MODERN MONETARY REALISM
As many of you now know, the divide within some of the MMT thinkers has grown fairly substantial. The schism over the Job Guarantee revealed several points of disagreement that lead to vastly different conclusions than those espoused by the primary MMT thinkers. Several commenters and vocal proponents of MMT have made it clear that my positions are not those of the MMT economists and founders and are in fact something different. I won’t do the developers of MMT the disservice of pretending that my ideas are completely in-line with theirs. That would only serve to confuse those learning MMT and could undermine the efforts of the MMT developers.
I feel that the core operational aspects of MMT are among the most important ideas in the world and my goal here has always been to help promote those ideas. Because I believe in those ideas I will not stop promoting them. So I’ve been working with Michael Sankowski, Carlos Mucha (who most of you probably know as reader Beowulf) and several others to help formulate our thinking. I’ve also been in detailed talks with Warren Mosler over the last several weeks hashing out some differences. It’s safe to say that we have his blessing even though he’s not 100% in agreement with all we’ve concluded.
Importantly, I want to be clear that I do not view Modern Monetary Realism as a competing idea to MMT. Rather, it is merely the form of Mosler Monetary Theory that I wish to promote (without confusing readers into thinking that I am promoting the exact MMT ideas and prescriptions). After all, Warren is still the father of the theory and it’s incredibly important to note that he is, by far, the most influential thinker in this offshoot of MMT. If anything, I hope that by focusing on the operational realities of MMT via Modern Monetary Realism that I will bring even greater credibility to MMT and its operational realities. The fact that we have differences regarding prescriptive uses, in my opinion, gives the idea even greater credibility. But in the end, it should be clear who gets the credit for these ideas – Warren and the other developers. Modern Monetary Realism is merely standing on their shoulders.
You can find my revised paper on Understanding the Modern Monetary System here. We will also be running a new website at www.monetaryrealism.com (not yet activated) to update our ideas and help to promote the heterodox movement.
A positive development. Getting rid of the JG is going to be like shedding 50 pounds. You’re going to move MMT forward much faster now.
That begs the question – what are the other differences you found?
The big ones:
1. We side with Godley on the current account issue.
2. We view the state theory and the “taxes drive money” idea as incomplete.
3. We will focus more on productivity as a compliment to consumption as opposed to mainly looking at ways to increase aggregate demand.
4. We reject the JG as a central component of understanding the modern monetary system.
A big problem is that economists assume that the equilibrium state is full employment and balanced trade (or a “closed system” which amounts to the same thing). When we have high unemployment or a large trade deficit (and today we have both), we can be stuck in a rut a long time unless the govt takes action, or to put it another way, we’re still in a rut because of the govt.
Cullen mentioned Wynne Godley above, that guy had it figured out. Godley’s John 3:16-like summary of Macroeconomics was this:
The budget balance is equal to the difference between the government’s receipts and outlays, but it is also equal, by definition, to the sum of private net saving (personal and corporate combined) plus the balance of payments deficit.
If the private sector decides to save more, the government has no choice but to allow its budget deficit to rise unless it is prepared to sacrifice full employment; the same thing applies if uncorrected trends in foreign trade cause the balance of payments deficit to increase.
I thought the Job Guarantee debate was putting the cart before the horse. If Washington doesn’t understands Godley’s point, the JG won’t ever be enacted. However, if Washington does understand his point, a JG won’t ever be necessary.
“the same thing applies if uncorrected trends in foreign trade cause the balance of payments deficit to increase.”
So if that’s the trend governments should allow that to happen just because the private sector looks like is fine with it? That’s what he is saying?
By the same standard I guess we must let bubble grow because ‘the private sector is willing to and knows better’ load on irresponsible leverage to raise asset prices. So Greenspan was right after all and we should believe in the Ayn Rand mantras?
I you only care about short term that may be the right thing to do, but it may not be the most sustainable thing in the long term. Or I’m reading it wrong and is the contrary? Please explain this intriguing point.
I would like to know what ‘monetary realism’ has to say about inflation, growth, purchasing power/disposable income/income disparity, productivity, sustainability etc. if its meant to be a macroeconomic theory, will wait for the primer.
You’re assuming facts not in evidence since the answer to your first question is no.
Please expand on your comment. What does “uncorrected trends ” mean and how or what does one do to “correct” them? And why does the JG become unecessary if one understands the uncorrected trends and presumably corrects them?
What does “uncorrected trends ” mean and how or what does one do to “correct” them?
And why does the JG become unnecessary if one understands the uncorrected trends and presumably corrects them.
Check out this sectoral balance chart. Except for briefly in 1991, we’ve been running continuous trade deficits for 30 years. THAT’s an uncorrected trend.
http://static.seekingalpha.com/uploads/2011/8/14/saupload_sectoral_balances.png
Trade deficits are a demand leakage. That $600B a yr leakage can be filled (or corrected, if you will) either by deficit spending or by closing the trade gap. What’s interesting about our chronic trade deficit is that its actually a bigger problem whenever we approach full employment. Whenever the budget deficit becomes smaller than the trade deficit, private sector savings are drained out of the economy like a hole in a gas tank. You can see in the above chart, this happened running up to the 2008 recession and before that the 2001 recession.
If govt loosens its fiscal stance (either with spending hikes or tax cuts) and corrects for the trade deficit, the private sector economy will be able to provide full employment on its own. As Keynes’s student Arthur Plumptre put it, the idea is to “devise the minimum government controls that would allow free enterprise to work.”
If we get to full employment, we may find there’s still a fraction of people who are, for whatever reason, unemployable. That’s the time to debate whether to set up a JG; or perhaps, simply provide them a guaranteed income by enrolling them in SSI (which contrary to popular belief, is NOT the same thing as Social Security).
I got that but it seems the same as MMT. I thought by siding with Godley you were supporting something different? I’m missing something here.
Godley disagreed with MMTers on this point. Here’s Wray on their disagreement (a point we are agreeing with Godley on):
Thanks for that. It is not evident what his rationale was for that. But now I understand the point of contention. I’m sure there will be more later.
So it seems the main difference for item 1 is whether the trade balance matters? Isn’t that obvious with the sectoral balances model?
Or is the issue whether fiscal policy should account and compensate for it? That, too, seems quite obvious.
Items 2 and 3 I totally agree with, good for you on that, and item 4 we saw coming a mile away.
So well done, and I look forward to seeing the site. I’m actually launching an MMT-friendly (maybe now MR-friendly?) public policy site/blog this year, so I look forward to seeing how you get started and approach this new project.
I’ll elaborate on 1 in the future, but I think the major difference is that we view a persistent CAD as being problematic in that it will inevitably require higher budget deficits to offset (this is both politically untenable and economically dangerous). Like Godley, we don’t view this as a sustainable sequence. He said:
He and Kaldor largely agreed on this point. Kaldor said:
Kaldor wrote that in 1971….It turns out he and Godley were dead right.
I think you are on to something here. If foreign goods are seen as more worthwhile than domestic production, then any recovery will mean only more imports and require more stimulus to maintain full employment. We end up chasing our tail and inflation is likely higher as well. Now how do we reverse it?
Long time reader, first time commenter, love the site.
“I’ll elaborate on 1 in the future, but I think the major difference is that we view a persistent CAD as being problematic in that it will inevitably require higher budget deficits to offset (this is both politically untenable and economically dangerous). Like Godley, we don’t view this as a sustainable sequence.”
I’ve often wondered how the Triffin Dilemma fits into MMT (or, now MR). Since the Dollar is the world’s reserve currency, Musn’t the US, as Triffin observed, always run a CAD; in order to supply dollars to the world and prevent the global economy ex US from contracting? So, problematic or not, wouldn’t correcting the persistent CAD be problematic in and of itself? Also, to this point I’ve only read about MMT as it pertains to a monopoly currency issuer. How does MMT address the next leg up, ie. Monopoly Issuer of the world’s reserve currency?
The bit about the excesses of Rome are exactly what I’ve been afraid of for some time.
Cullen- I am really interested to hear your guys thoughts on this in the near future. It’s definitely one area of macro I haven’t yet explored enough.
However, don’t you think this is getting into prescriptive/politics vs descriptive? And that’s 100% fine, but I don’t think it’s then fair to say MR is just descriptive. What makes you so certain they were dead right? Are we not getting into the standard “USA doesn’t manufacture and net exports that’s really bad” argument, which is subjective and political? That we don’t mfg as much any more isn’t necessarily a sign to me that our productivity is down. The knowledge economy, services, tech/med innovation, etc – this is all important productivity as well. That’s not to say maybe Kaldor is ultimately right, but I don’t see how the prescription of lowering the trade deficit for society’s benefit is less prescriptive than recommending a JG. Both are prescriptive, theoretical, and have a chance of being right. JG might be more politically radical, but they are both prescriptions and they both are intended to optimize the performance of an economy.
Of course Randy is wrong there! In the article he further suggests that the UK was on fixed rate regime but I believe it was floating when the UK had to borrow from the IMF later. (The ERM was introduced in 1979)
http://www.telegraph.co.uk/news/1399693/A-history-of-sterling.html
In fact the crisis was predicted by Wynne:
“Francis Cripps and I set out the significance of this identity [sectoral balances identity] as a logical framework both for modelling the economy and for the formulation of policy in the London and Cambridge Economic Bulletin in January 1974 (Godley and Cripps 1974). We correctly predicted that the Heath Barber boom would go bust later in the year at a time when the National Institute was in full support of government policy and the London Business School (i.e. Jim Ball and Terry Burns) were conditionally recommending further reflation!”
“If govt loosens its fiscal stance (either with spending hikes or tax cuts) and corrects for the trade deficit, the private sector economy will be able to provide full employment on its own.”
Is this a rejection of the buffer stock concept as necessary to maintaining price stability? If not, then the only buffer stock the private sector will provide for itself is unemployed but employable workers. The public policy question is whether this is acceptable.
If the idea of a buffer stock is discarded, then there’s some space to fill in regarding how price stability happens at full employment.
As I explained in this piece, the MMT JG does not serve as a price stabilizer at full employment. Even Warren admits that it will require other policies to contain inflation at FE. The inflation fighting effect of the JG is vastly overstated by the MMT academics.
“As I explained in this piece, the MMT JG does not serve as a price stabilizer at full employment. Even Warren admits that it will require other policies to contain inflation at FE.”
Use fiscal heat to for demand-driven private sector full employment and yes, you will exhaust whatever buffer stock you had (it doesn’t matter if they were unemployed or JG employed, they’ve been pulled into private sector employment).
Having exhausted the buffer stock (again, agnostic as to which), inflation ensues and now you have a price stability problem. When talking about other policies to contain that inflation, are there any at all that don’t involve reducing demand and knocking workers back into buffer stock (still agnostic) as an answer?
In light of that catch-22, your very valid critique applies equally to the status quo without a JG.
Well, as I stated before, MR isn’t about getting involved in the politics and the prescriptions are entirely separate from the operational aspects I will prefer to focus on, but we’ve discussed Vickrey’s anti-inflation market as a possible alternative. The flaw in the JG thinking is that it’s somehow the ONLY option and HAS to be a crucial component of MMT. MR says that is false (and I am pretty sure I can show convincingly that it is false). Here’s Vickrey on a price stability option. Interestingly, the MMT economists take much of Vickrey’s work on employment, but seem to ignore some of his brilliant insights regarding inflation fighting (most likely because if you use the anti-inflation market then you don’t need the employment buffer stock):
Thanks for that. it’s certainly some outside the box thinking on inflation fighting. Kind of like a carbon cap and trade scheme for prices. Interesting stuff.
