Warren Mosler

As it happens, while watching for content to add to the site, I’m generally moving back in forth in time. Tonight, I participated in a chat that touched on Warren Mosler’s contribution to MMT thinking. Consequently, I’ve added four or five pieces older pieces to his page, here. Warren, while neither an academic nor an economist, is generally regarded as the founder of MMT. I’ll be adding more to the page, but this seems a good start.

New Zealand

Having finally caught up with (Australian) Steven Hail’s productive relationship with Interest.co.nz editor @GarethHVaughan, I’ve added information to #GlobalMMT: Commentary re Developed & Developing Nations and created a page for Steven Hail. Linked from People Doubtless, I’ll be adding more.

Here’s the article that got my attention:
Jude Murdoch and Steven Hail argue modern monetary theory offers desperately needed clear thinking and fresh ideas for our society and our democracy
— Jude Murdoch and Steven Hail (@StevenHailAus) Interest (@interestNZ) (@interest) Nov 27, 2020 MORE

Galbraith: “tormenting central bankers is great fun”

Who’s Afraid of MMT? • It is not surprising that current and retired central bankers feel threatened by Modern Monetary Theory. With deep roots in the Keynesian tradition and a consistent commitment to achieving full employment, MMT shows that good economics and sound policy doesn’t have to be shrouded in obscurantist cant.
— James K. Galbraith, Project Syndicate (@ProSyn) Dec 23, 2020
Added to “Debates & Controversies” – still my favorite page on the site. Read from oldest (at the bottom) to newest to follow the story line.

MMT Explains What Governments Can Do. It Is Not A Proposal.

At Business Insider, Jim Edwards and Theron Mohamed do a good job explaining MMT in, “MMT: Here’s a plain-English guide to ‘Modern Monetary Theory’ and why it’s interesting.”

They begin with these bullet points:

  • MMT is a big departure from conventional economic theory. It proposes governments that control their own currency can spend freely, as they can always create more money to pay off debts in their own currency.
  • The theory suggests government spending can grow the economy to its full capacity, enrich the private sector, eliminate unemployment, and finance major programs such as universal healthcare, free college tuition, and green energy.
  • If the spending generates a government deficit, this isn’t a problem either. The government’s deficit is by definition the private sector’s surplus.
  • Increased government spending will not generate inflation as long as there is unused economic capacity or unemployed labour, MMT proposes. It is only when an economy hits physical or natural constraints on its productivity — such as full employment — that inflation happens because that is when supply fails to meet demand, jacking up prices.
  • MMT proponents argue governments can control inflation by spending less or withdrawing money from the economy through taxes.
  • Needless to say, traditional economists have some issues with all this.

Just ONE quibble with that, where they write, “It proposes governments that control their own currency can spend freely.” They should have written It EXPLAINS, not that it “proposes.” Big difference.

MMT EXPLAINS that governments that control their own currency can do a lot of things.

A Great ‘Job Guarantee’ Twitter Thread

Cory Doctorow has a great thread on Twitter about Pavlina R. Tcherneva’s book The Case for a Job Guarantee. Click the following to see the thread.

The Deficit Myth: MMT & the Birth of the People’s Economy

Extra! Extra! Read all about it. @NathanTankus wrote this fine review on Amazon. Please be encouraged to read them all, mark as ‘helpful’ what you find to be helpful, and (if you qualify under their rules) write your own. On A or elsewhere. Spread the word!

One of the most important books written in the 21st Century
Reviewed in the United States on June 10, 2020
disclosure: I work with Professor Kelton on various projected related to Modern Monetary Theory in my capacity as Research Director for the Modern Money Network

The book is just out and I see there are already a couple of people who have claimed to read it who have given the book bad reviews based on their preconceived notions. As someone who played a small part in the book’s construction, and received my copy before official release, I’d like to provide an informed viewpoint on the quality of The Deficit Myth.

This book is masterfully done and a deeply important read for anyone who cares about creating a just society without mass unemployment while responding to the crises of our age such as systematic racism and climate change. Professor Kelton guides readers through what the national debt is, how government deficits are our surpluses (or how the government’s “red ink” is our “blank ink”), what are the real constraints on government spending (the availability of physical resources) and how we can wage trade peace.

