Modern Monetary Theory

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:

Stephanie Kelton in London

Published by Anonymous (not verified) on Tue, 19/06/2018 - 4:16pm in

Yours to enjoy, from last week:

The Five Stages of Money (and why we’re stuck at stage 4)

Published by Anonymous (not verified) on Tue, 19/06/2018 - 10:24am in

By J.D. ALT Like everything else, money has evolved. It began in a primitive form and morphed into something more sophisticated, more successful. Then, probing and testing for an even better form, it morphed again. A simplified history of money’s … Continue reading →

The post The Five Stages of Money (and why we’re stuck at stage 4) appeared first on New Economic Perspectives.


The government is like the Football Association – there is no limit to the number of points it can issue

Published by Anonymous (not verified) on Tue, 19/06/2018 - 2:10am in

Commentator Stephen Fergusson has written this on the blog in response to the discussion on the ‘household analogy’ of the economy. It reflects comments made by other MMT commentators, but is none the worse for that. I think it works:

Q: If a government is not like a household, then what is it like?

Having got their attention, we then fill that void with a CORRECT metaphor. What could that be? Might I suggest one almost everyone is familiar with: Football. So the response to the question would be something like….

A: Government is ‘like’ the FA. Firstly, the UK government, like the FA vis-a-vis league points, is the ONLY entity that can issue £ sterling. Secondly, the UK government, like the FA vis-a-vis league points, CANNOT ever run out of £ sterling.

The metaphor is equally apt for many other aspects such as the FA will ONLY accept its OWN points (not EUFA Champion’s League points, not gold, not Bitcoin, not anything else) in ‘payment’ for the ‘tax’ collected at the end of the season – when it zeros all the teams points in the table.

From there the message can be rammed home by contrasting and comparing the ludicrous ‘household’ model vs the ‘FA’ model.

For example, we might point out that that never in the history of Association Football has a sports reporter ever asked the FA “You've issued 350 league points this season, how on earth are you to going to afford issuing yet more points for this Saturday’s fixtures?”

Similarly, never in the history of the game have football fans lost sleep over the FA’s possibly going ‘bust’ and being unable to sustain its ‘deficit’

Quite so. 

Tax revenue means ‘to bring the money back’, just as MMT implies

Published by Anonymous (not verified) on Mon, 18/06/2018 - 3:44pm in

This is fascinating. What it shows is the etymology of the word revenue:

As a commentator, using the name Calgacus, said in a comment on the blog yesterday:

Revenue is a pretty good word to use for taxation. What is bad is the idea that it provides income for the state. Revenue comes from re + venir; means to come BACK. It encapsulates the idea that taxation returns unto Caesar what originally came from Caesar, the correct spend first, tax later order.

Or, in other words, it is MMT compliant.

It’s by choice that the NHS is in crisis. And it’s by choice that it can be got out of it

Published by Anonymous (not verified) on Sat, 16/06/2018 - 6:12pm in

The Resolution Foundation has published a chart that reveals just how big the Tory assault on the NHS has been. As they said in an email circular yesterday:

The chart below from our Healthy Finances report shows why we’re having [a] row [about NHS funding]. If the government doesn’t announce quite a bit more cash for the NHS, average annual spending growth is on course to be lower this decade than at any other time in the NHS’s history. Real terms per capita spending is set to grow by an average of just 0.4 per cent a year between 2010-11 and 2019-20, down from an average of 5.9 per cent a year in the preceding decade.

As the chart makes clear, that's the lowest spending increase since the 50s. No wonder the NHS is in crisis. And no wonder some of us say that's entirely by choice.

No wonder too that some of us say that this can be solved by choice. I quote an editorial from the Guardian yesterday:

Before spending more money on the NHS, British politicians should take the advice of the US economist Stephanie Kelton: in a UK lecture this week, she explained that it was wrong for politicians and the media to argue that the government must balance its books, just like a household. If a household were to continually spend more than its income, it would eventually face insolvency; it is thus claimed that the government is in a similar situation. This is false.

Yet politicians are obsessed with avoiding an increase in the deficit, an impulse so ingrained that Professor Kelton described as it “almost Pavlovian”. An analysis of the UK’s economic position tells us how to fund the NHS: growth is flatlining, real wages are stagnant and there’s little inflation. The UK’s indebted households are sinking deeper into debt. Hardly the time to raise taxes. The public sector deficit ought to be seen as an instrument to support the economy, not a way to break it. To pay for the NHS, which is critical for long-term prosperity, the government should engage in Keynesian deficit spending: this would help to keep not only the public healthy but the economy too.

Stephanie asked me to join her at that lecture to take part in discussion. I was unable to do so. It sounds like I missed something special. Not least because Stephanie's prescription is entirely correct: I wrote much the same a year or so ago. 

It's by choice that the NHS is in crisis.

It's by choice that it can be got out of it.

And the right choice is glaringly obvious.

Cenk and Young Turks Team: Your Deficit Hawkery is Unrealistic and Stands in the Way of Progressive Change

Published by Anonymous (not verified) on Tue, 08/05/2018 - 10:20am in

By Michael Hoexter, Ph.D. [The Young Turks (TYTNetwork) is an online news network that has a wide reach among mostly progressives and independents in the United States with viewership in the hundreds of thousands of unique visitors per day and over … Continue reading →

The post Cenk and Young Turks Team: Your Deficit Hawkery is Unrealistic and Stands in the Way of Progressive Change appeared first on New Economic Perspectives.


Framing a Job Guarantee

Published by Anonymous (not verified) on Thu, 03/05/2018 - 10:11am in

By J.D. ALT Note: This essay was first posted on realprogressivesusa.com Now that progressive leaders (Bernie Sanders, Kirsten Gillibrand and Corey Booker) have placed a proposed “Job Guarantee” program onto the mainstream political stage, it is essential they begin explaining … Continue reading →

The post Framing a Job Guarantee appeared first on New Economic Perspectives.


Framing the Progressive Platform

Published by Anonymous (not verified) on Tue, 17/04/2018 - 11:54am in

By J.D. ALT This essay was first posted at www.realprogressivesusa.com I keep reading the big challenge Democrats face in the 2018/2020 elections is that they have moved too far left, proposing a platform that includes “free” universal health care, “free” … Continue reading →

The post Framing the Progressive Platform appeared first on New Economic Perspectives.


Doing What the Market Can’t

Published by Anonymous (not verified) on Thu, 29/03/2018 - 7:44am in

By J.D. ALT What decides whether something is undertaken in America is the “market.” The way the market decides what is to be done is by determining whether people are willing to pay to benefit from the undertaking, how many … Continue reading →

The post Doing What the Market Can’t appeared first on New Economic Perspectives.


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