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Archive 1 |
Contributors to the article on Chartalism might be interested to know that a proposal has been put forward for a Wikiproject on Chartalism, in case they want to support it or participate in the project.- The Gnome ( talk) 11:00, 22 March 2011 (UTC)
There seems to be a great deal of confusion on Wikipedia as a whole as to whether chartalism represents the dominant monetary theory, with circuitism as an alternative, or whether there is some third theory (referred to on various pages as "mainstream" or "classical" monetary theory) which is the dominant view. It seems that if chartalism is the dominant view, this would be a good place to say so. If it isn't, some mention should be made of what the dominant view is. RaulGroom ( talk) 03:41, 7 October 2009 (UTC)
.Warren and Pearson acquired a far greater renown during the Great Depression through their remedies for economic distress. […] Because gold is the key variable in this theory of prices we will call it "metalism". Metallism[sic!] has the implication that by increasing the money price of gold government could increase the money price of commodities. Metalism was an unorthodox theory of prices in 1933: to Keynes mind it was "rubbish". (Brooks, 1969, p. 112). Metalism is also antagonistic to the non-Keynesian view which emphasises the quantity of money, or monetarism, which sees money prices as determined by the demand and supply of money.
— William Coleman, The New Deal's New Gold Policy: A Case Study in the Power of (old) Ideas, History of Economics Review, Volume 17, Winter 1992
Chartalists don't guarantee a job. They merely argue that the role of government in cases of underutilization is to provide the necessary demand to resolve that situation, since otherwise you have unused capacity and net economic loss. It's quite a jump to take that and conclude the government hires everyone who isn't employed; in fact, it often means the government becomes the customer of a lot of businesses. If you are in a state of underutilization that represents an economic loss, and it's due to a demand problem, it means you must have some net fiscal expansion from some source in order to drive utilization. If the private sector is attempting to build assets (run a surplus) and you have an external deficit, the only mathematical means of accomplishing this is public deficit, that is, the government is either hiring people or buying from the private sector. So the section I've marked for expert review needs to recognize that Chartalists prescribe that government deals with unemployment not by guaranteeing a job, but by hiring more and/or spending i.e. buying more from the private sector. Things could easily, and likely would, weigh more towards the second option. ThVa ( talk) 21:28, 27 June 2011 (UTC) (posting on behalf of one Filburt)
It looks like this has become an article on 'Modern Monetary Theory'. Perhaps Modern Monetary Theory should be a separate article? - Crosbie 18:18, 26 July 2011 (UTC)
I'm going to have a go at expanding this article into what will hopefully be an easy-to-read introduction for non-economic types. I've tried to incorporate many of the points people have noted above. However, there is surprisingly little criticism on the actual descriptive part of the theory - it seems to check out in its description of reserve accounting and deficit spending. However, if anyone has any relevant scholarly criticism, please feel free to add. Andyk 33 ( talk) 13:18, 3 March 2011 (UTC)
I was caught by these two sentences: "MMT does, however, insert one caveat: that long-term government bonds can affect the term structure of interest rates. For example, in times of uncertainty, long-term debt may not be desired by the market, leading to high interest rates for that particular type of debt, and therefore affecting the yield curve. MMT proponents therefore tend to argue that government should limit itself to short-term bonds." MMT (I thought) is not a policy advocation, but simply a description of how monetary and fiscal policy is interwoven.
What I would add is a section regarding how government bonds differ from private sector debt. Starting with private sector debt is continually maintained (interest and principle are paid back over time) where as sovereign government bonds are accrual type (interest and principle are paid at the time of bond maturity). Second, private sector debt is a claim on an asset that has a limited life span whereas sovereign bonds can be issued in maturities that exceed the life span of any private sector asset. Third, I would describe how banks and other large bond holders manage their duration and default risk by mixing sovereign debt with private sector debt. Fourth, a description of how government bond auctions are handled would be helpful - the sovereign decides the maturity spectrum of the debt it is trying to sell, while the private sector determines the amount of interest it wants for purchasing that debt.
On the last point realize that a sovereign can in fact sell debt at any interest rate - real or nominal. Imagine for instance if the bond auction process was reversed. The sovereign determines the interest rate on the debt it wants to sell, and the private sector submits bids for the maturity. Obviously, the sovereign would try to delay the payment of interest for as long as possible and so would accept bids of the longest maturity. Meanwhile, the purchaser of the bond is taking on more risk with the longer duration, but that is the point - for any term structure out to infinity there is a price for risk.
Finally, I would nod to the risks associated with sovereign debt - inflation, currency debasement (if you are a nonlocal holder of the debt), political upheaval, invasion, and armageddon. 67.165.88.175 ( talk) —Preceding undated comment added 01:59, 2 September 2011 (UTC).
Why does this keep getting deleted?
I, for one, believe that this section should certainly be deleted. Although I think the point it is making, could, in some way, be incorporated into the artice, as it currently stands it is an original piece of work which cites no source. It is also very odd sitting by itself at the end of the article. Andyk 33 ( talk) 12:42, 31 August 2011 (UTC)
The point is multifaceted - but let me try to explain. A sovereign government does not go bankrupt for the following reasons: 1. A sovereign government has the ability to tax the populace and use the taxes to pay the interest on the debt 2. The bonds that it sells are accrual type bonds (as opposed to coupon type) meaning that the interest payments in cash are only made at the date the bond matures 3. A sovereign government has an infinite financing horizon meaning that it can roll over its debt again and again and again infinitum. More to the point it can sell debt of any maturity of its choosing (1 year, 30 year, 50 year, 100 year, whatever). 4. Put two and three together, and you arrive at an entity that can defer the cash payment of interest as long as it likes 5. Since a sovereign government can defer cash payment as long as it likes it can pay any interest rate that it likes by decree. 6. The monetary authority generally sets interest rates on short term debt lower than interest rates on long term debt. Meaning that there will always be buyers for long term debt as long as it is profitable to borrow short term and lend long term. Notice this is a more general description of the "printing money" hypothesis. Money (cash) is simply a zero term liability of the monetary authority that can be used to purchase long term liabilities.
How does this relate to capitalism? Capitalism itself is built upon the sale of liabilities to finance the difference between what an entity takes in revenue, and what an entity spends. It is an economic impossibility for all sectors ( sovereign government, businesses, individuals ) to run surpluses even under MMT, and so one sector must defer consumption / production, ie they must buy the liabilities of a second sector for that second sector to run a deficit. In the corporate sector there are two types of liabilities - equities and bonds. The difference between the two is that bonds represent senior claims on future income while equities are junior claims. The difference between the two comes into focus when a company tumbles into bankruptcy. When it becomes clear that a company cannot meet its obligations often times the equity holders are wiped out or suffer a dilution as bond holders are forced to convert their holdings to equity (debt to equity bankruptcy restructuring).
What is missing from most of the MMT theories that I have read are equity like claims sold by a sovereign government. Remember that in the corporate arena, equities are junior claims on a corporations revenue stream. A sovereign government can sell non-guaranteed claims on its future tax revenue as easily as a corporation can. In fact by doing so, an economy can escape the 0% lower bound for the cost of debt service in the private sector. 4.49.117.146 ( talk)
A little bit more on #4 will make things clear. Sovereign governments hold bond auctions where the federal government decides what duration of debt it wants to sell and the buyers determine what interest rate they will accept for that debt. What if the two are reversed? What if the federal government decides the interest rate and the buyer determines the duration? For instance, suppose the U. S. Treasury decided it wanted to sell 10% bonds. It would then start accepting bids with the longest duration bid being accepted (50 years, 100 years, whatever). Obviously, the purchaser of the bond is taking on more risk with the longer duration, but that is the point - for any term structure out to infinity there is a price for risk. Whether the markets can properly gauge that risk is a separate issue.
As a visual example imagine stretching a sovereign debt yield curve out to infinity. What is the interest rate at infinity? What you will discover is that the interest rate is infinity as well. The mathematical reason is that the derivitative with respect to time of a yield curve does not have a zero except at infinity. The reason the derivative with respect to time does not have a zero is because of the monetary authority always keeping short term rates below long term rates (with rare exceptions). 4.49.117.146 ( talk)
MMT does not just apply to federal governments. You should consider replacing the term "federal government" with either "government" or "govenment sector" or "sovereign government" (meaning a government that has sovereignty over its monetary system (so excluding Eurozone countries)). You should also formally cite MMT's major proponents and it's published documents in this section. You need also to expand on the mechanism by which a government can set "any" yield at which it issues government debt, and under what institutional arrangements. Charles Jurcich ( talk) 13:12, 31 August 2011 (UTC)
The institutional arrangement would be a reversal of the bond auction process. The Treasury department announces that it is going to sell debt with a yield of such and such percent. Bidders then submit bids on the duration (5 years, 10 years, 30 years, 50 years) that they are willing to absorb to purchase the debt. — Preceding unsigned comment added by 67.165.88.175 ( talk) 03:28, 28 September 2011 (UTC)
Andyk, In the second paragraph of this section you have the sentence
I would remove this sentence for two reasons
Simply removing it is fine, but then deal seperately with the issue of deficit spending without corresponding debt issuance. Do not quote me directly - i'm not an economist - but find the description of this on Prof. Bill Mitchell's blogs. Charles Jurcich ( talk) 13:36, 31 August 2011 (UTC)
Further to the point above, Mitchell deals in detail with the specific issue of running a government deficit without corresponding debt issuance in this Questions and Answers blog under 'Question 1' - http://bilbo.economicoutlook.net/blog/?p=15747 you can then try to find more citable references later perhaps. Charles Jurcich ( talk) 14:47, 31 August 2011 (UTC)
Georg Friedrich Knapp described the theory in "The State Theory of Money". This book was published in 1905. Alfred Mitchell-Innes articles on money and credit appeared in 1913. So why does the article say the theory was developed by GFK in the 1920s? GFK would have been in his 80s! It looks like 1900s would be more accurate! 86.214.202.188 ( talk) 23:24, 14 November 2011 (UTC)
The article fails to mention Wynn Godley, Marc Lavoie and gives only passing mention of L. Randall Wray and can't even give a web link to Wray of which google says there are almost 900,000. Sigh.
Godley was only the major architect of the theory and has the best description of it in one place.
Reading the first three chapters of his book Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth would be sufficient to understand Modern Money theory. This article gives short shift to all of his major explanations.
There is talk in the comments above about metalism- meaning I guess a money system that is 'backed' up by precious metal. Since no such money system is now in existence on the planet, what is the point?
Quoting Paul Krugman "has stated that the MMT view that deficits never matter as long as you have your own currency" is just plain silly. The guy has it all wrong and MMT never says that anywhere. Instead it says that policy makers must use great discretion in creating government debt. L. Randall Wray has responded to Krugman's gross simplification and blew it away. So I see no point in making up a straw man - was that just to fill up the page?
