By L. Randall Wray

I thought readers might enjoy taking a peek back in time to 1999, to a conference organized at the New School by Stephanie Bell (Kelton), Mat Forstater and Edward Nell. This was pre-UMKC, just before we made the big move. The Center for Full Employment and Price Stabililty was housed at the Levy Economics Institute and Ms. Bell was pursuing a PhD. I’m including the conference program, my outline, and my notes for presentation. Note that the conference was organized around Charles Goodhart’s presentation, based on his deservedly famous article, “The Two Concepts of Money”, published in the European Journal of Political Economy in 1998. Hence in my presentation, I adopt his taxonomy of approaches to money as the “M form” (metalist or monetarist) and the “C form” (cartalist or chartalist or state money). You will see that it’s all there–the basics of what became MMT: state money of account, taxes drive money, endogenous (private) money, and labor bufferstock to stabilize prices.


  1. Good stuff. This presentation was later published in Stephanie and Ed’s “The State, the Market and the Euro”, no?

  2. The comment about the Euro in 1999 is most interesting and prophetic, and should be preserved for any arguments about which economists make better predictions.

    And the statement that early coins were worth far more than their bullion value, and far too much for everyday transactions is quite compelling. How did that get left out of the MMT Primer?

  3. DeMyth: heck if I know. I came across this in my office yesterday. I cannot remember what I published last week, let alone 14 years ago.

    Golfer: I get tired of repeating myself. The point is well established by me, and more importantly by all serious historians of coins–all the way back to Roman Law, value of coins established in law was NOMINAL, not in the imagined “commodity value” way. Only economists are confused on this.

  4. In the 1960’s, someone having only three hours university credit was considered 86th percentile knowledgable in the world in Economics. Another three hours credit placed that student into about the 94th percentile. Those possessing degrees earned in economics were truly among the elite insofar as knowledge of Economics was concerned. At that time, and little change is shown since, opinions about economics and ignorance of economics were then, for all practical purposes, synonymous, except in the current age, that ignorance has become grossly incompetent ignorance. Much of the abysmal failure of public opinion can be traces back to the failure of education to illuminate history beyond the trivial, the disconnected and the inane. There is little difference between the public memory and the memory of a final stage alzheimer’s patient. The public hasn’t a clue where they’ve been, where they are, or where they are headed; and it is impossible to communicate the necessary information as there is usually some poorly learned opinion blocking access to the mind so engaged. It is little wonder the public preference for conspiracy conjectures, those theories are among the little that makes coherent sense in their knowledge deprived world.

    Before the ascendency of the Chicago School of Economic Phrenology and Harvard’s School of Business Grafters what was being taught in university as economics was very similar to that being promulgated in these pages. This was in the early and mid 1960’s and the students were those destined mostly for governmental administrative positions. With Nixon, the silent majority and the political success of political correctness, those so educated were overwhelmed and became silent themselves. About the only difference between the MMT of the 1960’s and that here, today was then the MMT was connected coherently with not only monetary and fiscal policies but tax and spending policies as well. The criminal implosion of the Nixon administration sent the ideological rats in the administration’s dungeons deep underground only to reemerge into daylight in the dementia and detritus of the Reagan/Bush 41/Clinton/Bush 43/Obama administrations. The country has not had an economically sane or competent administration since before 1980, that is going on three generations now since mature, educated, economically aware adults held power. The consequences of this diversion from economic and political maturity will be lived with until daylight is again present in the public’s benighted mind, the prospects of that occurrence being utterly dim. One thing to be noted, with the exception of this site’s ‘herd wrangler’s’, without exception, those names appearing most frequently in the comments are those least likely to understand economics and seldom have more than naught to add.

  5. Stephanie Kelton

    Very well said, T-Bear! (Completely agree with the last sentence too.)
    Demythify — yes. The proceedings were part of the edited volume.

  6. Thank you so much for publishing this. An after-dinner party discussion last night grew into an astonishing fight-fest, wherein I was accused with considerable venom of being the “only person in the United States who seems to know this stuff. You! Only you know this!” [I don’t know it. I’m learning it.] I had zero means to defend myself as someone who had explained over the past few months to this same crowd that the country wasn’t broke, the US federal government issues its own currency, why the deficit is being described inaccurately and the dire consequences of not understanding it. Etcetera. (I won’t preach to the choir.)

