Essays in Monetary Theory and Policy: On the Nature of Money (6)

By Andreas Lückert*

1. Introduction

Money is “what we use to pay things”. In order to be efficient it needs to be generally accepted. (Lerner, 1947) The question arises how this general acceptability gets created. The true origin of money will never be known for sure. (Wray 2005, p. 3) Still, the heterodox and the orthodox view established different explanations for the nature of money.  These theories will be explained in the following and a recommendation for policy making will be made.

2. Orthodox Approach

The orthodox approach goes along with the exogenous theory of money. It sees money as a neutral thing, which evolved out of barter and is not determined by the real economy. This paragraph explores this nature of money from the orthodox view.

2.1 History of Money

The orthodox story for the nature of money is represented by the Austrian school and the Monetarists. The theory tells the “barter story” in order to explain the nature of money. It is stated that markets evolve naturally out of the human disposition to exchange. Some time later, money was introduced to the market in order to ease the exchange of goods. Also, this emergence of money is described as a natural process. Indeed, the orthodox story assumes a natural propensity to barter. (Wray 2005, p. 5) That means people exchange goods in order to improve their living condition. By exchanging these goods markets come into existence. Thus, according to the “barter story” markets evolve even before money exists. (Tcherneva 2001, p.109) In case of barter, always a double coincidence is needed, which goes along with high transaction costs. The exchange partner is required to want what you have, but also to have what you want. Furthermore, the amount of exchanged goods could not become easily determined. The barter did not provide a common measure of value or even a standard for payments. (Wray 1993)

“Fundamentally, behind the veil of money, people specialize in producing particular goods and services to exchange them for the specialized outputs of other people.” (Smithin 2003, p.2) Nonetheless, a division of labor would have been foolish, because people could not be sure to find an exchange partner for their goods. In order to avoid this insecurity and to minimize transaction costs buyers and sellers were seeking for a single commodity to serve as a unit of account, so a “unit in which price lists are expressed and accounts are kept”. Without this unit of account it was difficult to determine which quantity of product B had the same worth as a certain quantity of product A. Thus, this unit of account would also help to determine the value of a commodity. (Smithin 2003, p. 19) Silver, copper, grain, and other commodities were used as this unit of account. (Hudson 2004, p. 108) Gold was the most common medium of exchange due to its inherent characteristics such as a high value to weight ratio or its divisibility. In order to reduce counterfeiting, these gold coins were stamped by monetary authorities. (Wray 2002) In this way, money got its “medium of exchange function”, its “store of value function”, and its “unit of account function”. (Smithin 2003, pp. 19-20)

The goldsmith-bank story explains further how fiat money and the bank business could be created: Keeping gold with its high value was very risky. People were frightened to become victims of a robbery, thus they brought their gold to a goldsmith who had safe vaults. In return for the gold, the goldsmith gave a receipt to the depositor and charged a fee for the service. People started to exchange these receipts instead of the gold. In this way, paper money replaced commodity money. The goldsmith soon noticed that he could increase his earnings by lending more receipts than he had gold in his vault at a certain interest rate. This could be seen as the beginning of the bank business. (Even 1936) Also the government began to issue its own currency. First, this currency was backed by gold, later it was “just” fiat money, which is not backed by any commodity and has no intrinsic value. The fiat currency was issued through the treasury or the central bank and allowed the state to spend more. People accepted this currency because they knew that other people will accept this currency as well. Also private banks could hold the fiat money issued by the government, thus they could use the money multiplier and thereby strongly increase the money supply. (Wray 2002)

This orthodox story does not give an explanation how money works and the relevance of social relationships isn’t considered. The establishment of a currency looks like a ‘helicopter drop’; it is not stated where the money comes from. (Tcherneva 2001, p.109)

