Anti “MMT Types” Memes Migrate to Stage II


One of the famous statements attributed to Mahatma Gandhi is that opposition to new, powerful ideas goes through three stages.  First, they ignore you.  Then they attack you.  Then you win.  Modern Monetary Theory (MMT) has reached the second stage.  It has, on the same day, been attacked by Paul Krugman and John Carney (CNBC.com’s “senior editor”) in their unrelated columns. 

The attacks are particularly interesting because they share two characteristics.  They independently use the meme “MMT types” to disparage their opponents and they do not engage the accuracy of MMT theory.  The CNBC commentator dismisses MMT because he fears that if members of  Congress understood how monetary operations worked they would be tempted to support government programs.  The CNBC commentator has an intense ideological opposition to government programs, so he opposes MMT.  Note that he opposes MMT because it is substantively correct.  That is the oddest objection to a theory that I have seen presented.


CNBC’s hostility to MMT was predictable and its commentator was playing by modern journalistic rules with no pretense to academic objectivity.  Krugman’s disparaging dismissal of “MMT types” based on a straw man argument that he falsely ascribes to MMT is far more embarrassing because he is a globally prominent academic.

I am not an “MMT type.”  MMT is a macroeconomic theory.  I teach courses in microeconomics, law, regulation, finance, and criminology at the University of Missouri-Kansas City (and previously at the LBJ School of Public Affairs at the University of Texas at Austin).  I’m still trying to get past the first stage (being ignored) with Krugman.  He cited one of my columns favorably in his blog in which I recounted ECB President Trichet’s 2004 speech in Ireland urging new EU nations to use Ireland as their economic model.  My work explains how accounting control frauds drive our recurrent, intensifying crises and what policies create the criminogenic environments that produce fraud epidemics and hyper-inflate financial bubbles.  Criminological research findings would add considerable support and new insights to Krugman.  Scores of economists now cite our work, but Krugman still shares the characteristic reluctance of economists to use the “f” word (fraud) to describe frauds.    


UMKC’s economic department has a storied reputation going back over a half century.  It is one of the few remaining “heterodox” economics departments in America.  “Heterodox” is not a euphemism for Marxist and it is not an oxymoron describing a department filled with intellectual clones.  UMKC’s economics department is also cheerfully interdisciplinary.  They welcome the research insights of other fields such as criminology and law.  White-collar criminological theories about “control fraud” have shown far greater predictive strength than neoclassical and “modern finance” models.  White-collar criminologists falsified the efficient markets hypothesis 25 years before the hypothesis was created. 

As Jim Sturgeon, the chair of the economics department puts it: “UMKC, the place that got it right; and probably will again.”  I love Jim’s use of “probably.”  It is so wonderfully and appropriately Midwestern.  Our students are taught both the neoclassical canon and critiques of that canon.  The neoclassical model and “modern finance theory” have failed and are in their paradigmatic death throes.  Unfortunately, their dogmas will likely persist for decades and cause several more crises.  UMKC doctoral students have proven extremely successful in finding academic positions because of their broader training.  As heterodox economists, we are a tiny minority, but we punch way above our weight class.  (If you are interested in studying in an economics graduate program that is reality-based please contact us.)    
 
My closest colleagues at UMKC include Randy Wray and Stephanie Kelton and my closest colleague at U. Texas was Jamie Galbraith.  Wray is the nation’s leading MMT theorist.  (Bill Mitchell of the University of Newcastle and Wray are the best known academic developers of MMT.)  Wray was one of Minsky’s grad students and has continued to develop Minsky’s famous work on the paradox of financial stability leading to instability.  Jamie Galbraith has several specialties; including MMT.  Kelton is a younger colleague whose dissertation on government finance spawned two classic works on MMT, and the New Economics Perspectives blog — now a major player — was her creation.  I have been privileged to see each of these colleagues present on the subject of MMT in the U.S. and in several other nations and I have read Wray and Galbraith’s congressional testimony on MMT and read other academic and policy articles that they have authored. 

