As many regular readers know by now, I had a rather public falling out with MMT earlier this year leading to the creation of Modern Monetary Realism.  This was in large part due to disagreements over the Job Guarantee and the fact that many MMT founders said you can’t have MMT without the Job Guarantee (JG).  Specifically, Bill Mitchell said the JG was “central” to MMT.  Pavlina Tcherneva then wrote a piece at the MMT website asking if the JG was “crucial to MMT” in which she said:

“The JG is not just an afterthought to MMT but a crucial component that has so far offered the most coherent counter-cyclical economic stabilizing mechanism.”

It became clear that MMT was a macroeconomic theory that offered comprehensive solutions to price stability and full employment with the JG being the “most important policy proposal” (Wray’s words) in achieving this.  If you believe in unemployment buffer stocks you weren’t working under the theoretical framework that has come to be known as MMT.  So you can see how some of us find it odd that Randall Wray, an MMT founder, wrote a piece yesterday directly contradicting the comments of his founding colleagues saying:

“So, can we have MMT without a JG? Certainly!”

What makes this comment even more bizarre is that Wray wrote a piece earlier this year confirming that Mitchell’s comments were right and that price anchor (JG) was something we “need”:

“Bill’s post led to a bit of a scuffle over what is actually in MMT—with Cullen arguing that the Job Guarantee cannot be a component, while Bill insisted that it mustbe. Warren has sided with Bill and written very persuasive comments arguingthat we need the price anchor.”

So earlier this year MMT included the JG and this fellow named Cullen was wrong.  But the MMT of today doesn’t include the JG and this fellow named Cullen appears to have been right?  So the obvious question is – does anyone actually know what Modern Monetary Theory is?


Got a comment or question about this post? Feel free to use the Ask Cullen section, leave a comment in the forum or send me a message on Twitter.

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  1. Cullen,

    You were unable to grasp the difference between MMT operational realities and MMT Macro Theory.

    As a policy choice, it is a matter of a buffer of unemployed people for price stability or a buffer of employed people. It is that simple.

    Best of luck with Monetary Realism, please let me know when you put a proposal on the table that leads to full production/productivity which in turns leads to full employment (frictional unemployment)?

    Other than that we will all continue to agree on the operational mechanics of the function of currency.

    Thanks for your time.

  2. “Unable to grasp”? Oh this is too good. 3 months ago the JG was “crucial” and “central” to MMT and now you’re coming here basically calling me a fool for originally saying what MMTers are now saying was right all along – that the JG is indeed an afterthought??? Ha. Wray agreed with Mitchell three months ago and mentions my name saying I was originally wrong to claim otherwise. And today he changes his tune claiming he never said otherwise. And now you’re coming here saying I was wrong all along or “unable to grasp”. Did you even read the comments? And you write your comments in the typical condescending MMT tone as if you’re talking down to a child who can’t comprehend what you’re discussing. Unbelievable really. If you can’t see the blatant contradictions in the above post then nothing can take the blinders off your face….

    And no, we don’t agree on the operational realities of the monetary system. That’s why this whole debate started. You thought it was all politics and you guys tried to turn it into politics alone. And in doing so you totally failed to try to understand how I was explaining why your ideas of the state theory and money monopoly were wrong. You don’t just have the conclusions and policies wrong. The MMT explanation of the monetary system is also wrong. Do we agree that an autonomous currency issuer can’t “run out of money” or go bankrupt? Yeah, but any one can understand that. Alan Greenspan has understood that for 20 years, but he’s no MMTer. There’s nothing unique in that MMT insight. What’s unique to MMT is the state theory, the myth of the money monopolist and the ELR. MMR says all three are based on misconceptions. So no, we don’t agree on the operational aspects and this whole debate is rooted in that. And now you guys are retracting core pieces of MMT in what is a clear contradiction to past statements….Personally, I’d love to see Pavlina or Bill Mitchell admit that the JG is not a “central” piece of MMT. That’s a retraction I’d like to see. But they won’t do that because they disagree with Wray.

  3. I don’t even understand what Wray is saying in his post yesterday. He first says you can’t possibly believe unemployment buffer stocks make sense, but then says you can have MMT without the JG. But if you don’t have the JG then you don’t have full employment and price stability and the solutions that MMT as a theory claims to be able to provide.

