MMT’s Opening

By J. D. Alt, author of The Architect Who Couldn’t Sing, available at Amazon.com or iBooks. Originally published at www.realprogressivesusa.com

I recently read in the WSJ that Modern Monetary Theory is defined as the proposition that the federal government can borrow as much money as it needs so long as the interest rate it pays is less than the growth rate of the GDP. The short article, by Desmond Lachman, went on to argue why this was a dangerously false premise. Thus, MMT got shot with two bullets in one paragraph: first by defining it in a way that negates its most fundamental principle (that the federal government doesn’t need to “borrow” fiat currency in order to spend fiat currency), and second, by declaring MMT to be not only false, but dangerous.

It’s remarkable how stubbornly tenacious mainstream economic thinking is about misunderstanding and fearing MMT. The fundamental belief that refuses to be shaken is that for a sovereign government to spend, it must first claim—either through taxation or borrowing—some portion of the profits of private commerce. This immediately sets in motion complex calculations about what percentage of those profits can be claimed for government spending before the profit-making capabilities of private commerce, itself, are harmed (because the capital that would otherwise be used for expansion, is being appropriated for government spending). When that point is reached, the calculations insistently predict, private commerce will cease to grow—perhaps even shrink—which perversely will then reduce the amount of currency available for the government to claim a portion of; if, under those circumstances, the government continues nevertheless to increase its spending (by insistently increasing its taxing or borrowing), private commerce will be driven to shrink even further, setting in motion a disastrous downward spiral. The calculations, in other words, are structured to demonstrate that government spending per se strangles the goose that lays the eggs—and, therefore, it is rational to argue that government spending should be limited, and specifically that it should not exceed some calculated percentage of GDP (which, of course, in most calculations of this sort, it already does)!

Why is it so difficult for MMT to get itself properly understood—and, once understood, to get itself over the hump of this narrative calculation? Part of the problem was revealed to me on New Year’s Day at McGarvey’s Saloon at City Dock in Annapolis when a neighbor—who is a retired banker, sharp as they come, and who understands quite well what fiat money is—said to me, “Yes, yes, that’s all well and good, but the fact is the federal government does not own the Federal Reserve. It is owned by the private banking industry.”

Whether or not he was technically correct (and the reality of it is so ambiguous that arguing the point on one side or the other is futile) what he meant, of course, is that it is meaningless for MMT to argue that the sovereign U.S. government creates U.S. dollars by fiat and then spends them into the private economy—because it is the Federal Reserve, in fact, that creates U.S. fiat dollars, and it does so only to service the needs of private commerce. The Federal Reserve cannot, by law, create U.S. fiat dollars for government spending. It can create them, as necessary, to maintain the liquidity of the reserve banking system—which generates the loans that support the profit-making enterprise of private commerce—but it cannot create fiat dollars and deposit them in the U.S. Treasury’s spending account. Therefore, the fundamental belief that cannot be shaken (as described above) is unshakable because it is, apparently, based in reality: Operationally, it seems, the sovereign federal government really does have to claim—through taxation or borrowing—some portion of the profits of private commerce (fiat dollars created by the Federal Reserve) in order to have dollars to spend.

MMT therefore is made difficult not because it must disprove a false “truth,” but because the “truth” which it is trying to replace cannot seem to be disproved so long as one accepts words to have their conventional meanings. This dilemma is often brought to light with the question: if the Central Bank and the Treasury are really two components of the same sovereign entity, why are they not set up that way? If the Federal Reserve can create sovereign fiat dollars at will, why limit this ability only to the meet the “demands” of the operations of the reserve banking system in support of private commerce? Why is it not structured to also enable the Federal Reserve to create fiat dollars as “demanded” by the spending needs of the federal government in support of the collective good—as is implicitly (and often explicitly) suggested by the advocates of MMT?

Again, the answer most likely lies in my neighbor’s perspective: because the banks—despite the fact they grudgingly allowed themselves to be “regulated” by a federal agency— “own” the banking system. And being “owners,” they have a natural prerogative to guard against what they fear most, which is dilution of the value of the fiat currency they use: i.e. that they might loan out dollars that have one value, and then be repaid with dollars having a lower value. In other words, inflation. Fiat dollars created in support of private commerce, the thinking must go, will not produce inflation because the money supply increases commensurate with the production of the goods and services private commerce produces for people to buy. More dollars = more goods and services, therefore the value of the dollars relative to the goods and services to be purchased remains more or less constant. (A good argument, but not a proven explanation of the dynamics of inflation.)

On the other hand, fiat dollars created directly for government spending (the argument continues) would not typically create more goods and services for people to buy; instead, after the government spends them (for example, to make a welfare payment) they simply increase the number of fiat dollars competing for the existing goods and services produced by private commerce. In other words, creating fiat dollars for the purpose of government spending inevitably must dilute the value of the currency—and the banks will realize their greatest fear: getting repaid with dollars less valuable than what they loaned out. Therefore, the banking industry, from the very beginning, when the Federal Reserve system was created, made sure it was structured so this could not happen; i.e. the federal government, if it is short on spending money, is required to issue treasury bonds to make up the short-fall—an operation which became known by the pejorative term “deficit spending.”

Given the context of this understanding, it seems perfectly reasonable that mainstream economic thinking (which is primarily the thinking of the banking and financial industries) clings so tightly to the unshakable belief that a sovereign government, in order to spend, must first claim, through taxation or borrowing, a portion of the profits of private commerce—as well as all the other “rational” axioms that build upon that belief:

  • That to avoid the appropriation of too much capital from private commerce, government taxing and borrowing must be limited to some small percentage of GDP;
  • That limited government is, therefore, implicitly desirable—and expanded government implicitly to be feared as endangering the profits of private commerce;
  • That to keep government limited, social welfare and safety net services should primarily be the responsibility of voluntary private charity and philanthropy rather than federal spending;
  • That any federal regulation hindering the ability of private commerce to generate profits hurts the collective good, because hindering profits ultimately hinders the profit-share the collective good can claim or borrow;
  • Any kind of federal welfare payments are inherently inflationary because they give people money to spend without producing anything for them to spend the money on;
  • etc.

Is there a chink in the armor of this narrative that might give MMT an opening? Is there a seed of misunderstanding in the “truth” that it presents? The place to look, I think, is the fundamental notion that federal spending absorbs and threatens the availability of capital for private commerce. If that is true, then it is, indeed, reasonable that federal spending should be curtailed and limited—which means it is reasonable that the activities and responsibilities of the federal government, itself, should be curtailed and limited. If it is not true, however, a completely different rationale is required to argue that the sovereign government’s efforts, responsibilities, and spending on behalf of the collective good of its citizens, should be limited.

In other words, to look from a slightly different angle, is it possible for the sovereign government’s spending, in the interest of the collective good, to expand by orders-of-magnitude beyond current spending—without increasing rates of taxation or diluting the value of the currency—while private commerce remains fully and happily capitalized to pursue its profit-making enterprises?

MMT answers “yes.” The key to this answer lies in seeing a flaw in the conventional “truth” of Treasury bonds, the reality of what Treasury bonds legally represent and, consequently, the value and usefulness they have in the operations of private commerce.

To uncover the flaw, begin with the question: why would a private bank (or anybody else in private commerce) trade real, genuine, “spendable” sovereign fiat dollars for a Treasury bond representing fiat dollars that can’t actually be “spent” for, say, ten years? Does the U.S. Treasury coerce the purchase of its bonds? In fact, banks and big spenders and players in private commerce pretty much line up to trade their fiat dollars for the Treasury’s bonds like cattle line up at a hay-trough. Why? Hunger—not for the crunch of hay, but for safe, guaranteed, no-work-required profits. Safe, guaranteed, no-work-required profits are not something easily found in the world of private commerce. They are much appreciated and sought after, however, because the biggest headache in private commerce, if the truth be told, is figuring out what to profitably do with profits. There is a staggering amount of profit in private commerce that hasn’t figured out what to do next. If it does nothing, it simply shrinks due to “background” inflation. If it rushes to invest itself recklessly, without the concerted and creative efforts required by successful private enterprise, it risks being lost completely. Thus, the U.S. Treasury bond is a godsend for private commerce: the players trade their excess capital (sovereign fiat dollars) for the interest-bearing Treasury bonds and make a profit without having to creatively exercise their brains or worry about anything at all—except, perhaps, whether the United States is going to collapse as a sovereign government.

What makes the Treasury bond even more magical, however, is that if, say, a big opportunity comes along to invest real sovereign fiat dollars in a killer profit-making venture—no problema! The secondary market for U.S. Treasury bonds—other folks who can’t imagine, right now, what to do with their private commerce profits—provides instantaneous liquidity: the Treasury bond can be traded for the real sovereign fiat dollars needed to make the killer investment.

Given this transparent and virtually seamless interchangeability between U.S. fiat dollars and U.S. Treasury bonds, it is clear theTreasury bond represents something fundamentally different than the government’s “borrowing” of dollars from private commerce. The fiat dollars supposedly “borrowed” are, in fact, replaced with another kind of fiat dollar represented by the Treasury bond. Therefore, it is INCORRECT to imagine or say that the issuing of Treasury bonds subtracts capital from private commerce. In fact, the opposite occurs: first, the fiat dollars represented by the bonds are greater than the fiat dollars private commerce traded for the bonds (because the bonds are interest-bearing); second, when the federal government subsequently spends the fiat dollars it received in trade, they are spent back into the market of private commerce. The net result of the entire operation, therefore, is that private commerce now has substantially more capital available to invest than it had before the trade.