Mat Forstater is a colleague who is an active MMT scholar.  Mat runs our Center for Full Employment and Price Stability (CFEPS) and is particularly active in developing programs to use the government as the employer of last resort (ELR).  Warren Mosler, a hedge fund manager and leading MMT theorist, provided the primary funding for CFEPS and many of our grad students.    

Wray, Galbraith, Kelton, Forstater, and Mitchell are serious academics by anyone’s standards.  Mosler’s knowledge of actual monetary operations is legendary.  They present at major economic conferences, often as prominently featured speakers.  They are open to criticism and they engage in civilized dialogue with their critics.  One of the odd aspects of MMT is that none of the scholars who developed the theory likes the phrase “Modern Monetary Theory.”  Indeed, they do not like any of the three words in the term.  “Modern” is something of an internal joke among MMT theorists because Keynes observed that the state theory of money described events that arose over 4,000 years ago. 

MMT is a rich theory in that it is built from diverse supporting strands pursued independently that were eventually woven together to form a far stronger intellectual fabric.  The heart of MMT is not a “theory.”  It is a description of reality as opposed to an idealized theory with simplifying assumptions.  It turns out that the description of monetary operations we were taught in conventional macro courses is inaccurate in several important areas.  MMT theorists cite the statements of central bankers (even Alan Greenspan) that demonstrate that their actual operations accord with MMT’s description of those operations.  If Krugman believes that the heart of MMT – the description of actual monetary operations – is incorrect he should explain what he believes is incorrect.  He has never suggested that MMT’s description is inaccurate.  MMT has found increasing popularity among financial market participants precisely because they know that it is an accurate description of actual monetary operations. 

MMT is also woven with strands drawn from research of monetary and macroeconomic history.  One component of this historical research has refuted the conventional “just so” story of the creation of monetary systems.  MMT shows the closeness of the relationship between the sovereign and the monetary system.  MMT research shows that it was normal for the U.S. government to be in deficit and normal for the U.S. government to be in debt.  These deficits have not led to hyperinflation in the United States.  Historical research shows that the age of the gold standard was not a golden era.  The gold standard caused recurrent crises in many nations.  MMT research shows that when President Roosevelt listened to his conventional economic advisors in 1937 and attempted to balance the budget the result was to throw the U.S. back into the depths of the Great Depression.  MMT research has shown that the extremely uncommon periods in which the U.S. runs a material budget surplus are typically followed quickly by serious recessions.  Wray, Galbraith, and Kelton are appropriately cautious in concluding that this historical pattern demonstrates that the surpluses caused the recessions.  They do, however, offer a credible explanation of why budget surpluses could lead to recessions.  Again, if Krugman has specific disagreements with these findings about monetary and macroeconomic history my colleagues will be delighted to discuss the merits.  As we will see, Krugman is one of the scholars whose historical research has confirmed and extended these findings.  

The leading MMT scholars have been among the strongest spokespersons predicting that the proposed U.S. stimulus program would prove far too small and explaining why the budget deficit is a consequence of Great Recession, why vigorous counter-cyclical fiscal policies are essential to our recovery, why austerity would worsen the recession and increase budget deficits, why our focus needs to be on restoring full employment (the MMT scholars are strong supporters of government ELR programs), and why these policies are not inflationary in the current circumstances.  Krugman acknowledges that he agrees with each of these conclusions.             
        
Regular readers of comments will notice a continual stream of criticism from MMT (modern monetary theory) types, who insist that deficits are never a problem as long as you have your own currency. I really don’t want to get into that fight right now, because for the time being the MMT people and yours truly are on the same side of the policy debate. Right now it really doesn’t matter at all whether the United States issues zero-interest short-term debt or simply prints zero-interest dollar bills, and concern about crowding out is just bad economics.

