An MMT Fiscal Responsibility Narrative: Some Truths After Crowd Sourcing Revision

By Joe Firestone

Many MMT posts and other writings on fiscal responsibility, including my own, focus on the myths of neoliberalism, pointing out why they are myths and developing an alternative MMT perspective in some detail. Off  hand, and I may have forgotten something, I couldn’t think of a brief positive MMT narrative related to fiscal responsibility containing primarily the truths, rather than the myths.

So, here’s my version, revised after calling for and receiving comments from readers at New Economic Perspectives, Correntewire, FireDogLake, DailyKos, and Thanks to Tadit Anderson, Mitch Shapiro, Nihat, James M., Marvin Sussman, joebhed, Clonal Antibody, Ed Seedhouse, JonF, Lyle, Thornton Parker, Sean, Golfer1john, Rodger Malcolm Mitchell, econobuzz, Lambert Strether, maltheopia, Ian S., for contributing significantly to the critical evaluation of the earlier version.

More comments, criticisms, recasting in more effective form, are all welcome.

The Narrative

— The US Government can’t involuntarily run out of fiat money, since it has the constitutional authority to create it without limit. Congress constrains and regulates this ability. But its existence is still a stubborn fact!

— In addition to taxing and borrowing money, the Government (including the combined activities of the Congress, the Treasury, and the Federal Reserve) has an unlimited capacity to create it. When it taxes and borrows, the Government removes money from the private sector. When it creates money, over and above what it taxes or borrows, it adds it to the private sector. Since this is the case, it’s clear that present proposals to reduce the deficit by an average of $400 Billion over the next ten years are sure to remove net financial assets from the private sector.

–The Treasury can keep borrowing money if we want it to. There’s no limit on the Government credit card except the one imposed arbitrarily by Congress in the form of the amount of debt-subject-to-the-limit, otherwise known as the debt ceiling. So, if the US does run out of money due to a failure to raise the debt ceiling between now and March 31, 2013 it will clearly be the fault of the Congress for refusing to raise the debt ceiling!

— Even though it may seem that foreign nations can place a limit on “the credit card” by refusing to buy Treasury securities at auction, foreign nations holding dollars basically have a choice between continuing to hold them and earning no income, or earning interest on securities. So, as long as other nations are exporting to the US and accepting dollars as payment; those dollars are likely to be invested in Treasury securities.

— Bond markets don’t control US interest rates; the Federal Reserve Bank does by exercising its authority to meet its target interest rates. Bond vigilantes have no power against the Fed. If they fight against its interest rate targets by trying to bid them up; then they will “die” in the flood of reserves the Fed can unleash to drive the interest rates down to its chosen target. The Fed can’t control the money supply. But it does control the price of it with its interest rate targeting.

— The bond markets will buy US debt as long as we keep issuing it; but if one insists on considering the hypothetical case where the markets won’t, the US would still not be forced into insolvency; because the Government can always create the money needed to meet all US obligations.

— The US is obligated by the 14th Amendment to pay all its debts as they come due. Nevertheless, our national debt cannot be a burden on our grandchildren; unless they wish to make it so by stupidly taxing more than they spend. This is true because, assuming the debt ceiling is raised when needed, or repealed, we have an unlimited credit card to incur new debt at interest rates of our choosing. So, we can “roll over” our national debt indefinitely. Or, alternatively, we can create all the money we need to pay off the debt-subject-to-the-limit, without ever incurring any more debt;

— A fiscal policy that measures its success or failure in reducing deficits, rather than by its impacts on public purpose, is fiscally irresponsible and unsustainable. The deficit is a meaningless measure because the US Government has no limits on its authority to create/spend money other than self-imposed ones, so neither the level of the national debt, nor the debt-to-GDP ratio can affect the Government’s capacity to spend Congressional Appropriations at all.  Also, a deficit/debt oriented fiscal policy ignores real outcomes relating to employment, price stability, economic growth, environmental impact, crime rates, etc. which actually can affect fiscal sustainability by strengthening or weakening the underlying economy, and, with it the legitimacy of the Government and its fiat currency.

— The Federal Government is not like a household! Households can’t make their own currency and require that people use that currency to pay taxes! So, their supply of dollars is always limited; while the Government’s supply is a matter of its decisions alone.

— Social Security has no solvency or “running out of money” problems. The SS crisis is a phoney one. No solution to this “fiscal crisis,” bipartisan or partisan, is needed. What is needed is a solution to the political problem of getting SS’s funding guaranteed in perpetuity  by Congress, just the way it guarantees funding for Medicare Parts B and D. The same applies to the so-called Medicare crisis. It too is phoney, and can be solved easily by Congress guaranteeing funding in perpetuity to Medicare Parts A and C.

— However large the Federal Debt becomes, it cannot be a “crushing burden” on our Government, because Federal spending is virtually costless to the Government, if it wants it to be.

— Greece and Ireland are users of the Euro, not issuers of it. So, their supply is always limited and that’s why they can run out of Euros. The US is the issuer of Dollars; so it’s supply of dollars is limited only by its desire to create them, and its ability to mark up private accounts, and that’s why it can’t become Greece, Ireland, or any other Eurozone nation.

— Austerity requiring budget surpluses cannot work in the United States economy because surpluses, defined as tax revenue exceeding spending, destroy net financial assets in the private sector. Unless these financial assets are replaced through revenues acquired by running a trade surplus; the continuous loss in net financial assets by the private sector is unsustainable, eventually leading to credit bubbles, recession or depression, and the return of deficit spending. It is mathematically IMPOSSIBLE for the USA to simultaneously run a government surplus, have a trade deficit and increase aggregate private sector wealth! (h/t  Ian S.)

— It is fiscally irresponsible to frame and follow a long – term deficit reduction plan (limited austerity) when both a trade deficit and an output gap exists, because by definition, such a plan is one that must remove more net financial assets from the economy than would otherwise be the case every year the plan is pursued. Eventually, if pursued for long enough, declining rate of addition to financial assets will exacerbate the output gap by lowering aggregate demand and causing both labor and capital to deteriorate, thus reducing the productive capacity of the economy, and the Government’s ability to sustain deficit spending producing outputs of real social value.

— REAL fiscal responsibility is a pattern of fiscal policy intended to achieve public purposes (such as full employment, price stability, a first class educational system, Medicare for All, etc.), while also maintaining or increasing fiscal sustainability, viewed as the extent to which patterns of Government spending do not undermine the capability of the Government to continue to spend to achieve its public purposes. REAL fiscal responsibility is Government fiscal policy creating greater real benefits than real costs for people! It has nothing to do with conforming to some standard simple measure like an acceptable debt-to-GDP ratio that has only a questionable theoretical connection to the actual well-being of people. It’s political malpractice to give greater priority to that kind of abstraction than to full employment, price stability, a strong social safety net, and Government programs that will help us solve the many outstanding problems of our nation. Let’s put an end to the domination of Washington by that kind of malpractice.


Current claims that we have a fiscal crisis, must debate the debt, must fix the debt, and must immediately embark on a long-term deficit reduction program to bring the debt-to-GDP ratio under control, all misconceive the fiscal situation. They are based on the idea that fiscal responsibility is about developing a plan to bring the debt-to-GDP ratio “under control,” when it is really about using Government spending to achieve outputs that fulfill “public purpose.” There is no fiscal crisis that will require “a Grand Bargain” including cuts to popular discretionary spending and entitlement programs. It is a phoney crisis!.

The only real crisis is a crisis of a failing economy and growing economic inequality in which only the needs of the few are served. MMT policies can help to bring an end to that crisis; but not if progressives, and others continue to believe in false ideas about fiscal sustainability and responsibility, and the similarity of their Government to a household. To begin to solve our problems, we need to reject the neoliberal narrative and embrace the MMT narrative about the meaning of fiscal responsibility. That will lead us to fiscal policies that achieve public purpose and away from policies that prolong economic stagnation and the ravages of austerity.


117 responses to “An MMT Fiscal Responsibility Narrative: Some Truths After Crowd Sourcing Revision

  1. No replies ? No cajones. We need to print money at least for now to keep from going over the fiscal cliff, but then go after those who have caused overprinting; simple; somebody get adjudicating please, or somebody else start actions of ‘misprision of felony’ against those who wish to ruin the country. Please help save the best idea mankind ever had for a governmental form, as imperfect as it has ever been. A new US dollar can wait a while, while we sort out who is to blame for the ‘failure’ of the most successful country in the history of the world.

  2. If this is intended for an ordinary audience and not the choir, then they are going to choke on “In addition to taxing and borrowing money” after the first paragraph without explaining it right away. You have to give a hint, otherwise you conjure China and the current mindset of debt, and you confuse.

    Lousy examples in boldface to indicate the additions:

    In addition to taxing and borrowing money, the Government (including the combined activities of the Congress, the Treasury, and the Federal Reserve) has an unlimited capacity to create it. When it taxes and borrows–it “borrows” to maintain the overnight interest rate–the Government removes money from the private sector. When it creates money, over and above what it taxes or borrows–it doesn’t “borrow” from China, it borrows from itself–it adds it to the private sector. Since this is the case, it’s clear that present proposals to reduce the deficit by an average of $400 Billion over the next ten years are sure to remove net financial assets from the private sector.

    • And this you’re talking about the deficit, it should read “$400 Billion/year over the 10 years.” BTW, AP Style is to use the actual number in text starting with the number 10.

    • I appreciate the comment MRW, but I think the additions themselves would be confusing. As it is, the first bullet point contains the simple assertion that Government has the authority to create money without limit. So, the next bullet point asserting that it can create more money in addition to taxing and borrowing is logically consistent with it even though it doesn’t explain how this could be done or the circuitous route by which it is done now.

