Home > Uncategorized > Who’s afraid of MMT?

Who’s afraid of MMT?

from Lars Syll

As anyone who has ever been responsible for legislative oversight of central bankers knows, they do not like to have their authority challenged. Most of all, they will defend their mystique – that magical aura that hovers over their words, shrouding a slushy mix of banality and baloney in a mist of power and jargon …

In our day, the voices of Modern Monetary Theory perturb the sleep not only of present central bankers, but even of those retired from the role. They prowl the corridors like Lady Macbeth, shouting “Out damn spot!”

Two fresh cases are Raghuram G. Rajan, a former governor of the Reserve Bank of India, and Mervyn King, a former governor of the BOE. In recently published commentaries, each combines bluster and condescension (in roughly equal measure) in a statement of trite truths with which one can, for the most part, hardly disagree.

Modern Monetary Theory Is Wrong: Inflation Is ComingBut Rajan and King each confront MMT only in the abstract. Neither cites or quotes from a single source, and neither names a single person associated with MMT …

What, then, is MMT? Contrary to the claims of King and Rajan, it is not a policy slogan. Rather, it is a body of theory in Keynes’s monetary tradition, which includes such eminent thinkers as the American economist Hyman Minsky and Wynne Godley of the UK Treasury and the University of Cambridge. MMT describes how “modern” governments and central banks actually work, and how changes in their balance sheets are mirrored by changes in the balance sheets of the public – an application of double-entry bookkeeping to economic thought. Thus, as Kelton writes in the plainest English, the deficit of the government is the surplus of the private sector, and vice versa.

MMT shares Keynes’s view that a proper goal of economic policy in a sovereign and developed country is to achieve full employment, buttressed by a guarantee of jobs to all who may need them. This is a goal that I helped write into law in the US under the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978, along with balanced growth and reasonable price stability. With occasional successes in practice, this policy objective, known as the “dual mandate,” has been the law of the land in the US ever since.

In short, as an example of good economics made popular, accessible, and democratic, MMT represents what central bankers have always feared – as well they might.

James K. Galbraith

Many countries today have deficits. That’s true. But the problem is not the budget deficit. The real deficits are in the climate, healthcare and infrastructure. How do we tackle those deficits? By spending!

MMT rejects the traditional Phillips curve inflation-unemployment trade-off and has a less positive evaluation of traditional policy measures to reach full employment. Instead of a general increase in aggregate demand, it usually prefers more ‘structural’ and directed demand measures with less risk of producing increased inflation. At full employment deficit spendings will often be inflationary, but that is not what should decide the fiscal position of the government. The size of public debt and deficits is not — as already Abba Lerner argued with his ‘functional finance’ theory in the 1940s — a policy objective. The size of public debt and deficits are what they are when we try to fulfil our basic economic objectives — full employment and price stability.

Governments can spend whatever amount of money they want. That does not mean that MMT says they ought to — that’s something our politicians have to decide. No MMTer denies that too much of government spendings can be inflationary. What is questioned is that government deficits necessarily is inflationary.

What is “forgotten” in mainstream macro modelling, is the insight that finance — in all its different shapes — has its own dimension, and if taken seriously, its effect on an analysis must modify the whole theoretical system and not just be added as an unsystematic appendage. Finance is fundamental to our understanding of modern economies and acting like the baker’s apprentice who, having forgotten to add yeast to the dough, throws it into the oven afterward, simply isn’t enough.

All real economic activities nowadays depend on a functioning financial machinery. But institutional arrangements, states of confidence, fundamental uncertainties, asymmetric expectations, the banking system, financial intermediation, loan granting processes, default risks, liquidity constraints, aggregate debt, cash flow fluctuations, etc., etc. — things that play decisive roles in channeling​ money/savings/credit — are more or less left in the dark in modern macro theoretical formalizations.

  1. bruceolsen
    April 21, 2021 at 6:50 am

    Unfortunately, MMTers aren’t especially effective at conveying their point to ordinary people.