Krugman agrees that the MMT scholars are correct except as to one matter: “MMT … types … insist that deficits are never a problem as long as you have your own currency.”  That is a straw man argument.  I can personally attest that Wray, Galbraith, and Kelton do not argue that “deficits are never a problem.”  MMT explains the economic circumstances in which “deficits are … a problem.”  I am unaware of any MMT scholar who asserts that “deficits are never a problem” for a nation with a sovereign currency.  It is not uncommon for academics to misunderstand an academic literature that they have not read.  I invite Krugman to read the academic MMT literature and critique it substantively.


Three aspects of Krugman’s dismissal of “MMT types” strike me as unworthy of him.  The term “MMT types” is deliberately ad hominem.  Using the term to belittle and dismiss scholars such as Wray, Galbraith, and Kelton is unwarranted and diminishes Krugman. 


The “stream of criticism” of Krugman from supporters of MMT is largely driven by his repeated straw man assertions that MMT predicts that “deficits are never a problem as long as you have your own currency.”  Krugman then attacks the straw man he created by arguing that that because deficits mattered in France after World War I (one of the subjects of his dissertation) he has refuted MMT’s (non) prediction that deficits never matter.  MMT supporters have repeatedly explained to Krugman that MMT does not predict that “deficits are never a problem as long as you have your own currency.”  Wray, Galbraith, and Kelton have emphasized that MMT predicts the circumstances in which deficits can cause problems.  World War I was fought largely on French soil, destroying and allocating real resources to the imperative of national defense.  France went off, then on, then off the gold standard.  Yes, France followed policies, in dreadful circumstances, that sometimes produced serious financial instability – as MMT would predict. 


Making a dismissive straw man assertion once is a common error.  Ascribing the same straw man assertion to “MMT types” after he had been warned repeatedly that his assertion was false evinces a serious flaw.


The final aspect of Krugman’s response that is so disturbing is his claim that he is the victim of “harass[ment]” by “MMTers.”

Now, all of this is remote right now. And notice too that France in the 1920s stabilized with debt of 140 percent of GDP — far higher than the numbers that are supposed to terrify us now. So none of this is relevant to the current policy debate.
But since the MMTers seem to have decided to harass those of us who want stronger action now but think there really is a long-run fiscal issue, I needed to put this out there.

This passage is odd on several different levels.  He asserts that MMT predicts that deficits never matters.  MMT supporters point out to him that he has erred – MMT theory predicts the circumstances in which deficits can cause severe problems.  Krugman does not respond: “thank you, I am delighted to learn that MMT does not make such a prediction.”  Instead, Krugman repeats the straw man assertion that he knows to be false.  He gets called on it – again.  He now plays the victim card: “MMTers … harass” him when he writes about MMT.  Critiques of what we write are valuable, particularly when we commit error.  There is nothing better for an academic than being saved from error by a commenter’s correction.  Krugman is both a journalist and a scholar, so he should take special joy in receiving vigorous critiques from readers of his New York Times column. 


The passage is also bizarre with regard to the substance of this argument about MMT.  Recall what I have explained about MMT scholars’ historical findings.  While MMT theory explains why severe deficits could indeed cause problems, historical research shows that nations with sovereign currencies are far less vulnerable to deficit levels than the deficit hawks assert should “terrify us.”  Deficit hawks’ primary strategy is to create what criminology and sociology call a “moral panic” (think “Reefer Madness”, the “crisis” of “illegal immigrants”, and the plague of “voter fraud” led by ACORN).  As the term implies, the goal is to moralize the issue and generate a panic that makes immediate action imperative to save the Republic.  Anyone who opposes immediate action is immoral and disloyal to the Republic.  Government deficits are generally not a “moral” matter.  Governments are not like private households.  Deficits are “just business.”  They may be good for the economy or bad for the economy.  Given the roughly 25 million Americans who want to be fully employed and cannot find such jobs, it would be far easier to craft a moral argument in favor of a larger federal budget deficit during the current economic crisis than a moral case for consigning millions more to unemployment – which is what “balancing the budget” would do.  MMT scholars are the “owls” in the debate between the deficit hawks and doves (Krugman is a dove).  MMT scholars seek to alert the public to the deliberate generation of a moral panic.  President Obama has appointed (think Simpson-Bowles) leaders of the campaign to create a moral panic.  Krugman has decried this, but he seems to believe that we have an inherent budgetary (as opposed to cost containment) crisis in health care.  I will respond to the roots of the rise in health care costs in a later column.  Hint:  I will often cite Krugman.     
  
