Modern Money and Public Purpose 2: Governments Are Not Households

Presentation by Warren Mosler and Stephanie Kelton. Presented at Columbia Law School on September 25, 2012 as part of the Modern Money and Public Purpose series.

39 Responses to Modern Money and Public Purpose 2: Governments Are Not Households

  1. Moderator: “If things work as you say they do, then why don’t the policymakers take advantage and do what you say they should do?” (Or something to that effect)

    Upton Sinclair: “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”

    Great show, btw.

    • I loved it when Warren turned to the Moderator and then asked him to answer that question. From what both of them said it seems pretty clear this is not a mystery to a lot of people. And it shouldn’t be. For the better part MMT is not rocket science. Anyone who spends a few hours with Warren’s little book or the many slide presentations by Wray and Stephanie would have the basics. So I no longer believe our “leaders” don ‘t understand. Something else is going on here, a dirty little secret I suspect. I’m not taken to conspiracy theories but this refusal to understand approaches it. So what does that say about what we, the general public, should be doing?

  2. A question for you esteemed MMT’ers out there:

    Would it be fair to say that the primary cause for the recession/depression here in the US as well as across the Euro area is due to mismanagement of fiscal policy going back to Clinton surpluses? That if we had simply cut taxes or ramped up spending enough we wouldn’t be facing this situation? (assuming the Euro’s still had their own currencies)

    Stephanie makes the point that running surpluses has always led to recessions, do you agree that it is that simple of an explanation? Clinton running the surplus led to massive borrowing and unsustainable private debt, so (along with deregulation of derivatives and government incentivizing of borrowing) we ended up with the housing bubble?
    Could we conceivably avoid any kind of recession by managing it correctly from this perspective?

    • Jerry: Would it be fair to say that the primary cause for the recession/depression here in the US as well as across the Euro area is due to mismanagement of fiscal policy going back to Clinton surpluses?In short – Yes. Particularly about the Clinton surpluses.

      Could we conceivably avoid any kind of recession by managing it correctly from this perspective?
      No on the “any kind”. That is what the Old-Keynesians tried to do. To fine-tune, generally from the top-down, which made it much harder. One way or another, the business cycle is not going to be abolished. People will always make misteaks, and they’re going to accumulate & feed on themselves. A sane economy, with a JG, would permanently raise GDP & its growth. But there would be fluctuations, perhaps even financial crises. But they would merely result in the enlargement of the JG pool. Human intelligence & action would be used to make their impact minuscule in comparison to nowadays . Which is like machine-gunning people who lose at a game of musical chairs.

      Spending & tax cuts can alleviate crises, avert problems for a while, as the Bush tax cuts & spending kept the damage associated with the Clinton surpluses from appearing for a while. But it matters whose taxes are cut, who is spent on, Bush making pretty much the worst possible choices, requiring the biggest deficits. So the private debt-fueled party became unstable & had to end. More precisely, the problem was the austerian setting of US taxation and spending levels during Clinton-time & before (& after, for the ordinary person). So a good economy with rising real wages, the first in a long time, led to excessive taxation, spending shrinking too fast, and since there was no real-world reason for it to end, private debt didn’t look crazy, which kept the thing going on. Has there been a JG in 1999, it would have been small. Then once the dotcom bubble burst, it would have greatly increased, an automatic stabilizer & the relatively good times under Clinton would have kept on going until private debt levels became tolerable again. The Great Stagnation aka Great Moderation would have definitely ended.

      • One way or another, the business cycle is not going to be abolished. Calgacus

        I read somewhere that the business cycle was unknown until central banking was invented but in any case we do not need nationally (globally?) synchronized business cycles such as we have now. The key to eliminating those is to abolish government priviledges for credit creation and usury and to allow genuine private money alternatives, especially those which are not based on credit creation or usury.

