Stephanie Kelton appears on Majority Report

Stephanie appeared on Majority Report with Sam Seder on 11/20/2012. The image as well as this link will take you to the Majority Report web site.

The podcast can be downloaded or listened to by clicking this link (opens in new window).

28 Responses to Stephanie Kelton appears on Majority Report

  1. How long do you have to listen to him talking about his daughter vomiting before you get to Stephanie?

    • Stephanie Kelton

      Ha! That was my fault (technically). They couldn’t reach me because I thought they were calling at 12:04 (CST) not (EST).

  2. What’s the chances of Dr. Kelton appearing on NPR’s Diane Rehm Show? – Diane Rehm has a large national audience of intelligent listeners who, I believe, would be very receptive to Dr. Kelton’s message.

  3. Stephanie did a terrific job, and covered a lot of ground, including the possibility of using coin seigniorage under current law, a pleasant surprise for me. Please take the time to listen!

    • I agree Joe. On a related note, do you have much in the way of readership/contacts on dkos, FDL, where I think you also blog? In a comment below I seconded Malmo’s suggestion re: getting Stephanie on MSNBC and also found a contact email for the Rachel Maddow show. Any thoughts on how to mobilize large numbers of emails from these other sites (and, of course, NEP) suggesting the show invite Stephanie to talk about MMT, deficits, etc. with Rachel?

  4. I wish she’d go on MSNBC. They are sorely in need of MMT shock therapy.

  5. Mark Robertson

    I have two minor quibbles.

    At 27:43, Stephanie repeats the standard MMT mantra that Zimbabwe’s hyperinflation problems happened because “Mugabe took away farm land from white farmers, and redistributed it to blacks who had no farming experience.” Hence there was no capacity to produce. This caused shortages, which led to price inflation.

    I have heard this fable repeated for a long time, and I have shrugged it off without ever making a comment. Until now. I don’t have the space here to expose all the details, but the fact is, Zimbabwe’s hyperinflation was engineered by the West.

    Mugabe has always been a Pan-Africanist and a dedicated anti-imperialist who will not let foreign corporations extract Zimbabwe’s resources for nothing, as corporations do elsewhere in Africa. It’s a long story, filled with broken promises by foreign powers (e.g. the Lancester House Agreement of 1979), but the upshot is that Mugabe’s resistance to imperialism, and his alliance with people like Gaddafy, caused the EU, USA, IMF, World Bank, and Australia to impose brutal sanctions on Zimbabwe, beginning in 2001. (Standard collective punishment.)

    Meanwhile the corporate media embarked on a non-stop vilification of Mugabe, just as it did with Idi Amin, Moamar Gaddafy, Thomas Sankara, Patrice Lumumba, and many other Africans who stood for freedom and national self-determination. (The West arranged for the assassination of every one of them except Amin who escaped, and Mugabe who is still alive. Libya, of course, was destroyed.) This negative imperialist propaganda is swallowed without question by average Westerners, including MMT people.

    U.S. sanctions began with the Zimbabwe Democracy and Economic Recovery Act of 2001, which totally eliminated Zimbabwe’s access to finance and credit facilities. The Act empowers the USA to use its voting rights and influence (as the main donor) in multilateral lending agencies, such as the IMF, World Bank, and the African Development Bank, to veto any applications by Zimbabwe for finance, credit facilities, loan rescheduling, and international debt cancellation.

    To punish Mugabe, international bankers cut Zimbabwe’s 12.6 million people off from international credit markets, thereby eliminating Zimbabwe’s ability to reschedule its loan payments and to apply for debt cancellations in times of severe financial crisis. And once the IMF and World Bank stopped doing business with Zimbabwe, the country’s credit and investment rating dropped to zero. And of course, all Zimbabwe assets that had been deposited in foreign banks were stolen by the imperialists. A nd all government ministers were personally sanctioned with travel bans, and so on.

    Libya survived imperialist sanctions because Libya had oil, but Zimbabwe took to relying purely on barter trade, and on concessions from mining, agriculture, and exports-generated foreign currency. This, plus the savage Western sanctions, slowly strangled Zimbabwe’s economy, while the media told wild fables about Mugabe being a madman. (Remember the lurid tales about Idi Amin massacring whole villages, and keeping the heads of his victims in refrigerators so he could routinely “lecture them on the error of their ways”? It ws absolute rubbish, but the Western masses relish such nonsense. They believe it EVERY TIME.)