    Just one example: at the end of Dr. Kelton’s video she mentions a number falling out of the budget box at the end of each fiscal year. What on earth does that mean to normal people? There’s no damn number, no damn box (with an apology to Kurt Vonnegut).

    Perhaps it won’t matter if, once the policies are enacted (assuming the Dems find it within themselves to get rid of the filibuster), the results are so positive that normal people actually won’t need to understand more than they currently do.

    But keeping the masses ignorant of the realities of our economy is not a good long-term strategy–there are too many powerful people (and an entire political party dedicated to serving them) who will lie unashamedly to undo any positive progress.

    • April 21, 2021 at 6:20 pm

      You are judging based on a video? Read Kelton’s book and you will find a detailed clear reference to the issue you raise in your last paragraph. The number falling out of a box is a clear metaphor and frame meaning it is insignificant and not to get exercised about.

      • bruceolsen
        April 22, 2021 at 1:38 am

        I have read her book, and her paper, as well as Wray’s textbook (and other of his works) and Mosler, and Mitchell, and more.

        It’s not the concepts. The messaging is poorly constructed. Mitchell is the best. The rest are not very good at messaging

        For example, MMTers typically begin by describing the family budget metaphor, and then disputing it.

        Ironically, they’re actually strengthening the very idea they seek to dispute. In some cases, they’re actually implanting that idea in the first place.

        Any marcom person knows this places the wrong idea in the listener’s head, and forces the speaker to first dislodge that idea, then replace it with the intended idea.

        Regarding the video: it’s supposed to stand alone, so she shouldn’t be using specialist language in a video intended for the general public. She should have used any of several other ways to discuss the irrelevance of the deficit’s magnitude.

        Do you even know who Kurt Vonnegut was?

  2. Mike Ralph King
    April 21, 2021 at 7:23 am

    MMT is mistaken from beginning to end. It’s fundamental error is to believe that governments can create money. That is true of cash, but not of any other element of the M4/M2 aggregate. All central bank methods for funding government spending, from QE to lending to the proposals for direct monetary financing, are functionally equivalent to borrowing. All are vulnerable to base rate rises. https://stochasticpress.com/economics/2020/06/12/why-modern-money-theory-is-wrong/

    • Ikonoclast
      April 21, 2021 at 10:20 am

      Then where do the M4 amounts of money, excluding M1, come from? If they exist as a human artifact then someone must create them. Nobody argues that the natural processes of the universe sans humans create money. Let us ask then, who else creates them if it is not the government (via its reserve bank operations)?

      If “All central bank methods for funding government spending, from QE to lending to the proposals for direct monetary financing, are functionally equivalent to borrowing” then this is only so because it is constructed to be so. A government can decide to borrow or it can decide to create fiat money ex nihilo, out of nothing.

      When the government borrows does it not follow that the lending institution is creating the money? It creates money for circulation (at least at M4 level), lends it and places a debt on its own books. But the credited money is functional at that point and circulates or forms balances, securities or sureties at M4 level if no other.

      If a government never created new fiat money then the growth in the money supply could only come from private lending; essentially endless lending in an increasing upward spiral. If all debts are not re-payed then some original debt is written off. But the debt-created money would remain in circulation or as money supply. Someone else other than the debtor now has it. This amounts to non-government money creation if the lenders are private.

      If the privately lent money is repaid with interest, then the interest monies must be new monies. Where have they come from? They can only have come from government fiat money creation (if that procedure is engaged in) or else they must come the increasing upward spiral of private lending alluded to earlier. Bank A gets the loan principle back from Customer A but the interest monies it gets from Customer A must come from somewhere else, for example from Bank B creating another loan to another customer B who then spends it to Customer A. Chain private lending into the future and spiraling up (total loaned amounts spiraling up) can be the only place the interest repayment monies come from if the government always has a balanced budget and never engages in money creation.

      Essentially, you are arguing that only private banks currently create money (a descriptive claim) and that only they should be permitted to create money (a prescriptive claim). In other words, you are arguing that that a privileged portion of the private sector and that only be permitted to create money and profit from those operations as a state granted monopoly or oligopoly. From my point of view, I would argue that the government (of the people, by the people, for the people) should be the only body permitted to enjoy the natural monopoly of money creation. If that makes me an MMT advocate, then so be it.