        Our current system drives people into unsustainable debt since those who don’t borrow from the counterfeiting cartel are priced out of the market by those who do borrow. But even if credit creation was totally eliminated, the honest lending of existing money is unsustainable according to Karl Denninger since the interest normally compounds faster than real economic growth.

        But consider common stock as a private money form. Common stock is not lent into existence so there is no necessary need for it to return to the issuer, much less with interest. Nor does the issuing of common stock create any liabilities for the issuing company since common stock is normally not redeemable. Instead, the receiver of the common stock becomes a co-owner of the issuing company.

    • Thomas Bergbusch

      As I understand it, what you suggest makes sense in terms of proximate causes, but that Randall Wray and Stephanie Kelton and the rest of the MMTers would largely agree with Minky’s longer-term view that the post-1976 neoliberal growth model relied on rising debt and asset price inflation to fill the hole in aggregate demand created by wage stagnation and widened income inequality. Minsky’s financial instability hypothesis explains how financial markets filled this hole and were able to defer corrective episodes of deleveraging through financial innovation. But this just meant that the reckoning was deferred. As I understand it, this does not mean that the current crisis necessarily requires some “Darwinistic” culling — exactly the opposite, since sufficient public sector spending, things like the job guarantee, could remedy the short-term realities of our depression, but that there remains debate among post-keynesians, MMTers, circuitists, etc., on the extent that existing stocks of debt have to be reduced to avoid future crises. (Hope I got that right.)

  3. Also, does anyone know if there is a PDF available of the slides used in this presentation?

  4. Nice show.

    Btw, one can be for a 100% reserve lending requirement* AND for continual budget deficts by the monetary sovereign. They are not at all mutually exclusive. Why imply they are, Stephanie? Moreover, a 100% reserve requirement would allow much tighter control of the current combined government/private sector money supply by the monetary sovereign. If the private sector desires to create its own private money then let it but NOT via government priviledges that allow it to leverage government money.

    *Or at least the removal of ALL government priviledges for the banks such as deposit insurance and a legal tender lender of last resort.

    • From your mouth to the” Invisible Hands” ears.
      What if :
      The Federal Reseve Bank (almost all agree can make unliminted purchases of assets)
      were to purchase ALL residential and commercial real estate loans outstanding and rather than the stupid practice of being guarantor to actually become the lender of future loans.
      Correct QE3 (Infinity) stop bailing out the foxes in the hen house, stop foreclosures (85% of which the homeowners wish to stay and pay), start curing the crisis in housing, create millions of jobs.
      Immediately , modify all loans at 2% for 36 years.What would that do for the “people”?
      Force the banks to comply by doing what the Fed failed to do in 2001-demand 100% reserve.
      How great would it be if the banks needed $100 trillion to be whole at 100% reserve?
      At 2% for 36 years that would produce $5.5 trillion per annum in “RAISED REVENUE INSTEAD OF TAXES”.
      “The Wealth of a Nation is in How it Redistributes That Wealth” by justaluckyfool.
      Excerpts contain quotes by Steve Keen, Michael Hudson, and others but most important
      theory of Frederick Soddy “The Role of Money. 1926,1933″.
      What if:
      As Soddy thought, “A Monetary Sovereignty must be the sole issuer of its currency”
      The currency is a representation of all the goods and services of that Sovereignty and that currency
      be it paper, metal or whatever is the system of distribution.

      • Immediately , modify all loans at 2% for 36 years.What would that do for the “people”? justaluckyfool

        Your plan does nothing for non-debtors except perhaps indirectly thus it is not politically feasable.

        Steve Keen’s univeral bailout (which he calls “A Modern Debt Jubilee”) gives new fiat equally to the entire population. Who can oppose that especially if it is combined with leverage restrictions on the banks to prevent price inflation?

        • The modern-ness may lie in it not being a debt-jubilee exactly, as the gains of the general population are funded by borrowing by the government.
          At least that’s the way I understand it.
          Why bother?

          • Keen recommends that central banks create the new money but Greenbacks could be used instead.

