By Usha Pradhan*
And there I was, a teenager, strolling on the Kingsway – a district with a long road that encompasses high-end shops, restaurants, and hotels on both sides of the road and as the name implies, it literally used to be the King’s way to his palace – when I saw a few street children walking around begging the privileged passersby for mercy-money. Sadly, I observed that the street children were invisible to almost everyone. The fortunes would look straight at them and see right pass through them. I wondered why those shoppers who could afford to spend on high-end designer handbags could not show mercy on those children and spend a few dollars on them. One of the conclusions I reached was that maybe because they were so used to encountering not only those underprivileged children, but also, a lot of other underprivileged people in their daily lives in that society that they were immune to them. This story is of a developing country and as with a lot of developing nations, the income gap between the “haves” and the “have-nots” was pretty high and consequently, inequality persisted in every aspect of life among the citizens there.
After this encounter, I couldn’t stop thinking about why the government was not doing anything to take care of those children and why the King was turning a blind eye when he must have seen the dire circumstance of the pillars-of-the-future-nation right outside his luxurious palace. After all, I thought the government had the necessary means to afford to devise a program that could provide basic necessities to those children; it wasn’t like the government’s money printing machine was stolen by an alien and they couldn’t make another one.
In all seriousness, I couldn’t understand why the sovereign government, despite all the power and authority it had, was reluctant in taking appropriate actions. According to some people (Anonymous, personal communication, n.d.) that I had exchanged dialogue with regarding this matter, the following were some of the road blocks:
- Affordability issues: The government was not able to collect enough tax revenue due to corruption so it had budget constraints. Therefore, it was unable to afford to spend on social welfare programs etc.
- Inflation: Due to the possibility of inflation as a result of the government printing money excessively, it was hardly printing money.
- Poor Nation: The nation was simply too poor.
Fast forward to the Global Financial Crisis (GFC) of 2008, my mind, like most other’s in the US, was muddled with the news of the government’s decision to bail out some1 irresponsible banks. These were the very banks whose actions had caused the great crisis to begin with. I pondered over whether the bailout action that the government had taken was the right one or not. On the one hand, I thought that if the government had not intervened and let the banks shut down, then, given the size of those banks, there could have been major implications in the society, including, loss of a lot of jobs.
On the other hand, I thought that it wasn’t right of the government to bailout those banks whose irresponsible action caused the crisis in the first place. The banks should have been held responsible and should have been allowed to face the outcome of their decisions on their own. The greed of the bankers to accumulate bigger profits led them to take bigger risks – as the saying goes, ‘bigger the risk, bigger the profit’ – and they failed miserably but, why was it the government’s headache? Why was it the taxpayer’s headache? The government doesn’t bailout a restaurant or a household when they are in trouble so why should the government be biased towards the banks and bail them out? The big banks do not offer to bailout households when they are under water so why should Americans come together and help those banks out?
There was a lot of buzz about the size of some of the banks that were in financial trouble as they were considered too big to fail. I couldn’t understand why the government let the banks be so threateningly big in the first place. I pondered over a few things regarding the crisis. For example, did the government think that those banks would never get into trouble? Why did the government not refer to the 1929 Crash and become more vigilant about the activities and also the size of the banks?
This was before my knowledge about MMT and at that time, I thought, like many others, that the decision of the government to bailout banks meant using tax payers’ hard earned money to save the very banks that caused the chaos in the society. I did not see any justice in that action. I thought that if the tax payers were to help those banks out, then the government should also bind those banks into a contract to give back to the society in some fashion later on.
1 It seemed unfair that the government was picking and choosing which banks to bailout and which banks to let it be. What was the criteria to be on the bailout list of the government? It didn’t seem like the government was saving the most responsible ones.
Over the next few years, before I was introduced to MMT, I gathered some more knowledge on how the economy works and I also learned about the fear that was consuming most US citizens. Some of the examples of what I learnt at that time are:
- The government has a budget constraint just like households do and how much it can afford to spend
- The government has to collect taxes or borrow in-order to spend
- The government is running out of social security
- US has a huge trade deficit with China and that is not a good thing
- US is in a massive debt with China
- US deficit spending is not sustainable and will lead to bankruptcy
- US might be the next ‘Greece’
- US will be doomed if one fine day China decides to dump all the US treasuries
- Our grandchildren’s future look bleak because they will be inheriting our massive-unserviceable debt
I truly believed in the above knowledge that I had acquired throughout the years. My belief that the federal government can go bankrupt was validated when abcnews.go.com reported that President Obama said, albeit it was in the context of health care, “… [federal government] “will go bankrupt” (as cited in abcnews.go.com, 2009). I thought that if the President was saying so then it has to be so, at least in this context. After all, he is surrounded by a sea of knowledgeable economic advisors.