2.2 Neutrality of Money

Monetarists state that the money supply can be controlled by the central bank. It is argued that the central bank has the control over the bank reserves through the reserve requirement ratio. It has to use this control in order to regulate the reserves and to prevent inflation. (Wray 1996) This is based on a “natural” but also “neutered” definition of money, which leads to the suggestion of the orthodox theory to stop the use of monetary policy, which has no effect besides inflation. Tight money policy would cause a stable nominal price level. Based on a lower actual inflation, people also expect lower inflation in the future, leading to a decrease in the nominal interest rate. (Smithin 2003)

Furthermore, the Philips Curve shows the tradeoff between unemployment and inflation in the short run. Consequently, orthodox policy focuses on low growth in the money supply in order to prevent inflation. (Wray 2000, p.3) A constantly low money supply growth could ensure the stability of the price level since a causal dependence of price level and money supply, as stated in the quantity theory, is assumed. It follows that the orthodox view sees a separation of money and fiscal policy as favorable. It is believed that this policy, including open market operations, discount rate and required reserve ratio would help to prevent inflation. (Tcherneva 2001, pp.110-111)

Friedman stated that money is neutral in the long run but has effects on growths and employment rate in the short run. He explained that the state can fool people, by increasing the money supply higher than expected. Thus, it takes time for people to realize the higher level of inflation and therefore for the economy to get back to the previous level, which means that money is neutral in the long run. This theory is based on the belief that it is possible to fool people. In fact, it is possible to fool people only once. After that, they will adapt their expectations. Only with random policy the central bank could fool people more often. Still, it would not yield a desirable result. (Wray 2000, p. 3)

2.3 Exogenous Money

This policy suggested by the orthodox theory is based on the assumption of an exogenous money supply. According to the exogenous money approach, money is an independent variable and determined by factors outside the model. Monetary authorities determine the money supply, which is the FED in case of the US. The money multiplier and the monetary base determine the money supply. Since the central bank provides the required reserves and sets the required reserves ratio, it can control the monetary base and the money multiplier. It follows that the central bank can control the money supply exogenously. (Wray 2001)

Desai differentiates between strong and weak exogeneity. He describes weak exogeneity as a condition where endogenous variables have a slight influence on the money supply through the past values of price, interest rate, and national income. Whereas, in the case of strong exogeneity, endogenous variables have no influence on the money supply. (Desai 1989, pp. 146-150)

According to Hume, even commodity money can be exogenous since the coining authorities are able to change the proportion of inferior metal in the coins. Furthermore, in a gold based commodity an extension of the money supply is possible if new gold reserves are discovered. Thus, the money supply is exogenously determined by either the supply of a commodity or, in case of fiat money by the government. (Desai 1989, pp. 146-150)

3. Heterodox Approach

According to heterodox economists, including Post-Keynesians, the described orthodox view is wrong in many ways. E.g. the choice of a medium of exchange is not described sufficiently. Consequently, the heterodox approach which is based on chartalism contradicts the orthodoxy theory. It explains that money and prices had to exist first, while markets and money things evolved later. Money is a unit of account, which is used in order to measure things. In fact, a market is not needed. Before a market can exist, money has to exist first. With money, a production process can be started in order to make more money. (Wray 2005, p. 22)

3.1 Credit Money Approach

The credit money approach goes along with the heterodox view and is represented by Schumpeter and Innes et al. Innes describes credit as the “correlative of debt”, which is easy to handle, to transfer and the most permanent form of property. He states that all forms of money, including commodities such as gold but also fiat money and HPM, are credit money and that money has always been debt. (Innes 1913, p. 392) The credit theory of money defines the origin of money as inherently social since it lies in the credit and debt relations. The relation between debtor and creditor is a result of complex social, historical, and economic forces. (Wray 2005, p. 9) A person who buys something becomes a debtor, while a person who sells something becomes a creditor. (Innes 1913, p. 392) As it is stated by Innes’ primitive law of commerce, a sale “is not the exchange of a commodity for some intermediate commodity called the “medium of exchange”, but the exchange of a commodity for a credit.” (Innes 1913, p. 391) With the credit purchasing power is transferred from the future to the present. (Wray 1994, p. 93)

