MMT And Debunking AMI: Postive Money

Steve Grumbine talks with NEP’s L. Randall Wray for Real Progressives LIVE. Topics include MMT and Debunking AMI: Positive Money and other important and relevant economic issues that affect the progressive agenda.

19 responses to “MMT And Debunking AMI: Postive Money

  1. If you can get a transcript of this up, please do so. Thanks. Not everyone has time for a long video. But many can skim through a transcript for the parts that they are most interested in reflecting on.

  2. Yeah, a transcript would be wonderful.
    Not having to type Dr. Wray’s comments would help avail a nice discourse on the ‘apparent’ debunking, which, to be honest, somehow I missed.
    where was that?
    Did you get the debunking of public money, Jill, because that is what we would have if the Guv issued money via spending.
    which is what we all want.
    So, why, and what, is he debunking.

  3. Ya I’d be interested in the transcript of the part about Positive Money, as an hour video is a bit long.

    The last thing I remember on the Wray vs PM series of debates from last year, was that Positive Money came to a weird conclusion about money matching the definition of equity – that was a really odd reply to the debate, which I don’t think Wray responded to, but I haven’t seen a counterargument yet and am confused enough by PM’s conclusion that I’m unsure how to dispute it myself?

    I remember that being one of the few economic/theory debates that I really made an effort to read up and dig into the details for, to try and give informed/useful replies in the comments etc. – and where I came to the conclusion personally, that part of the differences between both sides might largely be due to the semantics/words used – it would be interesting to see where the crux of that debate still lies, and how the strange money-as-equity response from PM is flawed.

  4. Randolph Wray was good. We could have such a great society with a shorter hourly week, Medicare for all, good state pensions, a lower retirement age. And it can be done with lower taxes.

    Randy raises some good points about tackling the problem of runaway CEO wages at source rather than trying to tax them. And I liked his idea on corporation tax – do away with it. Now if you are on the left, like me, you might find the idea of doing away with corporation tax abhorrent at fist, but Randy makes some excellent points.

    And governments have the money to tackle climate change without raising taxes. So the Right can’t stop us trying to tackle climate change on grounds of cost. This will expose the propaganda of the fossil fuel industry.

    We could also be developing new Hi Tech Green industries creating well paid, skilled jobs for Americans. The government could set up incentives for private industry, or even fund some of its own research to benefit everyone.

    We have the science, the skills, the innovation, the know how, the intelligence, the cleverness, so what stops us from creating a great society? Just a few selfish mega rich elite at the top who have captured our government and who own the media which puts out their propaganda. They have also captured the universities which teach neoclassical economics.

    I’m so pleased with MMT. If this catches on progressive left politics could become unstoppable. Great public services but with lower taxes. This is not socialism, but common sense. I’m spreading the word.

    • “”And governments have the money to tackle climate change without raising taxes. So the Right can’t stop us trying to tackle climate change on grounds of cost. This will expose the propaganda of the fossil fuel industry. “”
      Would that this were so.

      But ….

      A lot of the good public policy elements being espoused by MMTrs have nothing to do with any of MMTs tenets, but of Post-Keynesian theories that are limited to proposing more public debt funding of these endeavors. But Post-Keynesians do not believe that the government DOES create new money via spending, just that they should be able to, based on sovereignty. We agree.

      As Dr. Kelton explained at the Minsky conference, today, any public good requiring more debt is dead in the water, from both sides of the aisle.

      Now Trump wants to borrow our way to infrastructure-led prosperity, meaning more debt, but also more competition FOR that new debt.
      Climate restoration ? Carbon-balancing ? Greedy old crony-capitalism ?
      Where’s Steve Bannon to make this call?