Big Question Mark on my acquired knowledge
One day my friend and I were engaged in a small talk about student loans. At one point, I said that basically, it was the tax payers who were financing federal student loans. At that time, my friend mentioned that it wasn’t so and that the government just debits and credits bank accounts. She continued to say that it would not even affect the government or the tax payers if the students were not able to service their student loans (Anonymous, personal communication, n.d.).
What I heard that day was something that I had never heard before. I always believed in the cycle, or the recycle, of the tax money, where people pay taxes to the government and then the government uses that tax money to spend back in the economy. I thought that although the government had the ability to print money it wouldn’t do so because, printing money would lead to inflation. Hence, the government used to borrow if it needed to pump more money into the economy.
Was what I had learned and believed in so far wrong? It perturbed me.
My Introduction to MMT
The veil that had been plagued by false information about how the economy works slowly started to lift from above my head when I got introduced to Modern Money Theory (MMT), by sheer serendipity. More than my disbelief on how I had been fooled for so long about the workings of the economy and the nature of the money, I was excited that I had stumbled upon MMT. I was enthused to learn more about MMT.
I remember that my eyes almost popped out when I was reading Mosler’s (2010) book, The 7 Deadly Innocent Frauds of Economic Policy. Mosler lays out the seven false beliefs that has plagued the minds of most of the Americans and then goes on to explain very clearly why those beliefs do not hold ground in his book. According to Mosler’s (2010), the seven deadly innocent frauds of economic policy are as follow:
- “The government must raise funds through taxation or borrowing in order to spend. In other words, government spending is limited by its ability to tax or borrow” (p. 13).
- “With government deficits we are leaving our debts to our children” (p. 31).
- “Government budget deficits take away savings” (p. 41).
- “Social Security is broken” (p. 51).
- “Trade deficits are detrimental” (p. 59).
- “We need savings to provide the funds for investment” (p. 63).
- “It’s a bad thing that higher deficits today mean higher taxes tomorrow” (p. 67).
Nature of Money
Money is a peculiar thing. It has stirred a long standing debate amongst the economists on the origin of money, the importance of money in the economy, and so forth. This debate about the money has divided the economists into two camps, the Orthodox and the Non-orthodox. I will be discussing about what the nature of money is from these two perspectives.
The orthodox story of money begins with a barter story. They believe that in the beginning, there used to be a barter economy, where commodities used to be exchanged directly for other commodities. This belief is contrary to what Clower (1965) said, “money buys goods and goods buy money, but goods do not buy goods” because according to orthodox story, goods buy goods.
However, the barter system was inefficient. There had to be a presence of “double coincidence of wants” for it to occur. For example, if you wanted to exchange a sack of potato for a sheep then you would have to find somebody who had a sheep and was willing to exchange it for a sack of potato. There were also issues of indivisibility of certain goods. Continuing with the above example, if the owner of the sheep thought that his sheep was worth more than a sack of potato but, wanted to take home a sack of potato then, he couldn’t just cut the sheep into pieces and engage in the exchange process.
Due to the inconveniences with the barter system, the orthodoxy say that the people, spontaneously and unanimously, decided to settle on gold to be used as the medium of exchange or the commodity money. Due to inefficiencies of barter system, traders chose one particular commodity to serve as the money numeraire (Innes 1913; Wray 1998; Ingham 2000). The advantage of using metal as a medium of exchange was that it was easily divisible (unlike cattles) and was non-perishable (unlike potatoes). Also, metal was very portable to carry around unlike other commodities. So, according to the orthodox story, the system of c-c’ evolved into c-m-c’. However, the problem with owing gold and other precious metals was it was prone to theft and robbery. So, people started to store their gold with goldsmiths for safety reasons as they owned vaults. The orthodoxy goes on to say that the goldsmiths started giving out notes and sometimes giving out more notes than they had gold in their vaults. And hence, the story of the deposit multiplier came into play in the economy.
