By L. Randall Wray
MMT continues to inflame hysterical attacks. Who would have thought that it would take MMT to bring together everyone from the crazy right to the insular left to unite in common cause against an obscure theory of money and government finance? The attacks seem to be so concerted and coordinated that one starts to think there just might be a conspiracy behind them. But why?
Bill Black’s recent column The Day Orthodox Economists Lost Their Minds and Integrity exposes the dishonesty of MMT’s critics on shocking display in a newly released poll of mainstreamer economists on two questions that supposedly are based on MMT’s teachings.
The poll was put together by the Chicago Booth School of Business whose motto goes like this: “Since 1898, we have produced ideas and leaders that shape the world of business. Today, we empower bold thinkers and inquisitive minds to dig deeper, discover more, and shape the future.”
No they don’t. They design surveys to quash “bold thinkers” and “inquisitive minds”. Their poll is just plain troll.
Here’s how they decided to take a troll poll:
“We decided to put the ideas to our US panel of economic experts by asking them whether they agreed or disagreed with the following statements, and if so how strongly and with what degree of confidence:
(a) Countries that borrow in their own currency should not worry about government deficits because they can always create money to finance their debt.
(b) Countries that borrow in their own currency can finance as much real government spending as they want by creating money.”
As Bill argued in his piece, you will not find an economist anywhere on the planet who would agree with these statements. The MMT position, in fact, is precisely the opposite to what has been posed by Booth.
Given the questions, the results were a foregone conclusion:
“Of our 42 experts, 38 participated in this survey. On the first statement, only 1 expressed no opinion, 15 disagreed and 22 strongly disagreed. On the second statement, 3 expressed no opinion, 11 disagreed and 24 strongly disagreed.”
Now, to be sure, these “experts” consist mostly of a rogue’s gallery of the clueless. Still, surprisingly, many who disagreed with the statements offered commentary that any MMTer would agree with, or at least be sympathetic with. These responses were not featured in the highlighted results, but it is worthwhile to take a quick look at them.
Thaler on Q2: I don’t like this question. I guess it is true in some sense, but surely inflation looms at some point.
Shimmer on Q1: The real value of the money supply is bounded above. At some point, this must create inflation.
Samuelson on Q1: Deficits can be financed by creating money, but still have disadvantages as well as advantages that should be carefully considered.
And on Q2: Creating money can finance a great deal of spending, but incidents of hyperinflation, collapse and other crises indicate there are limits.
Nordhaus on Q1: Obviously, they should worry. However, the open economy issues are less pressing, particularly with flexible exchange rates.
And on Q2: At some point hyperinflation would break it all apart. However, this is an irrelevant question in an open world.
Maskin on Q1: Printing money causes its own problems, e.g., the risk of inflation
And on Q2: There will come a point where the currency is so debased that further spending becomes difficult if not impossible.
Kashyap on Q1: Money financing yields some seigniorage, but also inflation and the inflation has costs and there are limits to seigniorage capacity
Judd on Q2: Friedman wrote a book “There’s No Such Thing As a Free Lunch.” He also meant road or bridge or army or school or ANYTHING!
Hart on Q1: This kind of behavior can quickly lead to inflation or even hyperinflation once the economy is close to full capacity.
Fair on Q1: Surely inflation might be a problem.
Eichengreen on Q1: The “not worry” phrase in the question is a bit vague admittedly.
Edlin on Q1: Less worry is not the same as no worry
And on Q2: There are limits to capacity and no limits to wants.
Duffle on Q2: If this were true, each such country could finance the purchase of all of the world’s output, which is obviously impossible.
You will note that this substantial subset of the surveyed mainstreamers explain that they disagree with the questions on the basis that unbridled spending would exhaust the supply of available resources and thus cause inflation. This has always been MMT’s point, too. Their disagreement is not with MMT but rather with a proposal to spend without limit—which has never been an MMT proposal.
It is also interesting that Nordhaus agrees with the MMT position that floating the currency increases policy space, while Judd goes on a tear about free lunches (ignoring the fact that employing previously unemployed capacity is indeed a free lunch).
So if the questions had been stated correctly it looks like many of the mainstreamers would have agreed with the MMT position.
