Alternative Framing of Money: Coda

By L. Randall Wray

Today George Lakoff had a new piece on Michigan’s “right to work” law. I won’t go into that issue, but obviously the framing involved in the naming of a law that is diametrically opposed to “right to work” is worth examining. Instead I just want to quote a couple of particularly insightful (incite-ful?) paragraphs.

Progressives and conservatives have opposing views of democracy. For progressives, democracy is based on citizens caring about each other and acting responsibly on that care, with both individual and social responsibility, to provide through the government protection and empowerment for all. Government thus becomes a means by which citizens pay for public provisions to benefit all: public infrastructure (roads, bridges, hospitals, public buildings), public education, public health and safety (clean air, clean water, safe food, disease protection), a patent office to protection innovations, a justice system, and networks for energy, communication, and transportation. Without all these public provisions, we are not free: Business cannot thrive (if it can operate at all) and we cannot live decent, civilized private lives. It is a deep truth about our democracy: our freedom depends on such public provisions and the private depends on the public. Unions both defend these freedoms and add to them the worker rights unions have created.

Conservatives don’t accept this truth, if they perceive it at all. They tend to see democracy as providing “liberty” — the liberty to pursue one’s own interests and well-being through personal responsibility, without being responsible for the interests or well-being of others and without others being responsible for them.

From this conservative perspective, businessmen should have the liberty to run their businesses as they please to maximize their profit, and workers should rely on only their personal responsibility to get and keep a job. Unions, for conservatives, thus violate (1) the liberty of business owners to offer workers what is most profitable for the business, (2) the personal responsibility of workers, and (3) the liberty conservatives think workers should have to work without paying union dues.

From the progressive perspective, the new Michigan law is a corporate servitude law, while from the conservative perspective, the law is a “right to work” law.

Again, I do not want to debate the new law or the role of unions (full disclosure, I agree with Lakoff). Instead, what I want to do is to emphasize Lakoff’s take on the progressive view of democracy and government. As I said in the closing blog on the alternative meme for money, all of us, everywhere, deserve better government. But I cannot see a better alternative to democracy. And the conservative view that we’d all be better with less—or no—government is, as Keynes would put it, “crazily improbable”. It has no evidence to support it. It is ideology—or morality—with nothing to support it.

Conservatives, including so far as I can determine most commentators in the blog-o-sphere, take the view that government reduces freedom, defined as the ability to do whatever one wants. Progressives emphasize the positive role for government: government helps us to care for ourselves and others, which vastly increases our freedom. Note I said “role for government”; we are not naïve—we do not imagine that government is only positive, it is government’s role but government doesn’t necessarily perform its role. Democracy is the best way we know to try to encourage government to do good. We are not always successful. It is not “natural” it results only from our will.

For the conservative, however, this is all silly. Government is run by individuals, each of whom is out to protect his own interest and screw everyone else. There is no such thing as “citizens caring about each other and acting responsibly on that care, with both individual and social responsibility, to provide through the government protection and empowerment for all”. For the conservative that is not only impossible, but also undesirable. The Hobbesian ideal is dog eat dog, dog eat man, man eat dog, and ultimately man eat man.

There were several hundred comments to this series on the meme for money. A large proportion pushed the conservative meme. Not surprising. Across every blog site I’ve written for, conservative commentary tends to dominate. For these readers, the entire purpose of this series was anathema. As I made clear, I was providing advice to progressives: how to frame discussion of money to further the progressive agenda. Obviously, conservatives would oppose that. Many simply register their objections openly, others try the “why can’t we all just get along” defence. Well, because if progressives adopt conservative framing they will lose policy debates.

Yes, I understand (and agree with) the claim that MMT has something for everyone (remember, I wrote that MMT is for Austrians, too!). No matter how conservative you are, you need to touch base with reality now and then, and so a truthful description of the monetary system can be useful. If you’ve only got “angels on pinheads” you don’t have much for policymakers. So conservatives can learn a lot from MMT, and can use their conservative framing to ensure their own policy implications from MMT are consistent with conservative morality. That is fine. You don’t need my advice. And you won’t get it.

There were also various objections to modern money theory, itself, as a description. These comments were just dredging up dead issues, things covered many times by advocates of MMT. Others disagreed with progressive policy recommendations. But neither of these topics were the subject of the series. As I said, I was taking MMT as well as a progressive policy stance for granted, with a view to discussing the proper framing for progressives (and especially for those who know and accept MMT but who have not been successful in framing the issues).

There were also a number of comments complaining that this particular series was not aimed at the “man in the street” level. Of course it was not—it was aimed at progressives who understand the theory and the issues. We’ve been trying to aim the theory at the general audience for years, not always successfully. In my view that is in part due to framing. We need to back up and get the framing right.

So, again, most of these comments were off-topic.

There were, however, a few relevant and good comments. I think we all need to step back and take some time to digest some of the proposed memes contained in those comments. In case you missed it, I think this particular comment, by “AJ” was particularly insightful:

I too struggled for a while wondering if MMT is just a load of bullocks. You would think something this important would be subscribed to by more people. At that point I tried to find as many articles and posts I could find on why MMT was not true, and I could not find one article or post that could logically point out any faults. The argument against MMT usually starts off by someone just flat out saying something like, “you can’t just create money out of thin air.” This point MMT easily proves false, and you can get most people to concede this point fairly easily. The next hurdle is inflation, which usually gets expressed as the argument, “but, but but, ZOMG inflations!!111!, Zimbabwe, Weimer Germany!1!1!!” This argument can be countered by explaining how increasing demand when an economy is under capacity increases supply. That price only goes up (inflation) when supply can’t keep up with demand. This explanation is more difficult to get across, because the person must be somewhat familiar with econ 101 supply and demand. Most people who value intellectual honesty will now concede both of these points to you. Now you are up against ideology: “We have to impose all these rules to limit federal spending, because if we didn’t the Congresscritters will just spend money all willy-nilly on whatever projects they want.” It is this conservative mistrust of giving congress too much power that prevents us from giving them enough power to do what should be done. This is why Randy is looking for an alternative framework: to help win the moral argument.

There are several reasons this is not more mainstream. First and foremost it requires a lot more economics knowledge than most people have. Your average Joe could care less about reading Randy’s MMT Primer or understanding exactly how the Fed and Treasury conduct monetary operations. The reason that you don’t see more academics jump on the bandwagon is that mainstream economics has a vested interest in maintaining its status quo. As Steve Keen frequently points out, mainstream economics completely ignores the private banking sector. As incredulous as that sounds to a non-academic, it is completely true. For example take Paul Krugman’s comment “Now, I’m all for including the banking sector in stories where it’s relevant; but why is it so crucial to a story about debt and leverage?” If you don’t know why Krugman is wrong, go to Keen’s website and watch a few of his lectures. Economics is still a relatively young discipline, it is hard to set up experiments to confirm or hypotheses and real world scenarios play out over decades or centuries, not days or months. There is really only 1 other depression with which to compare the current one, and an experiment with 2 observations doesn’t really lend itself to developing hard and fast theories. What Randy and the rest of the MMTers at UMKC and elsewhere have done is resurrect theories that were discarded during the “great moderation” and update and expand on them.

Expect to see more people accept MMT over the course of the next few years. Especially if we start double-dipping in 2013.

Yep. That’s all on the right track, so far as I see it. Let’s take a long vacation from the theory and even from the policy. Let’s come back in 2013 with better framing. While it would be nice if we could distil MMT down to a single nice catchphrase, I do not think that is possible. Money is hard stuff. It is contentious. It is layered under tons of misunderstanding and misinformation. We have to peel back those layers. We need to get to the core, or rather cores (there are certainly many).

And we need to refine the progressive memes. Indeed, we probably need to identify what is progressive. This is tough—far more difficult than uncovering how money actually works.

Getting the right framing requires understanding how the mind works—likely more complex than how our monetary system works. I can accurately and (relatively) simply explain how the government spends. But I cannot understand, much less explain, how individuals react to that explanation. I am perplexed beyond comprehension how a simple description of “monetary operations” triggers the “Weimar” response in a large part of the population—importantly a population so young that even their grandparents and great-grandparents could have had no significant personal experience with hyperinflation. How is the virulent Weimar virus propagated from brain to brain over so many generations? I do not know. Are there anti-bodies to the virus? I do not know. Why are a few immune to the deadly disease? Is it education? I doubt it. Upbringing? Perhaps. Genes? I hope not. And so on for all the other conservative viruses afflicting thought.

Lakoff argues that language has a lot to do with the propagation of the virus. Once infected, the brain thinks through the metaphor. He’s identified many of the metaphors often invoked:

The simplest, is the metaphor named MoreIsUp, which is a neural circuit linking two distinct brain regions, one for verticality and one for quantity. It is a high-level general metaphor widespread throughout the world, and occurs in a vast number of sentences like “turn the radio up,” “the temperature fell,” and so on… Why is economic activity conceptualized as motion? Because a common conceptual metaphor is being used: ActivityIsMotion, as in sentences like “The project is moving along smoothly,”…The common metaphor TheFutureIsAhead accounts for why the motion is “forward.”…In a diagram of changes over time in a stock market or the GDP, the metaphor used is ThePastIsLeft and TheFutureIsRight…

I realize this goes against the grain. We all like to think of ourselves as “rational”, “logical”. But we’ve known at least since the time of Sigmund Freud that that is not true at all. The mind takes on a life of its own, so to speak. It is mostly out of control. Our control, that is. The viruses got it.

