There is burgeoning school of economics called Modern Money Theory (MMT) that I really think warrants consideration. Not only is it theoretically quite intriguing, but if accurate, has tremendous political and social implications. One might even say that (perhaps in contrast to the Obama administration), it is actual cause for hope.
So I’d like to bring MMT to your attention. If you have already encountered, and dismissed, MMT, I’d like to encourage you to give it a second look. If you have already encountered, and dismissed, the entire field of Economics, I’d like to propose MMT as the exception to the rule.
This primer is meant to be accessible introduction to someone with no prior understanding of MMT or even Economics. Wray will be adding a chapter every Monday for the next year, and responding to comments every Wednesday. (And for those of you who can’t possibly wait a year, I highly recommend Wray’s textbook Understanding Modern Money)
Okay okay but what is MMT?
Well, Wray and his colleagues will do a much better job than I of explaining, but here’s the gist as I understand it:
- In a fiat economy, public debt = private wealth
- Taxes don’t fund government spending; taxes create demand for fiat currency so that people are willing to sell goods & services to the government in exchange for said currency
- Taxation is a sufficient (though not necessary) means to create demand for fiat currency (& thus prevent against undesirable levels of inflation)
- By serving as an “Employer of Last Resort”, essentially hiring anyone who is willing but unable to find work in the private sector and paying them a living wage, the government can ensure both full employment and price stability.
and finally, perhaps most radically:
If true, this is pretty huge. Calls for “austerity” and the need to “reduce the deficit” become specious; there is an economically-sound mechanism to employ everyone at a living wage; not to mention that the government can suddenly “afford” all kinds of neat social programs, like universal health care, daycare and public transportation.
Zimbabwe! Wiemar Germany!
Nothing you just said made any sense to me!
Rebecca, what the hell makes you, with your film degree, qualified to talk about economics?!
Yes, in many ways MMT runs completely counter to our conventional understanding of money. It sounds insane at first. But I think, if you give Wray a chance, you will see all the above points (except perhaps the last one) thoughtfully addressed.
And unlike most branches of economics, which could be accused of hiding behind intimidating jargon and complicated mathematical models rooted in mythology, the folks at New Economic Perspectives (the group of scholars behind the primer) are actively soliciting comments & critiques from their readers in an effort to make this primer as clear and thorough as possible. So I encourage you to check it out and ask questions and follow along over the next 50 weeks, if that’s your sort of thing.
PS. If you contacted me nearly a year ago about that economics discussion list I wanted to start, apologies for never actually getting around to making it. I’m gonna try and get that started up soon, for real. Perhaps we can work our way through the Modern Money Primer together. Everyone who requested an invite will get one. If you didn’t and want in, let me know!