The conventional meaning of the term “borrow”—as applied to the U.S. Treasury’s operation of issuing Treasury bonds—then, is the seed of misunderstanding that lies at the heart of MMT’s dilemma. Correcting the misunderstanding shouldmake it possible for MMT’s logic not only to be accepted, but for that logic to prevail in future dialogs about what the federal government can undertake to accomplish—and pay for—in the collective interests of society:

  • U.S. fiat dollars are promissory notes for federal tax credits—of which the federal government has an infinite supply (and for which there is infinite demand)—so long as U.S. citizens and businesses are required by law to pay federal taxes.
  • The federal government does not “borrow” fiat dollars from private commerce; it trades new fiat dollars, issued by the U.S. Treasury in the form of Treasury bonds, for existing fiat dollars in the private market (created by the Federal Reserve); the government then spends the fiat-dollars it has traded for back into private commerce.
  • What is called “federal government borrowing,” in the lexicon of mainstream “truth,” is actually and operationally the issuing of new fiat dollars by the U.S. Treasury—and these new fiat dollars are what, operationally, enable the government to purchase goods and services for the collective benefit of society.
  • “Deficit spending” by the federal government, therefore, does not increase something called the “national debt” because the holders of Treasury bonds already “have their money.” (This is why no one is knocking on the federal government’s door asking for the “national debt” to be repaid.)
  • Federal spending, therefore, does not require the government to claim a portion of the profits of private commerce; and increasing federal spending, therefore, does not require increasing that claim—either through taxing or “borrowing.”
  • Federal spending, through the issuing of Treasury bonds, in fact results not only in the creation of useful public goods and services, but in the expansion of capital in the private markets.

It is therefore possible to understand that fiat money creation by the sovereign government has two sources—the Federal Reserve, which creates fiat dollars as necessary to meet the liquidity demands of private commerce, and the U.S. Treasury, which creates fiat dollars (in the form of Treasury bonds) to meet the demands of federal spending beyond what can be covered by tax collections.

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101 comments

  1. Susan the Other

    The last phrase, “…beyond what can be covered by tax collections” is another throw-back to gold standard thinking. Because we could dispense with taxing altogether. It serves only to sop up extra money in the system which does control price stability, maybe a little, … but our taxing mechanism has produced such egregious inequality we really should just chuck it. It serves no positive service, except for rich people and their loopholes. Instead of archaic terms and the confusion they create, “tax” and “borrow” should be discarded in favor of terms of simple obligation – as in rights and obligations – that we voluntarily fulfill. How to rewrite it all so that it actually represents the real world would be a big fight in Congress where ignorance and obfuscation are the name of the game. The problem with private commerce capital v. government capital is interesting because private profits are off the charts for the very rich and it is simply not enough for them. Why’s that? Because, in a panic, they have captured the fiat system to service only their interests. They are allowed to externalize and socialize all their costs.!! It is the Achilles heel of capitalism. Now all the easy money has been made and vast profits are stashed around the devastated world in secret “bank accounts” – desperately seeking interest. If that’s not inflation I don’t know what is. And nobody can find a profitable investment anymore. This has nothing to do with social spending, but only to do with social austerity. And they are just so damn lazy and scared they can’t rub two brain cells together. But the government can (rub two brain cells together). It will take the government, leading the way, to dig us out of this absurd, shameful mess. That’s not “borrowing” or “taxing” – it’s CPR.

    Reply
    1. polecat

      Only when the ‘government’ does a complete rotation, and changes out the glad-hands to just the hired-hands. So the glad-hands need to die off first, as they’ll not let go of their grift willingly. How long will that take ??

      Reply
  2. Keith Newman

    It seems to me an important reason MMT, well functional finance really, has a hard time being properly recognised is the fact it empowers the federal government to essentially run the country if it wants. If a government priority is to develop, say, green industries the government can afford to do so. Similarly for healthcare, day care, you name it. ”We don’t need the rich to fund what needs to be done” to paraphrase Stephanie Kelton. That reality takes power away from big business and puts it into the hands of the federal government. Currently in the US that power is wielded to build up the military. Any economist who’s paid by business interests that fear government intervention, which the military obviously does not, will find some reason to oppose MMT, no matter how silly.

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    1. Grant

      “Any economist who’s paid by business interests that fear government intervention, which the military obviously does not, will find some reason to oppose MMT, no matter how silly.”
      It seems that most of what neoclassical economists say on money and banking is ridiculous, if they address money at all in their models. But I think opposing MMT will make most look silly, because at its core, MMT is just an explanation of how things are. We continue on doing horrible policies in part based on willful ignorance, and those that oppose MMT are really just trying to get people to not realize the potential of the present system. The politicians will largely oppose the insights of MMT more than anyone, because in the end, we all know they have no excuse to push for most of what they push for and to oppose most of what they oppose. Pretending that the government “can’t afford” this or that, or that future generations will have some massive public debt burden forced on them is helpful for them and their donors. Same goes with pretending that the federal government needs taxes or bond auctions in order to spend beyond the taxes coming in.

      Reply
  3. JP

    Why is it so difficult for MMT to get itself properly understood?

    Why is it so difficult for the Fed. Res. to get itself understood? Why does this opinion piece state that the Fed creates fiat money when it is individual commercial banks that loan money into existence? Is MMT all about a political agenda rather then explaining how our monetary system really works?

    I have found this to be really helpful in getting perspective:

    https://www.pragcap.com/modern-monetary-theory-mmt-critique/

    Reply
    1. tegnost

      so how bout we ditch the fed and just let commercial banks loan it into existence? What’s that? Did you say that without a backstop from the sovereign they can’t make loans? Damn….Close that discount window wouldya’? Getting drafty in here…

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      1. JP

        Did you bother to read any of the link above?

        The Fed was instituted to solve the problem of bank panics and liquidity based insolvencies.that plaqued the US prior.Their primary function is inter-bank settlements and as a lender of last resort. Fractional reserve means banks must deposit a fraction of the loan amounts with the fed. This is insurance and it’s worked well for over 100 years.

        I’m not saying the Fed is the end all be all but the numerous conspiracy theories are just that. No body likes the Fed, which makes me think they are doing their job. The link above is outside of the MMT echo chamber and not from the vested anti-MMT club. It just speaks to how the system was designed to work.

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        1. tegnost

          paraphrased, the purpose of government is to enforce capitalism, and this

          “For instance, let’s use an example that MMT advocates sometimes refer to – groups of wild animals. Is there unemployment in species without money? MMT says no, because they don’t use money. In fact, there is. In a troop of chimpanzees, for instance, each member has a specific role. They all have a certain value to other members of the troop. They are essentially “employed” by this role in the troop. When one of them becomes a negative value add to the other members they are often removed from the troop or killed. The “full employment” we see in wild animals is a case of survivorship bias.”
          No mention of the Treasury.
          should I go on?

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        2. James Cole

          The Fed *also* uses interest rates to make sure there is always enough unemployment to keep the rest of us in line. That is straight-up class warfare, disguised as fighting inflation.

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          1. John k

            Absolutely. Full employment is supposedly just as important in their writ as maintaining inflation at some low number, but only the latter is observed. Plus, of course, official unemployment ignores changes in participation rate, specifically to maintain an army of unemployed to hold down wages and hold up profits at record numbers.
            Certainly we need a fed to avoid the widespread bank failures and resultant loss of savings that made the gold standard era recessions/deprecessions so much deeper and more frequent than today- the great deprecession was neither the deepest or longest of the many such events of that era – but their use of their short term interest rate wand makes recessions far more frequent than necessary.
            Mmt can maintain full employment with low inflation, but not if the fed raises rates specifically to boost unemployment as soon as treasury threatens to spend, say on infra and or m4a. So critical to change thinking in legislature, executive and fed before real change can occur.

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          2. knowbuddhau

            Exactly. Seems to me a lot of the difficulty, in disproving and displacing mainstream economics, is that it is, as Michael Hudson calls it, a cover story.

            The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.” https://www.sanders.senate.gov/newsroom/press-releases/the-fed-audit

            $16T/320M = $50,000.00

            Minus 60M under 15: $16T/260M = $61,538.46

            If only US taxpayers: $16T/138M = $115,942.03

            Still less than a quarter of what I’m out from having a job stolen (by a federal contractor, working on a Navy base) 12 years ago. But I’d take it.

            Reply
        3. John Zelnicker

          @JP
          January 23, 2019 at 2:04 pm
          ——-

          Fractional reserve is not a thing anymore. It has become obsolete, if, in fact, it was ever really used.

          Banks make loans to any creditworthy customer and acquire the necessary reserves later. And, those reserves are always provided by the Fed. If they didn’t the payment settlement system would collapse.

          Pragmatic Capitalism was, at one time, a believer in MMT, but somewhere along the line found some tangled logic and went off on his tangent. It’s actually the place from which I found Naked Capitalism.