Innes states that the credit as a medium of exchange could only be used if the exchanges were made in a relatively small region. In case the commerce widened out credits became worthless since others did neither know about the creditworthiness of the issuer nor about the credits’ acceptability. (Innes 1913, p. 403) A system for centralizing debts was needed, which led to the banking system. Given their creditworthiness, a bank accepts the IOUs (I owe you) of private persons, requiring a certain interest rate. The bank holds this IOU as an asset and creates a demand deposit. In this way, the bank can make a payment for the customer using its own IOU, which is accepted on a broader basis. Today, the bank does not need any cash for payments, it just uses keystrokes and transfers “money” to a different bank. The credit system can be used to stimulate growth in the economy. (Innes 1914)

The credit money approach does not sufficiently answer how money gets its general acceptability. This gets done in the state money approach, which is consistent with the credit money approach. In fact, both approaches accept the importance of relationships. However, the state money approach sees fiscal relations as the most important ones. (Smithin 2003, p. 26) It is argued that state money is a special kind of credit, “redeemed by taxation”. (Wray 2005, p. 19)

3.2 State Money Approach

Historically, before the well-organized sovereign national states of modern times, money was backed with precious metal. Still, even then it was an IOU. Money as a unit of account is used to measure fines. Since sovereign states have the power to collect taxes this backing is not required. The state can choose anything it wants to accept in terms of tax payments. Today, it usually chooses its own IOUs in terms of coins and paper money. (Lerner 1947, p. 313) This tax driven money approach is advocated by the modern money theory and based on a “penal system”. (Wray 2005, p. 17) In order to avoid penalties, people have to pay their taxes (preferably obligatory ones, such as landowning taxes). These liabilities have to be paid in the government’s own currency, which is an IOU issued by the state. Since the government accepts tax payments usually only in its own unit of account people have to obtain this currency. Thus, by requiring a monetary unit in terms of tax payments the state creates a currency. (Wray 2012, pp. 42 -53)  As Lerner puts it “money is a creature of the state.” (Lerner 1947) This currency issued by a sovereign government is called “sovereign currency”. The sovereign government has the power to collect taxes, fees, fines, etc. and the authority to determine which unit of account is accepted in terms of payments towards the government.  Furthermore, it can choose in which way it will pay its own debts.  (Wray 2012, p. 42)

By collecting taxes, the government shifts resources from the private to the public sector. Since the governments’ task is to spend for public purposes such as police force or social workers, it has to ensure a demand for its currency. This demand gets established by imposing taxes or other obligatory payments to the government. (Tcherneva 2001, p. 4) The “unit of account” issued by a nation as currency mostly consists of metal coins and paper notes. (Wray 2012, p. 40) “In (almost) all modern developed nations, the state accepts the currency issued by the treasury (in the US, coins), plus notes issued by the central bank (Federal Reserve notes in the US), plus bank reserves (again, liabilities of the central bank) — together, HPM.” (Wray 2005, p. 18) However, money does not need any physical existence. It is an asset, which just needs a form of record. (Wray 2012, p. 272) It is usually the primary and in most cases even only unit of account, since theoretically, also other entities could create its own money of account. (Wray 2012, p. 43) The currency in the US is “fiat”. It is not backed by gold or any other commodity in order to ensure its acceptance, nor is there a promise to convert it into a foreign currency or anything else. In fact, the government has just to promise to accept its own IOU in terms of payments to itself. (Wray 2012, p. 45)  By accepting its own money in terms of tax payments and other obligations to the state, the state gives these IOUs value. Everybody will try to get at least the right amount of the government’s IOU to pay her own taxes. (Lerner 1947) Furthermore, a demand for that currency becomes established since a large portion of the community has to pay these obligations. (Forstater 2006, pp. 202-209) “Everyone with obligations to the state will be willing to accept the pieces of paper with which he can settle the obligations, and all other people will be willing to accept these pieces of paper because they know that taxpayers, etc. will accept them in turn.” (Lerner 1947, p. 313) Thus, “neither reserves of precious metal (or foreign currencies) nor legal tender laws are necessary to ensure acceptance of the government’s currency”. (Wray 2012, p. 49) “Taxes drive money” and establish the general acceptability of the state’s currency. The fiat currency gets its value through the governments’ promise to redeem it, in terms of obligations to the state.  In this way, the state can afford everything that is available in its own unit of account. It taxes “by debiting bank reserves and spends by crediting bank reserves.” (Wray 2012, p. 111) It follows that the government cannot go bankrupt in its own currency, since it can spend as much as it wants. There is no risk of default. (Wray 2012, p. 53) However, in order to be able to collect taxes the government has always to spend first since it is the monopoly issuer of its currency. Governments can neither tax before they spend, nor collect more money through taxation than they issue through spending before.  (Tcherneva 2001, p. 4)