In the recent history, the government used to issue paper money with a promise to convert it to gold on demand. Later on, the government decided not to convert money into gold and started issuing fiat money that was not convertible to gold or any other precious metals. For orthodoxy, fiat money has nominal value but does not have real value since it is not backed by precious metals such as gold.
In orthodox view, markets existed before money did. They believe that people used to go to markets to barter goods (without money). Hence, they say that the markets existed prior to money did. They say that the money was introduced to function as a medium of exchange to lubricate the existing markets and reduce transaction costs. Smithin (2003) mentions, “… ‘implicit mainstream view’… focuses on the medium of exchange function per se, and asserts that money arises as an optimizing response to the technical inefficiencies of barter” (p. 18).
The orthodox believe that “Money is Neutral”. For example, the Monetarists believe that Money is non-neutral in the short run but it is neutral in the long run. Hence, they think that money does not matter. They also believe that Money is exogenous. In the control sense, they believe that the government controls the supply of money. The logic is that the government sets the requirement for required reserve ratio (RRR) and therefore, it has the power to control the supply of money. Brunner (1968) insisted that since the government controls the RRR, they control the reserves; consequently, the government can control the supply of money (p. 9-24). They argue that money can only determine the nominal value of real variables and that the causation runs from money to prices (MV =PQ). They also claim that the causality runs from income to spending. They believe that the government uses tax revenue to run the government.
They believe in general equilibrium, and in general equilibrium, you cannot find an important role for money or for financial institutions. Goodhart (2008) argues that the reason orthodoxy cannot find a place for money in their general equilibrium model is because default is ruled out by assumption. They believe that promises to service debt are always kept, hence, there is no uncertainty. This means that the lender are always willing to lend because there is no risk of default on the loan. In contrast, heterodox believe that there is a risk of default on money (IOU). As such, credit worthiness of the debtor is important.
Orthodox claims that government compete in the market for loanable funds when it needs to borrow in order to deficit spend and hence, push the interest rates up. Unorthodox argues that government borrowing does not increase interest rates, instead it provides an opportunity to the private sector to earn interest on otherwise non-interest bearing reserves (the government has started to pay interest on reserves now). Also, unorthodox argue that the sale of government bonds is not actually government borrowing to spend. Infact, they claim that the government does not need to borrow since it has the power to create money. When the government is engaged in selling bonds, it is actually draining the excess reserves from the market.
Orthodox believe that there is a natural rate of unemployment. They claim that the attempt to increase employment beyond the natural rate will only lead to hyperinflation in the long run.
MMTers agree with the monetarists that one of the ways to fight high inflation is to cut government spending or to raise taxes but, MMTers disagree with monetarist’s belief that the cause of high inflation is due to a simple matter of too much money.
Orthodox do not believe in fiscal policy. They assume that there is perfect competition and perfect knowledge. They believe that market adjusts itself. Therefore, the government should leave the market alone (invisible hand takes care of it).
Wray (2012) mentions that money might have evolved out of the penal system, which consisted of a set of fines, tithes, and fees for settling disputes. Wray also comments that the emergence of money was always preceded by the emergence of a class structure, which gave rise to state power. Knapp ( 1973), Lerner (1947), Goodhart (1997), and Wray (2012) argue that the state imposed a tax liability on its people, and enforced them to pay the state in the unit of account that the state had decided upon. Henceforth, a certain unit of account came to dominate state markets since it was the required unit of payment to fulfill government tax and fee obligations.
Money is a unit of account to measure debt, just like a metric system is a unit of account to measure physical things. Money is a debt measured in the unit of account chosen by the government. Money, as a unit of account, keeps record of the debt. In the case of the US, the unit of account is the US Dollar, in Mexico it is the Peso, and in India it is the Rupee. The dominant practice has been for each nation to adopt its own unique money of account (Wray 2012). One of the exceptions is the European Union, where multiple nations have been using a single currency, the EURO. I will briefly talk about the EURO later on. The sovereign government has the power to name the unit of account. Money is an IOU (I owe you), which means that it is a financial liability, obligation, or debt to pay, and it is denominated in the state money of account. The coins, bills, electronic entries on bank balance sheets (demand deposits, bank reserves) are the “money things”, hence, “money things” are simply “money denominated IOUs” (Wray 2012). Also, money helps to move resources to the public sector.