          Reply
          1. rob

            “fractional reserve banking isn’t a thing anymore”?
            Really?
            Just because a rule may not be followed, that doesn’t make it NOT a rule.
            My guess is;The rule of thumb of fractional reserve banking, is what allows banks to just lend without worrying about the actual ratio. But considering the rules are always the fallback when accused of something, I don’t think fractional reserve banking has “gone” anywhere.
            I agree that the rules don’t really apply to business as usual, that is just what “the story” is. But those rules are paraded out every time someone says the industry needs reform…they say we already have rules… yada yada yada

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        4. rob

          Jp morgan was the actor behind the panic of 1907, the final crisis of the system before his associates made good on their plan from jekylll island. The federal reserve was a creation of the bankers, for the bankers. The house of morgan and the other reigning bankers at the time pushed through their plan with help from members of congress like nelson Aldrich(a namesake of nelson aldrich rockefeller) who wrote the original response to the 1907 panic, in a call to create a fed like creature. But many parts of the country resisted the creation of this “money trust” by the NYC bankers.After congressional in fighting, the NYC bankers got their way with the bill of carter glass, which was about the same as the original by nelson aldrich. There was a hundred plus years of national banking trial and tribulations. Before the adoption of the federal reserve act; there were decades of debate as to whether it should be a public banking system, or a private one. The private one, was the one established .The private wolf wears public sheep clothing.
          It was not a creation for the people, but for the banks.
          A hundred years later, we see what it has done….. made the bankers kings.

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    2. aj

      That article is all strawman arguments that have been addressed in the MMT literature many times over. While there are some specific policy proposals that MMTers espouse that I don’t agree with for non-economic reasons, the facts of MMT are indisputable.

      The government CAN create money out of thin air, it CAN spur demand and private investment through spending, it CAN solve unemployment by creating jobs, and if properly managed it CAN do all those things without destroying the economy and/or causing hyperinflation.

      Whether or not it SHOULD do any or all of those things is up for debate. Do we trust politicians with that much power or should we keep them artificially constrained? What would Trump be buying if he figured out he didn’t need taxes to pay for his wall or space force? Those questions scare people and its just much easier to pretend like the reason we can’t do those things is because “we can’t afford it.” But we CAN.

      We could afford to build a giant wall around this whole country, surrounded by a moat. And we could put alligators in it with lasers attached to them to shoot all the scary brown people. We shouldn’t do it because it’s a horrible idea, but we could do it without regard to the financing. Similarly, we could afford to make sure everyone that wants one has a job and a place to live and enough food to eat. Should we? I’ll leave that up for you to ponder.

      Reply
      1. Skip Intro

        Your plan is fascinating, but I think we would be resource-constrained by the number of adult alligators available. The price would skyrocket, and those alligator nuggets we all love so would become unaffordable… for a while. Once a stable Alligator Army Border Force was established, I imagine the nuggets would become cheaper than chicken!

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      2. VHammon

        If government “can create money out of thin air,” then why is 17 percent of our Operating Fund going to pay interest to the bankers (who are the ones who actually create the money supply)?

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    3. diptherio

      No, banks create bank credit when they make a loan. The Fed ensures that there is adequate fiat currency in the Fed Funds market to back that credit. They do so automatically, right now, but that wasn’t always the case, and it needn’t always be the case.

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    4. Big River Bandido

      Why is it so difficult for MMT to get itself properly understood?

      Politicians and “banksters” understand MMT perfectly when it comes to regressive initiatives like wars, bailouts, and complicated regulatory schemes that privilege those who can just “lawyer up”. The same interests are extremely well-paid to not understand anything related to progressive or salutary policies.

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    5. political economist

      The article you have linked to gives a weird blowing of smoke masquerading as a critique of MMT. Its main flaw is that it generally conflates currency or high-powered-money (which are US government IOUs) with money (which are financial assets of the privater sector). While the author gets some things correct, it is likely a propaganda piece, but perhaps he simply doesn’t want to understand as the ideas are too threatening to his worldview. Regardless of why he wrote this, it does not display a very deep understanding of how finance works in the US, which is the heart of MMT. I tried to comment on the article to correct him but this was not allowed.

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      1. Howard Switzer

        He and thee, Mr. Firestone, I’d recognize your narrative anywhere. He and thee peddle myths. He, I expect, the orthodox myth, thee and MMT, the Modern Monetary Myth, both using complexity as a device for claiming sophistication to disguise truth, not to reveal it. A duopoly drama to divert the gullible from stumbling upon real monetary reform and how the system works to concentrate the wealth of all nations while generating the greatest catastrophe of the human epoch. You focus on government which is powerless, spineless, under the dominating global money powers who own it all. A ‘political economist’ you say, one who studies the relationship between wealth and power. Time to get on the right side of history Joe, time to end the debt for money system. Such Usury is evil as its bitter fruits should reveal to those with a taste for truth.

        Reply
  4. notabanker

    Boy, I don’t know. This post has actually had the opposite effect it was intended to have on my thinking, being a proponent of MMT.

    It dismisses the hard reality that the Fed is a private entity and supposes infinite supply on Treasury bonds, when in reality, it relies on excess profits in the private sector for demand. Just because it hasn’t happened yet doesn’t mean it cannot, especially when MMT is a theory, not a practice.

    If I extend this thought process, it tells me that the Fed can at it’s discretion refuse to issue treasury bonds. And private enterprise, either at it’s discretion or because there is no longer excess capital, will not purchase treasury bonds. In which case, the ability of the government to spend is now solely based on it’s ability to tax.

    Reply
    1. Grant

      “If I extend this thought process, it tells me that the Fed can at it’s discretion refuse to issue treasury bonds. And private enterprise, either at it’s discretion or because there is no longer excess capital, will not purchase treasury bonds. In which case, the ability of the government to spend is now solely based on it’s ability to tax”

      You are a proponent of MMT? Doesn’t MMT say that the government doesn’t need bonds to spend, and that it only issues bonds after deficits have been created because the Federal Reserve Act requires it to? L. Randall Wray has been calling for the government to stop issuing bonds all together. Could the law not be changed so as to not require the government to issue bonds after deficits are created, and to largely manage inflation through things like taxation? I also thought that MMT has said that the deficit spending is used to buy the bonds and to pay taxes, and that the spending comes before the creation of bonds all together (seems to necessarily be the case).

      I also thought that the Fed was required by law to work with the Treasury and was the buyer of last resort of Treasury bonds on the secondary market. There was a FOIA request a few years back, and the courts did determine that the Fed (contrary to what it was arguing) had to abide by the FOIA request. The courts determined it to be a federal institution. Maybe it is a quasi-public institution, but whatever it is, it is required by law to do certain things.

      Maybe I am missing something and am wrong.

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      1. MyLessThanPrimeBeef

        Managing inflation via taxation…

        Other options:

        1. We can ration certain products to manage inflation
        2. By substitution.
        3. By less consumption.

        Other uses for taxation, if not used for managing taxation:

        1. to reduce income inequality
        2. to deny people products (make them more expensive…could be abusive)

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        1. notabanker

          Hey now, I’m no scholar on the subject, nor am I an incognito troll. If I’m wrong I am happy to be corrected.

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          1. Grant

            I think it is good that you are interested and you, like me and most others, are trying our best to understand a very complex situation.

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          2. todde

            Congress has the power to coin money, it does not have to tax or borrow to be able to spend.

            The Fed’s Board of Governors are picked by the President and nominated by the Senate. That makes the Fed ‘not a private entity.’ Control determines who owns something, not stock.

            There is an infinite supply of T-bonds (and money for that matter). The key is to get someone else to accept them (which you were alluding).

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            1. Grant

              “Congress has the power to coin money”

              By Congress, you mean the Treasury. It also has the power to create paper money, and has in the past.

              “Control determines who owns something, not stock.”

              The Fed is required to work with the Treasury, and the government has some power as far as appointing people to manage the Fed. That is why the courts said that it was a public body. I don’t know if that equals control. Are you arguing that the government has more power over the Fed than the banks? I think that is at least open to debate.

              “There is an infinite supply of T-bonds (and money for that matter). The key is to get someone else to accept them (which you were alluding).”

              My understanding is that those that take part in bond auctions are required to bid, and the Fed is the buyer of last resort of bonds on the secondary market. So, I don’t see demand as being a problem, especially since bonds are highly liquid, accrue interest and come with basically no risk. But, in regards to spending, we don’t need bonds to spend anyway.

              Reply
              1. John k

                The habit has been to appoint bankers and or academics the bankers approve. There is no requirement to do so, but it is also the habit for both the pres and congress to take large campaign contributions from banks, and this has historically given banks de facto control of the fed.
                However, modern banks can only exist by using the sovereign power to create money equivalents (credit), meaning they are in fact an extension of the sovereign that can be withdrawn in an instant. Government has infinite power to regulate banks and the fed, neither of which can be properly categorized as part of the private sector, but chooses not to exercise its power.
                Somewhat similar to gov choosing to not control military, pharma, monopolies, etc.

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            2. rob

              If the fact that all the shares of the federal reserve member banks are in turn owned by banks, doesn’t make it a tool of the banking elite, maybe the fact that everyone who is picked to run the bank is from the banking elite, who were groomed by the banking elite…. and who work for the banking elite before and after.
              It is just a case of the revolving door,
              A private wolf in public sheeps clothing

              Reply
      1. Grant

        Right, didn’t say that the Fed issues Treasury bonds. My understanding is that when there is a deficit, the Federal Reserve Act requires the government to issue Treasury bonds.

        Reply
    2. False Solace

      > the Fed is a private entity

      This statement reflects a flawed understanding of the Fed. Remind me what private entities were created by an act of Congress, are governed by board members appointed by the President, and are required to deposit all profits to the US Treasury.