    The West put in place measures to bring about the downfall of Mugabe by orchestrating the economic collapse of all Zimbabwe. This, combined with missteps by Zimbabwe’s government, led to hyperinflation, just as Allied demands helped spur the hyperinflation of Weimar Germany. By 2009 Zimbabwe’ national currency (the Zimbabwe dollar) was so worthless that the government dropped it, and Zimbabwe took to simultaneously using the euro, U.S. dollar, British pound, South African Rand, and the Botswana Pula. This remains the case today.

    Were white farmers’ lands requisitions? Yes, but not nearly as much as Western imperialist propaganda claims. Some of these “farmers” were individuals, but most were foreign corporations. Thus, the requisitions in fact nationalizations, which for imperialists is unforgivable.

    As always, the West says it might consider easing the sanctions if Zimbabwe holds an election and a referendum that Western imperialists regard as “credible” (i.e. that gets rid of Mugabe, and allows foreign corporations to re-enter and resume stealing all of Zimbabwe’s resources).

    I know that what I say here will anger people who have totally swallowed the imperialist propaganda, but I ask everyone to investigate the matter for themselves, and not rely on standard lies spewed by the corporate media. MMT-ers often fancy themselves to be “politically agnostic.” I ask for some of that with regard to Zimbabwe.

    The other minor quibble I have with Stephanie’s talk is that I have never agreed with the standard MMT line that federal taxes are necessary to control inflation, and to maintain the authority of the fiat currency. I say that inflation can be controlled via central bank interest rates, while the dollar’s legitimacy can be maintained via payment of local taxes (state, county, and municipal). I say that federal taxes should be a LAST resort when all other measures fail. This is only my opinion, of course, but I reject the way that MMT-ers regard their own opinion on this as fact.

    As I said, these are minor quibbles.

    • I don’t know anything about Mugabe except what I’ve read here, but I do have some personal experience with Idi Amin. I was on USS Enterprise in 1977 when he rounded up all the Americans in Uganda and threatened to kill them. We had just finished a port call in Mombasa and were headed home, and when this happened we turned around and steamed in circles off the coast until he let them go. It was the act of a terrorist, not a man interested in “freedom”.

      As for federal taxes being necessary, the math, rather than the theory, requires it. State and local governments are not going to run surpluses very much or for very long, and federal spending is now upwards of 25% of GDP. Some of that spending is automatic stabilizers that would end, but unless our savings and net imports are going to rise to maybe 15-20% of GDP, there will have to be significant taxation by someone well in excess of State and local spending, or else the Federal government is going to be trying to buy things that don’t exist, and can’t exist (with deficits at 25% of GDP today, we’d hit full employment very quickly).

      • As for federal taxes being necessary, the math, rather than the theory, requires it. Golfer1john

        Don’t forget that net credit repayment destroys private spending ability too. So during the bust the monetary sovereign might easily have more room to deficit spend without causing price inflation. Also, when banks lend they do not create the interest for their loans and do not recycle 100% of the interest they receive by spending it so either the private sector must go into even more debt to obtain the interest (unsustainable) or the monetary sovereign must supply the missing interest or else some loans must default (A trade surplus might provide the required interest for a while but only until the foreigners run out of the required currency and exhaust their credit). Also, savings by non-debtors tends to increase during the bust as a buffer for economic uncertainty (ironically increasing that uncertainity – the “Paradox of Thrift”) so that gives the monetary sovereign even more room to deficit spend without causing price inflation.

        • True, but how much? We’re taxing about 20% of GDP now, and there is slow growth. If we taxed, say, 10% instead, the deficit would more than double. Would that not be enough? If all federal taxes were eliminated, would that not be too much? How would we be doing today, if the deficits had been $2.5T a year instead of $1.2T a year for the past 4 years? Plenty lot better, I think. Did they need to be $3.8T a year? I doubt it.