    • Howard Switzer

      Keven Kavy outlines the things we could do with sovereign non-credit money being spent on common good priorities. This what Greens and progressives want but for the most part don’t understand. I tried hard to get Jill to come out swinging with the Green monetary reform plank, which is what this would be, but she lacked confidence in talking about it. (?) I told her gov would not need to tax becasue it could create the money and as J.D. Alt pointed out that with such a system cost is no longer a matter of money but a matter of resources, which is how it should be, a resource based economy. I’m glad that MMT has helped you know this. What I don’t understand is the misrepresentation of AMI and Positive Money nor the awful notion that money cannot be created without debt. Why should government created money have to be entered on the books as a debt? A debt payable to whom? The banks did not lend it, government can spend it and the AMI & PM proposals allow banks to lend government created money held in time deposits, which is what they call 100% reserve. Why would that be a problem? It seems the best of both worlds, we would need less regulation so smaller government and less taxes for the right, and a more caring society addressing poverty and climate change for the left.

      • I emailed a prominent MMT professor about this and he agreed that government created money is not debt as we know it. From a technical point of view government created money is recorded as double entry bookkeeping so it might be seen by some economists as debt, but the government created the money and can’t really be in debt to itself. This professor prefered to call it government equity money as the government had a lot of infrastructure and public investment to back up the currency. Positive Money would then be calling what Randy says its government debt government equity money. The same thing but different terminology.

        If the government creates the money it needs itself then it does not need to borrow it from the private sector. What PM is saying is that as the private sector creates the money out of nothing and then loans it to the government, then why doesn’t the government create the money it needs itself.

        Randy does explain how the bond market works very well, but Bill Mitchell still believes that bond holders get a free ride. They complain about people on benefits and yet take massive government handouts themselves.

        • Correction: Positive Money would then be calling what Randy says is “government debt” government equity money.

          • Howard Switzer

            Thank you Kevin for doing that and I’m happy that Randall’s confusury was cleared up, government issued money is not debt but equity, just as Positive Money and AMI say. Government debt liability is mostly in bonds, government issued money is equity in the nation. All Americans should be allowed their share in that equity as AMI and PM have proposed …so I don’t understand why the “debunking” as there is nothing to debunk.

            What we do have is the tremendous task of getting a government that will step up to its responsibilities to care for the nation and that will require all of us who understand this to be pushing together to get it out into public awareness so everyone knows.

            I lived in a community in the 70s and once when loaded truck of concrete came it could not get up the muddy hill as the tires just spun. The call for “monkeys” went out and soon there was 30-40 hippies pushing that full truck of concrete up the hill. I would not have thought it possible but there is was.

            So…. Monkeys!! Lets push this thing up the hill.

        • A lot of times debt- based credit – the money-power tool of the Creditocracy – has a way of being presented as ‘basically the same thing’, and ‘equal’to public money, or money issued debt-free.
          But it is the opposite of the same thing, and as unequal as the scales can be tilted.
          In favor of money power over politics.

          All public investment made under our debt requirements represent that amount ‘owed’ by the public to the private sector.
          Had all that investment been made with public money, there would be the same amount ‘owned’, again as public equity.
          So looking at their ‘equivalence’, this would be to represent the difference between $19 Trillion public Debt, and $19.5 Trillion public Equity on the national economy’s balance sheet, or a minimal difference of $39 Trillion, not counting the interest.
          So, $39 Trillion.
          If you wanna call that ‘functionally-equivalent’, then the function cannot be the public ‘good’.
          Rather, it’s opposite.

          • Howard Switzer

            Thank you for making that clear, clear, Joe. That is one of the things that I’ve felt MMT doesn’t make clear and yet that is the most important point of this whole business, isn’t it? Thatcher tried to eliminate the concept of ‘public’ from the public mind and others do as well but it is the public vs private ownership of the money system that is at issue, is it not? And the transition can be no more disruptive than an exchange in YAP where money is not physically exchanged, becasue it is in large heavy stone wheels, but the ownership of it is exchanged.

  5. Howard Switzer

    Yes, I agree, a transcript would be great but I did watch it, as painful as it was. There was no debunking of AMI or Positive Money, however, it was more of a dismissal with a sneer rather than providing any evidence that what they propose is wrong. He then went on to mis-characterize monetary reformers as “wanting to not allow banks to lend money.” I’m a Green (we were included in that brush) and I don’t know anyone who says that, even the socialists who want to take them over don’t say that thus it seems a bit slanderous. AMI certainly does not propose any such nonsense. He did not show any, and I don’t believe there are any, gaps in the accounting knowledge and presentation on these facts by AMI and Positive Money. And, if there is anything, of either banker-FRB, or public money operational design that was not covered by AMI then Chapter 4 of Dr. Joseph Huber’s new book on Sovereign Money, would most assuredly close that gap. And did I hear him say there is no fractional reserve banking?

