Author Archives: L. Randall Wray

An MMT View of the Twin Deficits Debate

Invited Presentation by L. Randall Wray at the UBS European Conference, London, Tuesday 13 November 2018

Q: These questions about deficits are usually cast as problems to be solved. You come from a different way of framing the issue, often referred to as MMT, which—at the risk of oversimplifying—says that we worry far too much about debt issuance. Can you help us understand where fears may be misplaced?

Wray: First let me say that I think the twin deficits argument is based on flawed logic.

It runs something like this: the government decides to spend too much, causing a budget deficit that competes with private borrowers, driving interest rates up. That appreciates the currency and causes a trade deficit.

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MODERN MONEY THEORY: How I came to MMT and what I include in MMT

My remarks for the 2018 MMT Conference September 28-30, NYC

L. RANDALL WRAY

I was asked to give a short presentation at the MMT conference. What follows is the text version of my remarks, some of which I had to skip over in the interests of time. Many readers might want to skip to the bullet points near the end, which summarize what I include in MMT.

I’d also like to quickly respond to some comments that were made at the very last session of the conference—having to do with “approachability” of the “original” creators of MMT. Like Bill Mitchell, I am uncomfortable with any discussion of “rockstars” or “heroes”. I find this quite embarrassing. As Bill said, we’re just doing our job. We are happy (or, more accurately pleasantly surprised) that so many people have found our work interesting and useful. I’m happy (even if uncomfortable) to sign books and to answer questions at such events. I don’t mind emailed questions, however please understand that I receive hundreds of emails every day, and the vast majority of the questions I get have been answered hundreds, thousands, even tens of thousands of times by the developers of MMT. A quick reading of my Primer or search of NEP (and Bill’s blog and Warren’s blogs) will reveal answers to most questions. So please do some homework first. I receive a lot of “questions” that are really just a thinly disguised pretense to argue with MMT—I don’t have much patience with those. Almost every day I also receive a 2000+ word email laying out the writer’s original thesis on how the economy works and asking me to defend MMT against that alternative vision. I am not going to engage in a debate via email. If you have an alternative, gather together a small group and work for 25 years to produce scholarly articles, popular blogs, and media attention—as we have done for MMT—and then I’ll pay attention. That said, here you go: [email protected].

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MINSKY AND MODERN MONEY THEORY: Was Minsky a “forefather”?

By L. Randall Wray

A few weeks ago, a video of a lecture that Hyman Minsky gave at Westminster College on Oct 30, 1991 was made available. Although the Levy Institute has some audio of Minsky, this is the only video I know of. The audio of this one is not great, but you will get some flavor of his style. In truth, it was always a bit hard to follow his presentations as he had a tendency to lower his voice and mumble near the end of sentences as his mind raced ahead to the next point. He usually did not script his talks (he walked into many of his university lectures with nothing more than a copy of the Wall Street Journal), but he would read some brief sections of papers—while riffing the rest–and it appears that this is what he was doing that evening.

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WHY ARE WE GATHERED HERE? Remarks Made at the 13th International Post Keynesian Conference

L. Randall Wray

The following text reproduces my notes for my talk on the final night of the conference; I think there is a video of the entire panel that will be posted up on the conference site later

This conference is dedicated to the memory of Landon Rowland, a local Renaissance man. You have heard both Robert Skidelsky and Chancellor Leo Morton speak of his accomplishments.

Over the years, Landon regularly invited Bill Black and me to lunch to discuss our view of the state of the world. We’d meet at a local restaurant where all the wait-staff knew Mr. Rowland by name, and knew where he wanted to sit and what he liked to eat.

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TRUMPBUSTERS: WHO YOU GONNA CALL?

Randall Wray, Bard College

For months now, the Hillary campaign has vigorously argued that Bernie supporters have to fall in line to support the Democratic National Committee’s favorite candidate. Anyone not willing to jump to Hillary is a “Bernie Bro”—not willing to vote for anyone but Bernie. Why? Because, Trump. Forget the will of the people, the democratic process, or “voting one’s conscience”—Trump trumps all hesitation. We simply cannot afford to give Trump any chance of winning.