Lerner (1947) mentioned that money is, “a creature of the state” (p312-p317). What he meant by that is that the state has the power to create money, and choose the unit of account. The state also has the power to impose tax and fee liabilities upon its citizens in its monetary unit of account. The tax obligations imposed by the state creates a demand for the state’s money. In other words, tax drives money. Forstater (2006) mentions:
“…the concept of ‘tax-driven money’ (TDM) refers to the idea that the power of the State (or other political authority) to impose a tax (or similar) liability payable in its own currency is sufficient to create a demand for that currency and give it value” (p. 202).
Minsky (1986) said that “everyone can create money” but the issue is that it has to be enforceable or accepted by the others.
According to modern money theory (MMT), government creates the money and issues it to its people and then, imposes tax liability on its people in that money of account. The government is the issuer of the currency and its citizens are the user of its currency. In this kind of system, logically, the government has to spend first in-order for it to be able to impose tax liabilities. On the same note, government cannot impose tax liability in excess to what it has supplied to the public. So, the causality runs from spending to income in aggregate level unlike households, where the causality is reversed. Since the government holds the power to create money, it also holds the power to destroy money. When the taxes are paid to the government, the money received in taxes are destroyed. Money is a medium to keep record of the debt: government creates money by crediting the bank account using a keystroke and when the taxes are paid, it destroys that money by debiting the bank account. It is a simple accounting method. Molser (1999), Forstater (1999), and Wray (1998) talk about the creation and destruction of state money by the issuer of the currency, “…creation and destruction of money by the sovereign State constitutes the ‘vertical’ component of the money supply process” (as cited in Forstater, 2006, p. 202).
The issuer of the IOU must accept its IOU back in payment, otherwise, it is called a default. So, the government who issues state money must accept it back in payment (Innes).
Keynes (1936) mentioned:
“Unemployment develops, that is to say, because people want the moon;–men cannot be employed when the object of desire (i.e. money) is something which cannot be produced and the demand for which cannot be readily choked off”. (p. 235)
I will briefly talk about private financial liabilities here. Private financial liabilities are denominated in the government’s money of account and they are ultimately convertible into the state’s currency. On a pyramid of liabilities, the nonbank IOUs are at the very bottom. The bank IOUs are just below the government IOUs. Government IOUs (non-convertible) is at the very top of the pyramid. Liabilities issued by those higher in the pyramid are more acceptable, in general. If the government promises to convert its currency on demand then, that government’s IOU is not at the apex of the pyramid.
One cannot service one’s debt using one’s own IOU. They have to use someone else’s IOU to retire their debt. Normally, those lower in the pyramid use the bank’s IOU to retire their debt, and the banks use the government’s IOU to retire their debt. However, government can retire its debt using its own IOU because, it’s currency is at the apex of the pyramid. Also, there is no other IOU that is higher than government’s IOU.
MMT share their belief with “endogenous money” or “horizontalist” approach. In the control sense, they believe that the money cannot be exogenously controlled, meaning that the central bank (CB) cannot control the supply of money or bank reserves (the recent exception being the Quantitative Easing (QE)). They believe that the function of CB is to provide or accommodate the demand for reserves by the banks to clear accounts. The CB’s role is also to operate as the “lender of last resort” (LOLR) during crisis to stop a bank run. On one hand, in the control sense, the CB’s target interest rate is exogenous, meaning that the interest rate is exogenously controlled or set by the CB. On the other hand, CB uses the interest rate as a tool to hit the targeted exchange rate. So, in theoretical sense, CB has given up the control of the interest rate since its goal is to hit the exchange rate target.
In contrast to orthodox view, money is never non-neutral to heterodox. Money matters and it plays an important role in the economy. Orthodox believe that the money pre-dates the market. They believe that the production always starts with money. They do not believe in commodity money. Clower (1965) said, “money buys goods and goods buy money, but goods do not buy goods” and hence a commodity can never be money (gold cannot be money). It has to be a unit of account.
I will very briefly go over the heterodox approaches to money below:
Marx, Keynes, and Veblen argues that the production always starts with money. The capitalists engage in production to end up with more money than they started out with i.e. M-C-M’, where M’ > M (M is the initial capital). Marx calls it, the surplus value.
Institutionalists argue that money is an institution. Money is important because possession of money gives political and social power. This power can be used to do good and/or bad in the society.
