Modern Monetary Theory

Paying for Hurricanes

Published by Anonymous (not verified) on Tue, 18/09/2018 - 11:50am in

By J.D. ALT What you believe America can build—or rebuild—as a collective society hinges on how you answer one fundamental question: When the U.S. government issues a treasury bond, is it “borrowing” money that must be repaid with future tax-dollars—or … Continue reading →

The post Paying for Hurricanes appeared first on New Economic Perspectives.


The Second International Modern Monetary Theory Conference

Published by Anonymous (not verified) on Tue, 11/09/2018 - 6:35am in

The Levy Institute is a cosponsor of the Second International Modern Monetary Theory Conference, which will take place September 28–30 at the New School and will feature Institute scholars L. Randall Wray, Pavlina Tcherneva, Stephanie Kelton, and Mathew Forstater:

Like the first conference, this year will feature contributions from fields as diverse as macroeconomics, law, history, public policy, and corporate finance, with the goal of creating a community of scholars working within the MMT paradigm. This year’s theme, “Public Money, Public Purpose, Public Power,” signals the MMT community’s efforts to build bridges between social justice movements, inspire broad-based participation, and more deeply discuss how our ideas may be concretized politically.

The conference runs from Friday, September 28 through Sunday, September 30. Friday will feature roundtable discussions and keynote addresses from MMT luminaries on the origins of MMT, the process of making MMT “mainstream,” and the relationship between MMT and progressive advocacy for the job guarantee. Saturday will feature workshops facilitated by a range of community leaders and experts seeking to develop and deepen connections between MMT and other fields. Sunday begins with two “town hall” meetings, exploring MMT’s capacity as both a domestic and an international movement. The proceedings will conclude with a plenary session on the strategic and institutional goals of the movement going forward.

To learn more about the Second International MMT Conference or to register, visit their website at mmtconference.org or email conference@mmtconference.org.

Learn more about MMT in these Levy Institute publications:

Functional Finance: A Comparison of the Evolution of the Positions of Hyman Minsky and Abba Lerner
L. Randall Wray

This paper examines the views of Hyman Minsky and Abba Lerner on the functional finance approach to fiscal policy. It argues that the main principles of functional finance were relatively widely held in the immediate postwar period. However, with the rise of the Phillips curve, the return of the Quantity Theory, the development of the notion of a government budget constraint, and accelerating inflation at the end of the 1960s, functional finance fell out of favor. The paper compares and contrasts the evolution of the views of Minsky and Lerner over the postwar period, arguing that Lerner’s transition went further, as he embraced a version of Monetarism that emphasized the use of monetary policy over fiscal policy. Minsky’s views of functional finance became more nuanced, in line with his Institutionalist approach to the economy. However, Minsky never rejected his early beliefs that countercyclical government budgets must play a significant role in stabilizing the economy. Thus, in spite of some claims that Minsky should not be counted as one of the “forefathers” of Modern Money Theory (MMT), this paper argues that it is Minsky, not Lerner, whose work remains essential for the further development of MMT.

Money, Power, and Monetary Regimes
Pavlina R. Tcherneva

Money, in this paper, is defined as a power relationship of a specific kind, a stratified social debt relationship, measured in a unit of account determined by some authority. A brief historical examination reveals its evolving nature in the process of social provisioning. Money not only predates markets and real exchange as understood in mainstream economics but also emerges as a social mechanism of distribution, usually by some authority of power (be it an ancient religious authority, a king, a colonial power, a modern nation state, or a monetary union). Money, it can be said, is a “creature of the state” that has played a key role in the transfer of real resources between parties and the distribution of economic surplus.