  3. “Public purpose” seems to be defined, at least in part by MMT propounders , as “full employment”, whatever that might be, since there can be no such thing. A portion of the work force will always be, for one reason or another, unemployed. But what’s the reality of “public purpose”, since it is, of course, an abstraction? Does your public purpose necessarily coincide with my public purpose? Or the supposed public purpose of any of the other 320 million souls currently navigating the land of the free and the home of the brave? And if the sovereign government has the wherewithal to enpixelate an unlimited amount of money for any purpose, why does it need to confiscate the relatively insignificant sums it gets from the lower orders under penalty of incarceration? You don’t seem to be as opposed to taxes as you are enthused about the expansion of the money supply, which, as you admit, must be managed by evidently superior beings. What’s wrong with each of us managing our own money, just as we manage the other affairs in our life?

    • I do believe that “full employment” is generally assumed to be NO involuntary unemployment. Yes, there will always be some unemployment as people are moving around looking for jobs. But if someone wants to work, they should have the opportunity. I think in essence, 1 job opening for each person person seeking employment.

    • Chuck, I agree: if, from a sovereign government’s perspective, taxes are not for the purpose of raising revenue but merely a tool to control the temperature of the economy, it becomes easier to argue for or against various forms of taxes subject to political constraints like fairness.

    • I think what most people are after is for money to represent the underlying goods and services economy accurately. Thanks to financial ponzi schemes we have a distorted this relationship. I certainly like preventative medicine more than the cure. Problem is we now have the disease. We seem to love fiat paper to contract the disease, but never as the cure. We should have stopped the banks supply of credit and we should shift taxes onto assets and off labor and capital to discourage this kind of credit creation. The problem is we didn’t do that. So now the cure after asset bloat is austerity on goods and services?

    • “Public purpose” seems to be defined, at least in part by MMT propounders , as “full employment”, whatever that might be, since there can be no such thing. A portion of the work force will always be, for one reason or another, unemployed. No, there can very easily be such a thing as full employment. Unemployment is a government decision to have unemployment, to disemploy ready, willing and able workers. To mindlessly destroy a scarce, valuable and perishable resource, impoverishing everyone. To end unemployment, all government has to do is to decide to end unemployment.

      No government which has ever actually tried have full employment has ever failed. It is very easy to have chock-full employment (William Vickery’s phrase) – defined as if you lose your job on Friday, you can have another one on Monday. The weekend, the time spent walking to the JG office is hardly worth defining as unemployment, or as anything. Did people care or think about gold unemployment when there was a gold standard – defined by the time gold prospectors had to spend to get it to the assay office, or the amount of gold that just lay around with nobody bothering to pick it up, I guess? All MMT/JG says is – (valuable) labor standard, not (worthless commodity) gold standard.

      But what’s the reality of “public purpose”, since it is, of course, an abstraction? Does your public purpose necessarily coincide with my public purpose? Or the supposed public purpose of any of the other 320 million souls currently navigating the land of the free and the home of the brave? And if the sovereign government has the wherewithal to enpixelate an unlimited amount of money for any purpose, why does it need to confiscate the relatively insignificant sums it gets from the lower orders under penalty of incarceration? You don’t seem to be as opposed to taxes as you are enthused about the expansion of the money supply, which, as you admit, must be managed by evidently superior beings.

      Public purpose is defined by what the public wants, through its instrument, the government, it’s a “public” thing, not a private one, “my public purpose” doesn’t even make sense. Invading another country for Lebensraum could be the public purpose. Having a healthy & wealthy country is a better one. Most JG proposals focus on having JG workers just do what local communities elect to have them do, loose central supervision. The only essential is that Uncle Sam write the check.

      The sovereign government taxes because it is necessary to give value to its liabilities, its debts, its tax credits, its currency. Taxation is just the price, the rent that people pay for the right to perform the taxed activity. You might as well ask why do ushers confiscate theater tickets from patrons if they are just going to rip them up? It’s because the ticket represents and delimits the right to see the show. It’s that simple.

      No, we don’t admit that “expanding the money supply” must be managed by “evidently superior beings.” Just ordinary people who actually understand what money is and how it works, how it has always worked, who have unlearnt the insane ravings called “commodity money” “neoclassical/mainstream economics”. Part of the reason for US economic success is that it was always close to MMT, far from neoclassical commodity money ravings, more than most nations. But tragically the neoclassical virus got imported to these shores along with the healthy reaction to it, called Keynesian economics. BUT except particularly for UMKC, Keynesianism mostly supplanted the hardier native variant called “Institutional Economics”, but eventually succumbed itself to the nonsense-neoclassical virus.

      What’s wrong with each of us managing our own money, just as we manage the other affairs in our life? Nobody can manage their own money if they don’t have any! You can’t create money all by your lonesome.

      Money is a social relationship, not a thing. It is inherently something of a community. If the community is monetarily-insane = doesn’t have a Job Guarantee, but demands money payment for debt settlement, to pay for the necessities of life, then it will usually have involuntary unemployment. People deprived of the right to work for themselves, and everybody else, for no speakable reason at all.

      As you yourself have observed, you don’t see unemployment in non-monetary societies. But today’s world is hypermonetized. So people have to understand money; they don’t have the family farm to fall back on, as they did even as recently as the Great Depression. All the JG & MMT does, will do, has done is to bring the same level of self-understanding, of self-consciousness to modern monetary economies that premonetary economies have and always have had, to realize that they are not so different, to realize why premonetary economies never had unemployment.

      • The sovereign government taxes because it is necessary to give value to its liabilities, its debts, its tax credits, its currency.

        What’s that supposed to mean? The government takes money (which represents value) from its citizens to “give value” to its liabilities, etc? That statement approaches the gibberish cliff. In fact, it leaps off the cliff of gibberish and spirals down into the abyss of nonsense.

        • Not quite nonsense, just backward causality that could theoretically be true, depending on spending. Money has value because government has the power to tax, and requires money in payment of the tax. But, if government spending were low enough, and leakages high enough, there would be no economic reason for taxing (spending low enough so that it could be 100% deficit pending without causing inflation), and if there were no taxing a fiat money used by the government in its spending would have no value, except the circular logic that says it has value because it is widely accepted, which is because it has value. In that case, government would have to tax (and spend more) in order to give value to its money.

        • Chuck: money (which represents value) I was trying to explain WHY money can represent value, based on understanding what it is – a “valuable” relationship, classifiable as a form of debt.

          Yes, to what Golfer1john says, except that there is no backwards causality, or really anything theoretical about it. This is the standard, trivial, straightforward, tautological, “Keynesian” MMT Tax-driven Money story (which everybody used to understand a few decades ago.) It is just how things work, right now, in practice, everywhere. No nonsense at all. The backwards story is the commodity-money one that too many people have in their heads now.

          I used all the words government liability, government money, tax credits, government debt, currency as synonyms above, because they are synonyms. And for simplicity, assume that only government “fiat” money exists, no bank money. (Perhaps I should have said “demand” instead of “value” above.)

          Then it works just like the theater ticket example. The usher is the tax-man, taking your theater ticket, which is worthless to the theater-owner, Uncle Sam. In return, you get to see the wildly popular “Outside of Jail” show. The real taxation of the patron, you, is “what you have to do to get the ticket”. The usher gets his tickets by working, ushing for Uncle Sam. Uncle Sam’s money doesn’t grow on trees. To pay your taxes, you have to somehow procure Uncle Sam’s money, his favor. But Uncle Sam’s money (money-things) are worthless to Uncle Sam; once he gets them back from the patrons, he just rips them up, like an usher rips up a theater ticket. Uncle Sam creates his money(-things) at will, and always has, just like theater owners print up those cheap little tickets at will.

          The commodity money story I think you still adhere to is that the private sector somehow has money, which naturally spontaneously magically arose in the mists of time, created by God, with no human having to enpixelate it into existence. Then the big bad ole gubmint has to take/confiscate the JobCreators’ “my precious”, their money, so it can do the evil things that governments do. That is getting everything backwards.

    • As Devin says full employment is defined as the condition in which anyone who wants a job offer of full time useful work at a living wage and can perform at the job gets employed at it. With the JG, it’s easy to full employment. It’s the sum of the people employed at the JG and those working for other employers. Unemployment with a JG buffer stock of labor is at zero.

      Public purpose is an abstraction, and people will have different theories about what’s involved in “public purpose.” We can all advance our theories about this; just as people all advance their views about “the national interest” in foreign affairs. In the end, however, in a democracy, the people will decide which theory of the public purpose prevails. I’ve written about public purpose here.

    • “What’s wrong with each of us managing our own money”

      Go ahead and make your own “money”. The government has a constitutional right to create money, create laws, and lay taxes.

    • Thornton Parker

      In the context of the Federal Grant and Cooperative Agreement Act back in the late 19700s, public purpose was interpreted to mean a purpose specifically authorized or directed by legislation. (In an earlier time, I wrote the interpretation.)

      Thornton Parker

      • The problem with that of course is that legislation can be motivated by special interests for private purposes. In fact, that happens all the time; so the notion of public purpose has to be broader than that. It has to be something that we continually strive for. It’s normative in nature; rather than positive.

        • Thornton Parker

          Be a bit careful there. The Federal Government is one of enumerated powers. I can only spend on things that are first authorized by the Constitution and then in statute. People can go to jail for not living within that framework.

  4. Sir;

    Please don’t take this the wrong way. I am exceedingly grateful for the frequent, energetic, astute and carefully crafted posts you have presented lately, including this one. And if the intent here is to anchor the emerging consciousness of people who are already sympathetic to the MMT idea, I’d say this is pretty close to perfect. What I feel sure it will not do is earn MMT a hearing from people who are wedded to (or simply still embedded in) the conventional, neoliberal economic narrative that lies, like an all-smothering blanket, over our public discourse. It is too technical for that, and, short as it is, still too long.

