Category Archives: Guest Blogger

Thornton Parker

      In the first part of this series, we explained why MMT should be seen as a political problem rather than just an educational one.  In this concluding part, we will discuss where MMT promotion is most likely to fail or have good chances of success.  First, consider some poor prospects.   

      All readers of NEP know how Social Security works and it seems like a natural for MMT.  But is it?  Wall Street sees the program as a leak from what should be their profitable money flow.  For years, the former investment banker and secretary of commerce under Ronald Reagan, Pete Peterson, kept forecasting its failure.  George W. Bush tried to fix the leak by privatizing it.  Arguing the virtues of MMT for Social Security is a sure way to stir up Wall Street bees that are quiet at the moment.

By Thornton Parker

       The way a problem is seen can determine how or even if it gets solved.  When the French engineer, Ferdinand de Lesseps, was picked to build the Panama Canal, he saw it as another excavation problem as his Suez Canal had been.  But Egypt was flat and Panama had a mountain. 

When the United States took over the job, John Stevens, who was put in charge, saw it as a railroad problem.  The biggest task was to move ninety-six million cubic yards of rock and earth, as fast as the fifteen giant steam shovels cut them out of the mountain, from the Pacific side of Panama to the Atlantic side for building a dam and raising a lake that would be part of the canal.  

Crossposted from Phil Pilkington’s Blog – Fixing the Economists.

Readers are probably aware that there is quite a lot of discussion of Modern Monetary Theory (MMT) and the potential for fiscal experimentation batting around at the moment. Others have weighed in on this already, and I have little to add.

It is striking, however, that most of the push-back — where there is push-back — is not focused on trying to discredit the idea that we should engage in fiscal experimentation. Indeed, the notion that we should engage in fiscal experimentation seems to be, if not mainstream, at the very least part of the discussion.

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By Rohan Grey and Raúl Carrillo

Orthodox economists are often inclined to think of law as an external force that ‘intervenes’ to regulate otherwise naturally occurring economic phenomena. In contrast, Modern Monetary Theory and its antecedent intellectual traditions have long recognized that law in fact constitutes and shapes modern economies and the monetary regimes that underpin them. For example, Knapp argued explicitly that money was a “creature of law.” Similarly, Keynes, in A Treatise on Money, stated:

“The State…comes in first of all as the authority of law which enforces the payment of the thing which corresponds to the name or description in the contracts. But it comes in doubly when, in addition, it claims the right to determine and declare what thing corresponds to the name, and to vary its declaration from time to time-when, that is to say, it claims the right to re-edit the dictionary. This right is claimed by all modern states and has been so claimed for some four thousand years at least.”

Today, many of the core propositions of MMT can be understood as essentially legal arguments. Here are a few examples:

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