Tag Archives: Modern Monetary Theory

Millennial Agenda― (and how to pay for it!)

By J.D. ALT

What follows is a to-do list for the next political power generation―the Millennials in whose hands the operation of America will begin soon, thankfully, to be grasped. The Boomer and GenX generations have succeeded in guiding America to the brink of social chaos and environmental disaster. Thankfully, the Millennials actually have the critical tool necessary to build anew what the 1% power-structures of the Boomer/GenXers have so greedily destroyed. All that is required is for the Millennials to step into their political power, grasp the tool, and begin the work.

The Millennial Agenda, as I think of it, encompasses a broad scope of specific, concrete, public and collective goods and services. Underlying each of the specific agenda items is the same essential proposition―the “tool” I just made reference to. This tool is already in place and operational, though it has been willfully misunderstood, misused and gummed up by the Boomer and GenX logic of economic power. The tool is “sovereign fiat-money.” And the proposition which will underpin each of the Millennial Agenda items is this: public and collective goods in America are to be purchased from American businesses and citizens with sovereign fiat-money―rather than U.S. tax dollars.

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Monetary Mental Illness

By J.D. ALT

It is literally painful to watch our political leaders’ efforts to rethink and restructure how we are going levy taxes on ourselves as a collective society. It is like watching a family member struggling with mental illness: the demons being wrestled with are imaginary—yet they have the palpable force somehow of a granite wall. And as the struggle with this palpable monolith unfolds, even we—the clear observers of reality—forget that it is imaginary; when we do remember, the pain becomes excruciating for the simple reason that we know it is completely unnecessary.

Why does our political system choose to believe and struggle with the imaginary constraint that taxes must pay for sovereign spending? How can we explain to ourselves, in the face of this rock-solid demon, that the simple logic of fiat money demonstrates that sovereign spending must occur first, with taxes collected after? How can we reassure our terrified and confused representatives in congress that if our sovereign government collects back fewer dollars than it issues and spends, the difference is not our collective “debt”—it is, in fact, our collective savings? But the demon will not allow us these explanations.

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Wouldn’t it be great if America had a fiat-money system?

By J.D. ALT

Think of how many of our seemingly intractable local and national problems could be solved if only America had its own sovereign fiat-money system! Unfortunately, most Americans can’t even think about that question because they’ve never heard a proper explanation of what “fiat-money” actually is. Here, then, is quick solution to that problem:

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Hy Minsky, Low Finance: Modern Money, Civil Rights, and Consumer Debt

By Raúl Carrillo

I delivered the remarks published below at the First International Conference on MMT on September 22nd, 2017. The panel, entitled “Modern Money, Courts, and Civil Rights — Against Legal Predation”, explored the interplay between the cycle of crisis, austerity, and privatization, and the concomitant loss of rights for the public. I was joined by two esteemed law professors: Angela P. Harris, formerly of UC Davis School of Law, and Martha McCluskey, of the University at Buffalo School of Law. The panel was moderated by Danny Sufranski, MMN Harvard Chapter President.

These remarks were delivered solely in my capacity as a director of the Modern Money Network and do not reflect the views of any past or present employers.

Good morning, everyone. My name is Raúl Carrillo and I’m a director of the Modern Money Network (MMN), a student-driven interdisciplinary organization promoting public understanding of money, law, finance, and the economy (obviously embracing MMT as a foundation). By day, I’m an attorney specifically focused on consumer financial protection or as one notorious predator, Capital One, would say, “What’s in your wallet?” Perhaps a better way to put it, is that, in the Minskian sense, I help people manage their “survival constraints.”

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Italy’s Great Experiment

By J.D. ALT

Italy is experimenting with giving tax-cuts to its citizens in exchange for public services―such as pulling weeds and cutting grass. Wow. What an amazing idea! The government issues a tax credit, and uses it to pay a citizen in exchange for the citizen’s services to the government. The government could even make this arrangement more formal by printing the tax credits on pieces of paper called “LIRIES” (or something like that) and paying for the weed-whacking services with this “cash.” That way the citizen who’s earned the “LIRIES” has the option of using them as payment to another citizen (who’d also like a tax-cut) for, say, a bag of potatoes. So, the first citizen pulls some weeds, gets paid in “cash” and then uses the “cash” to buy her dinner. If you thought about it, you could possibly run an entire economy in this fashion. The only thing you’d have to worry about, of course, is that the government might run out of the tax-credits it needs to pay the citizens to do the work! If that happened, where could the government possibly get more tax-credits? Could it collect tax-credits as “taxes”? Could it borrow them from all the street-sweepers and weed-whackers who’ve earned them? (In which case it would have to pay “tax-credit interest”―which just seems to exacerbate the problem!)  Hmmm. I’m going to have to think about that one. But in the meantime, doesn’t this mean that any Eurozone country has the option to stay IN the Eurozone while at the same time operating its own local economy using its own local “sovereign” currency?