In discussing the fiscal cliff metaphor and all the discussion about the need to get the nation’s “fiscal house in order”, Lakoff goes on:

The Austerity Frame is about self-denial. As used in Europe, it assumes two conceptual metaphors, TheNationalBudgetIsAFamilyBudget and TheNation’sWealthIsTheGovernment’sCashOnHand. Both are terribly misleading. Great Britain is richer than it has ever been, just as America is, if you count the total wealth of their corporations and citizens. The nations are far from broke, but the requisite money is not in the government’s coffers. A family budget is nothing like a national budget, because the nation has vastly more resources and possibilities than any typical family. These are the austerity metaphors….Austerity implies a long-term responsible form of self-denial that makes your situation better….

Can you kill the austerity virus with cold, hard facts? Of course not. You see facts through the fog of viruses that infected your brain. Keystrokes? Zimbabwe!

You need a better meme. And we’ve got to start from the ground up. Focusing on the description of money will fail. Even if we focus on the desired policy outcome, we will fail. We have to start with morals. I still think Springsteen has got the starting point: We take care of our own. We is all of us. Our own is all of us. We are all of us in this together. We take care of our own.

79 responses to “Alternative Framing of Money: Coda

  1. That’s not surprising. Ethics always form the basis of any argument dealing with social issues or public life. It’s why Aristotle spent so much time writing on how to treat your friends before launching into politics and economics.

    But ascribing ethics to money? Guawh.

    • Sorry to sneak my comment in here at the top, but I want people to see it. How many will go to the last few comments on an old thread like this.
      My reason that a national economy can’t be compared to a family budget is — a large majority of the transactions that make up the national economy are made inside the nation, while all of the transactions that make up a family budget are with someone/something outside the family. They are comparable to the “current account” of a nation’s economy. The transactions inside the family are not even usually valued in dollars; and even if they were, cutting the kids’ pay for cleaning their room when the parents get it all back by charging them for food does nothing to help pay the credit card bill.
      What is the family equivalent to the nation’s GDP? What is the name for the “currency” that it is measured in? Is it the “Love Points” that wives give for receiving a dozen long stem roses?

  2. Then again, what if we’re making this unnecessarily difficult?

    Money is morals.

    A common framing is that money is a store of value–but isn’t value a subjective judgement in and of itself? Therefore it’s also subject to a moral judgement–what you spend your money on represents your moral character.

  3. The prevailing meme for ‘what money is’ appears to be MoneyIsValuableMatter.

    But money is not matter. Money is information. Information is not matter. Information requires some matter to exist but it is not matter. The rules that govern information behavior are different from the rules that govern matter behavior.

    Yet, the concept of information is a very new one in historical terms. Anything that can be made to spread the MoneyIsSpecialInformation meme will help.

    • Money is contracts! Transferrable Generic Contracts for a slice of the labour pool! – this explains very well how governments can create money out of thin air – no-one wonders where their contracts of employment get created from, and they can accept that someone can create a lot of employment contracts without running out of them.

      Also explains how inflation gets created when full employment is reached – too many contracts chasing too little labour.

      There are more implications flowing out from this definition, but short is sweet!

      • My answer is —
        Real Money is Gold.
        Dollars are fake gold.
        Money is related to social status.
        What is a family doing when it spends a lot on their daughter’s wedding? They are buying status among the invited guests.
        Gold is the universal status “object”; that is why it is real money.
        Humans are Primates, this is why status is so important. We are hard wired to understand and desire status. We work for it just like we work for food, water, shelter, pleasure, safety, etc.
        If humans were like tigers, status would not be important and society, along with money, would not exist.

  4. Indeed. It seems to be the difference between hasty generalisation and nuance. Many will see some of the descriptive comments of MMT and then make hasty generalisations according to their frame of reference. It is when you dig deeper to get to the “cores” as you put it, you see nuance and much nuance in a simple statement.

  5. It’s not a better meme you want, it’s a better model to use. As you point out, economics is something fairly new under the sun, the last prime philosopher of economics (John Maynard Keynes) died just over sixty five years ago, followed by only second rank entities at best but mostly by theoconomic acolytes and propagandists given the public ear.

    The core of the necessary economic model needs to distinguish fundamental economic principles from the structures developed to further economic processes. In a past comment, description of income accruing to basic economic production was mentioned, those sources economic production aimed at satisfying economic needs, wants and desires. Adam Smith mis-identified the fundamentals of value, Karl Marx followed identifying the real source of value. Adam Smith lost the plot as to money and went moralistic instead, opening the door for the observations of John Maynard Keynes’ contribution to the economic dialogue. Using the neoliberal model of economic function is akin to wearing another’s used drawers, it is clearly time to produce a ‘set of drawers’ of our own, fitted to our needs.

    Not far away is a world heritage site, Altamira, holding a significant display of cave art. Connected to the public reproduction of the original cave is a collection of recovered artifacts of the period dating some eighteen thousand years ago. Those artifacts probably comprise 5% of the likely economic goods meeting the needs, wants and desires used by the creators of the cave art. What is needed is an economic model, the core of which describes the economic dynamics of Altamira as well as those same dynamics today. The superstructures since developed will be different, of course, but the core economics will be unchanged. The superstructures available today were changed when, after Johnson’s failure to stem the gold outflow, Nixon abandoned commodity based currency. That is the superstructure that MMT needs to analyze (mostly done), design an alternative (MMT), and construct.

  6. Why not frame it useing good old Henry George and Abraham Lincoln when he spent greenbacks into circulation?

  7. To paraphrase David Sloan Wilson in his article “The New Fable of the Bees” conservatives “demonically strive to widen their slice of the pie while remaining oblivious to the size of the pie.” Wilson calls this the fundamental problem of social life. The principal motive for MMT’s development is the recognition it can make the pie bigger and, therefore, how a society can best make the pie bigger should be a goal of “framing” arguments.

  8. If David Sloan Wilson is implying that conservatives are not open to new ideas about increasing the size of the pie because they are obsessive about increasing their slice of the pie then it follows that they are unlikely to be open to expanding their understanding of a fundamental aspect of money’s nature. They will struggle to understand that money like our DNA coding mechanism is a “conceptual communication system,” that it allows labor to be instructed to use resources to produce goods and services including the social exchange of goods already produced or indeed benefit from the social effects of services already funded (e.g. improved policing). This failure leads to not seeing that a healthy economy requires an optimal of money of money for both active spending and prudent saving. Accordingly the lack of conservatives “openness” has to be framed by progressives as detrimental to advancing an economy just as obsessiveness with part of the pie rather than the whole pie is too.

  9. Schofield: I like the wilson point on the pie–it has always been the conservative approach to “distribution”: a fixed pie so if I get more, you get less. I also like your analogy to DNA–could be something important there for developing the alternative framing.

  10. The phrase “conceptual communication system” for one aspect of money’s utility is a straight lift from the following article:-

    It seemed to fit since I was interested in exploring what we know about any rational argument concerning the origin of cooperation at the molecular and cell level of life. Precious little it would appear. But since money is a social technology that helps us to cooperate with each other to meet our needs then so is DNA coding to help cells survive and meet their objectives.

  11. “It is this conservative mistrust of giving congress too much power that prevents us from giving them enough power to do what should be done.” – AJ

    A great point, I agree. And it is rather hard to argue with this given the current performance of our government. Will the wider understanding of the first part of MMT (the description) lead people to accept more naturally the second part (the prescription, which -“officially” – seems to only include the JG)? This is a huge paradigm shift to make in the way people think about the economy and their government, but it is also an unambiguously democratic/progressive shift. That is what is encouraging to me; we can afford to give everyone a job, we can afford to give people a college education if they want it, we can afford to provide healthcare to everyone (though preferably not in its existing structure). The prescription is where you really create the fissure between progressives and the free-market, conservative ideology. United Healthcare is in the Dow 30 after all, and it happens to be one of the best living examples of the “private-sector-knows-best” model gone horribly wrong. It would be helpful to have MMT advocates on the side of the people in issues like this, but this is far from a new fight.. and there are enormously powerful interests on the other side.

    It will continue to be a tough slog for MMT.. but I do share AJ’s optimism.

  12. A Track II Diplomacy Meme

    I believe that going BIG on infrastructure spending on roads and bridges, culverts and sea walls; likely already has supermajority support in the US. And if MMT can make the case that it is not inflationary we have a ready-made action of which to build a coalition. There was such a bill stuck in congress, and there was a bipartisan effort to have the funds managed by the States, that in theory would have gotten the bill out of the House.

    Anyone interested in MMT taking a leadership role in getting behind that or a similar bill? This would be a BIG win for MMT and the country. I would fully promote it on aGREATER.US, and in my discussions with other activists.

  13. Thomas Bergbusch

    Interested in AJ’s comments that “What Randy and the rest of the MMTers at UMKC and elsewhere have done is resurrect theories that were discarded during the “great moderation” and update and expand on them.”

    In the light of that, I just thought I’d point out that Lakoff’s definition of Conservative is exclusive to US discourse, which has no Tory tradition (beyond, I gather, one or two New England Brahmins and a couple of Louisianans).