Krugman’s historical research into France’s deficits for his dissertation is part of the academic literature supporting MMT.  He found that France “stabilized” “with debt of 140 percent of GDP – far higher than the numbers that are supposed to terrify us now.”  An MMT theorist could not have said it better.  The nature and magnitude of the deficit can cause a problem, but the deficit hawks and the deficit doves are both allowing current U.S. deficits that are far lower than France ran to “terrify us now.”  Like Krugman, in his dissertation, Wray, Galbraith, and Kelton’s research findings refute the claim that the current U.S. deficits are too large and should terrify us.  Once one strips away Krugman’s straw man misconception about MMT (“deficits are never a problem”) one is left with Krugman agreeing entirely with MMT scholars on substance with regard to current policies.  I believe that he would also agree with me that the hawks are deliberately generating a moral panic for political and ideological purposes and that it is essential that economists fight this panic and show that the policies its proponents advocate would be disastrous for the nation.  Indeed, I believe that Krugman would agree that this has been the thrust of dozens of his columns. 


Now, if I could only find him a way to get him to read the research on accounting control fraud…. 

    

*Bill Black is an Associate Professor of Economics and Law at UMKC.  He is a former senior financial regulator, a white-collar criminologist, and the author of The Best Way to Rob a Bank is to Own One.  

31 responses to “Anti “MMT Types” Memes Migrate to Stage II

  1. Great piece, Bill!And getting him to read accounting would be victory enough, much less accounting control fraud!Best,Scott Fullwiler

  2. Krugman would be correct if he simply qualified his general statement by saying that MMT believes deficits are never a problem – until they're a problem. That’s probably what he means. MMT eschews financial planning in the form of deficit projections and deficit policy projections. That is a profound weakness, because all of the competition at least attempts such a thing. The “balanced budget" notion, while wrong in terms of prudent policy, is at least a form of such planning. MMT basically responds by saying "trust us", we don’t need to plan. That’s not good enough.

  3. I fully expect Krugman to be one of the first in the mainstream to, if not embrace MMT, then at least say the same things as "MMTers". Like you say, he already largely does. Of all the things he is, the man ain't stupid. He does deserve a smack upside the head for his straw man in that post, but I'm glad you chose the rubber mallet instead of the steel sledgehammer, so to speak…

  4. MMT rightly eschews the 'financial planning' you are talking about since it's mostly meaningless, unless it's tied to projections of inflation, unemployment, and other important economic outcomes. This is a key insight of MMT, since if traditional default is impossible, then the bogey must be inflation. Case in point is the CBO model, which projects the massive future debt:GDP levels you hear about, yet inflation and employment are normal.That said, I agree that not doing any modeling/projections is probably not 'good enough' if MMT wants to win the debate and not appear reckless. If the MMT scholars can devise accurate models and perform economic projections of their policy recommendations, this would surely strengthen their case.[That said, I don't see any of the prominent economist bloggers rigorously modeling out their own recommendations. All they offer is qualitative analysis, and MMT does the same in a very substantive manner – it goes much more beyond 'just trust us.']