    I thought we all wanted government issued money for public spending for the common good?
    Wray, regarding AMI and monetary reform in general, seems to be practicing confusury.

  6. Maybe Steve could be responsive here.
    “Debunking” in economics is all the rage these days, for good cause given.
    Totally deserved as to those who teach from those more classical textbooks, for sure, but given that AMI and Positive Money both profess toward the same end that MMT espouses as the way things ARE today, meaning that the Guv SHOULD create public money via spending ……. then why would Wray and MMT need to oppose, let alone debunk, such a proposal?
    That’s the question.
    And as to John B’s point, money thus created (via public purpose spending) WOULD become the permanent equity of the national economy and government.
    Why would it not?
    Were not Greenbacks so accounted for 135 years or so?

  7. It seems that the way to get anything done politically these days is to first convince the propagandists who control the beliefs of the voters– over at Breitbart, Fox, Drudge etc. I don’t expect them to be open to things coming from citizens. Their agendas appear to be handed from the top downwards. And the ideas of MMT conflict with the beliefs of the top Right Wing donors and propagandists who dictate the agenda for the media, and thus for the nation.

    If we want a change, we need to start acknowledging where we are now, so we know where it is we are starting from.

  8. MMT has the process of money creation correct. However, what nearly everyone misses including MMT and heterodox economists are the correct structural and paradigmatic targets, namely the virtual monopoly on credit creation by private finance and the ideas that money can be created only as debt, as a loan and only for consumption. Structurally, a public banking system could establish the needed competition to reduce financial costs, and either mandating the Federal Reserve or fourth branch of government with full political independence to create and distribute a $2000/mo. universal dividend to everyone 18 and older and also that sets a discount in the range of 30-40% to retail prices and then distributes the monies/rebates participating merchants for those discounts so that they can be whole on their overheads and profit margins. This downsizes the 5000 year old problematic business model of finance and accomplishes more monetary and economic democracy and frees enterprise from the vain attempt to solve a systemic lack of demand/individual income by re-distributing that scarcity….instead of simply costlessly eliminating it by income and price gifting.

    • Correct. The guaranteed job policy proposed by MMT would become an administrative nightmare where as a guaranteed income would be very simple to operate and would accomplish the same goals..

  9. Make that “only for production”

  10. The proponents of the Positive Money movement should take this all on board.

    Wray puts PM under the magnifying glass of double entry book keeping and tries to connect the statements PM makes about banking system. He describes some errors.

    Now what they (the PM money people) should do is take this advice on and say “ok we got some of our semantics wrong , we’ve now changed some ways we propose solutions to the problems we’re trying to address”. After all they are progressive and broadly state problems with parasitic financial system which are true as everybody agrees.

    However. If they become combative and continue on as if the critiques made is invalid (wrays critique falls on deaf ears) it makes them a liability to the progressive left.

    In some ways it makes them as embarrassing as neo-classical economists constantly being bombarded with proof their theories are flawed.

  11. MMT has a lot of things right and Randell Wray is very competent in his field but, bottom line, they are all apologists for our current monetary system of a central bank and commercial banks. He does not accept the concept of “debt free money” that many propose; money spent into the economy and allowed to stay there, not borrowed and not owed by anyone to banks. He allows, in accounting terms, that this does occur with coins minted by the treasury. From 1913, when the Fed was formed until 1933, the treasury printed gold certificates, just paper which provided a national uniform currency, and gave them to the Fed for use by commercial banks. Then when FDR removed the “gold standard” in the US the treasure still printed what was now money and gave it to the Fed. This process enables banks to earn interest on the seigniorage of US currency and the seigniorage of US money should benefit the citizens, not banks which are privately owned, for profit companies.