We need a Trumpbuster. Who you gonna call?

Hillary Clinton or Jill Stein?

Before reading any further, please first watch (or read) this debate between Bob Reich and Chris Hedges:

Who Should Bernie Voters Support Now?  Democracy Now! 27 July 16

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Progressives Don’t Let Friends Vote Neocon

By L. Randall Wray

The drumbeat is quickening as Hillary’s surrogates insist that Bernie’s supporters fall in line. Bernie’s chances are said to be hopeless. Continuing to run only plays into the hands of truly despicable Republicans.

And forget about trying to pressure the Democratic Party’s establishment to let Bernie play a role in formulating the convention’s platform. That also would just play into the hands of the Republicans.

Time to unite behind Hillary, and let her move further to the right. No more talk of revolution, of trillions of dollars of new spending, of significant increases to the minimum wage. Let’s talk about Hillary’s issues: regime change abroad, downsizing dreams at home, and protecting Wall Street from the pitchforks.

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CAN BERNIE DO IT? The View of a Non-Establishment Economist

By L. Randall Wray

Bernie Sanders has an ambitious agenda. Too ambitious, insist his critics (including, especially, surrogates of Hillary Clinton). He would break up the big banks, reverse the redistribution of income and wealth to the top (that accelerated under the triple whammy of the Bush-Clinton-Bush administrations), restore and improve our nation’s infrastructure, and provide employment and better wages at the bottom. The critics proclaim that his programs cannot “pay for themselves”.

Using conventional macro models, Professor Gerald Friedman at UMass showed that they would. He was then attacked for using the conventional models that all conventional economists use. Apparently, these models are fine when they support austerity, but are out-of-bounds for use when they support progressive policy. Adam Davidson (of NPR’s “Planet Money”) has noted that in spite of the empirical results, even Friedman admits that perhaps only 4% of economists believe that Bernie’s programs can pay for themselves.

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DEBT-FREE MONEY PART 4: AMERICAN COLONIAL CURRENCY

By L. Randall Wray

In Part Three I argued that the government issues currency as its liability and imposes tax liabilities on its subjects/citizens that can be paid in that currency. When taxes are paid, both the government and its taxpayers are “redeemed”. I cited Innes’s argument that the universal law of credit is that the issuer of a debt must take it back. This is the fundamental notion behind redemption of debts.

To be sure, debt is much older than money. No human has ever escaped debt. At birth, you are indebted to your parents, your kin, and your gods. You spend your lifetime incurring new debts and repaying old debts and accumulating credits that are the debts of others. If you earn enough credits, you join the Redeemer and make it to the Promised Land after death; if you don’t you join Satan—the original tax collector–in hell.

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THE VALUE OF REDEMPTION: DEBT-FREE MONEY PART 3

Sorry that it has taken me a while to get back to my multi-part series on debt-free money. This is the third part of the current series, although I had previously written several other blogs on the related topics of debt-free money, positive money, and 100% money. See links at the bottom.

This post will focus on the concept of “redemption” as the most fundamental requirement of indebtedness. This seems to confuse readers. For example, Eric Lonergan calls this a “fantastic linguistic contortion”, a “pure semantic confusion”, a “hidden definition slipped in between dashes”.

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DEBT-FREE MONEY AND BANANA REPUBLICS, PART TWO

By L. Randall Wray

My previous blog sparked a lot of discussion, especially over at Naked Capitalism. I do pity Yves Smith! There’s enough nonsense in the commentary to populate a large nation.

As I have argued, it is very hard to figure out what the debt-free money folks want as they are confused on the accounting, vague on the terminology, and rarely provide details on their proposal. However, a reader has directed me to a fine published article that has mostly got the accounting right, lays out a detailed proposal, and contrasts the proposal against alternatives.

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