How sophomoric
How cliché
There's a much better description of Modern Money Theory here
http://pragcap.com/resources/understanding-modern-monetary-system
Thaddeus0720 (
talk)
01:54, 18 November 2011 (UTC)
There was a big-ish change to the Background section, which looked to have some good info but which just isn't formatted well enough to suit the article. If the original submitter or someone else, would reformat it to suit the article better here in Talk first (to see what people think) and then put it back, that would be good (I may not get around to rechecking this page, just pulling it and leaving it here to be sorted out).
I've pasted it below, verbatim. Arfed ( talk) 09:46, 25 November 2012 (UTC)
Evidence for MMT/Chartalism:
I just go by empirical scientific evidence which is why MMT or www.MonetaryRealism.com wins over rational people --the most important is that ALL spending is income for someone else --and that all gov spending is income for the private sector (that's just regular accounting --someone's debit is someone else's credit)... & that the vast majority of the money supply is made up of money creation(aka as loans/credit by fractional reserve lending) by private banks & when they reduce loans/credit/money creation, recessions happen...and then it's up to gov to counteract the money supply contraction with gov money creation (aka 'deficit spending)--which shows why taxes should be cut & gov money creation(aka 'deficit spending') increased during stagnant economies(recessions are caused by contractions in money supply) so as to fund hiring & spending/demand:
there's tons of empirical evidence/data charts from official sources like Federal Reserve Charts of evidence/facts here- Oil/energy prices cause inflation, NOT federal deficits -evidence/facts here: 1. http://rodgermmitchell.wordpress.com/2010/04/06/more-thoughts-on-inflation/
2. Economics Verifiable EVIDENCE by CEO/MBA economist at http://rodgermmitchell.wordpress.com/2009/09/07/introduction/ & http://rodgermmitchell.wordpress.com/2011/07/09/why-bank-lending-leads-to-recessions-a-counter-intuitive-finding ..more at www.RodgerMitchell.com
3. http://pragcap.com/debunking-ron-pauls-talking-points
4. http://pragcap.com/the-most-destructive-monetary-myth-in-the-usa
5. 7. Seven Deadly Frauds of Economic Policy http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf by Bank CEO/economist Warren Mosler from http://MoslerEconomics.com/ -Daily Insightful & Most Accurate Verifiable Economics Analysis
6. http://mikenormaneconomics.blogspot.com/search?q=fdr+social+security -Proof showing how FDR & his a cabinet admitted that Social Security/payroll taxes are UNNECESSARY in a fiat currency gov but they agreed to them as a "useful fiction" by conservative politicians so that politicians in the future wouldn't cut it since people "paid into it" & video testimony & writings by several Federal Reserve chairmen from Greenspan, Bernanke & Eccles that Social Security can not go bankrupt since it's all fiat
The biggest objection is "what about inflation or devaluing US dollar?"
The US dollar has value because it actually is still the LARGEST country exporter of food & manufacturer of goods (from Intel chips, Microsoft Windows/Office, to Hollywood movies/music) that the world wants
--China depends on the US for imports of wheat, soybean, rice, corn. See charts below --btw, Russia & China stopped using the US dollar for trade between them.. the US dollar didn't lose/drop in value nor collapse nor hyperinflate
http://seekingalpha.com/article/165958-u-s-still-the-world-s-largest-manufacturer
why US fiat dollar (and even EURO) has value, backed by world's greatest production/export of food:
http://in.reuters.com/article/2008/04/18/trade-wto-food-idINL1835607720080418
The US doens't need nor needed Braetton Woods' Accord to be 'world reserve' currency... that happened after the fact because the US for years prior was the world's greatest exporter & producer of goods (and still the leading nation as biggest exporter of FOOD) after WW2 (making the US dollar most valuable), & then world's biggest importer (by 'exporting' fiat US dollars as nations exoprted to the US to accumulate US dollars because they wanted US dollars to buy US goods/services) which is how it became 'world reserve' currency.
P.S. Weimar Germany's hyperinflation was caused by shortages caused by 90% drop in it's production when almost all their industrial/manufacturing workers went on strike for 8+ months to protest French/Belgian invasion of Germany to confiscate German industrial goods (coal, steel, manufactured goods,etc) for war reparations & from economics professor Bill Mitchell: http://bilbo.economicoutlook.net/blog/?p=3773
Zimbabwe's hyperinflation was caused by shortages caused by drops of 30%-57% of it's production sectors(food, textiles, manufacturing,etc) due to Mugwabe after years of civil war won & expelled all the white landowners(who made up most of the educated, skilled, professional, managerial class & employed most of the population) & gave their land/assets/factories to his revolutionaries who were mostly armed peasants who had no idea how to run a farm, agribusiness, nor factory & unemployment then skyrocketed to 80%+
Both Michael Hudson & Steve Keen predicted in detail the Housing Collapse & resulting economic crisis while mainstream economists were completely clueless (and remain so) Vilhelmo ( talk) 04:16, 17 January 2013 (UTC)
Is it normal to have the majority of the criticism section made up of statements from supporters of a scientific theory? 212.56.120.79 ( talk) 17:44, 31 March 2013 (UTC)
Modern Monetary Theory has certainly received enough coverage from media outlets and comments from high-profile economists to justify a separate article under WP:GNG. There are a fair number of theoretical claims and policy proposals associated with MMT (including some referred in this article) that aren't simply logical consequences of Knapp's Chartalism and don't really warrant detailed discussion on a Chartalist page (the post-Keynesian theory of endogenous money, and Warren Mosler view of imports, and many of the criticisms of MMT being the most obvious examples). Removing this could be balanced by adding more general discussion of critical reception of Knapp's book, links with Keynes' general theory, fiat vs commodity money debates, historical precursors etc. that aren't part of the MMT core. I've created a proto-MMT page on my user-space.
here which will start off by absorbing much of the content here and hopefully develop into something more coherent and comprehensive. I'll try to add new content here and to get consensus for the replacement of the redirect with a new Modern Monetary Theory article before removing all the MMT stuff from this page, but it could use a trim now...
Any help with developing either page would be much appreciated. — Preceding unsigned comment added by Dtellett ( talk • contribs) 16:15, 15 April 2012 (UTC)
Ok, it is just a suggestion. However it is a bit odd to find an article where in almost every single line it is written "MMT is", "MMT has" and then you notice that the name of the article is "Chartalism". -- NUMB3RN7NE ( talk) 13:06, 23 July 2013 (UTC)
I found a sentence in the main article that was incorrect in claim and I explain why it should be either removed, altered, or substantiated with a secondary source.
The sentence that is problematic is this: "As such, a critique of MMT that employs an example of a society without a monetary system exhibiting those qualities cannot be a critique of MMT."
Wikipedia has an article on
critique and I base my objection to the inclusion of the aforementioned because it does not agree with the definition of critique as stated in the wiki article. According to the wiki article, if the critique employs deductive logic then it is considered strong. If the Austrian position is simply that an economy can produce savings absent a "monetary system, that employs a fiat currency and floating exchange rate" then it respresents a valid critique of MMT's theory of "savings". While the Austrian school is currently considered
heterodox and while the Austrian critique can be generalized to all economic theories that presume "a monetary system that employs a fiat currency and floating exchange rate", nevertheless to make the statement that the Austrian critique using Robinson Crusoe worldview cannot be a critique specific to MMT is a bit too bold and inconsistent with the current wiki article on
critique. If the sentence was stated as a defense by a reknown MMT proponent, it should directly cite that person and include the appropriate verifiable citation. Otherwise, the sentence appears to be synthesis
WP:NOR.
K♪monkey@('_')@
Talk⇉✌
02:08, 22 November 2011 (UTC)
Kjmonkey said:
" If the Austrian position is simply that an economy can produce savings absent a "monetary system, that employs a fiat currency and floating exchange rate" then it respresents a valid critique of MMT's theory of "savings"
It is not a valid critique of MMT.
MMT refers to savings of financial assets NOT real assets.
MMT agrees that an economy can produce savings of REAL assets absent a monetary system.
Vilhelmo (
talk)
18:02, 28 November 2013 (UTC)
Any criticism available?
Good to see that the criticism section has been updated - but I still feel it is rather poor at the moment. The criticism sections on other economics pages go into specific detail, whereas the criticism cited on this page seems to be along the lines of "this theory is wrong because it's wrong". I will have a look in more detail at the links to see if I can pull out some more information. Andyk 33 ( talk) 01:31, 31 July 2011 (UTC)
Hope this helps. Charles Jurcich ( talk) 17:30, 31 August 2011 (UTC)
Chartalism warrants its own article. The previous chartalism article became almost completely about MMT, so the MMT standalone fixed that. But there should be a stub for chartalism, if there isn't interest yet for developing the standalone, rather than a redirect. Chartalism isn't necessarily "modern". MMT economics is quite a bit more than chartalism (neo-Keynesian, pulling in the Minsky financial sector component, the job guarantee etc). The conflation of the two (chartalism and MMT) as we're doing now with the redirect, as if they're synonyms, misleads readers. I recommend that Chartalism be stubbed -- that neochartalism redirect here and reference to chartalism here in the MMT article text be wikilinked to the stub--hopefully sparking interest in developing it. Professor marginalia ( talk) 05:48, 7 April 2014 (UTC)
I have never understood a word written about MMT is this me or am i the rule ? if I am the rule, why is this state of affairs ? it is sort of like marxism - one has the constant feeling of trying to punch through tacky jello — Preceding unsigned comment added by 2601:6:3880:CC8:E1E9:A589:57D7:BE1B ( talk) 01:40, 12 January 2015 (UTC)
This bit was added by an anonymous user, criticizing Mosler's view on exports/imports, but it doesn't fit the formatting of the article and isn't cited, so moving here:
Arguably, this isn't suitable for the article at all - I don't know what Wikipedia guidelines it would fall-foul to though ( WP:NOR?) Arfed ( talk) 21:01, 12 November 2015 (UTC)
The criticism from Thomas Palley was expanded recently, and it is just a big block of text in the criticism section now. Could this be cleaned up a bit? Also, Post-Keynesian (and, as far as I know, MMT'er) Phil Pilkington did a good analysis of Palleys criticism there, and has shown it it is in part, more neo-Keynesian/neoclassical-synthesis than Post-Keynesian (e.g. relying on IS/LM, when this seems to be rejected by most Post-Keynesian's?); maybe this warrants inclusion as a 'counter-criticism': https://fixingtheeconomists.wordpress.com/2014/02/18/palleys-critique-of-mmt-post-keynesian-or-neo-keynesian/ Arfed ( talk) 00:22, 19 February 2015 (UTC)
The following quote from the article is: "the government has an unlimited capacity to pay for the things it wishes to purchase" is not true. If it were the governments having poor or corrupt leaders would be able to control world events and for all their citizens to benefit greatly.