    But again, I do not mean to quibble. Thank you for presenting a fine, succinct distillation of these important MMT principles.

    • Thanks for your comment, Dale. I think you’re right. But I’m not really interested in convincing the neoliberals. I’m more interested in challenging their authority with a narrative that’s simple enough for progressive political operatives to understand enough of to get them thinking about learning this new approach well enough to use when they lobby Congress. I’d also like to refine this narrative sufficiently, so that the lay public can understand it.

  5. I’d suggest a talking point about inflation very early on in the narrative. When I discuss this with friends, that is always the very first objection that they raise – INFLATION, INFLATION, INFLATION!!

    This should be knocked down right away, in the first couple of talking points.

    • I discussed this in the first thread, when exactly the same issue came up. The current thrust behind austerity is the fear of insolvency, not the fear of inflation. So this narrative addresses that. If people object to it by bringing up inflation, then I’m happy to debate that, while reminding them they’re accepting the very critical point that there’s no solvency issue, so what they’re doing is supporting austerity as a cure for inflation, when there is no appreciable inflation; but an awful lot of poverty, suffering, unemployment, illness without access to care, family breakup, community disintegration is occurring because they fear inflation more than they fear these things.

  6. The Obama administration appears to be hell-bent on implementing some version of Simpson-Bowles. The Republicans appear to be hell-bent on eliminating programs for the poor. Nobody is willing to increase spending to move the economy. Where do we start?

    • Read up on sovereign currency, then we get rid of the reason we do not have one….the ‘federal’ reserve; add to that the move toward public banks, like the bank of north dakota, which returns all profits to the state residents as new valid loans or direct tax refunds, instead of it being given to wallstreet…as it has for about 80 years, and is the only bank in the country to always have run surpluses…their legally binding mission statement to whit should be in our Constitution IMO.

      • But we do have a sovereign currency. So you can forget about the rest!

        • Sir, you are totally mistaken ! The federal reserve prints/generates our money supply…where have you been for 100 years ? Have you not read LTMcFadden, and how about JFK’s sivler certificates ? Not trying to be nasty or uppity here as so many seem to be. I hope you realize that fully 1/2 the ND is the fed’s, and I have a big discussion on my own ideas for that which would change a lot to benefit all Americans, but being in the wrong profession, all this will fall on deaf ears of course, but I must try while the country burns…got 1 fiddle left !

  7. a sovereign currency never has a deficit ! The gov. prints money as needed, and as I would have it to roughly track the GNP, asset base of the country. If there is a shortfall in tax revenues and fees, the choice is made to either overprint as in an emergency or properly declared war or raise taxes and fees, etc. The inlfation suffered due to overprinting would be repatriated after a war with say, eg. $.20/gal. gas, made available to ALL not just the oil companies, which is a dream of course, as is that of my monetary system, a total fiat, paper, legal tender system without the usury of the federal reserve private banks, which would print money that accrues no debt in being printed/generated, much like Ben Franklin’s colonial scrip, under which the colonies prospered until theBrits forbade it’s use, so we had a revolution over that, during which Ben’s continental dollar got us through until the Brits figured out how to counterfeit that well enough and it fell into disfavor….on and on The “national debt’ should not be used as a vehicle of the super-rich to transfer debt to “we the people” simply stated, but instead, used for situations as above and for small retirement accounts and other public benefit programs…and NOT sold to large or foreign interests as part of the maliscious “service economy”, which should be severly regulated, esp. in light of the fact that the gambling on derivatives is now fully insured by the FDIC, and to my knowledge is the stated reason for QE3, the other 2 still not adjudicated for malfeasance against the American public and it’s Constitutional “general welfare”…judges like Born and Preska, etal. have been silencedin their attempts to remedy the country’s ills in this area ‘for some reason’, and it ain’t good for any of us as we march toward serfdom IMO.

    • Sorry Thomas. I don’t consider this a serious position to debate. It’s a doctrinaire point of view that plays with semantics.

      • Would you mind listing your positions to be able to say such outrageously wrong things ? I just want to know which organizations are for America and which are trying to destroy it, like “Bain” capital, etal.? If you’re FOR the federal reserve, I have NO use for you period.

  8. Good piece. One thing jumped out at me as possibly incorrect:

    “It is mathematically IMPOSSIBLE for the USA to simultaneously run a government surplus, have a trade deficit and increase aggregate private sector wealth!”

    This statement strikes me as ignoring one crucial factor which is asset values. Wouldn’t it be the case that as long as asset values are increasing it would be possible (not likely, just possible) for total private sector wealth to increase even as net financial assets are being destroyed?

    For example, if someone discovers some new important use for iridium, the notional value of iridium mines goes way up. Thus whoever owns an iridium mine is suddenly wealthier, while no one else is necessarily less wealthy.

    To make the example even clearer (and more ridiculous) what if everyone in the US suddenly discovered a chunk of platinum buried under their home? They’d all be richer regardless of the fact that net financial assets are being destroyed on net.

    Obviously this scenario is unlikely but it seems off to say that any outcome that includes the real economy could ever be “mathematically impossible.” Math alone doesn’t dictate the value of real assets – expectations about their real productive value also plays a role.

    • The catch in this hypothetical iridium find example is, if the US private sector financial wealth is being drained by the US government and the foreign sector, who is going to appreciate the value of the iridium and pay for it? It will have to be a sector that can: either the foreign sector or the US government, turning trade deficit to surplus or govt budget surplus to deficit. So, such a find would not save us and keep the impossible equation intact, but it would (potentially) alter the equation, make it a possible one.

    • The iridium example is good, but if everyone found platinum under their homes, would not the current owners of the world’s platinum become poorer when the price of platinum plummeted? On net, real wealth might go either way.

    • AM1976, I think you’re confusing asset market values at a micro-level with net financial assets at a macro-level. Net financial assets are reserves, cash, or securities in accounts. They’re not unrealized market values of real assets someone owns. When people sell those real assets, then they increase their net financial assets, while other people decrease their financial assets by the amount they paid. So far, none of this involves increasing net financial USD assets in the macro-system.

      • This is the critical point. “Financial assets” have a narrow definition. The following involves some guesses on my part, since when I asked on this blog I was told the only place to find the definition of a “financial asset” was to watch a two hour video, but here’s what I can see about financial assets (as defined by MMT):

        Financial assets are cash, private reserves with the Fed, bank accounts, loans, private bonds, and government bonds. Basically anything where a change in market value for the owner requires that the counterparty’s market value gets the opposite adjustment.

        Financial assets are NOT property, plant, equipment, stocks, commodities, etc. If an asset can change value without somebody else having to record an equal and opposite change in value, then it is not a financial asset. This applies even if it is not a physical asset (e.g. a company’s stock),

        This is what makes the MMT statements about net financial assets axiomatic. Also note that under MMT, if foreign exchange is ignored, I believe “net financial assets” are equal to government debt.

        My reaction to this is largely “so what?” Most people spend a large proportion of their life with negative “net financial assets.” If one has a mortgage, a car loan or two, and retirement / savings invested in the stock market, it’s easy to be very affluent with “net financial assets” well below zero.

        I’m afraid MMT’s obsession with “net financial assets” or “net private savings” (I think the same thing, but am not sure) reminds me of mercantilism. Mercantilists argued that nations which accumulate gold will be more prosperous. MMT argues that nations which accumulate fiat currency (conventionally in the form of government debt) will be more prosperous.

        So I’ll repeat a question I asked a year ago with regard to “net private savings.” Can MMT provide evidence that increased “net financial assets” (meaning increased government debt) results in higher economic growth, economic well being, or some similar measure? When I asked a year ago I was basically told that I would not find any correlation between “net private savings” and growth, but that higher “net private savings” is still important.

        • Thomas,

          In your analysis, you must be very careful to distinguish between real assets and financial assets, and between stocks and flows, and between micro and macro.

          Consider your mortgage example, for instance. You own a house (a real asset) with a mortgage (a negative financial asset). Buying the house and taking out the mortgage lowered your financial assets, but your wealth remained the same. You traded a financial asset for a real one. In the aggregate, net financial assets also remained the same. Yours went down, the seller’s went up. The bank’s assets stayed the same: they traded one financial asset (cash) for another (your IOU). Their reserves went down, because the cash went away, but the reserves of the seller’s bank went up by the same amount. No net change in the aggregate. Any transaction between individuals in a sector will give the same result: no net change in aggregate net financial assets for the sector.

          MMT deals with macroeconomics, with aggregates. Flows among individuals in a sector always net out to zero. Flows between sectors are what matters. Stocks are simply the summation of the flows.

          MMT says that exports are a cost, and imports are a benefit. In that sense, accumulating of fiat by the exporting country makes it poorer, not richer. It’s the opposite point of view as mercantilism, which would say the exporting country is richer, not poorer, for the trade. Mosler writes about this at length.

          I think, though, that what you mean is unrelated to trade, and that a country with a fiat currency that increases its private sector NFA faster, by running a higher government deficit, will grow richer faster. I would say that is generally true. Think of the flows that would result if the government of country A simply printed some currency and gave it out to its citizens. They would buy stuff with it, or save (hoard) it. There are no other choices. If they buy products of the local economy, that economy grows. Sellers hire more workers, and incomes increase. If they buy imported goods, and the fiat goes to a foreign central bank somewhere, the net imports enrich country A (real wealth). If the foreigners (in the aggregate, not necessarily the ones A imported from) don’t hoard country A’s fiat, but buy goods from country A, such that the trade balance remains the same as before, the effect is the same as if the citizens of country A had spent it locally: more sales, more jobs, higher incomes.

