Category Archives: L. Randall Wray

MMT Does Do Policy

By L. Randall Wray

I’ve seen some pretty bizarre claims about MMTers. They are “tea partiers”, “barely left of center”, who “are not interested in policy”, who “ignore inequality”, who “are only interested in reducing taxes”. “MMTers ignore the fraud of the banksters.” They are at best “one issue” advocates for a particular view on money, taxes, and employment. I have no idea where critics get this stuff. I’m convinced they make it up. Ignorance or dishonesty; probably both.

For anyone who wants to disabuse herself of such nonsense, please go to www.levy.org, click on scholars, click on my name, and find right in front of your face a few hundred pieces on policy that I wrote. Yes, inequality. Yes, the explosion of incarceration. Yes, the War on Poverty’s failure. And so on. Stephanie Kelton just reminded me of an interview I gave in December to Travis Strawn–who happens to be a former student. He was writing for the Seven Pillars Institute (full disclosure: I’m not sure what it is). Judge for yourself if this is garden-variety “liberal”, let alone “tea party”.
Continue reading

The Reality of the Present and the Challenge of the Future: Fagg Foster for the 21st Century

By L. Randall Wray

Here is a presentation that I’ll give today at the University of Denver at the annual J. Fagg Foster honors ceremony. Most of you will not know of Foster, but you should. While he did not publish much, he was the professor of a number of prominent institutionalists who attended DU in the early postwar period. I was lucky to have studied with his student, Marc Tool, and was introduced to Foster’s work at the very beginning of my studies of economics. My presentation below is based on two of Foster’s articles: J. Fagg Foster (1981) “Understandings and Misunderstandings of Keynesian Economics”, JEI, vol XV, No 4, p. 949-957.; and (1981) “The Reality of the Present and the Challenge of the Future”, JEI vol XV, No 4, p. 963-968. Both are from 1966, republished in a special issue of the Journal of Economic Issues, 1981. You should read them.


Is this the age of Keynes? That’s the question raised by Fagg Foster in 1966.

In the 1960s the answer seemed obvious. Keynes dominated economics—or, at least, macroeconomics—and Keynesianism dominated policy. And it worked! Or, so most thought.

Foster wasn’t sure. While he agreed that “[t]here probably has been no instance in history in which a pattern of ideas has had so much effect on the everyday life of everyone in so short a time”, he thought most of Keynes’s followers misunderstood his theory.

Continue reading

MODERN MONEY IN SIX SHORT VIDEOS

By L. Randall Wray

I recently did an interview for Euro Truffa on six topics related to Modern Money – MMT.

They are transcribing my interview to Italian and putting up the videos (I think that only two are up so far). However, they have also posted all of the videos to YouTube.

As you can tell, I did not realize they were recording the video—I might have tried to sit still if I had known. Also, the coffee had not quite kicked in so I was not entirely awake. Here are the links with just a brief indication of the topic for each.

Continue reading

NEP’s Randy Wray appears on Euro Truffa

Euro Truffa (eurotruffa.it) interviews Randy Wray about MMT in this video from March 13, 2014. After the Introduction which is presented in Italian, the questions are presented in English with Italian subtitles.

When Will They Ever Learn: Uncle Sam is not Robin Hood

By L. Randall Wray

Memo to Obama: Don’t tie progressive spending policy to progressive tax policy. Each can stand on its own.

Reported today in the Washington Post:

Obama proposes $600 billion in new spending to boost economy

President Obama on Tuesday unveiled an ambitious budget that promised more than $600 billion in fresh spending to boost economic growth over the next decade while also pledging to solve the nation’s borrowing problem by raising taxes on the wealthy, passing an overhaul of immigration laws and cutting health costs without compromising the quality of care. Obama seeks to raise more than $1 trillion – largely by limiting tax breaks that benefit the wealthy — to spend on building roads and bridges, early childhood education and tax credits for the poor.