          • True, but how much? Golfer1john

            That’s complicated by the credit cartel which is also capable of creating purchasing power and price inflation. The danger is that once a credible recovery is under way that the demand for credit will increase and the banks will be much more willing to provide it. That creation of purchasing power by the banks will “crowd out” the ability of the Federal Government to deficit spend without price inflation.

            • Which is why the government should create all the money, and the banks should USE THAT MONEY to create credit.
              Then, and only then, would we have a currency-issuing government, which would create all of the purchasing-power media, and a currency-using banking system, that could never again have any effect on the amount of purchasing power in the economy.

              Said President Lincoln on this matter:
              “The government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. The financing of all public enterprise, and the conduct of the treasury will become matters of practical administration. Money will cease to be master and will then become servant of humanity.”
              Thanks.

              • I agree that the US Federal Government should create all legal tender for government debts and it should be inexpensive fiat. However, I don’t see why private monies for private debts only should not be allowed (As you say, the banks are not true private money creators but a government backed cartel). That way, the private sector would be insulated from government monetary mismanagement should it create too much or too little money. It would also derail attempts to impose a government enforced gold standard or to limit deficit spending by the Federal Government since if the Federal Government overspent relative to Federal taxation then taxes would become easier to pay in real terms.

                • @F. Beard Thanks.
                  “I agree that the US Federal Government should create all legal tender for government debts and it should be inexpensive fiat……. That way, the private sector would be insulated from government monetary mismanagement should it create too much or too little money.”

                  I guess I’ve never seen a “government monetary mismanagement”, as you call it.
                  That is because “managing” monetary matters is already, and has been for a hundred years, a strictly private affair. And they haven’t done very well at it.

                  If I understand correctly, “creating legal tender” for government debts would replace issuing government debts. Thus, we would have permanent Greenback money created by the government and issued into existence by the government spending on its budget.

                  So the present $1.7 Trillion deficit would be replaced with that amount of permanent Greenbacks and, after 9 or so more years of such issuance, we would have replaced the $17Trillion money stock with permanent public money (creation and issuance without debt) I like that idea..
                  Of course, once that money is spent into the economy – at that instant it becomes private sector money.
                  So, at the point of public money replacement at $17 Trillion, and with all of that publicly created and issued money in the private sector, there would be no need whatever for the private sector to create any new money. We would have all the money we need.
                  All the private sector money-managers would NEED to do is to lend it, which is what people actually think they do now.
                  Or, am I missing something here?
                  Thanks.

            • Right, so they must tax, if they wish to spend more than the total of private and foreign savings. Which they do. Even now, never mind in a more healthy economy with normal levels of loan creation (i.e., lower net savings in the private household sector).

      • Mark Robertson

        Golfer1john, Idi Amin’s initial problem was with Britons, who had tremendous control of Uganda’s industry and finance. When British-owned corporations would not help him ease poverty in Uganda, he nationalized eighty-five British-owned businesses in 1972. Amin then turned to Israelis in Uganda, who also had tremendous control. Amin was a firm friend of Israel, and even received military training there. He bought most of his arms from Israel. But when Israelis in Uganda would not help him ease poverty, he nationalized their businesses too, and started deporting Israelis, beginning with his military “advisors.” Amin then turned to Muammar al-Gaddafi and the Soviet Union for support.

        As a result, the USA closed its embassy in Kampala (1973) and began a propaganda campaign to vilify Amin as “racist and insane” (the same garbage they use to denounced Mugabe, Gaddafy, and so on.) The USA armed Kenya and Tanzania to make war on Uganda, and also built up a terrorist insurgencies (e.g. the Uganda National Liberation Army or UNLA).

        Amin would not back down to the combined might of the imperialists. Foolishly, he took the imperialist bait and invaded Tanzania, which responded by joining with the U.S. / Israeli-backed terrorist insurgents (UNLA) in Uganda. The external war, plus the internal terrorists, eventually cause Amin to loose. He fled on 11 April 79.

        Next came a period of extremely bloody chaos (Uganda Bush War, 1981-86) with the U.S.-backed warlord Yoweri Museveni emerging supreme. Museveni, as puppet dictator, has ruled Uganda with an iron fist for the last 26 years, obeying IMF dictates, such that Uganda is now one of the poorest nations in the world. Even the World Bank admits that over a third of Ugandans live on less than $1.25 pr day. Child labor is endemic.