There is a serious limit on how much money governments can print and and issue without inflating or super-inflating the currency. Of course they can try, but will then cease to be viable. Surely here we do not wish to consider the way governments can work to fail, but only how money printing can help governments to regain stability and have good control of their country's progress. The MMT idea that current fiat money makes its issue less constrained than with the gold standard, is true to a limited degree. The article should clearly explain the way this is normally constrained. Macrocompassion ( talk) 10:24, 11 January 2017 (UTC)
Mainstream economics says an economy can only be sustainable if the amount of spending is kept closed to the amount of tax received. MMT says the the amount of spending is limited to the amount of unemployment. If there is unemployment, then there is scope for additional government spending. If more spending is required when there is full employment, then additional tax is needed to increase unemployment, and so to make more resources available for use by the government. — Preceding unsigned comment added by 194.75.63.98 ( talk) 12:17, 23 January 2018 (UTC)
Is it advisable to include innumerable uses of pathetic fallacy in a Wikipedia article? "A nation wants," for example. "MMT considers," "MMT concludes," "a desire on behalf of the exporting nation" etc.
"Some leading proponents of MMT such as Warren Mosler advocate" is a preferable style.
Mydogtrouble ( talk) 12:48, 24 July 2011 (UTC)
I suppose this is probably obvious, but the Chartalism page is almost entirely reproduced within the MMT page. I'd like to try to separate the material but I don't have the time at this moment. David A Spitzley ( talk) 17:50, 10 January 2019 (UTC)
>>Based on the national income identity,
Does this mean "national savings identity" or something else? Confused.
>>MMT states that it is [not] possible for the non-government sector to accumulate a surplus [unless //only if] the government runs budget deficits.
Suggested revision for readability. The algebra shown does not support any reasonable interpretation of this claim. Make a case or delete. Define "surplus" exactly.
>>As most private sectors want to accumulate a surplus, How are "wants' relevant ? We need a basis in fact.
>> MMT economists usually advocate for government budget deficits. "usually?" Is there evidence or a poll to support this claim ? 24.165.181.87 ( talk) 02:02, 12 February 2019 (UTC)
There are well over 2,000 competing cryptocurrencies in the world today that either directly or indirectly compete with national fiat systems. The MMT claim that money is a monopoly is seriously whistling past the graveyard and that's being excessively polite. At present there doesn't seem to be anything out there Wikipedia RS worthy that handles this double facepalm worthy observation so I'm just leaving this in comments. We desperately need something that covers exactly how divergent from reality MMT is in its baseline assumption that "the currency" is "a public monopoly" TMLutas ( talk) 18:32, 15 March 2019 (UTC)
I reverted an edit which added this:
A 2019 survey of leading economists showed a unanimous rejection of modern monetary theory's assertions that "Countries that borrow in their own currency should not worry about government deficits because they can always create money to finance their debt" and "Countries that borrow in their own currency can finance as much real government spending as they want by creating money.
The reason is that every economist (MMT economists included) would have answered the same way. In other words, this has nothing to do about MMT and about what MMT says. The MMT is a macroeconomic description of the monetary system characterised by its view of the currency as a tax credit and, therefore, of the currency as a public monopoly. (source: http://www00.unibg.it/dati/corsi/910003/64338-Warren%20Mosler%20Bergamo%20paper%20March%2010.pdf ) -- NUMB3RN7NE ( talk) 08:47, 15 March 2019 (UTC)
To add to this discussion, here ( http://rooseveltinstitute.org/deficits-do-matter-not-way-you-think/ ) is an article from Randall Wray (well known founding MMT academic), directly addressing/refuting the claim about MMT (that deficits don't matter) in the above survey. The claim is not a part of MMT, it should not be cited as a reflection of MMT in the article. Arfed ( talk) 06:09, 18 March 2019 (UTC)
Hi,
I saw this:
https://en.wikipedia.org/?title=Modern_Monetary_Theory&diff=888506920&oldid=888506340
and I ask you how to show that this article:
http://www00.unibg.it/dati/corsi/910003/64338-Warren%20Mosler%20Bergamo%20paper%20March%2010.pdf
is free from copyright. I explain: this article is on the website of University of Bergamo and it is free from copyright.
Thanks. -- NUMB3RN7NE ( talk) 16:58, 19 March 2019 (UTC)
Hi,
I wrote to the professor who held the course (Stefano Lucarelli) and this is his response (in Italian):
---------- Forwarded message --------- From: Stefano Lucarelli <stefano.lucarelli@unibg.it> Date: mar 19 mar 2019 alle ore 18:37 Subject: Re: Stefano scusa una domanda: ma tu sai se questo paper qui è coperto da copyright? http://www00.unibg.it/dati/corsi/910003/64338-Warren%20Mosler%20Bergamo%20paper%20March%2010.pdf
Non è coperto da copyright, è materiale didattico preparato per il corso a Bergamo di cui ero coordinatore. Puoi farlo circolare.
TRANSLATION (of his answer): "It is not covered by copyright, it is teaching material prepared for the Bergamo course taught by me and of which I was the university coordinator. You can reproduce it."
-- NUMB3RN7NE ( talk) 17:52, 19 March 2019 (UTC)
...is kinda POV, kinda of WP:PRIMARY, some of it even WP:OR. It displays the *claims* that MMTers make about mainstream. Most of these are nonsense. For example:
I'm going to remove it until 1) we can get rid of the original research and 2) we present this as claims MMTers make about the mainstream, not what the mainstream actually is. Volunteer Marek ( talk) 05:04, 23 March 2019 (UTC)
I think we should discuss what's appropriate to link to as further reading on the subject. There are links to economists' blogs in the external links section, which I find to be appropriate as per Wikipedia:External_links#What_should_be_linked section "to be considered", item 4. They are not intended to be citable sources.
There are also non-blog writings published on Warren Mosler's site, for example, that are arguably mandatory readings on the subject. I feel as though those can be considered to have real authority. -- Geoffpursell ( talk) 23:52, 5 April 2011 (UTC)
Rejoinder: Although the above reference guide says expert blogs are appropriate, citations to personal blogs within the MMT article are unnecessary. The blog citations in the current article are overwhelmingly from Bill Mitchell. Those blogs are quite frankly poorly edited and difficult to read. Every citation in the article to Bill Mitchell can be replaced by a reference to the same point in a formally edited and published work of an MMT economist, even Mitchell himself. Editors should endeavor to replace as many of the Bill Mitchell blog references as possible, with references to formally edited and published works. I have already done so myself. This is easily done by reading the MMT literature. -- 97.119.0.118 ( talk) 00:39, 28 April 2019 (UTC)
This table is really quite shoddy. We should remove the back and forth between Kelton and Krugman. Each side of the table should deal with it's side of the theory, and leave criticism to the criticism section. I recommend we just have a simple well-cited sentence or two in each box, letting the citations show who said what. Zyzzek ( talk) 14:19, 5 May 2019 (UTC)
This article is completely wrong in so many ways it should be pulled. It goes wrong right from the get go, calling Modern MONETARY Theory a 'fiscal' policy. Monetary and fiscal policy are fundamentally divergent elements. Anyone who calls one the other is just making stuff up. — Preceding unsigned comment added by 74.15.90.8 ( talk)
In the video at https://www.cnbc.com/2019/03/26/aocs-economic-theory-has-gotten-one-big-fact-wrong-fitch-says.html at approx. 08:50 she says "I reject the idea that MMT is about using taxes to reduce inflation". Didn't check the authoritative source for the bullet points, but clearly there's some controversy about it.
Removal of money by use of tax / sales of bonds to reduce inflation, is kind of supporting the Quantitive Theory of Money. As far as I am aware, QTM is strongly opposed by MMT academics. Kelton is bang on when she says that tax should not reduce inflation. Tax is to create unemployment (of labour and resources), which will allow the government to purchase, without devaluing the currency. — Preceding unsigned comment added by 188.28.59.47 ( talk) 21:35, 6 October 2019 (UTC)
Ketil ( talk) 09:01, 28 March 2019 (UTC)
I think its just the interpretation of her statement. From Bloomberg: "The reason the government doesn’t need to sell treasury securities, or levy taxes, to spend money is that the central bank, under the control of the treasury, can pay for everything by conjuring up electronic money. In MMT’s ideal world there would still be taxes, but their main purpose, aside from lessening inequality, would be as “offsets” to keep inflation under control. Taxes would drain just enough money from consumers and businesses so total spending in the economy won’t be excessive." Bloomberg Farcaster ( talk) 14:20, 28 March 2019 (UTC)
I have attempted addressed this as of 27 April 2019 by specifying the bullet point be demand-pull inflation (as per Fullwiler/Grey/Tankus 2019), and citing the Fullwiler/Gray/Tankus column which clarifies and addresses the issue
2600:8804:280:6E:3C9C:D2B2:E41:C0F (
talk)
01:39, 28 April 2019 (UTC)
The very first sentence claims Chartalism to be a monetary standard and fiat money a unit of wealth. Let it be explained how we can call it an standard or unit. Free floats are known to be tokens that represent variable quantities of wealth. It neither has any intrinsic value nor any known or definite or definable purchasing power. Market measure wealth using money as the measure of wealth. therefore common medium of exchange must satisfy technical requirement for unit and that require it be precisely defined quantity of what it measures. It must also be noted that measurement is a scientific issue and the opinion that really ought to be considered is the opinion of scientists and technologists. I am of the view that calling Chartalism a monetary standard and fiat money as unit of wealth is foundation of worst fraud against humanity and it must be challenged. — Preceding unsigned comment added by Hrsiddique ( talk • contribs) 06:09, 28 January 2011 (UTC) There is a long and dry looking section called 'Deriving the National Accounting Identity from the Expenditure Model of GDP'. A Google search for "National Accounting Identity" chartalism returns one hit, besides Wikipedia. This looks like original research. I will remove it if no sources are provided. - Crosbiesmith ( talk) 18:29, 5 October 2009 (UTC)
Not only that, but the deriving of the national accounting equation is completely incorrect. As such I'm going to remove it now. Matthew 18:15 10 october 2009 —Preceding unsigned comment added by 115.70.133.89 ( talk) 10:11, 10 October 2009 (UTC)
A simple comment from somebody who knows no economics: The first sentence doesn't seem to really make any sense to me. It still sounds confused even after I added a little punctuation. 31.125.76.2 ( talk) 10:33, 28 March 2020 (UTC)
The page is going through a lot of edits recently, and the formatting of the content has gotten bad and is not in line with other Wiki pages - the introductory paragraph for instance, should not contain the numbered list of some of MMT's core distinguishing features - it's meant to be an introductory section, which leaves those kinds of more detailed points to later.
I haven't got more to add, nor the time to review everything, but please be mindful of the formatting of the article, keep it in line with other wiki pages, and keep in mind that laymen wholly unfamiliar with MMT, will be coming here to get an introductory/broad idea of what it's about. Edits with new/more-clear information are good, fair play - but emphasis on clarity and fitting in with other wiki articles. Arfed ( talk) 23:33, 30 March 2019 (UTC)
I'm moving these files here - they're not referenced in the text and not particularly relevant.