            • F.
              I had not seen anything about that.
              So, CB balance sheet holds what for collateral from whom?
              Of course, Greenbacks are the only real answer.
              But the CB can’t issue those.

              • Here’s Steve Keen himself:

                A Modern Jubilee would create fiat money in the same way as with Quantitative Easing, but would direct that money to the bank accounts of the public with the requirement that the first use of this money would be to reduce debt. Debtors whose debt exceeded their injection would have their debt reduced but not eliminated, while at the other extreme, recipients with no debt would receive a cash injection into their deposit accounts.

                The broad effects of a Modern Jubilee would be:

                1. Debtors would have their debt level reduced;
                2. Non-debtors would receive a cash injection;
                3. The value of bank assets would remain constant, but the distribution would alter with debt-instruments declining in value and cash assets rising;
                4. Bank income would fall, since debt is an income-earning asset for a bank while cash reserves are not;
                5. The income flows to asset-backed securities would fall, since a substantial proportion of the debt backing such securities would be paid off; and
                6. Members of the public (both individuals and corporations) who owned asset-backed-securities would have increased cash holdings out of which they could spend in lieu of the income stream from ABS’s on which they were previously dependent.

                Clearly there are numerous complex issues to be considered in such a policy: the scale of money creation needed to have a significant positive impact (without excessive negative effects—there will obviously be such effects, but their importance should be judged against the alternative of continued deleveraging); the mechanics of the money creation process itself (which could replicate those of Quantitative Easing, but may also require changes to the legal prohibition of Reserve Banks from buying government bonds directly from the Treasury); the basis on which the funds would be distributed to the public; managing bank liquidity problems (since though banks would not be made insolvent by such a policy, they would suffer significant drops in their income streams); and ensuring that the program did not simply start another asset bubble. from http://www.debtdeflation.com/blogs/2012/01/03/the-debtwatch-manifesto/ [emphasis added]

                So Keen does not suggest using Greenbacks but the next best thing – new fiat directly from the central bank in exchange for government bonds. Of course that leaves open the possibility that the CB could resell those government bonds but that could (and should) be forbidden by law.

                Greenbacks are, of course, the clean solution. Government backed central banks are an abomination.

                • F.
                  Thanks a lot.
                  Been away sailing for a few days and still rocking a bit.
                  That great explanation leaves us a LOT of stuff to consider..
                  I hope you agree that ultimately, the debt jubilee is not a debt jubilee, it is a debtor bailout BY the government.
                  And, reading between the lines, it is somewhat of a bailout OF the debt-issuing creditors.
                  Let’s begin by saying that the statutory requirements are significant.
                  Yes, they can be done, but at what cost and what are the alternatives.
                  One would be Greenbacks.
                  I hope we are all ready to discuss this at the proper time.
                  It seems to be “sort-of” like QE, in the sense that the proposal seems to avoid the QE-issuing CB in favor of the Regional Feds. Who owns THEM, by the way?
                  It ultimately confirmed my point that the whole thing is about more government debt, akin to GWB’s stimulus of $600 per person.
                  Ignoring the details for the moment, as you said, Greenbacks are the cleaner option.
                  Greenbacks, or ‘money-printing’ as Lerner called it, avoids private regional banks indebting the taxpayers, and, as this IMF Research Paper suggests, actually substantially reduces both government and private debt, which is exactly what is needed..
                  http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf

                  I don’t understand how the debt-funded. quasi-jubilee and quasi-QE could be a better option than the Kucinich Bill.
                  For the Money System Common.

          • If the Fed accumulated the same amount of debt as the debt-jubilee then it would shift the balance from private debtors to Fed held debt which is essentially fictitious. The profits are rebated to the Treasury so its doing nothing but driving in a circle without ever hitting the road as a real obligation. Fed debt isn’t debt. Ron Paul proposed a bill to cancel it which actually ironically makes him an MMT hero.

            http://www.huntingtonnews.net/7025

            So we should bother with it in a big way.

