Tag Archives: public money monopoly

The Public Money Monopoly (Pt. II)

By Dan Kervick

In Part One of this essay I defended the MMT view that the national government is the monopoly issuer of the currency in the US, and I attempted to clarify the actual economic status of that government currency with respect to the Fed’s conventional balance sheet accounting.   In this concluding part of the essay I will further develop the contrast between the government’s role as currency issuer and the role of private sector households and firms – including commercial banks – as currency users.  I will then make a few points about how the government supplies currency to the non-governmental sectors of the economy before concluding with a discussion of several topics that tend to engender resistance to the very idea that such a currency monopoly exists.

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The Public Money Monopoly (Pt. I)

By Dan Kervick

Modern Monetary Theory (MMT) emphasizes the central role of governments in sovereign monetary systems.  MMT co-developer Warren Mosler has described the US dollar system, for example, as a “simple public monopoly.”    L. Randall Wray has written that, “In the United States, the dollar is our state money of account and high-powered money (HPM or coins, green paper money, and bank reserves) is our state monopolized currency.”   Sometimes this crucial MMT claim is expressed more broadly by saying the US government is the monopoly supplier of “net financial assets” to the non-governmental sectors of the dollar economy.

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