Bangabandhu ( talk) 01:57, 1 June 2020 (UTC)
recently editors have pointed to [ this 2007 article] to state that MMT is heterodox. Source doesn't say MMT is heterodox, but features of it are heterodox. [ 2019 source] says "But what was once an obscure “heterodox” branch of economics has now become a major topic of debate among Democrats and economists with astonishing speed." Bangabandhu ( talk) 12:38, 20 July 2020 (UTC)
Search on Google and Google scholar for "mmt heterodox", you will find a slew of RS. That you didn't even do this low level of due diligence shows your bias on this issue. I'm adding some more references to the lead. Do not remove the word heterodox, as it is well accepted. LK ( talk) 13:59, 27 July 2020 (UTC)
The first paragraph of Criticism reads as follows:
Is it normal to start a criticism section with endorsements? It reads strangely and perhaps there is precedent for this sort of thing that I am not familiar with. 68.148.75.147 ( talk) 22:25, 9 December 2020 (UTC)
Addendum--the second paragraph also reads like criticisms of criticisms:
And the final sentence:
Seems out of place in a criticism section also, mostly since it lacks further explanation. Apologies for my formatting. 68.148.75.147 ( talk) 22:33, 9 December 2020 (UTC)
I added links to Stephanie and L. Randall's names, and corrected the typo in Fullwiler. This sentence still seems a bit out of place. 68.148.75.147 ( talk) 23:07, 9 December 2020 (UTC)
I decided to be BOLD since no one has responded to my objections here. I deleted the first paragraph of the Criticisms section. 68.148.75.147 ( talk) 23:09, 11 December 2020 (UTC)
After learning a bit more about wiki and the history page, it appears what occurred here was actually a BRD failure. This undo: https://en.wikipedia.org/?title=Modern_Monetary_Theory&diff=993007604&oldid=993007490 by User:Liberaldemocrat Should have been discussed prior to undoing the reversion. 68.148.75.147 ( talk) 22:01, 23 December 2020 (UTC)
In the United States, the Treasury Department with one hand prints government debt and sells it to investors; with another hand the Treasury Dept prints green dollars and delivers them to the Fed for cost of printing. From time to time the Fed buys government debt and pays with dollars received from the Treasury actually for free. If one disregards the investors, then it becomes clear that the Treasury Dept prints government debt, and also prints free dollars for the Fed to buy the government debt. The government debt constantly rolls over; the new debt is replacing the old debt. In fact, the federal government is already practicing the fundamental aspects of the MMT. Japan, with government debt two and a half times larger than its GDP, is a good example of MMT being practiced for decades, and it works perfectly well. But the good questions are, what is the optimal size of the government debt; what is the optimal level of inflation (both nominal and real); and when the hyperinflation will creep in (Germany in '20s, or Zimbabwe more recently). Government of Japan owns its Central Bank, and they are wise enough to keep interest rates close to zero, regardless of level of inflation. But the Fed, being private and independent, may start increasing interest rates on a whim "to fight inflation" caused by MMT. Irving Fisher explained in his classic Booms and Depressions (1932) how liquidation of debt causes a vicious self--enforcing debt--deflation spiral and economic depression. [1] Lunine ( talk) 03:49, 15 February 2021 (UTC)
We should admit that in this debate we have a lot of miscommunication and misunderstanding. When we make statements that government should not worry about budget deficits and government debt, very many reasonable people get nervous, and we should not blame them. Instead, we should start talking about limits, limitations, and common sense. Consider the case of Zimbabwe. The government was printing money to pay salaries of the government employees. The result was hyperinflation. It is clear that there are limits, and governments should indeed worry about those limits. Imagine now that the government of Zimbabwe printed the same amount of money, but ALL that money was paid to create a strong construction materials industry, and to build whatever the country needs -- decent housing, chicken farms, etc. What would have been the result? Zimbabwe would be a rich country by now. Most of the population would live in decent apartments, and there would be "a chicken in every pot." The point here is that creation of money out of thin air not either good or bad. We should frame the MMT in terms of economic development. Consider Argentina. Was bankrupt many times, and bankrupt again. Borrowing money from other countries in their currencies will always bankrupt you. MMT, on the other hand, is a very potent tool for any government to improve the living standards, and to reduce poverty. The main argument of our opponents is an elevated level of inflation. Monetary savings will lose value, but there is a solution. Commercial banks still pay high interest on deposits in saving accounts. The central bank will pay high interest on the reserves the commercial banks keep in the central bank. Holders of cash will be properly compensated. But inflation, as we know, benefits debtors and hurts creditors, and creditors are mostly banks, so the government will have to print money and compensate them. Those who hold debt instruments, government or private, must be compensated. It will take a lot of planning, preparation, and educating all levels of the society how inflation works. But the reward will be tremendous for any country that needs financing to create millions of productive jobs. In countries like India not millions but tens of millions of jobs will be created. Poor countries with underdeveloped financial systems suddenly will be able to finance construction of modern new cities with modern public transportation where most of the people will not even own a car, so the country will save tons of money on import of cars and gasoline. We need to start talking to poor countries, to their governments, bankers, and economists. And the last point. Housing built with government money becomes government property. A better way is for the central bank to print money and to make loans to a government-owned commercial bank which will make loans to private real estate developers which will build whatever the country needs, is that new cities or chicken farms. When construction is completed, the newly built assets will be sold, and the debt will be paid back all the way to the central bank. This way there will be no increase in inflation in the long run. It is explained on this website: http://www.globalpovertysolution.com. The authors refer to it as MODIFIED KEYNESIAN THEORY. Both MMT and MKT have their roots in Keynesian Theory; they are just more promiscuous versions of the same principle - to give the government more active role when the financial system is not capable to do the job. ( Lunine ( talk) 05:07, 26 February 2021 (UTC))
A number of central banks all over the world, most notably in the U.S. and in Europe (European Central Bank) have adopted the MMT as their default monetary policy. In practical terms, it means that those central banks are printing currency and buying government obligations like Treasury bonds, notes, and bills. The result is a direct monetization of government debt if the central bank buys it straight from the Treasury. [2]. In this case the central bank receives currency from the Treasury for the cost of printing, and then pays that currency back to the Treasury for government debt. Usually central banks use indirect monetization of debt. In this case the Treasury prints government obligations and sells them to investors. From time to time the central bank buys government debt from investors and pays with currency received from the Treasury for the cost of printing. Buying the government debt from investors is just an indirect way to monetize the government debt directly. [3]. Many economists do not understand the monetary theory, and they are still in denial about MMT. An important fact to remember is that when the central bank buys government debt from commercial banks, the result is an increase of bank reserves against which the banks make loans. If the banks make what Irving Fisher called "productive loans" [4] (to buy new housing, for example), then such productive loans are good for the economy. If the banks make loans to buy millions of houses or apartments which have not even been built yet, the result is always speculation, fraud, and the Great Recession. [5] Lunine ( talk) 19:12, 25 March 2021 (UTC)
The essence of MMT can only be understood by comparing it to other major economic theories. The basic philosophy of the classical school was determined by gold standard. Gold was money, and paper money was representing claims on real money which was gold. Classical economists did recognize that the economy was inherently unstable, with boom-and-bust cycles, but they attributed economic depressions to overproduction of goods. Their advice was to wait until the accumulated goods were sold - and no government intervention. In 1932, Irving Fisher published his classic Booms and Depressions where he explained the major cause of the economic depression< ref>. According to Fisher, liquidation of debt was causing lower money supply, lower aggregate demand, lower production, higher unemployment, lower confidence in the economy, and still more liquidation of debt, and so on and so forth in the vicious cycle. In 1936, four years after Booms and Depressions was published, Keynes published his General Theory<ref> where he explained that the major cause of the economic depression was low aggregate demand. His advice was to increase government spending. Money could be borrowed by issuing government debt. In the 1960s, Milton Friedman discovered, three decades after Irving Fisher, that the main problem was unstable money supply<ref>. His advice was to keep the money supply increasing at a steady but moderate rate. The main difference of MMT is the recognition that modern money no longer represents claims on gold. Modern money represents claims on the whole wealth of a country, and it is this recognition that allows the government to print money. The money supply must increase at the same rate as the wealth of the country. If the wealth of a country is increasing, but money supply is not, then it will cause deflation and an economic downturn. If the money supply is increasing, but the wealth of the country is not, then it will cause a high level of inflation. The goal is to increase wealth of the country as much as possible while keeping the inflation as low as possible. The MMT offers the optimal approach to balance the conflicting goals to keep wealth increasing while keeping inflation reasonably low. There are a number of ways to do it. If the goal is to finance construction of housing and chicken farms, then the government can print currency and make loans to build housing and chicken farms. After construction is completed, the asset will be sold, and the construction loans will be paid back. With this approach there will be no increase in inflation in the long run, and it is basically a Modified Version of the Keynesian Theory.<ref>. Another approach is to borrow money by issuing government debt. This approach can be utilized to finance all kinds of infrastructure -- roads, bridges, charging stations for electric cars, etc. These kinds of assets can not be easily sold, and they must be financed with long-term government debt. To keep interest rates low, the central bank can from time to time buy government debt on the open market and pay with currency received from the Treasury for the cost of printing. The Federal Reserve has been doing it for many decades, and will continue doing it for many decades to come. This, in a nutshell, is the Modern Monetary Theory: responsible governments must print money and pay for construction of whatever the country needs - housing, infrastructure, etc. Many economists do not understand it, but there is no reasonable alternative. ( {help} Can I post this on a main page if I add some references?) Lunine ( talk) 22:19, 26 March 2021 (UTC)
Can I post this on a main page if I add some references?- No. This is not how Wikipedia is written. You can't write whatever you want and then find "references". Editors are expected to read references and summarize them. Please see WP:V. --- Avatar317 (talk) 23:48, 26 March 2021 (UTC)
References
Hey folks, what do you think if to change buzz word "heterodox" which is uncommon and unusual with the more common word: pseudoscientific or pseudoeconomic? -- 2A01:598:B10D:7036:78D0:960D:F4E4:DD56 ( talk) 17:42, 16 February 2021 (UTC)
Based on other discussions above, that sounds like a bad idea which is likely to antagonize some of the other editors. ″Heterodox″ implies a lack of current acceptance for the theory among the majority of economists, without Wikipedia taking a position on which economic theory is correct. "Pseudoscientific" is an explicit statement that the theory is WRONG. It would be a violation of Wikipedia's neutral voice to take a position this way. Take a look further up this page, and you will find a discussion in which at least one other editor takes the position that even the word "heterodox" is too strong. If other editors question the validity of "heterodox", then "pseudoscientific" seems like a move even farther away from neutral voice. NikolaiSmith ( talk) 05:55, 11 March 2021 (UTC)
This quote from 2006 is in the section talking about what mainstream economists agree about with MMT economists. But nowadays, on a practical level, most economists in the United States, mainstream or not, worry about default because the yahoos in the legislature might intentionally allow the United States to go into default if they don't get their way. So it's misleading. Rich ( talk) 19:09, 19 October 2022 (UTC)
I've removed the quote because its source never mentions MMT; it is some editor's disallowed WP:SYNTH to connect it to this subject.--- Avatar317 (talk) 23:09, 20 October 2022 (UTC)
![]() | This is an archive of past discussions. Do not edit the contents of this page. If you wish to start a new discussion or revive an old one, please do so on the current talk page. |
Archive 1 |
Contributors to the article on Chartalism might be interested to know that a proposal has been put forward for a Wikiproject on Chartalism, in case they want to support it or participate in the project.- The Gnome ( talk) 11:00, 22 March 2011 (UTC)
There seems to be a great deal of confusion on Wikipedia as a whole as to whether chartalism represents the dominant monetary theory, with circuitism as an alternative, or whether there is some third theory (referred to on various pages as "mainstream" or "classical" monetary theory) which is the dominant view. It seems that if chartalism is the dominant view, this would be a good place to say so. If it isn't, some mention should be made of what the dominant view is. RaulGroom ( talk) 03:41, 7 October 2009 (UTC)
.Warren and Pearson acquired a far greater renown during the Great Depression through their remedies for economic distress. […] Because gold is the key variable in this theory of prices we will call it "metalism". Metallism[sic!] has the implication that by increasing the money price of gold government could increase the money price of commodities. Metalism was an unorthodox theory of prices in 1933: to Keynes mind it was "rubbish". (Brooks, 1969, p. 112). Metalism is also antagonistic to the non-Keynesian view which emphasises the quantity of money, or monetarism, which sees money prices as determined by the demand and supply of money.