Yeah, it’s a neat little idea. I think the most beautiful part of it is that it would give the govt much more flexibility in being very efficient in its spending approach. We don’t just need to have this massive bureaucracy hiring who ever will walk in the door to dig a hole or play a guitar (not to mention that the JG doesn’t even provide price stability to begin with!). We can really target spending projects and fiscal ops while also implementing a REAL price anchor.
Vickrey was a genius. I hadn’t read the anti-inflation market though. Really interesting idea. It seems that if you could implement this (much more politically feasible than a JG) then you can achieve full employment through fiscal policy AND achieve price stability.
I love where you guys are headed with your thinking on Monetary Realism. Awesome stuff so far.
I liked Mike’s post at TC. He says we’re going to be jamming the operational realities down everyone’s throats. I think we’ve got superior prescriptive ideas also, but honestly, I don’t have the time right now to develop them. Besides, we have to get the basics into the mainstream first. So, let’s get more people on board with the basic ideas and then we can take it from there. The prescriptive side will come with time and I will likely be reaching out to economists over the next year to help us develop some of this work. This is just the beginning….I’m going to make it a life mission to get this out to the public….MMT was the beginning. MR is taking it to the next level.
Right, Vickrey was a genius. He was also an all around good egg. This story by Mason Gaffney is worth sharing:
The evening of the day Bill Vickrey won his Nobel I impulsively, hesitantly dialed his home. His phone surprised me by ringing unbusy, and Bill surprised me more by answering, and sounding unhurried. After congratulations, I asked “Bill, was this for a lifetime of achievement, or some specific work?” “I don’t know,” he replied. “Well,” I persisted, “Is there a citation? What does it say?” “Yes,” he said, “there is one, but I can’t understand it.” If you and I find it a puzzle, we have good company.
Here’s the citation: (1996) J A Mirrlees and W S Vickrey – for their fundamental contributions to the economic theory of incentives under asymmetric information;
Mission performed, I hastened to ring off, but Bill kept me on the line. To Bill, the transaction was incomplete — too one-sided. He turned things around and said “Tell me about yourself. What are you working on now?” I told him as briefly as I could, and he immediately offered to help. It was not a perfunctory sham offer, he’s helped me before. “How are the wife and children?” He really wanted to know, and report back to Cele. That was Bill, thinking of others, in the time of his greatest triumph, at the end of a long, wearying day of praise and celebration. What a saint! And I thank that other saint, my wife, who nudged me to call right away: two days later Bill left us forever.
http://www.wealthandwant.com/auth/Vickrey.html
What a great story.
The fundamental problem here is that there are three major macroeconomic dimensions of the economy that we would like to control: the price level, the level of employment, and the division of the total output between provision for current wants and investment for growth, whereas we have only two adequately orthogonal means of control: monetary measures operating through interest rates and the capital market, and fiscal policy operating through the generation of disposable income. Attempting to control three parameters with two instruments is like trying to fly an airplane without ailerons: it may be possible in smooth air if there is no need for sharp turns, but attempting to land in a cross-wind involves a high risk of disaster. A third control is likely to be needed if we are ever to get close to real full employment.
http://findarticles.com/p/articles/mi_hb6413/is_n1_v22/ai_n28645797/pg_4/
Vickrey’s inflation control appears to be price control. Fix prices net net; if one company’s prices go up, another selling the same product has to go down so there is no net difference. This isn’t going to work. It works on paper, but there is no way it will work in reality. Not only do you have to fix prices, you have to fix the quantity of product sold at those prices. You would have to enforce this somehow. It strikes me as completely untenable for the government to try and control the price of every item sold in the entire economy so net net there is no price inflation. As more or less a business owner, I wouldn’t want this anyway.
I think the solution is to realize the government and the private sector need to be fluid, reactive entities. In other words, it needs to allow for the human element to make decisions relative to current conditions. Having a perfectly mechanical economy might be possible, it might even be preferable, but it isn’t going to look much like the existing economy in important respects.
Bottom line: I don’t think people who are so horrified by inflation should be setting the terms of the debate. I think they overemphasize inflationary harm. There is a bit of hysteria surrounding inflation frankly which is largely propagated by the hyper-inflationist, convertible currency crowd. This crowd is wrong about many things, and they are wrong about how to properly view inflation and therefore how to deal with it when it arises.
It strikes me as completely untenable for the government to try and control the price of every item sold in the entire economy so net net there is no price inflation
Robert Rice, do you know who agreed with you? William Vickrey (from link above):
My own preferred scheme builds on a suggestion by Abba Lerner that inflation should be controlled by establishing a market in rights to raise prices… in a manner comparable to schemes for tradeable pollution rights. Because of the administrative difficulties of measuring changes in individual prices this is a non-starter. There is also the problem of allowing for pass-through of price changes of suppliers, which immediately suggests a solution in terms of value added.
Briefly, the proposal is to issue warrants for value added, here termed “gross markups” as connoting something to be controlled rather than encouraged. These would be issued to firms on the basis of operations in a comparable previous period with adjustments for changes in prime inputs such as labor and investment. These warrants would be freely tradeable for cash in a competitive market… Firms enjoying a favorable situation, that would enable them to have gross markups greater than the amount originally issued to them, would be able to realize these markups only by buying warrants from firms unable to realize their allotment of markups…
Sorry beowulf/Carlos, I posted my response to you in the wrong portion of this thread. It appears just below if you are interested.
on the Vickrey & Lerner proposals:
I flew through some of their stuff a while back and am talking from memory, which is quite fuzzy. But I seem to remember it puzzling me how both proposals would get past a valuation problem. To me, they both assume that somehow products and services are somehow comparable among one another without the price information which the markets delivers ex post. Ramanan linked to a paper by Wynne Godley over at Robert Vienneau’s site that had the following quote:
– In particular, I do not believe that there exists a market in which goods in aggregate and labour in aggregate can be exchanged for one another provided only that the price of each is right in relation to some given stock of ‘money.’” -
It seems that that is exactly what the inflation reguzlation proposals trying to achieve by taking the mark ups (or whatever theory of profits one might subscribe to) out of the equation. I may be missing the forrest for all the trees or just be completely lost at sea, but to me the fuzziness of prices and profits is, for all its short comings, the only means we have for exchanging goods AND being motivated to enhance our productivity. (Net) Profits are the carrot, even if it’s only an illusional carrot.
And, keeping on my contrarian cap for a moment, the other problem I see is with shifting the focus to the external sector. Take the US, for a minute (but this implies equally to other nations, possibly with opposite signs). There is the issue that MMT constantly presses, of foreigners wanting to hold US$ as a reserve currency. Then there is also the issue of US output not being competitive / desirable for foreigners. The latter is a question of industrial policy, education and other micro and macroeconomic measures whereas the prior is beyond anyone’s control (short of the US deliberately trashing its own currency / economy). By taking the current account as a measure, one implicitly brushes over this very important distinction. One must separate these matters, both in description and in prescription, I’d say.
I’m sure Ramanan has some good answers or links to these questions
Carlos, what I’m arguing is that a market for the rights to price changes won’t work without a government enforcement agency. Some entity will need to compel businesses to behave. Is the IRS going to be broadened to check the pricing of every company under its jurisdiction? And how will it do that exactly? Check every single invoice to verify every item sold wasn’t sold at a price greater than what they have the right to sell it at? Not only this, but that every item sold above the equilibrium price has a corresponding sale by some other company of the same item below the equilibrium price? That doesn’t sound practical/realistic or even possible to me.
Let’s boil it down to its simplest elements.
Imagine combining the value added tax and an excess profits tax– only its as a cap and trade market so the money stays in the private sector. Companies with above-average value added/gross markups (remember Lerner index, the higher the profit margin the the greater the monopoly pricing) would face a stiff penalty unless they bought gross markup warrants from companies that had below average value added. A company could always hit their revenue numbers by cutting margins and the selling greater volume at a lower margins (plus reaping the proceeds from selling their unused gross markup warrants). Vickrey is tackling inflation on two fronts, encouraging firms to both lower prices and increase aggregate supply.
The govt wouldn’t care what product a company sells or at what price, all it would care about is each firm’s (above a small business size threshold) gross markups. It already collects all the information (and then some) it needs every April 15 anyway.
Now certainly there are practical difficulties to be worked out and policy decision to be made, but I think Vickrey’s idea is worth further examination even though inflation isn’t on the horizon currently. You don’t wait till its raining to start fixing the roof.
Let me just said I’m not married to any particular policy, if the Vickrey market has some insurmountable obstacle, then let’s keep looking for other anti-inflation tools.
Here’s the point, if Vickrey’s idea (or someone else’s) allows the govt to lower its target unemployment rate while still controlling inflation, it will have a huge beneficial impact.
A 1% reduction of unemployment equates to an additional 1.7% of so increase in GDP, that’s a $250 billion a year increase in national income. I would suggest this is one area of govt R&D that is underinvested.
So it’s the contrary of what I though, this was the sort of explanation I was looking for.
I’m glad you’re giving trade imbalances more weight in your theory. I suppose you still agree with ‘exports are a cost’ but at the same time they are demand leakage.
Now, I know this theory probably won’t get into these questions but how trade can affect economic structure, productivity etc. and develop unsustainable patterns in the long term is also an important matter (and the one I guess Godley said that eventually these deficits had to be corrected).
We’re so lucky we have government to fix all these economic problems don’t ya think? If only we could have just a bit more government, maybe an Office of Official Leeches maybe?
I was impressed with Bernanke yesterday though, he is so committed to his role to destroy the dollar and the curreny international monetary system. He will hasten the collapse.
The next few years you MMT guys are going to have so much fun!
Yes, Gary_UK, that is exactly Ben Bernanke’s goal ‘so committed to his role to destroy the dollar and the curreny international monetary system. He will hasten the collapse.’ wait… what font do I use for sarcasm?
I think he probably knows a lot more about economics than you do. Just a hunch.
You don’t know anything about him, apparently.
Wynne Godley: “If the private sector decides to save more, the government has no choice but to allow its budget deficit to rise unless it is prepared to sacrifice full employment; the same thing applies if uncorrected trends in foreign trade cause the balance of payments deficit to increase.”
Agree on sectoral balances, but is the direction of causation right? Does the private sector ever ‘decide to [net] save’? It would seem to me that net saving results from either a government deficit or a current account surplus, not vice versa.
To ask this question another way, is “private sector net saving” exactly the same thing as private sector net repayment of debt? The private sector can pay down debt, causing bank balance sheets to shrink (and recession), without necessarily *causing* a matching increase in government deficits (assuming automatic stabilisers are not sufficient).
I often think that ‘saving’ is terribly ambiguous term that is probably best avoided altogether. ‘Private sector surplus’ is probably a better term than ‘Private sector net savings’.
I think I am on board with your number one. The next two I don’t know enough about yet. On the JG I consider that to be in someone else’s court. It sounds like an impossible idea from a political perspective, but the proponents have to develop it. Otherwise it will just die on the vine.
I did get to read carefully your MMT paper. I got the part on how the system works and try to use to to improve my “trying to make a buck” skills. I will go ahead and read your revised paper.
I am no-one to give you free advise but I hope you do not put too much energy into try to develop some kind of new economic theory that will beat capitalism, socialism, and communism. On paper, I.e., on the theory side, communism is virtually impossible to beat, it is when human nature/reality gets into the way that it sucks. I guess that is part of the problem pure MMtrs have with the JG.