  5. It is enough to say that Krugman would never allow the truth to get in the way of his partisan loyalties. More than anyone I've read other than, perhaps, Juan Cole in the foreign policy field, Krugman's arguments are, first, those of a Democrat and, second, those of an economist. AndreiVyshinsky

  6. Keep pounding away at Krugman and other like him. I don't think he understands MMT and his reaction is one of NIH (Not Invented Here) Since he became a NYT columnist he's become more political and oligarchy centered, and less of a scientist. He never criticizes the banks, let alone admit they committed control fraud. His bread and butter depends on his not straying too far from the conventional "wisdom". In the end MMT will become accepted. When people like Nouriel Roubini can say Marx was right about capitalism being the seeds of its own destruction, it won't be long before the old guard in the Ivy League ivory towers loses their shine.Keep up the good work!

  7. Can I say one thing? Please stop writing about MMT. I don't want anyone else to learn this stuff before I have a chance to make my billions.

  8. Great post, Bill. However, it omits the historical fact that MMT began with Warren Mosler's paper, Soft Currency Economics (Jan 1994), which he showed to Randy who incorporated the ideas into his book and fleshed out Warren's insights with contributions of Knapp, Lerner, Godley, etc., and other academics like Bill Mitchell got on board, too.Krugman's example fails because MMT specifies that currency sovereignty giving full control over domestic monetary and fiscal policy requires monopoly provision of a non-convertible floating rate currency without foreign borrowing. While the first two conditions were met since the gold standard did not apply then, France was indebted to foreign lenders (US) in their currency rather than the franc, which limited France's domestic options as MMT says. Moreover, France was destroyed and unable to collect reparations from Germany to meet obligations it was struggling with after a devastating war. Of course, France was not alone in this predicament, and the debt and reparations overhang lead to global depression and laid the ground for WWII. France is hardly an example of a country using MMT principles that got into trouble with inflation because MMT did not work. Not only was it not tried, but the conditions did not exist.In fact, in his 1926 letter, Keynes counseled France that their problem was that while the franc was devalued internationally, there had not been sufficient inflationary adjustment in France at the time to offset internal debt, so that France was struggling not only with external debt with rentier income that was disproportionate to circumstance. See J. M. Keynes, Essays in Persuasion (1931), II, 3, p. 105-117.

  9. "One of the odd aspects of MMT is that none of the scholars who developed the theory likes the phrase “Modern Monetary Theory.”?Bill Mitchell labelled it so.

  10. Great article, Mr. Black !I've watched your interviews on different TV channels discussing financial fraud even before I knew about MMT. You are one of the most well known faces on American television with an already established and well deserved reputation in your field of expertise. It would be great if in the future you could put more effort into spreading the word about MMT thereby helping your colleagues and friends, and America, and the world.

  11. If not MMT, what would you call it?

  12. "Krugman's example fails because MMT specifies that currency sovereignty giving full control over domestic monetary and fiscal policy requires monopoly provision of a non-convertible floating rate currency without foreign borrowing. While the first two conditions were met since the gold standard did not apply then, France was indebted to foreign lenders (US) in their currency rather than the franc, which limited France's domestic options as MMT says."Bingo.He also wrote: "because France’s budget problem was overwhelmingly the debt overhang rather than current spending…" and then writes "the biggest source of our long-run deficit isn’t the overhang of debt…" So France is relevant because he happens to have written his dissertation 'bout it ….There's also a conflation of "liquidity trap" and "debt overhang."By the way, when I point my friends – and my enemies – to this place, what should I call you if not MMT people? Nobody goes nowhere with no brand in America, ya know.

  13. Dave,We aren't running from MMT. Calls us MMT. Call us deficit owls. Just call us!

  14. I didn't realize the beginning quote was from Ghandi. The scientist in me always related it to the phase changes of verity: All truth passes through three stages: First, it is ridiculed; Second, it is violently opposed; and Third, it is accepted as self-evident.

