Pavlina R. Tcherneva
Pondering here from my academic station
Why has never before such a simple observation
Caused more confusion and consternation
Amongst the general population
That the government is the currency-issuing monopolist
Is not a radical idea, nor a hypothesis
It is a simple, nay, elementary fact
That is often so fervently attacked
IT conjures fears of hyperinflation
The dread of every civilized nation
A crippling phobia that stunts our facilities
To rationally think about the economic possibilities
Pundits, economists, and the average bloke
Firmly believe that the U.S. government is broke
And defend this dreadful and deadly mythology
“There Is NO Alternative,” they say, without an apology
Inequality, retirement insecurity, mass unemployment
Environmental blight, pay gap, and other disappointments
Are no longer problems intractable, alarming and eerie
With a brief introduction to Modern Monetary Theory
©March 31, 2015
Living now in Argentina, and not being from this country, I observe how the local population mainly understands that the government is the local currency-issuing monopolist. Its actually no surprise. Moreover, and surprisingly, a relatively wide segment of society likes to talk about economics; from your businessman to your taxi driver. In fact, most are pretty well versed in economic matters out of necessity; their ability to preserve the value of their often modest savings in local currency, depending in part on their ability to navigate what is a not so straight forward foreign exchange market (both formal and informal). At the same time, there is a widespread understanding that the issuing powers of the government are limited; not least because not that much is relatively for sale in the local currency (including oil that the country sadly has to import despite having the potential to be energy self sufficient) and also because there is inflation (the rate is not easy to establish, but which for sure is in the low double digit range). What are the causes of inflation in Argentina is hugely debated, and I personally am not clear whether part of it is institutional, with periodic wage negotiations being engrained into the system, and the resulting salary increases feeding into the price mechanism. Most people think inflation is caused by too much currency issuance. Am not sure they are right, but at least here down South it is interesting to note how people in terms of MMT are generally one step ahead of their North American counterparts; here the debate is not whether a sovereign can issue its own currency, its whether that issuing power is put to good use and whether inflation is not being caused as a result of some related mismanagement.
Why do we keep calling it a Theory? Isn’t it a completely valid practice for a monetary sovereign nation?
If we don’r believe it has validity, then we need to address the issues of why it isn’t valid, and what needs to be done to overcome the problems with the “theory”.
As far as I can see, there is nothing to stop the system being put into practice, other than the Banks and the paid off politicians. The hurdle is a mental block, which seems to be too difficult to overcome. Get rid of the hurdle and the system will flow like oil.
I always think the “theory” in MMT is more akin to the definition; “a coherent group of tested general propositions, commonly regarded as correct, that can be used as principles of explanation and prediction for a class of phenomena”
So true on every level.
Facts, empirically testable data and well researched evidence are no match for mindless ideology.
The mind it shies from such rational simplicity
And paranoid fantasies of government duplicity
Are promoted by bankers protecting their fees.
They cannot allow us to print it for free!
Neat-o!! Thanks, nice work. If only I had the time to set this to music. What better way than to promulgate the message. Perhaps when my training is concluded I can participate.
In a similar vein I began to make a list of other anachronisms (like the gov’t=household anachronism).
Things that don’t belong in the 21st century:
Political leaders wearing military uniforms.
Sectarian conflict.
Governments that claim to have a shortage of their own money.
Well done. 🙂
Fabulous! If it’s alright with you I will put this on the air next Thursday on The After Show on Netroots Radio. It “all MMT all the time” for this econo-rabbit and this poem fits right in.
I’m a bit puzzled by your assertion that “the government is the currency-issuing monopolist“.
When the Treasury has to borrow from banks to cover a deficit in government spending, are not banks also currency-issuing? For that matter banks create money out of thin air whenever they make loans–since we have fiat money, there is no need to back the dollars lent with gold-backed dollars of bank depositors, meaning fractional reserve banking is passé.
I believe I have seen other MMT advocates include banks as money creators. Of course, they end up still issuing US dollars, which may be the basis of your assertion. But can you clarify what you mean and don’t mean by your assertion?