    • April 21, 2021 at 6:22 pm

      You may want to check this out. https://youtu.be/7JJJcB3X3ag

    • April 21, 2021 at 9:09 pm

      Mike King’s claim that money creation by a central bank is functionally equivalent of borrowing just ain’t true. A borrower is legally obliged to repay a creditor a sum at some date. CBs are under no obligation to pay anything to anyone in respect of the base money they create and distribute.

      • Mike Ralph King
        April 22, 2021 at 7:15 am

        The legality is certainly an interesting question. Reserves are loans from private sector banks to the Central Bank. Any trained accountant called in oral evidence at the Supreme Court will testify that. If the CB refuses to pay interest on reserves then the private banks are saddled with dead non-earning assets matched by interest-accruing deposits saddled upon them by gov’t spending against those reserves. A case brought to a circuit court by the banks claiming extortion by the CB-gov’t would ultimately be settled by SCOTUS. I believe it would force the CB to either pay interest or to extinguish the reserves by handing the banks interest-bearing high-quality collateral (formerly the requirement to obtain reserves). In which case Treasuries would land back in private hands, constituting borrowing in the normal classical sense.

  3. Cristi C
    April 21, 2021 at 11:04 am

    Who is afraid? I’m afraid. MMT equals “unsound money”.
    Taking the essence of “balanced growth and reasonable price stability” in the quote above from the initiator of MMT mandate for FED, “reasonable” is a political term.
    I don’t find it reasonable that if I keep my money in CD then I would find them worthless 20 years later.
    MMT is just a scheme that aimed high and achieved the same as tax cuts. The top holders of assets just got way richer than before, the bottom got some jobs that they actually hate, and the middle of the pack just see their savings erode by the inflation, that “reasonable” inflation which is computed by eliminating major contributing factors (such as education, energy, housing and healthcare costs).
    MMT is just a FRAUD.
    Thank you Mrs Yellen from telling low income families that they should own more liquid assets in the financial markets.

    • April 21, 2021 at 6:28 pm

      Clearly you have not studied MMT or if you have read it remain trapped in the gold standard thinking from 70 years ago. From where I am sitting you appear to have made up your mind a priori and have not checked out the accounting facts.

      Steve Keen questioned it but then checked it out and confirms it’s validity as do the Exchequer folks in the video link I posted above.

    • Craig
      April 22, 2021 at 5:06 am

      Cristi C,

      You’re correct that MMT is going no where fast. Why? Because they’re trying to get some where with nothing but an idea, and they’re trying get something done politically when we are in the most politically polarized state we’ve ever been in.

      If you want change you have to create a mass movement that herds both sides of the political apparatus toward significant change. The new paradigm concept and its policies I advocate here benefit all economic agents individual and commercial and thus it and its policies are politically integrative. Politicians never lead, they have to be pushed. MMTers have the cart before the horse. Only a new paradigm and its policies can excite the masses and integrate the interests of traditionally opposed political constituencies.

      All of the well meaning erudite dunces here have not broken through the sound barrier that the real problem is the 5000 year old monetary paradigm that holds all of the seeming thorny and/or unresolvable problems of the economy in suspension. Thus their perfectly correct heterodox observations….are of no avail. You can bring the economist/economic pundit to the paradigm, but you can’t make them actually look at it.

      • Craig
        April 22, 2021 at 5:11 am

        Sorry, I was actually responding to bruceolsen.

      • bruceolsen
        April 26, 2021 at 4:29 am

        I’m criticizing the messaging, not the message. MMT is succeeding–it’s just that no one can say it out loud (as Kelton said in her book).

        The Biden Infrastructure plan will rely heavily on the essential irrelevance of deficit spending. In addition, by creating a broad (and wholly appropriate) definition of infrastructure it will cause the hiring of a large number of people, which is as close to as a job guarantee as we’re likely to come.