    For simplicity’s sake, let us divide the U.S. into:
    1) Right wing classical liberals (which Americans call Conservatives); and a bunch of libertarian looneys; plus some “religious conservatives”;
    2) Progressives: who consist of a bunch of left liberals (including most MMT-ers), and de facto social democrats (and a few related sub-species).

    Lakoff’s definition of Progressive is much closer to various other countries’ definitions of Conservative, which agree with his definition EXCEPT in that they maintain, at the same time, that the unequal division of wealth and political privilege among social classes can be justified, if members of the privileged class practice noblesse oblige and contribute to the common good.
    [Clearly we are not talking about reality here, but about the “framing” of conservatism.]

    That being the case, the great communications weakness of US progressives, as their name actually implies, is that they set sometimes themselves (rhetorically I mean) against tradition. US progressives and MMT should defend their values as “traditional” American values and do what they can to undermine US right-wingers’ title to “tradition”.

  14. To paraphrase Trevors and Abel in their article referenced about the property of “value” in money relates to the operation of a “linear digital algorithmic program.” So a simply coded program would incorporate the understanding that if too much money is injected into an economy relative to resources availability “value” will tend to fall and vice-versa. Additional coding, for example, could support Steve Keen’s observation about economic performance being related to income and the quantity of increase or decrease in private debt but it obviously also impinges on money’s “value.” A good algorithmic program would obviously help determine the parameters affecting “value” and clearly this relates to Wynne Godley’s life-time’s work on Sectoral Accounting Balances. So money is like DNA it’s subject to algorithmic programming.

  15. I got quoted by L. Randall Wray. (Thanks Randy!) I will be expecting my honorary Ph.D in the mail any day now.

    In recent conversations, I’ve moved the money argument toward the end of the conversation, focusing on the moral aspect first. I like to ask how at the same time, there are 12 million people who would like to work can’t find a job, and the public infrastructure of the US gets a D rating and is estimated to need over $2.2 Trillion worth of improvements. It seems ridiculous to most people to have a) jobs that need done and b) people who want to work. (Stephanie Kelton often uses this framing, and I think it’s effective)

    You can ask people how these two things can exist simultaneously. They will most likely follow the path of argument I outlined in my previous post (quoted above). However, this time when you hit the moral argument, you’ve already started that debate with the opener.

    I guess what I’m saying here is that we need to have the moral argument up front and only proceed into the monetary details once we’ve won that.

    • I agree with aj (and congrats on the honorary Ph.D!) that “we need to have the moral argument up front and only proceed into the monetary details once we’ve won that.”

      I’d suggest the following one sentence statement as a way to get started. It summarizes what I believe may be the most fundamental value/purpose of MMT.

      MMT explains how modern monetary systems can provide all citizens with the opportunity to thrive by providing value to their fellow citizens and the society in which they live.

      As I see it, this initial value-based statement leads directly to a discussion of the Job Guarantee (and related publicly-funded investments in training, education, etc.) as both a moral AND economically feasible public policy.

      It also invites (but doesn’t require) a discussion of what comprises a “modern” monetary system, for those who are ready to digest and discuss the relevant economic principles. And, for those who raise the “we’ll become another Greece” argument, it opens the door to a discussion of why the current Eurozone system is, in key respects, NOT a modern monetary system as defined by MMT.

      While it’s intended to mainly trigger a “nurturing parent” framing (e.g., “we’re all in this together” or, as Randy and Springsteen put it: “we take care of our own”), this statement also incorporates what I’d consider a relatively healthy version of the entrepreneurial-minded “take personal responsibility and take initiative” value framing that has been largely co-opted by the right.

      But it integrates the value of taking responsibility and being compensated for it within a fundamentally progressive rather than conservative framing. As Lakoff has explained, many of us have internalized multiple values and frames, (i.e., we’re “conservative” on some issues and “liberal” on others). So, as he explains, the key in frame-based communication is to trigger the desired frame rather than the undesired one, since the triggered frame largely determines how subsequent facts, labels and statements are filtered, interpreted and integrated.

      By emphasizing “the opportunity to thrive by providing value to their fellow citizens” this statement essentially defines all work–whether it’s via healthy-functioning private sector markets or via non-profit or governmental public-purpose-focused entities—as service to one’s fellow citizens, for which one can and should be able to earn financial compensation.

      It even (at least to me) opens the door to viewing “the needy” (e.g., elderly, disabled, poor or otherwise deprived of resources, skills, etc.) and their “needs” (e.g., healthcare, social and government services, education, etc.) as “providing value to their fellow citizens.” They provide this value in the form of paid-work opportunities that support their needs and help overcome their constraints (e.g., healthcare and social service jobs, teachers and teachers aids, public infrastructure construction and maintenance, etc.).

      As I see it, an MMT-grounded perspective is key to being able to adopt this perspective, since it frees us from the perception that “human need without the ability to pay” is a chronic and unsustainable financial drain. This framing tends to trigger a mix of mostly negative reactions including resentment, guilt, disrespect, distrust, frustration, hopelessness, an exaggerated and discouraging sense of scarcity, etc. Though one’s particular reaction might depend on whether you’re inclined toward a progressive or conservative value system, I think it’s fair to say that, without an understanding of MMT, your reaction is likely to include one or more of these negative elements (e.g., progressives might feel guilty while conservatives might feel resentment and disrespect).

      MMT provides a conceptual framework for replacing those conflict & scarcity-based perspectives with one that perceives abundant opportunity to provide value to one’s fellow citizens (which itself provides important non-monetary forms of reward) while also receiving financial compensation that can support one’s own needs and aspirations.

  16. “Your average Joe could care less”

    “Could care less” makes no sense.

    It should be: “I couldn’t care less”. As in “it’s not possible for me to care less”, implying that you don’t care at all.

    “Could care less” doesn’t make sense. It means “it’s possible for me to care less”, which implies logically that I do care a bit at present.

    Get it right America!

    • Irregardless of you’re grammer policing, the metaphorical symobology remains the same. Alot of times American colloquisms don’t make sense. If you understood the meaning of the sentience, than you should just get over it. Their are plenty of better things for you to waste your time on. I could care less about some slight lapse in grammer, but I don’t.

  17. Re: Get it right America!

    Very unlikely in a functionally illiterate, hopeless vulgarized, media-addicted and media-driven, extremely decadent, and very ignorant populace.

    • It is 2/11/13 today.
      I just heard Tom Hartman expouse MMT on his show.
      It is beginning to reach the mass of people who don’t know to dig on the internet to find it.

  18. I think that single biggest problem for people in understanding MMT is in separating nominal value of money from real value. They understand it at first, but as topic gets more complicated they go back to giving money a real value. At first mention of printing money they go into “But i earned my money, i want everyone else to earn theirs, i do not want to be only sucker” and they see money as real value again, which is “size of the pie” problem. They go into fetal position trying to protect themselves. People just can not keep two abstract descriptions at the same time and keep them separated and understand additional concepts, so they refuse further explanations.
    I would recomend repeated explanations about meaning of nominal value, not just once and take it for granted that they understood it.

    • It is very similar to the paradoxes of micro vs. macro. Sometimes when I get into economic conversations I ask people to explain to me supply and demand, then I ask why are there quantity discounts when you buy more.

      Or I ask people if they want prices to go down or up over time (they usually say down), then how they feel when someone has bought something at a lower price then they had bought at an earlier time (they consistently say they feel ripped off).

      I’m not saying that these examples win anyone points or are effectively way to convince someone of anything.

      There is something fundamental in the micro/macro distinction that humans have a hard time grasping – they usually can get it intellectually (with some work), but emotionally it is REALLY difficult. And actions are driven by emotions.

  19. the conservative view that we’d all be better with less—or no—government
    Conservatives, including so far as I can determine most commentators in the blog-o-sphere, take the view that government reduces freedom, defined as the ability to do whatever one wants.

    Since when do conservatives want to minimize government (or promote freedom)? Not when it comes to deploying our military throughout the world; not when it comes to censorship, drugs, what you do in your own bedroom or what a woman does with her own body; not when it comes to any of the myriad ways government can be used to keep “the little people” in line, frequently while making a profit for their corporations. The only time conservatives aren’t happy to support more government is when it might lessen the gap between them and the huddled masses just a tiny bit.

    Perhaps you (and Lakoff) are thinking of right-wing Libertarians? Conservatives make use of libertarian trappings when it suits their purpose, but their insincerity is transparent.

  20. Money is the conservative “crown of thorns”. This goes straight to the point that the message is lost in the moral passion. Among interpretations of the sermon on the mount some are not so magical, one details the miracle of how the sermon was delivered when the number of those gathered made it impossible for them all to hear the message. It was passed along as the guidance to feed each other. As missionaries we could differ as to the positions we advocate if the moral message is not lost, yes I’m expecting titters. We must protect the poor because they can not buy justice and the hearing they’d get if they could afford one would not be impartial, but one already bought, paid and ruled on in advance. Why because the idea of money is confused with gaining justice,but in truth it is driven by greed and imagined scarcity. Why is what should be our servant, now our jailer, why?, there is no lock on the cell the only lock is one of ideas we choose to accept and ways we choose to act. Where? Where is your freedom ? it lies inside you. Walking on water is a metaphor for living above, having freedom to choose above the ideas which make a hardship of the world. What I’m suggesting is that our memes already exist but must be discovered and if they can’t be discovered they must be remembered.