            • James
              Not sure what you mean by the ‘private debtors’.
              Do you mean the private holders of the public debt – those who now receive interest payments?
              Because I think of them as private ‘creditors’, and the government – who makes the interest payments on behalf of the taxpayers – the debtors.
              The transfer of this public ‘debt’ to the Fed merely provides liquidity to those private creditors, an interest-earning asset to the Fed, and no-change to the government and taxpayer. (Just Keep Paying !)

              The transfer of excess-earnings to the Treasury is not a legal requirement, merely a policy of the Fed Board – a policy that depends upon the Fed making a profit and not a loss. Somehow.
              It is meaningless and provides a balance of less than zero in the Fed-GUV interaction.
              There is nothing fictitious about the government debt, no matter who holds it.
              Public Debt instruments are marketable securities.
              The Fed can put those securities back on the market tomorrow.
              Fed balance-sheet reduction.
              Interest payments back to the private holders.

              No, the fiction here with regard to the Debt Jubilee is the historic tradition of an actual ‘cancellation’ of debt, usually with a complementary re-transfer of the pledged land, etc, rather than merely a transfer of the private debt to the public, from whom it will be collected.
              And, on the other hand, there is the unspoken NON-fiction, the factual, legal, reality that it is the people’s government, and not the private bankers, that have the power and authority to create, issue and regulate ALL of the nation’s money.
              Without debt.
              Now, that would be cause for Jubilee!!

              • Those who hold government debt would actually technically creditors. What I mean by debtors are those who owe some sort of bank credit. Because the profits of any interest bearing security held by the Fed are rebated to the Fed its indistinguishable essentially from issuing “greenback”, Treasury issued currency. Now if you are saying that “a policy of the Fed Board ” can thwart this, then I suppose it can but Congress can just as easily do one thing as the other. I personally don’t see a reason to even have a Fed. I think we should have a simple greenback system.

                • James.
                  Thanks.
                  “”Because the profits of any interest bearing security held by the Fed are rebated to the Fed its indistinguishable essentially from issuing “greenback”, Treasury issued currency.””
                  I think you meant they are rebated to the Treasury, and not the Fed.

                  I would argue, no, it is not “indistinguishable essentially” from issuing “greenback”, Treasury issued currency
                  It is quite distinguishable. I ask if it is “essentially” the same thing, then why do it?
                  Those are ‘pretend’, kind-of, privately-issued “Greenbacks”.
                  They use privately-issued money and are backed up by a legal requirement for payback by the government with interest on a date certain.
                  They are unnecessary.
                  They increase public debt and purchasing power transfers. There was no debt-issuance with the Greenbacks.
                  Which is why I totally agree that, “we should have a simple Greenback system.” (my emphasis)
                  Which is what the Kucinich Bill does.
                  http://kucinich.house.gov/uploadedfiles/need_act_final_112th.pdf
                  My statement was that it was Fed policy to DO this (returning net profits) not to thwart doing this. The devil is in the details of determining net-profits – ultimately.
                  For the Money System Common.

        • “Immediately , modify all loans at 2% for 36 years.What would that do for the “people”? justaluckyfool.
          Your plan does nothing for non-debtors except perhaps indirectly thus it is not politically feasible.
          Steve Keen’s universal bailout (which he calls “A Modern Debt Jubilee”) gives new fiat equally to the entire population. Who can oppose that especially if it is combined with leverage restrictions on the banks to prevent price inflation?”
          First, I must thank you for your challenge because “only after due examination” should a concept be accepted.
          REPLY:
          If all the loans on land and improved land value were to made by the Monetary Sovereignty instead of simply guaranteed the loans would be backed by 100% currency. Let’s say for example for a sum of $36 trillion (makes the math easy because at 2% for 36 years it would produce a “revenue, or income in place of an income tax of $2 trillion per year.
          How good is that for all the people?
          For the individual homeowners, especially the 85% that want to stay in their homes, it makes their homes affordable EVEN IF THE NOTE IS GREATER THAN ITS PRESENT DAY VALUE.
          A home with a mortgage for $120,000 would have a monthly payment of $556 per month.
          Plus the added benefit that they will gain value as the price of the home may increase because the assumable mortgage with its fixed rate will allow the homeowner to capture that gain.