Let me finish, I hope your incursion into macroeconomics does affect your interest in investment management and this site which is what, IMO, makes people love your site.
Quite the contrary. I’ve realized that it is not and never will be my intention to compete with economists. That has never been my goal here. My goal is always to focus on the operational realities and then help explain how things work in the monetary system so people can make more informed decisions. I have zero interest in trying to formulate a new theory. I think the core aspects of MMT are perfectly fine. But I can’t promote it under the name MMT given that I disagree with components of it that are clearly “central” to MMT.
If anything though, this is a change in direction for me from focusing too much on macro theory and instead focusing on how operational realities influence investors and citizens. I’m glad that there won’t be any more silly arguments over theoretical govt programs and I regret having gotten so involved in those discussions in the first place….
Amen!
While I am sure all your long-time readers love to indulge in the occasional theoretical post, your macro and market advice must be the most sought after IMHO.
While I am still to digest the new white paper in its entirety, I had an important question from the world view: does MMT or MMR apply only to the US (and may be Japan) or can it be said to apply to any nation that has the right to issue its own sovereign currency and in which the bulk of the transactions in the country actually do happen in that currency e.g. the BRIC countries?
Cullen, I feel like I really nailed the macro environment in 2011 and jumped on treasuries as a result of reading this site and taking a non- consensus position on QE. But what now? With yields having fallen so substantially, how do we use the knowledge of MR or MMT in this environment? Do you think MR provides any thematic suggestions for where we are at right now (market wise, not economy wise)?
I’ve mentioned several times (at higher prices) that I’m no longer bullish USTs. I’d wait it out. Let the yields jump a bit and we’ll revisit. No reason to get greedy after a great run….
A welcome and interesting development. Looking forward to it.
Cullen-
Congratulations. I can’t wait. I’ve followed you long enough and have alot of respect for you in many ways.
It’s unbelievable the amount of focus you have with the different hats you wear. I can’t wait for the new site.
BUT..WTF- who the hell is Carlos Mucha? You mean that panda bear is latin? I was convinced Watson was blogging under the moniker Beowulf. It was just a matter fo time before IBM figured it out.
Let me guess Carlos Mucha is a well renowned economist. I feel like Chris Farley again. “man..I’m so stupid”
Look forward to what ever you create Cullen, Michael…and Carlos aka beowulf aka Latin Panda aka Watson.
I’m like Tom Clancy, even my ghost writers need ghost writers.
)
I bet if they audited you. “they” would find out you made a killing with the first ever porn site. It’s implausible that your intelligence didn’t figure that one out way beck then. ME..yeah I missed that cash cow. I used to be morally casual so I had my chance.
I’ve never read someone who has your knowledge of fiscal/monetary issues to…Fear and Loathing movie clips.
Do you have a site or blog beowulf?
Do you have a site or blog beowulf?
http://hotchickswithdouchebags.com
Just kidding, I just wish I’d had thought of this. Thanks for the kind words.
I don’t like the name. It’s kind of… loaded. I mean every person regards their own thinking on economics as ‘realistic’, so even if yours is the most realistic, it still comes of as sounding slightly arrogant, and PR is important.
We bounced around a lot of names. Unfortunately, we’re not dealing with pornstars or sports teams so awesome names are pretty hard to come by….And if focusing on the operational realities is arrogant then call me arrogant!
Oh I agree it’s certainly not arrogant to focus on operational realities. Nevertheless, I can see that name annoying some people, because it implies even before you read about it that if you disagree with this theory you’re some kind of post modern monetary ‘anti-realist’, so the name is provocative. How about a name like “modern institutional monetarism”?
Hopefully it will annoy Scott Sumner. If he thought MMT focused on reality too much before then he has a whole new problem coming his way.
And once I get around to finishing my NGDP targeting piece he’ll really hate me….
I was thinking a diff name too. Fiat Currency Economics. You can hate fiat, but you can also understand it. Monetary Realism will invite the gold bugs who will “debunk” it simply by saying they “know” a better way.
Fiat Currency Realism could work too, or FC Monetary Realism. We are only talking fiat in a floating exchange rate system, right? Or will your work incorporate other systems, including the Euro?
Wait till I post about his recent idea on “Why can’t we be more like the Australian housing bubble”
Nick Rowe is reasonable enough, but Scott S won’t ever back down. So we must take Monetary Policy out to the woodshed again.
If I had known it was gonna take this long I actually would have taken bets in the forum on the timing of your nGDP piece.
Having said that, it seems ridiculous that MMT economists include ideas about JG, it doesn’t seem related to monetary operations and doesn’t seem particularly modern either.
Great news. The JG debate showed how politically biased some MMT advocates really are. It will be nice to cut the political baggage loose.
I liked Market MMT better, but I guess it’s good to divorce yourself from the MMT name entirely. It has a stigma attached to it that is not hard to overcome.
We went back and forth on what to call this. Cullen wouldn’t let me call it Pragmatic Money Theory!
And we’re just realists about what we can do, and what needs to be done. We want to face what we need to do and get it done in the simplest way possible.
Yeah, I suggested going the Donald Trump route and call it the Roche Monetary System. For some reason, Cullen thought that was a bad idea.
And thanks for the kind words Joe.
I second Pragmatic Monetary Theory!
The more the merrier. Looking forward to the debates, Cullen.
My personal view is that, for 100 different reasons, we need a much more active public sector with a commitment to full employment driving much more public enterprise and much more public investment. I think it’s just socially stupid to leave gigantic masses of people unemployed, and that the fact that thoroughly capitalist systems are able to stabilize for long periods of time in a condition of chronic underemployment, as Keynes observed, is one of the manifest failures of thoroughly capitalist systems.
Any additional price stabilizing benefits that come from running a JG employed buffer stock program are just gravy in my book. The version of the JG that says we should just use a one-person bureaucracy to send our checks for existing private sector firms to hire people is weak tea. The public needs to get down to some much more serious work with the sector it operates.
I want a big, broad honking new Big Government bureaucracy to get to work building 21st century America, fighting and winning the the war for a prosperous future, and doing all the things that the impotent and neurotic private sector with its repeating crises and bouts of financial vapors just can’t do.
We’ve got too many parasitic private sector rentiers and not enough public sector muscle.
I think I agree with you that the taxes-drive-money view is incomplete.
Thanks Dan. Debates make progress. We’ll talk in the future.
The big question is still HOW do we get to the “big broad honking” government that will get to work?
No clever answers. We’ll have to vote for one. It won’t happen tomorrow.
I think one of the operational advantages of classical monetary policy, is that you can define a bunch of rules that can be followed by a bunch of ‘technocrats’ running an ‘independent’ central bank. Now they effectively target inflation, and also look at unemployment, a bit. All the horse-trading about what people want to spend money on, and what not, all of that is concentrated in government, and that must obviously be under democratic control. Responsible to ‘the people’. The advantage of that divide is that these ‘technocrats’ can follow some rules that would limit growth when it is really high, en stimulate during a recession. They can have a long-term view, by implementing a rule. The democratic government would have difficulty implementing anticyclical policy, as it might ruin their chance of getting elected again.
MMT needs something similar. You need to decide on a long-term strategy that stabilizes the economy, and that can be implemented by a bunch of technocrats that follow a relatively simple set of rules to decide what they do. Everything else must be decided by a democratic government .. but within constraints set by the central bank. And MMT might need to redefine the parts of policy that could be determined by a long-term (nearly) rule-based decisions. There might be some redefinitions of where the boundaries are between monetary and fiscal policy.
Nichol,
I fully agree with this sentiment. I created the TC rule in response, and Carlos has an even better policy rule which relates taxes and unemployment levels.
http://traderscrucible.com/2011/05/11/our-story-so-far/
http://traderscrucible.com/2011/11/03/4-ways-to-change-the-fed/
Nick Rowe has an interesting post up about this idea. It’s only 9 months after I wrote the TC rule.
http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/01/asking-the-right-question-about-fiscal-policy.html
nichol, one thing I find is there is so much practical work to be done. It’s shocking to me Nick Rowe asks these questions – because it means not many people have even thought about this stuff.
There is nothing realistic about using taxes as monetary policy tool, in fact is the most problematic thing of the ‘theory’ and very unpractical in reality.
So if you want to support the status quo via monetary policy because you are “being a realist” is fine, but go full for it, conducting monetary policy using taxation is very unrealistic.
So if you want to support the status quo via monetary policy because you are “being a realist” is fine, but go full for it, conducting monetary policy using taxation is very unrealistic.
Except conducting monetary policy using taxation IS the status quo!
The current payroll tax holiday (which had never been done before in the 70-odd year history of the FICA tax regime) is exactly the right idea, it just should have been turned up to 11.
http://youtu.be/EbVKWCpNFhY
No it’s not, it’s just a momentary patch that can get you so far. The politics of taxation will always get in the way, ie. once you cut taxes it’s hard to rise them again unless deficits get out of hand (too late then and contributes to inflation) and even then is problematic (see discussion right now by GOP candidates). That’s exactly what has happened since Reagan. Then is the question of tax structure, who and what to tax, etc. which will cause social tensions.
And then there is the problem of getting people to understand why taxes are being cut or risen, you can’t take for granted that the majority of the population would agree with ‘monetary financing’ (which now is done by a convoluted process exactly to give an appearance of political independence) and that basically governments can just print money to finance theirshelves. If you get the majority of the population to agree with it then is a ‘free lunch’ (except that there is no such thing, and you would have to pay it with inflation) and why tax at all when the government can just print and spend.
There is a whole social dynamic and a load of unknown consequences to the process. The main point being that taxation can’t be utilized in a neutral technocratic sense, like supposed CB independence to rise or cut rates is now (even if it’s a matter of perception of how it affects each economic actor pocket, and if you try to change perception like neoclassical economy did then you may as well change the rules and dynamics of the game and new constraints and conflicts will happen).
I was always suspicious of the mantra that taxes regulate demand and control inflation. Increasing taxes, indeed doing almost anything, will always involve a political fight.
The politics of taxation will always get in the way, ie. once you cut taxes it’s hard to rise them again unless deficits get out of hand (too late then and contributes to inflation) and even then is problematic (see discussion right now by GOP candidates).
Congress could create a formula for the payroll tax rate to adjust quarterly based on the unemployment rate. This would allow Congress to tighten or loosen fiscal stance counter-cyclically without giving Tsy discretionary power over the tax code. Its not a new idea.
In correspondence with the economist James Meade in 1942 Keynes says he is “converted” to Meade’s idea of altering the social security payroll tax over the business cycle… “I am converted to your proposal…for varying rates of contributions in good and bad times.”
http://thinkmarkets.wordpress.com/2009/02/06/keynes-supported-payroll-tax-reductions/
And it would be really easy to implement. As easy as an FOMC meeting and rate decision.
No it wouldn’t. Political reality is that of an adaptive and dynamic system. There would always be pressures in Congress to change the tax laws. An automatic increase is scheduled, and then Congress intervenes and delays it 2 years….. How many times have you seen this happen? The same thing is true with the Job Guarantee. Its very existence would strengthen the labor movement, and Congress would be put under irresistible pressure to increase the wages and privileges of the labor pool workers. Political reality would cause 1970′s style inflationary pressures because voters always want more, especially if they are convinced that Congress can actually give them more. Talking about MMT or MMR in isolation is nice, but what is really needed is a unified theory that takes into account how economics affects politics and vice versa. It may be true that a truly stable and sustainable system is impossible because of the huge nonlinear interactions between economics and politics in the real world.
zzzzzzzzzzzzzzzzzzzzzzz
At a glance, it looks like standard MMT with slightly different politics. Not that politics is a dirty word.