    Drs. Wray and Kelton: in case you ever think your efforts with this blog and your public appearances are for naught, and why do we bother, please let me tell you how I can’t thank you enough. I’m not an economist, or in the financial business, but I know you are right. I’ve struggled to wrap my head around this for two years because I know you are right. I know that I’ve been taught improperly, and it drives me nutz to be stupid. Ignorance I can fix. Being stupid is failing to fix it, or not wanting to. (Dr. Kelton, it was your two-part teeter-totter article that was the ‘open sesame’ for me. Bill Black’s articles on financial fraud are what brought me here.)

    You two, Warren Mosler, and the entire UMKC team (including Bill Mitchell), deserve a Nobel for how you are helping humanity, and I’m not blowing smoke up your ass. I wish I could nominate you.

    • I second that emotion, MRW. When I heard the Guns and Butter broadcasts (KPFA/Pacifica Radio) of the 2012 MMT Summit in Rimini, Italy, I was blown away by the sectoral balances model presented by Dr. Stephanie Kelton, the fact the USA wasn’t broke, which was consistent with Dr. Richard Wolff’s previous public explanations of how the debt ceiling brinksmanship was “political theater.” The entire notion of acknowledging fiat currency to differentiate between a sovereign currency issuer and a user of a currency was eye-opening.

      But having Dr. Michael Hudson and Dr. William K. Black is what initially attracted me to the proceedings. To me, they’ve always had serious street cred, in terms of incorporating an honest and human contextualisation of the “political decisions” of various economic policies and abstract economic modelling and analysis. Many economists seem to avoid those political and sociological factors, which is a shame for the people’s sake.

      I can understand the necessity of ‘respectability’ or ‘objectivity’ and the problems with demagoguery, or gaming maximising audience numbers. But I also know how irrelevant economics can be to the general public and how powerful and influential it is when economists are able to speak directly to the public and relate to people’s experiences. I like Dr. Joseph Stiglitz statement:

      “I am more convinced today of the importance of studying politics, sociology, broader perspectives on social sciences, that the two are always mixed together. And studying economics in isolation from the other social sciences is wrong, particularly—for all countries, but, including, for developing countries. ” “Questioning the Value of Economics,” OR )

      • Mark Robertson

        Agreed. Now if only we could get the MMT crowd at UMKC to be honest, and candidly admit that austerity is not a “mistake,” or a “failed policy,” or the result of “misguided principles.”

        Just once — JUST ONCE — I would like to hear one of them admit during a guest appearance that, ” The purpose of austerity is to widen the wealth gap between the rich and the rest. This is why you are told the LIE that the U.S. government is ‘broke,’ and has a ‘debt crisis’.”

        Just once.

        • Quite agree with your point of view. We are being conned.

          However, since the US dollar has become the currency of international trade, there are trillions of dollars out of the reach of the US Treasury. These dollars (as debt – to US citizens ?) or by sovereign governments to the IMF or World Bank are a real problem if we want monetary reform, for example HR 2990

          • Frank,

            That doesn’t make sense to me. I thought we are the reserve currency. If we’re the reserve currency, that means other countries will want to save in our dollars, which they do by selling us stuff or buying our T-bills. They are saving in $US reserves. The day all of them decide they don’t want $US reserves, and want to cash out into something else, is the day we stop being the reserve currency. Unless I’ve got it all wrong, what’s wrong with that? I mean, those bucks, for the most part, are sitting in a bank account at the Federal Reserve. Where’s the problem?

            By what logic are “sovereign governments to the IMF or World Bank … a real problem” when it comes to our monetary policy, or are you just looking for a reason to push Kucinich’s bill?

            • “those bucks, for the most part, are sitting in a bank account at the Federal Reserve.”

              I have a US dollar account with a bank in Switzerland. How are they sitting in the Federal Reserve ?
              My company also has a bank account in London, which is denominated in US dollars.

              This is multiplied millions of times over across the world. From my point of view I am not very interested in whether the US dollar is a reserve currency, whatever that means. I use them mainly in order to facilitate international trading. I can easily sell these dollars to buy other currencies, when the need arises or if I think the US dollar is going down in value compared with say pounds sterling or the Euro. Gaddafi threatened to sell Libyan crude oil in gold backed dinars instead of US dollars; zap.


              These offshore dollars are both a blessing and a threat to the US monetary system, but more of a threat to every other country, who take out US dollar denominated loans. The IMF has reduced many to poverty.