As Bill argues, the poll was designed merely to smear MMT, not to actually survey opinions on what MMT actually says. This was recognized even by St. Louis Federal Reserve Bank Vice President Adolfatto, who wrote:
Was any MMT proponent included in the survey? Don’t be ridiculous, of course not (there were a couple from MIT though–perhaps they thought this was close enough). How would a typical MMT proponent have answered these two questions? I am sure that most would have answered in the exact same way as other economists. If this is the case, then why does Chicago Booth preface the survey with MMT? There are many possibilities, none of which are attractive for Chicago Booth.
Digging a little deeper, it is quite interesting that the Booth school credited the assistance of someone named Steve Klenow at Stanford University, who helped provide links to critics of MMT. And credited the London School of Economics for providing expert PR assistance from a Mr Romesh VAITILINGAM, Press and Public Relations – Support, http://cep.lse.ac.uk/_new/staff/person.asp?id=2359.
Wait. They hired a PR assistant? Stanford and LSE? A Northern Atlantic Alliance to attack MMT?
So there is real money in this campaign to discredit MMT? I had wondered why, after 25 years of laboring in the wilderness, suddenly all the knives have come out. Krugman cannot talk about anything else but MMT. Everyone from Summers to Powell, from Henwood to Epstein, has to join ranks to attack a theory created by half a dozen economists?
And they’ve all adopted the Trump tactic of lies, lies, and more lies? A sheer coincidence? Or a carefully coordinated strategy?
Make no mistake about it, as Bernie would say. This isn’t about MMT. And it isn’t, mostly, about Bernie, either. They are after Alexandria Ocasio-Cortez.
Just look at every report in the media on MMT—it will include her name. Google her name and you get MMT. She’s the real danger, not us. She must be stopped. They will spare no expense, use any lie, go to any extreme.
For decades the neoliberals have used the threat of taxes to stop any progressive movement in its tracks. “How you gonna pay for it?” killed every proposal that came from the left.
It is a foregone conclusion that if you link anything that would benefit the public to a tax hike, it will never make it out of committee. The official left uses this tactic as a “go away and leave me alone” strategy: see, we’ve really been working hard for progressive policy but we just can’t get those rich people to line up and tax themselves to pay for it. Selfish bastards. But money grows on rich people and they don’t want to pay for all the goodies we’d like to get to help the poor. So they’ll just have to stay poor a bit longer. Uncle Sam is broke.
But tax cuts for the rich? Oh, sure, why not. Something might trickle down. Campaign contributions, probably. Keep those coming.
AOC has cut through all that. We don’t need their stinking money. We’ve got MMT.
But let’s tax them anyway. They are too rich.
A double whammy against the comfortably privileged. We don’t need you. We’re passing the Green New Deal. We’re saving the environment. Jobs for All. Raising incomes of most people. And reducing yours. We don’t need the rich so we’re taking away your riches. We’ve got Uncle Sam’s purse.
AOC brought the right and the official left together. Make no mistake about it. They’ll spend billions, even hundreds of billions to stop all this “nonsense”, this “garbage”, this “crazy” theory.
Last time around the DNC decided they preferred Trump over Bernie. This time they’re going to put their money on Biden and Beto.
Better Trump than Red remains the DNC strategy.
Old serial loser Uncle Joe with his checkered past and petroleum lubed Beto who cannot stake out a position on Coke vs Pepsi out of fear of offending someone. Trump’s going to chew up and spit out Biden, then use Boy Toy Beto to wipe up the mess on his mouth.
Humanity cannot afford another 4 years of Trump. Nor 4 years of Biden. Delaying the Green New Deal by four more years virtually assures failure to reverse the worst effects of climate change.
The attitude of elites has always been Apres Moi Le Deluge. If they cannot have it all, bring on the deluge.
Make no mistake about it—this is not just a Koch attitude. Even Buffet—who never misses an opportunity to beg for a larger tax liability (knowing it ain’t going to happen, of course)—prefers the deluge and joined the attack on MMT. I mean AOC.