          Comparing stocks in one economy to another, though, you won’t necessarily see a correlation. Japan has the highest stock of outstanding government debt as compared to its GDP, but its growth lately has been dismal. Japan historically has had high leakages (hoarding) by its citizens. If it had higher deficits now (flows), it would have higher economic growth. Exporting countries can have lower deficits and higher GDP growth and lower unemployment because their real assets (the product of their labor) are flowing out of the country, and financial assets are flowing in. With fewer goods available for local consumption, they need less money creation by their government to support their economy. Consider Germany vs. Greece. Greece needs higher deficits than Germany because they import goods and export NFA, like the US does. Unfortunately, they cannot create Euros, and are prohibited by treaty to run the size deficits needed to support their economy with their negative balance of payments, so they have depression-level unemployment.

          I don’t know if that’s the sort of “evidence” you’re looking for, but it is compelling.

          Rodger Malcolm Mitchell likes to show charts of US deficits and GDP, and they do show that every recession has been preceded by a drop in the government deficit. I can’t say that they show more than a simple business cycle, where a boom drives tax receipts up, and then the boom ends. The boom may have ended because of the smaller deficits, but it may also have ended because it encountered a shortage of something, or because demand reached a plateau from which it could not keep rising. People had all the stuff they wanted, and stopped buying more stuff. Economists would call that a drop in the marginal propensity to spend. Kinda like an unsustainable housing bubble, but less dramatic.

          Anyway, the notion that an increased government deficit in today’s economy would benefit the country by increasing growth and wealth is not unique to MMT. I think all schools of economics would agree on that. They differ on what to do later on, when the economy is more healthy.

  9. Great piece, Joe. Here’s a couple ideas I had:
    The payroll tax should be abolished because it is regressive and the federal government does not need revenue to conduct spending.

    Raising the federal minimum wage would reduce poverty because the working poor’s income would be increased.

    • Tyler, no doubt you know this, but raising the minimum wage also causes minimum-wage employees to be less competitive with higher-skilled labor or automation, and there are conflicting studies about whether those employees are better or worse off, in the aggregate. Clearly the ones who keep their jobs are better off. The ones who lose jobs are worse off, and the ones who never get jobs are particularly difficult to measure.

      JG is a much better way to set a floor under wages than legislated price-fixing.

    • Hi Tyler, I like those ideas, but this is a narrative about fiscal responsibility rather than about specific MMT-based fiscal policy measures.

    • In a free society, contracts between individuals are their own affair. The government doesn’t specify how much some one is allowed to charge to wash a car or what the price of a dozen eggs would be. Why should the government become involved in a private relationship between an employer and employee? Especially when you consider that members of the US Congress have unpaid interns doing their drudgery for them.

      • Chuck. They’re called employment rights. You want to strip people of their rights. You’re not in favour of freedom, you’re in favour of plutocratic dictatorship.

  10. Thanks for the shout-out, and just some math/semantics comments.

    Government spending creates money. All spending, not just deficit spending. Taxing destroys it. The deficit is the net amount of creation, after being offset by taxation.

    Reducing the deficit doesn’t remove money from the private sector. As long as there is a deficit there is addition of money to the private sector. A smaller deficit is less addition. It is not subtraction.

    Off-topic, I guess, but

    Whether the next 10 years deficits ought to be $12T or $8T depends on the growth of the economy during that time. If China and Russia go to war, and the iPhone factory gets bombed, we might have net exports again, and high employment, and even $8T might be way too much. It’s hard enough to determine in advance what the deficit ought to be this year, never mind the total over the next 10. A 10-year projection of deficits is meaningless, in that it depends entirely on assumptions about growth. The meat of the document is the changes in policy that are proposed, and they get little or no attention in the shadow of 17-digit deficit numbers.

    • Thanks, John

      Government spending creates money. All spending, not just deficit spending. Taxing destroys it. The deficit is the net amount of creation, after being offset by taxation.

      Reducing the deficit doesn’t remove money from the private sector. As long as there is a deficit there is addition of money to the private sector. A smaller deficit is less addition. It is not subtraction.

      This is right! I’ll make the appropriate changes in the next version.

      Whether the next 10 years deficits ought to be $12T or $8T depends on the growth of the economy during that time. If China and Russia go to war, and the iPhone factory gets bombed, we might have net exports again, and high employment, and even $8T might be way too much. It’s hard enough to determine in advance what the deficit ought to be this year, never mind the total over the next 10. A 10-year projection of deficits is meaningless, in that it depends entirely on assumptions about growth. The meat of the document is the changes in policy that are proposed, and they get little or no attention in the shadow of 17-digit deficit numbers.

      I agree with this too. But this isn’t just faulty projections against which I’ve been inveighing for years now, myself. It’s about trying to manage the budget from the viewpoint of whether you want deficits or surpluses. From an MMT point of view, whatever deficits or surpluses occur should be the result of fiscal policy that aims at public purpose including full employment and price stability. They shouldn’t the result of vain attempts by the Government to run as low a deficit as possible and to target a particular deficit or surplus level.

  11. casino implosion

    First of all , this is definitely on the right track. Good work.

    Second, I think you need to engage the deep underlying fear that people have about accepting MMT, which is that people sense that chaos could result if it were widely known/accepted/part of popular wisdom that money creation is entirely at the whim of government.

    This is what people are getting at when they bring up the inevitable argument about out of control inflation.

    People want to believe that we’re operating in a money system that is fundamentally objective, in the sense of money in the last analysis being a finite commodity. If money is a finite commodity, as most believe in their guts, then poor fiscal decisions will ultimately be “punished by harsh reality itself”. This is the emotional framework that guide’s almost everyone’s moral/economic choices.

    To learn the truth of MMT is terrifying as it is liberating, because we perceive clearly that politics is everything. PEOPLE, in all their fallibility, control the money supply.

    This needs to be dealt with for the layman in very clear and non-condescending language.

    • Yeah, MMT is not for the faint of heart, you could say. But, it is trivially easy to show that money is not, cannot, and should not be a finite commodity. It’s volume has to grow for you to grow, have children, etc., or you die of deflation. The question is, what or who would one prefer to fuel the growth of the volume of money?

    • This needs to be dealt with for the layman in very clear and non-condescending language.

      I guess I’m not their yet?

    • To learn the truth of MMT is terrifying as it is liberating, because we perceive clearly that politics is everything. PEOPLE, in all their fallibility, control the money supply.

      This needs to be dealt with for the layman in very clear and non-condescending language.

      I’m a democrat — small d. So, I believe that “PEOPLE, in all their fallibility,” ought to control deficit spending. Then let the central bank, under Treasury’s supervision, control the FFR, and let the money supply take care of itself. It will adjust.

  12. Jerry Hamrick

    Many years ago, my father observed that the ancient Athenians were able to finance a good portion of their society’s GDP by working the state-owned silver mine. He said that America has a state-owned dollar mine, and like the Athenians, we can dig out some more dollars whenever we wish. So, he said, whenever we need to pay for something, like building the Interstate Highway System, we should just go to the dollar mine and all will be well. He said that we never would need to borrow money again. He was a child of the Great Depression and he remembers the public works programs very well. My mother likewise.

    So, was his idea about the dollar mine close to MMT?

    • I think it’s a good analogy. More than analogy, a close parallel. And helps to relate the metal-standard era to the fiat era.

    • Your parents are pretty damn close. Economic understanding in academia, and worse the general public has greatly decayed in the last few decades. MMT returns it to the previous peak and goes further. The reality of the Great Depression and the value of the public works programs, which has been belittled by economic royalists ever since, educated them in the best school of all, that of Hard Knocks, of experience. The great Abba Lerner, MMT forefather sometimes wrote about an “ideal gold standard” with a “magic mine” that kind of anticipated the bufferstocky stabilizing properties of the Job Guarantee. SO your father’s idea was very close. And all will be well as long as the US has the real resources. People who say it doesn’t are out of their minds – the problem is that the US squanders and destroys them in fantastic quantities.

      My only cavil is that the US government doesn’t & didn’t borrow money, never really has; maybe a couple hundred years ago. Selling bonds is not borrowing, it is offering a swap of assets to the private sector; exchanging the government bond called currency / reserves for another government bond called a Treasury bond. This is of course unnecessary.

    • The only problem with the analogy is that the silver mine can get played out. But the Government’s ability to create fiat money is unlimited.

  13. Joe…thanks for taking the time to incorporate the feedback you received. I haven’t had a chance to review this in detail yet, but have a few initial suggestions, which might apply to any MMT advocacy piece.

    I think this will be more likely get readers’ attention (and to engender a relatively open, positive attitude) if it starts with content similar to your final three paragraphs. My sense is that people (especially those of a more progressive persuasion) will be more receptive to pro-MMT arguments (which may be challenging to digest intellectually and in terms of confronting entrenched beliefs) if the argument starts by reminding them of its potential benefits in relation to issues they care about–e.g., “REAL fiscal responsibility is a pattern of fiscal policy intended to achieve public purposes (such as full employment, price stability, a first class educational system, Medicare for All, etc.)”

    Another things I’d suggest including at or near the top of a piece like this is something like the following (which you do mention in your last paragraph):

    “The U.S. federal government, as the ISSUER of currency (i.e., dollars) in a modern monetary system, is FUNDAMENTALLY different from households and businesses (and Eurozone countries like Greece) that are USERS of a currency. In fact, to treat federal “deficits” in the same way that families and businesses must treat their debts is not only misguided, but is a major contributor to the many problems our nation now faces, and a major obstacle in the way of efforts to truly solve them.”

    Once this statement (which will seem provocative to many readers) is forcefully made, it can be explained, as you’ve done above. The transition to this explanation might be something like: “Though this reality may seem counter-intuitive at first, it’s actually not hard to understand. And with the future of our nation at stake, we owe it to our children and future generations to make the modest effort required to do so.”