      > in reality, it relies on excess profits in the private sector for demand

      This statement reflects a flawed understanding of MMT. The private sector would not have any dollar profits if not for prior government spending.

      Reply
      1. rob

        You can’t say the fed deposits all profits in the treasury.(or you can but that is a matter of faith) It has not been audited in over a hundred years, we don’t really know what percentage of the profits,the deposits to the treasury actually are.And what are “profits”?
        The reason we overthrew the democratically elected gov’t of iran was because (among other things) that the iranian people had been being ripped off for decades, because they had entered into a deal with anglo-iranian oil co, that all the “profits” belonged to the iranian people, and were to be deposited into their accounts. Problem was though that anglo-iranian oil co(actually the owners thereof) also created about thirty other companies, who actually bought that oil at cost, leaving no “profits” according to the deal, to deposit in their accounts. The shahs(recieving their “cuts” were fine with this relationship. The “profits” were distributed, by the letter of the law. to where they were due. Problem was though, that the resources were being extracted, and the owners of the other thirty some odd companies were the ones who were really making a profit, on that iranian oil… And those owners were the same as the ones who owned anglo-iranian oil, but these other entities did not have the requirement of passing on the “profits”… Bottom line is though, the iranians were being ripped off by what is now BP(then anglo-iranian”… and they didn’t like it and elected a new leader. Too bad for them, because the power that be, the US, overthrew mossadeq and made things right again for the shahs and for anglo iranian oil co.
        My point being, without an actual audit, we don’t really know.

        Reply
        1. rob

          Let me correct myself,
          There was an audit(but I don’t think it was a “total” audit, as was stated..but whatever).. a couple of years ago….. but the fact of when the fed created 16 trillion dollars to “bail out” banks and other companies like insurance, not just in this country, but around the world…
          This is too big a point of fact to ignore.
          The total corruption of a supposedly public bank creating trillions of dollars to bail out criminal bankers and wall street types,and foreign companies, even to foreign banks like deutche bank(who profited from trading with foreknowledge of 9-11), While letting states turn to rot, and not bailing out any state financial system, allowing the carnage that happened for a decade in the local levels.All the state employees, who “gave up something”, should be pissed.

          They claimed much of this sudden 16 trillion dollars wasn’t”money”, and were just to be “on the books” of these corporations…. well considering that those “not monies”, were on the books of banks and insurance companies whose solvency is only shown by “what is on the books”…. that is a big deal. Considering these are the same wall street actors who screw everyone for a living…. And people have the nerve to say the federal reserve is a good thing….. WTF!

          Reply
  5. Chauncey Gardiner

    Thank you for JD Alt’s post, which represents one of the prerequisites to increasing political acceptance of MMT.

    Shorter: …”It is difficult to get a man to understand something, when his salary depends on his not understanding it.” —Upton Sinclair

    Like the science of climate change, there is an organized and well-funded effort underway to prevent MMT from being understood and accepted by the American people and to thereby both preserve and increase the economic and political power of existing institutional structures, together with their revenue and profit streams. One need only consider who benefits from maintenance of the status quo to understand the sources of that resistance, and those sources are politically powerful indeed.

    The question in my mind is whether they recognize the risks inherent in the fallout from their engineered federal government shutdown?…

    Reply
    1. rob

      I agree, there definitely does need to be a good discussion about the federal reserve. There is a real disconnect as to what they do, and who they benefit. MMT seems to assert that it is benign, and should remain intertwined with the public function of money and debt creation. Despite the fact that the 12 member banks of the federal reserve are “owned” by the shares of each bank, all “owned/held” by private banking institutions.
      I don’t understand how 400 economists,including milton friedman,irving fisher and the rest can, in the thirties see this creation as private, with public oversight only(which has never been exercised in over a hundred years), and people today claim it is a public institution.
      http://faculty.chicagobooth.edu/amir.sufi/research/MonetaryReform_1939.pdf

      Reply
  6. Moshe Braner

    The following two quotes from the article above contradict each other:

    “government spending … would not typically create more goods and services for people to buy; instead, after the government spends them (for example, to make a welfare payment) they simply increase the number of fiat dollars competing for the existing goods and services produced by private commerce”

    “when the federal government subsequently spends the fiat dollars it received in trade, they are spent back into the market of private commerce”

    Reply
    1. ChrisAtRU

      No they don’t.

      Read the first one again, slowly, taking note of my added emphasis:

      “government spending … would not typically create more goods and services for people to buy; instead, after the government spends them (for example, to make a welfare payment) they simply increase the number of fiat dollars competing for the existing goods and services produced by private commerce

      This is a counter to the prevailing fallacious fear by capitalists that government spending invariably tends to crowd out the private sector. Personally, I would like to see the government doing more crowding out – with more public housing and postal banking as a start – but I digress. The way I like to explain this is thus: If you’re ostensibly a capitalist, and you’re railing against the government stimulating the economy at a time like this, you’re an absolute idiot. Take the example JD gave – if they government decided that it was going to expand assistance to families below a certain income level, where does that money go? Those families don’t go shopping at a government owned supermarket; they don’t go fill up their car at a government owned gas station; they don’t pay their cell phone bill to a government owned telecom. This is what JD means when he says the government isn’t typically creating the goods and services people consume, but rather providing the money they can then go spend on private sector goods and services. So whether you’re the CEO of Walmart, Target or Verizon, you should be licking your chops at the idea of government providing more disposable income to the masses, especially lower income groups, because those groups have a higher marginal propensity to consume – and they’re coming to you (Walmart, Target, Verizon) for those goods and services.

      Reply
  7. djrichard

    Regarding the differentiation between Fed Reserve money creation system and Fed Gov “money creation” system isn’t it easier to simply point out that the Fed Gov spending does not increase the monetary base in contrast to loans from fractional reserve banks (federal reserve system) that do increase the monetary base?

    Reply
    1. Mel

      It would be inaccurate. In the U.S., the monetary base is the reserve accounts of private banks, plus circulating bills and coins, plus the private banks’ vault cash. See Wikipedia: https://en.wikipedia.org/wiki/Monetary_base
      This is not increased by private bank lending.
      It would be increased if the government openly spent the money into existence, or (roughly the same thing) if the Central Bank automatically covered the government’s overdraft.

      It’s the money supply: M1, M2, etc. that increases with private bank lending.

      Reply
  8. sd

    I have a suggestion for the author. State the basics of MMT in the first sentence under the assumption that your reader has never heard of it before.

    So much ink is wasted on what MMT is not early on, that the article really muddies the water on what MMT is.

    “It’s not a dog. It’s not a cat. It’s not a bird. It’s not a turtle. It’s not a fish. It’s not a mosquito. It’s not a giraffe…”

    Reply
    1. Code Name D

      … MMT is not policy.

      What needs to be stressed is that MMT is a discription of how monitary systems work. ALL monitary systems. Including the one we have now where the fed is treated as a “privet entity.”

      Critics can argue that it’s “dangrious” all they like. Because MMT gives us tools to understand how the economey got so messed up in the first place.

      But Ido get the sense that MMT tends to focus too much on policy recomendations. This should not be neglected of course. But one also needs to pay attention to how MMT works in regards to current policy and idlogy as well.

      Reply
  9. ChrisAtRU

    I have indeed. Did not correctly read in context. The fallacious part though, is the “number of fiat dollars competing”, which is a ludicrous concept if you’re a capitalist. I now see where JD goes on to articulate about currency dilution etc, and later on where he includes issuing treasuries to conclude: Federal spending, through the issuing of Treasury bonds, in fact results not only in the creation of useful public goods and services, but in the expansion of capital in the private markets..

    #MeCulpa

    Reply
  10. Katy

    For those who need context: This is how money works. Watch this video.

    The video is entitled “The Millennials’ Money,” but it’s not a very good title because that doesn’t actually capture what the video is about. It explains Modern Monetary Theory (MMT).

    You have to watch the entire 31:58. If you don’t, you will not get the full picture. (That’s the second critique that I have of the video. If you don’t watch the whole thing, you will misunderstand.)

    In summation, watch the video.

    Reply
  11. Synoia

    Wray’s book answers this more succently:

    Dollars, currency, are a non interest bearing account.
    Bonds are an interest bearing account.
    From an accounting perspective the Fed and Treasure are a single entity.
    If the Fed is privately ownerd then it is a contractor to the treasury

    Historically in the UK, Banks issued their own currency, and they discovered that they had to honor all other bank issues of “Bank Notes” and settle among the Banks periodically.

    The US invented a crazy Public (Treasure) Private (The Fed) arrangement that is a typically unique US twist in complexity.

    Mr Alt confuses the issue in his essay, and should reread the chapter in Wray’s MMT Book, where monetary issue it is clearly explained. NC fails in it editorial mission by publishing such confusion, when simpler, clearer explanations are extant, and both should review the history of “Bank Notes” in the UK.

    Note that a “Bank Note” is a debt instrument, both in name and function.

    Reply
  12. djrichard

    I don’t think the topic of interest on national debt was directly addressed in this analysis. I’ve taken to not referring to MMT when arguing that the interest is not an issue. But it would be interesting to learn what the canonical arguments from MMT land are on why the interest on national debt is not an issue.

    The simplest argument I have is that those who are collecting interest on treasuries by definition have nothing better to do with that interest. The article above is sort of getting at that too, but not quite. It just needs to point out that they would plow the interest back into treasuries. So any new “treasury” issuance needed to “pay” for interest would eventually be paid for by the party that is receiving that interest. In essence, the treasury holders are paying themselves. What do they get out of the deal? They get an increasing pile of treasuries, which they can lord over us or whatever dragons do with their hoardings.