The value of money is determined by the money supply. (Forstater 2006, p. 204) Being the authority, the government can name the price for its currency. OK It decides what has to be delivered (labor hours and money wage unit) to get a unit of the currency.  Since the government can issue as much of its own IOU as it wants it also can spend as much money as it wants. In a two sector model, with governmental and private sector a surplus for both sectors is impossible. In this model, the following equation applies: Domestic Private balance = Government balance. That means the accumulated net financial assets of the private sectors equal the governments’ deficit, thus the wealth of the population can be seen as the liabilities of the state. (Taking also the exchange with foreign countries into consideration the equation gets expanded to: Domestic Private Balance + Domestic Government Balance + Foreign Balance = 0. It follows that both the private and government sector can run budget surpluses  only in case of an export surplus.) (Wray 2012, pp. 1-14).

“Money buys goods and goods buy money, but goods do not buy goods.” (Wray 2010, p. 18) The purpose of production is to accumulate money, but money cannot be produced. Otherwise, unemployed people could just start to produce money.  Since money is no commodity the production of money is not possible. Money can buy commodities and commodities can buy money. Within the exchange for money, the commodity gets its market value. This means that any commodity can only be bought with money. Thus, as it is stated by Marx the production process has to start with money to buy a commodity which should be used to produce a different commodity. This commodity should be sold to end up with more money finally (M-C-C’-M’).  (Wray 2012, p. 267)

A government might increase the acceptability of its currency by promising to convert it into a commodity or foreign currency. The state has to be able to keep this promise by having accumulated reserves of that commodity or currency. Pegging the currency in this way would reduce the possibilities for money policy since it requires the state to have a certain amount of the promised commodity. The risk of default arises because the government might not be able to meet the demand for conversion. The belief that the government will default on its currency would lead to a run on that currency. Only if the currency is completely backed can default be avoided. Also, the general acceptability will fall if the state defaults on its own IOU. For the government it is only possible to fool people once, and to reject its own IOU in terms of tax payments. This fooling would result in non acceptance of the currency. (Wray 2012, p. 77)

Banks and private issuers of IOUs do the same thing as the government. They promise to accept their own IOU. The difference between a bank and the government is that the bank usually has to convert their IOUs into something, mostly the government’s IOU, while household’s and firm’s IOUs are converted into demand deposits of banks. Still, usually highly leveraged banks are not intermediates between savors and investors. Rather, banks accept IOUs from private persons and make payments for their customers using its own IOUs, denominated in the State’s money. According to Wray IOUs issued by banks are not called “currency” but “money things” (Wray 2012, pp. 40-44) However, not all IOUs are equally accepted, as it is shown in the pyramid of liabilities; the risk of default between the different issuers varies. Government IOUs (“outside money”) are generally the most accepted since in case of a sovereign government they are risk free. Higher leveraged IOUs issued by banks are slightly less accepted, while Nonbank IOUs are the least accepted. The IOUs of the non-government sector are called “inside money”. Depending on the risk of default, the interest rate varies. High risk leads to a high interest rate, low risk to a low interest rate. Moreover, these IOUs differ in their transferability. While government IOUs are mostly accepted in the whole country of issuance and sometimes even across its borders, the IOUs of a private household are only accepted within a small area. That is why household IOUs usually do not circulate around third parties. (Wray 2012, pp. 85-89)