    One last point. In a (too long) comment responding to Marshall’s “Populist Revolution” post, I suggested that the MMT community focus some effort toward getting pro-MMT op-ed pieces published in mainstream newspapers like the NYT. With the Fiscal Cliff debate just gearing up again, it seems very timely for MMT to get that kind of visibility.

    And maybe the same is true of efforts to brief or getting MMT materials in front of members of Obama’s (economic and/or political) team, and maybe some the new Senators (e.g., Elizabeth Warren?).

    Marshall closed his post with: So this [election] could very well set the stage for a new kind of future for the country some 30 years after Jesse Jackson began his progressive crusade. If he’s right (and I hope he is), one of the central players on that stage should be an economic perspective grounded in MMT.

  14. Thepowerofmeow

    The statement – “the Fed cannot control the money supply” confuses me. I recognize that when the Fed loans, it is owed that money back, so no asset is created. And when it buys and sells Treasuries, I get it.

    But what about when the Fed buys mortgage-backed securities? Or some other asset, even real estate?Doesn’t that increase the money supply if the Fed pays more for them than they would get back later when sold?

    thanks for the help, POM

    • During the 1970s and early 1980s, the Fed tried to hit money supply targets. It never could. The reason is that private banks also create demand deposits and reserves when they lend and the Fed has little control over how much lending they do.

      When the Fed buys MBSs or real estate, of course, it adds to the money supply. Can it add more than the worth of the assets so it creates a net financial asset? Of course, but 1) it’s not supposed to do that; and 2) the MBSs or real estate could turn out to be worth more than the money traded, so this can create a loss of net financial assets.

      • Thepowerofmeow

        “private banks create…..reserves when they lend…”

        I thought that private banks could only create bank credit, not reserves? Or do you mean that banks may indirectly create reserves by needing to borrow newly created reserves from the Fed to meet their reserve requirement?

        When one bank pays a check to another bank, doesn’t it have to clear that through the Fed with reserves?

        Thanks again, POM

  15. Thepowerofmeow

    Or perhaps asset prices don’t matter. The Fed will use whatever it buys and sells to achieve the level of reserves in the system to meet the banking sectors needs and achieve the target interest rate.

    Is that the proper way to think of it? So the Fed does sort of control the money supply, but not really, because it is the indirect product of serving interest rate targets and banking sector needs?

    • Asset prices do matter, because the Fed isn’t authorized to give free assets gains to banks. That’s not its mission. That’s corruption. But it may well have gone on for years now. The Fed’s job is to meet its target interest rate, make sure the banks don’t have liquidity problems, regulate the banking system, and facilitate getting to and maintaining full employment, which it has little power to do.

      So, finally, the Fed can’t control the money supply because it’s only one actor putting new money into the system. But it certainly can and does control the Federal Funds Rate, and through that rate longer-term interest rates as well. The bond markets can’t do anything about that as I’ve pointed out above.

  16. If private banks and the fed create money…that they can claim on their bottom line when paid back…that’s usury and both practices should have been done away with long ago…L T McFadden, JFK, remember ? I even read that the Chicago bunch said that the principle was destroyed when loans were paid back, ya right.
    If I had a say in it all, I would have the gov. print the money only, with the banks sending for that which they needed for loans, only a few offices and clicks away to keep track of it all…then, to keep the gov. from printing too much, the states with their powers of nullification, etal. would keep the fed. gov. in check to prevent inflation…what’s wrong with that ? esp. if I would also have it that of course this means money does NOT being as debt…no national debt increases for such (more ideas if interested on ND)

  17. No government that taxes and freely issues the currency it taxes in borrows money in its currency.

    It offers saving accounts in the currency it issues.

    In this view the fourth period can be re-written, given the Government is identified

    In addition to taxing and offering saving accounts in US money (US dollar), the Government […] has an unlimited capacity to create or destroy US money (US dollars). The saving accounts are usually called US Treasury securities.

    • Another angle on the T-Bills as savings plans that I don’t see much of is this little thought experiment:

      If the gov’t actually got to a point where it was in true yearly surplus, taxing more than spending, and stopped issuing T-bills altogther (no more debt), who would be hurt? Obviously, anyone who likes to have a safe interest bearing financial instrument, which is pretty much every retiree and investor and, well, everyone. And just as obviously, no one really has any interest in getting to such a world, despite what they might say in front of the TV cameras.

      Also, there is the fact that the Fed is currently buying 77% of new Treasury issues, which means that plenty of folks (prime dealers) are turning a profit for just transfering t-bills from Treasury to the Fed!

  18. Hi Joe,

    Lot’s of great and useful stuff in your post. But I think there is one really important issue that keeps getting pushed aside in a lot of MMT presentations and discussions, and until it is addressed more forthrightly, compellingly and concisely, MMT will continue to face strong headwinds on the political and public policy front.

    Yes, there are some people who really don’t understand that the government is the organizer and administrator of the monetary system, and not just the user of it, and that the government can always make whatever payment obligations it has committed itself to make. But many people understand these facts perfectly well, and they also understand that since we live under a government-administered fiat monetary system, and since the government’s capacity to produce the money of that system is unlimited, then one of the chief responsibilities of the government is to maintain the stability and integrity of the monetary system, and preserve the value of the fundamental units of that system. For these people, it is just not compelling to be told that the the volume of public debt is of no concern, because we can always make the payments. What they want to know more about is what mechanisms MMT proposes for regulating the total volume of monetary expansion and maintaining monetary stability.

    Part of that story is the job guarantee of ELR proposal. But frankly, the various pieces of MMT thinking on that subject are scattered around in various sources written by different people, and it doesn’t strike me that the totality of these writings add up to something that is, as yet, either theoretically complete or internally consistent. It still seems to be a work in progress. And of, course, it is a system that so far doesn’t exist.

    Another part of the MMT price stabilization account rests on the ability of the government to tax in order to drain excess demand if necessary. But then, that just raises the specter that haunts people about the debt in the first place. It does no use to tell people that the government doesn’t have to tax them more in order to make debt payments if they continue to believe that the government will tax them more as they make debt payments in order to make sure that the debt payments it makes don’t destabilize the price system.

    • I think Dan raises good points that should be addressed in the kind of “fiscal responsibility” narrative targeted here.

      Though Dan’s comments about incompleteness and lack of full consistency among JG proposals/theory may be correct (I don’t have a strong opinion on that), my sense is that including the JG component and its role as price stabilizer–in addition to its economically beneficial and politically attractive employment-related impacts–can strengthen rather than weaken the narrative.

      With “jobs” a central, painful and potentially chronic problem facing the country, I think the timing is good for efforts to gain visibility for JG proposals, even if there may be somewhat different iterations of them within the MMT community (the discussion and resolution of which seems like a very worthy and timely undertaking).

      I think this is especially the case because a comprehensive MMT-based solution would also include approaching taxes and deficits in a way that provides far more flexibility and “breathing room” than is afforded by mainstream economic thinking…something that seems especially important and timely as we move closer to the so-called Fiscal Cliff, followed shortly by another vote whether to raise the debt ceiling (put more simply, MMT offers solutions that can greatly and simultaneously ease problems related to unemployment, relative and absolute tax burdens, and the federal deficit).

      I think this also relates to Dan’s comment regarding concerns that the government will increase taxes even if it doesn’t have to. I really don’t see this as a problem, at least relative to mainstream neo-liberal economics, which is locked into a tight win-lose box with regard to the relative distribution of tax burdens, and the relationships between taxes, spending and “problematic” deficits.

      In fact, if MMT was linked to a broadly progressive program (which is suggested by the nature of the JG, and which I think is strategically smart, both politically and in terms of actually solving problems), the two-part MMT message regarding taxes could be that: 1) MMT greatly eases pressures to increase taxes on anyone and; 2) if tax increases are required to support stability of prices and the monetary system, such increases would be borne mainly or exclusively by the 1% (and especially the .1% and the .01%, including taxes levied on—and therefore discouraging—economically destructive Wall Street gambling practices, including ultra-high-speed trading, overly-complex and opaque derivatives, etc.).

      I think this message is both economically sound in terms of the balance and distribution of costs and benefits, and also politically sound in terms of its appeal to what seems to be an expanding and increasingly progressive electoral majority (the intensely-gerrymandered House of Representatives notwithstanding).

      To circle back to the JG for a moment…it would be great to see an analysis of how various JG/ELR proposals compare to each other and perhaps to also present this comparison to the MMT community for feedback and further discussion.

      • A few more comments in response to Dan’s observation that the JG “is a system that so far doesn’t exist:”

        One thing this suggests to me is that MMT proposals should focus initially on deploying one or multiple trial-sized JG programs. These could be geographically focused on areas of greatest unemployment and/or other measures of need. A particularly good set of targets might be areas hit by Sandy and other natural disasters. Targeting these areas would be particularly timely and politically appealing, since it would leverage strong and urgent feelings that “more help is needed here and soon!!”.

        Related to this is the simple logical appeal of a JG program (particularly a well-designed one) when compared to the current system of unemployment insurance. One pays a person to do productive work (again, especially if the program is well designed to generate socially productive, though relatively low-skill, work opportunities). In contrast, the other pays someone who is not working (and is therefore easier to brand as a lazy and unproductive “taker”). Seems to me that the JG would fare better among conservatives in this comparison, though I could be wrong.

        I’d argue that combining these two themes would make the JG idea politically appealing, since it would have lots of potential benefits but carry minimal risk at the trial-project stage. And if this trial-project stage was able to leverage and respond to the combination of urgent near-term need and long-term environmental/climate concerns triggered by Sandy, it might be very popular indeed.