          Or what if, this small move which would produce $2 trillion per year revenue (since all income to the Fed Reserve must go to the US Treasury) , how about then we drop FICA.
          What would that do , I in particular ask Dr. Wray as in “Job Guarantee”
          Lower real estate (commercial buildings) cost= lower production cost.
          Lower tax with holdings = raise in pay.
          Lower cost of wages (No corp FICA co-pay)= increase in profit.
          WITH A SUM TOTAL OF MASSIVE JOBS CREATED WITH PRICE STABILITY INTACT.

          As for ” cancellation of debt” , only one benefits, the borrower and since that is such a lopsided result, it may have many unintended consequence: Why pay any debt when one needs only to “string it along for seven years or so.” And who would lend, knowing that debt could be outright just forgiven. (Would that become a risk factor?)
          As for “universal bailout”. That does not begin to address the problem. Even Keen said , “credit expansion.. in uncomprehesable amounts”. Von Mises, “unavoidable collapse- credit expansion”

          We must take away the power from the private for-profit banks to issue (“print”) legal currency and that stupid practice “charge interest” on that currency.

          Please,

          challenge,

          clarify,

          or improve.

          I am just a fool in search of profound answers.

          Please, anyone with a voice that is heard, please “after due examination”

          promote that which you find to be of a benefit to all mankind.

          If I , a fool, who has but only for such a very short time found from “due examination”

          articles from Steve Keen, Michael Hudson, L Randell Wray, Warren Mosler and taken from them

          what I ,just a lucky fool, found to be true added to that some of what Frederick Soddy wrote

          “The Role Of Money””Virtual Wealth”.

          Please,please by the grace of an “Invisible Hand” join forces to do what Lincoln did for

          those who knew they were slaves; set the American free from possible servitude and turn them on to a path of prosperity.

          Justaluckyfool Rules:

          A Monetary Sovereignty must be the only source of issuance of its currency.

          A Monetary Sovereignty must use that currency as a system of distribution of itswealth.

          A Monetary Sovereignty must “by the good faith and credit of its people”

          guarantees that no matter what physical form its currency is

          it is redeemable in “goods and services” by the Sovereign Nation”

          A Monetary Sovereignty must have in place ways and means to protect the quality and quantity of its currency.

          As Frederick Soddy wrote, “Money now is the NOTHING you get for SOMETHING before you can get ANYTHING”.

    • If we had industrial finance one could debate that against full reserve currency. What possible justification is there to expand money with loans against ground rents? The expansion of the money supply as a byproduct of nothing could certainly be done far more cheaply with larger deficits.

  5. The Dork of Cork

    As the chief warlord of Dorknonia I am not satisfied with this deficit arrangement.

    I think we can use our domestic resourses (energy etc) to sustain domestic demand and investment.
    I will spend more domestic money to burn up my resourses before others get their oily little hands on the stuff.

    What size army has Keltonia again ?

    All Keynesian stuff leads to war………….it first happened in 1914 with the production of those 10 shilling notes with interest.

    Produce fiat to reduce the bank leverage – yes , but to claim resourses beyond ones borders is a act of war before a shot is fired.

  6. The Dork of Cork

    Dorkonia even…………….

    http://www.youtube.com/watch?v=OevB_oft7_0

  7. Absolutely brilliant presentation from Stephanie and Warren. Many Thanks.

    It’s a pleasure to hear such a clear and convincing explanation of how the economy really works compared to the obfuscatory drivel pumped out daily in the media, even by such reputable sources as the BBC here in the UK.