  21. “[Great Britain and the United States] are far from broke, but the requisite money is not in the government’s coffers.” – Lakoff

    Oops. Looks like Lakoff needs to visit this website.

  22. Framing? You want framing? I’ll give you framing!

    Tie MMT
    to very heavy spending needs
    to needing the world’s best infrastructure
    to having overwhelming military superority
    to fearing outsiders
    to patriotism
    to love of liberty
    to the flag!

    What kind of a CommuNazi child molester are you to oppose MMT??!!

    • If there was a like button, I would have hit it for this post. Let me try one.

      Only a fascist, Jesus-hating, un-American neo-Nazi would say we can’t use our own money to do what we want. We are the best country in the world and we want to keep it that way. What kind of pinko Ruskie commie bastard are you to try to undermine our economy.

      (I think I hit at least 5 or 6 of those points in there somewhere)

      • There is a serious side to this frame. Eisenhower financed the Interstate Highway System as a defense need. NASA was born as a Cold War need. The internet grew out of DOD. I could go on.

        My point is that infrastructure in the broadest sense (including education, sports, transportation and communication systems, domestic manufacturing capabilities, etc.) is vital to military strength. Somehow, those who want to drown government in a bathtub have to be convinced that they are on the road to serfdom and that flag-wavers should also be demanding full employment so that they can keep their liberty.

  23. For the three or four years I have followed it, the entry point to MMT has been:

    “A tragic mistake has been made. Once I show you exactly what this mistake has been, you will see that most of our economic problems are just consequences of the original set of mistaken ideas. Together, we can work to correct the mistake. We can then organize our economic life around a set of conceptions that corresponds to objective reality. This will allow us avoid the mistake – and thus begin to solve our economic problems.”

    This, I think we can all agree, has been a reasonably good approach to reasonably smart, and unusually open-minded, people. It has gotten us this far. But Professor Wray is spot on about the inadequacy of this entry point going forward. It is too hard to explain and bears far too close a resemblance to all of the crank theories and economic panaceas floating around out there. It is also, at its core, untrue. Our economic plight is not the result of some accident of history. It was no mistake, even though it relies, utterly, on getting people to make the mistake of thinking that money is a thing – and that, like all valuable things, it originates in the activity of the private sector.

    The whole “meme” thing is unfamiliar to me, and deep. I need to think about it. But my take is that what MMT needs most is a whole different attitude. The people who are abusing us through their control of the money system are killing people. A lot of people. A lot of whom are children. For no good reason. For no reason at all. It’s not a mistake. The plutocrats are a class of sociopathic ***holes who regard other people as either prey animals or disposable humanity. They are, collectively, the “vampire squid.” In their fantasy, they are John Galt. In reality, they are Ming the Merciless.

    After they have finished making us their slaves, they intend to burn all of the hydrocarbons in the crust of the Earth, and let unregulated market forces determine how many billions of us die as a result. In my (really, sincerely) humble opinion, it may be time to get a little more energized about what it’s going to take to stop them.

    • Stephanie Kelton


      Please drop me an email. [email protected]


    • Dale, good post. Your opening paragraph is almost word for word how I used to try to explain MMT to people. I agree, to someone who is open and searching for answers, this is the approach to take. In fact ,this is why I first started reading NEP. My undergrad degree is in Economics so some of my family was asking about the national debt. Particularly about how much was desirable or too much. Intuitively, I knew that the nominal dollar amount was not as important as some ratio, like debt/GDP, but I was not sure what the correct amount should be. I thought that it must be somewhere greater than zero but less than 100. Then I saw Japan’s staggering GDP ratio and wondered how that worked. No where could I find an explanation that made any sort of logical sense.

      I don’t remember the exact sequence of events that led me to NEP, but when I did, Randy was about 10 or 15 weeks into the Primer. What can I say, except that I was floored. I’d never heard anyone make so much damn sense about economics in my entire life. Now I’m hooked.

      RE memes: You can thank Richard Dawkins for that word. It’s gained popularity over recent years as that is the title now given to all the pictures with funny sayings you see all over Facebook. It comes from the book, the Selfish Gene, which is a pretty good read if you are into that sort of thing.

  24. L. Randall Wray

    Money, debt, and religion (and morals) have always been closely tied. Look, I have no desire to create an atmosphere of desperation. What I am saying is that we need to think more about how we frame these arguments. We don’t have good framing. We often trigger the Zimbabwe virus. Is there a way to say what we want to say without triggering that metaphor? It has become clear to me that otherwise intelligent people cannot hear what we are saying–their brains are infected with the conservative metaphors. More importantly, we shouldn’t demonize conservatives. If we compare what is possible to what we are doing, it is extremely troubling. Could we eliminate poverty and hunger within a few months, if we understood the monetary system? Yes, with some organizational impediments that it is hard to foresee. We have achieved a global productive capacity that allows that. But do not underestimate the barriers we face–not necessarily due to evil but to misunderstanding, to the sorts of viruses we’ve been talking about, and ro a narrow view of self interest.

    • To differ: “Money, debt, and religion (and morals) have always been closely tied.” more accurately stated with “Money, debt, and POWER have always been closely tied.”, will lead to vastly more productive fields. When religion (and morals) are present in a discussion, it is prima facia evidence of conversation with a charlatan and their agenda. Both religion and morals have their place but that is seldom found in connection with fact, knowledge or the intellect and definitely not in the field of economics.It is necessary to maintain the separation of belief and knowledge as the same separation of church and state and for the same reasons, that neither ends well mixed with the other.

      The few comments entered in response to your query seem lost in the noise. Stated in another manner: it is not necessarily framing that is necessary, what is required is a new tapestry picturing economic knowledge as presently understood incorporating MMT as its central motif. A lot of work, yes, but effective in conveying a picture to others. Terms used must be minted afresh, terms used by the neoliberal establishment carry heavy baggage of implications not conducive to the MMT story and should be abandoned as counterproductive. Both Marx and Keynes captured the language for themselves and enlarged economic perceptions. For MMT that will be necessary as well if it is to prevail in economic consciousness.

  25. Conservative frame: “lack of affordability.” Progressive frame: “availability of real resources.”

    I recall being gobsmacked when I first got this and asked Warren if it was true that we could afford to do just about anything we chose to do as a country as long as the real resources were there, and he responded, in essence, “Of course.” I was immediately appalled that we weren’t doing this because we stupidly thought we couldn’t afford it.

    • Well said, Tom. You clarify a central difference in the two frames that facilitates a fundamental MMT-oriented understanding without having to first digest a lot of information about the monetary system. Seems to me that this provides a good foundational piece of framing. You can, for example, link it pretty directly to the Springsteen value statement: “availability of resources to take care of our own.”

    • There is a reason it is called “supply-side” economics. If you can convince those who have limited access to resources (e.g., most of the public) that their experience is due to the economy being limited in supply, then the rest of neo-liberal economics falls into place.

      The problem is that theoretically, the planet is limited in supply (at least, I think it is), so it is natural thinking to buy into that argument. This is also the basis of support for austerity programs – we over stretched our capacity (over-production), we now have to pay the price.

      I think we need better arguments around 1) that a sustainable real economy producing enough for the population is possible, 2) the financial system should exist to ensure we don’t outstrip that capacity, but utilize its full potential.

      • I am new to MMT. I am not new to progressivism, i.e. life long progressive.
        You bring up an important point. There are real limits to what we (humanity) can do.
        MMT seems to me to be ‘true’. OK it is true. So, the US can create all the $$ it wants, until it reaches full employment (with all saving desires satisfied). It can use this power to fund many desirable projects and poverty reducing programs. We will not run out of real resources (yet).
        I’m all for that. However, people like children, especially their own. If the people internalize MMT, they will have more children. This coupled with more consumption will likely lead to all the worlds resources being consumed sooner rather than later. That is we (humanity) will run out of ‘real resources’.
        Is there any way to stop or avoid this outcome?

  26. What I am saying is that we need to think more about how we frame these arguments. We don’t have good framing. We often trigger the Zimbabwe virus. Is there a way to say what we want to say without triggering that metaphor?

    [Disclaimer: I’ve been trying to figure out MMT for several months and economics is definitely not my strongest suit but here goes:]

    Zimbabwe virus: I think that arises, at least partly, from the order in which MMT tells its story. Most explanations I’ve seen of MMT start off essentially as saying “The sovereign issuer creates its own currency. It cannot go broke. It can always pay. It can create money with keystrokes.” That sounds a lot like, well, a recipe for runaway inflation—Zimbabwe!!

    Contrast that with this elegant précis (from geerussell on Naked Capitalism):

    MMT is utter simplicity. Spend enough to fund public purpose. Tax enough to control inflation. Rinse, repeat, enjoy prosperity.

    What’s the difference? The typical MMT explanation starts off with a story about currency creation—here’s where the money comes from, here’s how money creation is unconstrained (Zimbabwe!); the other starts with a functional explanation—look at how spending and taxation affect the economy—and notice how the control of inflation is embedded right there in the tax piece.

    MMT, it seems to me, is reacting to the dominant economic narrative rather than simply telling its own. If the dominant memes are, say, “the government is like a household,” or “we’re going to go broke,” MMT feels compelled to address those first—the government is not like a household, it can’t go broke. But the important part of MMT is not that the government can create limitless currency—it’s that MMT allows for optimal use of capacity in the economy. (That the government can create limitless capacity, while true, is irrelevant to how MMT proposes it create an optimal—and, by definition, inflation-free—economy.)

