Category Archives: Eric Tymoigne

FUNDAMENTALS: Monetary Policy, Interet-Rate Targeting and the Corridor

The latest in a series of class project videos from Eric Tymoigne’s upper division Modern Money Theory class at Lewis and Clark College. Over the next several days, we will be posting  select videos created by his most recent class. Eric has created a YouTube channel to be the home of MMT videos created by L&C students. You can check it out here.

FUNDAMENTALS: Monetary Instruments, Principles and Logic of Acceptance

The latest in a series of class project videos from Eric Tymoigne’s upper division Modern Money Theory class at Lewis and Clark College. Over the next several days, we will be posting  select videos created by his most recent class. Eric has created a YouTube channel to be the home of MMT videos created by L&C students. You can check it out here.

Fundamentals: Automatic Stabilizers and “Clinton’s Surplus”

The latest in a series of class project videos from Eric Tymoigne’s upper division Modern Money Theory class at Lewis and Clark College. Over the next several days, we will be posting  select videos created by his most recent class. Eric has created a YouTube channel to be the home of MMT videos created by L&C students. You can check it out here.

US Treasuries auction: method and implications

The latest in a series of class project videos from Eric Tymoigne’s upper division Modern Money Theory class at Lewis and Clark College. Over the next several days, we will be posting  select videos created by his most recent class. Eric has created a YouTube channel to be the home of MMT videos created by L&C students. You can check it out here.

Penny Hoarders: A Contemporary Example of a Problem with a Gold/Silver Standard

By Eric Tymoigne

Yesterday National Public Radio ran a segment on penny hoarders. These are people whose hobby is to hoard pre-1982 pennies. Some even go to their local banks and ask to convert dollar bills into pennies and then spend their evenings triaging boxes of pennies. Why would they do that would you ask? Well, pre-1982 pennies are made mostly of copper and, given the price of a pound of copper tripled over the past ten years, the face value of a penny is half the value of the content of copper: face value is 1 cent, intrinsic value is 2 cents. 100% profit from selling pennies for their copper content!

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Bitcoin System: Some Additional Problems

By Eric Tymoigne

In my last post, I argued that the fair price of a bitcoin as a monetary instrument is zero BTC; a bitcoin contains no promise in terms of income, in terms of convertibility, in terms of maturity, or any other. As a commodity, I have no idea what its fair price is. BOA says it is $1300. I will let those who find utility in the bitcoin payment system and speculators decide how much they are willing to pay in USD for a number credited on their screen in BTC. All I can tell you is: “money does not grow on trees.” Money is not a natural occurrence, it is a man-made financial devise. It looks like the bitcoin creator’s views on money were shaped by the old and erroneous idea that “gold is money.” Gold was at best a collateral embedded in a monetary instrument (gold coin), the metal itself was never money. In today’s blog, I will focus on three other issues with the bitcoin system that prevent it to work well as a monetary system. While I explain what ought to happen to make the bitcoins work properly as a monetary instrument, I am not sure it can be done.

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MMT 101: A Response to Critics Part 6

Policy Aspects of MMT

By Eric Tymoigne and L. Randall Wray

[Part I] [Part II] [Part III] [Part IV] [Part V] [Part VI]

From the theoretical framework discussed in the 5 previous installments, MMT draws specific policy conclusions about fiscal, monetary and financial policy. In this final post we address the policy implications.

In line with Keynes and Minsky, MMT recognizes that unemployment, arbitrary distribution of income, price instability and financial instability are central problems of market economies that require some government involvement for resolution. 

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MMT 101: A Response to the Critics Part 5

Adding the Foreign Sector

By Eric Tymoigne and L. Randall Wray

(Revised Figure 8 on 12/6/13)

[Part I] [Part II] [Part III] [Part IV] [Part V] [Part VI]

Paul Davidson has recently written:

What is Bitcoin?  According to Modern Money Theory, bitcoin can not be money since it is not accepted in payment of taxes by any government — nor is it issued by any government via the governed purchase of goods and/or services from the private sector.  So what is bitcoin in terms of MMT?  I do not know what MMT  proponents would respond to this query?

Similarly, Tom Palley argues that government currency is demanded for reasons other than paying taxes and that foreigners who may want to hold the domestic (foreign to them) currency do not pay taxes to the domestic government. In addition, he says, in some countries the domestic private sector does not want to use the domestic government currency in many, or even most, economic transactions even though the government is imposing a tax; thus taxes do not drive currency. 

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MMT 101: A Response to the Critics Part 4

Adding the Central Bank

By Eric Tymoigne and L. Randall Wray

[Part I] [Part II] [Part III] [Part IV] [Part V] [Part VI]

Beyond the inflationary aspect of MMT, Palley (2013) argues that MMT does not account for the flooding of reserves in the economic system that results from a monetary financing of government spending. In this case, a deficit leads to a decline in interest rates and potential financial instability.

Fiebiger (2012a, 2013) argues that Treasury operations do not lead to a change in the level of central bank liabilities and so there is no monetary creation, and that it is disingenuous to exclude the Treasury General Account at the Fed (TGA) from the money supply. He also wonders why the Treasury continues to issues bonds when the fed funds rate (FFR) is effectively zero today, if, following MMT, bond offerings are voluntary operations used to drain excess reserves.

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MMT 101: Response to the Critics Part 3

Adding the domestic private sector

By Eric Tymoigne and L. Randall Wray

[Part I] [Part II] [Part III] [Part IV] [Part V] [Part VI]

In the previous installment, we focused mostly on the government side of the circuit. In this piece, we study the interaction between the government and nongovernment sectors while retaining the consolidation hypothesis.

For the purposes of the analysis, we will think of the nongovernment sector as equivalent to the domestic private sector, however, the analysis could just as well include state and local (nonsovereign) levels of government as well as the foreign sector in the nongovernment sector.

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