  4. It’s similar to when they say things like “we need more spending now, but don’t blame us when inflation jumps because there’s no JG in place to serve as a price anchor”. It’s called playing both sides of an argument. Ie, a contradiction and inconsistency. See above post. :-)

  5. Although i certainly find the intellectual debate quite interesting, can we just stop creating names? We are all post-Keynesians after all, trying to label each and every branch is at the very least unproductive. Should Steve Keen also name his work as MM(something) and then have three branches fighting over.. copyright?

    I ‘ve seen my share of branching out in the open source software world. Witnessing the same thing happen in the post-keynesian wave is sad and certainly unproductive and not necessary.

    Just write a few papers and debate all these (important) issues.

  6. Of course it’s productive. My intention, from day one, has been to get the understanding of the monetary system correct. I do not believe MMT presents an accurate portrayal of the money system. So no, we’re not just having silly semantic disagreements. We’re having a very important and fundamental debate about the way the system works so we can then begin to understand the best ways to use that system. But getting the core understanding right is the key component here. And I think the reason why MMT is so confused and contradictory regarding the JG is due to the fact that they don’t exactly have a consistent or accurate story about the way the system actually works. Rather, they’ve envisioned the way they want the system to work and designed a theory around that. That’s why they use the money monopolist to justify the JG and price setting. But there is no money monopolist in the USA. So their whole argument and structure of the way they think the system is designed is based on a faulty belief leading to faulty conclusions….These aren’t minor details. They’re core understandings (or misunderstandings).

  7. Cullen maybe i didn’t make what i meant quite clear. I certainly agree that the theoretical debate is very important (that was my first phrase after all). My impression though is that instead of debating important theoretical issues, the debate has moved to the issue of what name is written on the hat one’s wearing and who’s allowed to wear it.

    I didn’t like the fact that Bill Mitchell made the JG an integral part of MMT (it’s not the ten commandments after all) or that Randal Wray called you Monetary Retarded. An outside observer will probably conclude that it’s mostly a fight of egos than anything else.

    I just consider you, Wray, Mitchell, Keen and others, part of the post-Keynesian society and find no real interest in labels between any of you. What is interesting is the scientific debate. Can you really imagine a world were we ‘d have post-Keynesians debating post-Kaleckians and post-Minskyans like they ‘re parts of separate groups?

  8. Cullen, I quite agree that JG is a set of ideas which are essentially separate from MMT. Warren Mosler agrees with this. Plus like you, I’m not too impressed with some of the UMKC lot.

    Indeed, the WPA in the 1930s was JG writ large, and MMT was not around then. You have to be a bit ignorant of history to think that JG and MMT are inextricably linked.

    As to what MMT is, an essential element is the idea, as Lerner pointed out, that the overridingly important consideration in relation to any bit tax or spending is the EFFECT, not the actual numbers. A classic example relates to reducing the national debt: which is a doddle for anyone who thinks in MMT mode.

    That is, dummies think that $X of tax has to be collected for every $X of debt reduction. The reality is that ceasing to roll over the debt (or doing QE) has a pretty mild stimulatory effect per dollar. Thus the debt can be reduced by any amount anytime simply by printing money and buying back the debt. The (mild) inflationary effect of that can be counteracted by a relatively small tax increase because the deflationary effect of tax increases is much larger per dollar than the inflationary effect per dollar of QE.

  9. Wow. Cullen, you’re way off the cliff. Don’t you know that “need” isn’t a very precise word ? Often, “need” really just means “desire extremely”. You don’t need a tie to work. You can work, be very proficient, all without a tie. Yet, if the tie is a symbol of ability, entrepreneurship, social integration, etc. you then “need” it.
    Do we “need” a JG/ELR ? To improve significantly the current economic situation, clearly no. MMT minus JG is already much better. To get the last unemployed guy into work, do we “need” the JG, we need it, because the market is not efficient enough to always prefer hire the cheap guy instead of auctioning employed ones. If you don’t want to skip middlemen to employ everybody through deficit, you can perform fiscal stimulus. But fiscal stimulus hurts a Philips’ Curve. Better to skip them through a JG.