In modern capitalist economies, the currency is also a simple public monopoly. As long as money has existed, someone has tried to tamper with its value. A history of counterfeiting, as well as that of independence from colonial and economic rule, is another way of telling the history of “money as a creature of the state.” This historical understanding of the origins and nature of money illuminates the economic possibilities under different institutional monetary arrangements in the modern world. We consider the so-called modern “sovereign” and “nonsovereign” monetary regimes (including freely floating currencies, currency pegs, currency boards, dollarized nations, and monetary unions) to examine the available policy space in each case for pursuing domestic policy objectives.

This paper is also available in Spanish.

Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems, Second Edition
L. Randall Wray

In a completely revised second edition, Senior Scholar L. Randall Wray presents the key principles of Modern Money Theory, exploring macro accounting, monetary and fiscal policy, currency regimes, and exchange rates in developed and developing nations. Wray examines how misunderstandings about the nature of money caused the recent global financial meltdown, and provides fresh ideas about how leaders should approach economic policy. This updated edition also includes new chapters on tax policies and inflation.

Modern Money Theory 101: A Reply to Critics
Éric Tymoigne and L. Randall Wray

This paper examines the views of Hyman Minsky and Abba Lerner on the functional finance approach to fiscal policy. It argues that the main principles of functional finance were relatively widely held in the immediate postwar period. However, with the rise of the Phillips curve, the return of the Quantity Theory, the development of the notion of a government budget constraint, and accelerating inflation at the end of the 1960s, functional finance fell out of favor. The paper compares and contrasts the evolution of the views of Minsky and Lerner over the postwar period, arguing that Lerner’s transition went further, as he embraced a version of Monetarism that emphasized the use of monetary policy over fiscal policy. Minsky’s views of functional finance became more nuanced, in line with his Institutionalist approach to the economy. However, Minsky never rejected his early beliefs that countercyclical government budgets must play a significant role in stabilizing the economy. Thus, in spite of some claims that Minsky should not be counted as one of the “forefathers” of Modern Money Theory (MMT), this paper argues that it is Minsky, not Lerner, whose work remains essential for the further development of MMT.

 

Other Levy MMT Publications:

Banking, Finance, and Money: A Socioeconomics Approach
L. Randall Wray

Functional Finance: What, Why, and How
Stephanie A. Kelton

Functional Finance and Full Employment: Lessons from Lerner for Today?
Mathew Forstater

(Full) Employment Policy: Theory and Practice
Dimitri B. Papadimitriou

 

The Second International Modern Monetary Theory Conference

Published by Anonymous (not verified) on Tue, 11/09/2018 - 6:35am in

The Levy Institute is a cosponsor of the Second International Modern Monetary Theory Conference, which will take place September 28–30 at the New School and will feature Institute scholars L. Randall Wray, Pavlina Tcherneva, Stephanie Kelton, and Mathew Forstater:

Like the first conference, this year will feature contributions from fields as diverse as macroeconomics, law, history, public policy, and corporate finance, with the goal of creating a community of scholars working within the MMT paradigm. This year’s theme, “Public Money, Public Purpose, Public Power,” signals the MMT community’s efforts to build bridges between social justice movements, inspire broad-based participation, and more deeply discuss how our ideas may be concretized politically.

The conference runs from Friday, September 28 through Sunday, September 30. Friday will feature roundtable discussions and keynote addresses from MMT luminaries on the origins of MMT, the process of making MMT “mainstream,” and the relationship between MMT and progressive advocacy for the job guarantee. Saturday will feature workshops facilitated by a range of community leaders and experts seeking to develop and deepen connections between MMT and other fields. Sunday begins with two “town hall” meetings, exploring MMT’s capacity as both a domestic and an international movement. The proceedings will conclude with a plenary session on the strategic and institutional goals of the movement going forward.

To learn more about the Second International MMT Conference or to register, visit their website at mmtconference.org or email conference@mmtconference.org.