        Of course, execution of any JG trial project would be very important, since the program’s prospects for future expansion could depend on it. Toward that end, it seems like a good idea to carefully review the body of research related to what has worked (and not worked) in prior JG-like deployments, and perhaps synthesize it into a fairly concise “how to” document that could be a component of any JG/MMT proposal. And also to build sufficient transparency, accountability and feedback/research loops into the system.

        • Politically appealing? That is probably one of if not the most difficult parts of designing and implementing a JG program. Due to the size of the program, it has to be federally funded so therefore it is a creature of the government. This quickly gets drawn out into the government is competing with the private sector which capital really hates. After all, capital holds the power in this country. Another camp is that the government is wasting “tax payers” money [we know whose money it really is] on make-work jobs. Then there is the efficiency camp – it truly cannot be efficient because it comes from the government. It could only be efficient if the “market” …

          You can look at some of the stuff written around CCC and WPA in depression era US. The perceived competition to capital was one of the greatest attacks on the programs as was the wasting money on make-work jobs. Contrary to the rhetoric, these were successful programs.

          The programs provided employment for millions while constrained by a mandate to not provide competition with private industry nor engage in regular government tasks. Even working within these constraints, WPA workers built or repaired 617,000 miles of road, 124,000 bridges or viaducts, 120,000 public buildings as well as numerous parks and playgrounds. They also drained swamps and exterminated rodents, set up nursery schools and helped illiterate adults learn to read and write. (Ginsburg, H. (1983). Full Employment and Public Policy: The United States and Sweden. Lexington Books.)

          The Jefes program in Argentina was launched in response to their financial crisis of the late nineties and early 00’s and was successful in stopping the slide of a large portion of the population into destitution as well as settling civil unrest and providing employment opportunities. It didn’t stop the slide into poverty as the benefits of the program were below Argentine poverty levels. Once the economy began to stabilize, talk immediately started around dismantling the program because of “market pressures.”

          India’s National Rural Employment Guarantee Act (NREGA) and South Africa’s Extended Public Works Program (EPWP) are faring better politically but these economies and governments are quite different than US’ capitalistic democracy.

          • Devin: I agree with Mitch. The political appeal is the easiest & simplest part of the JG. By political appeal, I mean to ordinary people, ordinary voters, not plutocrats and their political pseudopods. The real, serious obstacle is how ordinary people have been programmed to punish themselves- for example as below. And IMHO, the USA is the place where the JG has the best chance, the best place to push it.

            wasting “tax payers” money [we know whose money it really is]
            Yes, it is very important to point out this locution. It’s a neologism dating from the time the finance-capitalist-blob-empire started striking back in earnest a few decades ago. Look at older books and articles. People said “public money”, not “taxpayer money”, no matter their political stripe. It was a major, effective effort to encode the return of destructive economic superstition into common phrases.

            You can look at some of the stuff written around CCC and WPA in depression era US.
            Here’s a great old free download book by WPA Labor Relations Section director, Nels Anderson. His 1938 The Right to Work. Apropos of nothing, from his wikibio, I suspect Anderson was the model of many Robert A. Heinlein characters.

    • Good point, Dan.

      But actually, I think Both Scott Fullwiler and I treat the issue of the likelihood of inflation when using the Government’s money creation power to pay down or pay off Treasury debt in the context of the use of PPCS. The conclusion is that there’s no reason to think that the new money used to pay off debt will be any more inflationary than the continued existence of the debt instruments. Here and here are the references with the arguments.

      Also, I don’t think the issue of the JG is relevant to the question of whether using the money creation power to pay of the debt-subject-to-the-limit would cause inflation. The JG is relevant to the question of whether an employed buffer stock funded through deficit spending is less likely to cause demand-pull inflation than a conventional deficit spending stimulus package for creating full employment. That’s a different question and one already answered in Bill’s and Randy’s writing’s on the JG.

      • Joe, I believe the claim that has been made on behalf of the ELR proposal by Wray, Mitchell and Mosler is not just that a fully employed buffer stock would be no worse than an unemployed buffer stock, but that the ELR system would actually serve as a better nominal anchor and will increase price stability. Since delivering price stability – or at least price volatility that does not exceed a level beyond which it becomes economically harmful and that the public deems acceptable – is a key element of every macroeconomic policy framework that has any chance of selling well in the marketplace of political ideas, MMT price stability ideas need to be give prominent treatment.

        You and Scott may be right that debt repayment that is not offset by tax increases and additional borrowing just builds up bank reserves and does not add to inflationary pressures. But that points needs to be argued clearly and convincingly, and backed up with empirical evidence.

        Let’s remember that millions of Americans are still traumatized by the 2008 vaporization of a good portion of their retirement savings. Preserving the value of their savings and the purchasing power of fixed incomes is extremely important to them. They are not going to buy into some policy program that they have been always been told will destabilize prices unless they are presented with clear and convincing argumentation to the effect that it will not. Otherwise, MMT will just come off to them as an undisciplined scheme of banana republic money printing.

        Unfortunately, MMT is not just known to the economic world as the work of a handful of professional economists, but is also represented in the blogosphere by scores of eager amateurs, some with a weak grasp of elementary economics who think that in MMT they have discovered the fabled city of El Dorado, and that the fact that the US administers a fiat monetary system means that the sky is the limit and their are no real constraints or challenging social choices to be made.

        • Dan and All, why pay down the ND with our money, ( I realize Kuckinch wants to do it this way also/HR6550) no matter which is given legal tender status ? Do you really want to reward 100 years of malfeasance against the American people and our Constitution ? Each case of money generation/printing should be dealt with on a case by case basis with adjudications to whit and with retroactive, internationally binding legislation with powers of extradition regardless of implied, real or treatied immunities, with forcibly subpoenaed evidences, grand juries and public FOIA trials, and if found guilty of substantially or even “unknowingly” endangering the ‘general welfare’ of the country be made/prosecuted to suffer jail time and in some cases total forfiture with appropriate legislation such that these crimes against us will not be repeated. I hope you all take into consideration Iceland’s fine example of what is possible AWA the bank of north dakota, which many states are considering now, AWA Philadelphia.

        • Dan, I agree that the JG employed buffer is would be a price anchor, and if I do add inflation considerations to the narrative in a systematic way, I will certainly talk about the JG. As you know, I’ve done quite a bit of writing about the JG in the past especially in reply to attacks on it by Cullen Roche, the MMR people, and John Carney. So, I can easily include it here. However, I’m still questioning whether this narrative should include very much about inflation, because the attack from the austerians is about solvency, not about inflation.

          If the debate does shift to inflation, then the austerians lose because they can’t possibly justify cuts to the safety net on inflation grounds. The safety net is just more important to people than the issue of controlling inflation, especially since COLA adjustments in the safety net can just be made more generous.

          Finally, I want this narrative to be on the offense, not to be defensive in nature. Most of our critiques of the austerians thus far have been defensive. Pointing out the dishonest, mythological character of their narrative. That’s well and good; but I wanted this one to be much more positive; more in the nature of this is the way things really are. Now compare it yourself to the BS you’re hearing on the MSM and from all the politicians.

      • Full employment is not possible by conventional spending/taxing policy without a JG-type program, because the skills of the last unemployed workers will never match the skills demanded by the employers looking to hire. Meanwhile, the skills that are in high demand and short supply will be bid up in price, resulting in inflation despite the remaining unemployed. JG jobs will have to require no specialized skills, so that any unemployed person will be able to perform them. The perfect sort of jobs are those done today by volunteers in places like Habitat for Humanity, food banks, and other charitable organizations.

        General stimulus can only go so far before shortages thwart the progress. Yes, we need a whole bunch of it right now, but it can’t do the whole job by itself. Jobs that are often suggested for JG, like the public works projects of the Depression, are good candidates for general stimulus (and for a “new normal” type of government spending), but not for JG.

  19. Thanks Devin for all that helpful background information, which I look forward to digesting. For now let me respond briefly on the “politically appealing” question.

    I certainly agree with you that there will be the kind of “pro-private market” and “anti-government as competitor to the private sector” arguments we often hear. But I’m not so sure they will carry quite as much weight as they have in the past, especially if the counterarguments are well presented.

    I think the Occupy Movement (particularly the 99% vs. 1% narrative), this election campaign and resulting vote counts, and events like Katrina and Sandy, are reinforcing the sense that “we are in this together (at least 99% or so of us)” and that the government has a constructive role to play…especially in cases where the private sector can’t either make enough money to invest, or where there’s a significant level of “market failure” (see Wall Street-induced GFC as a major example of the latter). Though I wouldn’t claim that victory in this debate is anything close to a slam-dunk, I would argue that the tide seems to be generally, if slowly, shifting in our favor.

    Part of this, I believe, is a growing sense among the public that the private sector has it’s own forms of inefficiency, corruption and coercive exploitations (again, with Wall Street and the GFC as poster-child), and that these match, and in many cases, exceed the level of these flaws attributed to government.

    On top of this is a growing sense that there are two trends of government…one that abuses the 99% on behalf of the 1%; the other that attempts–often with success–to support the extension of opportunity and support in times of need to the 99%. And, as coverage of the Obama-Christie “bromance” suggests, this second trend of government can be approached in a genuine and admirably nonpartisan manner…and can work notably well when it is (which may make voters more inclined to demand it in the future).

    As one example that I hope isn’t too tangential, I’m pretty familiar with these kinds of debates in the telecom/broadband industry, where the level of hypocrisy among the major network operators can sometimes be pretty intense. For example, while they spend tons of money lobbying state governments to ban community-owned networks, even in areas they themselves won’t serve (because they can’t generate their target rate of return), they simultaneously employ the “government shouldn’t interfere with private market” arguments to attack these same community-controlled networks.