 

A Memo From MMT’s Legal Department

By Rohan Grey and Raúl Carrillo

Orthodox economists are often inclined to think of law as an external force that ‘intervenes’ to regulate otherwise naturally occurring economic phenomena. In contrast, Modern Monetary Theory and its antecedent intellectual traditions have long recognized that law in fact constitutes and shapes modern economies and the monetary regimes that underpin them. For example, Knapp argued explicitly that money was a “creature of law.” Similarly, Keynes, in A Treatise on Money, stated:

“The State…comes in first of all as the authority of law which enforces the payment of the thing which corresponds to the name or description in the contracts. But it comes in doubly when, in addition, it claims the right to determine and declare what thing corresponds to the name, and to vary its declaration from time to time-when, that is to say, it claims the right to re-edit the dictionary. This right is claimed by all modern states and has been so claimed for some four thousand years at least.”

Today, many of the core propositions of MMT can be understood as essentially legal arguments. Here are a few examples:

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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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Who will play the Harlequin?

By J.D. ALT

In a recent essay (“A Strategic Thought”) I suggested that right now is an opportune moment for some brave progressive leader to step out and explain what modern fiat money is, why we’ve been using, in fact, it for the past half century, and how it changes the way we imagine our federal government pays for public goods. Whoever takes on this challenge, I suggested, would be treated as a harlequin by mainstream media and economic pundits—and would be marginalized and shunned by other political leaders on both sides of the aisle. No main-stream politician is ready to hear—let alone agree—that the federal government can issue and spend as many dollars as needed to accomplish whatever the nation has the real resources to undertake. No main-stream economic pundit is ready to hear that our federal “deficit” is a necessary aspect of a healthy fiat monetary system. No main-stream Republican or Democrat is ready to acquiesce to the reality that our national “debt” is not something we have to “repay” to anyone but is, in fact, the savings account of our private sector economy. No main-stream anybody who, by definition, depends on their position in the main-stream idea-flow for their livelihood and personal status, is ready or willing to hear, or even seriously listen to, any of those realities. Yet at some point all of it has to be formally presented and argued on the national stage—otherwise, modern fiat money, and the enormous possibilities it creates for human society, will continue to languish forever as a suppressed and poorly understood reality.

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A Walk in the Forest after the Election

By J.D. ALT

On November 8, I happened to be complacently immersed in one of the important books now available to the human species—The Hidden Life of Trees, by Peter Wohlleben.  On the morning of November 9, I realized that what I was reading not only offered a perfectly analogous explanation of what “happened” in the U.S. Presidential election, but also laid out instructive insights about what’s to come next.

To provide a highly simplified overview (please bear with me for a moment), forests of trees are highly integrated communities composed basically of three parts: the canopy, the ground, and the root-and-fungi structures below ground. The community grows and evolves very slowly, and once it is established certain inherent dynamics provide a long-term stability that is measured in centuries. One of the most crucial dynamics is the fact that the mature canopy, during the growing season, absorbs something like 97% of the sunlight falling on it. This means at the ground level, new trees—growing from the seeds dropped from above—receive essentially no sunlight for photosynthesis (which they need in order to produce sugars for growth). These baby trees are, in fact, “nursed” by the root systems of the parent trees around them. The nursing trees grow very slowly, biding their time until one of the parent trees dies and collapses. This leaves a gap in the canopy where sunlight suddenly streams through, and those baby trees fortuitously located below the gap begin to produce their own sugar like mad—and grow very rapidly upward toward adolescence. At the same time, in a healthy forest, the mature trees adjacent to the gap extend their own branches and leaves to fill the open space. Before this process is complete, the adolescent trees have several years of rapid growth, but when the canopy is re-closed, they have to stop and bide their time again. Once more, they are fed by the root systems of the parental forest. It isn’t until another parent collapses to the forest floor, that the late adolescent tree finally has the opportunity to rapidly grow into the gap of the canopy and become a mature member of the community.

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Two Loaves

By J.D. ALT

Recently, I’ve been trying to zero in on a peculiar set of ingredients that seem to be baked into our economic pie―and which are depriving that pie of a sustenance we, as a collective society, need it to provide. The peculiar ingredients have to do with our monetary system. Specifically, the fact that we―whether intentionally or by happenstance―have put in place and operate a money system that seamlessly creates dollars, as necessary, for profit-making enterprise, but specifically does NOT create dollars for not-for-profit ventures.

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