We’re not reworking the entire thing. But many people were very clear that disagreeing with the taxes drive money and JG aspects of MMT make me outside of the theory. Which is true. What we’re doing importantly, is removing any debate over prescriptive vs descriptive. The descriptive aspect of MR is crystal clear. If we want to propose a JG on top of that then that is fine, but it’s peripheral to everything else. The core 4 points I outlined above make us disagree with MMT on some pretty substantial points though….and I wouldn’t say it’s at all drawn down party lines. In fact, my goal is to bring MMT back to center and eliminate the politics entirely and ultimately making it more agreeable to everyone….But the key point for me is clear. I want to teach people HOW the system works. Where they take the political aspects from there is up to them. It’s not the role of the educator to steer the politics of the people learning.
I’ll happily concede that the taxes drive money debate is peripheral in the specific context of the 2012 US economy. Dollar acceptance is firmly in place supported by many complex factors and debating the pea of coercion under all those mattresses serves little purpose.
Full employment and price stability are another matter. At the end of your revised intro you say “We believe the government should focus on other policy measures to establish an environment of full employment and price stability.”
MMT has its cards on the table in that regard. If there’s a coherent counter-proposal, I’m eager to read it and would do so with an open mind. As uncomfortably political as it may be, at some point the rubber has to meet the road in policy advocacy if FE&PS are to be achieved.
My monetary system primer is not a policy primer. That’s one of my goals here. I don’t want to muddy the waters of understanding the monetary system with policy proposals. Of course, I want to create an economic environment that generates full employment and price stability. I want to use the govt to maximize the living standards of the pvt sector. The policies that are required for this are many and complex. I’ve detailed many of my positions over time and I’ll expand on those ideas as we move forward. But let’s not jump into MR assuming that it’s some political or policy approach because that’s exactly what it’s not.
Imparting wisdom without ideological bias is what higher education once aspired to do. Those days are long gone. This site has taught me more about economic and monetary reality than any other single source over the past couple of years. It is really a shame that the academic MMTers have allowed their ideological bias to cloud their judgment as to the possibilities of allies on the right side of the spectrum and in the center. All econ professors should be required to spend at least three years in self employment status so that they get acquainted with the real world.
Insofar as MMR deals with production as well as demand (both are necessary in a real economy) I think supply side economics are implicitly part of your revised school of thought.
Well, there are elements of many schools of thought in our work. But I do not promote a trickle down approach. There are ways to promote production without giving the rich tax cuts or deregulating….
The foreign account was always bothersome to me. It will be nice to see you guys take a different approach on it. MMT always seemed a little weak there.
Thanks – we think its an important part of our economoy and the world economy. I have a gut feeling there is crucial work to be done on the current account which has not yet been done. The work of Godley and a few others are close but do not fully describe this area.
We’re not economists, we just play them in the blogosphere. I take inspiration from Keynes, who was also not a formally trained economist.
This paragraph sticks with me and directly bears on our reasoning behind starting this project:
“The economist Harry Johnson wrote that the optimism imparted by Keynes’s early life is key to understanding his later thinking.[15] Keynes was always confident he could find a solution to whatever problem he turned his attention to, and retained a lasting faith in the ability of government officials to do good.[16] Keynes’s optimism was also cultural, in two senses – he was of the last generation raised by an empire still at the height of its power, in its own eyes and by much of the world (at least outwardly) seen as preeminent in both power and benevolence. Keynes was also of the last generation who felt entitled to govern by culture, rather than by expertise. According to Skidelsky, the sense of cultural unity current in Britain from the 19th century to the end of World War I provided a framework with which the well-educated could set various spheres of knowledge in relation to each other and to life, enabling them to confidently draw from different fields when addressing practical problems”
This is undoubtedly my take on life: “always confident he could find a solution to whatever problem he turned his attention to,”
But the rest of that paragraph also has serious overlaps with how we think.
Congratulations, Cullen, Mike and Carlos. I’m very pleased that you’ve decided to explicitly distinguish yourselves from MMT, especially since I’ve been arguing in my own series ( see here for its conclusion: http://www.correntewire.com/blog/2925 ) that your orientation is fundamentally different in its value, problem, prescriptive and narrative aspects, in addition to your disagreements on factual questions such as whether the JG will work to create FE and PS, in the context of a broader program including full payroll tax cuts and State revenue sharing measures.
In my view, this is a very good development because it will allow both Modern Monetary Theory and Monetary Realism to develop the differences between the two “paradigms” (I call them Knowledge Claim Networks) more independently, under separate “banners”, that will allow different groups to self-organize more easily around one or the other.
I’m also glad that Carlos Mucha has now gone public, so I won’t, any longer, have to credit “beowulf” for the proof platinum coin seigniorage idea I’ve blogged about so much, when I could be crediting Carlos with that piece of brilliance.
In ant event, best of luck to the three of you, in developing solutions to the problems and solutions that Monetary Realism will make visible.
Thanks Joe.
We already have a theory – Rodger M. Mitchell’s Monetary Sovereignty (MS) – very close to MMT but with some points of divergence with it, particularly on the origins of demand for money and on the effectiveness og higher interest rates in fighting inflation.
Should we see MR as a second offshoot from MMT? What’s MR’s stand on MS? Do we really need to go on creating new labels every time we find differences on minor – repeat, minor – details of MMT such as the not so fortunate JG policy prescription? Is this profusion of labels going to help us introduce a measure of realism and basic learning in a political debate dominated by anti-deficit hysteria?
These are some of the questions I’d like to see answered by the proponents of Monetary Realism.
Anyone who says our differences are minor does not fully understand the scope of MMT. The JG is a central piece of MMT. Removing it is like removing the warm blood from a mammal and still calling it a mammal. They are intertwined. All of the academics have come out in recent weeks repeating this fact. Even Warren admits that the JG is the “base case”. So, rejecting it is not a minor difference. It is changing the DNA of the theory.
That said, I don’t know what Rodger would say about MR, but my guess is we likely agree more than the MMT academics agree with us. I haven’t seen his ideas on the current account idea or some of his policy proposals. He seems more focused on interest rate maintenance as far as I can tell….
I don’t think academics should have the right to decide ex cathedra what is fundamental or not fundamental about any theory – even if they are the founders of said theory. We’re not exactly living inside a medieval church where self appointed Popes decide on matters of orthodoxy and heterodoxy, who’s inside and who’s outside the temple.
Anyway, I don’t recall “Soft Currency Economics” – the book that really created MMT – being about job guarantees. It described the monetary system as it really is in the post gold standard era. If it had been about policy prescriptions it wouldn’t have revolutionized the way we think about the economy as it did.
I agree with another reader who complains about this tendency to create small sects within a camp, that later on will probably keep splitting into other even smaller subsects in a regrettable movement towards irrelevance.
Come on, the MMT camp is already small enough. Let’s not condemn it to political impotence by engaging in well meaning yet divisive/ sectarian behaviour that will only serve to undermine the credibility of modern money theory – or reality or technique or whatever we ultimately decide to call it – among the public at large.
Goin’ rogue!
Congratulations.
Relating to Beowulf’s commensurate swing to CA deficit hawk, cum import certificates, shall we expect to see the three of you at next year’s State of the Union – as a replacement for Buffett’s secretary?
JKH, just waiting for your endorsement. We know you’re on board, right!?!? Right??
You can just email me to discuss!
Likely will do, at least as a courtesy, particularly if I start feeling the urge to kick up some dust openly instead.
I like your starting point in principle. I’d like to see roughly where you’re going with it first. I’ll just say now that my attitude toward the “descriptive” component of MMT, as currently presented by MMT itself, is that of Lavoie on steroids – concerns about style and form to the point of it being a substantial issue, including much more than Lavoie pointed out. Perhaps you’ll evolve it differently.
Insufficient time and focus to get into it properly at this moment… later …but as I say, I’ll contact you first if slash and burn fever starts to grip me at some point. Meanwhile, I have large fish to fry as an end game, like the inability of those esteemed members of the academy now debating Ricardian equivalence to understand that they are totally beholden to accounting identities in order to make any progress whatsoever, even while denying it. There’s a strict correlation between accounting ignorance and silly economists who revise their failed arguments every five minutes, as in throwing spaghetti at a wall.
Godley rocks
Out
You know where to find me.
Well, the Romney campaign could always change the subject by endorsing balanced trade and calling it the “Real Buffett Rule”.
)
Geithner says he’s not sticking around.
Is there a connection?
Is he abandoning bonds and joining you?
do we really need to make a whole bunch of competing sects?
No. But some have requested that I not use “MMT” to describe what I discuss. Plus, we’re not competing, but we are different….
Heh, so they ride the coat tails of the publicity you brought them, and then when you disagree with one of their beliefs, you aren’t allowed to play football anymore? The JG is really that important to MMT academics? I have the sense that Economics is almost as bad as Evangelical Christianity and it’s many unsettled disputes; what’s one more denomination?
I started to write you a couple weeks back when all of this hooplah was coming out over the JG, but as with the other writings I have developed over the last several months to be sent/shared with you, I never sent what I wrote because I wasn’t quite satisfied with it. That and life’s distractions in conjunction with other studies/interests (largely the former), and what’s written sits stored as bits on a server’s hard drive. But this article, like others which have come before it, is prompting me to write what I wrote before but this time to share it as opposed to delaying any longer over aesthetic concerns.
What I have wanted to write to you is to encourage you to consider the potential negative implications for you personally and more importantly for the MMT ideas you agree with, if a divide is created between you, MMT, and the MMT academics. The association has been mutually beneficial to you and the academics who appeared to stand behind you. More importantly it has been beneficial to the consideration of these ideas. Without this social order, once the dust settles from this recent fussing, I fear MMT will return to obscurity as popular interest slowly wanes without its loudest and certainly most listened to voice. You reach a much broader, more popular audience the academics have utterly failed to reach. They may have the correct ideas, but they have not effectively disseminated those ideas to the populace. Ideas locked in academia don’t serve much utilitarian purpose. Obviously you have done a much better job of giving those ideas the opportunity to serve their use. But the consideration of MMT is still in progress, and it is still young in so far as one considers general acceptance. I fear a schism over the JG will be detrimental to the ideas you all do agree on, all of which are exceedingly important to a properly managed economy. I also fear you won’t be taken as seriously in future discussions on macroeconomic theory because you won’t have much in the way of academics to support you. Perhaps you can find enough academic writings to help support you, perhaps you become more of one yourself. Perhaps new academics arise and bear the torch. Perhaps you distance yourself from macroeconomic theory and pursue trading instead (which I believe would be a real shame as trading has no social value at all and macroeconomic theory has plenty). Who knows what will happen, but we do know what has happened and what needs to happen. We know the social order has brought MMT to a much broader crowd, and I believe that to be a very necessary thing. Will this continue with a disrupted social order? Perhaps. Perhaps disassociating with MMT is a step in the right direction, an uncharted path of sorts. But if you don’t intend to seriously develop MR into a full theory with academic writings (if not you, then one of the other gentlemen needs to), MR is not likely to amount to anything. This is unacceptable because these ideas need to amount to something for the sake of all of us. That isn’t to say this is your responsibility, but people are listening to you when it comes to macroeconomic theory. You can accept that fact, or you can decide you don’t want to be heard on these matters any longer for whatever reason and choose a different path. Understand though there is an opportunity currently your shoes are filling. That can disappear as quickly as it unexpectedly appeared.