    So what they’re saying is essentially that it’s OK for state governments (enticed by big corporate donations and well-funded and relentless lobbying) to forbid local residents, businesses and public service entities from coming together to decide they need and can finance and manage a community-owned network. But at the same time that they’re using state governments to restrict the freedom and autonomy of local communities, they attack every attempt to deploy a community owned and controlled network as unfair government intrusion on the private market (which, in the Internet access sector, is often subject to serious “market failure,” due to this market’s tendency toward monopoly or duopoly structures).

    To circle back to your point…my overall sense is that these “pro-private market no matter what” arguments are and will continue to be increasingly seen as weak on the substance, but retain much of their brute-force political power–as much or more at the state level (thank you ALEC) as at the federal level.

    Which is why I support a coalition that includes not only MMT advocates and the “New Economy Movement,” but also those like Larry Lessig, who are focused on truly effective campaign finance reform (even if it takes a constitutional convention), as I explained toward the end of this blog post:

    Anyway….thanks again for the reply. At the very least, I agree that we need to be VERY prepared to deal with the types of arguments you rightly note will be relentlessly (and misleadingly) raised.

    And in terms of the fight against money-controlled politics, it seems likely that, at best, it’ll be a long and hard-fought one. But I’m somewhat heartened by the fact that all the billionaire dollars spent to elect Romney and Republican senators did not have much to show for themselves at the end of the day. So maybe there are some limits as to how much political influence money can buy, especially when it’s arguing that black is white.

    • Very nice comment, Mitch! But I think there’s something else we very badly to bring back our democracy. See here, here, and here.

      • Thanks for the links Joe. I’m intrigued by the title of your posts and will do my best to digest them (printing them now). Are you still tracking comments on them? I may have a comment (or more likely a question or two) once I read them. Am looking forward to it.

      • Fascinating stuff Joe. Do you know how far along this project is? Would be great to see it move from concept to reality….the sooner the better!

        • I’m not going to read 1/2 dozen books for you various experts, as that’s more YOUR job to digest and bullet the high points as you see them so we can discuss is too short as it is to bother with so many unreasonable demands, so my point will only be that chartaism/ government money creation is ALL; everything else follows, as you people need to be the ones as professionals to flesh things out…I am in the wrong profession and do not appreciate your condescending ways. If I were to have you in my Dental chair,we’dhave a much different conversation I’m sure. Simply, debt money rots; Iceland got it right and so does the bank of north dakota.

          • Dr. Lamar: I’m not really sure what you’re talking about in this comment…but since it seems to be a reply to one of my comment(s), let me encourage you to skip them, and any others you find “condescending,” “unreasonably demanding” or otherwise bothersome. And though this may require a few extra seconds of your time scrolling down the page, I’d remind you that this something we all have to contend with here (and most everywhere on the web and in life).

        • It’s very far along in many ways, and now has two patents; but it’s still operating on a shoe string and needs start-up funding. As you can see, that’s not trivial, because the project isn’t friendly to the emerging plutocracy.

  20. A good summary of what MMT has been expounding. The problem is that much of what you’re saying seems to only work for the United States (world reserve currency) or a similar large, prosperous nation.

    Please rewrite this fiscal responsibility narrative using some other nations such as India, Thailand, or Botswana (I think they all issue their own currency) and demonstrate that each of the assertions is true for that nation.

    In particular, is the following true?

    – Even though it may seem that foreign nations can place a limit on “the credit card” by refusing to buy Botswana government securities at auction, foreign nations holding pula basically have a choice between continuing to hold them and earning no income, or earning interest on securities. So, as long as other nations are exporting to Botswana and accepting pula as payment; those pula are likely to be invested in Botswana government securities.

    The obvious issue here is that exporters will probably demand payment in something other than Botswana pula. In general, exporters want payment in their own currency. The US is in the position today that most of the world is happy holding dollars, so your narrative works so long as the dollar retains its position.

    I think this either needs to be entitled “A United States Specific MMT Fiscal Responsibility Narrative” or the narrative should be rewritten without mentioning any specific nation and demonstrating how the narrative applies to ANY currency issuing nation, not just a select few.

    • ThomasW: MMT, functional finance applies to any nation. The value of, the demand for, a country’s exports sets something of a floor under the foreign exchange value to its currency. So even if there is NO foreign desire to save in Botswana’s currency, its Pula, there will be demand for Pula.

      People who want to import from Botswana (getting diamonds from them, their leading export) need to get Pula to pay Botswanan exporters, who equally want to be paid in Pula, just as Americans exporting to Botswana want to be paid in Dollars. In this worst case scenario, the Pula will become a proxy for bartering with Botswana. Trading with them will be something like trading with a country on a diamond standard. Since diamonds are highly demanded, Botswana would have little obstacle coming from currency depreciation to adopting an MMT / JG full employment program, and other things being equal, would greatly benefit.

      • Calgacus: You’ve made my point.

        The “Fiscal Responsibility” narrative above speaks of the government having an “unlimited” credit card and says foreign nations basically have no choice but to hold dollars and Treasuries. I asked whether this applies to other nations and picked Botswana as a reasonably well run lower income country.

        Your response is not to show how the original Fiscal Responsibility Narrative applies to Botswana. Instead you’ve given a fairly conventional economic explanation that Botswana Pula have a value because they’re required for those who want to purchase Botswana exports and give some specifics based on diamonds as Botswana’s major export.

        Thus, it appears that the Fiscal Responsibility Narrative as written is specific to the United States and its dominant position in the world economy. If this is intended as a statement of MMT as a general economic theory, then the “narrative” should be rewritten so it applies to other countries. Otherwise it should specifically state that it only applies to the United States (and to a lesser extent to a few other nations). It will also only apply while the United States maintains its dominant position economically.

        • ThomasW: But then the point is that you are misreading Joe if you think anything he wrote really needs to be changed. It is not US specific. Some people think that even floating fiat issuing governments do face a nominal external constraint, using various IMHO very bad, obscure and ultimately preposterous reasoning. They believe that a “Keynesian” expansion stimulus to achieve full employment must be throttled because it enlarges trade deficits, worsens the balance of payments, depreciates the currency, causes dogs & cats to marry, whatever, and that there will be some crisis and the sky will fall and the policy will prove unsustainable. That is what I thought you were vaguely saying or worrying about; I am glad you are not. I was trying to counter such arguments.

          But from your response to me, it seems you’ve misinterpreted Joe. For his Fiscal Responsibility Narrative does apply to Botswana.
          Even though it may seem that foreign nations can place a limit on “the credit card” by refusing to buy Treasury securities at auction, foreign nations holding dollars basically have a choice between continuing to hold them and earning no income, or earning interest on securities. So, as long as other nations are exporting to the US and accepting dollars as payment; those dollars are likely to be invested in Treasury securities.
          What Joe is saying is that IF foreigners (or anyone other saver) want to hold Pulas, then they can and will hold them in Pula bonds. If they don’t want the Pula, they get rid of them. They’ll return to Botswana. What’s the problem? There is no problem. Joe is countering some naive objection that thinks of treasuries as borrowing, as a credit card, and dollars as real money.

          But note his last sentence above – Joe is NOT saying “the government has an “unlimited” credit card and foreign nations basically have no choice but to hold dollars and Treasuries.” This is true of neither the USA nor Botswana.

          The USA has a bigger credit card than Botswana. That’s all. The only really bad thing that having the big credit card, the high demand for you currency, can cause is that it can cause Mr. USA or Mr. Botswana to quit his job (have high unemployment caused by foreign saving of your currency) and live off the credit for a while. This is not a good idea. Some people, as above, think there is a mystical magical force that dictates that Mr. USA or Mr. Botswana MUST quit his job if he runs up a foreign credit card balance in his own currency. That says he can’t just print the money that the foreign sector is draining from his economy, in order to employ himself. There isn’t.

          • Thanks Calgacus. All good, you understand me well. But, in addition, when I say there’s an unlimited credit card, I’m also saying that the Government, including Congress can decide to issue as many savings instruments in whatever denomination it decides to issue. There’s no constraint on that except a self-imposed one. Now other nations may not want to invest in the dollar-equivalent of savings accounts that we call Treasury securities. But as long as they hold USD their choice is to hold it in the functional equivalent of their checking account; or put it in that savings account; or buy what they can buy with it here; or trade it on the international exchange for other currencies with the last being subject to market forces. So, all their choices are fine for us; but for them the savings account will often turn out to be their best option. Which is why that “credit card” is “unlimited.”

            • In the aggregate, foreign central banks can either hold dollars (or T-bills), or spend them on US goods and services.

              Trading on currency exchanges or buying things from other countries that are for sale in $US (like oil from Iran, for instance) only transfers the balance from one CB to another, it doesn’t change the aggregate.

              If, for instance, China were to decide they wanted to hold Euro instead of dollars, they would sell dollars on the forex market, driving the price down until enough other CBs were willing to buy and hold them, because their effective interest rate was higher. Or, possibly, willing to acquire dollars in order that their citizens can buy US goods, because they are now cheaper than before.

              If they spend on US goods and services, the US trade deficit goes down, and there is no need for a budget deficit to offset those $ that came back here in trade.

              If they hoard dollars (or T-bills) then we can (and should) create enough dollars to offset their hoarding. Without limit. In that sense, the limit on our credit card is set by the willingness of foreigners, in the aggregate, to hold dollars.

  21. Good start but it’s too wordy. If I might suggest lock yourself in a room with several truck drivers, waitresses, nurses aides and a few unemployed construction workers. What comes out of that meeting will immediately resonate with the public and don’t forget the JG. Let them convince the elite.

    • There’s always a choice between wordiness, often resulting from qualifications, included so as not to mislead, and being simple, direct, and also misleading. I’m trying to get to the right place in that tradeoff. As you can see, the suggestions about including the JG and inflation considerations would also increase length and wordiness.