— William Coleman, The New Deal's New Gold Policy: A Case Study in the Power of (old) Ideas, History of Economics Review, Volume 17, Winter 1992
Chartalists don't guarantee a job. They merely argue that the role of government in cases of underutilization is to provide the necessary demand to resolve that situation, since otherwise you have unused capacity and net economic loss. It's quite a jump to take that and conclude the government hires everyone who isn't employed; in fact, it often means the government becomes the customer of a lot of businesses. If you are in a state of underutilization that represents an economic loss, and it's due to a demand problem, it means you must have some net fiscal expansion from some source in order to drive utilization. If the private sector is attempting to build assets (run a surplus) and you have an external deficit, the only mathematical means of accomplishing this is public deficit, that is, the government is either hiring people or buying from the private sector. So the section I've marked for expert review needs to recognize that Chartalists prescribe that government deals with unemployment not by guaranteeing a job, but by hiring more and/or spending i.e. buying more from the private sector. Things could easily, and likely would, weigh more towards the second option. ThVa ( talk) 21:28, 27 June 2011 (UTC) (posting on behalf of one Filburt)
It looks like this has become an article on 'Modern Monetary Theory'. Perhaps Modern Monetary Theory should be a separate article? - Crosbie 18:18, 26 July 2011 (UTC)
I'm going to have a go at expanding this article into what will hopefully be an easy-to-read introduction for non-economic types. I've tried to incorporate many of the points people have noted above. However, there is surprisingly little criticism on the actual descriptive part of the theory - it seems to check out in its description of reserve accounting and deficit spending. However, if anyone has any relevant scholarly criticism, please feel free to add. Andyk 33 ( talk) 13:18, 3 March 2011 (UTC)
I was caught by these two sentences: "MMT does, however, insert one caveat: that long-term government bonds can affect the term structure of interest rates. For example, in times of uncertainty, long-term debt may not be desired by the market, leading to high interest rates for that particular type of debt, and therefore affecting the yield curve. MMT proponents therefore tend to argue that government should limit itself to short-term bonds." MMT (I thought) is not a policy advocation, but simply a description of how monetary and fiscal policy is interwoven.
What I would add is a section regarding how government bonds differ from private sector debt. Starting with private sector debt is continually maintained (interest and principle are paid back over time) where as sovereign government bonds are accrual type (interest and principle are paid at the time of bond maturity). Second, private sector debt is a claim on an asset that has a limited life span whereas sovereign bonds can be issued in maturities that exceed the life span of any private sector asset. Third, I would describe how banks and other large bond holders manage their duration and default risk by mixing sovereign debt with private sector debt. Fourth, a description of how government bond auctions are handled would be helpful - the sovereign decides the maturity spectrum of the debt it is trying to sell, while the private sector determines the amount of interest it wants for purchasing that debt.
On the last point realize that a sovereign can in fact sell debt at any interest rate - real or nominal. Imagine for instance if the bond auction process was reversed. The sovereign determines the interest rate on the debt it wants to sell, and the private sector submits bids for the maturity. Obviously, the sovereign would try to delay the payment of interest for as long as possible and so would accept bids of the longest maturity. Meanwhile, the purchaser of the bond is taking on more risk with the longer duration, but that is the point - for any term structure out to infinity there is a price for risk.
Finally, I would nod to the risks associated with sovereign debt - inflation, currency debasement (if you are a nonlocal holder of the debt), political upheaval, invasion, and armageddon. 67.165.88.175 ( talk) —Preceding undated comment added 01:59, 2 September 2011 (UTC).
Why does this keep getting deleted?
I, for one, believe that this section should certainly be deleted. Although I think the point it is making, could, in some way, be incorporated into the artice, as it currently stands it is an original piece of work which cites no source. It is also very odd sitting by itself at the end of the article. Andyk 33 ( talk) 12:42, 31 August 2011 (UTC)
The point is multifaceted - but let me try to explain. A sovereign government does not go bankrupt for the following reasons: 1. A sovereign government has the ability to tax the populace and use the taxes to pay the interest on the debt 2. The bonds that it sells are accrual type bonds (as opposed to coupon type) meaning that the interest payments in cash are only made at the date the bond matures 3. A sovereign government has an infinite financing horizon meaning that it can roll over its debt again and again and again infinitum. More to the point it can sell debt of any maturity of its choosing (1 year, 30 year, 50 year, 100 year, whatever). 4. Put two and three together, and you arrive at an entity that can defer the cash payment of interest as long as it likes 5. Since a sovereign government can defer cash payment as long as it likes it can pay any interest rate that it likes by decree. 6. The monetary authority generally sets interest rates on short term debt lower than interest rates on long term debt. Meaning that there will always be buyers for long term debt as long as it is profitable to borrow short term and lend long term. Notice this is a more general description of the "printing money" hypothesis. Money (cash) is simply a zero term liability of the monetary authority that can be used to purchase long term liabilities.
How does this relate to capitalism? Capitalism itself is built upon the sale of liabilities to finance the difference between what an entity takes in revenue, and what an entity spends. It is an economic impossibility for all sectors ( sovereign government, businesses, individuals ) to run surpluses even under MMT, and so one sector must defer consumption / production, ie they must buy the liabilities of a second sector for that second sector to run a deficit. In the corporate sector there are two types of liabilities - equities and bonds. The difference between the two is that bonds represent senior claims on future income while equities are junior claims. The difference between the two comes into focus when a company tumbles into bankruptcy. When it becomes clear that a company cannot meet its obligations often times the equity holders are wiped out or suffer a dilution as bond holders are forced to convert their holdings to equity (debt to equity bankruptcy restructuring).
What is missing from most of the MMT theories that I have read are equity like claims sold by a sovereign government. Remember that in the corporate arena, equities are junior claims on a corporations revenue stream. A sovereign government can sell non-guaranteed claims on its future tax revenue as easily as a corporation can. In fact by doing so, an economy can escape the 0% lower bound for the cost of debt service in the private sector. 4.49.117.146 ( talk)
A little bit more on #4 will make things clear. Sovereign governments hold bond auctions where the federal government decides what duration of debt it wants to sell and the buyers determine what interest rate they will accept for that debt. What if the two are reversed? What if the federal government decides the interest rate and the buyer determines the duration? For instance, suppose the U. S. Treasury decided it wanted to sell 10% bonds. It would then start accepting bids with the longest duration bid being accepted (50 years, 100 years, whatever). Obviously, the purchaser of the bond is taking on more risk with the longer duration, but that is the point - for any term structure out to infinity there is a price for risk. Whether the markets can properly gauge that risk is a separate issue.
As a visual example imagine stretching a sovereign debt yield curve out to infinity. What is the interest rate at infinity? What you will discover is that the interest rate is infinity as well. The mathematical reason is that the derivitative with respect to time of a yield curve does not have a zero except at infinity. The reason the derivative with respect to time does not have a zero is because of the monetary authority always keeping short term rates below long term rates (with rare exceptions). 4.49.117.146 ( talk)
MMT does not just apply to federal governments. You should consider replacing the term "federal government" with either "government" or "govenment sector" or "sovereign government" (meaning a government that has sovereignty over its monetary system (so excluding Eurozone countries)). You should also formally cite MMT's major proponents and it's published documents in this section. You need also to expand on the mechanism by which a government can set "any" yield at which it issues government debt, and under what institutional arrangements. Charles Jurcich ( talk) 13:12, 31 August 2011 (UTC)
The institutional arrangement would be a reversal of the bond auction process. The Treasury department announces that it is going to sell debt with a yield of such and such percent. Bidders then submit bids on the duration (5 years, 10 years, 30 years, 50 years) that they are willing to absorb to purchase the debt. — Preceding unsigned comment added by 67.165.88.175 ( talk) 03:28, 28 September 2011 (UTC)
Andyk, In the second paragraph of this section you have the sentence
I would remove this sentence for two reasons
Simply removing it is fine, but then deal seperately with the issue of deficit spending without corresponding debt issuance. Do not quote me directly - i'm not an economist - but find the description of this on Prof. Bill Mitchell's blogs. Charles Jurcich ( talk) 13:36, 31 August 2011 (UTC)
Further to the point above, Mitchell deals in detail with the specific issue of running a government deficit without corresponding debt issuance in this Questions and Answers blog under 'Question 1' - http://bilbo.economicoutlook.net/blog/?p=15747 you can then try to find more citable references later perhaps. Charles Jurcich ( talk) 14:47, 31 August 2011 (UTC)
Georg Friedrich Knapp described the theory in "The State Theory of Money". This book was published in 1905. Alfred Mitchell-Innes articles on money and credit appeared in 1913. So why does the article say the theory was developed by GFK in the 1920s? GFK would have been in his 80s! It looks like 1900s would be more accurate! 86.214.202.188 ( talk) 23:24, 14 November 2011 (UTC)
The article fails to mention Wynn Godley, Marc Lavoie and gives only passing mention of L. Randall Wray and can't even give a web link to Wray of which google says there are almost 900,000. Sigh.
Godley was only the major architect of the theory and has the best description of it in one place.
Reading the first three chapters of his book Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth would be sufficient to understand Modern Money theory. This article gives short shift to all of his major explanations.
There is talk in the comments above about metalism- meaning I guess a money system that is 'backed' up by precious metal. Since no such money system is now in existence on the planet, what is the point?
Quoting Paul Krugman "has stated that the MMT view that deficits never matter as long as you have your own currency" is just plain silly. The guy has it all wrong and MMT never says that anywhere. Instead it says that policy makers must use great discretion in creating government debt. L. Randall Wray has responded to Krugman's gross simplification and blew it away. So I see no point in making up a straw man - was that just to fill up the page?