3.3 Endogenous Money

In contrast to the orthodox theory, heterodoxy follows an endogenous money approach, which is consistent with both, the credit money and the state money approach. The endogenous money supply depends on the demand for money. That means if the money demand increases, also the money supply will increase and vice versa. Also the interest rate influences the money demand, since a decrease in the interest rate can be seen as a “lower price” for money which of course increases the money demand. The central bank hasn’t the complete control over the money supply. The effect of an increase in reserves would just set the overnight interest rate to zero because it would lead to excess reserve holdings. (Wray 2001, pp. 1-5) Inside money, which is created by banks is endogenous. It is argued, that a higher profitability of banks can be only reached by a “differential between the interest (discount) rate borrowers are willing to pay and the rate at which banks can acquire liquidity”. (Desai 2003, p. 148)

Horizontalists like Basil Moore, state that the bank reserves cannot be controlled by the central banks. Rather, the supply of reserves has to be “horizontal” adjusted on the demand at the overnight bank rate which is exogenously set by the central bank.  “The horizontalist approach effectively reverses the ‘deposit multiplier’ of the money and banking textbooks, arguing that ‘loans make deposits’ and ‘deposits make reserves’.”(Wray 2007, p.10) Furthermore, it is argued that money matters in both the short and the long run, since it is tied to fundamental processes of a capitalist economy. “Money always matters.”(Wray 2007, p.10)

To sum up, being the sovereign issuer of the currency, the state has the power to create and to destroy money. The government creates money by spending, and destroys it by collecting tax payments. (Lerner 1947, p.314) That means after the government issues its currency by spending it gets redeemed by raising taxes in that same money of account. After the redemption these IOUs cannot be spend anymore. The government could also accept a foreign currency in terms of tax payments, but it has more domestic policy space when it spends and taxes in its own currency. (Wray 2012, p. 41)

3. Policy implications

“The primary function of money is to allow governments to spend and consume.” (Tcherneva 2001, p.112) This spending should support the public purpose, including the “material, social, physical, and psychological well-being of all members of society”. While the policy aims on price stability, it should use its power to establish full employment. (Wray 2012, p. 192)

Having the currency monopoly, the state can use government spending and taxation in order to prevent depressions and to maintain the value of money. While high spending could cause inflation, too low spending or too high taxes could cause depression. (Lerner 1947, pp. 314-315) Government policy has to follow these consequences. Thus, its spending should be counter-cyclical, it should be increased in an economic downturn with investments in e.g. generous social safety, while taxes should be pro-cyclical and decrease economic downturn. However, this only counts for a sovereign government with floating currency. (Wray 2012, pp. 208-211)

In case of a pegged money, the principles by Lerner wouldn’t be true anymore. For example, a gold standard could prevent the risk of inflation but would also reduce the opportunities for government policy since a floating currency offers the largest policy space. (Lerner 1947, p. 314) In Lerners’ functional finance approach, two principles explain how the government should use its currency monopoly for policy. The first principle states that the government can increase its spending and thereby increase the domestic income. According to Lerner, unemployment is always the government’s fault, since the government is always able to spend more or reduce taxes in order to reach full employment. The second principle says that in case of a too high domestic interest rate, the government is supposed to increase the money supply, in order to lower the interest rate. Thus, it should not be important where the interest target is, rather that the government can always afford to hire as many people as it wants and in this way could get the economy to full employment. (Wray 2013, pp. 193-194) Still, to achieve the desired interest rate, government policy namely the selling or buying of government bonds can be used. That means if the non-government has too much money (HPM), the government should sell bonds and vice versa. According to Wray setting the overnight interest rate target at zero would be the most efficient. He argues that monetary policy is usually inefficient. Since, based on rational expectations of the population, “useful” policy usually gets anticipated immediately, it has only slight impacts. Thus, only random policy would have greater influence, but would neither lead to a desirable result. (Wray 2007, p. 22)