    So the MMT story starts, not with the sovereign issuing currency all over the place, but with an economy that is operating at below optimal levels (people not working and needs not being met (e.g., infrastructure)) and then backs up into fiat currency, sovereigns, and all that. The hyperinflation fears can be dealt with in terms of the people not working and the needs not being met.

    The structure of the argument, then, is not

    Sovereign issuer can do x –> x leads to an optimal economy


    An optimal economy looks like this/ours isn’t optimal –> A sovereign issuer of currency can (and should) do x to achieve that economy

    My 2¢.

    P.S. Conservative frame: “lack of affordability.” Progressive frame: “availability of real resources.”

    Like that!

  27. I agree with the framing issue on the whole but am very pleased with the generally increasing profiles of the standard bearers. Stephanie on RT & NPR, Bill Black and JKG on The Real News Network, NYU Seminar–great stuff, well done. In addition to better packaging of the argument, I think a broader effort needs to be made to provide organizational support to open more doors for you. You guys focus on the message, we’ll sell it. We need a lobby!

  28. Great economist Joseph Stiglitz once said that everyone has models in their head how economy operates, but it is different thing whether they correspond to reality or not. (He was talking about former World Bank economists and their policy, can’t find the video anymore)

    I thinks that this is what it all boils down to, from highest echelons of political power, Obama, Geithner, Bernanke, to our MMT-gurus to man on the street everyone has these simple, mechanical models about how such an abstact apparatus as economy or monetary system operates.

    These are really simple and almost subconscious frameworks, and could be wrong even on the most educated, presticious and influental persons.

    In theory, it should not be too much trouble changing these models since they are so simple. For man on the street this is indeed the case because he is in reality unsure how things work. Models are hazy. More educated man is more convinced that his models correspond to reality.

    I think Richard Koo does excellent job explaining his balance-sheet recession theory in a way that plants these small models in our heads.” Money is taken from this group, given to that group, and the economy moves forward.” “Too many borrowers, interest rates are raised, too few borrowersm interest rates are lowered.” “Goes back to the income stream.” This keeps within two rules: simple and mechanical.

    To make any sort of impact, messanger has to be credible. Repetition also helps.

    Most misleading model of all is that people don’t see government debt as wealth. After all, it is not called wealth. It is called debt. And we all know what debt is, at least we think we do.

    As for the “Weimar”-resonse, I have long argued that most people imagine closed money supply. With that kind of model any kind of monetary increase manifest itself as inflation. How can they think this way? Well, where were we supposed to learn about flexibility of the money supply? There is no such institution that would educate us. So people have wrong models. But this is only my gut feeling. Have economics profession ever not conducted a survey about how people think about money?

    Solution could perhaps be to not talk about money, but about wealth.

    • The accustomed reaction of people used to debate, which includes most academics, is to respond directly to the issues. However, in policy discussions whose aim is to influence views, this is often the wrong strategy because it plays into the opponent’s framing. The correct way to advance one’s objective is to change the framing.

      Framing that is political is usually based on norms rather than theory or facts. In fact, theory and fact is influenced by the ideological norms involved. As George Lakoff notes, the political extremes are uni-conceptual and have a single coherent ideology for the most part, but the “center” is bi-conceptual and holds norms from both sides. The political tug of war is over the center and the way to approach it is through providing a choice between competing norms.

      The overarching competing norms here are affordability and fiscal responsibility versus progress and prosperity. In a showdown, it simple to see who is going to win this argument, especially when “affordability” and “fiscal responsibility” are bogus.

      So lead with the progress and prosperity through creativity and only then heading off objections about affordability or fiscal irresponsibility by showing that they are based on a rather simple to understand mistake, the difference between sovereign issuer and users.

      • I think Tom makes very good and important points here about the battle between alternative norms and frames with regarding to public policy discussions…and hits the nail on the head in his closing paragraph:

        So lead with the progress and prosperity through creativity and only then heading off objections about affordability or fiscal irresponsibility by showing that they are based on a rather simple to understand mistake, the difference between sovereign issuer and users.

  29. I think we need to understand that Money (like Property) is just the outcome of a relationship, and that we use language to frame these relationships which must necessarily evolve if we are to make the necessary Resolution of unsustainable debt and Transition to a low carbon economy..

    I am finding it useful to use the word ‘Prepay’ (remember ‘Pay it Forward’ ?) as a description of the 21st Century methods and instruments I am using, prototyping and observe emerging in use by the zombie banking system .

    The intriguing thing which has emerged from my ‘action-based research’ into resilient markets at UCL is that the methods and instruments I believe to be optimal – and which accommodate the resilient, dis-intermediated networked economy of the future – are based firmly upon methods and instruments which pre-date modern finance capital by hundreds, if not thousands of years.

    So if you look back at tally ‘stock’ , you find that one of its two uses (the other was as a memorandum/receipt/record of title) was in relation to tax PREPAID at a discount which gave a profit to the creditor.

    Moreover, the very phrase ‘Rate of Return’ is self evidently derived from the rate at which such prepay instruments could be returned to the issuer for cancellation. This truth has of course been long forgotten, as has the origin of the expression ‘Tax Return’, and the bifurcation of the original undated ‘stock’ into the twin absolutes of modern finance capital: ‘Common Stock’ (absolute permanent ownership of infinite duration in ‘Joint Stock’ Companies) and ‘Loan Stock’ (absolute dated use of finite duration eg the UK Treasury’s ‘Gilt Edged’ Stock).

    As a mathematician by background, I observe that maths has +1, -1 and 0; physics has positive, negative and neutral/null; but Economics, which I see as the Physics of Value, has no null state.

    Well, actually, that’s not true. The null state has always been the Commons, and the financial instrument of indeterminate duration was ‘stock’. But no ‘null’ property relationship has yet been defined.

    That’s why I felt the need to create a new word Nondominium for the neutral property relationship which includes all of the stakeholders – including investors for the first time – in the Property relationship.

    ie it’s back to the framing again, and the need for new language capable of spreading virally and ‘bottom up’ as did – interestingly – the Condominium tenure dreamt up all those years ago by a smart lawyer.

    • Will Richardson

      Isn’t pre-pay, pay it forward, pass/ing it on about generosity trust risking being rebuffed?

      The government entity has to Eco-Socio-Political Economically pump-prime by injecting Government owes You (GOU) or We Owe Eachother to sustain combustion in the “engine”.

  30. We have to start with morals. L. Randall Wray

    Our money system is inherently imoral:

    1) The banks lend stolen purchasing power for usury. Ironically, the banks require government priviledge to do this in our so-called “free market economy.”
    2) The monetary sovereign pays needless usury, typically to the rich, when it creates money.

    The workers have little power because business can and has financed itself without having to bother with paying honest interest rates for the workers’ savings or without having to “share” profits and power with them.

    Want to fight conservative memes? Then hammer home that justice in the Bible is REQUIRED and not optional (but strongly encouraged) as mercy is.

  31. Because money is a social technology MMT in considering framing must also consider the latest insights in sociobiology. MMT must consider multi-level selection processes which are starting to make it clear that both egoism and altruism are built into the algorithms driving the evolution of life forms with the human species eusocial or “nesting” instincts probably having the edge since we have now evolved to nation states from hunter-gatherer bands. This is in opposition to the conservative framing of life which still seems to be stuck with an out-dated social Darwinism from the nineteenth century. As Robert Augros and George Stanciu write on page 6 of the following extract “Competition and the Enculturation of Science” the prominent nineteenth century philosopher, Herbert Spencer under the influence of Malthus, argued six years before Darwin published his “The Origin of Species” “that competition for limited resources must have a beneficial effect upon the human race, stimulating human advancement and selecting the best of each generation for survival.” Darwin in his introduction to “The Origin of Species” credits Mathus “The Struggle for Existence……is the doctrine of Malthus applied to the whole animal and vegetable kingdoms.”

    Of course, with the development of multi-selection theory we now know that collectivism can be as strong, if not maybe a stronger, influence on evolutionary development as individualism. Indeed perhaps one day we may find that Nature very finely balances egoism and altruism in DNA algorithms.

    Since MMT is concerned with the socially optimal use of money in an economy it is important to remind conservatives that times have changed and that since we now know Nature finds optimal balance through the deployment of both individualist and collectivist strategies the same should be considered by them in regard to the use of money within an economy. It is now a moribund outlook on life to believe that increasing their slice of the pie, without concern for increasing the overall size of the pie or even promoting fairer shares for social cohesion purposes, is the only survival game Nature plays.

  32. Okay, so I’ve been processing all this for a couple days. How’s this? The US is the alpha country, reserve currency and all. The world sends us all their real wealth in the form of real property. It’s as if we as a nation were a teenager. One morning we woke up and could sing like Steisand, compose like Berlin, groove like Brubeck, paint like Pollack, architect like Wright, well, you get the point. What do we do now? Our gift scares us. And maybe it should. So we can provide for all the basics a good and caring society should. But is MMT always the greater answer? Or just something more than another ideology? Sure, MMT COULD just write the checks for Social Security. If I were grading papers I’d give it an “A”. But, there is an A+ answer. If the SS fund invested 25% in the stock market, and MMT guaranteed the payments In the event of a prolonged downturn, that is wonderfully poetic…everyone in their dotage owes their retirement to the success of the whole US, private and public sectors, and with the advent of THE new whale in the stock market who only buys on dips, or even just dollar cost averages, puts a floor in, and makes rapacious billionaire short sellers krill. Tremendous private sector wealth would be created. Why do I give this an A+? Because this can bring compassionate conservatives and NPR republicans into our tent. Which means this is doable faster. And is a nose in the tent for MMT. That might be all it takes to tip MMT. Although the infrastructure argument passing project control to the States should be a winner, too.