    That’s an awful lot of brainwashing to overcome, but it’s heartening to see MMT is gaining momentum and important new allies such Steve Keen.

  8. Perhaps MMT enthusiasts should also comment more about the implications of money supply data in relationship to austerity programs and deficit hawks:-

    http://www.telegraph.co.uk/finance/economics/9242042/Record-collapse-in-UK-money-supply-blamed-on-banks.html#disqus_thread

    • “The drop has come despite the Bank’s efforts to boost the stock of cash in the system with £325bn of QE stimulus. However, banks and investors are hoarding the money in safe assets…”,Quote from
      “Record collapse in UK money supply blamed on banks”

      “There in lies the rub”,Why blame the private for-profit banks for doing their job-Maximize profits for the benefit of their owners.

      The solution as stated by Keynes, Minsky and Soddy along with many others is to

      “separate private for-profit financial institution from government. ” It is the providence of government “to promote the general welfare”.

      Quote Soddy, ”

      http://archive.org/stream/roleofmoney032861mbp/roleofmoney032861mbp_djvu.txt
      THE
      ROLE OF MONEY

      WHAT IT SHOULD BE,
      CONTRASTED WITH WHAT IT HAS BECOME
      By

      FREDERICK SODDY

      M.A. (Oxon) ; LL.D. (Glasgow) ; F.R.S. ; Nobel Laureate
      in Chemistry, 1921 ; Author of ” Science and Life ” ; ” Wealth,
      Virtual Wealth , and Debt ” ; ” Money versus Man ” ; etc.

      PREFACE

      This book attempts to clear up the mystery of
      money in its social aspect. With the monetary
      system of the whole world in chaos, this mystery
      has never been so carefully fostered as it is to-day.
      And this is all the more curious inasmuch as
      there is not the slightest reason for this mystery.
      This book will show what money now is, what it
      does, and what it should do. From this will
      emerge the recognition of what has always been
      the true role of money. The standpoint from
      which most books on modern money are written
      has been reversed. In this book the subject is not
      treated from the point of view of the bankers
      as those are called who create by far the greater
      proportion of money but from that of the
      PUBLIC, who at present have to give up valuable
      goods and services to the bankers in return for
      the money that they have so cleverly created
      and create. This, surely, is what the public
      really wants to know about money.

      It was recognized in Athens and Sparta ten
      centuries before the birth of Christ that one
      of the most vital prerogatives of the State was
      the sole right to issue money. How curious that
      the unique quality of this prerogative is only now
      being re-discovered. The” money-power ” which
      has been able to overshadow ostensibly responsible
      government, is not the power of the merely ultra-
      rich, but is nothing more nor less than a new
      technique designed to create and destroy money
      by adding and withdrawing figures in bank ledgers,
      without the slightest concern for the interests of
      the community or the real role that money ought
      to perform therein.

      The more profound students of money and,
      more recently, a very few historians have realized
      the enormous significance of this money power
      or technique, and its key position in shaping the
      course of world events through the ages. … It is con-
      cerned less with the details of particular schemes
      of monetary reform that have been advocated
      than with the general principles to which, in the
      author’s opinion, every monetary system must at
      long last conform, if it is to fulfil its proper role
      as the distributive mechanism of society. To allow
      it to become a source of revenue to private issuers
      is to create, first, a secret and illicit arm of the
      government and, last, a rival power strong enough
      ultimately to overthrow all other forms of
      government. ”

      And for fun, read:
      “The Wealth of a Nation Is In How That Nation Redistributes Its Wealth”
      by justaluckyfool.
      In hope that it receives a profound -
      CHALLENGE, IMPROVEMENT, CLARIFICATION, CORRECTION, THEN USE IT AS YOUR GUIDE!