Let me be clear the above are fears and not predictions. They are rational fears I believe supported by data. Academics serve a cultural purpose, popular writers serve a cultural purpose, and the two together are synergistic. Without this order, success of the ideas you do agree on strikes me as less likely and more difficult. Success in the arena of ideas is already hard enough.
I think the effects on the hearing of the ideas you all agree on will not likely be positive. I hate to say this, but the MMT academics are not good communicators. They have needed you and I believe still do. The ideas need you right now. I think some of your own work can be communicated more clearly (keep in mind this is coming from someone rarely satisfied with his own writings), but as imperfect as it may be, your getting the ideas out there and people are learning. Do you think that is as likely to occur as Cullen Roche the non-academic who doesn’t have any academics standing with him, just his own ideas which he espouses on a blog in the middle of the very big internet? I realize you don’t have a crystal ball and there are risks to any chosen path, but you know what the path up to now has been bringing you and to MMT ideas. From a social/cultural perspective, Cullen Roche the popular MMT writer/theorist backed by academics is different than Cullen Roche some blogger who has his own, original ideas which haven’t necessarily been vetted in an academic setting. You’re likely to have a bigger audience with the former. The place for original ideas is largely academia where the ideas can be examined and critiqued. The ideas trickle down to the masses from here. Ideas and academics come together as academics largely hold ideas and the people who espouse them accountable. This cultural structure does have a value and didn’t arise because it doesn’t. So if you intend to make any further contribution to macroeconomic theory, I would really encourage you guys to think about what you’re doing and to do it through sensible avenues. Being heard is just as important as being right, and an audience is not always an easy thing to come by. Words I say to myself as much as to you gentlemen.
Thanks for the thoughtful comment Robert. First, the MMTers have been very good to me (with the exception of a few emails and comments from some of the more politically motivated MMTers in recent weeks). Warren in particular has been very generous. I consider him a mentor and a great friend. If anything, I’ve been riding his coattails.
The power of MMT is in its operational realities. Unfortunately, as some people stated above, I think there is a strong political bias in some of the MMT academics. And I think it muddies the waters. The JG is an obvious political position and not an operational reality of modern money. But it’s embedded in the core aspects of MMT as though you can’t understand modern money without understanding the JG. I think one of the reasons why I’ve had such enormous success spreading the ideas of MMT is because I NEVER talked about the JG. It was always peripheral to MMT to me. Clearly, that was wrong. The JG is central to MMT. And it’s MMT’s kryptonite. I just don’t think the academics are aware of it (or won’t admit it) and I am not sure Warren realized it until just recently when I told him that point blank (not sure he even agrees still).
Anyhow, the academic analysis is still there because Scott and many of the others have done the legwork on the operations side. But obviously, I’d be interested in academics joining us as time goes on so they can develop some of these ideas. I won’t be able to do that. I am not an economist and while I have a certain sense for marketing ideas and understanding principles of money and life, I don’t think I can build what I would like to. We will need help there. But there are a lot of smart people reading this information and I am confident that MR will only spread as time goes on and gain popularity. After all, I’ve only been writing about MMT for a few years and look what we’ve built. There’s nothing bad that can come of it….All we’ve done is make the pill easier to swallow.
I hope for all of our sakes that you are right. These ideas need to be given serious consideration by the entire country, and I’d hate for the freshly sprouted MMT seedling to be damaged or die because of the human crap that seems gum up the machinery in everything.
On a separate matter, as far as the current account (which we are long overdue to talk about…), it sounds like you guys might be incorporating into MR the ideas I was arguing for all those months ago, i.e. the trade deficit is a monetary drain on the domestic economy, and with this money being funneled out of the domestic economy into foreign economies in such great quantities, production levels domestically cannot be sustained because the money used to create the demand which supports those production levels is not being sustained. I don’t mean to suggest you are putting this in your theory because of me, but it is encouraging to see the idea being espoused. If the quantity of money in the domestic economy is not maintained, deflation (both price and wage deflation) will need to occur to raise the level of domestic demand back toward full production. If this doesn’t occur, unemployment and so on are the effect. I believe this is one of a number of problems for our economy currently which could easily be solved by the production and sensible distribution of money.
I look forward to the new site dedicated to macroeconomic theory. I’ve often thought to use your discussion board for this avenue to discuss/debate these macroeconomic issues, but as noted previously, I’m rarely satisfied with my writings and view them a lot like works of art that just aren’t quite right until their quite right (which seems to be a painstakingly slow process and goal to reach).
Robert,
If there’s one thing I’ve been good at over the years it’s communicating complex ideas to people in easily understandable ways. I’m far from a theoretical guru, but I understand people. I wish I’d met Warren 20 years ago. I would have begged him to leave the JG out of MMT. Or at least make it crystal clear that it’s only an option….People don’t understand money and finance. And they definitely don’t understand financial theory. So when you throw a big govt labor program on top of a theoretical framework you might as well being throwing water on a circuit board. I don’t care how well the thing operates, it fizzles when you go political like this….Whether or not people understand that is unimportant. If you want to make a difference and you want to give the gift of understanding modern money to society then you need to understand people. Misunderstanding people and foregoing this gift is a grave and costly mistake. Think of all the jobs that have been lost just because MMTers can’t communicate their ideas in a way that helps influence policy? This has been going on for 20 years! Throughout the entire neoliberal rampage. All for a job guarantee? Imagine the losses.
MR gives us the ability to push the MMT core ideas into the mainstream without insulting the work of the MMT academics or confusing people into thinking that we are MMT. If anything, I think this will make our ideas even more digestible and popular. When MMTers run into political backlash they’ll kick people over to us and say “see, you’re wrong”. It is, in my opinion, a positive development.
Also, I hope you’ll contribute more. I always enjoy your thoughts. And yes, let’s build on these CAD ideas. It’s important.
Cullen
Cullen, I don’t know the history enough, but has it really been the JG that’s been holding MMT back? Because honestly, until this big internet debate, it never seemed to get that much attention in my eyes. Mostly, it seemed the debate was centered around fiscal/monetary operations and the banking system.
In any case, I look forward to reading about MR. I do hope that you’re right, that this will only bring MMT’s operational/descriptive components further into the mainstream. MMT’s been on a tear lately, and in your words, I wonder if MMT should really change its methodology. I realize it’s been 20 years, but I do wonder how much of that is the JG vs after 20 years we’ve finally entered a time period of economic upheaval that has challenged mainstream ideas while playing right into MMT’s predictions. On the other hand, maybe now that MMT is getting a lot of attention, it would be a good strategic/marketing move to abandon the JG (and I do want to make clear I have not formed my opinion on the JG, beyond it being a tough political sell for the foreseeable future).
(Also, how ironic would it be if MR catapults MMT’s descriptive ideas into the mainstream, which eventually results in the voters demanding a JG?
)
Maybe that would be a great development. I am not here to push policies on people. I am here to explain to people how the system works. If the populace wants to apply certain policies based on a better understanding of the monetary system then good for them. It’s not my job to push a political agenda on anyone. And it’s never been my intention. Divorcing myself from MMT keeps me true to the cause.
I can only speak from personal experience, but the JG was a hurdle that, when first confronting MMT, was nearly insurmountable for me. And I am a pretty open minded person. I think most people confront MMT and hear about the job guarantee and get immediately turned off and compare MMT with socialism or Keynesianism on steroids. I think the only reason why I’ve garnered such attention for MMT is because I eliminated the JG from my work. I was working from the foundation that the only way to make MMT mainstream was to eliminate the politically divisive ideas and elaborate on the operational realities. A theory is no good if it’s buried in a scroll in the desert. That’s my approach at least. And it seems to have worked pretty well.
Yeah, and I guess my history is biased since I was introduced and mostly learned through you.
This is a good start Cullen. I was originally opposed to a schism in MMT and tried to suggest semantic re-expression to prevent it. But I now believe your approach is the way to go to better make the most useful ideas from MMT public.
Let me make one side-note prediction. Krugman will never formally embrace MMT but he will eventually support Monetary Realism. This schism with your re-expression of the core monetary ideas and the underlying psychology will give him and others like him the cover to “discover” it without looking like they’re admitting a mistake or backtracking. The fact that they wouldn’t have to implicitly embrace the JG is obviously critical.
I’ll even bet they will credit you with fixing problems with MMT that don’t even exist. Anyone care to take that bet?
G’day Cullen
First up many many thanks for contributing all this wealth of knowledge, for this site and all the papers. it was my intro to MMT and from here I wondered off and found Warren, Bill, and others. This last year has been a revelation!
OK a suggestion about the name – not your Monetary Realism (and you’re right to drop the ‘modern’) though I’m surprised you’re not leveraging the pragmatic capitalism.
But we need a separate label for the core facts of the monetary system that we have (USA, UK, Japan, Australia etc), say ‘Monetary Technics’ or ‘Fiat Monetary Technics’ FMT. Note there is no ‘ism’.
It should just cover basic stuff that most people don’t know: eg the central bank is an arm of government (it sends its profits to treasury), the operational stuff etc. Banks not constrained by reserves etc.
These should be plain facts that every neoclassical economist however reluctantly, cannot deny .
Then maybe build your new branch on to this, and compare and contrast with MMT.
Seperately I realise the JG is a real issue (and I’m certainly not yet in any position to judge re MMT) but just to say I probably support a JG in all nations, all systems and instead of a welfare cheque. There is so much stuff to de dealt with (eg clean up the enviro, run down infrastructure) and so many people who want/need work. It is an utter tragic waste. Some people in the comments assume that must be lefty politics – but this need not be a massive socialist exercise. The right wing version is that govt identifies a task (which will not be done otherwise) and labour conditions (salary below private sector minimum) and puts the project out for private enterprise to run. And I’m all for teaching business skills in schools.
For me this JG is regardless of any economic theory or politics. But here is another ‘right wing’ take on it: if we run a weekly marketplace for fruit trees and at the end of the day some of the stock is unsold, do we let them wither or keep them growing in a healthy and productive environment so they can br part of the next sale? If that is the way we would want to operate an efficient fruit tree market, why wouldn’t we want something similar for people and the employment marketplace?
Anyway good luck with this new intellectual enterprise! You’re right to identify that the first task is get people over the hurdle that money is not stuff and that government deficits are not household deficits, they shouldn’t even be called deficits. ‘Sounds a bit life funny money to me’ as one of my relatives said. ‘No – that is the way it bloody works’ I replied again again…
Cheers
Alex
Should read: ‘Sounds a bit like funny money to me’…
I have asked for this many times in the past: I would like to see a post on the Triffin Dilemma and MMT.
Last time I asked, both Scott Fulweiler and Cullen merely referred me to Jan Kregel’s work – without explaining anything themselves. Which leads me to think they may not be that knowledgeable about the Triffin Dilemma. I have no problem with that – it’s unfortunately an obscure concept that nonetheless affects our lives.
So how about it Cullen? The JG program is easy stuff, let’s tackle the MMT (prescriptive school not descriptive school) view on the Triffin Dilemma.
I made a comment about the Triffin Dilemma earlier before reading this post by Misthos…
I’m second this sentiment…
Cullen, What says MMT about the Triffin Dilemma? How does the US ever correct the CAD w/o shooting itself in the foot? Or, Must the dollar simply abdicate it’s role as the world’s reserve currency in order to enact a reversal of the problematic CAD?
I have a recommendation for the MR people as you head out on this new path. Don’t fall for the myth of America’s exorbitant privilege. Try to remember that this applies to countries outside of the USA. Just a thought from a foreigner.
There shouldn’t be a national ‘world reserve currency’ (Keynes knew) just as banking & shadow banking system should be much more controlled by the sovereigns (financial globalization should be strongly limited) and not allowed to wreak havoc with capital flows around the globe.