  15. You saw this article from Krugman? http://krugman.blogs.nytimes.com/2011/08/12/the-cracked-conservative-mirror/#Complaining about people misrepresenting one's position. "A few minutes searching this blog would disabuse them of these beliefs, but they don’t need to check — they know."Wow, you can't make this stuff up. "I have no hope of actually getting through with this, of course. For to actually understand what people like me are saying, we’d have to get past crude slogans and simplistic nostrums. The problem is obvious."Some have complained about being to hard on Krugman. Seems he's used to being hard himself.

  16. You know, it is just truly sad that Krugman won't take that little extra step and read up on MMT and control fraud. I have a feeling he would likely agree and with his fame, he *could* be a truly transformative person in changing this world into a better place.

  17. Bill,John Carney appears to have responded to this article – Would Modern Monetary Theory Lead to Crony Capitalism? Quote:In short, the part of the monetary system that some MMT enthusiasts regard as a feature seems to me a lot more like a bug.“Note that [John Carney] opposes MMT because it is substantively correct. That is the oddest objection to a theory that I have seen presented,” William Black has written over at New Economic Perspectives.I think that’s largely right. The problem with MMT is that it fully understands the way our monetary economy operates but doesn’t couple this with a full understanding of the way our political economy operates. The likely consequence of MMT’s influence on politics is not more rational policymaking. It’s more crony capitalism.

  18. @ Bob Lavergne"All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident".I think this quote originated earlier: Arthur Schopenhauer (1788~1860) – Quotes

  19. I found my way here after hearing about MMT through Krugman's blog. Still have a lot to learn but so far I'm thrilled at the prospects for a much better society. I look forward to the next response to Krugman's latest and I wonder if someone might have a response to this from the WSJ:http://t.co/[email protected]

  20. Say what you will about Krugman as an economist, he's a brilliant blogger; quite the stylist! I'm thinking he missed his metier…

  21. Dear UM-Kansas City professors who are part-time bloggers and are therefore justified to reply with links to previous writing if you find it expedient unless this blog starts earning you Kos-level fame and fortune (although a "read first" or faq link might save you/us some time),Is your primary area of disagreement with Paul Krugman that he is a "deficit dove"? or are there are fundamental economic/other areas of disagreement? If the following is an answerable question, what/where are the answers: "If you stumble on examples of events that they [NEP blog] say their theory explains and traditional progressive Krugman-esque economics does not, and their explanations of why, I'd be interested."I don't claim such "events" exist nor have I read every post on NEP in pursuit of references but if they do what might they be? Nor do I claim you are doing different economics than "beltway progressives" or Paul Krugman because I wouldn't know if you were. My sense is you have a different understanding of the federal budget and its relationship to the economy and therefore draw different policy conclusions.Andy of Allentown

  22. You're being far too kind. Any "scholar" that is being deliberately obtuse like this is playing games. Or politics. In fact, it makes much more sense if one views Krugman as a Democratic partisan rather than a journalist or serious academic. He may be capable of serious economic analysis, but obviously his allegiance to the Democrats and the status quo trumps real honesty (at least full honesty, he can be more than honest when he's criticizing the Tea Party, for instance). But the fact remains that Krugman is engaging in a hack job and while you are being far too kind to him in response it is very clear he is attacking MMT for political reasons. He's a hack–that's clear now. You should treat him as such. And actually aiding and abetting the criminals–so he doesn't want to read about your control fraud. He will continue to ignore it and belittle you the best he can to cover up for the crooks.