        Sorry, I’m not sure what the remainder of your comment means…

  4. Gerald Holtham
    April 21, 2021 at 12:33 pm

    When the central bank thinks it is appropriate to buy government bonds, it is generally appropriate for the government to issue more of them. The central bank is signalling that the economy is depressed and aggregate demand is not enough to sustain full employment – for whatever reason. By lowering interest rates on government bonds it hopes to encourage other borrowing and more economic activity. Whether it succeeds in that it will drive up financial asset prices to the benefit of wealth holders. It is seldom a good idea to leave expansion entirely to monetary policy. The financial distortion is high relative to the effect on activity, which can be “pushing on a string”. By stepping in and spending more, the government can directly stimulate those parts of the economy that need it without distorting asset prices and wealth distribution. It can allow the central bank its independence but still ensure the co-ordination of fiscal and monetary policy. At least it can do so in a Parliamentary system and in the US when it happens to have a Congressional majority.
    MMT is a fine example of intellectual product differentiation: I am going to sell you the same soap powder as other people but I’m putting it in a new packet and calling it something else. There is not much in MMT that wasn’t in Abba Lerner 80 years ago.
    M.R.King’s point is based on the view that commercial bank reserves are really a debt of the central bank so the public sector borrows via the central bank when the government prints money. But that “debt” cannot be repaid because it is the ultimate form of money, the final medium for settling accounts. So central banks don’t have to pay interest on those reserves and sometimes choose to do so only to discourage credit creation and secondary money creation by commercial banks. Mr King’s point is correct, however, that if the government overdoes the primary money creation it will have a big problem in preventing excessive secondary money creation by the banking system. Then it has to borrow in some form or other to drain those reserves or sterilise their effect. This all comes down to a point on which everyone agrees: the government can print money but it can’t print goods and services. The extent of its money creation is limited by the capacity of the economy. It also has to take account of the way that the financial system operates to amplify its own money creation.

    • Mike Ralph King
      April 21, 2021 at 2:31 pm

      Hi Gerald, I am not at all sure that the CB can simply choose whether or not to pay interest on excess reserves. It did not, prior to QE, because the banks had no reason to hold excess reserves. Now, as you say, reserves are a debt of the CB, and hence government, to the private sector. You say they cannot be repaid. I think they can. Banks used to obtain reserves in exchange for high-quality collateral – commercial or government bonds. I would assume they can demand them back. Of course it does not help them other than this: the collateral would pay interest. So, I don’t believe the CB can refuse to pay interest on reserves, or it would have to hand over interest-paying collateral. Hence all CB methods of raising money for government are functionally equivalent to borrowing.

      • April 21, 2021 at 6:30 pm

        You need to review actual MMT material to become sure. Kelton covers that in her book.

  5. Gerald Holtham
    April 21, 2021 at 12:42 pm

    Cristi C, fiat money systems result in creeping inflation. If they are well run the inflation is low – below 3 per cent. Then it is actually not a bad thing – as Adam Smith pointed out; it makes relative prices more flexible. The system can also adapt to shocks better than a gold-standard system which was prone to booms and busts because the gold supply could not be changed quickly to meet new circumstances. But you can seldom have everything in this world. It does mean that it is a bit silly to leave a lot of money on account for 20 years. Make sure the interest rate is higher than inflation or buy an appreciating asset.

    • Cristi C
      April 21, 2021 at 9:32 pm

      I’m not a gold standard advocate but thank you for the reply.

      I find it immoral to suppress the short end of the curve of the interest rates. As I mentioned, the immorality is in the destruction of basic investment elements like CD (deposits). The immorality is in pushing ordinary people into financial markets, not for higher rewards but for not being wiped out after 20+ years. It is immoral to have inflation between 2 and 3% and CD 1Y rate of …. ZERO point 18??? https://www.bankrate.com/banking/cds/current-cd-interest-rates/

      This is what I call “unsound money” and maybe I borrowed this term from the gold advocates. I think there are good ideas in both MMT and gold standard. I just don’t know how to combine them.

