Tag Archives: Modern Monetary Theory

Public Banking and Boom Bust Boom

By L. Randall Wray

While in Spain for the launch of my Modern Money Primer in Spanish, I gave a long interview for Public Television. Parts of that interview are interspersed in this segment on Public Banking.

My interview is in English (with Spanish subtitles) while the rest is in Spanish. Other portions of my interview will be broadcast later.

The Boom Bust Boom movie on Minsky will be released next month. Watch for it. I do not know how widely it will be distributed, but it is well worth seeing. Here’s a nice piece from the Guardian:

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The Millennials’ Money (part 3)

By J.D. Alt

Commentary on part 2, again, was extremely helpful and much appreciated. Especially useful were suggestions from readers who “didn’t recognize” my description of the Boomers ideological obsession. This got me to substantially rethink the framing, and I hope that is now fixed. What I realized—and looking back on my own experience, it seems obvious in retrospect—was that what the Boomers were focused on had little to do with the idea of “competition” and much to do with rebelling against (and distrusting) institutional power—especially the institutional power of the federal government. It became natural for them to want to starve that government to keep it from interfering with the individualism the Boomers championed. As I said in my comment to the post, “Do your own thing” seems to have morphed seamlessly into the “trickle-down” economics of federal austerity.

Draft of the next section is as follows:

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The Value of the Right Ratio Is Zero

The public debt-to-GDP ratio is, perhaps, the most important measure used in discussions of the relative fiscal sustainability of nations. Nations with high levels of debt-to-GDP are viewed as having more serious fiscal problems than nations with lower levels. Nations having increasing ratios over time are viewed as becoming less fiscally sustainable, while those with decreasing ratios are viewed as more fiscally sustainable.

But is the public debt-to-GDP ratio really a valid measure of fiscal sustainability, or is it a measure that incorporates a neoliberal theoretical bias in its fundamental assumptions? In the United States the total value of public debt subject to the limit at any point is the total principal value of all the outstanding debt instruments sold by the Treasury Department. The GDP is the aggregate value of the production of goods and services in the United States within a particular period of time, adjusted for price changes.

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Maya MacGuineas: The Profound Fiscal Irresponsibility of Resistance to Facts

Just as every Spring we can count on the Peter G. Peterson Foundation (PGPF) to do a supportive press release when the CBO issues one of its budget outlook 10 year projection reports, we can also count on being treated to public statements by Maya MacGuineas joining in the Peterson Army choir, warning about the coming debt crisis, and singing about the glories of deficit and debt reduction. And this while completely ignoring the real and sad consequences of deficit and debt reduction policies throughout the world since the crash of 2008, as well as previous applications to Latin American, Asian, and the nations of the disintegrated soviet empire, most notably Russia itself. Let’s look at Maya MacGuineas latest effort; her testimony to the Senate Budget Committee.

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The Peterson Foundation Sings the Same Old Song

The Peter G. Peterson Foundation (PGPF) always does a press release when the CBO issues one of its budget outlook 10 year projection reports. The PGPF did another in January quoting its President and COO, Michael A. Peterson. Let’s go through that press release and see how many troublesome or false statements we can find. Here’s a breakdown of the press release quotation from Michael Peterson.

Today’s CBO report reminds us once again that our nation has significant fiscal challenges that have yet to be solved.

It certainly does, but I doubt that Peterson and I would agree on what those challenges are. He thinks they have to do with bringing the national debt under control. I think they have to do with creating full employment with a federal job guarantee program, price stability, a robust economy, a great public and free educational system through graduate school, stopping and reversing climate change, providing everybody in, nobody out, no co-pays and no deductibles health care for all, a first class infrastructure, and a greatly expanded social safety net including a doubling of SS benefits.

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The “Debt Crisis” According to Bruce Bartlett: Generational Accounting

This is the last post in my analysis and commentary on Bruce Bartlett’s testimony to the Senate Budget Committee. There’s one very significant issue left to discuss, and that is the issue of fiscal gap and generational accounting and whether it should be institutionalized in legislation. I’ll begin this post with that discussion and then end the series with my overall evaluation of his effort.

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The “Debt Crisis” According to Bruce Bartlett: Debt Thresholds, and Wars

This is the fourth in a series of commentaries on Bruce Bartlett’s recent testimony to the Senate Budget Committee. I appreciated his testimony and his critical evaluation of the idea that there is a public “debt crisis” in the United States. I also agree that there is no debt crisis. However, I was disappointed that his views, for the most part, did not show the across the board relevance to most aspects of the “debt crisis” of the fact that the United States is a fiat currency sovereign.

In the previous three posts, I’ve outlined the many contexts in which the fiat currency sovereignty of the United States is relevant to showing that the idea that the United States has or can have a debt crisis is just bunk. In this post, I’ll continue my discussion of Bruce Bartlett’s testimony in the same way.

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Randall Wray: ¿Austeridad presupuestaria frente a déficits públicos?

Why the EMU is designed to Fail

Randy’s presentation for FUHEM in Madrid, Spain coinciding with the release of the spanish version of his Modern Money Primer. The introductions are in spanish and Randy speaks in english beginning at about 10:00 with a panel member translating to spanish. He presents  Modern Money Theory and then what is wrong with the Euro/EMU.  

The “Debt Crisis” According to Bruce Bartlett: Household Analogy, Inflation, Savings, and Taxes

In the first two parts of this series of commentaries on Bruce Bartlett’s testimony to the Senate Budget Committee, I’ve reviewed the first 8 paragraphs in his statement. These points debunked various concerns of those who think the United States has a serious “debt crisis” it must handle before it takes on trivial problems such as its unprecedentedly high level of wealth inequality, lack of true full employment at a living wage, roughly 30 million people still lacking health insurance, one of the worst infrastructure systems in the developed world, transitioning from fossil fuels and ending climate change, creating a first class public educational system from pre-K through graduate school, ending the student loan crisis, creating a single standard of law for all, including the various categories of violators categorized as too big to prosecute by recent Administrations, and ending the student loan debt crisis, just to name a few.

However, what was noticeably missing from the variety of arguments given in his eight paragraphs was a recognition that the United States is a fiat sovereign nation and that this fact has serious implications for most of the subject matter Bruce Bartlett covers in his statement. In this post I’ll continue my analysis of his statement to explore the extent to which his views correspond to Modern Money Theory (MMT).

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Why Understanding Money Matters in Greece

By Robert W. Parenteau
March 06, 2015

As Greece staggers under the weight of a depression exceeding that of the 1930s in the US, it appears difficult to see a way forward from what is becoming increasingly a Ponzi financed, extend and pretend, “bailout” scheme. In fact, there are much more creative and effective ways to solve some of the macrofinancial dilemmas that Greece is facing, and without Greece having to exit the euro. But these solutions challenge many existing economic paradigms, including the concept of “money” itself.

At the Levy Economics Institute conference held in Athens in November 2013, I proposed tax anticipation notes, or “TANs”, as a way for Greece to exit austerity without having to exit the euro (see “Get a TAN, Yanis!” published here last month, for an updated version of that policy proposal). This proposal is based on a deeper understanding of what money actually is, and the many roles that it plays in the economies we inhabit. In this regard, Abba Lerner captured the essence of modern fiat currencies, which are created out of thin air by modern states with sovereign currency arrangements. Lerner’s essential insight is contained in the following passage from over half a century ago (and, you will note, Lerner’s view informs much of the neo-chartalist view espoused by advocates of what is called Modern Monetary Theory):

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