Tag Archives: Modern Monetary Theory

Framing MMT – Modern Money Network

A Modern Money Network contributor – Jason Kessler put together this beautiful graphic based on Randy Wray’s Meme for Money series that appeared here on NEP.

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Why Money Matters

By L. Randall Wray*

Our Mission Oriented Finance conference explores how to direct funding toward what Hyman Minsky called “the capital development of the economy”, broadly defined to include private investment, public infrastructure, and human development. (See more here.)

But to understand how, we need to understand what money is and why it matters. After all, finance is the process of getting money into the hands of those who will spend it.

The dominant narrative is that money “greases” the wheels of commerce. Sure, you could run the commercial machine without money, but it runs better with lubricant.

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IT’S OFFICIAL: TOO BIG TO FAIL IS ALIVE AND WELL

By L. Randall Wray

Thank heaven for Tom Hoenig, the only proven-honest central banker we’ve got. Yes, I know he’s moved on from the KC Fed to serve as Vice Chairman of the FDIC. He actually might do a lot more good over there, anyway.

In recent months, we’ve heard how Wall Street’s Blood-sucking Vampire Squids have reformed themselves. They no longer pose any danger to our economy. They’ve written “living wills” that describe how they’ll safely bury themselves without Uncle Sam’s help next time they implode.

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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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