We have to approach this Green New Deal as the real MEOW. (As opposed to Jimmy Carter’s baby kitten meow.) Roosevelt’s New Deal was only a half measure. Even its best innovation—Social Security—is weighed down by the ball and chain of a payroll tax. Much of the rest of the New Deal didn’t even survive for a generation. “Paying for it” was a big part of the problem. Fear of offending the sensibilities of Southern Democrats was another. Opposition of the AMA to universal healthcare was a third.
It was only WWII that freed the government’s budget on the necessary scale. This was justified on the basis that there was no alternative—global subjugation to Nazis, or spending on an unprecedented scale. We chose survival. We learned that “taxes for revenue are obsolete” (as Ruml put it). And we came out of WWII stronger and richer than ever before.
The task ahead of us is bigger. The stakes are bigger. The future of humanity lies in the balance. Half measures will not do. It will take all of our available resources—and then some—to win this battle. The experts (and I’m not one of them) say we’ve got most of the technology we need. We’ve got unused resources to put to use. We can shift others from destructive uses to be engaged in constructive endeavors. We can mobilize the population for greater effort with the promise of greater equality and a shared but sustainable prosperity.
First we have to shake off the neoliberals who’ve been destroying our country and our world for more than two generations. They began in 1974 with the argument that an overspending government caused inflation. Too much regulation and coddling of unions caused unemployment and slow growth. In reality, OPEC caused both of our high inflation periods (early and late 1970s), and the adoption of austerity to fight oil price hikes slowed growth and led to unemployment.
The correct policy then—and now—is conservation and conversion to alternative energy sources. Instead we got then—and now—austerity and ramped-up dependence on climate-killing carbon.
Neoliberals want to continue with the same-old same-old. More austerity. More reliance on markets (carbon trading—that is, using the price system to try to resolve a problem created by the price system). More half measures. More meow.
MMT teaches that we can afford the real MEOW. If we tackle climate change as the moral equivalent of war, and if this really does take us to and beyond full employment of resources, we can adopt measures to counter inflation pressure. No one has a vested interest in high inflation—in spite of what the inflation worriers want you to believe. We can work together—as we did in WWII—to put all our resources into the effort without stoking inflation.
Affordability is not the question. MMT shows how to pay for it. There is some danger of inflation—not because of the manner in which the GND will be financed but because of potential pressure on resources. Knowing that that is the real danger, we can formulate a strategy to prevent it.
I saw in some commentary a plea for a simple statement of the main principles of MMT. Let’s try this.
The great J. Fagg Foster said “Whatever is technologically possible is financially feasible”—a line I’ve often used.
If you think about it, there’s really no other reason to have a financial system. If you know how to build houses but your financial system can’t find a way to make them affordable, then you have to replace it with one that will.
MMT claims that we’ve got all the financial wherewithal we need already in the hands of our sovereign government to afford whatever is technologically possible.
We don’t need to go hat-in-hand to rich folks to get them to pay for it.
We don’t have to beggar our grandkids to pay for it.
We don’t have to borrow from China to pay for it.
We don’t have to get the Fed to “print money” to pay for it.
All we need to do is to remove the self-imposed constraints, the myths, and the misplaced morality.
Then budget for it. Approve the budget. And spend.
No new spending process is required. Follow the normal procedures that the Fed and Treasury have developed.
That’s how you pay for it.
Righteous, right-on rant! I’ve been missing hearing your voice for a while now.
Sometimes a measured academic tone is best. This is not one of those times. It’s time to call out unbridled evil and the folks who sustain it in no uncertain terms.
Those questions are meaningless without reference to resources as noted by Dr. Wray and, very importantly, without reference to a nation’s taxing authority which is the ultimate monetary tool to forestall inflation.
Are too much time and effort being spent in a futile attempt to convince mainstream economists of the clarity of the MMT lens? As others have indicated, doesn’t that endeavor run smack up against the stone wall described in the old line: “It’s difficult to get a man to understand something, when his salary depends upon his not understanding it?” I suggest that proponents of MMT draw strategic wisdom from another old line: “Let the dead bury the dead.” While the idea of speaking to a general audience is anathema to most academics, let’s continue to see MMT economists buck that elitism (or better yet, “f” it) by taking the self-evident axioms of MMT directly to the people via easily-grasped and entertaining vehicles like Stephanie Kelton’s “Angry Birds.” Let these rogue economists focus more and more on giving the masses the ability to understand, on an elemental level, why their governments can afford beneficial and necessary social programs, beginning with the most pressing of all as pointed out by Dr. Wray–the MEOW avoidance of ecocide. “The harvest is plentiful but the laborers are few.”
