Democracies With Sovereign Currencies Can Dance

By Anonymous
April 9, 2019

The mainstream attack on MMT is nothing less than an attempt to disguise the glaringly obvious error at the center of the mainstream view of economic thinking.  Mainstream economics is a nihilistic theory devoid of moral anchor.  Mainstream economics ceased to explore the operation of the real economy decades ago and has become an intellectual exercise that assumes the organization of modern society is justified simply because that is how it is.  While some mainstream economists may want to tinker around the edges to make the system more fair few really want to call into question the organizing realities.  The biggest reality they do not wish to face is that money is a symbolic creation rather than an actual productive resource.

Mainstream economics abandoned any attempt to justify the payments to capital owners when they surrendered the field to Post-Keynesians at the end of the Cambridge controversies.  Capital is not paid due to its productivity.  Capital is paid as a residual that is left over after production occurs.  Capital is simply another form of rent.

With the abandonment of any attempt to justify the role capital plays in the production process mainstream economists ventured further and further into the intellectual woods.  They began to abandon any semblance of justifying the payments to capital.  The distinctions between capital as machinery and capital as money blurred and the mainstream literature simply stopped caring about the topic.  Money is capital, and control of money gives the lords of finance a right to call upon the income stream of society, why would anybody question that?

Machinery and money capital are the same thing in the writings of most mainstream economists.  This line of thinking places the banking industry, not the engineering community, as the source of economic progress.  The ability of the bank to make a loan is how the house is built.  The ability of the bank to finance the creation of a new business is the origin of the value of that business.  Or so the mainstream vision presumes.

The ability to fund the action is the power of capital.  Capital, in this mainstream vision, is the power to fund the activities of the people who wish to take action.  The mainstream has spent decades building up a theory based upon the assumption that funding of activities is the justifying reason for capital to be paid its income.  The reasoning of the mainstream is simple:  finance risks its wealth in order to pay people to take economic actions and that risk is the reason finance should be paid.  Finance funds those actions through the selfless acts of savings done by the titans of finance and that savings is costly in terms of sacrificed personal consumption.  The payment is clearly justified, within this perspective, because each act of financing risks the loss of that sacrifice.

MMT calls into question this fundamental justification of the power of the financial elites.  By showing that money is a creation of the state and banks it threatens the very myth that underpins the massive stream of income diverted to the overlords of finance.  MMT shows that government creates money through the act of spending and destroys it through taxation.  MMT forces economists to admit that banks do not fund lending through savings.  Instead MMT shows that savings is the result of borrowing and that the lords of finance literally create the money they lend with the wave if a hand.  If the money is simply created by whim, it is much harder to justify the incredible payments these financiers obtain.

Mainstream theorists do not attack these fundamental points of MMT, they pretend that their actual issue is with the outcomes of uncontrolled government spending.  Of course MMT would never justify such an inflationary policy.  Instead MMT demystifies the true source of power in finance and this is what is feared.  MMT points out that money is a creation of society and currently we have given a monopoly on that creation to the financial elites who have used that monopoly to extend their personal power.  They have used that monopoly to build mansions and private jets while letting millions go without educations and healthcare.  They have used that monopoly to empower themselves as economic overlords while indebting their fellow citizens without justification.

MMT has the gall to point out that society is only at the mercy of these titans for as long as we choose to be.  Mainstream economists are afraid because MMT practitioners have pointed out that the emperor has no clothes.  For as long as nobody was hearing what MMT was saying the emperor could dance, but now the emperor’s aides are afraid the citizens might be listening.

[This post was posted as anonymous as the author is a grad student who fears his professors.]

16 responses to “Democracies With Sovereign Currencies Can Dance

  1. Charles Silva

    To be honest, I think the attacks against MMT are just due to people literally not understanding it because they are so indoctrinated by mainstream economics. I experienced this myself when learning heterodox econ like MMT and Marx. Yes, there are powerful interests that MMT threatens. But I think the mainstream resistance is mostly due to the inertia of institutional ideology.

  2. Howard Switzer

    Can you name one “democracy” with a sovereign currency?

  3. It IS idiotic that we enable a private monopoly on the most powerful and important factor in a monetary economy, namely money/credit creation. Even more idiotic is not seeing through the virtual monopoly paradigm of Debt Only as the sole form and vehicle for the distribution of money/credit. Finally, economists have failed us by being off in thrice removed abstraction from present time observation of the economic process itself and hence have missed the significances and monetary policy potentials present at its terminal ending point at retail sale. Knowing the mechanics of money creation is important. Knowing how implement a new monetary paradigm is earth shaking.

  4. And, so what is MMT going to do to save the environment? In Consilience, the last chapter, EO Wilson, places the blame for climate change directly on economists who refuse to account correctly for the use of the earth’s resources. This is how economists have failed us, and no new monetary paradigm like MMT is going to save us. It is just a distraction at this point in history.