    Anyways, as far as the dragons it’s an asset, a way to hoard wealth. Either we let them hoard our currency (which would deplete what main street needs), or we let them hoard treasuries instead. As dragons, they’re happy as long as they’re hoarding something. [But getting them to stop hoarding (e.g. by taxing them or balanced trade with them)? Forget about it! We should be happy for the service they’re already providing us. You know trickle down and all, lol.]

    Reply
    1. aj

      Ostensibly, the interest is an incentive to purchase and hold treasuries over just hoarding dollars. Since the mainstream insists that bonds aren’t really currency, they want people to have those instead of dollars to keep the “money supply” in check.

      However, since debt isn’t really a necessity of a fiat concurrency and treasures are essentially just an interest-bearing dollar account, any interest is just a reward for saving. Call it a hand-out if you want since basically you are getting extra money just because you have money already (talk about unearned income!). Warren Mosler has often commented that the “natural” rate of interest is zero and I agree. Either way, since we can always just make more there’s no financial reason to fret over the interest.

      Reply
      1. John k

        Interest on treasuries is an income stream to the private sector.
        Money leaks out of the private sector thru fed taxes, the trade deficit (dollars retained and hoarded by foreign savers), and/or by domestic savers (hoarders.). Money is injected into the private sector by deficit spending, of which treasuries interest is a part. (The Clinton surplus that they like to brag about immediately killed demand and began a recession.)
        When too little money is injected to replace the amount drained away the economy suffers from insufficient demand (spending.) layoffs, bankruptcies and recession begins and continue until a) auto stabilizers kick in and deficits rise sufficiently for demand to rise, bringing about hiring, or, b) if stabilizers are weak, bankruptcies continue until economy reaches some very low point and resets as it used to do in the gold standard era. (One treasury secretary infamously said ‘liquidate, liquidate, liquidate’, as the answer to depression.)

        Reply
  13. redleg

    It seems to me that the current government shutdown is a great unintentional experiment.
    If MMT works, there should be a slowdown in the general economy as appropriations diminish and taxation continues unabated.
    If MMT doesn’t work, there should be a substantial increase in private sector spending as government spending competiton wanes, leading to general economic growth.

    Reply
    1. Katy

      A great unintentional experiment, indeed!

      Although I’d restate that a little:

      If MMT is an accurate descriptive model of the US monetary system, there should be a slowdown in the general economy.

      If MMT is not an accurate descriptive model of the US monetary system, there should be a substantial increase in private sector spending…leading to general economic growth.

      The mainstream “model” of how the US economy works is descriptive, i.e., claims to describe how the economy works, but it is not accurate, because its predictions (for example, that cutting taxes on the rich will lead to economic prosperity for the many) have empirically shown to be false.

      Reply
      1. ape

        Anyone have a quantitative model that predicts how long the shutdown in the US has to go on before we see a slow-down, and of what scope?

        Without that, we got nothin’ either way — because a model that works at the limit that we never reach, is a useless model (I’m looking at you, almost all economics using steady state models “at the equilibrium limit”).

        Reply
  14. readerOfTeaLeaves

    Public officials and economists who do not understand how a fully sovereign currency works apply a fake constraint – “tax revenue” – rather than what Strain admits is the actual constraints we need to consider and address, which are real resources.

    Yes. A thousand times ‘yes!’

    And having believed the same error for far to long, it’s easy to trace the additional, cumulative errors that follow from this mistake 8^(

    Reply
  15. Tomonthebeach

    All systems have rules – so does the US financial system. Some people will always try to game the rules to their advantage. What prevents gaming the system for personal gain at the expense of the public or private commerce if Congress eliminates austerity policies?

    I am convinced that MMT models how our monetary system works in principle. However, as a scientist, I am always looking for the unintended consequences that the model failed to anticipate. As I look at MMT, it would seem that taxation and government spending need to be kept in balance for happilyeverafters. I wonder if our government would do any better job of that regulation than it does at other regulations – which is not very impressive.

    Anybody have an enlightening source to suggest that addresses that concern?

    Reply
    1. Will S.

      Actually, by my understanding, you have it exactly wrong. As the supply of real goods and resources increases, so too must the supply of dollars, else we get deflation. The primary way more dollars enter the system is by federal government spending; ergo, not only is it not true that spending/taxing must be balanced forevermore, in actuality spending must be greater than taxation in order to expand the money supply as needed.

      Reply
  16. Hameloose Cannon

    The Federal Open Market Committee meets eight times a year to strategize the buying and selling of government securities to and from institutional investors, or anybody, really. This expands and shrinks the money supply, which determines how much bang Congress gets out of its buck. But this system, like astrology, was sober and accurate, like, only that one time from 1960-61 when Germany made good on the Marshall Plan, and France was fighting in Indochina, not us, Russia built a million tractors nobody wanted, and China was busy with cultural revolution and starvation. Since then, things sort of escalated, and now, it’s like trying to talk down a warehouse fire with sign language. But the promise of the US dollar system is that the politicians of the day won’t walk off with everything that isn’t nailed down, be it fascist pirates or popular revolutionaries.

    Let’s say, a President wants to build a 2,000-mile-long monument to himself in the desert, well the entire Federal Government shuts down before anybody splurges on anything. Whoa, heck of a shoplifter alert… Point being, by legislation, Congress could create a note that represents the social spending needed, a note that people and banks want to buy to support medical care and green things, and if the Treasury guarantees it, bingo-bango-bongo, we are on our way. No arguments over theories required.

    Reply
  17. nothing but the truth

    money is a token used to manage the real economy.

    The govt can redefine one meter to mean the distance between the earth and the moon. So would your meter ruler touch the moon?

    Reply
  18. rob

    MMT has problems
    It tries to pretend that the federal reserve is a public institution. As opposed to a hybrid public and private institution. In the 1930’s, 400 of the countries leading economists, including milton friedman and irving fisher,and came up with a proposal to to end the “private banking cartel” the federal reserve, and Incorporate its function into the treasury, where the original constitution placed the power to create money, and carry out monetary policy. MMT tries to pretend that it is just a matter of semantics, that it is public or private. But ignore the fact that the entire process is only needed BECAUSE it is private.
    The US gov’t has to create debt, to pay for the money created by the federal reserve. If the federal reserve was a public entity,say the treasury; it could just create the money, and not have a debt. All those treasuries, which other entities get to peddle,(for a fee) are all the money that was created, with interest. Meaning more money will have to be created to pay the interest when it comes due.
    How do I know this, well 400 of the leading economists, who created the chicago plan in the 30’s seemed to think so. So all the federal reserve manual details, and procedures and practices, were already thought of at that point. The new “chicago plan” that was created to fit into the scope of the modern monetary system which was HR 2990 in the 112th congress, called “the NEED act”. also addressed the private banking system, called the federal reserve.
    But the reality is there seems to be a big disagreement, when it comes to echo chambers. There was recently a very interesting debate as to whom is correct, or really who holds the more serious view of how things work. The green party has a platform plank called “greening the dollar”, which is predicated on the construction of the new version of the chicago plan, made to fit the current procedures and practices. This has been the plank for a number of years so far. The MMT school of proponents has been trying to replace the chicago plan type plank, with a MMT oriented worldview. What was interesting is that in most instances, groups end up just not believing the other, and going on their merry way… but this time, each side was allowed to present its case with experts of their choosing , in a reasonable and fair way.
    I am interested to hear how it turned out. The last I heard, of the 70 some odd panelists who were weighing the validity of the assertions of each side against each other, the vast majority, were siding with the chicago plan, and its greening of the dollar platform. When people who can, are allowed to chase answers out of the intelligensia of the MMT movement, they are persuaded to agree with the “semantics” of the terms needed, to believe that MMT does actually describe our monetary system.

    Reply
  19. rob

    Also the really glaring problem I have with MMT is that it is describing the system as it is, but it says it is OK. And that is my problem with it. MMT is the “bankers” monetary system. It says, the people of this country and their posterity, will always be the backdrop who will foot the bill created by this system of creating our money. We have a fiat currency, but it is now associated with @22 trillion dollars of national debt, that the people of the united states, living at the time, OWE… to whomever the financial services industry has sold it to… some to many of the same private members of that “public” banking cartel, the federal reserve. So that those interest bearing notes of ours, will mean they are better off tomorrow than they are today.
    They also get that money from the federal reserve at the lowest rate as set by the committee. They then loan those funds and the multiples of those funds allowed by fractional reserve banking at any rate they can.. whether it is through their commercial banking houses or all the way up their credit card rates for the people whose posterity, allows them to call the money they made, federal reserve notes and credits, valuable and safe.
    THere are so many level and entities that the financial services industry, uses that cheap money to screw us every day, and make a hefty profit, no matter how big they screw up. They use that cheap money to pervert our democratic republic. They use the money to influence the stock market, in ways that screw the planet. They use that money to kill us, and our children.
    So I have a problem with this system that MMT says is OK.
    When there is an alternative. Anyone can read the text of the bill, HR2990 112th congress the need act. Anyone can look at the arguments on both sides.Anyone can look up the history of our money. From continental script to lincolns greenbacks . After the civil war till morgan got his federal reserve created, there was a debate in this country as to having a public or a privately controlled monetary system. A hundred twenty years ago, this federal reserve was planned as being the private bankers bill. And aldrich and the others got it through.15 years later.
    If we had a public monetary system , which was something the treasury would run,we would be allowed (at least in design) to control the use of that monetary creation power… rather than just be happy we can rack up debt, till the end of the world…. all the while making the banks our kings and the financial services industry our vassals.