I am not impressed by the mainstream critiques of MMT as I agree they miss the mark but I think MMT brought it upon themselves for saying stupid stuff like “taxes are destroyed not spent”, “money is always a debt” and the worst, “the government is the monopoly issuer of our money”. I still see MMT as a banker funded effort to keep the lid on and to discredit real monetary reform as presented in the NEED Act. But then I don’t have any state approved credentials for credibility so perhaps read what Dr. Huber has to say about it.
https://www.monetaryalliance.org/modern-money-theory-revisited-still-the-same-false-promise/
Two questions of clarification:
Who is the “official left” to which Wray is referring?
What is “MEOW” an acronym for (or, what is meant by “the real MEOW”)?
“No new spending process is required. Follow the normal procedures that the Fed and Treasury have developed.”
Perhaps someone can help me out on this one. Shouldn’t we be pushing for a new spending process as a natural conclusion of MMT? E.g, allow the Fed to overdraw the TGA.
Second question- can someone explain to me (in accounting terms) exactly what happens when a bank buys a bond from the Treasury on the primary market? I always thought the balance sheet changes were simply:
Private bank – debit to reserves (asset) and credit to treasury securities (asset)
Treasury – credit to TGA (asset) and an increase in securities (liability)
I’m reading through prof Wray’s Modern Money Theory 2nd Edition and he includes a government demand deposit created at the private bank on sale of the Treasury security. Just looking for some clarification here.
Randy, As you often say on the one hand MMT is just about the reality of US government (or other monetary sovereigns) spending. And, on the other most in the MMT camp are progressive and believe that the US is not currently close to full employment and therefore less of an inflation worry than most economists claim. It is this latter point rather than the former that I think needs to be spelled out more explicitly to counteract the anti-GND crazies. Of course, it’s crazy to worry more about inflation than global climate change anyway but given how far the economy is from its potential I think it’s a point that is not emphasized enough. What do you think.
Great comments , all!
I have been arguing for years for an MMT authority to say this. I have been shunned by Steve Grumbine for even mentioning this. Somehow, I feel vindicated.
I think they know already! They just don’t want to admit it, because it’ll shake their little tree.
So this is personal – they see that giving away the control over currency creations and having everyone know about it ruins the shell-game.
As well as having policies based on MMT principles; as well as having spending directed towards the public good, we need to install a system of process visibility which strips away the veil of secrecy that has enveloped all government processes recently.
Normally a “Budget” process lays out the intention for future spending but how many times is it scrutinised after the fact? Like, I do hesitate to say, a P&L.
Let’s see intended and actual government spending up on a public website, maintained in real-time.
It would be much more useful that that ridiculous ‘debt clock”!
Great post Randall, and a big thank you for all you doing 🙂
It’s quite something.
Every week I receive a few (Belgian) ‘where to put your money’ e-mails from which although I have zero ‘investments’ I never unsubscribed, because somehow I found it mildly interesting to see what the Warren Buffett worshiping, government sucks, gold bugs who buy goldmine stock, aluminum options, crypto, silver and such think about the economy. You never know what you might stumble into.
So today the heading of their newsletter was ‘Modern Monetary Madness’ … mm, what would that be about?
Even though it was the usual ‘Zimbabwe Weimar MMT bad’ litany, the fact that some right wing gold bug trader/’investor’ guy in Belgium now casually reads up on (Noah Smith’s Bloomberg distortion of) MMT, having heard about it via Congresswoman AOC and senators Bernie and Warren and other ultra left wing Stalinist extremist threats to Society, might be telling.
It tells you that people who have quite a bit to lose because they are now profiting from our diseased form of Capitalism, start to get slightly worried. When it is your god given right to make money off of artificial money scarcity (created by austerity) among the general public, so that society must pay you interest to borrow your surplus or simply bank created money, it is a very bad thing when some underground group of sensible economists start to explain that the only real scarcity or surplus is in the real wealth of the nation, i.e. its labour, brains, land and resources.