  5. Steven Craig Hummel

    The ecological problem is resolvable only after overcoming the financial delusion that the massive programs necessary for reducing green house gases and (as quickly as possible) the off planeting of the energy involved in production are “too expensive”. Enforcing individual and systemic monetary austerity is idiocy. Not being willing to finance species and planetary survival is insanity.

  6. James Cooley

    I’ll give you one example to consider. Do you think the Green New Deal is at least a step in the right direction to save the planet? MMT shows not only how a sovereign government can afford to implement a GND, but shows why “How are you going to pay for it?” is the wrong question to ask. How to pay is irrelevant for a sovereign currency issuer with a free floating currency and no debts in other currencies. If the resources are available and unused, a GND can be implemented.

  7. Charles Silva


    I’m not really sure what you’re getting at. If anything, MMT is crucial for implementing policies like the Green New Deal because it dispels the myth that we ‘cant afford’ it.


  9. Good article. I think it’s insane that banks take a cut of the compounding interest on your mortgage. They should just have flat service fees, and interest should be based on asset valuation risks, not opportunity cost or the borrower’s risk. Obviously the reputation of the borrower should affect whether or not they qualify for the loan, but it should not determine the rate. Money, as an accounting record, has no opportunity cost.

  10. GrahamPaterson

    It is a sad reflection on the education of economists that C H Douglas, back in the 1930s, pointed out that “the emperor had no clothes”. His book, “The Monopoly of Credit” is a very real and explicit forerunner to the reality of MMT. It has long been my contention that MMT is not a “theory” but an explanation of how a proper money system should be made to work. Douglas clearly saw that the “monopoly of credit means the effective domination of human activity and is being pursued with relentless persistence.” That persistence has continued to the point that “the outcome of this policy, so far as can be seen, determines the earthly destiny of the human race.”
    Douglas’s foresight is now coming home to roost with the looming environmental crisis facing the planet.

  11. EO Wilson is blaming mainstream economists. I don’t know if he has ever even heard of MMT. MMT economists also blame mainstream economists for preventing any significant actions to stop climate change. Please read more articles at this blog, like:

    A US Climate Platform: Anchoring Climate Policy in Reality (1/3)
    Posted on September 17, 2015 by Michael Hoexter | 5 Comments
    By Michael Hoexter

    Living in the Web of Soft Climate Denial
    Posted on September 7, 2016 by Devin Smith | 12 Comments
    Michael Hoexter, Ph.D.

    A Global Marshall Plan for Joblessness?
    Posted on May 12, 2016 by Pavlina Tcherneva | 11 Comments
    By Pavlina Tcherneva

    Democratizing Government Spending in an Era of Climate Change: Decision Criteria and Spending Priority Lists – Pt 1
    Posted on June 25, 2014 by Michael Hoexter | 4 Comments
    By Michael Hoexter

    Naomi Klein’s “Hard-Money” Ideas Undermine Her Laudable Climate Action Goals
    Posted on November 13, 2014 by Michael Hoexter | 16 Comments
    By Michael Hoexter

    Bill McKibben’s and the Climate Movement’s Fatal Misunderstanding of the Role of Demand (for Energy/Fossil Fuels)
    Posted on May 18, 2015 by Michael Hoexter | 19 Comments
    By Michael Hoexter, Ph.D.

  12. First and foremost, of course, no MMTer would ever hold it back with “How are you going to pay for it?”

  13. Christine,
    The main social justification for defilement of the environment is it will generate employment. The main resistance to transitioning to sustainable energy systems is the fear that it will cost jobs. MMT demonstrates that people can have public sector funded employment that doesn’t defile the environment. Sovereign monopoly issuers of their own currencies can employ as many people as are seeking work, to repair environmental damage, protect biodiversity, transition to a sustainable energy system, and all the other work that needs to be done to save the planet. It is not a distraction, it is part of a solution. Environmental sustainability is made more possible by adopting an MMT based analysis of the economy.

  14. John Hermann

    Could anything be more insane than for the human race to die out because we “couldn’t afford” to save ourselves? — John Hotson

  15. Howard Switzer

    We cannot ignore the idea that we need a NEW financial system, not a re-justification for the one we have.

  16. Creigh Gordon

    IMO, MMT is being hated on because it eventually arrives at two conclusions. One is that policy options exist that would result in full employment and stable prices. The other is that monetary policy (interest rate manipulation) is ineffective as an economic control mechanism and fiscal policy (spending and taxing) should be used instead. These two conclusions separate the objectors into two classes.

    There are plenty of people in this country whose level of profits depend on a pool of unemployed people willing to flip burgers or whatever for minimum wage. These people have bought-and-paid-for think tanks and economists whose job is to come up with reasons why we can’t have full employment and price stability.

    There is another class of economists whose careers and reputations are tied up with monetary policy. MMT attacks the very basis of their world view.