Post Keynesians (PK) argue about money and uncertainty. They believe that the government is the monopoly issuer of the high-powered money (HPM). They believe in the power of the state to create and destroy money. They believe that government deficit spending means private sector surplus. Whereas, monetarists believe in the opposite view: they believe that government spending crowds out private spending. PK say that since there is uncertainty, economic actors write contracts in money term. They argue that the government cannot and has not controlled the supply of money. They believe in Keynes’s liquidity preference theory (1936).
Chartalists argue about the state money theory. MMT is based on chartalist theory of money.
Functional Finance argue about the state money theory and government spending.
Now, I will briefly talk about the sectoral balance approach. According to the text book (Wray 2012), the economy is divided into three sectors. They are domestic private sector (households and firms), domestic government sector, and foreign sector (the rest of the world (ROW)).
These three sectors cannot run budget deficit or budget surplus simultaneously. One of the sectors must run budget deficit in-order for the other sector(s) to be able to run budget surplus, by accounting principle. If we add up the deficits run by one or more sectors, this must equal the surpluses run by the other sector(s). According to the text book (Wray 2012), Wynne Godley’s simple accounting identity in regards to sectoral balance approach is:
Domestic Private Balance + Domestic Government Balance + Foreign Balance = 0
This accounting identity helps us to clearly understand how these three sectors of the economy work to create balanced budget, on the macro level. For example, in the aggregate level, if we have a balanced budget in the foreign sector, then either the domestic private sector has to be in surplus or the domestic government sector has to be in surplus. In order for one sector to be able to accumulate net financial wealth, the other sector(s) has to accumulate equal amount of debt.
A sovereign government who issues its own nonconvertible floating currencies can afford to purchase anything that is for sale in its own currency (including labor). It can never run out of money because a sovereign government can create money by simply crediting bank accounts with a keystroke. It does not need to borrow to spend because it has the power to create money. It will never go bankrupt and it can never be forced to default on its own currency (Russia was not forced by anybody to default on its own currency, it made a political decision to default on its own). It can always service its debt. Examples of such currencies include the US Dollar, the Australian Dollar, and the UK Pound.
A sovereign government deficit spending is sustainable because sovereign government itself is the issuer of the currency. However, the private sector deficit spending is not sustainable because the private is the user of the currency. There is a huge difference between the “issuer” of the currency and the “user” of the currency. Although, it is widely believed that the government runs like a household, the truth is, the government does not run like a household. Therefore, it does not have a budget constraint like a household.
According to the accounting identity that we discussed above, (let us assume that the foreign sector has balanced budget) for the public sector to be able to run budget surplus (like most Americans want), the private sector has to run budget deficit. However, private sector budget deficit cannot be sustained whereas the public sector budget deficit can be sustained. The only way a private sector can accumulate net financial wealth is if the public sector decides to deficit spend. In Dr. Wray’s term, “it takes two to tango”. Hence, government budget deficit is not bad for the private sector. In the text book (Wray 2012), there is a graph by Scott Fullwiler that shows how the three sectors (the domestic private sector, the domestic government sector, and the foreign sector) balance in the macro level. It shows the “mirror image” of how the deficit spending of one or more sector(s) is a net financial wealth accumulation for the other sector(s) (p. 29).
However, the government budget deficit spending is not sustainable for the nations under the European Monetary Union (EMU) system. The reason is that the nations under the EMU have abandoned their sovereign currency and have adopted Euro as their currency. The Euro is like a foreign currency to each nation under the EMU system. The European Central Bank (ECB) creates and issues the currency to the EMU nations. EMU nations are the “user” of the currency and not the “issuer” of the currency. Therefore, they run like a household, in the sense that they have budget constraints. Such nations’ budget deficit spending cannot be sustained.
Although, the ECB is the issuer of the currency and acts like a LOLR, the Maastricht criteria bars the ECB from rescuing financially troubled nations (although, there have been some exceptions during the current crisis). The EMU system have divorced EMU nations from its currency. When a nation is separated from its sovereign currency, a nation is left with a very little space for domestic policy. It also exposes the country to budget constraints and default risks.
Therefore, a sovereign nation who issues its own nonconvertible floating currencies, like the US, has the most domestic policy space. Such nation can always afford to spend as much as it likes by crediting the bank account. However, just because it has unlimited budget doesn’t mean it should spend excessively. There will be negative repercussions if the government doesn’t constraint it’s spending. For example, excessive spending can cause inflation, could pressure the exchange rate, and might leave only a few resources for private interests.