And if it is your god given privilege to employ people from a huge pool of underemployed, unemployed, overexploited workers, you can then maximise your profits. It would be a very bad thing if governments were to realise they could hire any worker who would wish to do so in a JG program, or could afford any spending on education, health or infrastructure that the [insert sovereign currency] could buy, to lift people and communities up from their chronic economic depression and uncertainty.
Remember that those who have most to lose will be the most violent and ruthless when it’s time for them to strike back. They will send others than Krugman or Noah Smith if they can’t get the job done.
So this is just the beginning.
…
Let us also condemn the US and its puppets’ aggression and sanctions against Venezuela and, who knows, send a team of MMT’s greatest to assist President Maduro’s legitimate government in how to operate an economy on its principles. So that among other things, we can get rid of the insane idea that mere “oil reserves” are what funds the wealth of that nation.
MEOW = Moral Equivalent to War I agree with Newton, “Let these rogue economists focus more and more on giving the masses the ability to understand, on an elemental level, why their governments can afford beneficial and necessary social programs, beginning with the most pressing of all as pointed out by Dr. Wray–the MEOW avoidance of ecocide.” Yes, and so why doesn’t MMT form an alliance with the Monetary Reformers and get behind the NEED Act legislation that has the government take the money power back (to actually be the sole originator of money) from the banking system to do exactly that and more?
This is a great post and long overdue. It’s past time for MMT to come out of the orthodox imposed closet and, as another commenter said, speak directly to the people. Stephanie Kelton has been doing her best at that, but more needs to be done. It is the fact that some young progressive Democrats have caught on and begun advocating for MMT policies that so terrifies the establishment parties and the orthodox economists. It’s time for the heterodox cohort to come out in full force, as Randy has done her to support them.
Those of us who read and understand MMT will then do our best to distribute the message to the general reader. We must all become more active if human civilization is to have any hope of surviving the ongoing climate catastrophe.
Well said Professor Wray . Your second last line is the key “Then budget for it. Approve the budget. And spend. No new spending process is required. Follow the normal procedures that the Fed and Treasury have developed.”
Perhaps you could explain that for public consumption in your next post.
From what I understand Professor Kelton is explaining how in this interview – https://www.youtube.com/watch?v=H_il45h3Nmo&fbclid=IwAR0IADTLEZjh8K1ue8jCau3MGX-NS-GpFlCmzqZ2p05id-mFO4SukZZDjLM
At 13:09 The interviewer asks “so if we if the United States prints its own currency why do we have to borrow” The following is the Youtube slightly garbled transcript of Professor Kelton’s answer, “That is such a good question nobody ever asked to that question we saw we don’t have to borrow money we choose to borrow money because the financial industry the middleman in this game likes very much intermediating between the federal government and the rest of the economy in other words they want their cut so the the question is various student if we can if we control our own currency if the US dollar comes from the US government and can’t come from anywhere else why does the government pay interest to borrow its own currency and that’s a question I wish more people would wrestle with because it’s a policy choice we don’t have to do it that way and in fact because we do it that way you know we’re we’re giving a subsidy to bondholders we’re saying to people we’re gonna pay you some interest income for nothing really you know you’re not taking risk there’s no risk of default associated with US government securities with buying Treasuries but we’re gonna give you compensation anyway we’re gonna pay you interest on those securities the government could say you know what no more no more Treasuries we’re not borrowing any more from this point on when we spend we’re just gonna spend into the economy and we’re gonna tax back enough to keep that spending from causing other problems in the economy like an inflation problem but no more this interest income and then lawmakers wouldn’t be so obsessed with this line item in the budget called interest on the debt because they freaked out about this they all see this and the cost of servicing the debt and they say oh my god we’re spending all this money servicing the debt and that money could go to something else and they’re absolutely right”
“I still see MMT as a banker funded effort to keep the lid on and to discredit real monetary reform as presented in the NEED Act.”
Tell us PRECISELY how “bankers” in general, or any particular “banker”, benefit(s) from the spread of MMT.