    Reply
    1. skippy

      MMT does not say anything of the kind, now if you want to take mainstream economics and ideological – philosophical preferences wrt judicial appointments and the results during the neoliberal period, that’s another thing, but hanging everything on MMT is just silly, otherwise the same issues of corruption would not rinse and repeat – no matter what system of money is used.

      Reply
      1. rob

        That is a straw man argument. MMT doesn’t “say” those things, but those things are happening. And MMT is just a description of the monetary creative powers employed as they are; is it not? So really, MMT is not really addressing any of the problems mainstream economists and the current neolberal realities have wrought upon this world.
        And that is really my problem with MMT. It is all bluster, as if with its keen insights, we could change the world, but really it is just another path to rome. as it were.
        And even with a plan like the green party’s “greening the dollar”, there is still room for corruption and mismanagement, and even incompetence….. but then the whole ball of wax would actually be played on a different field, in a different game…. one of purely monetary creation. And that specific task, could be a stand alone reality, wherein it could be audited, and hopefully kept in line with higher ideals of what american sovereign monetary creation could be good for. That whole idea is why there does need to be a real discussion about monetary reform. Like they say, we can’t get there from here. We need a national spotlight on this, so people understand what they are giving up by keeping things as they are.And what they risk if they embark upon a change.

        Reply
        1. aliteralmind

          Aside from the FJG, MMT is descriptive only. It’s a school of thought. How can we decide which pieces of our system should be kept and which should be discarded until we understand the system that we’re actually dealing with?

          Referring to the parts of our system that are corrupt, you say that MMT “says it’s OK.” Then you admit that what you actually mean is that you are upset that MMT *doesn’t* say that those corrupt pieces are corrupt.

          The study of medicine refuses to denounce Nazis who used the knowledge of medicine to conduct terrible human experiments.

          The study of religion refuses to denounce devil worshipping.

          The study of chemistry refuses to denounce chemical warfare.

          The study of political science refuses to denounce voter suppression and money in politics.

          And so on.

          You are ascribing more to MMT than is reasonable.

          Reply
          1. rob

            If MMT were just describing the system as it was, and that was all it professes to do, then I wouldn’t really care whether I agreed with it or not. I would feel that your assertion that asking too much of a midpoint on a line is unreasonable;is justified.

            I however, do not feel that the subject is unimportant.In the sense that so many problems the world and our country is facing is directly concerned with money. Either too much of it in the wrong places and peoples hands, and too little of it in places and peoples hands who are trying to help things out. The commonality is wall street and the monied class. The federal reserve and the financial services industry, are the key players in the direction of this country. If the system was not made to funnel money into the coffers of the key players in wall street and washington dc, then the people may have a voice. The supreme court equates money in politics with freedom of speech. One side has all the money, now. And all the “free speech” money can buy. The fact that there is a mechanism available for the masses to create money and direct its use; be it for education,healthcare, or political campaigns, in a way that may allow those elected to the roles of representatives, to be able to avoid the “voice” of the private capital that is there,yelling so loudly, it should be employed.

            My reason for “being unreasonable” is that the worldview of our monetary creation system espoused by MMT, is subversive in that it doesn’t mean to disrupt the current regime of money created for the wealthy to use first, and forever.

            All of this stemming from my seeing that the description of the money system as described by MMT,sees fit to try and make the debt as created in our current system, not real, and not a drain. It also pretends that these current realities of debt burdens don’t disenfranchise any who would want to create a better world, only to be dealt the death blow of a question as to how they would” pay for it”. Then to be left with the reality that they must , if they do want to make a go at any good cause; compete for the finite pool of funds, the system deems for “public” uses.

            MMT, would say, we can do anything we want, within the system as it is…. except we can’t. The system as it is, isn’t interested.And that is the subversive part. People who want to change the world had better not be waylaid by this wild goose chase of an idea. It is a hollow promise of hope. Something the world doesn’t need now. We must change the system.

            So, my apologies for ranting, It is just that when you see well meaning people eating something that is rancid. You are apt to say, watch out.That stuff is bad.

            Reply
      2. skippy

        The Strawman in the conversation is when you attempt to ignore MMT is not an economic school of thought, but proceed to ascribe that kinda dominate agency to it.

        Since neoliberalism became dominate MMT has had nothing to do with anything as monetarists and now quasi monetarists, working without a functional model of either monetary or financial systems, dictate social policy and legal precedent.

        Now post Keynesian’s have suggested policies as informed by MMT, but, that is only on the proviso of what MMT informs is possible, contra to mainstream economics working on a monetary preference and not reality.

        Personally I’m not compelled by your arguments, just from the stand point of NAIRU and share of productivity e.g. its still a free market argument premised on investor sentiments with front loading by the Government. Seems a AMI sort of approach e.g. hand pick the “right sorts” to manage the money supply in a non democratic way and let the deductive free market calculus work its magic.

        The kernel code is always the the same but presented in a new way – old wine in new bottle ….

        Reply
        1. rob

          why is it the AMI approach to handpick “the right sorts” to handle our money system?
          Isn’t that what the federal reserve governors,committee members,staff,etc do?
          The federal reserve which is a system of 12 banks, that are in turn owned by the shareholders of those 12 banks, 100% of which are the TBTF private banks. They are the the ones who “hand pick those sorts”….
          I would imagine, a consensus of reasonable people would be that these things would be better off in the hands of people with the proper inclination and aptitude.,especially after the system is reclaimed to being a public function, for the public good.

          Reply
          1. skippy

            I did mention anti democratic, congress already has the power, but, due to decades of neoliberal free market grooming have abdicated that responsibility too the so called experts, noted the quasi – monetarist leanings of those that staff the Fed, so I really don’t agree with your conclusions based on all the heterodox optics.

            I have had conversations with various proponents from AMI over the years and find many to have forwarded Chicago school and right wing social policies once they wander off the money crank reservation, one even said he was fighting on the side of “light”. With that noted I would point out lack of hard evidence in this perspective – arrived at by deductive powers alone.

            I also think you need to respond to my comment above and consider the broader social implications without making it all about the money e.g. changing the system does not automatically change the previous environments incentives – NAIRU and wages vs productivity et al.

            As Keynesian said in a conversation with a AMI proponent, I was involved in … attempting an A – political fix to a political problem is quite the blinkered view, money is not a political creature with agency, its the humans with moeny and an agenda.

            In ending its my experience that once the sales rhetoric is removed there is some troubling aspects about the “Science of Money” camp with overtones to some antiquarian perspectives. To be quite honest I’ve had a devil of a time with ethical issues and bad faith argumentation that verges on classic AET behavior. So until these other concerns are redressed I find little evidence in the Sound Money camps – leaps of faith – and then have them accuse MMT of the very same lack of depth in economic matters e.g. post Keynesians do have a broad evidence based view wrt how MMT should be managed, per se a JG vs. the UBI I’ve seen many AMI proponents promote over sometime.

            Reply
            1. rob

              I have never said that changing the monetary system would just “change everything”. What I have said is that MMT DOESN’T change anything.How you can say MMT isn’t a “school of thought”, and then move on to say MMT informs these post keynesians in …. That is sort of wanting it both ways.
              I also don’t think MMT has to be a school of thought to be addressed. I also don’t think things like a JG Are really “THEIRS”. Even if some group comes up with an idea, it doesn’t mean they “own” it, until they DO it.
              But to equate Monetary reformers from the AMI as “right wing”… that is a big “REALLY?”

              I don’t know what you think I ought to respond to , that already hasn’t been addressed. Those other side remarks you made were too vague to respond to. I know You like to talk in riddles, so that any criticism of what you say can be deflected, and that is fine. It is a offensive/defensive mechanism.

              I also believe that monetary reform, is one aspect of the change needed. And I actually don’t think that economic “knowledge” is really all that definitive. It is ambiguous at best. I actually think, people make more impact to our economic circumstances than “schools of thought”. After all, graduates of every school of thought, have acted in all kinds of ways. So things like “post-keynesians”, “do this” or “don’t”,is just a broad brush to sweep reality under the rug.

              I do know people say the other side debates poorly, or with a lack of ethics, I have seen this first hand and I know it is true.. but hey thats life , right. That is why having a non biased forum that is open to people who actually want to debate ideas is important.
              And I doubt I will change your mind, And I doubt you will change mine…
              Time will tell.

              Reply
  20. rob

    MMT espouses very convoluted solutions for doing what could be done much more simply, and with no debt. The act of money creation, being an act of law, only. debt free.
    Then that money could be used by whom ever, for whatever… in that anyone who had money could gather it and invest, and loan, and all these things. But the original money could be spent into the economy in the free healthcare system, or the pre-k thru post graduate education system, or by building sane planetary energy creation systems. All the things we can’t “afford” to do now.

    Reply
    1. Grant

      “Then that money could be used by whom ever, for whatever… in that anyone who had money could gather it and invest, and loan, and all these things. But the original money could be spent into the economy in the free healthcare system, or the pre-k thru post graduate education system, or by building sane planetary energy creation systems.”

      ?!