    Jon Denn

    • If the SS fund invested 25% in the stock market, and MMT guaranteed the payments In the event of a prolonged downturn, Jon Denn

      The monetary sovereign should provide generous pensions as needed but as for investing in the stock market that should be left to the private sector because 1) government must not play favorites and buying stocks could not help but favor some companies over others and 2) private sector investors with skin in the game are much more likely to invest wisely.

      Because this can bring compassionate conservatives and NPR republicans into our tent. Jon Denn

      By bribing them? Much as Alexander Hamilton bribed the rich with a needless US National Debt into supporting the fledgling US Government? Forget bribing the rich. The entire population deserves restitution for theft by what is essentially a government backed counterfeiting cartel, the banks. New fiat, spent into existence without borrowing, is the ideal tool for that purpose.

      As for “compassionate conservatives”, stealing from the poor and then returning only some of what was stolen is not even justice, much less compassion.

      • F. Beard wrote

        “The monetary sovereign should provide generous pensions as needed but as for investing in the stock market that should be left to the private sector because 1) government must not play favorites and buying stocks could not help but favor some companies over others and…”

        My suggestion is index funds not stock picking. I agree government shouldn’t pick winners or losers in this instance. Of course they do/will all the time with tax policy.

        And you wrote…
        “2) private sector investors with skin in the game are much more likely to invest wisely.”

        The stock market has become a casino for high frequency trading algorithms. Bringing a floor to it would greatly reduce volatility and make it an investment once again for everyone.

        And you wrote…
        “By bribing them? Much as Alexander Hamilton bribed the rich with a needless US National Debt into supporting the fledgling US Government? Forget bribing the rich. The entire population deserves restitution for theft by what is essentially a government backed counterfeiting cartel, the banks. New fiat, spent into existence without borrowing, is the ideal tool for that purpose.

        As for “compassionate conservatives”, stealing from the poor and then returning only some of what was stolen is not even justice, much less compassion.”

        There is a median income in the US. Generally speaking the upper half is content with their lot, conservative small business people and trades and professionals, and perceive they have won a well played game by working hard and taking risks. They were rewarded. They believe they have created jobs, trained workers, and made their communities better places. I don’t think politically any meaningful implementation of MMT principles will come to fruition unless a few conservatives are won over. I’m speaking strategically. These two subgroups are the most likely to tip. I suppose in some future election the Democrats might have both Chambers and the White House but even then I doubt the monied interests that bought them their seats would let MMT policy be implemented. Monied interests don’t want government changing the rules of the game, unless they write them.

        A great(er) coalition possibility would be MMTers and Electoral reformers. Just being pragmatic here.

  33. When I try to discuss this with my friends whose only exposure to economics is the news and their pay cheques, I like to point out that at some point it is not about money at all. Money represents stuff. It is used to get stuff. At some point in the money food chain, you can just talk about the stuff. When Bill Maher complains about wasting money on going into space, I want to ask him, “Did you need the rocket for something? If not then it doesn’t really ‘cost’ you anything for our government to send people into space.”

    Money is just a way to move stuff around. If we think in terms of stuff, we can all think of things we can afford to do. It takes 2% of the population to grow more than enough food for everyone in the country. What is everyone else supposed to do? How can we have too many pot holes and not enough work for everyone? People have to eat whether they work or not. Let’s let them work. (Is this not the same idea as fixed capital costs that we use in economic models? You are paying for the capital whether it is used or not, so why not use it all?) I digress. OK, I fear I am beginning to ramble. To sum up, at a certain level, the Federal level, it is not about money, it is about stuff. How can we use the stuff we have (including people) efficiently/fairly, etc.? Money is the mechanism.

    As for taxing the rich, ask this question: What is the difference in wealth between the richest person in an unorganized area with little to no gov’t or infrastructure and someone in a place with good infrastructure and a strong legal system? That difference is the gift of civilization and any tax that is paid on that that helps to maintain that system should be seen as a bargain.

    Were those memes? Did that help? Or does this seem like someone who’s been up all night tapping away at his iPad?

  34. It is not only the case that MMT points that a tragic error has been made (Dale Pierce). It is also a case of social behaviors control. Social behaviors are mediated by verbal language. Human populations present strong limitations and weaknesses in using verbal language.

    Predators relentlessly exploit the limitations and weaknesses that most of the people present in the use of verbal language, to control social behavior

    The most important weakness appears to be the use of language without words and sentences having actual meaning or evidential referents. Or: the most important weakness appears to be the use of language without the meaning of words and sentences being checked to be actual things and behaviors in reality.

    This, in turn, appears to come from the use of analogy and metaphor as devices to cope with the extension of verbal language to (new) situations for which no words or phrases exist. Key to use of analogy and metaphor is similarity. If the new situation seems similar to an old one, the easiest thing to do is to apply the old frame of discourse. More often than not, this results in the verbal productions of the frame for the new situation having no meaning that can be tested against evidence.

    This mixture, of phrases devoid of actual meaning and support for phrases exclusively made of analogies and metaphors, appears to be the main device used by mainstream media to deceive universal or public judgment into being against their interests. By public judgment I mean here the selection of the particular set of memes used to perceive reality and to choose actions within a given citizenry.

    In a progressive way, one could say that the progress of human societies, of the whole species, is conditioned by the capability of the population to use verbal language into an evidentially meaningful way to coordinate their actions. No phrases devoid of content in this sense should be considered in taking decisions that affect the whole of citizenries and each citizenry as a whole. Use of metaphor and analogy should be reduced to the minimum consistent with use of language itself. If that would be the case, the information transmitted in the mainstream media would change a lot. Predators would have no option but to change behavior.

    I think that one of the best options for progressives is to require relentlessly the check of real meaning in discourse leading to political decision. I find MMT can clearly be seen as the result of requiring evidential meaning in a scientific way from economic discourse.

    Following this reasoning, the referents of words used in discourse are to be well established. These should be a distinctive feature of the new framings to develop. We can consider ‘money’, for example. Which are the evidential referents of ‘money’, from an individual perspective? Money is a set of numbers that can be assigned to every person. Each number in the set corresponds to a given currency. The numerical values of the numbers in the set are established and stored in bank accounts, notes or coins. If the number is positive the person has a money credit or the social power to pay in the currency goods, services or debts. If the number is negative, the person owns a money debt and is expected to earn currency to pay the debt.

    If the use of money and its sum total expand in societies, with prices of goods and services being constant or decreasing, and incomes of people increasing, wealth of societies increase. The key question would be now to evidentially show that this cannot happen without proper public law and management of public spending and taxation.

    • Here is the MMT rub for main street conservatives, not billionaires. Take a town that can support two restaurants. Now, every once and a while, someone who shouldn’t, but does anyway, takes a huge risk to open a third, chasing the American Dream. Of course, one goes out of business. (I lived in a town and watched this happen like ten times). Now let’s say government comes along and starts passing out community development grants, and huge SBA loans. Now, in that same town, dozens of unsophisticated business people who are essentially investing with OPM, other people’s money, open a fourth, fifth, sixth, seventh, etc. restaurant (plumber, dentist, coffee shop, etc.) And now maybe the town can support three. My point is, the conservatives, skin in the game, experienced-risk takers, stop taking risks. But they are the best at it. America got great that way. It would take a brave conservative to see that growing the pie is better for all Americans because they would be initially going against their best self-interests. That’s a tall order, something akin to joining the military. And that’s above and beyond just an intellectual exercise.

      Going back to the purpose of this series, the memes, rebuilding the infrastructure, caring for the populace in their dotage, caring for the mentally ill, maybe JG (I’m not convinced of the technical aspects, yet, but want to be) seem all good and reasonable and more importantly doable aspects of MMT, with a few brave conservatives won over. But venture into the upper half (conservative) vs the lower half (liberal) issues, it gets less doable real fast.

      • The stress can be put on increasing incomes versus constant or decaying prices of goods and services. If this happens in a universal manner it is impossible for anyone to be worse off.

        Whit regard to distributional issues I think the following question in coordinating intelligence can be of a Socratic nature:

        Is it better to change (in personal fraction and absolute value of GNI)
        a) from an income of 0.1*1 to 0.125*0.8?
        b) from an income of 0.1*1 to 0.125*1.25?

        The b) variant gets the same relative result as a) but much greater universal gains, 25%, and individual gains, 56%.

        Of course, it seems difficult that in the long run societies capable of continued growth in real incomes would tolerate such capricious behaviors. Another possibility

        c) from an income of 0.1*1 to 0.1*1.25?

        seems more probable.

        Progressives should require criteria to assess governmental policy. Already defined criteria are UN Universal Declaration of Human Rights; the Human Development Index: income, life expectancy, education.