Well, any publicity is good publicity- even from these woeful waggers I guess. Remember Marx’s adaptation of Dante :Segui il tuo corso, e lascia dir le genti. “Go your own way and let tongues wag [or more literally, ‘let the people talk’]”
To accentuate a positive: Though he may not be completely on board in all respects, why not send this economist – or any other economist asking for one – a desired MMT membership card? 🙂
I invite people to actually look up and study H.R.2990 — 112th Congress (2011-2012), short-titled “National Emergency Employment Defense Act of 2011” (or NEED Act) referenced by Howard Switzer above. You will be surprised (but you ought not be, this is PM/AMI) and not happily. I’d be very interested in who funds Positive Money and the American Money Institute, and so handsomely.
Professor Wray’s comment on Foster was particularly effective conveying the goal of the proper use of money. His terrific tribute to Foster below expands those insights and largely explains that we can pay for the critical needs like a New Green Deal.
https://neweconomicperspectives.org/2014/04/reality-present-challenge-future-fagg-foster-21st-century.html
AMI funded handsomely? That’s a laugh!
Actually not funny, no millionaires backing AMI? Come on!
Let’s fix this rickety old thing we’ve all inherited.
We all want to get on with that spending that was just laid out, right?
You say it makes no difference how it is created and issued or by whom?
We must realize that issuing money as debt is usury
which alone brings negative consequences for society.
Τhe mainstream’s reaction is making me giddy. Be still, my heart.
@Spitzer
Sorry, a quick skim of the linked article reveals many distortions. Not only does MMT not agree that “deficits don’t matter,” MMT accurately calls fiat money “debt.” It’s not like household debt, it’s like bank debt.
Your bank account is your asset, but to the bank, it’s a liability (i.e. debt). Writing a check operationally means assigning a portion of the bank’s debt to your (i.e. your asset, your account) to the payee. Currency is simply checks made out to “cash” in fixed amount. Not just bonds, but currency appears on the books of our central bank (“the Fed”) as a liability, too. In fact it says it’s debt on the dollars. They are “Federal Reserve Notes”…”note” being the legal term for an IOU.
Anyway, this fairly fundamental description of money is one that has repeatedly been distorted in favor of austerity. Until the population gets it, they’ll be in the position of a mob of depositors marching down to the bank to demand it diminish its debt (i.e. make their accounts smaller).
What’s the common name for all the dollar financial assets (including currency) in circulation? One name: The savings of the citizens. Another: National ‘Debt’
Adam – what linked article? Top monetary economists have said there is really very little difference between MMT and the Positive Money and AMI positions. But MMT appears to be ok with the Banks creating money for the public sector. In this link Kelton states that MMT would create money for the public sector. – https://www.youtube.com/watch?v=H_il45h3Nmo&fbclid=IwAR0IADTLEZjh8K1ue8jCau3MGX-NS-GpFlCmzqZ2p05id-mFO4SukZZDjLM
At 13:09 The interviewer asks “so if we if the United States prints its own currency why do we have to borrow” The following is the Youtube slightly garbled transcript of Professor Kelton’s answer, “That is such a good question nobody ever asked to that question we saw we don’t have to borrow money we choose to borrow money because the financial industry the middleman in this game likes very much intermediating between the federal government and the rest of the economy in other words they want their cut so the the question is various student if we can if we control our own currency if the US dollar comes from the US government and can’t come from anywhere else why does the government pay interest to borrow its own currency and that’s a question I wish more people would wrestle with because it’s a policy choice we don’t have to do it that way and in fact because we do it that way you know we’re we’re giving a subsidy to bondholders we’re saying to people we’re gonna pay you some interest income for nothing really you know you’re not taking risk there’s no risk of default associated with US government securities with buying Treasuries but we’re gonna give you compensation anyway we’re gonna pay you interest on those securities the government could say you know what no more no more Treasuries we’re not borrowing any more from this point on when we spend we’re just gonna spend into the economy and we’re gonna tax back enough to keep that spending from causing other problems in the economy like an inflation problem but no more this interest income and then lawmakers wouldn’t be so obsessed with this line item in the budget called interest on the debt because they freaked out about this they all see this and the cost of servicing the debt and they say oh my god we’re spending all this money servicing the debt and that money could go to something else and they’re absolutely right”
Your issue is not with “debt” as the formal description of what money actually always is, it is with the idea of paying interest on the debt, i.e. you have a problem with the Treasury, or the central bank, or the Treasury but indirectly i.e. via the central bank, buying reserves from the banks in exchange for treasuries, bonds, bills etc. or its equivalent procedure world wide. Thus subsidising the rich and having “the taxpayers” pay for that subsidy (which they don’t, literally, but they still do, by seeing the inequality gap ever increase).