I will briefly go over Lerner’s functional finance approach to policy. The text book (Wray 2012), talks about the two principles that Lerner proposed. The first principle is that if there is unemployment then, it means that the government is not spending enough or the taxes are too high. Lerner proposes that the government needs to spend more in such event. The second principle is that if the domestic interest rates are too high, then it means that the government needs to provide more money in the form of bank reserves, to lower the interest rate.
Domestic spending is largely discretionary. Spending largely determines income. Sectoral balances should be taken as mostly nondiscretionary. I believe that the government should use policy that promotes full employment with price stability. Since we know that the government doesn’t have budget constraints, it should spend/invest/sponsor in the programs that reduce poverty, promote better education, science and technology, and general betterment of the society. In short, the government should engage in public purpose (public purpose is said to be inherently progressive and aspirational).
One of the methods to achieve full employment is direct hiring by the government. A program called the “employer of last resort” (ELR), which is also known as “job guarantee” (JG). It is designed to provide direct employment by the government. Wray (2012) mentions, “…JG/ELR program actually acts as a powerful macroeconomic stabilizer, achieving full employment (as defined) while enhancing price stability. The key is that the JG provides a price anchor even as it provide jobs for anyone wanting work at the program wage and benefits package” (p. 222).
The JG/ELR version that has been explained in the text book (Wray 2012) is consistent with the functional finance approach of Lerner but also takes into account the inflation issue.
Money is an IOU issued by the government. The demand for the government’s IOU is driven by the tax liability the government imposes on its people.
There is no reason to fear to use fiat money thing that are not backed by precious metal or foreign currency.
Sovereign inconvertible currency issuer has the most domestic policy space.
In the modern times, the government can create money rather easily. All it has to do is credit bank account with a keystroke. When the taxes are paid, that money is destroyed by debiting the bank account.
Affordability is not an issue for sovereign inconvertible currency issuer like the US. It can always purchase anything that is on sale in its own currency. However, it should not spend excessively since that can cause inflation.
Divorcing a nation from its sovereign currency (monetary authority) is not a good idea. In doing so, it reduces the domestic policy space of a nation. The experimentation with the EURO has proven that a nation needs both fiscal and monetary authority to be able to stabilize the economy.
Sectoral balance approach tells us that government budget deficit means private sector budget surplus.
Government should spend in the economy when there is economic downturn instead of taking austerity measures.
Money is not neutral.
Money is a debt.
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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Brunner, Karl. “The Role of the Money and Monetary Policy.” Federal Reserve Bank of St. Louis review 50, # 5 (August 1968): 9-24.
Clower, R. (1965). The Keynesian Counter-Revolution: A Theoretical Appraisal, in F.H. Hahn and F.P.R. Brechling, (eds), The theory of interest rates, 103-125, London: Macmillan
Forstater, M. (2006). Tax-driven money: additional evidence from the history of economic thought, economic history and economic policy. In M. Setterfield (Ed.), Complexity, endogenous money and macroeconomic theory (p. 202). Cheltenham, UK: Edward Elgar Publishing Limited.
Goodhart, C. (1997, March 20). One government, one money. Prospectmagazine.co.uk. Retrieved December 1, 2013, from http://www.prospectmagazine.co.uk/magazine/onegovernmentonemoney/#.UqZuH_RDuSo
Ingham, G. (2000). Babylonian Madness: On the Historical and Sociological Origins of Money. In John Smithin (ed.) What is money. London: Routledge.
Innes, A. M. (1913). What is money? Banking law journal. May, 377–408.
Keynes, J.M. (1936). The general theory of employment, interest and money. New York: Harcourt-Brace & World, Inc.
Knapp, G. F. ( 1973). The state theory of money. NY: Augustus M. Kelley.
Lerner, A. P. (1947). Money as a Creature of the State. The American economic review, 37, 312-17
Minsky, H.P. (1986). Stabilizing an unstable economy, New Haven: Yale University Press.
Mosler, W. (2010). The 7 deadly innocent frauds of economic policy. USA: Valance Co., Inc.
Smithin, J. (2003). Controversies in monetary economics. Revised Edition. Massachusetts: Edward Elgar Publishing, Inc.
Wray, L.R. (2012). Modern money theory: A primer on macroeconomics for sovereign monetary systems. New York: Palgrave Macmillan.