  23. "I fully expect Krugman to be one of the first in the mainstream to, if not embrace MMT, then at least say the same things as "MMTers". Like you say, he already largely does. Of all the things he is, the man ain't stupid.He does deserve a smack upside the head for his straw man in that post, but I'm glad you chose the rubber mallet instead of the steel sledgehammer, so to speak…"I simply don't understand this sentiment. It's being far too kind to Krugman and setting up this false hope in him–as if we should be waiting for Krugman to "get it" and support MMT, when it's his job to not "get it", and in fact is trying to sow disinformation and diminish the very idea you want him to get. If he's intelligent enough to realize that he is engaging in a straw man argument why do you give him a pass for engaging in a straw man and hope that he gets it in the future? So many progressives exhibit this same hope with Obama. He's attacking you, not helping you attack the 'other side.' When are people going to stop giving the Krugmans and the Obamas free passes? They are not on your side. They are loyal to the Democratic party and the current elite. Krugman is simply playing the scholar role and writes for the NYTimes so he has to jump through more hoops to make it look like he's thoughtfully considering all the arguments (even though those hoops are getting easier and easier to jump through–he claimed a simple blog post in between his text book editing was a sufficient refutation of the entire body of MMT work). So he my throw the MMT people a bone in the future, or privately reach out to them, because he has to to save face, but in the end his job is to stick the shiv in the back of MMT.

  24. WK Black wrote:'MMT explains the economic circumstances in which “deficits are … a problem.” 'and, 'MMT supporters have repeatedly explained to Krugman that MMT does not predict that “deficits are never a problem as long as you have your own currency.” Wray, Galbraith, and Kelton have emphasized that MMT predicts the circumstances in which deficits can cause problems.'So how about providing links or citations to support these assertion? This is the crux of the disagreement with Krugman.

  25. I am not an economist, and I really don't understand finance at all. That said, my read of Krugman's objection to "printing money" rather than borrowing it through the issue of T bills is that it will lead to hyperinflation.But isn't that a matter of degree? I mean, if the economy is producing at or near capacity, increasing the amount of money will result in inflation. But the money supply usually increases somewhat, and there is usually a moderate rate of inflation. Suddenly paying for the entire enterprise of government with "printed" money would certainly lead to hyperinflation, but I just don't understand haw a small influx of "printed" money as opposed to borrowed money would lead to more than a small amount of inflation.But of course I am constantly reminded that I don't know what I'm talking about.

  26. In my eyes, Krugman has already dug himself into quite a deep hole there (by making the same strawman over and over again). It is becoming increasingly difficult for him to accept the MMT paradigm without losing face.

  27. BaldApe – you understand finance better than Krugman. The idea that there is a substantial difference between "printing money" & "printing bonds" (misnamed "borrowing" – government "borrowing" is not borrowing) is stark raving mad, as is the weird practice of calling "printing money" "seignorage". All of the value of any form of modern fiat money is "seignorage".Bonds are just a kind of money. Money, currency is just a kind of bond. Bonds are money that inflates itself – call them Inflatos. Hyperinflationistas believe that the only thing holding back hyperinflation is printing lots of Inflatos, and there will be hyperinflation if we print non-self-inflating money instead. Does that make sense to you?

  28. Calgacus, I wouldn’t describe the idea that there is a substantial difference between money printing and bond printing as “mad”. There could be a substantial difference if (in the case of bonds) crowding out has a significant effect. The problem here is the widespread disagreement on the extent of the crowding out effect.What really is mad, seems to me, is going for a policy where there is widespread disagreement on the effect. A second reason for madness here is: what’s the point in a monetarily sovereign government borrowing money for stimulus purposes when it can print money for free itself? This is no different to a dairy farmer buying milk in a shop when there is a thousand gallon tank of milk outside the farmer’s back door.

  29. "Right now it really doesn’t matter at all whether the United States issues zero-interest short-term debt or simply prints zero-interest dollar bills, and concern about crowding out is just bad economics."I disagree. From a budget and time perspective, there is/are difference(s).

  30. @ Had enough,QE is not working. Go back and follow Wray's MMT primer. Zero interest will do nothing to stimulate the economy without fiscal stimulus to create employment which in turn provides incentives to lend. Unemployment = Uncreditworthy population. e.g.,Explain private sector being crowded out to Auto Dealers near Military bases/government installations. Would make a lot more sense in create A CCC to do public works. Which would give even more bang for the buck