      Dear proponents of MMT, may I remind you all that you are part of the 1% as intellectual ranking and probably top 10% considering wealth (as academia is not that well paid as investment banking). I’m afraid that you do not understand the pain you and MMT is causing in the 60-70% range of the society that starts from say … bottom 10% … up to bottom 80%. These are the individuals that do not have excess savings that could really capture the market growth. There are very good stats about how wealth and market exposure is distributed. Top 0.1% gets a large pie, top 1% gets a bit larger pie of the growth, and top 10% gets the most of it.

      The inflation that we talk about is not causing any harm to top 20%, as they have some market exposure and the knowledge to use it. I’m not sure how inflation is affecting bottom 10% as their life depends on social safety net which might be inflation-protected. But the rest of the society?

      Another intellectual that ended up running the FED was giving some advice about how to survive MMT in the long run….. “Yellen: get some financial assets”….. (the material is from the FED website)

      The Importance of Asset Building for Low and Middle Income Households
      Chair Janet L. Yellen

      At the 2014 Assets Learning Conference of the Corporation for Enterprise Development, Washington, D.C. (via prerecorded video)

      “Yet for lower and middle income families, financial assets, including 401 (k) plans and pensions, are still a very small share of their assets. According to the 2013 survey, the bottom half of families by income held only 8 percent of all financial assets held by households.
      Home equity accounts for the lion’s share of wealth for most families and many of these families have not yet recovered the wealth they lost in the housing crisis. The housing market is improving and housing will remain an important channel for asset building for lower and middle income families. But one of the lessons of the crisis, which will not be news to many of you, is the importance of diversification and especially of possessing savings and other liquid financial assets to fall back in times of economic distress.”

      • bruceolsen
        April 26, 2021 at 4:34 am

        Please read Kelton’s book. It will open your eyes.

  6. April 21, 2021 at 9:47 pm

    So, have you never heard of Madam Ruth; you know that gypsy with the gold-capped tooth, the one who sells little bottles of love potion number nine?
    Well, MMT should remind you of that 

  7. Craig
    April 21, 2021 at 10:53 pm

    MMT has the money creation structural process correct. Steve Keen is correct that accounting is important in understanding money in economics. Michael Hudson is correct that the financial system is a parasite on the economy. Now if heterodox economists would cognite on:

    1) the fact that the present monetary and financial paradigm is DEBT ONLY

    2) that this paradigm is a monopoly charter

    3) that money/credit is created entirely via accounting entries

    4) that a gifted 50% discount to the individual/rebate back to the enterprise price and monetary policy at retail sale:

    a) mirrors the money creation accounting process,

    b) ends inflation forever,

    c) ends individual monetary scarcity,

    d) ends systemic monetary austerity

    e) enables fiscal freedom

    f) ends the monopoly paradigm of DEBT ONLY idiotically granted to the banks and

    g) a 50% discount/debt jubilee policy at the point of loan signing for all “big ticket” and green consumer products enables us to move with post haste toward an ecologically sane industrial policy instead of wringing our hands about the fact that we’ve gone no where fast toward saving the world from climate change and global warming.

    Who’s afraid of the new monetary and financial paradigm?

  8. bruceolsen
    April 22, 2021 at 1:44 am

    Then come back.

    • bruceolsen
      April 22, 2021 at 1:46 am

      All you Austrians, gold bugs, and neoclassicals need to read Kelton’s book.

      Then come back.

  9. Biagio Bossone
    April 22, 2021 at 5:49 am

    Prof. Syll: you say
    “The size of public debt and deficits are what they are when we try to fulfil our basic economic objectives — full employment and price stability”, and
    “What is questioned is that government deficits necessarily is inflationary.”