        Progressives should go further. Progressives should require income to be measured not only by average per person income but also as minimal universal income, universal meaning over all citizens.

        Progressives should require the full employment condition asserted by the UN declaration to be also possibly a full occupancy condition, with occupancy being either employment or partnership.

        , with increased gains for the individual in security.

      • That hits the nail on the head. Government should regulate industry like a boxing referee: prevent unfair moves and stay out of the fight. And keep the audience and the environment safe.

        The natural spending province of the federal government is infrastructure, broadly understood to include education, health, sports, arts, science, energy, arms, communication, bridges, roads, and even potholes. States and local governments cannot print money and should get Treasury funding for infrastructure.

        If industry does not want to invest in maglev freight trains hurtling at sonic speeds through low pressure tubes (which will eventually replace the trucking industry) then government should finance the project through universities. Keystrokes!

        Unions were needed to protect workers from abuse and to distribute more fairly the wealth they produced. But the realistic solution for both problems is full employment in infrastructure for those not needed in industry. The best protection for all workers and the fairest distribution of wealth will occur when the unemployment rate dips below one percent.

        During WW II, workers were coddled as never before or since. Under wage controls, industry recruited workers by offering health insurance. I recall a restaurant sign declaring something like: “Dear clients, please be generous to our busboys. We have no trouble getting customers!” Let’s bring back the good old days!

  35. Jon Denn. Your argument about conservative risk-taking might seem reasonable on the face of it but it ignores the gate-keeping aspect of loans to establish businesses. There are two points I would like to make that I think are worth consideration.

    Firstly, data ( I forget my sources here but probably Dirk Bezemer, Steve Keen, Thomas Palley or Randy Wray ) on the financialization of the American economy seems to indicate that private bankers with their money creation powers have become progressively less interested in using money creation to provide loans for real economy business development and much more interested in using it to blow asset and commodity bubbles such as housing and student loans. The reason being the greater profitability in such bubble blowing.

    Secondly, in James K. Galbraith’s book “The Predator State” on pages 81 to 86 he describes part of the basis for Communist China’s exceptional GDP growth rate success over the last thirty odd years. This success hinges on state owned banks rolling over or cancelling their non-performing loan portfolios with money created by the Central Bank. The effect has been to allow a massive creation of new private enterprises together with continuing support and expansion for state owned enterprises. This has seen tremendous competition between enterprises with prices falling and real wages effectively quadrupling in the more urbanized and industrialized areas of China over this period. The Chinese Communists, together with currency pegging and foreign bond purchasing, have effectively like Hitler’s Nazi Germany been using a Functional Finance, or MMT, to grow their economy. Economists are predicting that China’s GDP will pass that of the United States by 2016 and China will takeover as the world’s super-power sometime in the third decade of this century.

    In my mind from a framing point of view I see a clear link between MMT and co-evolutionary adaption (the use of a social or cultural technology, which money clearly is) since between group competition is clearly beginning won by a Communist controlled China. The implications of all of this is a mixed development for human well-being. Whilst the use of MMT can be considered of great material benefit for the Chinese people in the West the limited pluralistic democracy we experience will be further degraded under the global hegemony of Communist China just as it would if the Axis Powers had won the Second World War. The degradation will be mainly manifest not only in a substantial reduction of human rights but in a continuation of and probable concentration of corruption. George Orwell’s “Animal Farm” writ large!

    • I’ve downloaded “Predator State” on my Kindle. Thanks. Again, I’m a journalist/activist not an economist. If I get your point about China correctly, isn’t the MMT genie out of the bottle in China? So, if we’re going to compete internationally, do we have any other choice but to pursue MMT?

      Crony capitalism, imo, is best stemmed by omnibus electoral reform. Another group I’m involved in has a framework for a constitutional amendment that looks very promising.

  36. The reference to the data on the debt financialization of the US economy can be found in the graph on page 2 of Michael Hudson and Dirk Bezemer’s article ” Incorporating the Rentier Sectors into a Financial Model”

    As the graph shows loans to the US real economy have remained steady and unexceptional from the period modeled 1952 to 2007. By comparison imagine what a graph would show for the Chinese Communist Party’s injection of government created money into the Chinese real economy ( both private and state enterprises ) for the last thirty odd years!

  37. Perhaps the answer to the question whether conservatives would see much merit in growing the overall size of the pie as opposed to merely personally gaining a bigger slice of the pie depends upon a true understanding of money’s role in an economy and in consequence of this the conditions under which a society should both create and loan money.

  38. Taking a different slant:

    Randy wants to find a “different frame” for MMT. Why? He knows the worldwide MMT team has not really made it inside the front door of (metaphor) the US Policy House. If we were inside, and part of the ongoing conversation on economic policy and budgets, the Very Serious People inside would (we hope) come to see that the US is not “affordability constrained”. It is “resource constrained”. And given our post-2008 balance sheet recession (Koo), there’s a long way to go in terms of employment and GDP growth before those constraints begin to bite. In other words, people’s lives could get a LOT BETTER before we would need to put on the brakes. But all we hear from the VSP’s is that we are broke.

    I suggest we go around the US Policy House and enter by the back door. Don’t reframe MMT. Pick an always current (in the Policy House) issue – QE and Inflation, then talk about it from an MMT perspective, or at least as one wearing MMT glasses, without even mentioning (at least not right away) MMT. Shakespeare said: “By indirection, find direction out.” To which I say, “Amen!”

    What has just happened at the Fed? They have committed to buying $85billion worth of securities (about half Treasuries, other half, mortgage securities) every month until unemployment drops below 6.5% or inflation moves over 2% and threatens to break through 2.5%. That’s $1.02trillion per year, with no more “sterilization” – straight printing. Since we are wearing MMT glasses, we know these asset purchases will not be inflationary (create base money reserves, do not expand broad money). Neoliberals will howl about impending hyperinflation (the “Zimbabwe virus”), but it won’t happen. By my reckoning, we can run a $540 billion deficit, issue Treasury securities (the law-not necessary, of course), rebut that same amount, and not have the debt go up. If the Fed were buying all Treasures, we could have a $1trillion deficit, buy an equal amount of securities, and not have the National Debt go up, AND NOT HAVE ZIMBABWE!

    This is happening right now, right before our eyes. We don’t have to get the entire MMT structure inside the door all at once.We just have to shout it from every rooftop that the Fed is doing something, which is thought to be impossible, and that is buying back an amount about equal to our forecasted deficit, meaning, WE CAN RUN DEFICITS AND NOT INCREASE OUR NATIONAL DEBT. AND NO INFLATION.

    Time for my dinner. Think about that for a bit. It’s huge, and could represent a turning point.

  39. Would the government have to/be able to spend so much if foreigners weren’t so desperate to hoard dollars in interest-bearing accounts at the Fed?


    The whole need for, justification for, and attraction of extraordinary fiscal outlays does ultimately come from the fact that the US has a MASSIVE current account deficit, thanks to our willing trading partners.

    Because foreigners want to save so many dollars, Americans could potentially get “free” healthcare, and all the rest of it.

    The Chinese people work, and accumulate dollars, and the Americans can get “free” healthcare.

    That’s what it’s really about, isn’t it?

    What happens when global trade becomes more balanced? When the US has a balanced current account?

    Then we have to pay for “free healthcare”, with taxes, just like Sweden and Norway.

    • A response to Y:

      “Would the government have to/be able to spend so much if foreigners weren’t so desperate to hoard dollars in interest-bearing accounts at the Fed?”

      Per MMT, the answer is Yes.

      As a currency issuer, the US doesn’t need anyone or any country to fund their operations, including their deficits. The fact that Treasury sells securities equal to the deficit spending is a legislative requirement, not a monetary one.

      China accumulates dollars because its exports to the US far exceed its imports from this country. This export surplus model has been the engine driving their growth: huge export surplus more or less approximating the domestic saving level, which funds the high investment levels that have driven rapid GDP growth. Our willingness to absorb massive amounts of Chinese product has been an essential element of their success. Although to a lesser extent, this is true of Brazil as well.

      For China, the export surplus first shows up as non-interest bearing reserves in their account at the Fed, and is then converted to Interest-bearing Treasuries. This same pattern happened during the Clinton surplus years, so the Chinese dollar accumulation machine clearly has its own dynamics, related to, but not bound by the US Government budget position.

      What will happen to “free healthcare” if Chinese-US trade moves to balance, and the Chinese slow down in accumulating dollars? Nothing. If the political will remains present to implement Obamacare, there is and will be no constraint on financing it. We simply do not need the bond market, foreign or domestic, to finance our Government. The fact that so many of us think the Government is somehow financially constrained is the core of our political battles, and precisely why Randy is looking for a better way to frame the truths of MMT, giving all of us the “Good News” that we actually can go ahead and feed the poor, clothe the destitute, provide healthcare and good jobs for all. Just reflect for a moment how much things will change when people realize this is so!

      • You haven’t got my point. I probably wasn’t very clear.

        The accumulation of dollars by foreigners (currenct account deficit) provides “space” to be filled either by government deficit spending or private deficit spending. When the CAD shrinks, that “space” shrinks.

        Say the government deficit spends at a certain level to maintain full employment given a certain sized CAD. When the CAD shrinks, government deficit spending has to reduce or you end up with excess demand – i.e. inflation. This means that deficit spending on things such as healthcare has to fall, and taxes rise, to maintain that same level of government spending in the face of a shrinking CAD – to avoid inflation.