  22. As long as America is the only super-power capable and ‘willing’ to project that power world-wide (it’s NOT police action, it’s imperialism, plain and simple, witness Benghazi), the frn will prevail, but the smart ones will watch for signs of it’s impending weakening and dump them for assets and contracts the worse our situation becomes, like on Jan. 1; probably a ‘sell-out’ on WS as the super-rich cash-in their HST chips and go home…to the Caymans of course. ….and JG ? that’s not much of a problem for the skilled; low enders always have that problem, but usually the ‘job description’ gets ‘discredited’ by many who won’t do what’s asked of them for basic sustenance…and the gov. let’s them get away with it…any wonder that adds to our problems with the work ethic ?

  23. How about a very brief header/teaser?

    1.) There is only one legal source of money. Because of that, there’s no shortage and no need to borrow.
    2.) There is one major problem with money: its distribution (soon enough, 99% of it will go to the 1%).
    3.) So, we’re in dire need to democratize the creation, distribution and circulation of money, get it back to work for public purpose and full employment, and we can start doing that tomorrow. Austerity has no base.

    Learn more about Modern Monetary Theory (MMT) and the creation and distribution of modern money at or at or read on: Here’s the Handy List of MMT Truths (for the US) as an initial primer:

    (followed by your bullet points)

  24. Thornton Parker

    Joe, your revised draft is really good. I admire you for being such a good sport and keeping this wandering conversation on a civil tone. I do have a few points that I hope will be useful.

    1. The second bullet under The Narrative said, “When it taxes and borrows, the Government removes money from the private sector.” Having been over Stephanie’s explanation several times, it seems to that the T accounts mainly show that when the government borrows, it creates new Treasury securities. From there, the discussion drifts off into the high weeds. You might want to finesse all that by eliminating “borrows” from the discussion. With it out, the discussion is consistent with what I think is the basic MMT idea of creating net new dollars by running deficits. Leaving it in leads to the appearance that deficits, which appear to be covered by borrowing, remove the money as it is created, leaving a net of zero. This appearance can be stated in two sentences — the denial takes many paragraphs.

    2. Much of this rambling discussion of your work involves theory, and different views of it. But theory is hard to sell to many Americans today. Rather than trying to explain MMT as if it were a science, it would be much easier to sell it as a technology — what it enables. Even better would be selling something that was made using the new technology — think iPods . We buy things all the time whose workings we will never understand.

    3. When working on a complex technology commercialization project, it is often useful to identify those who may become first to benefit and enlist them as champions. State and local governments are one group that can be among the first to benefit, and they have direct links to federal administrators and legislators. The are even represented in a building within sight of the Capitol. This suggests explaining how the country’s money system can help them out of the pit they are in, and get them to promote the idea on The Hill and with the Administration. One program could be to revive the old General Revenue Sharing that Richard Nixon started and Ronald Reagan ended. This would enable lower levels of government to do countless things with almost no red tape from Washington. As IMB used to do in the main frame heyday, “sell the sizzle, not the steak.”

    4. Lack of understanding may not be as much a limiting factor among senators and representatives as fear. MMT asks them to adopt and bet their political futures on ideas that are not widely accepted and they may never completely understand. To overcome their fear, they must have the confidence that good things can happen and that important constituents will help them do battle.

    5. Putting these together, promote general revenue sharing; enlist state and local governments to list all the good things that it can do for their constituents; and get them to apply pressure on their Washington delegations to make it happen.

    6. This is just one example of marketing what MMT enables, not how it works. There are countless others.

    7. If this is realistic, then what is really needed is a simple explanation of MMT (by another name) that can be inserted in proposals to do big things in many fields. In short, in addition to a plausible summary for economists, thousands of fields need help with their marketing campaigns that have MMT as an internal component.

    Thornton Parker

    • Good points, all, Thornton. Your suggestion to “market what MMT enables, not how it works” makes good sense to me. I’m not sure I agree that it makes sense to rename MMT as a theory and explanation of how modern monetary systems work, but maybe your suggestion of a new name could be applied to “what it enables.” By doing this, it might help distinguish the theory from the “enabled” benefits which, as you note, are what have the most power to motivate people to want to understand the theory. Any ideas for names??

      • Thornton Parker

        How about something like “modern dollars”? It does not lose the link to MMT and seems to work in the various contexts that I have tried.

        Thornton Parker

        • Thanks Tip and Mitch, I’ll take these considerations under advisement. On the State Revenue Sharing idea, it’s already part of the MMT policy program, along with full payroll tax cuts, and the JG. Whether the people at The Hall of the States can be convinced to get back to it by basing proposals on MMT, I don’t know. All the damned Governors lack experience working with sovereign fiat currencies, so they tend to believe that the Federal Government is like a Household, and to value their experience in managing budgets in such “households.”

  25. You have all ignored my post and refuse to take my issue seriously, however, here is an excerpt from a piece about the CBO today on Naked Capitalism.. Notice the what’s in parenthesis “But to get a sense of what is at stake, if you read the newest CBO document on the deficit, it is not a dispassionate analysis of budget math alternatives. This is an advocacy document. It has the tone, the use of overly simplified language (below 8th grade level, which is the level used to spoon feed journalists, as opposed to higher reading levels that you see in other types of reports. Contrast both the look and the writing style with this FHFA Inspector General report, as an example: text paragraphs, no nice bullet points and generous use of white space, not much coddling of the reader).”

    Again if you want to influence public policy you unfortunately must get down to their 8th grade level. I purposely left out a link to today’s post since I would suspect many of you read Naked Capitalism

    • I agree with you. I would go further. One has to start with simple goals and create agreement there first. And then go only as far into the weeds as absolutely necessary.

      • Thanks. I would go further and would fund it if I could but if we are all convinced that deficit reduction will be a disaster, a few simple statements to that affect on billboards throughout the country will do wonders for our credibility when the stuff hits the fan.

        • Charles…I think your point about short and simple language is REALLY important, and like both of your suggestions (talking to truck drivers, etc., and coming up with a few simple statements that could fit on a billboard). This isn’t an easy task (at least for long-winded folks like me), but I think it’s essential (though not sufficient) to get a message resonating (or even paid attention to) in Washington. Maybe MMT needs it’s own Frank Luntz.

          • I think it would be a good exercise to come up with five or so statements that MMTers could start all MSM conversations with. An example for me would be: Deficits create jobs.

            Sound messaging requires simple statements that are repeated with conviction.

            • I agree Econobuzz.

              I like the idea of holding a “contest” in which people can offer up these kind of short MMT “conversation starters,” with the rest of us voting on and ranking our favorites. This exercise could run parallel to what Joe got started here, which seems focused on drafting clear paragraph-length points that lay out an “MMT is true fiscal responsibility” narrative. And it would help further if, for each short intro statement, we could identify (and customize) one or a series of paragraph-length explanations that could naturally follow-up on that intro statement, with even more detail and clarification available beyond that for those who are interested (lots of this more in-depth material seems to available already).

              I also think that continued development of MMT-related graphics is very worthwhile and would fit well with these other pieces (remember what they say about a picture being worth a thousand words). If I remember correctly at least one set of graphics were offered up in a recent blog post and received some feedback.

              If enough people were interested in contributing to this, do you think the NEP blog would be an appropriate forum for this kind of cooperative exercise, or would something else be better and more appropriate (e.g., Google Docs/Drive)? At the very least, the folks who run the NEP site should weigh in on this in terms of what’s appropriate for the site to include and how it should be managed.

              • The logo for the billboards should be a deficit owl.

                This may be too long for a billboard, but

                The Fiscal Slope is as bad as the Fiscal Cliff. It takes longer, and you end up broken and mangled at the bottom anyway.

        • I very much agree with this! We really need those billboards.

    • Just because CBO has taken to writing at less than an 8th grade level, doesn’t mean I should or should want to. I’m writing for people at the intelligent lay level. Someone else can write one at 6th grade level. There’s room for many narratives, because there are many communication segments to target. I’m looking for one that will target the village on the Potomac. I can get up to high school for that!

      • Joe you are 100% correct about your audience and if I introduced a distracting thread I apologize. It’s just that I am frustrated not seeing anyone addressing that critical audience. Unfortunately we need a Pete Peterson type who believes in MMT and wants to help those who are and will continue to suffer until things change. We are a rich country with manpower and natural resources galore but those that are suffering don’t have the knowledge to ask why or to say “crap” when they are told “TINA”

        Thanks for indulging me I’l stop interfering and let you get back to your primary purpose.

  26. These last proposals on messaging are very good. I also agree with the way Mitch put my effort here in context!

    • As we all know, in a follow-up post Joe has put together a “final” draft of his narrative and encouraged the rest of us to use and revise it as we find it to be helpful. That’s a great step forward (thanks Joe!), as is Stephanie Kelton’s recent (and very good) 20-minute presentation at a conference on the Fiscal Cliff, which also appears in a later post here at NEP (and also on the C-SPAN site).

      And, as Joe notes, we’re making some initial progress in this and other threads in brainstorming ideas for overall MMT messaging, including getting Stephanie, Bill Black and/or others on MSNBC and other MSM programs to explain the MMT perspective on the Fiscal Cliff and related issues (see comment thread at:

      So, my question is: “how can we continue this discussion in productive ways, and maintain a focused effort to leverage the expanding MMT community’s energy and expertise to help develop and execute an MMT public communication strategy?”

      One initial (and simple) step that might help is to set up an ongoing discussion thread focused on this kind of effort and have a link to it posted in a reasonably prominent place on the home page. This would allow a discussion of this subject to continue in a dedicated discussion thread, where all the ideas and exchanges related to it could be posted and tracked.

      I’d suggest putting a link to this kind of discussion thread right under the “Help Us Develop New Media Content” Donation button at the top of the home page’s right panel. The link to this discussion thread might be entitled something like “Join the discussion on MMT media strategies.”