    Does that mean that, if the private sector is in structural (permanent) surplus and the economy, thus, tends to be in a stable underemployment equilibrium, the government could go on running structural (permanent) deficits and print all the money needed to finance them (ad infinitum), with no consequences?
    Wouldn’t the money stock grow unboundedly, in an attempt to keep output at full employment?
    Would then people and markets be willing to hold all the money printed (and accumulated over time) at an unchanged (external and internal) price, simply because their net savings are algebraically equal to the government deficits? Thus, no currency devaluation, no asset price inflation, and everybody happy? Really?
    Are stock supplies and demands, and the prices at which they trade, so irrelevant, even though Keynes’ (anti-classical) liquidity preference theory would say exactly the contrary?,
    Would this policy work so smoothly in an open and highly financially integrated economy, with largely concentrated wealth and investors ready to sell off the domestic currency at any whisper of financial and monetary imbalances?
    Countries such as the US, Japan or Switzerland might have some space to do so, but would you seriously advice such a policy recipe to countries that do not issue a reserve currency, are already largely indebted, and do not rank high in the perception of financial markets?
    Printing money to finance deficits on a permanent basis and do so with no reflow mechanisms (such as taxation) is simply untenable. How come you don’t see that, while yourself preach that “finance is fundamental to our understanding of modern economies”?
    It is surprising to see how you are so unforgivingly critical about mainstream economics flaws, and yet so a-critically enamoured of such bad economics as MMT…

  10. April 22, 2021 at 7:39 am

    Wow! This huge chorus of opposition to MMT sounds to me there must be a fire worth hiding behind by all the smoke. Chesterton of course put this more eloquently: “That which is large enough for the rich to covet is large enough for the poor to defend”.

  11. Ikonoclast
    April 22, 2021 at 9:44 am

    I agree with Gerald Holtham: “MMT is a fine example of intellectual product differentiation: I am going to sell you the same soap powder as other people but I’m putting it in a new packet and calling it something else. There is not much in MMT that wasn’t in Abba Lerner 80 years ago.”

    It is Functional Finance soap powder or even Chartalism in a new box. However, it is a soap powder that will clean some of the mud (muddle, uncertainty, doubt) out of the capitalist system. At the same time, it will not remove the capitalist stain itself. That requires sterner measures involving the most revolutionary detergents possible: those that deter the reactionary agents of capitalism, meaning the monied elites, their sycophants and apparatchiks.

    • Craig
      April 22, 2021 at 4:26 pm

      “At the same time, it will not remove the capitalist stain itself. That requires sterner measures involving the most revolutionary detergents possible: those that deter the reactionary agents of capitalism, meaning the monied elites, their sycophants and apparatchiks.”

      Precisely. Like the new monetary and financial paradigm of Direct and Reciprocal Monetary Gifting and its conceptually aligned policies and regulations. Stop fighting losing battles, even against the present set of enablers and anti-social assholes and embrace the better (for everyone) mousetrap.

      One quibble. Make that an EVOLUTIONARY detergent.

    • April 22, 2021 at 5:18 pm

      And Abba Lerner’s books were also best sellers! Oh, wait. There was virtually — pun intended — no public discussion about them likely because there was no internet for most of that time.

      IF you read Kelton’s book you would know that she credits Abba Lerner in her work. His name appears on page 3 for the first time and his ideas are mentioned in more detail later in the book where she credits him with inspiring some of the ideas in MMT. What is NEW is that people are talking about it and that NEVER happened 80 years ago. Your criticism of MMT seems to ignore that. Ditto with chartalism.

      The Overton window on those ideas is opening because of MMT. They, meaning MMT folk, are very clear that “new” means since the 1930s or the past 100 years, they are vague about the timeline. If you google Kelton’s book you will get 1.24 million responses after 1 year but if you google Lerner you get 1.1 million responses with 80 years to get there. You can quibble with me about the timeline of one year if you want, but even if you look at the history of MMT, that is barely 30 years old to get the Overton window open as far as they have is a huge accomplishment. Lerner’s work helped pave the way for MMT and they say that. They seem to have ALWAYS been careful to credit others who provide the foundation for their work.

      I have followed economic ideas for 50 of those 80 years particularly in the last 30 years and had NEVER heard of Lerner, seen his books at my bookstores including the university bookstore. And the used bookstore in my university town that resells university texts has never had them.

