Tag Archives: MMT

National Retirement Infrastructure – Part 2

Posted on July 9, 2014 by J.D. Alt | 6 comments

1. Why we can afford it—2. Why we need it—3. How we can build it

2. Why we need it.

What is retirement anyway? For most people it seems to be the end of that middle period of their lives where some business, or institution, or civic entity has paid them Dollars in exchange for their labor or personal services. This “Dollar-earning-in-exchange-for-work” period can end at various points in a life-span, for various reasons planned or unplanned: Some of us become disabled by health catastrophes in our 40s or 50s, some find the particular skill we learned or developed over the years is suddenly no longer in demand (and it’s much too late to start over again). Many people are forced to stop providing their labor or services at a certain age by retirement rules designed to create employment openings for the younger generation coming along behind. While a few are fortunate enough to continue earning Dollars in exchange for their services right up until the very end—entertainers, writers, highly specialized professionals come to mind—the vast majority of U.S. citizens all share the same basic fate: at some point in time, with many years or even decades remaining in our life-span, we will cease earning Dollars in exchange for our labor or services.

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Posted in J. D. Alt

Tagged MMT, Modern Monetary Theory, retirement

National Retirement Infrastructure

Posted on July 8, 2014 by J.D. Alt | 16 comments

By J.D. Alt

1. Why we can afford it—2. Why we need it—3. How we can build it

1. Why we can afford it

We, who face mass retirement at the same moment our life-expectancy has been stretched far beyond the retirement savings we managed to set aside during our working years—and anticipating that future generations will face equal, or even more difficult retirement circumstances—we offer to provide the initiating, planning and management efforts required to build, for our collective use, a permanent “National Retirement Infrastructure.” This infrastructure will provide us with housing and social accommodations over the next several decades and, subsequently, be passed on to the next generations inevitably to follow.

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Posted in J. D. Alt

Tagged MMT, Modern Monetary Theory, retirement

DEBT-FREE MONEY: A NON-SEQUITUR IN SEARCH OF A POLICY

Posted on July 1, 2014 by L. Randall Wray | 68 comments

By L. Randall Wray

While we are on the topic of monetary cranks, I thought it might be useful to quickly address a cranky idea that often comes up in comments to my blogs and also during Q&A after presentations: so-called “debt-free money”.

The first time I heard it, my immediate reaction was “Say what?”, and the second was puzzlement at the non-sequitur.

I am not sure exactly which of the crank approaches explicitly adopt the notion, but it seems common to a lot of them. I’m not going to address any particular approach but instead will address only the idea that we can have a “money” that is not a “debt”.

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Posted in L. Randall Wray

Tagged debt-free money, MMT, Modern Monetary Theory

More on Consolidating or Not

Posted on June 27, 2014 by Scott Fullwiler | 3 comments

By Scott Fullwiler

As Randy’s recent post on consolidating vs. not explained, a number of critics argue that consolidation doesn’t “really” happen. Of course, that’s not the point MMT is making, as we’ve noted numerous times, including Randy’s post. Regardless, though, there are real-world governments that do publish consolidated reports.

The UK posted its report here.

Neil Wilson has reviewed it for those that don’t want to read through the whole thing here.

Hat tips both to Neil Wilson and Economonitor commenter acornus

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Posted in Scott Fullwiler

Tagged Consolidating, MMT, Modern Monetary Theory

To Consolidate or Not To Consolidate, that is the Question (or maybe it isn’t)

Posted on June 26, 2014 by L. Randall Wray | 23 comments

By L. Randall Wray

This is another short post on MMT, a sort of follow-up to my post from a couple of days ago. There was an interesting response to various comments on my piece, which was posted up on Mike Norman’s website.

We got the typical: “oh you MMTers always want to consolidate the Fed and Treasury, but really the Fed is a private institution that is not a part of government”, and “in reality the Treasury cannot spend unless the Fed will allow it to spend, otherwise it must get tax revenue before it can spend”, and hence “really government spending is constrained by its revenue, just like a household or firm”.