Learn more about MMT in these Levy Institute publications:

Functional Finance: A Comparison of the Evolution of the Positions of Hyman Minsky and Abba Lerner
L. Randall Wray

This paper examines the views of Hyman Minsky and Abba Lerner on the functional finance approach to fiscal policy. It argues that the main principles of functional finance were relatively widely held in the immediate postwar period. However, with the rise of the Phillips curve, the return of the Quantity Theory, the development of the notion of a government budget constraint, and accelerating inflation at the end of the 1960s, functional finance fell out of favor. The paper compares and contrasts the evolution of the views of Minsky and Lerner over the postwar period, arguing that Lerner’s transition went further, as he embraced a version of Monetarism that emphasized the use of monetary policy over fiscal policy. Minsky’s views of functional finance became more nuanced, in line with his Institutionalist approach to the economy. However, Minsky never rejected his early beliefs that countercyclical government budgets must play a significant role in stabilizing the economy. Thus, in spite of some claims that Minsky should not be counted as one of the “forefathers” of Modern Money Theory (MMT), this paper argues that it is Minsky, not Lerner, whose work remains essential for the further development of MMT.

Money, Power, and Monetary Regimes
Pavlina R. Tcherneva

Money, in this paper, is defined as a power relationship of a specific kind, a stratified social debt relationship, measured in a unit of account determined by some authority. A brief historical examination reveals its evolving nature in the process of social provisioning. Money not only predates markets and real exchange as understood in mainstream economics but also emerges as a social mechanism of distribution, usually by some authority of power (be it an ancient religious authority, a king, a colonial power, a modern nation state, or a monetary union). Money, it can be said, is a “creature of the state” that has played a key role in the transfer of real resources between parties and the distribution of economic surplus.

In modern capitalist economies, the currency is also a simple public monopoly. As long as money has existed, someone has tried to tamper with its value. A history of counterfeiting, as well as that of independence from colonial and economic rule, is another way of telling the history of “money as a creature of the state.” This historical understanding of the origins and nature of money illuminates the economic possibilities under different institutional monetary arrangements in the modern world. We consider the so-called modern “sovereign” and “nonsovereign” monetary regimes (including freely floating currencies, currency pegs, currency boards, dollarized nations, and monetary unions) to examine the available policy space in each case for pursuing domestic policy objectives.

This paper is also available in Spanish.

Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems, Second Edition
L. Randall Wray

In a completely revised second edition, Senior Scholar L. Randall Wray presents the key principles of Modern Money Theory, exploring macro accounting, monetary and fiscal policy, currency regimes, and exchange rates in developed and developing nations. Wray examines how misunderstandings about the nature of money caused the recent global financial meltdown, and provides fresh ideas about how leaders should approach economic policy. This updated edition also includes new chapters on tax policies and inflation.

Modern Money Theory 101: A Reply to Critics
Éric Tymoigne and L. Randall Wray

This paper examines the views of Hyman Minsky and Abba Lerner on the functional finance approach to fiscal policy. It argues that the main principles of functional finance were relatively widely held in the immediate postwar period. However, with the rise of the Phillips curve, the return of the Quantity Theory, the development of the notion of a government budget constraint, and accelerating inflation at the end of the 1960s, functional finance fell out of favor. The paper compares and contrasts the evolution of the views of Minsky and Lerner over the postwar period, arguing that Lerner’s transition went further, as he embraced a version of Monetarism that emphasized the use of monetary policy over fiscal policy. Minsky’s views of functional finance became more nuanced, in line with his Institutionalist approach to the economy. However, Minsky never rejected his early beliefs that countercyclical government budgets must play a significant role in stabilizing the economy. Thus, in spite of some claims that Minsky should not be counted as one of the “forefathers” of Modern Money Theory (MMT), this paper argues that it is Minsky, not Lerner, whose work remains essential for the further development of MMT.