              • If your Swiss and London banks offer US dollar accounts, then they have reserve (checking) accounts at the Fed, just like China. When you wire US dollars to either of your accounts, it goes into your bank’s reserve account at the Fed, and your bank then credits (via a keystroke) your account in Switzerland or London.

                Now maybe you show up one day in Geneva and Zurich or London, and you want greenbacks. Different story. Then they physically have to have them in their vault. If they don’t have enough to cover what you want, you have to wait a few days until they get them brought in.

                • I limit my cash withdrawals to $10,000 and have never had a problem. This is the amount I can legally bring with me into the US without reporting it. If my wife is with me I give her another $10,000 in cash. These days I can use my debit card at any ATM worldwide and withdraw $500 per day.

                  • Just a heads-up. It’s actually $9999. $10Gs has to be reported. Jes’ sayin’. But they look for $9999 withdrawals. It’s a flag. So get the 10 and buy yourself a drink.

    • Mark robertson

      Most people reject MMT because most people would rather be “right” than be happy. They would rather “fit in” than be free. They would rather be resentful than be prosperous. Their self-delusion and self-righteousness maintain the wealth and power of the elites.

      In short, at least 80% of the population consists of impoverished buffoons. This is the nature of human society. Always has been. Perhaps always will be.

  7. I’m with MRW. That is the way I came to understand better what the financial crisis is all about. I’m so pleased that there are people on the Internet who actually know how money works and are willing to pass the information on for–nothing. Thanks to you all.

  8. The Guardian has announced a new development to augment your IT experience: Guardian Goggles,

    Guardian Goggles, because life is too short to think for yourself.

  9. I t would seem logical in the first instance to view the idea that taxes drive money arising from the need for a nation, or incipient nation, to mobilize resources to defeat primarily external threats and secondarily internal threats. In terms of unification of a discrete territory both geographically and with culturally similar people Peter Turchin describes in his book “War and Peace and War” that all ethnic differences are relative and he describes how the Romans under threat from the “barbarian” Gauls were able to first of all unify the different peoples of Italy to defeat the Gauls and then go on to establish the Roman Empire under a new found militarism. In Turchin’s book the chapter “Born to Be Wolves” describes the militarization of the Italian people indeed he tells us that the original meaning of the Latin world “people” was “populus” meaning “army.” The role that a Roman citizen had in their army was assigned according to wealth which was measured in “asses.” The “as” he tells us was a bronze coin and during their early period of Roman militarization gold and silver coins weren’t used.

    In a paper Randy Wray published in March 2011 entitled “Keynes after 75 Years : Rethinking Money as a Public Monopoly” ( Levy Institute Working Paper No. 658 ) he states on pages 6 and 7 the following:-

    “From inception, then, we can suppose that money was created to give authorities command over socially created resources.”


    “Often, it is the tax that monetizes an activity – that puts a money value on it for the purpose of determining the share to render unto Caesar”


    “We are admonished by the good book to be neither a creditor nor a debtor, but (almost?) all of us are always simultaneously debtors and creditors. Maybe that is what makes us human – or at least members of the same family as chimpanzees, who apparently keep careful mental records of liabilities, and refuse to cooperate with those who don’t pay off debts ( Atwood 2008 ). This is called reciprocal altruism: if I help you to beat Chimp A senseless, you had better repay your debt when Chimp B attacks me.”

    Randy Wray is talking about the Strong or Conditional Reciprocity developed and articulated by Bowles, Boyd, Fehr and Gintis in their book “Moral Sentiments and Material Interests” in which as a primate species we try to punish those who free-ride or disrupt social harmony. Indeed the group mentality that arises from such reciprocity led the Romans to unify the Italian peoples to defeat the “barbarian Chimpanzee Gauls.” As Peter Turchin tells us in his book the propertied classes had their “asses” taxed to pay for this unification process. He also tells us that it was under Caesar’s leadership that the Gauls were finally defeated.

    We can I believe draw a very useful conclusion from the combined work of Rand Wray, Peter Turchill, Samuel Bowles, Robert Boyd, Ernst Fehr and Herbert Gintis that a cohering force in making taxes drive money was the threat from other tribes or ethnic groups and we can usefully regard money as “monetized command” or in more peaceful times as “monetized instruction” that enables us to more effectively mobilize resources to produce the goods and services we need in response to changes in our “environment” both mental and physical.