How sophomoric
How cliché
There's a much better description of Modern Money Theory here
http://pragcap.com/resources/understanding-modern-monetary-system
Thaddeus0720 (
talk)
01:54, 18 November 2011 (UTC)
There was a big-ish change to the Background section, which looked to have some good info but which just isn't formatted well enough to suit the article. If the original submitter or someone else, would reformat it to suit the article better here in Talk first (to see what people think) and then put it back, that would be good (I may not get around to rechecking this page, just pulling it and leaving it here to be sorted out).
I've pasted it below, verbatim. Arfed ( talk) 09:46, 25 November 2012 (UTC)
Evidence for MMT/Chartalism:
I just go by empirical scientific evidence which is why MMT or www.MonetaryRealism.com wins over rational people --the most important is that ALL spending is income for someone else --and that all gov spending is income for the private sector (that's just regular accounting --someone's debit is someone else's credit)... & that the vast majority of the money supply is made up of money creation(aka as loans/credit by fractional reserve lending) by private banks & when they reduce loans/credit/money creation, recessions happen...and then it's up to gov to counteract the money supply contraction with gov money creation (aka 'deficit spending)--which shows why taxes should be cut & gov money creation(aka 'deficit spending') increased during stagnant economies(recessions are caused by contractions in money supply) so as to fund hiring & spending/demand:
there's tons of empirical evidence/data charts from official sources like Federal Reserve Charts of evidence/facts here- Oil/energy prices cause inflation, NOT federal deficits -evidence/facts here: 1. http://rodgermmitchell.wordpress.com/2010/04/06/more-thoughts-on-inflation/
2. Economics Verifiable EVIDENCE by CEO/MBA economist at http://rodgermmitchell.wordpress.com/2009/09/07/introduction/ & http://rodgermmitchell.wordpress.com/2011/07/09/why-bank-lending-leads-to-recessions-a-counter-intuitive-finding ..more at www.RodgerMitchell.com
3. http://pragcap.com/debunking-ron-pauls-talking-points
4. http://pragcap.com/the-most-destructive-monetary-myth-in-the-usa
5. 7. Seven Deadly Frauds of Economic Policy http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf by Bank CEO/economist Warren Mosler from http://MoslerEconomics.com/ -Daily Insightful & Most Accurate Verifiable Economics Analysis
6. http://mikenormaneconomics.blogspot.com/search?q=fdr+social+security -Proof showing how FDR & his a cabinet admitted that Social Security/payroll taxes are UNNECESSARY in a fiat currency gov but they agreed to them as a "useful fiction" by conservative politicians so that politicians in the future wouldn't cut it since people "paid into it" & video testimony & writings by several Federal Reserve chairmen from Greenspan, Bernanke & Eccles that Social Security can not go bankrupt since it's all fiat
The biggest objection is "what about inflation or devaluing US dollar?"
The US dollar has value because it actually is still the LARGEST country exporter of food & manufacturer of goods (from Intel chips, Microsoft Windows/Office, to Hollywood movies/music) that the world wants
--China depends on the US for imports of wheat, soybean, rice, corn. See charts below --btw, Russia & China stopped using the US dollar for trade between them.. the US dollar didn't lose/drop in value nor collapse nor hyperinflate
http://seekingalpha.com/article/165958-u-s-still-the-world-s-largest-manufacturer
why US fiat dollar (and even EURO) has value, backed by world's greatest production/export of food:
http://in.reuters.com/article/2008/04/18/trade-wto-food-idINL1835607720080418
The US doens't need nor needed Braetton Woods' Accord to be 'world reserve' currency... that happened after the fact because the US for years prior was the world's greatest exporter & producer of goods (and still the leading nation as biggest exporter of FOOD) after WW2 (making the US dollar most valuable), & then world's biggest importer (by 'exporting' fiat US dollars as nations exoprted to the US to accumulate US dollars because they wanted US dollars to buy US goods/services) which is how it became 'world reserve' currency.
P.S. Weimar Germany's hyperinflation was caused by shortages caused by 90% drop in it's production when almost all their industrial/manufacturing workers went on strike for 8+ months to protest French/Belgian invasion of Germany to confiscate German industrial goods (coal, steel, manufactured goods,etc) for war reparations & from economics professor Bill Mitchell: http://bilbo.economicoutlook.net/blog/?p=3773
Zimbabwe's hyperinflation was caused by shortages caused by drops of 30%-57% of it's production sectors(food, textiles, manufacturing,etc) due to Mugwabe after years of civil war won & expelled all the white landowners(who made up most of the educated, skilled, professional, managerial class & employed most of the population) & gave their land/assets/factories to his revolutionaries who were mostly armed peasants who had no idea how to run a farm, agribusiness, nor factory & unemployment then skyrocketed to 80%+
Both Michael Hudson & Steve Keen predicted in detail the Housing Collapse & resulting economic crisis while mainstream economists were completely clueless (and remain so) Vilhelmo ( talk) 04:16, 17 January 2013 (UTC)
Is it normal to have the majority of the criticism section made up of statements from supporters of a scientific theory? 212.56.120.79 ( talk) 17:44, 31 March 2013 (UTC)
Modern Monetary Theory has certainly received enough coverage from media outlets and comments from high-profile economists to justify a separate article under WP:GNG. There are a fair number of theoretical claims and policy proposals associated with MMT (including some referred in this article) that aren't simply logical consequences of Knapp's Chartalism and don't really warrant detailed discussion on a Chartalist page (the post-Keynesian theory of endogenous money, and Warren Mosler view of imports, and many of the criticisms of MMT being the most obvious examples). Removing this could be balanced by adding more general discussion of critical reception of Knapp's book, links with Keynes' general theory, fiat vs commodity money debates, historical precursors etc. that aren't part of the MMT core. I've created a proto-MMT page on my user-space.
here which will start off by absorbing much of the content here and hopefully develop into something more coherent and comprehensive. I'll try to add new content here and to get consensus for the replacement of the redirect with a new Modern Monetary Theory article before removing all the MMT stuff from this page, but it could use a trim now...
Any help with developing either page would be much appreciated. — Preceding unsigned comment added by Dtellett ( talk • contribs) 16:15, 15 April 2012 (UTC)
Ok, it is just a suggestion. However it is a bit odd to find an article where in almost every single line it is written "MMT is", "MMT has" and then you notice that the name of the article is "Chartalism". -- NUMB3RN7NE ( talk) 13:06, 23 July 2013 (UTC)
I found a sentence in the main article that was incorrect in claim and I explain why it should be either removed, altered, or substantiated with a secondary source.
The sentence that is problematic is this: "As such, a critique of MMT that employs an example of a society without a monetary system exhibiting those qualities cannot be a critique of MMT."
Wikipedia has an article on
critique and I base my objection to the inclusion of the aforementioned because it does not agree with the definition of critique as stated in the wiki article. According to the wiki article, if the critique employs deductive logic then it is considered strong. If the Austrian position is simply that an economy can produce savings absent a "monetary system, that employs a fiat currency and floating exchange rate" then it respresents a valid critique of MMT's theory of "savings". While the Austrian school is currently considered
heterodox and while the Austrian critique can be generalized to all economic theories that presume "a monetary system that employs a fiat currency and floating exchange rate", nevertheless to make the statement that the Austrian critique using Robinson Crusoe worldview cannot be a critique specific to MMT is a bit too bold and inconsistent with the current wiki article on
critique. If the sentence was stated as a defense by a reknown MMT proponent, it should directly cite that person and include the appropriate verifiable citation. Otherwise, the sentence appears to be synthesis
WP:NOR.
K♪monkey@('_')@
Talk⇉✌
02:08, 22 November 2011 (UTC)
Kjmonkey said:
" If the Austrian position is simply that an economy can produce savings absent a "monetary system, that employs a fiat currency and floating exchange rate" then it respresents a valid critique of MMT's theory of "savings"
It is not a valid critique of MMT.
MMT refers to savings of financial assets NOT real assets.
MMT agrees that an economy can produce savings of REAL assets absent a monetary system.
Vilhelmo (
talk)
18:02, 28 November 2013 (UTC)
Any criticism available?
Good to see that the criticism section has been updated - but I still feel it is rather poor at the moment. The criticism sections on other economics pages go into specific detail, whereas the criticism cited on this page seems to be along the lines of "this theory is wrong because it's wrong". I will have a look in more detail at the links to see if I can pull out some more information. Andyk 33 ( talk) 01:31, 31 July 2011 (UTC)
Hope this helps. Charles Jurcich ( talk) 17:30, 31 August 2011 (UTC)
Chartalism warrants its own article. The previous chartalism article became almost completely about MMT, so the MMT standalone fixed that. But there should be a stub for chartalism, if there isn't interest yet for developing the standalone, rather than a redirect. Chartalism isn't necessarily "modern". MMT economics is quite a bit more than chartalism (neo-Keynesian, pulling in the Minsky financial sector component, the job guarantee etc). The conflation of the two (chartalism and MMT) as we're doing now with the redirect, as if they're synonyms, misleads readers. I recommend that Chartalism be stubbed -- that neochartalism redirect here and reference to chartalism here in the MMT article text be wikilinked to the stub--hopefully sparking interest in developing it. Professor marginalia ( talk) 05:48, 7 April 2014 (UTC)
I have never understood a word written about MMT is this me or am i the rule ? if I am the rule, why is this state of affairs ? it is sort of like marxism - one has the constant feeling of trying to punch through tacky jello — Preceding unsigned comment added by 2601:6:3880:CC8:E1E9:A589:57D7:BE1B ( talk) 01:40, 12 January 2015 (UTC)
This bit was added by an anonymous user, criticizing Mosler's view on exports/imports, but it doesn't fit the formatting of the article and isn't cited, so moving here:
Arguably, this isn't suitable for the article at all - I don't know what Wikipedia guidelines it would fall-foul to though ( WP:NOR?) Arfed ( talk) 21:01, 12 November 2015 (UTC)
The criticism from Thomas Palley was expanded recently, and it is just a big block of text in the criticism section now. Could this be cleaned up a bit? Also, Post-Keynesian (and, as far as I know, MMT'er) Phil Pilkington did a good analysis of Palleys criticism there, and has shown it it is in part, more neo-Keynesian/neoclassical-synthesis than Post-Keynesian (e.g. relying on IS/LM, when this seems to be rejected by most Post-Keynesian's?); maybe this warrants inclusion as a 'counter-criticism': https://fixingtheeconomists.wordpress.com/2014/02/18/palleys-critique-of-mmt-post-keynesian-or-neo-keynesian/ Arfed ( talk) 00:22, 19 February 2015 (UTC)
The following quote from the article is: "the government has an unlimited capacity to pay for the things it wishes to purchase" is not true. If it were the governments having poor or corrupt leaders would be able to control world events and for all their citizens to benefit greatly.
