, are you claiming that banks don’t have the power that groups like AMI claim they do? If so, referring to Latvia vs the US government seems like comparing apples to oranges or (cannon balls to a pea). The concept of sovereign money does not apply to small dependent countries who, for all intents and purposes, are not economically sovereign. How does closing down and illegal operation relate to the money power of legit banks? Sorry, I guess I don’t quite get your point.
MMT and Mosler and not the first to discover Sovereign Money in the U.S.
In fact it goes back to the Revolution with the Continental.
More famously, it goes back to the first national paper money, the United States note, first issued under the Lincoln Administration in 3 installments totaling $450m. At the time, the NYC-based banks wanted 24-36% interest instead to lend the U.S. money, which certainly would have bankrupted the government.
U.S Notes were issued by the Treasury directly, and were specifically excluded from the national debt – even in the later issues of the quarterly debt report. U.S. Notes went through 14 series of issuances and were in officially circulation thorough 1996, and remain our longest-lasting currency.
They were an option re-proposed in then Congressman Ray LaHood’s highway bill: HR1452, which would have issued $350b in U.S. Notes, interest-free. More famously, but probably as an example of over-reach, they were part of a comprehensive effort to reform the entire monetary and banking system in a bill introduced by then Rep. Dennis Kucinich: HR2990.
Predictably, neither of these bills went anywhere. The private money/debt-money system would not allow a public option for money.
But it still remains a possibility, and more and more people are getting wise to the scam of the private debt-money system.
You nailed it. The ability generate a product with no effort and to charge “rent” for its use is something the banking industry will not give up without a fight. Its too bad many heterodox economists dismiss that power as a secondary issue.
I think one of the things holding us back is indefinite and incorrect conception of accountability procedures for the perps of these gigantic frauds. We need human jails where people’s needs are met, and they are genuinely reformed. One of the reasons the fraud perps work so hard to avoid accountability, at the cost of the very planet that they need just as much as we do, is fear of the draconian regimes to which they could be submitted once the game is all over. I liked a documentary I saw of a jail in Norway, where the prisoners had gardens, and unimposing buildings to return to. One prisoner interviewed had murdered someone, and he wasn’t that thrilled to be there. He said, you definitely know you’re in prison. We need something like this, along with a promise of return to pop. at large when genuine rehab has taken place, as an element of a workable reform regime.