      • Whoa!
        MMT is very much prepared to deal with the neo-classicals and the Keynesians, plus of course the Austrians of gold, or commodity money, and of either the fractional-reserve or full-reserve free-bankers, but I seriously doubt they are prepared to deal with the Soddy school.
        Here was a man who scientifically discovered the Role of Money, and did not discover it while lost in the unit of account fog of reserve-based banking. Neither electronic-money nor double-entry bookkeeping were present to obfuscate the relationship between the distributive mechanism of our national wealth, a.k.a. money, and our ultimate well-being.
        For all those who discovered MMT after an honest search for an alternative for ‘something better’ than the Phase-I debt-induced 2008 financial-monetary fiasco, do yourselves a favor, and go back and read Soddy.
        Then help us join these two.

        • Shouldn’t Keynes and Minsky be an easy fit with Soddy when it comes to “free banking”
          (What a lousy term-it sure doesn’t sould like “separation of private for-profit banks from government privelege”.
          Anyway, please, a little due examination by MMTers, find what they agree upon or what can be agreed upon.
          Isn’t this a site, “This website offers policy advice and economic analysis from a group of professional economists, legal scholars, and financial market practitioners . We started this blog in order to weigh in on the serious challenges facing the global economy following the financial meltdown in 2007. We aim to provide an accurate description of the cause(s) of the current meltdown as well as some fresh ideas about how policymakers — here and abroad — should address to the continued weakness in their economies. Our approach, which has been dubbed “Modern Money Theory” or “The Kansas City Approach,” builds on the work of Abba P. Lerner, John Maynard Keynes, Hyman P. Minsky, Wynne Godley and other important figures of the past. Above all, we are careful to provide analyses and policy recommendations that are applicable under a modern, fiat money system.”

          What if instead there was a post that addressed the possibility of both Obama and Romney having a solution to the way and means of , (as stated on ” 60 minutes” (12/11/11)”
          President Obama said,”You can’t raise revenues by lowering taxes unless you get the money from somewhere else.” ?
          And as Gov. Romney stated many times,” Lower taxes and not increase deficit spending”
          KEYNES AND MINSKY AGREE:
          Separate private for- profit banking from a government that has the interest of the general welfare of its people.
          Challenge, improve, clarify, correct, :
          “We can lower federal income taxes to zero for everyone, while we increase revenue by using that “somewhere else”, that is charging interest on the issuance of “our unlimited currency”.
          May God continue to bless America and allow “social media” to help us correct where we went wrong.
          Why isn’t “paying interest instead of income taxes” a principle of “Theories of Money and Banking” ,
          “Modern Money Theory”.
          Not only Keynes and Minsky, but how about William Black’ s thoughts about banks and financial institutions, put togetther with Michael Hudson’s thoughts about compound interest.
          Why would this site then not post “that which could benefit all mankind”. Why just walk away from possible properity for all and our children?
          OMG What if a fool could put something togetther like: , “The Wealth of a Nation is in How It Redistributes its Wealth.”
          (by justaluckyfool) and it were found after due examination, improved and corrected , it were deemed to be a guide to the path to prosperity.
          Ask Michael Hudson, “What if after winning over the opposing forces, The devilish Imps (Interest and compound interest) said, ‘ We shall serve a new master; prosperity and happiness’.?

          Read :

          http://archive.org/stream/roleofmoney032861mbp/roleofmoney032861mbp_djvu.txt
          “THE ROLE OF MONEY” “Virtual Wealth” by Frederick Soddy.

          • luckyfool
            Missed this comment.

            Whoa! Again.
            We’re always looking for the possible coalescing of elements to bring about the critical mass NEEDed to effect a truly transformational betterment for our society.
            Please don’t think that I have written off the benefits from the MMT school. It’s leaders call for use of the monetary system for achieving social justice. I don’t oppose it at all. I just want to change it in order for MMT to actually work in an open political-economic dialogue.
            And it’s no time to be shy about making your contribution, whatever it might be.