As long as these problems are not tackled any solution from a systemic point of view will be temporal and pushing problems further down the road, creating artificial problems and adding them up to real increasing problems (like resource constraints, headline inflation, waste, stagnation, worsening income disparity and increasing poverty, etc.).
Well, MMT says the CAD is not an issue. MR disagrees there. I think we would be wise to heed the other reader’s advice and not fall for the idea of America’s exorbitant privilege here. It’s easy to start with the USA and extrapolate out. The truth is, MR is applicable to countries outside the USA.
The Fed’s swap lines showed that dollar demand can be met outside of foreign trade so there’s one answer. I know some MMTers hate the swap lines and I am not particularly keen on them either, but we can’t have our cake and eat it too as the MMT position on the CAD implies. I’ll have to think about the Triffin Dilemma a bit more and consult some people on that. The USA obviously makes for a precarious case here that will not involve an easy solution!
This is a good move! People will relate much more to a description of what is happening in the real world rather than a solution that they simply don’t understand and quite frankly, would scare them directly away from us.
I think the biggest misunderstanding I come across when discussing this with others is they believe that the Government needs our money in order to spend. Therefore if the Govt spends less, we have more money. Little do they know that it is the COMPLETE opposite.
And this isn’t just the common man’s belief. Even Harvard economists and some of the leading economists in the world have this thought process.
Have you read Robert Barro’s piece on the stimulus? He explains it’s failures because of “crowding out”. That every dollar the Government spends is a dollar that is taking from the private sector. His conclusion is that the dollar the Govt spends has a lower multiple than the dollar the private sector spends, therefore we are actually losing money through Govt spending.
This guy is a Harvard economist who is involved in making real economic policy in America.
This is a fantastic development. The JG is politically motivated. Anyone who knows how MMT was conceived knows that Warren Mosler thought the JG was a policy option and not necessarily a core component of the theory. But he met Bill Mitchell and Randall Wray and they used MMT to push the ELR that they had already been working on for many years. MMT closed the loop for them and allowed them to plug a political and policy fix into a macro theory. The only problem with that approach is that they’ve been shooting themselves in the feet for 20 years because of this politically motivated approach. It’s nice to see you guys fixing that mess.
Congrats on establishing a new direction in such a short period of time.
However I think your rewriting of the modern monetary system primer might have been a tiny bit rushed.
For example:
“Monetary Realism is a description of the monetary system within a nation operating a fiat currency….(it) focuses on operational realities of the monetary system and attempts to eliminate the theoretical aspects of MMT that generate substantial political divisiveness and confusion. ”
And
“One important element of Monetary Realism is its political agnosticism.”
All well and good, but these commendable statements are then flatly contradicted by the following:
“Monetary Realism is agreeable to many right leaning economists because it favors lower taxes, reducing (or ending) the Fed’s role in the monetary system and focusing on efficiency of government (reducing wasteful spending and malinvestment). Monetary Realism is also agreeable to left leaning economists because it favors government deficits, tighter bank regulations and a focus on full productivity (hence full employment).”
How can Monetary Realism be both a politically agnostic *description* of the monetary system and at the same time “favor” certain policies, such as lower taxes? Surely policies are to a great degree theoretical and therefore political?
A purely descriptive, non-political school of thought should not have to have “components… that tend to be left leaning, (and) components… that are right leaning.” If you’re simply describing the operational reality of a system “as it really is”, is there any reason why you should have to take a left-wing view or a right-wing view?
The initial suggestion is that MR is predominantly empirical and objective is further undermined by the next passage:
“Monetary Realism is an offshoot of many different theoretical frameworks with GF Knapp, JM Keynes, Abba Lerner, Hyman Minsky, Friedrich Hayek and Wynne Godley playing central roles in helping to craft the thinking behind it.”
So we see that MR is in fact a mix of theoretical approaches – that it is based on those bits of theory which MR proponents agree with, whilst it rejects those bits of theory with which they disagree.
I’m sure many Hayekians might object to your selective reading of his work, whilst some Keynesians might object to your incorporation of the word ‘malinvestment’. Most ‘Austrians’ would no doubt disagree from the outset with the chartalist assertion that “money is always a creature of the state”. This is surely about as contentious as it gets.
In short, it seems like some of the original problems surrounding the prescriptive/descriptive so-called division of MMT are still here within MR. As with MMT, it would probably be best to really clarify which parts are truly descriptive, prescriptive, empirical, theoretical, political, etc, and not shy away from doing so.
Again, well done getting this show on the road so quickly. But perhaps take a bit more time to dispense with some of these apparent contradictions so as to be sure that you are taken as seriously by the mainstream as I hope you will be.
Phil, a very valid criticism. It’s impossible to build a macro understanding without many influences. What MR tries to do is describe the operational realities of the system without necessarily providing a prescriptive component. Clearly, we have opinions and they’ll fall on party lines to some degree, but those are peripheral to our focus. What we’re focusing on is things like an autonomous currency issuer can’t “run out” of money. Banks don’t lend reserves. Sectoral balances, etc etc. If you read the primer in its entirety you’ll find that 95% of it is operations and nothing more. I think you cherry picked the political parts a bit….
I think you cherry picked the political parts a bit….”
Seems to me that Phil nailed it pretty well. You might just want to rename your new theory Right Wing MMT. You claim to want Full Productivity which will bring us magically to Full Employment. We have had vast increases in productivity in the last couple of decades, and that hasn’t brought us any nearer full employment. The capitalist classes have just booked the productivity as profits. You incorporate memes of small efficient government which have nothing to do with the economics of the situation. I would say we obviously need (as MMT teaches us) more government spending when the private sector can’t or won’t hire people.
The job guarantee is about “public purpose” , direct spending of government money to achieve Full employment and good public works because the private sector is not going to do that no matter how much productivity is increased. I think characterizing the JG as “filling holes” shows perfectly your political bias. I would say the JG is the most “efficient” way govt. could achieve this goal. Anything else will be some convoluted system that won’t get us to the goal efficiently.
As an aside: The US Govt. already has this hole filling JG which is called the US military industrial complex. A lot of useless work to create destruction worldwide. But hey since it is the one aspect of govt spending that is a sacred cow with right wing capitalists they usually don’t see it hiding in plain sight. I would rather see govt. spending on creating useful public works, education, basic science research and other enhancements of the commons. The private sector won’t do this because there is no profit in it. We need to guarantee Full employment for the benefit of the public commons, and the JG is a pretty direct way of doing that.
How does Monetary Realism get us to this mythical Full Productivity/Full Employment paradigm? What is to prevent the private sector from siphoning productivity into profits and not achieving full employment. If capitalists had there fantasy world they would fire all employees and hire robots which would be very “productive” until they realized they had no one to sell to since no one would have money to buy the products they were making.
I think what we want is “Good Government” spending. This “small efficient government” meme is at cross purpose to any form of MMT because it is right wing dog whistle speak for no govt. spending at all, and especially no spending on the people. Spending which enriches crony capitalists is exempt of course.
1. I am not in favor of our large military (though I am certainly not against a moderate sized military).
2. I have repeatedly stated that I am in favor of more spending programs (though tax cuts are the only thing politically feasible at present).
3. I have not been a proponent of any form of trickle down economics. Nor have I ever written the words “small efficient government” on this website.
4. I have no idea why people keep trying to claim I am a right winger. I am a fiscal conservative (which is a stretch these days considering I am part Keynesian) and just about socially liberal in every way that a typical Californian gets stereotyped for. I am about as independent as they come….
5. It would be great if the people who support the JG stop trying to make this personal due to weaknesses in the actual JG argument itself. If you want to build the JG up then argue why its superior rather than just trying to tear other people down for asking very reasonable questions about it (which is all I’ve done). Falling back on ad hominems, snide comments and personal attacks will only further undermine your efforts. But please MMTers. Keep trying to jam your big govt program down people’s throats without rationalizing some of the issues in its implementation or its efficacy. It will get you the same place you’ve gotten the last 20 years with that approach. Exactly nowhere. Consider it constructive criticism for those who feel the need to continue pushing this policy on people….
6. If you read my primer you will in fact find that 95% of it is based on operational realities and explanations of the way things work. So yes, taking out 5% of it to misconstrue and build a politically charged argument is misleading.
Let’s be honest Cullen. The people who support the JG are the same people who want the government to provide everything for them. They don’t think we have to work hard. They just want to consume consume consume. There’s no balance in their outlook for the world. They just take production for granted and assume that consumption and boosting aggregate demand is the best path to prosperity.
If someone comes here arguing about the JG you should just ignore them. The MMT cult will go nowhere with the JG and you’re better off not giving them the attention they want.
I think you’re generalizing a bit, but I would agree that the avg JG supporter probably leans a little more left than most Democrats. That’s fine. But I’m not here to push a policy on people. I’m here to explain how things work. If people want to talk politics and policy approaches then fine. But it’s not my job to solve the worlds political problems and I am not going to waste my time pushing some “theory”. MR is going to be as apolitical as it gets. That’s my goal. How people want to use it is up to them. I’ll have opinions on how to implement it, but don’t confuse MR with being some competing theory with MMT. It’s not.
“Yeah, it’s a neat little idea. I think the most beautiful part of it is that it would give the govt much more flexibility in being very efficient in its spending approach. We don’t just need to have this massive bureaucracy hiring who ever will walk in the door to dig a hole or play a guitar (not to mention that the JG doesn’t even provide price stability to begin with!). We can really target spending projects and fiscal ops while also implementing a REAL price anchor.”
I guess I read the above quote as support for small efficient govt. Using the loaded terms like “massive bureaucracy” and trivial job examples like playing guitar made me think you thought that way. You also make it plain that you are a “fiscal conservative” which generally means deficit hawk small govt. supporter. I didn’t mean the post to come off as an ad hominem attack on you as I really like your blog. But I don’t really get your opposition to the JG which seems like a very sensible policy to me. Let’s face it if we accept MR/MMT to any degree we are generally arguing that there is a bigger fiscal role for govt. than is currently accepted. From your visceral reaction against the JG I have to conclude that it is being shaped by a lot of internalized political memes: for example “Keep trying to jam your big govt program down people’s throats”.
As for the military thing. I was just pointing out that we currently spend a hell of a lot of money on the equivalent of a JG, or worse since making bombs is arguably less productive than digging holes. Nobody seems to mind spending that money, but everyone gets their hackles up when someone suggests that we employ idle workers for a more productive public purpose.
In your criticism of the JG I have not seen anywhere an example of what you would replace the buffer stock with.
As I read it we either have an employed buffer stock or unemployed buffer stock. As I understand your position, if we use MR to get to full productivity that will engender full employment thus no need for a JG.
I think it is this nebulousness in your position that confuses me. How do you ensure full employment given the dynamic reality of the system. I would be more comfortable in you just coming out and saying that politically you don’t like the JG because that is what it looks like from my perspective. I don’t see any counter arguments to it coming from you other than that it is “trying to jam your big govt program down people’s throats” or that it is politically unsell-able.
It seems to me what Bill Mitchell and Warren are saying is that descriptively you have to have some kind of buffer stock for the system to work as they describe. You can choose the employed or the unemployed. They believe the JG is a better way of dealing with the dynamics both operationally and humanely than the current use of the unemployed as buffer.