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Posted in L. Randall Wray

Tagged MMT, Modern Monetary Theory

Keeping It Real: Law, Coercion, & The Frontiers of Public Finance

Posted on June 25, 2014 by Devin Smith | 24 comments

By Raúl Carrillo

“Where does money come from?” That’s our question. That’s the trump card Deficit Owls play to explain why the case for austerity is shallow and sadomasochistic, now and forever. When one spreads the true answer—that the Federal Reserve creates dollars with keystrokes, that the U.S. government, unlike like a state or a household, can’t possibly “go broke”, that Uncle Sam has to worry about inflation but doesn’t need to tax or borrow to spend—policy creativity explodes. The false choices of public finance are illuminated. We can decrease taxes AND increase expenditures. We can achieve full employment AND price stability at the same time. Once we align conversation with operational reality, and recognize that we can’t collectively run out of money, we can have an honest—if always antagonistic—conversation about what institutions should do to create, administer, and regulate stocks and flows of resources.

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Posted in Guest Blogger

Tagged Deficit Owls, MMT, Modern Monetary Theory, public finance

MODERN MONEY THEORY: THE BASICS

Posted on June 24, 2014 by L. Randall Wray | 36 comments

By L. Randall Wray

*I’ll return to my series on the role of taxes in MMT later this week. Meanwhile, here’s a short post on MMT.

Modern Money Theory (MMT) seems to confuse two groups of otherwise sympathetic economists. First there are those like Paul Krugman who are generally of the Keynesian persuasion and who like MMT’s “deficit owl” approach. I think Krugman would really like to stop worrying about the deficit so that he could advocate an “as much as it takes” approach to government spending. The problem is that he just cannot quite get a handle on the monetary operations that are required. Won’t government run out? What, is government going to create money “out of thin air”? Where will all the money come from?

He really doesn’t understand that “money” is key stroke records of debits and credits. He still thinks banks take in deposits and then lend them out. He starts to tear his hair out whenever someone tries to correct him on this. He’s wedded to the deposit multiplier idea he got from his Econ 101 textbook.
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Posted in L. Randall Wray

Tagged MMT, Modern Monetary Theory

Tax Bads, Not Goods

Posted on June 17, 2014 by L. Randall Wray | 39 comments

By L. Randall Wray

This is another instalment in the series on the MMT view of taxes. I’m back from China, participating in the annual Hyman P. Minsky Summer Seminar at the Levy Economics Institute. Yesterday my colleague, Mat Forstater, gave a talk on the job guarantee and “green jobs”. Along the way he made two particularly insightful comments on MMT and taxes that I’ll use to introduce this instalment.

First, he discussed the MMT view of “modern money”—that is to say, the money that has existed “for the past 4000 years, at least, as Keynes put it in his Treatise on Money. The money of account is chosen by the sovereign and used to denominate debts, prices, and other nominal values. It is the Dollar in the US.

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Posted in L. Randall Wray

Tagged MMT, Modern Monetary Theory, tax, Taxes

The Sinking of Norfolk

Posted on June 12, 2014 by Pavlina Tcherneva | 10 comments

By J.D. Alt

How would Thomas Piketty propose to save the city of Norfolk, Virginia? He teaches us, ad-nauseum, that what the U.S. collective state has to spend on such things as sea walls, flood gates, elevating infrastructure and roadways, buying-out property owners so they can relocate to higher ground, etc., etc., is limited to the number of tax dollars that can be collected from U.S. citizens—as if the collective state itself were like a club, and if the clubhouse needs repairing, the club members must first pay a special assessment of dues—or, alternatively, the club can borrow dollars from the supply of Capital owned by the wealthiest 1% of its membership, or (as a creative alternative) the rebuilding effort could be structured in such a way that the newly elevated Norfolk would pay rent to the one percent in perpetuity for the privilege of living above sea-level.

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Posted in J. D. Alt

Tagged MMT, Modern Monetary Theory, money, Thomas Piketty

Taxes and the Public Purpose

Posted on May 29, 2014 by L. Randall Wray | 17 comments

By L. Randall Wray

In previous instalments we have established that “taxes drive money”. What we mean by that is that sovereign government chooses a money of account (Dollar in the USA), imposes obligations in that unit (taxes, fees, fines, tithes, tolls, or tribute), and issues the currency that can be used to “redeem” oneself in payments to the government. Currency is like the “Get Out of Jail Free” card in the game of Monopoly.

Taxes create a demand for “that which is necessary to pay taxes” (and other obligations to the state), which allows the government to purchase resources to pursue the public purpose by spending the currency.

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