There is a serious limit on how much money governments can print and and issue without inflating or super-inflating the currency. Of course they can try, but will then cease to be viable. Surely here we do not wish to consider the way governments can work to fail, but only how money printing can help governments to regain stability and have good control of their country's progress. The MMT idea that current fiat money makes its issue less constrained than with the gold standard, is true to a limited degree. The article should clearly explain the way this is normally constrained. Macrocompassion ( talk) 10:24, 11 January 2017 (UTC)
Mainstream economics says an economy can only be sustainable if the amount of spending is kept closed to the amount of tax received. MMT says the the amount of spending is limited to the amount of unemployment. If there is unemployment, then there is scope for additional government spending. If more spending is required when there is full employment, then additional tax is needed to increase unemployment, and so to make more resources available for use by the government. — Preceding unsigned comment added by 194.75.63.98 ( talk) 12:17, 23 January 2018 (UTC)
Is it advisable to include innumerable uses of pathetic fallacy in a Wikipedia article? "A nation wants," for example. "MMT considers," "MMT concludes," "a desire on behalf of the exporting nation" etc.
"Some leading proponents of MMT such as Warren Mosler advocate" is a preferable style.
Mydogtrouble ( talk) 12:48, 24 July 2011 (UTC)
I suppose this is probably obvious, but the Chartalism page is almost entirely reproduced within the MMT page. I'd like to try to separate the material but I don't have the time at this moment. David A Spitzley ( talk) 17:50, 10 January 2019 (UTC)
>>Based on the national income identity,
Does this mean "national savings identity" or something else? Confused.
>>MMT states that it is [not] possible for the non-government sector to accumulate a surplus [unless //only if] the government runs budget deficits.
Suggested revision for readability. The algebra shown does not support any reasonable interpretation of this claim. Make a case or delete. Define "surplus" exactly.
>>As most private sectors want to accumulate a surplus, How are "wants' relevant ? We need a basis in fact.
>> MMT economists usually advocate for government budget deficits. "usually?" Is there evidence or a poll to support this claim ? 24.165.181.87 ( talk) 02:02, 12 February 2019 (UTC)
There are well over 2,000 competing cryptocurrencies in the world today that either directly or indirectly compete with national fiat systems. The MMT claim that money is a monopoly is seriously whistling past the graveyard and that's being excessively polite. At present there doesn't seem to be anything out there Wikipedia RS worthy that handles this double facepalm worthy observation so I'm just leaving this in comments. We desperately need something that covers exactly how divergent from reality MMT is in its baseline assumption that "the currency" is "a public monopoly" TMLutas ( talk) 18:32, 15 March 2019 (UTC)
I reverted an edit which added this:
A 2019 survey of leading economists showed a unanimous rejection of modern monetary theory's assertions that "Countries that borrow in their own currency should not worry about government deficits because they can always create money to finance their debt" and "Countries that borrow in their own currency can finance as much real government spending as they want by creating money.
The reason is that every economist (MMT economists included) would have answered the same way. In other words, this has nothing to do about MMT and about what MMT says. The MMT is a macroeconomic description of the monetary system characterised by its view of the currency as a tax credit and, therefore, of the currency as a public monopoly. (source: http://www00.unibg.it/dati/corsi/910003/64338-Warren%20Mosler%20Bergamo%20paper%20March%2010.pdf ) -- NUMB3RN7NE ( talk) 08:47, 15 March 2019 (UTC)
To add to this discussion, here ( http://rooseveltinstitute.org/deficits-do-matter-not-way-you-think/ ) is an article from Randall Wray (well known founding MMT academic), directly addressing/refuting the claim about MMT (that deficits don't matter) in the above survey. The claim is not a part of MMT, it should not be cited as a reflection of MMT in the article. Arfed ( talk) 06:09, 18 March 2019 (UTC)
Hi,
I saw this:
https://en.wikipedia.org/?title=Modern_Monetary_Theory&diff=888506920&oldid=888506340
and I ask you how to show that this article:
http://www00.unibg.it/dati/corsi/910003/64338-Warren%20Mosler%20Bergamo%20paper%20March%2010.pdf
is free from copyright. I explain: this article is on the website of University of Bergamo and it is free from copyright.
Thanks. -- NUMB3RN7NE ( talk) 16:58, 19 March 2019 (UTC)
Hi,
I wrote to the professor who held the course (Stefano Lucarelli) and this is his response (in Italian):
---------- Forwarded message --------- From: Stefano Lucarelli <stefano.lucarelli@unibg.it> Date: mar 19 mar 2019 alle ore 18:37 Subject: Re: Stefano scusa una domanda: ma tu sai se questo paper qui è coperto da copyright? http://www00.unibg.it/dati/corsi/910003/64338-Warren%20Mosler%20Bergamo%20paper%20March%2010.pdf
Non è coperto da copyright, è materiale didattico preparato per il corso a Bergamo di cui ero coordinatore. Puoi farlo circolare.
TRANSLATION (of his answer): "It is not covered by copyright, it is teaching material prepared for the Bergamo course taught by me and of which I was the university coordinator. You can reproduce it."
-- NUMB3RN7NE ( talk) 17:52, 19 March 2019 (UTC)
...is kinda POV, kinda of WP:PRIMARY, some of it even WP:OR. It displays the *claims* that MMTers make about mainstream. Most of these are nonsense. For example:
I'm going to remove it until 1) we can get rid of the original research and 2) we present this as claims MMTers make about the mainstream, not what the mainstream actually is. Volunteer Marek ( talk) 05:04, 23 March 2019 (UTC)
I think we should discuss what's appropriate to link to as further reading on the subject. There are links to economists' blogs in the external links section, which I find to be appropriate as per Wikipedia:External_links#What_should_be_linked section "to be considered", item 4. They are not intended to be citable sources.
There are also non-blog writings published on Warren Mosler's site, for example, that are arguably mandatory readings on the subject. I feel as though those can be considered to have real authority. -- Geoffpursell ( talk) 23:52, 5 April 2011 (UTC)
Rejoinder: Although the above reference guide says expert blogs are appropriate, citations to personal blogs within the MMT article are unnecessary. The blog citations in the current article are overwhelmingly from Bill Mitchell. Those blogs are quite frankly poorly edited and difficult to read. Every citation in the article to Bill Mitchell can be replaced by a reference to the same point in a formally edited and published work of an MMT economist, even Mitchell himself. Editors should endeavor to replace as many of the Bill Mitchell blog references as possible, with references to formally edited and published works. I have already done so myself. This is easily done by reading the MMT literature. -- 97.119.0.118 ( talk) 00:39, 28 April 2019 (UTC)
This table is really quite shoddy. We should remove the back and forth between Kelton and Krugman. Each side of the table should deal with it's side of the theory, and leave criticism to the criticism section. I recommend we just have a simple well-cited sentence or two in each box, letting the citations show who said what. Zyzzek ( talk) 14:19, 5 May 2019 (UTC)
This article is completely wrong in so many ways it should be pulled. It goes wrong right from the get go, calling Modern MONETARY Theory a 'fiscal' policy. Monetary and fiscal policy are fundamentally divergent elements. Anyone who calls one the other is just making stuff up. — Preceding unsigned comment added by 74.15.90.8 ( talk)
In the video at https://www.cnbc.com/2019/03/26/aocs-economic-theory-has-gotten-one-big-fact-wrong-fitch-says.html at approx. 08:50 she says "I reject the idea that MMT is about using taxes to reduce inflation". Didn't check the authoritative source for the bullet points, but clearly there's some controversy about it.
Removal of money by use of tax / sales of bonds to reduce inflation, is kind of supporting the Quantitive Theory of Money. As far as I am aware, QTM is strongly opposed by MMT academics. Kelton is bang on when she says that tax should not reduce inflation. Tax is to create unemployment (of labour and resources), which will allow the government to purchase, without devaluing the currency. — Preceding unsigned comment added by 188.28.59.47 ( talk) 21:35, 6 October 2019 (UTC)
Ketil ( talk) 09:01, 28 March 2019 (UTC)
I think its just the interpretation of her statement. From Bloomberg: "The reason the government doesn’t need to sell treasury securities, or levy taxes, to spend money is that the central bank, under the control of the treasury, can pay for everything by conjuring up electronic money. In MMT’s ideal world there would still be taxes, but their main purpose, aside from lessening inequality, would be as “offsets” to keep inflation under control. Taxes would drain just enough money from consumers and businesses so total spending in the economy won’t be excessive." Bloomberg Farcaster ( talk) 14:20, 28 March 2019 (UTC)
I have attempted addressed this as of 27 April 2019 by specifying the bullet point be demand-pull inflation (as per Fullwiler/Grey/Tankus 2019), and citing the Fullwiler/Gray/Tankus column which clarifies and addresses the issue
2600:8804:280:6E:3C9C:D2B2:E41:C0F (
talk)
01:39, 28 April 2019 (UTC)
The very first sentence claims Chartalism to be a monetary standard and fiat money a unit of wealth. Let it be explained how we can call it an standard or unit. Free floats are known to be tokens that represent variable quantities of wealth. It neither has any intrinsic value nor any known or definite or definable purchasing power. Market measure wealth using money as the measure of wealth. therefore common medium of exchange must satisfy technical requirement for unit and that require it be precisely defined quantity of what it measures. It must also be noted that measurement is a scientific issue and the opinion that really ought to be considered is the opinion of scientists and technologists. I am of the view that calling Chartalism a monetary standard and fiat money as unit of wealth is foundation of worst fraud against humanity and it must be challenged. — Preceding unsigned comment added by Hrsiddique ( talk • contribs) 06:09, 28 January 2011 (UTC) There is a long and dry looking section called 'Deriving the National Accounting Identity from the Expenditure Model of GDP'. A Google search for "National Accounting Identity" chartalism returns one hit, besides Wikipedia. This looks like original research. I will remove it if no sources are provided. - Crosbiesmith ( talk) 18:29, 5 October 2009 (UTC)
Not only that, but the deriving of the national accounting equation is completely incorrect. As such I'm going to remove it now. Matthew 18:15 10 october 2009 —Preceding unsigned comment added by 115.70.133.89 ( talk) 10:11, 10 October 2009 (UTC)
A simple comment from somebody who knows no economics: The first sentence doesn't seem to really make any sense to me. It still sounds confused even after I added a little punctuation. 31.125.76.2 ( talk) 10:33, 28 March 2020 (UTC)
The page is going through a lot of edits recently, and the formatting of the content has gotten bad and is not in line with other Wiki pages - the introductory paragraph for instance, should not contain the numbered list of some of MMT's core distinguishing features - it's meant to be an introductory section, which leaves those kinds of more detailed points to later.
I haven't got more to add, nor the time to review everything, but please be mindful of the formatting of the article, keep it in line with other wiki pages, and keep in mind that laymen wholly unfamiliar with MMT, will be coming here to get an introductory/broad idea of what it's about. Edits with new/more-clear information are good, fair play - but emphasis on clarity and fitting in with other wiki articles. Arfed ( talk) 23:33, 30 March 2019 (UTC)
I'm moving these files here - they're not referenced in the text and not particularly relevant.