        Meanwhile Western corporations extract Uganda’s copper and cobalt, and will extract Uganda’s oil and natural gas when they choose to.

        All this is what Idi Amin opposed. And because of Western propaganda, most Westerners see Amin as a demon. Now Amin is dead and Gaddafy is dead, so Mugabe is one of the current demons.

        I don’t expect you to believe me. As you said, “I don’t know anything about Mugabe except what I’ve read here.”

  6. Mark Robertson – to quibble with your quibbles – that federal taxes are necessary to control inflation is not an MMT line, nobody disagrees that local taxes can do the trick. But interest rate manipulation has limited power, because there are both inflationary and deflationary effects. What MMTers do opine – that somebody demanding or threatening to demand money at some time, is necessary to drive the demand for money is so tautologous that calling it a fact is quite reasonable. Money must be debt to be money, not just be called money or debt.

    From what little I know of Zimbabwe, I think there is quite a lot to what you say. But my feeling is that Mugabe, while not so bad, was not a Sankara, Lumumba or even a Gaddafy. After independence, there was a bright start, but things somehow went astray after a few good years, and that probably was Mugabe. The farming redistribution started then as I recall, so linking it so tightly to the hyperinflation years later is a stretch. Nobody said running a state, especially in a neoimperial era where the center attacks its own working class is easy. African nations that achieved even stagnation had to be run by George Washingtons. The main thing, I think, is that economists should resoundingly declare that hyperinflation is always & everywhere a supply phenomenon. (Locus classicus – Lerner: “The price of potatoes is always & everywhere a potato phenomenon.”) And agnostically leave it at that.

    • Mark Robertson

      CALGACUS WRITES, “Interest rate manipulation has limited power, because there are both inflationary and deflationary effects. What MMTers do opine – that somebody demanding or threatening to demand money at some time, is necessary to drive the demand for money is so tautologous that calling it a fact is quite reasonable. Money must be debt to be money, not just be called money or debt.”

      My opinion is that federal taxes may indeed be necessary. However, with a fiat system, federal taxes should always be a last resort when other measures fail. The U.S. government does not need or use tax revenue. My disagreement with MMT-ers is that they say federal taxes should be the first (and perhaps only) resort.

      CALGACUS WRITES, “After independence, there was a bright start, but things somehow went astray after a few good years, and that probably was Mugabe.”

      Since you use the words “somehow” and “probably,” let’s clarify what happened.

      When whites lost their control of Rhodesia in 1978, the blacks entered into agreements with whites to institute reforms that did not initially include land redistribution. Average white Rhodesians were not opposed to this. They were tired of civil war between the people and an oppressive government that represented rich whites. (Average white Rhodesians were no fans of the government.)

      In September 1979 the British invited rebel leaders, including Mugabe, to Lancaster House in England for talks on a cease-fire. The rebels agreed to a truce. They agreed on a new constitution for a new Republic of Zimbabwe, with elections to be held in February 1980. Mugabe agreed to reserve at least 20 seats for whites in the new 100-seat Parliament. He also agreed to a ten-year moratorium on constitutional amendments. He renounced the use of force for political ends. He made many concessions, and he returned to Zimbabwe in December 1979, where he was cheered by average whites and blacks alike. (Rich whites hated him, of course.)

      In return the British and American governments offered to buy land from willing white settlers who could not accept the new arrangement (the “Willing buyer, Willing seller” principle). A fund was established to handle this.

      All went well…at first. In 1981 the British assisted in setting up the Zimbabwe Conference On Reconstruction And Development, pledging more than £630 million of aid. The first phase of land reform, partially funded by the U.K., successfully resettled around 70,000 landless people on more than 7,700 square miles of land.

      Then things went awry. The U.S. and U.K. claimed that Mugabe’s government adopted “unworkable economic policies.” (That is, Mugabe was a socialist who felt that foreign corporations should pay more for the resources they extracted.) Therefore the U.S. and U.K. reneged on their promises to fund land reform. Mugabe responded by nationalizing some industries, and requisitioning some farm land.