 

Other Levy MMT Publications:

Banking, Finance, and Money: A Socioeconomics Approach
L. Randall Wray

Functional Finance: What, Why, and How
Stephanie A. Kelton

Functional Finance and Full Employment: Lessons from Lerner for Today?
Mathew Forstater

(Full) Employment Policy: Theory and Practice
Dimitri B. Papadimitriou

 

Those involved in tax debate need to get the basics right

Published by Anonymous (not verified) on Tue, 04/09/2018 - 5:38pm in

Why did PWC want to sponsor this?

In fairness, the report ends up saying hypothecation is not a panacea.

But it does not dismiss it and that's because the assumption is that tax pays for government services.

It's becoming deeply frustrating that many supposedly engaged in debate on tax do not even seem to understand what it is, what it does and what it is for.

Getting the basics right would really help.

An independent Scotland will need its own currency

Published by Anonymous (not verified) on Wed, 22/08/2018 - 3:57pm in

I gather my friends at Common Weal are launching their campaign for an independent Scotland to have its own currency today. This was a contribution to that debate I made a year or so ago, but it’s worth sharing again:

Miscalculating Medicare-for-all

Published by Anonymous (not verified) on Mon, 20/08/2018 - 7:07pm in

By J.D. ALT A report from the Mercatus Center at George Mason University calculating the “cost” of Medicare-for-all has received much attention recently—first, because Bernie Sanders claimed the report concluded that Medicare-for-all would save the American people $2 trillion over … Continue reading →

The post Miscalculating Medicare-for-all appeared first on New Economic Perspectives.


How big does the fire need to be?

Published by Anonymous (not verified) on Mon, 13/08/2018 - 7:11pm in

By J.D. ALT I have written about this before, but it bears repeating now—and perhaps it bears repeating every week until somebody with more leverage than me picks the message up and carries it a step further: America (and the … Continue reading →

The post How big does the fire need to be? appeared first on New Economic Perspectives.


The Explicable Mystery of the National Debt

Published by Anonymous (not verified) on Thu, 02/08/2018 - 9:36am in

By J.D. ALT America’s current “national debt” is tallied to be $21.5 trillion. When politicians and economic pundits talk (worry, fret, wring their hands, gnash their teeth) about this “debt” they implicitly assume—along with their listeners, readers, and potential voters—that … Continue reading →

The post The Explicable Mystery of the National Debt appeared first on New Economic Perspectives.


Labour, universal basic income and a job guarantee

Published by Anonymous (not verified) on Wed, 01/08/2018 - 5:40pm in

John McDonnell, the Shadow Chancellor, has apparently decided that the next Labour manifesto should include a commitment to Universal Basic Income (UBI) even though, as yet, no figures are available to support the proposal in the UK, and no data from previous trials has proven whether the system will work, or not.

I find the announcement a challenge.  I have in my time argued for UBI.  If I was now given a choice between Labour adopting modern monetary theory, with a job guarantee attached,  or a universal basic income I  believe that modern monetary theory with a job guarantee would be more important,  more realistic,  more likely to deliver,  and more acceptable to voters.

I can see value in a UBI. I do not dismiss the idea.  But I think the public are a long way from accepting it as yet,  whereas a job guarantee makes a lot of sense to many people,  especially given Labour's priorities, and the current state of the economy.

Debunking myths

Published by Anonymous (not verified) on Thu, 21/06/2018 - 5:32pm in

Stephen Fergusson, who wrote the comment I reposted on MMT and football league points, has provided another interesting comment in which he has pointed to the work of a climate change scientist called John Cook on debunking myths.

Cook seems to have dedicated quite a lot of thought to this issue, which could obviously be readily translated to debunking myths about money. As he puts it:

People build mental models of how the world works, where all the different parts of the model fit together like cogs. Imagine one of those cogs is a myth. When you explain that the myth is false, you pluck out that cog, leaving a gap in their mental model.But people feel uncomfortable with an incomplete model. They want to feel as if they know what’s going on. So if you create a gap, you need to fill the gap with an alternative fact.

His handbook on debunking myths looks to be useful:

As does this video:

Pages