      Reply
      1. rob

        The meaning of that is that in the current chicago style plan, the act of creating money is done by the treasury. And that is it. The whole job of the monetary creators is just to keep a reasonable money supply. That is function 1
        After that, with that US dollar that was created without the debt obligations, it would be infused into the economy, by spending. That is what gives the country a money supply. The choice on what to spend it on is open to debate, and those choices open to being recorded, so that the system can oversee democratically what has happened. But that isn’t in the scope of creating the money. Now that is function 2. a as are all the functions of money that follow.
        Another caveat of this new plan is that banking cease to be fractional reserve banking, and be 100% reserve required. Now in this new system, those that make money inventing, building,working,creating ,etc. can still pull their money, as was the same in the banking system, wherein people put up their own capital to lend out for an investment, and be a private bank. But who knows, maybe there would be a public bank, commercial players could go to, and the interest they paid would be redeposited in the federal coffers… All the circular accounting; as is done today, except that money wouldn’t be created by banks making loans, and the financial services industry wouldn’t have access to the golden goose of money creation. They would have to rely on the necessity of their products, and the skill in which they employed in executing their plans.
        Talk about a whole bunch of wall st money that is aligned against anything like this happening…. ohhhh the democracy of it all…
        But again, the national debate so that awareness as to what this all can mean. Green new deal anyone? single payer healthcare anyone? ending student debt? we need to open up ASAP

        Reply
      1. skippy

        Read 5000 years of debt for a broader human historical back drop, albeit, till then please take the time to do a bit of informed reflection on the actual state of affairs with your core objection.

        https://en.wikipedia.org/wiki/Greenback_(1860s_money)

        It seems you main grievance is with the term debt and how some relate to it on ideological grounds and not a more nuanced approach.

        Reply
        1. rob

          true enough.
          I know,our current form of federal reserve money IS debt.
          I also don’t discount history, I just don’t think that in this case, history is what we need to copy to move forward. In fact, history is what we need to learn from, so as to NOT repeat it.
          It is like religion… interesting to read what people thought… but hey it has always been BS, and we ought to move on… as a species. and stop believing in fairy tales.
          Money is law. money is construct.

          Reply
          1. Wukchumni

            The experience with Continental Currency was so disastrous, that not one Federal banknote was issued until 1861, about 4 generations after, when anybody alive had no recollection of what went down.

            “A Nation Of Counterfeiters” by Stephen Mihm, describes what filled in the Federal void, privately issued currency now referred to as “Broken Banknotes”.

            Reply
            1. rob

              The “continentals”, did have problems because they were counterfeited by the british, which was unhelpful to say the least. And couple that with colonies who were not used to acting in unison, and over printing. This was akin to a young driver being too heavy on the gas pedal, due to inexperience, as opposed to gov,t being unable to control our monetary system today. Even the green backs, were around in a time when the value of money varied widely. But in that era, even the value of a gold coin, varied . The value of a gold dollar depended on the purity of the gold,(as that varied) also, how close to the source it was being accepted.There was not a uniform value then, just like there isn’t one today. a dollar in NYC isn’t the same as a dollar in north carolina…
              But that doesn’t mean it can’t be better today, if the money supply was a treasury function, we are mature drivers today. And the fact is, our country has gravitas, making our currency desirable. Compared to a newborn breakaway colony of a superpower, or a troubled union with disparate views on the future.

              Reply
              1. Wukchumni

                But in that era, even the value of a gold coin, varied . The value of a gold dollar depended on the purity of the gold,(as that varied) also, how close to the source it was being accepted.There was not a uniform value then, just like there isn’t one today. a dollar in NYC isn’t the same as a dollar in north carolina…

                Sorry, you’re wrong. All U.S. Gold coins struck from 1795 to 1933 were .900 fineness and of uniform weights.

                In fact until 1838, all U.S. gold coins contained a little bit more than the face value, in gold content, as we had so screwed the pooch with our first attempt @ Continental fiat paper money.

                Reply
                1. rob

                  “Most US gold coins”, sure but Coins did not just come from US mints. There was a purity standard of @ 90% at the us mint in philadelphia, but between the 1790’s and 1830’s, there were people who would set up their own mints, as was the case in north carolina(bechtler,rutherfordton ,nc until 1852) and georgia(templeton reid, millidgeville 1830/later gainesville GA) The first three branch mints in new orleans, dahlonega(georgia), and charlotte (north carolina) only opened in 1838, even though the mint act was from 1792. And these federal mints had standards, but others saw fit to produce coinage from time to time and place to place. and was used by other people.The federal government didn’t even stop using foreign coins as legal tender until 1838.. As there was little american gold until the discovery of the north carolina mines. well before any of the west coast discovery of 1849.
                  So I agree, there was a purity, “at a US level” but a lot of this continent, wasn’t “US” at the time. And coins were coming from private actors and companies, along the way….in various regions. Which is what I meant by the fact that the bank notes and private minted coins were also accepted at various values . Back then there was a difference between legal tender for public and private debts. Certain things would be good for paying taxes, and other things could be used in a locally specific situations.

                  Reply
                  1. Wukchumni

                    Tiny amounts of coinage emanated from private mints compared to Federally issued gold coins, and only foreign silver coins the size of a Spanish 8 Reales were legal tender in the USA until 1858, as we utilized OPM.

                    During the California gold rush, it was discovered that some privately issued $10 gold coins only had around $9 worth of metal in content, and the publicity made the public not want to use them, and most were melted down.

                    Reply
                    1. rob

                      Yeah, I think we are on the same page now. I didn’t say, ALL US COINS, I said some gold coins , so after that…. I don’t have a quibble. Just growing up a family member of mine was a rare coin dealer, and I vaguely remember things about those minority coinages, as they are today quite rare, but in their own context as to what the history is, it is just another slice of the pie that got us here.. I still find coin and currency collecting interesting, as there were a lot of people “making money”, and that isn’t even part of the whole company script stuff. When you look at those old notes and papers that were used for money, some were beautiful, but you can see why they were fairly easy to counterfeit.
                      So going full circle in this, that is why I don’t think the original problems with mass counterfeiting is really an issue anymore, when it comes to why the treasury shouldn’t make it’s own money instead of the federal reserve.Also the ability of a unified executive department can handle the complexity of maintaining a monetary supply, without over extending the basic supply to the point of severe inflation.

                    2. rob

                      Yes and actually before the 1857 act, foreign silver AND gold coins were legal, and some newspapers would list the current prices of commodities and the valuations of the silver and gold coinage that was in use from these various areas like central and south america, and mostly mexico. But also from france and england and other european countries. etc.

  21. William Beyer

    Thanks for publishing the thoughts of J.D. Alt, whose day job is being an architect – one of those people who need to understand how things actually work in order to design spaces for them. His body of writings at New Economic Perspectives is impressive, and well-written.

    The only thought I’d add is that the use of the terms “borrow” and “debt” to describe the monetary operations of the federal government are Orwellian Newspeak. You don’t “borrow” your own money.

    Reply
  22. Kristin Lee

    AOC is breathing life back into the nation-state, which has been under attack by the neoliberal globalists for over 40 years, incrementally dismantling it (save the MIC) to the point of total evisceration. Why? Because it shares money creation powers with the private banks (credit). MMT shows us that sovereign nations can create a robust society again with a strong fiscal policy that invests in our nation, FDR-style. It’s time to finish his economic rights agenda.

    “The “nation-state” as a fundamental unit of man’s organized life has ceased to be the principal creative force: International banks and multinational corporations are acting and planning in terms that are far in advance of the political concepts of the nation-state.”
    ~ Zbigniew Brzezinski, Between Two Ages, 1970

    The globalists would love nothing more than to destroy the sovereign nation and its currency issuing power.

    I had to laugh when Stephanie Kelton thought of herself as a member of a curling team, scrubbing away all the artificial obstacles to creating a more egalitarian society. The problem is that the libertarian rentiers’ idea of freedom and human rights IS economic inequality. The only way to balance the economy is to decrease bank credit and increase government currency investment:

    Actually, bank lending creates credit money, which is different from the government’s currency. The bank’s credit is denominated in the government’s currency, and it leverages the government’s currency to do it, but it’s not the government’s currency.

    A lot of money in the system is, indeed, bank credit, but this is only because our government is eternally running an austerity program, constraining net issuance of its own currency, and thereby increasing demand for bank credit.

    Austerity is, in short, a policy to subsidize the financial sector by creating [artificial] currency shortages.

    Michael Hudson sharply frames the source of dysfunction:

    This idea that governments should not create money implies that they shouldn’t act like governments. Instead, the de facto government should be Wall Street. Instead of governments allocating resources to help the economy grow, Wall Street should be the allocator of resources – and should starve the government to “save taxpayers” (or at least the wealthy). Tea Party promoters want to starve the government to a point where it can be “drowned in the bathtub.”

    But if you don’t have a government that can fund itself, then who is going to govern, and on whose terms? The obvious answer is, the class with the money: Wall Street and the corporate sector. They clamor for a balanced budget, saying, “We don’t want the government to fund public infrastructure. We want it to be privatized in a way that will generate profits for the new owners, along with interest for the bondholders and the banks that fund it; and also, management fees. Most of all, the privatized enterprises should generate capital gains for the stockholders as they jack up prices for hitherto public services.

    You can see how to demoralize a country if you can stop the government from spending money into the economy. That will cause austerity, lower living standards and really put the class war in business.