Even though the government can afford everything which is available in its own currency the government should watch its spending. Too much spending could cause inflation, weaken the exchange rate, and might take too many resources from the private sector. So before spending, the government to consider its consequences since it impacts the economy in many ways. An example might be that too high spending on welfare could lead to a low willingness to work for many employees. Also the saving of banks and enterprises, which are “too big to fail” is not the right thing to do for sure since it leads to higher risk taking at part of the managers. Budgets, so a self imposed constraint should help as a tool of accountability. (Wray 2012, p. 188-189) Still, even if too high government spending could cause inflation, the monetarist belief that hyperinflation is just a matter of too much money is rejected by MMT. It is rather shown that in case of hyperinflation diverse factors, such as “social and political upheaval; civil war; collapse of productive capacity; weak government; and foreign debt denominated in external currency or gold” (Wray 2012, p. 257), have a great impact on the economy (Wray 2012, pp. 250-257).

The government should try to keep consumption relatively stable by increasing its spending when investments decrease and vice versa. Deficit spending creates net financial assets. Thus, it should not be tried to eliminate the government’s budget deficit, but to use it in order to reach the mentioned aims. Even at full employment a current account deficit is desirable to enable savings in the private sector. Real government surpluses are a burden for the public sector, since they move assets away from the private to the government sector. That means a government surplus would result in a decrease of net wealth for the population. However, although it is argued that government spending is sustainable, this doesn’t count for the private sector. Since the private sector is just the user but not the issuer of the currency a private sector deficit is unsustainable. Whereas, the government as the issuer of the currency can have a relatively sustainable deficit. It follows that only the government can increase “the wealth” of the economy by issuing its own IOUs but not the public sector. (Wray 2012, pp. 21-27)

Furthermore, export surpluses have a negative influence on the real wealth since they shift products produced in one economy to another economy. Which means the population produces and carries the costs of production but it shifts the profit in a different country. In contrast to exports, imports are benefits according to the functional finance approach. Moreover, it has to be noted that each export surplus in one country has to be an import surplus in another country. The multiplier effect, caused by the higher employment due to exports could also be reached by a greater government spending. It has to be kept in mind that there are other reasons besides the “wealth of the population” (e.g. strategic partnerships) which might encourage an economy to export. It follows that the government policy should not try to avoid a balance deficit. (Wray 2012, pp. 208-217)

As it is stated in the functional finance approach, the government could and should afford full employment. Nonetheless, the orthodox government policy aims on low spending in order to keep inflation low and to maintain the macroeconomic stability. MMT points out that it is highly unethical to use unemployment as a tool to maintain currency stability. (Wray 2012, p. 225) Based on these preconditions, MMT developed a proposal how it would be possible to implement full employment through a “Job Guarantee” or “Employer of Last Resort” system. Wray describes it as a government program which “promises to make a job available to any qualifying individual who is ready and willing to work.” (Wray 2012, p. 222) Via keystrokes the government can afford to provide jobs to unemployed people. In the proposal it is stated that the government should pay uniform hourly wages which are slightly under those of other employers. These wages would be paid by crediting bank accounts. By competing with other employers for the employees even the working conditions in the private sector might become improved since moving to a different (slightly less paid job) would be relatively easy. (Wray 2012, pp. 225-257) Due to the buffer stock mechanism this program even could enhance price stability. (Mitchell, 1989)

Based on these presented heterodox arguments the current policy needs to change. In times of wealth in the society the gap between the poor and the rich should not widen further. A first approach to tackle this problem was presented in this paragraph. The policy aim should be to achieve full employment and not to keep inflation low. A full employment program is the reasonable step to go.