      In retaliation, the US-EU-IMF-World Bank-and Australia totally cut off Zimbabwe from the world financially. For the last 11 years there has been a combined imperialist campaign to destroy Mugabe by destroying Zimbabwe’s economy. The sanctions are not the only cause for Zimbabwe’s currency problems (many of which have been resolved), but they are the main source.

      As for Mugabe, he is no saint, but neither is he the racist demon that Western propaganda portrays him to be. He is in league with South American leftist governments, all of which the corporate media call “brutal dictatorships.”

      And it is not a racial thing. Mugabe hates the corrupt black government of South Africa for keeping the masses in poverty. He supported Gaddafy during NATO’s destruction of Libya.

      Let me clarify that I disagree with the common MMT reason given for Zimbabwe’s currency problems, but I do agree that the Zimbabwe issue is an absurd example to use against MMT. “Hyper-inflation! Weimar Germany! Zimbabwe!”

      CALGACUS WRITES, “The main thing, I think, is that economists should resoundingly declare that hyperinflation is always & everywhere a supply phenomenon.”

      Perhaps, but the cause of supply problems is often imperialist sanctions. When external blockades combine with internal government corruption (e.g. Ahmadinejad’s agreement to obey IMF dictates to impose needless austerity) the result is inflation problems.

  7. Even if you cozy up to the taxes-drive-money construct, that does not come close to equating that money IS or must be debt.
    Dr. Wray likes to put it in terms of the “obligation” on the part of liability-issuers to receive in-kind payments from their debtors.
    This rather skews our understanding of the banker-taxpayer-government relationship.
    The liabilities the government issues are its debts, and not its money.
    Banks create money-as-debt in the form of bank-credit, and are thus “obligated” to accept that same liability in payment from their debtors.
    Thus banks must accept bank-credit for payment of bank loans.
    The party in play in the GUV-issuance myth is the taxpayer.
    All of us are (theoretically) taxpayers.
    It is as tax-paying citizens of the state that we join this requirement for payment.
    Where do each of us taxpayers get the “liability-money” to pay our tax bills?
    Same place as we get the liability-money to pay for groceries.
    From the debt-as-money issuing banks. Sometimes in a roundabout manner.
    So, on the payment side, the source for our tax payments IS the money created as debt and issued by the banks.
    This ‘endogenous’ money system is what keeps this all going.

    Then, there is the government tax-RECEIVING side.
    For sure, no government can have a sound, sovereign money system if that GUV excludes its money from being used to pay for any GUV services. National money cannot be workable if such a flaw existed.
    But nothing in that construct establishes the nature of sovereign money as a debt of the state.
    It can or cannot be a debt, and it can or cannot be a debt of the state.
    Under our private, endogenous money system, our money is not a debt of the state as issuer.
    It is a debt of the private bankers, who create and issue the money.
    So, for clarity, what the government is obliged to do is to receive the form of money it has authorized.
    The form of money the government has authorized is that which the private bankers create ; that is, debt-based money – but this does not make it a debt of the government.
    It does not make it debt at all.
    Only when government borrows does it have a debt.
    What makes our money debt is its method of issuance.
    Especially, regarding taxation, bankers create and issue all of the money that the taxpayers use to pay their taxes.

    • Joe – one more time. Looking at some of your older posts, it appears part of the problem is that you want to redefine the word debt from its primary dictionary meaning, to involve money & interest. Fine. In other posts you have said money is a liability. So you are using “liability” for the primary meaning of “debt” as any obligation, not necessarily involving money. MMT & most dictionaries use liability, debt, obligation etc as equivalents, as synonyms. So in your terminology, Mitchell-Innes & MMT say “money is liability”.