Bangabandhu ( talk) 01:57, 1 June 2020 (UTC)
recently editors have pointed to [ this 2007 article] to state that MMT is heterodox. Source doesn't say MMT is heterodox, but features of it are heterodox. [ 2019 source] says "But what was once an obscure “heterodox” branch of economics has now become a major topic of debate among Democrats and economists with astonishing speed." Bangabandhu ( talk) 12:38, 20 July 2020 (UTC)
Search on Google and Google scholar for "mmt heterodox", you will find a slew of RS. That you didn't even do this low level of due diligence shows your bias on this issue. I'm adding some more references to the lead. Do not remove the word heterodox, as it is well accepted. LK ( talk) 13:59, 27 July 2020 (UTC)
The first paragraph of Criticism reads as follows:
Is it normal to start a criticism section with endorsements? It reads strangely and perhaps there is precedent for this sort of thing that I am not familiar with. 68.148.75.147 ( talk) 22:25, 9 December 2020 (UTC)
Addendum--the second paragraph also reads like criticisms of criticisms:
And the final sentence:
Seems out of place in a criticism section also, mostly since it lacks further explanation. Apologies for my formatting. 68.148.75.147 ( talk) 22:33, 9 December 2020 (UTC)
I added links to Stephanie and L. Randall's names, and corrected the typo in Fullwiler. This sentence still seems a bit out of place. 68.148.75.147 ( talk) 23:07, 9 December 2020 (UTC)
I decided to be BOLD since no one has responded to my objections here. I deleted the first paragraph of the Criticisms section. 68.148.75.147 ( talk) 23:09, 11 December 2020 (UTC)
After learning a bit more about wiki and the history page, it appears what occurred here was actually a BRD failure. This undo: https://en.wikipedia.org/?title=Modern_Monetary_Theory&diff=993007604&oldid=993007490 by User:Liberaldemocrat Should have been discussed prior to undoing the reversion. 68.148.75.147 ( talk) 22:01, 23 December 2020 (UTC)
In the United States, the Treasury Department with one hand prints government debt and sells it to investors; with another hand the Treasury Dept prints green dollars and delivers them to the Fed for cost of printing. From time to time the Fed buys government debt and pays with dollars received from the Treasury actually for free. If one disregards the investors, then it becomes clear that the Treasury Dept prints government debt, and also prints free dollars for the Fed to buy the government debt. The government debt constantly rolls over; the new debt is replacing the old debt. In fact, the federal government is already practicing the fundamental aspects of the MMT. Japan, with government debt two and a half times larger than its GDP, is a good example of MMT being practiced for decades, and it works perfectly well. But the good questions are, what is the optimal size of the government debt; what is the optimal level of inflation (both nominal and real); and when the hyperinflation will creep in (Germany in '20s, or Zimbabwe more recently). Government of Japan owns its Central Bank, and they are wise enough to keep interest rates close to zero, regardless of level of inflation. But the Fed, being private and independent, may start increasing interest rates on a whim "to fight inflation" caused by MMT. Irving Fisher explained in his classic Booms and Depressions (1932) how liquidation of debt causes a vicious self--enforcing debt--deflation spiral and economic depression. [1] Lunine ( talk) 03:49, 15 February 2021 (UTC)
We should admit that in this debate we have a lot of miscommunication and misunderstanding. When we make statements that government should not worry about budget deficits and government debt, very many reasonable people get nervous, and we should not blame them. Instead, we should start talking about limits, limitations, and common sense. Consider the case of Zimbabwe. The government was printing money to pay salaries of the government employees. The result was hyperinflation. It is clear that there are limits, and governments should indeed worry about those limits. Imagine now that the government of Zimbabwe printed the same amount of money, but ALL that money was paid to create a strong construction materials industry, and to build whatever the country needs -- decent housing, chicken farms, etc. What would have been the result? Zimbabwe would be a rich country by now. Most of the population would live in decent apartments, and there would be "a chicken in every pot." The point here is that creation of money out of thin air not either good or bad. We should frame the MMT in terms of economic development. Consider Argentina. Was bankrupt many times, and bankrupt again. Borrowing money from other countries in their currencies will always bankrupt you. MMT, on the other hand, is a very potent tool for any government to improve the living standards, and to reduce poverty. The main argument of our opponents is an elevated level of inflation. Monetary savings will lose value, but there is a solution. Commercial banks still pay high interest on deposits in saving accounts. The central bank will pay high interest on the reserves the commercial banks keep in the central bank. Holders of cash will be properly compensated. But inflation, as we know, benefits debtors and hurts creditors, and creditors are mostly banks, so the government will have to print money and compensate them. Those who hold debt instruments, government or private, must be compensated. It will take a lot of planning, preparation, and educating all levels of the society how inflation works. But the reward will be tremendous for any country that needs financing to create millions of productive jobs. In countries like India not millions but tens of millions of jobs will be created. Poor countries with underdeveloped financial systems suddenly will be able to finance construction of modern new cities with modern public transportation where most of the people will not even own a car, so the country will save tons of money on import of cars and gasoline. We need to start talking to poor countries, to their governments, bankers, and economists. And the last point. Housing built with government money becomes government property. A better way is for the central bank to print money and to make loans to a government-owned commercial bank which will make loans to private real estate developers which will build whatever the country needs, is that new cities or chicken farms. When construction is completed, the newly built assets will be sold, and the debt will be paid back all the way to the central bank. This way there will be no increase in inflation in the long run. It is explained on this website: http://www.globalpovertysolution.com. The authors refer to it as MODIFIED KEYNESIAN THEORY. Both MMT and MKT have their roots in Keynesian Theory; they are just more promiscuous versions of the same principle - to give the government more active role when the financial system is not capable to do the job. ( Lunine ( talk) 05:07, 26 February 2021 (UTC))
A number of central banks all over the world, most notably in the U.S. and in Europe (European Central Bank) have adopted the MMT as their default monetary policy. In practical terms, it means that those central banks are printing currency and buying government obligations like Treasury bonds, notes, and bills. The result is a direct monetization of government debt if the central bank buys it straight from the Treasury. [2]. In this case the central bank receives currency from the Treasury for the cost of printing, and then pays that currency back to the Treasury for government debt. Usually central banks use indirect monetization of debt. In this case the Treasury prints government obligations and sells them to investors. From time to time the central bank buys government debt from investors and pays with currency received from the Treasury for the cost of printing. Buying the government debt from investors is just an indirect way to monetize the government debt directly. [3]. Many economists do not understand the monetary theory, and they are still in denial about MMT. An important fact to remember is that when the central bank buys government debt from commercial banks, the result is an increase of bank reserves against which the banks make loans. If the banks make what Irving Fisher called "productive loans" [4] (to buy new housing, for example), then such productive loans are good for the economy. If the banks make loans to buy millions of houses or apartments which have not even been built yet, the result is always speculation, fraud, and the Great Recession. [5] Lunine ( talk) 19:12, 25 March 2021 (UTC)
The essence of MMT can only be understood by comparing it to other major economic theories. The basic philosophy of the classical school was determined by gold standard. Gold was money, and paper money was representing claims on real money which was gold. Classical economists did recognize that the economy was inherently unstable, with boom-and-bust cycles, but they attributed economic depressions to overproduction of goods. Their advice was to wait until the accumulated goods were sold - and no government intervention. In 1932, Irving Fisher published his classic Booms and Depressions where he explained the major cause of the economic depression< ref>. According to Fisher, liquidation of debt was causing lower money supply, lower aggregate demand, lower production, higher unemployment, lower confidence in the economy, and still more liquidation of debt, and so on and so forth in the vicious cycle. In 1936, four years after Booms and Depressions was published, Keynes published his General Theory<ref> where he explained that the major cause of the economic depression was low aggregate demand. His advice was to increase government spending. Money could be borrowed by issuing government debt. In the 1960s, Milton Friedman discovered, three decades after Irving Fisher, that the main problem was unstable money supply<ref>. His advice was to keep the money supply increasing at a steady but moderate rate. The main difference of MMT is the recognition that modern money no longer represents claims on gold. Modern money represents claims on the whole wealth of a country, and it is this recognition that allows the government to print money. The money supply must increase at the same rate as the wealth of the country. If the wealth of a country is increasing, but money supply is not, then it will cause deflation and an economic downturn. If the money supply is increasing, but the wealth of the country is not, then it will cause a high level of inflation. The goal is to increase wealth of the country as much as possible while keeping the inflation as low as possible. The MMT offers the optimal approach to balance the conflicting goals to keep wealth increasing while keeping inflation reasonably low. There are a number of ways to do it. If the goal is to finance construction of housing and chicken farms, then the government can print currency and make loans to build housing and chicken farms. After construction is completed, the asset will be sold, and the construction loans will be paid back. With this approach there will be no increase in inflation in the long run, and it is basically a Modified Version of the Keynesian Theory.<ref>. Another approach is to borrow money by issuing government debt. This approach can be utilized to finance all kinds of infrastructure -- roads, bridges, charging stations for electric cars, etc. These kinds of assets can not be easily sold, and they must be financed with long-term government debt. To keep interest rates low, the central bank can from time to time buy government debt on the open market and pay with currency received from the Treasury for the cost of printing. The Federal Reserve has been doing it for many decades, and will continue doing it for many decades to come. This, in a nutshell, is the Modern Monetary Theory: responsible governments must print money and pay for construction of whatever the country needs - housing, infrastructure, etc. Many economists do not understand it, but there is no reasonable alternative. ( {help} Can I post this on a main page if I add some references?) Lunine ( talk) 22:19, 26 March 2021 (UTC)
Can I post this on a main page if I add some references?- No. This is not how Wikipedia is written. You can't write whatever you want and then find "references". Editors are expected to read references and summarize them. Please see WP:V. --- Avatar317 (talk) 23:48, 26 March 2021 (UTC)
References
Hey folks, what do you think if to change buzz word "heterodox" which is uncommon and unusual with the more common word: pseudoscientific or pseudoeconomic? -- 2A01:598:B10D:7036:78D0:960D:F4E4:DD56 ( talk) 17:42, 16 February 2021 (UTC)
Based on other discussions above, that sounds like a bad idea which is likely to antagonize some of the other editors. ″Heterodox″ implies a lack of current acceptance for the theory among the majority of economists, without Wikipedia taking a position on which economic theory is correct. "Pseudoscientific" is an explicit statement that the theory is WRONG. It would be a violation of Wikipedia's neutral voice to take a position this way. Take a look further up this page, and you will find a discussion in which at least one other editor takes the position that even the word "heterodox" is too strong. If other editors question the validity of "heterodox", then "pseudoscientific" seems like a move even farther away from neutral voice. NikolaiSmith ( talk) 05:55, 11 March 2021 (UTC)
This quote from 2006 is in the section talking about what mainstream economists agree about with MMT economists. But nowadays, on a practical level, most economists in the United States, mainstream or not, worry about default because the yahoos in the legislature might intentionally allow the United States to go into default if they don't get their way. So it's misleading. Rich ( talk) 19:09, 19 October 2022 (UTC)
I've removed the quote because its source never mentions MMT; it is some editor's disallowed WP:SYNTH to connect it to this subject.--- Avatar317 (talk) 23:09, 20 October 2022 (UTC)