But as Mr Wray has stated on many occasions, it is a political choice, not an MMT policy recommendation at all, to subsidise the banks and other financiers and institutions such as pension funds, by paying them interest on what is essentially risk free debt (government bonds are risk free under a sovereign currency regime, unlike Euroland). It is also a position held by many in MMT that the natural rate of interest is zero. So ‘usury’ is not the natural outcome.
The idea, for instance, of paying for workers’ pensions by having them invest in pension funds who then buy gov’t bonds which then yield interest so that people can have something to spend when they’re old, is merely a fancy, semi-privatised way for the government to finance people’s pensions. It wouldn’t matter one bit if instead, the government would just give the money to the pensioners instead of paying the nation’s ‘creditors’. But there is less money to be made on Wall Street and in the City, because it is much more fun to seduce pension funds, preferably the gullible ones, to buy magical instruments such as CDOs etc., while shorting those very same CDOs of course (hence the above-mentioned fun). It is profitable too.
That is what MMT is about: to expose the phony idea that we need the rich and their money to ‘fund’ the nation’s spending. It is a destructive idea that MMT threatens to dismantle, and that’s why Wall Street and its minions are out to destroy MMT.
Again paraphrasing Mr Wray:
We don’t *need* your money plutocrats, but we need to tax you and take your money anyway because you’ve got way too much of it, so much so that your wealth and the influence and power it buys destroy the Republic while ever expanding the Empire.
I appreciate that professor Wray’s heart is in the right place, but…it’s, essentially, utopian to think that MMT will ever be assimilated into the present US state. The present state is one that Mussolini would have been proud of – a highly predatory and corporate one which serves an elite minority. MMT policies would produce effects which are contradictory to a corporate state: jobs would give workers dignity, and education, a double-edged sword, would give them fodder to refute neo-liberal dogma and maybe inspire them to become independent of the corporate class, rather than having to constantly beg them for a few more crumbs.
We face a problem of our own creation. The strength of trade unionism in protecting and enhancing the dignity and independence of our class, has led to the necessity for the ruling class to destroy that dignity, independence and thought since those oppose the exploitation by which capitalism survives. Industry is where the working class had the highest concentration of organization. The dignity and independence that organization promoted had to be destroyed, and was destroyed, by destroying industry. For us, the inability to understand the necessity of building socialism has meant that capitalism has been permitted to remain in being, has indeed been driven to its extremities, along with a predatory, corporate state, in seeking to wipe out the spirit of our class.
Our class’s history is one of struggle, never making peace with capitalism yet never accepting the necessity of overthrowing it. A policy of survival within capitalism which gave birth to its’ ideology – social democracy. In our struggle we must understand the peculiar wisdom and present uselessness of such a course. Today, when to accept the constraints of capitalism is to accept defeat, social democracy has been transformed from an ideology of survival to one of destruction. It should be totally discarded. In seeking to turn aside from the burden of overthrowing capitalism, what we do above all is to seek to ignore the political kernel of events, that central core of class against class.
MMT could only make sense with a socialist state and makes no sense with what we presently endure. The policies that MMT promote make sense if the state were a public state, run by an independent civil service and accountable to the electorate. Instead, we continue to endure a state with historic levels of criminal activity: financial fraud, illegal invasions into other countries, renditions, and torture.
Thank you, Randy. 11 years ago, your ideas were ignored. So outrageous were they, ie the government does not work for the people, that you were easily dismissed as in the minority. Of course the government can print money, but we all know it shouldn’t…
No longer, mate. You know it and it’s time to be brutal with them as the gloves are off. The bastards are going to shorten my life and those of my children. There are many of us out here, standing next to you