    I never bought the “distrust the government” argument. If we failed to the point of choosing a government only caring about building penthouses for cronies, I prefer them to build it with otherwise unemployed people instead of a bad no-JG approach (or worse : balanced budget !). Only a non-existing government could be morality-agnostic. To watch the government, I prefer to rely on people employed and sure to make a living instead of worried yesmen and barely surviving people. They’ll be braver against cronies, better whistle-blower for instance.

    Now, make up your mind.

    I’m sad to remark you, Cullen, that you’ve been much more subtle many times before. This article is disappointing, and I still see the MMT-MMR debate as oversized and counter-productive quarrelling…

  10. “So, can we have MMT without a JG? Certainly!”

    And what Wray said next:

    But if we leave out the JG in our recommendations, we are seriously remiss in our advice.

    Fox News editing style?

  11. If you prefer to interpret it that way….I read it like saying that you can have Keynesianism without counter-cyclical spending. But maybe i’m being overly critical here….

  12. Its all silly to argue over this stuff, right now at least. That can be hammered out eventually.

    The important aspects that both theories are based on (you know what I mean…the truths about a sovereign currency issuer) are what needs to get out there asap.

    MMT/MMR should be working night and day to get those ideas out into the mainstream…the public is still so far off, quarrels like this have no use yet.

  13. I’m still waiting for the MMT crowd to grow up and get over the radical implications of their theory. Operationally relevant (for the most part), analytically useful and philosophically compelling – but, the entire conclusions and implications stuff doesn’t meet basic standards of scientific scrutiny or philosophically compelling literature. I’m in a far more hybrid camp and certainly less dismissive of the underlying ideas of other schools, particularly the Austrians. Ideological battles seem more tribal these days than they once did.

  14. How can you have MMT without the JG? I thought the main point of MMT was to create full employment and price stability?

  15. I don’t even know what you mean by “MMT minus JG”. MMT is a macro theory that helps achieve FE and PS. Remove it and you’ve eliminated the core piece of the entire theory. It’s like a Keynesian claiming to be a Keynesian while saying you can still be Keynesian without counter-cyclical spending. No.

  16. “How can you have MMT without the JG? I thought the main point of MMT was to create full employment and price stability?”

    Yes…in fact this is in the title of Randal Wray’s book: Understanding Modern Money-The Key to Full Employment and Price Stability.

    And as we know…the “Full Employment” part is coming from the JG

  17. Yeah, which is why it’s strange now that he says you can have MMT without the JG. As I keep saying, it’s like claiming to be a Keynesian, but saying you don’t don’t need counter-cyclical spending. It’s a confused position.

  18. Makes me wonder…what makes MMR so attractive is that its operationally descriptive rather than prescriptive. With so much political/economic polarization surrounding “economic theory”, people are looking for an objective framework to understand some basic economic principals and processes.

    Like it or not, MMT was politically loaded with the JG….and there is definitely a certain segment of our society that regards almost all government spending as inherently evil and wasteful…

    Perhaps, MMT has begun to recognize they may have overplayed their hand…and that MMR is quickly gaining the traction they’ve long felt they’ve deserved (and as result…they’re more willing to jettison the controversial part)

  19. I have a feeling they’re starting to change their tune because Jamie Galbraith rejected the JG. See here.

    Maybe MMT will start changing their position on other things as well and we can all merge as MMR one day. :-)

  20. Read his whole article. He says you can have MMT without the JG but it is stupid. Like you can have a germ theory without administering antibiotics and vaccines but it is stupid.

  21. So Germ Theory can be taken by some “apolitical people” into Germ Realism = Germ Theory minus the ideological talk about vaccines and antibiotics ;)

  22. It’s too late now, but I still prefer “Modern Monetary Practice” to “Modern Monetary Realism”.

  23. That’s just double talk. MMT is a comprehensive macro theory offering answers to full employment and price stability. Wray didn’t name his book “Understanding Modern Money: The Keys to Full Employment and Price Stability” for no reason. Get rid of the solutions for FE and PS and you don’t have a comprehensive macro theory. You just have a decent explanation of the monetary system. The JG being the answer to FE and PS is the key piece of MMT. I find it very odd that MMTers are now trying to say you can have a MMT world without the JG. It’s the very foundation of the entire macro theoretical framework….