Because we are dealing with peoples lives these questions are ultimately political. I know you are trying to be politically agnostic, but the reality is you can’t be. The question ultimately comes down to: What kind of a system do you want? One which treats people as some kind of economic commodity, or one which tries to humanely smooth out the vagaries of an unpredictable dynamic system. Should we be a dog eat dog society, or one in which we help each other? That is a political question.
I won’t bring up the JG anymore since it is such a touchy subject with you.
It’s only a touchy subject because people insist on making it personal. I can’t believe I am still reading about how this is all about politics. Is that the basis of the argument now? “Oh, Cullen Roche is a conservative ideologue!” That’s how weak the MMT position on the JG is? I am an ideologue who is against full employment? Too bad that’s 100% false. As I keep repeating, I’m socially liberal. Pro choice. Pro gay. Pro everything that would enrage a neoconservative on the social side. Now, I also understand that govt can do very stupid things on the policy side and that this is particularly true when it comes to spending money and picking and choosing winners in our economy. If you want to call that conservative then be my guest. I call it reality. All I’ve done with the JG is ask a series of questions regarding its efficacy. And yes, I’ve outlined a VERY LONG list of potential problems with it. See here if you’re not familiar with it. http://pragcap.com/discussion-forum?mingleforumaction=viewtopic&t=249
As for the buffer stock – Warren and I agree. The govt creates the unemployment via taxation and they should fill the void via spending (search the site for my various policy proposals here like my innovation initiative and infrastructure ideas). We don’t disagree there. Except that the JGers think you NEED the JG to contain inflation and maintain full employment when the economy sinks. There’s two big problems with that. The JG won’t serve as a price anchor at all. It will only serve as a price buoy. I’ve explained this here. http://pragcap.com/a-job-guarantee-is-not-a-price-anchor-its-a-price-buoy
They paint the JG as an all or nothing. They like to say “there is no alternative”. Except there are alternatives. Even Warren admits the JG might not boost demand. Even he admits it wasn’t created to fight inflation. It’s just a liquid buffer stock in his words. So, the founder of MMT says the JG won’t even do most of what it’s advertised to do. So it doesn’t come down to boosting the economy. It doesn’t come down to fighting inflation. It comes down to creating a more liquid buffer stock. That’s all! But at what cost? That’s all I’ve asked. We know we need to spend more to fill the unemployment gap. We also know there are policies that can be implemented that will fight inflation at the same time. The JG isn’t the ONLY option. It’s just a liquid buffer stock. And I am asking the important questions. Well, what if the govt implements this program in a manner in which this policy ends up being a worse investment than other potential options?
The JGers have all bought into the idea of “there is no alternative”. I am simply pointing out the obvious. There are other options. You don’t need the JG. It’s a policy option. And there’s no guarantee that it’s the best one….But people like you insist on coming here and writing these very personal comments as if my rational critique of THE LARGEST GOVT PROGRAM EVER ENACTED IN THE HISTORY OF MAN might have some downsides. How unreasonable of me to approach this in a pragmatic sense!!!!! Sorry, but I am tired of the weak political arguments and name calling. I’ve been dealing with really weak responses to my arguments for 3 straight weeks now. It’s gotten old. My position on the JG is 100% reasonable and rational. If you disagree with it then fine. But don’t resort to name calling and mud slinging just because the JGers can’t support their lack of factual evidence. And don’t act like you’re being politically unbiased when it’s clear that, if you call someone like me a right winger, you’re so far out left on the political spectrum that anything bipedal looks “right wing” to you….
Let’s be serious here Cullen, you’re not being serious. I know you wanted to get away from the discussion of the JG, so let me throw one last parting shot. You’re the one who started this entire hoopla about the JG. You keep saying that others wouldn’t like it and it would ruin MMT, but maybe it’s because you have a personal problem with it? Indeed, you said as much:
[quote]You guys see no need for unemployment. I do. I think it serves an incredibly important psychological component to any healthy economy. I’ve feared for my job and been unemployed. Those moments shaped who I am and what I’ve become. They were invaluable in retrospect. If I’d been able to apply for a JG job I might not be half the man I am today. Maybe it’s just personal entrepreneurial experience speaking here, but I know what it means to hunt and kill for ones dinner. Very little, aside from great parenting and education, was handed to me in life. My psychological development through having to earn things has been a building block that no govt program can ever provide. Ever.[/quote]
Indeed, you’ve said something to this effect a few different times in the previous posts regarding the JG. Nobody called you out on it, but I will. As I said previously as well, it appears all of this is just some attempt to boost yourself. The more ridiculous thing is that on more than one occasion, you’ve brought up your personal wealth and success(on facebook), and arguing that I previously WAS JEALOUS of your success when I argued with your contention that MMT wasn’t heterodox enough(when it’s not meant to explain everything, other aspects of heterodox economics already does that…but you wouldn’t know that). Not only would we have no idea how successful or unsuccessful you’ve been, but pointing to your personal wealth as a sign of your intelligence has to be one of the dumbest things someone can do to an audience that knows better than that. IE, we’ve read about a bunch of guys who, though they had skills, they also had a great deal of luck. Those that admit that 50% of their investing included luck have my respect. You on other hand have lost mine.
Look, there are other people like Rodger Malcolm Mitchell who like yourself doesn’t like the JG, and created “Monetary Sovereignty”, or MS, as an alternative to MMT. Rather than joining him though, you had to find your own little thing to create because you have an ego to boost. It’s entirely apparent.
Worse though, all of this shows that you simply dismissed the JG because it wasn’t an aspect of MMT that you liked, and it being something that greatly boosted your popularity you just couldn’t accept that. Calling the JG as the biggest government program ever, when in terms of its costs it wouldn’t be anything close to all the recent wars we’ve been in and even the financial bailouts, I mean seriously pal. You’re not serious. We(other MMTers) could have simply had a polite disagreement with you like we did with Roger Mitchell, so whenever you question whether it was something you said, yeah, it was. We knew you weren’t serious about this discussion as the quote above shows(you said it more than once, too).
Have fun with your monetary reality.
Here we go again. Another baseless personal attack from a JGer. Your comment history here is one embarrassing ad hominem after another. You’ve stereotyped me or insulted me in every comment you’ve written here. And now you want to come here and act like you’re taking the high road? Like anyone in the world should take you seriously? Seriously, do any of you have an actual JG argument to fall back on or have you all just resorted to personal insults??? Could you make your argument look any weaker if you tried?
And no, you’re not the first person who has brought up that ONE comment and taken it entirely out of context. I was very explicit that I am in favor of full employment and that my personal experiences didn’t prove anything. Joe F brought up that comment more than a few times in his 20 part series on Cullen Roche. I even clarified that point in a direct response to Joe on the day I originally made that comment and he STILL used it to try to prove his point and blatantly mislead people:
You’ve come here again and taken it out of context around nothing but a personal rant. Sorry, but you’ve proven nothing by calling out that comment except prove that you didn’t read all the facts or even understand my actual point (which was not to claim that we don’t need FE, but that perhaps we should be focusing on FP). But like Joe F, you’re trying to take the comment out of context as if you have some “aha!” moment there. Sorry to burst your bubble.
And I have no idea who you are. You have never met me and I have never talked to you directly on facebook so please don’t come here telling blatant lies and trying to pretend that you know something about me personally. And I’ve certainly never talked about my personal wealth on facebook or anywhere online. That’s absurd. I live a very modest life and I don’t throw money around in anyone’s face. If you actually knew me (as opposed to coming here pretending that we are friends on facebook or something) then you might actually know that. But you don’t know the first thing about me. You’re just another bitter angry JG supporter who has no real factual argument and a lot of mud to sling in a weak attempt to try to tear me down so you can build yourself up.
I don’t need MMT. If anything, MMT has hurt my reputation. Being associated with a very vague heterodox and controversial school of thought is not the fast track to popularity so I have no idea what sort of delusions make you think that I somehow need MMT to live my life. I’ve had to fend off baseless attacks from Republicans for years when they claim I am just making excuses to spend govt money. Ironically, now it’s the extremists on the left who are attacking me. Have you lost perspective entirely??? You guys are so far left that you now attack everyone who is even a wee bit to your right? You think that’s the best way to attract a following and spread your message?
Now, what no one needs is a job guarantee to show them how modern money works. But you and some of the extremist MMTers are trying to sell it as a package deal. And now you’re mad that I called you out on it. Sorry for telling the truth to the world. The truth that modern money and a job guarantee don’t go hand in hand. I guess I am the bad guy for telling the truth.
And try to remember something. MMT is bigger than all of you. It’s bigger than any single person. Ironically, you all are so invested in your JG that you don’t even realize it’s the biggest thing holding MMT back. So, in your push to protect the pet theory of a few specific MMTers, you’ve hurt society more than is even fathomable, by keeping the truth from even coming out. You’ve kept the entire theory held back just because you can’t get past your political tendencies… Ironically, you call my move egotistical, but Mike, Carlos and anyone who joins us are going to play a far more instrumental role in giving this gift to the world than anyone else. Why? Because we understand that it’s not about us. It’s about helping people understand modern money. And we know how to do that without the political bias, petty arguments (that you all are so expert in starting) or other baggage that has been holding MMT back. So yeah, I guess I am selfish and arrogant for trying to give the world the gift of being able to understand MMT….And in all honestly, your comment and the other attacks I’ve been fending off for weeks now are perfect examples of why the world won’t accept MMT the way you’re selling it. Your approach is so vile and political that I am even surprised it’s gotten anywhere at all….You might want to rethink this approach in the future….
Before I say anything else, Cullen you need to realize that MMT does not attempt to explain everything. It was never meant to do that. Heterodox economics and factions within it have already written about innovation and etc since Thorstein Veblen(actually you could go back to the 1300s or 1600s, but I won’t go there). If you want a good book that lays out the history, read “How rich countries got rich and why poor countries got poor”. I think it’ll be your bible after you read it, because this author takes a more evolutionary approach, drawn from Schumpeter. I think it’ll have all the stuff you’re looking for. After you read his book, you can read other works from his website here:
http://www.othercanon.org/
That should be a good starting point for your research and idea creation.
Now back to the juicy stuff.
The reason I attacked you before was because I deemed the REASON for your simple dismissal of the JG as simply boosting yourself. It was as I said, MMT’ers come from a long tradition of heterodox economics, and you were basically making the statement that heterodox economics wasn’t heterodox enough, and that I a trader will try to fill in the gaps. If anything was going to get me out of the cave, that was the statement. So it wasn’t your attack on the JG per say, it wasn’t your attack on MMTers who believe in the JG, it was the shameful self-aggrandizement. Not only did you bring down something publicly which the MMTers have been fighting for for a long time(indeed for some of them its their lifelong dream), you did it in the worst way possible, by stating they’re not being heterodox enough(not your words, but when you bring up innovation and other stuff that’s basically what you’re saying).
Cullen, let me be clear with you here. I am not really a JGer(i favor different sorts of policies, but a JG would be good too). I, however, only come out and say something if someone in a debate is being dishonest, has the veil of honesty over them. Yes, I’m prone to using ad-hominem often, but that doesn’t discount any of the stuff I’ve said here. Even pretending I was a JG’er, you ask me to make arguments in favor of it. The problem is, I don’t need to, the literature on it is so extensive that you should actually be arguing against each of the articles.
Then lets take that comment you said was taken out of context. As I said in my previous post, you also made a few other statements to that effect, and I remember one clearly, or at least what you said at the end of it when referring to the program, you mentioned how you were personally successful, and that “it’s not what I’m about”. So that’s two comments you’ve made showing that the argument you’re making is an ideological one, and not one based on any specific facts. I just went and looked at one of the first articles, and Scott Fulwiler said it too…that you’re just being ideological, that there is no substance to your argument(but I already known that).
