Tag Archives: MMT

Krugman Gives DeGrauwe 2011 Credit for What MMT Has Argued for 15+ Years

By Scott Fullwiler

In the comments section of my last post, Neil Wilson linked to this piece by Paul Krugman from last fall.  It’s a useful lecture in that it shows mainstream economists are beginning to understand that currency issuers under flexible exchange rates (a term he actually uses) are not generally subject to bond vigilantes, a condition that applies only to nations without their own currencies, debt in other currencies, and/or fixed exchange rates.

In the paper, as he’s done before, he cites DeGrauwe 2011 as the “seminal” paper demonstrating that Eurozone nations are subject to bond vigilantes while others like the US, Japan, and the UK would not be.  I’ve got nothing against DeGrauwe 2011 aside from his own failure to cite heterodox literature that preceded him by decades in some cases.  Ok, so I do have something against it, but not in terms of content (though I haven’t read closely so perhaps I’d find something).  And in fairness Krugman’s suggestion that DeGrauwe 2011 is “seminal” could be due to the fact that the latter provides a model (though the Kelton/Henry paper I cite below does, too; though it’s quite different, it would not be difficult to build on in the direction DeGrauwe 2011 moves)—and we all know that neoclassicals have difficulties discussing anything outside the context of a formal model (not that models aren’t extremely useful for many things, but they should not be the tail that wags the dog, and for neoclassicals they are essentially that).

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National Retirement Infrastructure – Part 3

By J.D. Alt

1. Why we can afford it—2. Why we need it—3. How we can build it

3. How we can build it.

Cohousing, as briefly explained in Part 1, offers a uniquely supportive context for retired living. Cohousing communities consist of between 10 and 30 privately occupied and maintained dwelling units which share certain common facilities, amenities and, in some cases, social responsibilities and activities. It is this “commons” sharing that can potentially provide a retired person with benefits they otherwise could not afford to have, or have easily. For example, the shared facility might include an apartment for a live-in nurse-assistant/care giver who would provide assistance, in each of the private dwellings, as needed. Or, the “commons” might include a small exercise pool that individual retirees can utilize for a daily work-out. “Traditional” cohousing projects typically include a common cooking and dining facility where at least one meal a week is a shared community event—(individual dwellings have their own small kitchens as well.) In general, the goal is to create a comfortable balance between private autonomy and community activities.

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National Retirement Infrastructure – Part 2

By J.D. Alt

1. Why we can afford it—2. Why we need it—3. How we can build it

2. Why we need it.

What is retirement anyway? For most people it seems to be the end of that middle period of their lives where some business, or institution, or civic entity has paid them Dollars in exchange for their labor or personal services. This “Dollar-earning-in-exchange-for-work” period can end at various points in a life-span, for various reasons planned or unplanned: Some of us become disabled by health catastrophes in our 40s or 50s, some find the particular skill we learned or developed over the years is suddenly no longer in demand (and it’s much too late to start over again). Many people are forced to stop providing their labor or services at a certain age by retirement rules designed to create employment openings for the younger generation coming along behind. While a few are fortunate enough to continue earning Dollars in exchange for their services right up until the very end—entertainers, writers, highly specialized professionals come to mind—the vast majority of U.S. citizens all share the same basic fate: at some point in time, with many years or even decades remaining in our life-span, we will cease earning Dollars in exchange for our labor or services.

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National Retirement Infrastructure

By J.D. Alt

1. Why we can afford it—2. Why we need it—3. How we can build it

1. Why we can afford it

We, who face mass retirement at the same moment our life-expectancy has been stretched far beyond the retirement savings we managed to set aside during our working years—and anticipating that future generations will face equal, or even more difficult retirement circumstances—we offer to provide the initiating, planning and management efforts required to build, for our collective use, a permanent “National Retirement Infrastructure.” This infrastructure will provide us with housing and social accommodations over the next several decades and, subsequently, be passed on to the next generations inevitably to follow.