Here’s the conceit: Uncle Sam is broke. He’s got a borrowing problem. He’s gone hat-in-hand to those who’s got, trying to borrow a few dimes off them. But they are ready to foreclose on his Whitehouse.

Continue reading

MMT AND EXTERNAL CONSTRAINTS

By L. Randall Wray

To Fix or To Float, that is the question.

MMT argues that a sovereign government that issues its own “nonconvertible” currency cannot become insolvent in terms of its own currency. It cannot be forced into involuntary default on its obligations denominated in its own currency. It can “afford” to buy anything for sale that is priced in its own currency. It might be able to buy things for sale in foreign currency by offering up its own currency in exchange—but that is not certain.

If, instead, it promises to convert its currency at a fixed price to something else (gold, foreign currency) then it might not be able to keep that promise. Insolvency and involuntary default become possible.

Continue reading

JOBS FOR ALL: THE MISSING BUT ESSENTIAL ELEMENT OF DR. KING’S MARCH ON WASHINGTON

By L. Randall Wray

“It was obdurate government callousness to misery that first stoked the flames of rage and frustration. With unemployment a scourge in Negro ghettoes, the government still tinkers with half-hearted measures, refuses still to become an employer of last resort. It asks the business community to solve the problems as though its past failures qualified it for success.” –Rev. Dr. Martin Luther King, Jr., in his last letter requesting support for the “March on Washington for Jobs and Freedom”

In recent days, the Job Guarantee has been thrust into public discussion, thanks in large part to Jesse Myerson’s Rolling Stone article—see here.

Continue reading

GROWING RECOGNITION OF THE NEED FOR THE JOB GUARANTEE

By L. Randall Wray

In recent weeks the Job Guarantee proposal has gained supporters, and the arguments for an increased government role in ensuring full employment have become stronger. (See herehere, and here.)

In this piece, I examine why. Bear with me because I will tie together four threads. First, we have the return of the stagnation thesis; Second there’s growing evidence that the US labor market is not recovering, and many are arguing that this is the “new normal”; Third, the Fed has (re)discovered what many of us have known all along: low interest rate policy does not stimulate investment; and Fourth, our “thought leaders” are finally discovering that Americans want government to do something about involuntary unemployment. All of these threads strengthen the case for the Job Guarantee.

Continue reading

The Greatest Myth Propagated About The FED: Central Bank Independence (Part 3)

By L. Randall Wray

Coda: Is the Fed Independent of Influence?

In my two part series (here and here), I examined conventional views of (mostly) economists on the Fed’s supposed independence. What they focus on is the Fed’s independence from our elected representatives and as well on operational independence of the Treasury. The reason why they believe this is important is because the Fed is supposed to protect us—we can identify us as “money users”—from the danger that the “government” (Congress and Treasury), our “money issuers”, might conspire to degrade our currency by having the Fed “print money” to finance a profligate government. These “Weimar Worriers” are just certain that if a cabal of central bank, treasury and congress had their way, we’d be off and running to hyperinflation. Hence, thank god that our central bank is independent! Any meddling by Congress (or the Treasury) in the affairs of monetary policy making would be the final death knell for our Dollar.

Continue reading

The Greatest Myth Propagated About The FED: Central Bank Independence (Part 2)

By L. Randall Wray

Last time we took a historical perspective on supposed Fed independence. In this blog we look at the myth of Fed independence from its creator, the Congress and from the Treasury.

Independent from Congress: Discretion in Selecting Tools

The strongest case for Fed independence would be in its discretion to choose the tools and targets to pursue Congressional mandates. Congress has shown little interest in interfering with the details of monetary policy implementation, preferring only to mandate the ultimate goals. The period from 1979 to the mid 1980s was an exception as Congress had become enamored with Milton Friedman’s monetarist focus on growth of the money supply. Even after the Fed had dropped money growth targets from serious consideration, Congress still wanted the Fed to provide them. However, for the most part, Congress leaves these details to the Fed.

Continue reading