  24. Many of the MMT crowd are political activists first, economic thinkers second.

    (And I understand many of them must be that way, or at least pretend to be, in order to keep their jobs and /or grant money coming in).

    Here’s another “test” : ask an MMT’er if a tax cut is just as stimulative as government spending.

  25. I’ve mostly ignored this MMT/MMR squabble, but how does that make sense? Wouldn’t inflation be greater when spending with a JG? I thought we have low inflation right now despite the massive deficit because the demand isn’t there…

  26. MMTers claim the JG would serve as a price anchor. I’ve argued that they’re wrong and that it would actually serve as a price buoy. That is, it would maintain the price of the lowest wages in the same way the minimum wage would, but wouldn’t actually contain inflation any better than what we’ve got going on now.. All other wages would still float up with demand (like a buoy in a rising tide)…

  27. Central planning. Either you believe in it or you understand economics, history and human nature.

  28. I would love to see these posts restricted to the MMR site and Prag Cap stick to the more investable-oriented themes (i.e. how an understanding of currency issuer vs currency user affects bond markets, the operational realities of the Fed and Treasury, QE, etc).

    Just sayin’. :)

  29. Probably a good move. It mostly devolves into MMTers coming here attacking me personally like they do with everyone else. It’s counterproductive in the end….Thanks.

  30. I’m perp neo…stick with the positive education you do so well…this comes across as petty and ego driven (even though I agree with your stance). Have the tenured professor arguments elsewhere.

    I’ve read long enough to know it is not your usual tone and approach.

    Occasionally, I try to imagine visiting this site for the first time, instead of my nearly daily habit.

    What would be my impression if this were that day?

    And would I have returned?

  31. With “MMT minus JG” I meant what your quote from Wray means : the MMT theoretical corpus without the JG. Practically it would mean our current US situation without insane debates on how much austerity, how quick and how long, but delighted people over coutercyclical budgets (specially deficits). Maybe with simplified Treasury operations and bureaucracy. Labelling is often loosy. A name meaning can be “extended”… or “restricted”. You want to restrict MMT to a more core component. Fine. But don’t just ignore what’s seems natural implications to many…

    Have a nice day, Cullen, regards,


  32. JBB,

    Either way, I don’t think MMT has the operational realities right anyhow. They describe the banks as being part of a money monopolist and serving public purpose. That’s very misguided and not at all an accurate description of the system we have.



  33. Hi Cullen,

    Personal attacks again?

    You agree with the sectoral accounting identities = zero don’t you?
    We all agree on that do we not?

    You have a differing assumption about trade deficit/balance of payments.

    Does anything else differ? If it does you have not made it clear.

    I had no Internet access when all this happened if I recall correctly, I stated a few MMT positions including policy and you attacked. I do not know what others have said. I have been respectful to you.

    I have consistently wished MMR luck. I ask you whom is playing politics?

    Would you like to make clear where MMR disagrees with MMT on operational realities? Or produce a position where FP leads to FE? I do not ask this to attack it, but to debate it, to see whether it is operationally feasible? Once established we can discuss the politics of implementation.

    Just looking for a little MMR substance.

    Once again, thank you for your time.

  34. 1. My comment contains no personal attacks so don’t get dramatic and try to divert attention from the fact that your original comment was rude and condescending.

    2. MMR has many differences. I am sorry if you haven’t taken the time to understand them before constantly.

    3. MMT has a policy agenda directly embedded in it so who is playing politics? The THEORY in Modern Monetary THEORY is all politics based on the JG….MMT, by definition, is a progressive policy agenda.

    4. MMR disagrees with the state theory, the ELR, the idea of a “money monopolist”, the idea that taxes drive money, the role of producers vs consumers, MMT’s policy stance being almost purely fiscalist, the foreign sector, the idea of embedding a policy agenda within the theory, etc. These aren’t minor differences. They are massive. Still, MMT should remember that MMR is as close to an ally as you guys have….

    5. MMR is not a set of policy solutions. I am approaching economics from a purely scientific perspective. A purely positive (as opposed to normative) perspective. MMT is an admittedly progressive approach. In this sense, MMT is normative rather than positive. I don’t feel it is my responsibility to find cures for the world’s problems. I would prefer we first understand the system causing the diseases. Someone else can cure them all. Maybe you guys are those people???