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DEBT-FREE MONEY: A NON-SEQUITUR IN SEARCH OF A POLICY

By L. Randall Wray

While we are on the topic of monetary cranks, I thought it might be useful to quickly address a cranky idea that often comes up in comments to my blogs and also during Q&A after presentations: so-called “debt-free money”.

The first time I heard it, my immediate reaction was “Say what?”, and the second was puzzlement at the non-sequitur.

I am not sure exactly which of the crank approaches explicitly adopt the notion, but it seems common to a lot of them. I’m not going to address any particular approach but instead will address only the idea that we can have a “money” that is not a “debt”.

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More on Consolidating or Not

By Scott Fullwiler

As Randy’s recent post on consolidating vs. not explained, a number of critics argue that consolidation doesn’t “really” happen.  Of course, that’s not the point MMT is making, as we’ve noted numerous times, including Randy’s post. Regardless, though, there are real-world governments that do publish consolidated reports.

The UK posted its report here

Neil Wilson has reviewed it for those that don’t want to read through the whole thing here.

Hat tips both to Neil Wilson and Economonitor commenter acornus

To Consolidate or Not To Consolidate, that is the Question (or maybe it isn’t)

By L. Randall Wray

This is another short post on MMT, a sort of follow-up to my post from a couple of days ago. There was an interesting response to various comments on my piece, which was posted up on Mike Norman’s website.

We got the typical: “oh you MMTers always want to consolidate the Fed and Treasury, but really the Fed is a private institution that is not a part of government”, and “in reality the Treasury cannot spend unless the Fed will allow it to spend, otherwise it must get tax revenue before it can spend”, and hence “really government spending is constrained by its revenue, just like a household or firm”.

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Keeping It Real: Law, Coercion, & The Frontiers of Public Finance

By Raúl Carrillo

“Where does money come from?” That’s our question. That’s the trump card Deficit Owls play to explain why the case for austerity is shallow and sadomasochistic, now and forever. When one spreads the true answer—that the Federal Reserve creates dollars with keystrokes, that the U.S. government, unlike like a state or a household, can’t possibly “go broke”, that Uncle Sam has to worry about inflation but doesn’t need to tax or borrow to spend—policy creativity explodes. The false choices of public finance are illuminated. We can decrease taxes AND increase expenditures. We can achieve full employment AND price stability at the same time. Once we align conversation with operational reality, and recognize that we can’t collectively run out of money, we can have an honest—if always antagonistic—conversation about what institutions should do to create, administer, and regulate stocks and flows of resources.

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MODERN MONEY THEORY: THE BASICS

By L. Randall Wray

*I’ll return to my series on the role of taxes in MMT later this week. Meanwhile, here’s a short post on MMT.

Modern Money Theory (MMT) seems to confuse two groups of otherwise sympathetic economists. First there are those like Paul Krugman who are generally of the Keynesian persuasion and who like MMT’s “deficit owl” approach. I think Krugman would really like to stop worrying about the deficit so that he could advocate an “as much as it takes” approach to government spending. The problem is that he just cannot quite get a handle on the monetary operations that are required. Won’t government run out? What, is government going to create money “out of thin air”? Where will all the money come from?

He really doesn’t understand that “money” is key stroke records of debits and credits. He still thinks banks take in deposits and then lend them out. He starts to tear his hair out whenever someone tries to correct him on this. He’s wedded to the deposit multiplier idea he got from his Econ 101 textbook.
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Tax Bads, Not Goods

By L. Randall Wray

This is another instalment in the series on the MMT view of taxes. I’m back from China, participating in the annual Hyman P. Minsky Summer Seminar at the Levy Economics Institute. Yesterday my colleague, Mat Forstater, gave a talk on the job guarantee and “green jobs”. Along the way he made two particularly insightful comments on MMT and taxes that I’ll use to introduce this instalment.

First, he discussed the MMT view of “modern money”—that is to say, the money that has existed “for the past 4000 years, at least, as Keynes put it in his Treatise on Money. The money of account is chosen by the sovereign and used to denominate debts, prices, and other nominal values. It is the Dollar in the US.

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