        • True in outline, but foreign trade is just one kind of savings. The government has to spend to accomodate it, in particular by the JG, to get to true, chock-full employment. The gains and losses from achieving/ abandoning full employment dwarf those from having / losing lots of nice imports on credit.

          A sane economy run by a sane government with a JG would automagically counter-accomodate new foreign dis-saving, trade moving to balance, which in the real world would not happen overnight. It would mean we would be selling more export goods, to get the foreign currency to pay for our imports, which might decline (& be import-substituted too). This would enlarge the private sector making exports and import substitutes, and tend to reduce the JG pool. Government spending, in particular JG spending, which would likely have become quite big because of big CADs, big leakages, would thus decline, and this would be deflationary. We would just be shifting to providing tradeable goods to foreigners, increasing domestic manufactures of replaceable goods and decreasing the amount of public goods from public, in particular JG spending. No tax hike / spending cut likely to be necessary. The auto-stabilization of the tax system and the JG and other stabilizers should do the heavy lifting. Invisibly. Except to a few IRS guys, honest bankers and JG program administrators. Remember – the natural state of a modern peacetime economy is deflation.

          Health care in particular is a bad example, for it is relatively free in several senses. A sick population is more expensive than a healthy one, and the unambiguous truth is that governments provide superior health care, more efficiently, than the private sector. If we didn’t have the current system, soon to metastasize further into Obamacare, but a sane single payer system, the hard thing would be to spend enough because it would be so much more efficient. There would be a great deal of people, some highly educated and compensated, thrown out of work, because currently, they do nothing really. Just push paper and obstruct, not aid patient care.

          Having anybody in a rich society like ours not have excellent healthcare is barbaric. Having anybody who is employable, who could possibly be on the JG, not have it, is simply idiotic. Real wealth-destruction. Treating humans worse, stupider, than a rancher would treat cattle. Economizing on health care for the working class is like a person of ample means economizing on food to the point of starvation. Human labor is a scarce resource. Society has already invested in someone who has reached majority, who is employable, a great deal. Not as much as it should and has in the past, but still a great deal. Disemploying anyone due to preventable, treatable or curable illnesses or even deaths, for lack of a few tens or even hundreds of thousands spent by the gubmint for his/her care, provided free to him/her, is false economy, just as any other kind of dis/unemployment is.

  40. Jon Denn. Yes MMT is out of the bottle. It’s been out since the 1930’s when the German Nazis adopted it. Yes Western economies have no choice in adopting MMT if they wish to save their concept of pluralistic democracy and actually make it work rather than being a front for kleptocracy. However, China being a secretive society in regard to its government nobody really knows whether an ignorant faction within the Communist Party will gain power and abandon MMT in favor of Western Neo-Liberal dysfunctional understanding of money’s role in an economy. Corruption within the Communist Party is as rife as the West just as George Orwell predicted in his book “Animal Farm.” The stakes are therefore very high as to which direction the world will move in this current century. The old selfish individual and group animal instincts still remain hard-wired within us as well as the more universal self-transcending instincts!

  41. Jon Denn. I agree Omnibus Electoral Reform is vital.

  42. Will Richardson

    Austerity cools the economy, given that the body politic/economy has got hypothermia, we need to warm it up, putting money/energy into the economy to get it back to optimal/equilibrium health/temperature.

  43. Maybe the framing will only come when society actually understands that money is a technology like fire that helps to promote eusociality or “nesting” ( the formation with altruism of groups within a group/nation ) in human societies as opposed to sticking with the greater emphasis on individual utility of our chimpanzee and gorilla primate cousins. Accordingly money enables labor to be instructed to utilize resources to produce the goods and services a society needs or indeed in the case of goods purchase those already made. If you don’t have enough money in active circulation and optimally distributed together with enough to meet savings and reserves requirements a society’s economy doesn’t function as well as it could to meet its society’s needs. In the same way in homo erectus times insufficient use of fire would not have allowed the changes to body and brain we currently enjoy through the use of cooked foods with their higher calorific content and easier digestibility leading to our increased time and brain capacity ability to process criteria for sociability and the formation of groups, move down from the trees and sleep on the ground protected from animal attack by fires with attendant night-watchmen and as a consequence of our increased sociality and bipedality make greater use of the world’s resources with increased geographical roaming capacity. Further information on this framing viewpoint to be found in Edward O. Wilson’s “The Social Conquest of Earth”, Richard Wrangham’s “Catching Fire”, and Peter Turchin’s “War and Peace and War.”

  44. The ultimate human framing or view of life that causes us so much trouble is the delusion that the individual, group or nation can have their necessary freedom at the expense of others and the planet.

  45. I just heard Tom Hartman expouse MMT on his show.
    It is wonderful that more people are exposed to it.

  46. Stanley Mulaik

    Randy, I’m so pleased to see you have discovered George Lakoff’s works. I’m a quantitative psychologist and I have studied most of his books and papers. He is a genius. He exposes the metaphors we use in mathematics, in politics, in philosophy, in everyday thinking. Apart from him, I’ve had a hobby to study philosophy, specializing in Kant, Wittgenstein, Schopenhauer. Kant remains my favorite, and I finally got to understand what Kant was about by understanding his use of “analysis and synthesis”. Synthesis comes from Greek meaning putting together, and analysis is breaking apart. Anyway Kant believes that the mind organizes perceptual experiences into concepts using a priori categories of synthesis. (I’ll be brief). George says we understand the abstract by using metaphors derived from embodied perceptual/motor experience. Metaphors are mappings from a source domain to a target domain, so that you can understand the target domain in terms of the structures in the source domain. In my thought, these structures in the source domain are forms of synthesis. Kant’s categories of judgment are like Lakoff’s metaphors, they organize and synthesize thought.
    For example, Lakoff says that we understand goal directed, purposeful activity by movement along paths to goal destinations.
    Movement is action; path is means, method by which we perform the action; the goal is the purpose of our action. Once you see that, you also immediately can understand how to stop someone from achieving their goal: you can obstruct them (Lat ‘ob’ = against + ‘struere/structus” build) build something against their movement along the path to their goal; preclude (Lat. ‘pre-‘ = before + ‘claudere’ = close, shut) to close a gate ahead of time on the path to the goal. “Let’s see if we can grease the skids on their program so they can get done sooner” You do something to reduce friction that helps move a vehicle (program, method of operation) along the path faster to the goal. Notice that the Romans had these same metaphors as we do for thinking about goal directed action.
    Anyway, I’ve recently been trying to find metaphors for explaining sector balances in MMT. I’ve come up with the swimming pool with several inflow pipes and several outflow drain pipes to do the job. The pool is full of water which corresponds to money circulating chasing goods and services for consumption. How full the pool is represents how much money is in circulation. Government spending is an inflow from the government, some of which involves newly created money (out of thin air) and others derived from taxes. Taxes are an outflow from circulation to the government. So government is another reservoir. Savings are private reservoirs from which and to which money can flow to and fro to consumption. Investments are inflows of money from savings to develop productive capacities to produce goods and services. Exports are inflows of money from sale of goods to foreigners. Imports are outflows of money to foreigners in return for their manufactured goods and raw resources (oil, coal, stuff at WalMart, etc.). In my recent thinking I’ve thought to add L (private bank loans) and R (redemption of loan debt) to cover mortgage, credit card, and college loan debt. So, you teach your students that if the inflows of money are less than the outflows, the pool will subside and there will not be enough money to support (float) all the goods and services initially produced. You will have a recession, and if the pool is nearly emptied, you have a depression.

    How might this occur? Well, the import drains, the drain to savings, and tax drains may be so open that the pool is getting emptied. People may be taking most of their income to pay off enormous credit card debt and mortgage debt. So, what to do? Increase the flow from government spending by deficit spending on appropriate programs which effectively but indirectly leads to creation and spending of new money into circulation. Ramp up export activity to get more foreign held dollars coming into the pool. You lower taxes (partially close the tax drain).
    Suppose you have inflation, which is represented by overfilling the pool, effectively nearly drowning the goods and services. That can come in several different ways: excessive deficit spending by government; excessive credit card credit, subprime loans, overwhelming inflows from exports. What to do to get things back to normal, i.e. full production and full employment? Well, cut off or greatly reduce the inflow from deficit spending. Put caps on credit card loans through regulation of credit extension. Open the drain to the Fed via bond sales to banks. Raise taxes to take money out of circulation. Taxes on capital gains will dampen investment. Raise interest rates which take portions of money transactions out of circulation.
    And you can show that fiscal budgeting of balancing spending with tax revenues is not sufficient to avoid either inflation or deflation, depending on which other drains are open and/or closed. A budget generating a surplus used year after year will lead to a constant drain to the government of tax money that is not spent back into circulation, hence recession or even depression. So, you get the idea. The idea is to enable the student to see all these inflow pipes and outflow pipes and the pool at once (that is synthesis). He/she will naturally get the idea of water flows into a pool through pipes. So, he/she can see that budgeting at the federal level is more complex than at the state level, since you are trying to get a balance that increases private savings and wealth, while dealing with inflows and outflows. And the deficit spending reservoir creates new water as needed. (There is a time and a place for everything).

  47. I’d call that lesson plan, “How Deep is Our Swimming Pool.”