      Chartalism NEVER came into my sight until I read the MMT literature. It gets mentioned by Kelton on page 27. And the Communist ideas and rhetoric that seem to fuel or motivate your jaundiced criticism have had even longer to take hold without success. Success meaning that the Overton window on COMMUNISM not MARXISM opened and was then SUCCESSFULLY slammed shut by the “…agents of capitalism,… sycophants, and apparatchiks.” Marx was a good critic of capitalism and is often cited as such. I do NOT equate/conflate communism and Marx.

      Intellectual knowledge and new ideas take time to take hold. And they build on one another. Even Friedman, as described by Melanie Klein, noted that there are ideas lying around to be picked up during times of crisis. When I worked as a crisis counsellor, I knew that crises provide opportunities for change. And change otherwise is often incremental. Nobody can now conceive of a society that does not use money and accounting to manage and describe its affairs. The notion that we use a commodity for or to back money is simply stupid to me yet that is how many critics here and in society think of money. Will that notion change?

      Money is described in economic texts as “Unit of account, means of payment and store of value” although some texts and Galbraith senior simply assume it is what people accept in payment. MMT seems to have dropped the “store of value” notion in favour of what I think money has always really been, a MEASURE of value, comparing it to points in a sporting event. Even the value of my credit is measured or denominated in money of some kind. But that leads to another discussion. But it does seem compatible with Lerner.

      • Craig
        April 22, 2021 at 7:14 pm


        The most important aspect of money is unit of account as it points at and describes how it is created and distributed. In the actual economy its paradigm of DEBT ONLY is a monopoly grant. Integrating monetary gifting directly to the individual and reciprocally back to enterprise with a 50% discount/rebate policy at retail sale (an accounting operation) breaks up that monopoly paradigm and is universally beneficial to all agents save private for profit finance of course, poor things.

        It’s time for private for profit financiers to become obsolete like the horse shite picker uppers after the invention of the internal combustion engine. Creative destruction and all of that. Whats good for the goose is good for the gander.

      • bruceolsen
        April 26, 2021 at 5:06 am

        Graeber (and many others) equate money with debt.

        As you may be aware, one of the earliest forms of money was the tally stick. Information identifying a debt would be carved into a piece of wood that was then split in 2 pieces along the wood grain. Each party kept half. The two pieces would fit only each other, guarding against counterfeiting. When the debt was paid off, the tally sticks could be destroyed, just as money received by the Federal Government is destroyed (because they don’t need it).

        Interestingly, the creditor could use their side of the stick to pay someone else (discharging a debt that they had).

        Medieval sticks were of different lengths, and the debtor possessed the shorter one: the apparent origin of “getting the short end of the stick”.

        The Bank of England used them for about 600 years, and kept them (as proof of paid off taxes). In 1834 they burned all the old sticks in furnaces beneath the House of Lords, causing it, the House of Commons, and most of the rest of Westminster to burn down, and providing the only coherent argument for the gold standard that I can see: incombustability.

      • Craig
        April 26, 2021 at 4:48 pm

        Yes I’m aware of tally sticks and Graeber. That’s all interesting history and data. I’m in agreement with virtually all of what the leading reformists have to say (Keen-the problem revolves around money, debt and banks, Hudson-finance is parasitic, Mosler-money is created and destroyed by accounting and fiscal debt is not really the problem, Brown-publicly administered individual state banks are superior to private commercial ones) …all I’m trying to do is get economists, pundits and activists to “up their game” to the more inclusive level of analysis of the paradigm. Why? So we can then think on what the new paradigm concept is in hopes of reaping the problem resolution, broadening flexibility of policy and historically verifiable universal benefits that such discoveries have always wrought.

        DEBT ONLY is the current problematic, MONOPOLY paradigm concept. GIFTING, Direct and Reciprocal Monetary Gifting integrated into the debt based system is the new paradigm concept, the most efficacious way to implement the benefits of that new concept is with 50% direct discounts and reciprocal rebates at the points of retail sale and at loan signing and with logically and philosophically aligned additional policies and regulations that fill out and maintain the new pattern.

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