            My Dad taught me first about Soddy.
            My Dad’s criticism of Minsky was his kind of “bubble” view of the problem of financial instability. That instability is a symptom of the impossible mathematics of the debt-based system of money, which periodically (cyclically) MUST crash because of the math.
            But by the mid-90s, Minsky had come around to recognizing the potential benefits of monetary reform, as advocated by Soddy and Fisher. He called for a new National Monetary Commission to work things out.
            MMT ignores that avenue of Minsky’s progress, calling full-reserve banking a throwback to the gold standard.
            They’re wrong. But they think they’re right.

            When it comes to Romney and Obama, I’m advised to say nothing at all.

            As for as separating the private banking privilege from right of public money-creation, that is what the Kucinich Bill does.
            We are at a point in time where the solution that MMT espouses is available – for real and not in theory – in a Bill lain on the Table of the Congress Assembled.

            And also at a point where the IMF researchers have modeled our economy using such a non-debt based system and resolved not only for Minsky’s hypothesis, but for long term inflation, deflation and debt.

            It’s the Money System Common.

            • Thank you for your reply.
              It is my hope that “social media” somehow, someway will communicate with all people so as to educate all as to where we are going wrong, if we are going wrong and how to fix it or how to improve it.
              But free dialog is needed in a free channel.
              Where can this be done ?
              Where can the people of the world, perhaps starting with the American people, where can we go to challenge, improve, and correct our governing so as “to form a more perfect union”.
              MIT , please extend xMIT, maybe questions would be answered.
              Joebhed, “As for, As for as separating the private banking privilege from right of public money-creation, that is what the Kucinich Bill does.”
              This may prove Frederick Soddy, once again correct when he wrote (1926,1933),
              It is con-
              cerned less with the details of particular schemes
              of monetary reform that have been advocated
              than with the general principles to which, in the
              author’s opinion, every monetary system must at
              long last conform, if it is to fulfil its proper role
              as the distributive mechanism of society. To allow
              it to become a source of revenue to private issuers
              is to create, first, a secret and illicit arm of the
              government and, last, a rival power strong enough
              ultimately to overthrow all other forms of
              government. ”

              FOR WHERE IS KUCINICH NOW ?
              What chance does his bill have ?
              Simple question. Doesn’t the Fed have the power to mandate 100% reserve ?

        • Oh the Austrians. I agree a lot with consistent Austrians. Can’t argue with no bank bailouts, student loan guarantees and halting other sorts of false demand. Imagine using more merit to the rationing system instead of degree auctions. Unfortunately I rarely meet them. The gold standard sorts seems unable to detect that legal tender laws are government grated monopolies which they claim to hate. Hayek in this case is a bit more consistent. Private property( land) , which they seem to believe in so much, is a creature of government no different than South Sea company. The irony of it all is that its governments that create private property. The government grants a land monopoly with a purchase. Otherwise all land is common. They have normalized this idea as if its natural, but as a government granted monopoly, it undermines what they suppose to be a purely consistent position. What pride they have in this fictional market. Nothing is more distorting to value than land monopolies to confuse the value of one’s contribution to the value of a privilege. So if you want to lay a trap ask them how they feel about government granted monopolies, and how they feel about public land. Private land is a government granted monopoly.

          • Yeah, well put.
            That is totally correct.
            But it was not my intention to debate/discuss Austrian philosophy in making that comment. It is better done on the Mises/Cobden/Hayek etc. blogs.
            My point was that MMT ignores the monetary system discussion based on Soddy and Fisher, right on through the more modern ecological-economics of Daly, Cobb etc today, and considers itself of the hetero-econ identity.
            Rather MMT discovered money as its post-Bretton Woods construct of the floating exchange rate fiat currency.
            In fact, all national currencies are fiat in nature, and getting off the BW ‘exchange’ standard just made the necessary reforms easier.
            But MMT does not capture the necessary reforms, with its focus on digital accounting.

            • OK fair enough. I would not view MMT as a complete economic system. The issue now is that money policy cannot even implement what ever it is we think we want since the polices adopted either fail to address it or make it worse. Its about money, but not really how we should mobilize the entire economy per se.

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