      The important thing is not the particular word, but defining it carefully and applying it consistently and doing the accounting correctly. The most important thing is the categorical nature of the thing defined – money (and the order of the concepts defined). Money is liability is a relationship between someone who “holds money as an asset” and someone to whom this same money is a liability. It’s not a liability “for” anything. It’s just a liability. Here asset & liability are just two words for the same thing, viewed differently. Then a major point is that government bonds are exactly the same kind of critter, a relationship, not a thing. I hope you are not going to say that “relationship” must be defined in terms of “money”. :-)

      Where do each of us taxpayers get the “liability-money” to pay our tax bills? Same place as we get the liability-money to pay for groceries. From the debt-as-money issuing banks. Sometimes in a roundabout manner. So, on the payment side, the source for our tax payments IS the money created as debt and issued by the banks.

      This is very, very wrong or misleading. Incorrect accounting. First, you can do all your business in cash. Never have to do with banks at all. Get all your money from the government in printed dollar bills. It’s still a possibility. Refutes the argument above.

      Second, more important, the source of the tax payments is the state’s money, which only it can issue. Bank reserves, dollar bills, coins. Banks cannot create them all by their lonesome. It’s called “counterfeiting” if they do. The government gets them from itself. Nothing to do with the banks. It may exchange them for bank liabilities towards the government, say at the discount rate, using a bond as collateral, but this needs the government to act, not the bank.

      The relationship of “I owe the government taxes” can ONLY be ultimately extinguished, settled, cancelled, completed by another relationship “The government owes me tax credits= I have a pile of dollars” . The government gives banks the tremendous privilege that it will accept their debts, debts owned by a taxpayer & owed by a bank, as settlement for the taxpayer’s tax liability to the government. The taxpayer can fuhgeddaboutit now, at this stage. But then the bank has to pony up the dough. The bank now has a “tax liability” transferred to it. And the only thing the government takes in settlement from the bank is the government’s own liabilities. NOT THE BANKS’ liabilities. Only when the reserves are removed from the bank’s account, can the bank fuhgeddaboutit. And if it had to get those reserves by borrowing at the discount window, the reserves are then GONE, but the debt of the bank to the Fed remains, and only in the future, when it is settled by the government’s reserves is everything done. Banks are not in control. The Fed is. And even more, the Treasury is.

      • @Calgacus
        “”First, you can do all your business in cash.””
        That is what is known as hyperbole. And, irrelevant hyperbole at that. Nobody reading this can do all of his or her business in cash.
        “”Never have to do with banks at all. Get all your money from the government in printed dollar bills. It’s still a possibility. Refutes the argument above.””.
        Actually refutes absolutely nothing. YOU go to the government and get your dollars. Try it. Let me know how you make out. Only the private banks issue the dollars. Gawd.
        “”Second, more important, the source of the tax payments is the state’s money, which only it can issue. Bank reserves, dollar bills, coins. Banks cannot create them all by their lonesome. It’s called “counterfeiting” if they do.””
        Exaggerated hyperbole here. And completely wrong.
        Reserves are not money. They are central-bank created accounting identities that only serve to balance the member bank’s accounts WITHIN the central bank. No taxpayer can pay his or her tax liabilities with reserves. You and I and all taxpayers need bank-credit money balances to pay our tax liabilities to the government. THAT is an undeniable fact.
        Banks do not ‘create’ the currency-dollars, as they are printed by the government, but they have ZERO value when printed. $100 Notes cost 2 cents to purchase. Only when they are ‘issued’ into circulation BY the banks do they have a ‘currency’ identity. It is like banks printing a bunch of bank notes and having them in their vault. They have ZERO purchasing power – the function of money, until someone trades them for collateral. Coins are too small to consider seriously. Unless they’re the $60 Trillion variety.

        “”The relationship of “I owe the government taxes” can ONLY be ultimately extinguished, settled, cancelled, completed by another relationship “The government owes me tax credits= I have a pile of dollars” . The government gives banks the tremendous privilege that it will accept their debts, debts owned by a taxpayer & owed by a bank, as settlement for the taxpayer’s tax liability to the government.””

        Sorry, this crosses from exaggerated hyperbole to misleading falsity.
        Indebted or not, the banks must pass through the taxpayers payments to the GUV accounts, wherever directed, and that action ultimately settles the taxpayer’s obligation. PERIOD. The bank’s reserve management practices have NOTHING whatever to do with taxpayers paying their taxes.
        What is true is that the government extends a massive and instability-causing privilege to the bankers – which privilege is that of creating ALL of the nation’s money as a debt; c.e.
        The inter-bank relationship that is at play as you describe it has nothing to do with the taxpayers paying their taxes to the government. Rather it is that the Treasury has ITS account at the same Central Bank that manages the national payments system – as a completely separate matter. Or, did you forget that we were talking about money?