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*A Note:

For the next few weeks we will be running a series of articles on monetary theory and policy. These are final essays written by MA students in my class this past Fall semester. I was very happy with the results—students indicated that they had a firm grasp of both the orthodox approach as well as the heterodox approach to the subject. Most of them also included some Modern Money Theory in their answers. I asked about half of the students in the class if they would like to contribute their essay to this series. Sometimes students are the best teachers because they see things with a fresh eye and cut to what is important. They are usually less concerned with esoteric academic debates than are their professors. Note that these contributions are voluntary and are written by Masters students. I told students they could choose to use their own names, or they could choose an alias. Comments are welcome, but please be nice—remember these are students.

For your reference, here were the topics for the paper. The paper had a maximum  limit of 6000 words.

Choose one of the following. You must consider and address both the orthodox approach and the heterodox approach in your essay. Where relevant, include various strands of each.

A) What is the nature of money? Given the nature of money, what approach should be taken to policy-making?

B) What is the nature of banking? Given the nature of banking, what approach should be taken to policy-making?

C) According to John Smithin there are several main themes throughout controversies of monetary economics, each typically addressed by each of the various approaches to monetary theory and policy. In your essay, discuss how each of the approaches we covered this semester tackles these themes enumerated by Smithin. 

L. Randall Wray

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Sources

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Even Louis. 1936. The Goldsmith. Who Became a Banker — A True Story. Cahiers du Crédit Social. accessed 03/12/2013: http://www.michaeljournal.org/plenty26.htm.

Forstater, Mathew. 2006. Tax-driven money: additional evidence from history and economic policy. Complexity, Endogenous Money and Macroeconomic Theory, Edward Elgar, pp. 202-217.

Hudson, Michael. 2004. The Archaeology of Money Debt vs. Barter Theories of Money’s Origins. in: Credit and State Theories of Money The Contributions of A. Mitchell Innes.

Innes, A. Mitchell. 1913. “What is Money?”. in: Banking Law Journal.  pp. 377-408.

Innes, A. Mitchell. 1914. The credit theory of money. in: Banking Law Journal, January, 151-168.

Lerner, Abba P. 1947. Money as a Creature of the State. The American Economic Review, Vol. 37, May, No. 2, Papers and Proceedings of the Fifty-ninth: pp. 312-317.

Minsky, Hyman P.  1986. Stabilizing an Unstable Economy. New Haven: Yale, University Press.

Mitchell, W. 1998. The Buffer Stock Employment Model. in: Journal of Economic Issues, June: 547-555.

Smithin, John. 2003. Controversies in Monetary Economics. Edward Elgar Publishing Limited.

Tcherneva, Pavlina R. 2001. Money: A Comparison of the Post Keynesian and Orthodox Approaches. Oeconomicus, Volume IV, Winter, pp. 109-114.

Wray, L. Randall. 1993. The  Origins  of  Money  and  the Development  of  the  Modem  Financial System. Working Paper No. 86.

Wray, L. Randall. 1994. Monetary Policy. in: The Elgar Companion to Institutional and Evolutionary Economics.

Wray, L. Randall. 2000. Money and Inflation. Working Paper No. 12.

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Wray, L. Randall. 2002. Monetary Policy: An Institutionalist Approach. Working Paper No. 21

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Wray, L. Randall. 2007. A Post-Keynesian View of Central Bank Independence, Policy Targets, and the     Rules-versus-Discretion Debate. Working Paper No.  510.

Wray, L. Randall. 2007. Endogenous Money: Structuralist and Horizontalist. Working Paper No.  512.

Wray, L. Randall. 2010. Money. Working Paper No. 647

Wray, L. Randall. 2012. Modern Money Theory – A Primer on Macroeconomics for Sovereign Monetary   Systems. Palgrave Macmillan.