It may seem that Professor Kelton’s vision is “pie in the sky” but that kneejerk instinct is based on ignorance and decades of propaganda and not on her expertise or track record. She knows how the congressional budget process works as someone who has worked on the senate budget committee and as adviser to a major presidential campaign. She does readers a great service by giving them insights and anecdotes grounded in that experience. She also has a fantastic track record of being correct when others were wrong. She was right about the fragility of the Eurozone. She was right we weren’t doing enough fiscal policy-wise during the Great Recession. She was right that quantitative easing wouldn’t cause inflation. She was right that the Trump tax cuts, while increasing inequality, didn’t reduce the federal government’s capacity to respond to the next recession- or depression as we’re seeing now. Buy the book and judge for yourself, but keep in mind how many big things Professor Kelton has been right about and read her erudite analysis with these facts in view.

What she has to say is more important than ever during the Coronavirus Depression. Get the truth straight from her and ignore the lazy “readers” on this website.

Why Do Governments That Issue Their Own Currency Bother To Sell Bonds?

Professor L. Randall Wray on why a government with a sovereign non-convertible currency might choose to issue bonds. Bond sales are not a borrowing operation for the state. Logically, since the dollar is a liability (an IOU) of the government, it’s impossible for the government to borrow back dollars, just like it would be impossible for you to borrow back your own student loan debt, or for Pizza Hut to borrow back its own coupons. Rather, a bond sale is just a swap of one government-issued asset (cash) for another (bonds) which pays interest. It doesn’t change the amount of assets or liabilities out there, only the form.

A government that issues its own non-convertible currency does not need to sell bonds in order to spend. This is because it issues the currency every time it spends (and destroys the currency when it taxes). The main reason such a government might want to sell bonds is because of its effects on interest rates.

If the government is running a deficit, then it is creating more money than it destroys through taxes. This means that the banking system will have excess reserves, more than they need to settle inter-bank payments and meet reserve requirements. Normally, banks don’t want to hold excess reserves, they’d rather purchase some other higher-interest-earning asset.

Continue reading

A collection of graphics

Via twitter and his YouTube channel, Sam Levey — aka @SamHLevey aka @DeficitOwls — has been collecting and sharing graphics for years. Sam has graciously shared them with me. Now we need to figuring out how to best share them with all of you, i.e. where to best put them. He notes: “if you want them stored as a teaching repository (as in, you want there to be a place for MMT-competent people to find the graphics as needed for conversation, then make a dedicated page. Or, if you want them to help actually teach people who are new, intersperse them in explanations.” I have both purposes in mind, and will do both. Grouping may be a challenge. Looking forward to Sam’s help and to subsequent additions from other folks. It’s going to take a little time…


Having noticed an uptick in commentary or explainers that come from and/or are about countries — other than the US — and may not be tracked by the MMT groups in those countries; and in hopes of being useful for the lay reader, macro-curious students and journalists; we offer this page of articles in English, organized by country and publication date.

Recently Added

Most mornings, I read through Twitter from a list of 24 trusted principal MMT sources. Mostly academics. List here. They are a busy lot. When they link to research, commentary, explainers, etc., I send myself an email as a reminder to add the material to the site. Sometimes, I appreciate their use of twitter as teaching tool noteworthy and capture a thread. What with the expanding body of content and work I’ve missed (see below) or didn’t think — or know — to include sooner, I’m always playing catch-up. It’s both exhilarating and a little daunting. Here’s what’s caught my attention over the last few days.

Added to page on Student Debt

Complete thread here from Marshall Steinbaum (@Econ_Marshall)

Warren vs. Sanders: Inside the Progressive Debate Over the Student Debt Crisis
• Their competing plans reveal a lot about how these White House hopefuls would govern.
— Kara Voght (@karavoght) Mother Jones (@motherjones) Jan 31, 2010

Student Loan Discharged in Bankruptcy – Just a Blip, or Something Bigger?
— Michael M. Krauss, James Park, National Law Review (@natlawreview) Jan 28, 2020 h/t @RaulACarrillo

Added to Debates & Controversies
Does Modern Monetary Theory Have Any Scholarly Validity?
— John Harvey (@John_T_Harvey) Forbes (@Forbes) Jan 28, 2020 Warning: he unfortunately evokes the household budget analogy.

Modern Money Theory 101: A Reply to Critics • Key words: Modern Money Theory, Price Stability, Full Employment, Financial Stability, Money
— Éric Tymoigne (@tymoignee) and L. Randall Wray Levy Economics Institute of Bard College November 2013

How the Economists Got It Wrong
James K. Galbraith The American Prospect (@TheProspect) Dec 19, 2001