Tag Archives: Modern Monetary Theory

By L. Randall Wray

Let us continue to develop an alternative frame for money. As you know, MMT says that “taxes drive money”. Let’s develop that further.

According to the orthodox meme, taxes are bad—the far right views them as outright theft—so the lower they are, the better. Most view taxes as necessary to “pay for” government spending, but again since in the conservative framing, government does next to nothing that is useful this represents a redistribution from productive, private, use to public waste. Hence, again, it is best to keep taxes as low as possible to “starve the beast” and to keep the private sector humming along. Continue reading →

By L. Randall Wray

In Part 2 we looked at the mainstream framing of discussion about money and about the economy and society more generally. Following Lakoff, my argument is that framing is important and that so far orthodoxy is winning all of the important policy debates because it has the better framing. Policy is always and everywhere a moral issue—not merely an economic issue and certainly not a technical issue. To win policy debates, we must—like orthodoxy—engage the moral issues. We can take the higher moral ground. Continue reading →

By L. Randall Wray

We all know the usual approach to money, that begins with a fantasized story about barter, the search for an efficient medium of exchange, the role of the goldsmith, and then on to the gold standard, the deposit multiplier, fiat money, and monetary neutrality—at least in the long run.^[1] It provides a perspective on the nature of money, on the primary functions of money, and on rules for proper monetary management. It frames all mainstream discussions of money—whether by economists, by policymakers and by the population at large. That framing is also largely consistent with the conventional view of the economy and of society more generally. To put it the way that economists usually do, money “lubricates” the market mechanism—a good thing because the conventional view of the market, itself, is overwhelmingly positive. The market “meme” frames our view of the economy and society, too—the market is the place we go to exercise choice, to assert our individuality, to catch and bring home prey to the adoring family. The king of the market, of course is the highly vaunted, entrepreneurial small businessman (gender specific) who provisions society with useful work as well as consumption goods and services. Each productive member of society is appropriately rewarded with money which preserves the freedom to choose how to apportion his claim on output in a manner consistent with preferences. The biggest potential threat to efficient allocation of scarce resources among competing unlimited wants comes from government’s exercise of control over money—first by replacing natural, intrinsically valuable, commodity money with fiat money, second by taking away people’s hard-earned money through taxes, and third by profligate government’s uncontrollable urge to inflate away money’s value. Continue reading →

By L. Randall Wray

This is the first part of a series on framing money.

I studied with Hyman Minsky in the early 1980s when he was writing his 1986 book (Stabilizing an Unstable Economy). There are two phrases in that book that I remember him saying in class:

“Anyone can create money, the problem lies in getting it accepted”.

Continue reading →