        The confusion and unnecessary complexity that MMT brings to the discussion of the nation’s money system by involving the reserve accounting of the Central Bank is only more abhorrent as it is MMT that continually brings up the unnecessary throwbacks to the gold standard, of which reserve accounting is the anchor tradition.

        Reserves are meaningless to money. But MMT gets thoroughly involved with reserves through its mis-identity of money via its unit-of-account function. Again, the true role of money in the national economy is to provide for a stable, unit-of-media-denominated system of exchange of goods and services.

        With regard to definitions – I do believe that eventually WE – and that means the MMTers and the true reformers alike – are going to end up in a tribunal of sorts where only legal, factual, truly reasonable stuff will prevail. That is why I try to address any misunderstanding that MMT may be creating about anything, but especially about two things so relevant to modern monetarism as sovereignty and “debt” – both of which MMT mis-defines.

        Your theme here involves the difference between your “primary, dictionary meaning” of the word debt, versus the legal definition of debt that I use. As you say, my definition of debt involves money always, and often interest.
        The definition of debt in my usual dictionary – the Merriam-Graves Concise – carries over to involve money, although we are all otherwise indebted, for favors etc. that do not involve money
        However, we are dealing with modern “monetary” economics and so our discussions of ‘debt’ carry down to these included in the same dictionary –
        1: Something owed.
        2: Obligation.
        3: A state of owing
        4: the common-law (debt)action for the recovery of money held to be due.
        a. For governments, the need to borrow in order to finance a deficit budget has led to the development of various forms of national debt.”
        So, I’m good with a plain vanilla dictionary definition of debt. Since we re talking about money HERE – there is the necessary matter that debt is one of the legal aspects of money.
        Under the legal aspects of money, debts are things contractual, they are things involving monetary sums, the sums are repayable at a certain time, by a certain method – and always of a certain amount and type of money. (See F.A. Mann : The Legal Aspect of Money)
        That is what a legal money debt is. And the government’s obligation incurred when it trades its IOU for existing bank credit money fulfills all of both the dictionary and legal aspect of what is a debt. The only debt that we concern ourselves with in discussing the monetary economy is something that involves borrowing a sum of money and repaying a sum of money.
        FYI, I NEVER use liability as the meaning of debt. Liabilities have many meanings. Liabilities enter financial economics under balance sheet accounting. Liabilities and other equities balance assets.
        On a balance sheet, “debts” are a type of a liability. As are equities
        Again, please do not put the words – Mitchell-Innes says ‘money is liability” as though I have said them. I would never say that. What I do say is that “Mitchell-Innes says ‘Money is Debt’”. And please understand the distinction, based on what I just clarified – money issued as equity (debt-free money) would still go on the liability side of the true government’s balance sheet. Which is where you find Greenbacks and coin seigniorage.
        But here, unfortunately, we are again not discussing money. We are discussing accounting. We are stuck in the MMT confines of Dr. Wray’s so-called ‘money unit of account’.
        In using the very limited accounting identity for all money, MMT is compelled to correctly portray the roles that money plays. That portrayal fails when MMT extends Knapp’s “State Money” identity – which correctly engages the natural fiat money construct – with that of Mitchell-Innes, who was just plain wrong. Money is not debt.
        If MMT is truly looking for a populist meme that is capable of achieving its broad social objectives – with which I wholeheartedly agree – then I suggest holding firmly to Knapp, and casting Mitchell-Innes aside.
        I believe you will end up with the Money System Common.
        Thanks.

  8. Mark Robertson

    Here is my argument in a nutshell:

    MMT: Zimbabwe’s hyperinflation problems happened because Mugabe took away farm land from white farmers, and redistributed it to blacks who had no farming experience. This caused shortages, which led to price inflation.

    ME: No, Zimbabwe’s hyperinflation problems happened because of Western imperialist sanctions. This caused shortages, which led to inflation.