    Reply
    1. John k

      Banks and bank lending via credit creation is only possible with sovereign guarantees. All bank lending could be replaced by gov lending, and understanding mmt brings this realization… and is likely the basis of bank opposition. Opposing post office banking is related…
      As banks control both fed, congress and pres thru donations, and msm thru cross ownership, fierce oppo will continue. Just part of the wars progressives must win to bring about real change.

      Reply
  23. Sound of the Suburbs

    MMT your time in near.
    There are fatal flaws in current thinking.

    Adair Turner took over at the FSA when Lehman Brothers collapsed, which gave him the incentive to find out what was going on.

    https://www.youtube.com/watch?v=LCX3qPq0JDA

    Adair Turner has looked at the situation prior to the crisis where advanced economies were growing by 4 – 5%, but the debt was rising at 10 – 15%.

    This always was an unsustainable growth model; it had no long term future.

    After 2008, the emerging markets adopted the unsustainable growth model and they too have now reached the end of the line.

    What do we do now?

    Government created money is the only way out of this mess.

    MMT has been developing since the early 1990s and they had plenty of time to understand the process of Government money creation.

    Let’s get this show back on the road.

    Reply
  24. Michael Green

    To put it simply, Governments do not spend money, they INVEST it. When I buy and hold a stock, I hope to be buying a long-term stream of dividends. In the same way, when the Government spends, it hopes to receive a long-term stream of tax receipts as the money it has invested moves through the system.
    Therefore the proper debate should be over whether a particular item of Government spending is a good or bad investment. With a good investment, the Government gets back more than it spends. With a bad investment, it gets back less.
    There is no fixed amount of money that a Government can spend. It should be limited by the amount it can invest well.
    Looking at our UK Tory Government on this basis, it gets almost every investment decision wrong. Spending freely where it will get a negative return, refusing to spend where a good return is available.

    Reply
  25. Mael Colium

    I get a sense that the author becomes bogged down with what money really is in a modern monetary system and so struggles to advance the case for MMT.

    I live in Australia, so I’m not sure if the USA monetary mechanics work in the same manner. However, Treasury credits the bank accounts of whomever is to receive funds without the need to reference the Australian Central Bank (RBA). These are keyboard mechanics and not the physical creation of fiat and any cleanup of balances is an accounting process. Sure the RBA manages the physical money supply and is a watchdog to the monetary machinations of Treasury, but they remain an arm of Government. So I’m struggling to understand the author’s claim that private banks “own” the Fed. How?

    The RBA was created under Royal Charter, and while claimed to be independent of Government control(splutter, cough!) it is Treasury that any spending is undertaken. The RBA Governors may rattle their sabres if they have concerns about the trajectory of Government spending, but ultimately the Treasury is directly controlled by the Government of the day who creates balances of fiat in the accounts held within the banking system on a daily, if not hourly basis. By the power of taxation it gives the fiat power so that whatever the banks or the Fed might quibble over, the Government via Treasury (Taxation Office) holds the power of the fiat in it’s fist. In this regard the banks and the Fed are pretty much irrelevant.

    There may be variations with the USA monetary system, but the fundamentals to me seem to be intact with MMT representing both situations. Perhaps it is more that self imposed restrictions to the capacity of the USA Government to use the fiat have been put in place around the Fed, but surely these rules can be changed through regulation or Acts of Government. Anyway, I’m trying to say that the fundamental of MMT holds for both nations, it’s just that the restrictive rules imposed on Government by themselves need to be changed to unlock the potential of a currency issuing sovereigns with floating exchange rates.

    The final points that must be clarified is that no such sovereign need issue Bonds to manage the monetary transactions of Treasury (see Japan for reference to this fact). The other is that for fiat to hold true power is the necessity for the exchange rate to float freely, otherwise the economy ends up looking like the Chinese basket case, which will never be resolved unless they stop meddling with their exchange rates to keep their economic miracle from collapsing back to the macroeconomic reality. Onya Trump, keep the bastards on the back foot! Sorry, the colonial boy in me escapes from time to time.

    Yankee friends across the pond may be interested that a social justice group in Australia called GetUp has just released it’s latest attack on Governments by advancing the case for a Job Guarantee, which is a major plank in the MMT policy framework. It’s calling out the Government by pointing out it’s fiat capacity, which has not been used for thirty years. I think that’s the last point where MMTers need to not forget. MMT provides the means by which Governments may address REAL full employment and not this articulated NAIRU notion of full employment which is nothing more than a feeling gained with one wet finger in the are and another inserted in the posterior. Without demand, the economy becomes a non productive shuffling of money around the place, kept in place by supressing wages and providing tax breaks to capital accumulation away from productive pursuits.

    Over and out!

    Reply
  26. knowbuddhau

    Thanks much, very informative yet not baffling to a non-wonk. I actually read it in one go, which is high praise for your prose if you knew how confusing I usually find this.

    Reply
  27. Sound of the Suburbs

    Trying to run a global economy on an economics that doesn’t consider debt was never going to be easy.

    Forgetting its old problems didn’t help.

    The 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression. No one realised the problems that were building up in the economy as they used an economics that doesn’t look at private debt, neoclassical economics.

    The sequence of events:
    1) Debt fuelled boom
    2) Minsky moment
    3) Balance sheet recession

    At 25.30 mins you can see the super imposed private debt-to-GDP ratios.

    https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6

    Japan was the canary in the mine that no one noticed. Then the UK, US and Euro-zone in 2008, and finally China.

    The balance sheet recession, that’s why there is no growth.

    Japan has been like that since the 1980s. Luckily, they have decades of experience of the balance sheet recession.

    Richard Koo explains:

    https://www.youtube.com/watch?v=8YTyJzmiHGk

    The US recovered the best as Ben Bernanke had read Richard Koo’s book. The UK and Europe did themselves no favours with austerity.

    QE can inflate the markets as the money goes to the banks.
    QE can’t enter the real economy as there are so few borrowers.

    It was China that kept the global economy going after 2008, but that has now burnt out too after its own debt fuelled boom.

    We’ve wasted ten years, don’t you think that’s enough?

    Adair Turner took over at the FSA when Lehman Brothers collapsed, which gave him the incentive to find out what was going on.

    https://www.youtube.com/watch?v=LCX3qPq0JDA

    He has learnt from Japan’s experience, where curing a private debt problem created a public debt problem.

    The money supply ≈ public debt + private debt

    The “private debt” component was going down with deleveraging from a debt fuelled boom and to maintain the money supply, and avoid debt deflation, they had to do a lot of Government borrowing.

    Adair Turner has worked out that Government money creation is the only way of getting the overall debt down, public and private.

    MMT, your time is here.

    Reply
  28. Sound of the Suburbs

    Trying to run a global economy on an economics that doesn’t consider debt was never going to be easy.

    Forgetting its old problems didn’t help.

    The 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression. No one realised the problems that were building up in the economy as they used an economics that doesn’t look at private debt, neoclassical economics.

    The sequence of events:
    1) Debt fuelled boom
    2) Minsky moment
    3) Balance sheet recession

    At 25.30 mins you can see the super imposed private debt-to-GDP ratios.

    https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6

    Japan was the canary in the mine that no one noticed. Then the UK, US and Euro-zone in 2008, and finally China.

    The balance sheet recession, that’s why there is no growth.

    Japan has been like that since the 1980s. Luckily, they have decades of experience of the balance sheet recession.

    Richard Koo explains:
    https://www.youtube.com/watch?v=8YTyJzmiHGk

    The US recovered the best as Ben Bernanke had read Richard Koo’s book. The UK and Europe did themselves no favours with austerity.

    QE can inflate the markets as the money goes to the banks.
    QE can’t enter the real economy as there are so few borrowers.

    It was China that kept the global economy going after 2008, but that has now burnt out too after its own debt fuelled boom.

    We’ve wasted ten years, don’t you think that’s enough?

    Adair Turner took over at the FSA when Lehman Brothers collapsed, which gave him the incentive to find out what was going on.

    https://www.youtube.com/watch?v=LCX3qPq0JDA

    He has learnt from Japan’s experience, where curing a private debt problem created a public debt problem.

    The money supply ≈ public debt + private debt

    The “private debt” component was going down with deleveraging from a debt fuelled boom and to maintain the money supply, and avoid debt deflation, they had to do a lot of Government borrowing.

    Adair Turner has worked out that Government money creation is the only way of getting the overall debt down, public and private.

    MMT, your time is here.

    Reply
  29. bruce wilder

    One thing I do not quite understand about the rhetoric of this article is the moral status of public debt.

    The conventional, mainstream economics rhetoric has always been that the public debt is a bad thing the accumulation of which weakens the state and the society because public debt is just private debt writ large and subject to the same hazards and posing the same burdens, requiring similar extractions and entailing predation on virtuous productive activity.

    The logic of MMT — though maybe not the rhetoric of this essay — would seem to me to be that the public debt is a vitally important resource. The rhetoric would seem to center on the idea that MMT conceptually frees the government to spend more without borrowing, but the logic of MMT would suggest that we need vastly more public debt. The common wealth would be enhanced by both using public spending to indirectly extinguish private debt with income flowing to labor AND additional public debt to serve as a vehicle for private saving (and a substitute for predatory private credit in household and business finance).

    A sovereign’s marketable public debt is a good thing and in times of great uncertainty, the general welfare requires much more of it, as a stabilizing factor. Why shy from that argument?

    Reply

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