When I referred to facebook, I was referring to your comment to Tschaff, when you said that 10 years of 17% return APY was a measure that you know something about “money” and “theory”. I mean, what kind of a statement is that? And when I argued with you before, you said I was attacking you because I was jealous of your wealth. I mean that’s straight out of some republican playbook, I was quite frankly shocked to hear it, but of course I know you’re not a conservative so don’t get in a hissy fit.
Anyway I’ve given you a research agenda, so go do it. No need to argue this anymore. You don’t like what you don’t like, but if you’re going to argue against it then be honest next time.
and on a personal note, the MMT crowd thanks you from the bottom of their hearts, which was all the reason this PUBLIC ATTACK on their core values was deeply hurtful, because they also felt you weren’t being honest. Tchaff over on facebook is one of the best examples of this.
So, let me get this right. I was being “dishonest” because I stated that a JG of the magnitude that would be needed in the USA has never been implemented before? I was being “dishonest” by pointing out that the JG could involve massive downside risks that the academic research doesn’t even come close to accounting for? I was being “dishonest” by pointing out that the JG is theoretical? I was being “dishonest” by pointing out that no one needs to understand a JG to understand modern money. Somehow, I am being “dishonest” by pointing out totally rational and factual points and asking totally reasonable questions? And you feel justified coming here and insulting me personally and defending Tchaff who called me ignorant for no reason? And I am the bad guy for defending myself to these persistent personal attacks from you all?
I am sorry that I have disagreements still. I am sorry that I don’t find the research convincing enough. I mean, hell, I debunked the price anchor stuff in about 30 minutes while eating a burrito and I’m not even a trained economist….The whole inflation argument is weak at best. And the other downside risks aren’t even close to being accounted for. Unfortunately, without real life test runs it’s hard to put together the research. So I don’t blame the academics. But you also can’t blame me for pointing out the obvious – that something that’s never been tested can’t be proven….Those are the realities. There’s nothing dishonest about it at all…You want to know what is dishonest though? Pretending that you need the JG to understand modern money. That “there is no alternative” to the JG. That the JG doesn’t have political biases. That the JG is a price anchor. That the JG is proven to work. No wonder it’s called the dismal science. You can push something on people as fact before you even test it. Now that’s dishonest.
I’m going to ask you politely not to come back here and insult me again. If you all are intent on burying yourselves in petty arguments and all then please go do it on a MMT website or your facebook group. I have no interest in being dragged through the mud by a bunch of politically biased theorists who can’t even treat their own friends with an ounce of respect.
Ok, and I didn’t know that Joe already raised this with you, i don’t actually read your blog often at all. Still, you made one other comment to this effect that I remember, so…whatever.
Also, as someone who calls himself a heterodox/MMTer, I don’t think the JG is an essential aspect of it. It is, as you say, just a policy option. I also asked you many weeks ago before I brought out the ad-hominem if you had any ideas to replace it, which I know you said you’ll work on. that’s fine. Again, I was only against the way you went against the JG. You really shouldn’t be surprised when even the founders like Scott questions your motives, and that you get pushback from almost every single MMTer. Again, it was something you said, not that all these MMTers are just a bunch of leftists who can’t stand their pet theory being attacked.
So, now you aren’t even that familiar with my work, but you feel justified attacking me personally. Are you serious? You think you’re contributing positively to the MMT movement with this stuff? Do you even have any idea how bad you and Tchaff look when you lash out in such personal attacks? And Scott apologized and we spoke just a few hours ago. We’re on the same page. Warren is behind our ideas 95%. So please stop acting like you know me or my relationship with these people because you clearly don’t.
Let’s be honest. You all think I’ve attacked people personally (which I have never done) when the reality is that I’ve simply questioned a theoretical aspect of MMT and questioned whether it is central to the thinking. You’ve all made it clear that it is central and we all agree that it is theory. Many of you then asked me to stop using the term MMT. So I did. But now we’ve got people like you coming back attacking me for moving out of paradigm and renaming the approach. Clearly, you’re more out of the loop than your ad hominems even led me to believe in the first place….
Finally some actual clarification on what your alternative to the JG is. That is all I was asking for (I thought I had read the whole JG thread but missed your big post) .
“THE LARGEST GOVT PROGRAM EVER ENACTED IN THE HISTORY OF MAN” I think that would probably be the communist chinese command economy or in dollar terms the US War Machine
Even if it was enacted I don’t think it would be as big and onerous as you think.
Reading through your arguments against the JG it seems to come down to your belief that it will not be a positive policy prescription. I disagree. Neither of us knows whether any of these policies will work since they have not been tested in the real world at least on a massive scale. I believe in the JG you don’t.
As Warren says:
It’s designed to get keep the unemployed shovel ready to go to work in the private sector, and at the same time reduce the real costs of sustaining an army of unemployed.”
I think this is a good goal.
You claim:
“However, an unemployment buffer has been proven to work to achieve prosperity over long time periods. ” I would say at what cost? We could say that the frequent periods of deflation and mass unemployment throughout American history using the unemployment buffer has been extremely harmful as well. Who knows how amazing America could have been if it had been using an employment buffer
As far as the political viability goes, it is amazing how fast & far things can be changed once enough of a crisis hits. I would recommend reading “The Fourth Turning” by William Strauss which has some interesting theories which pertain to the current crisis we find ourselves in.
http://www.amazon.com/Fourth-Turning-American-Prophecy-Rendezvous/dp/0767900464
Anyway, I am not attacking you. We just happen to disagree on this point. You haven’t convinced me, and obviously I won’t be able to convince you if Warren, Wray and Mitchell haven’t been able to sway you.
I don’t believe you are some hard right ideologue, you do believe in most of MMT which is pretty progressive after all
Sorry to have gotten your dander up. Continue to spread the word on how the economy really works.
Well we cant agree on everything, can we?
Must admit thought Cullen had over reacted as i hadnt seen anything particularly negative and by internet standards very polite but wow youve changed my mind…hopefully thats a 1 off
Triffin, Triffin, Triffin, Dilemma, Dilemma, Dilemma! How does the CAD shrink/ become extinguished without causing global contraction to the detriment of the reserve currency issuer’s exports; thus causing the opposite of the desired effect? What am I missing?
Firstly want to say your primer is always the first place i go when im struggling to understand things, its an easier read than some others
Really intrested where you go with this especially with trade deficits, the usual its a benefit to the importing country has never sat easily with me working in international trade as i do although will say now if there are more imports i make more money on that side, if more exports i make more money that side so slightly win win for me so i want to see how you can resolve it without throwing up barriers… the one thing ive read so far about buffets import certificates scares me to the core, whether you like it or not thats a trade barrier and the last time those were thrown up didnt end to well and all that will happen is other countries will react in kind and throw them up as well..cue breakdown in international trade with serious repercussions
Here’s a great example of the Job Guarantee failing right before our very eyes:
“Thousands of disabled Oregonians are stuck segregated in dead-end jobs at “sheltered workshops,” in violation of federal law, because of failed state programs that should help them find mainstream employment, according to a landmark lawsuit filed on Wednesday.
Sheltered workshops, sometimes called “work-activity programs,” are facilities funded by state and local agencies and nonprofit groups around the country that provide jobs to disabled people performing basic, unskilled labor such as packaging or simple assembly tasks.
Workers at these facilities are typically paid less than minimum wage, according to U.S. labor standards for piece work.
While intended as stepping stones to jobs in the competitive labor market, sheltered workshops have drawn fire from critics who say too many disabled people are being segregated and exploited by them. Those critics also say sheltered jobs tend to perpetuate a stereotype that disabled individuals are incapable of succeeding at real work.
Wednesday’s class-action case, brought on behalf of the Oregon chapter of the Cerebral Palsy Association and eight individuals with intellectual and developmental disabilities, is the first of its kind in any state, said Michael Bailey, president of the National Disability Rights Network.”
http://www.rawstory.com/rs/2012/01/26/lawsuit-challenges-work-activity-programs-for-oregons-disabled/
Good riddance to MMT and the JG.
doesnt the 2nd paragraph sort of contradict your last statement?
“in violation of federal law” so er its illegal so not sure what conclusion you can make IMO
Seriously?! Sheltered workshops are your paradigmatic example of how a JG would function in the real world.
Congrats Cullen.
There are two ideas you can sometime look into as part of the theme.
First one is the set of ideas something like in Martin Wolf’s recent column
http://www.ft.com/cms/s/0/c80b0d2c-4377-11e1-8489-00144feab49a.html
“Seven ways to fix the system’s flaws”
I am sure you are aware of Wolf’s points and will do much better than him in articulating in challenges such as corporate governance, international regulation etc. That is, Wolf’s ideas are in the right direction but somehow doesn’t look sufficient to me.
For example I regularly see in MMT blogs “demanding” that big banks should have been allowed to go bust – but the real world is not so simple!
The second one is more something along the lines of Charles Goodhart:
“…in the discord between having a system of national sovereignty at the same time as an international market economy,…”
For example, deregulation by one set of nations added pressures for others to deregulate etc.
If I understand your thought rightly, you have definitely taken a break and expanded your horizons but at the same time remain firmly attached to basic functioning of the monetary system. So congrats again.
Thanks Ramanan. I hope you’ll be active in helping push the debate forward in the coming years. You have an enormous amount to contribute. We heterodox thinkers need to muster together all the brain power we can! No one group has all the answers…
Defending descriptive MMT (de facto MR)against the forces of undesirable murkiness, confusion, and concealed illumination:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/01/robert-waldmann-and-others-on-dean-baker-and-hence-paul-krugman-and-the-burden-of-the-debt.html?cid=6a00d83451688169e201676122786b970b#comment-6a00d83451688169e201676122786b970b
(I’m flexible)
JKH,
Not sure if you saw my response to all that. http://pragcap.com/debt-matters
Your flexibility seems to mesh well with MR.
Heck, even Ramanan is contributing to MR’s development!!!!
My view is Tobinesque.
I quoted Tobin on his view about public debt here http://www.concertedaction.com/2012/01/18/james-tobin-on-public-debt/
James Tobin was a great man and some consider him to be Post-Keynesian. Some of his papers may sound confused analysis and he wasn’t quite there but close. Wynne Godley owed his greatest debt to him and Tobin achieved stock-flow consistency in 1980. Godley used his own ideas set out in his book Macroeconomics in 1983 and that of Tobin’s asset allocation, portfolio preference etc. Tobin was supposed to write a text in 1998 and Godley feared that Tobin would come out with a better approach than him but it didn’t happen.
“In reckoning the composition of the federal debt, the artificial distinction between the Treasury and Federal Reserve in the conventions of federal accounting should be ignored. A debt of the Treasury to the Federal Reserve is a debt of the left hand to the right. It does not enlarge the public’s claims.”
He even suggested that the Federal Reserve can purchase equities. He even suggested that the Federal Reserve in principle can purchase all government debt!
Anyway, in the Tobinesque view, debt owed to ourselves is not really a net burden as long as the nation is not a debtor nation.
So the United States is indeed indebted to China in every sense of the word “indebted”. It is true of course the true measure of a nation’s debt (at least one that comes closest to the concept) is the Net International Investment Position. Foreigners held $4,863bn of official sector debt at the end of 2010. Plus foreigners also hold other assets. Is this the US net indebtedness? No, because the US sectors hold assets abroad. But is burden in the sense we use burden for debt. I hold assets in the form of bank deposits and stock market securities but I also am indebted to a bank and that is a burden even though overall my net worth is positive. In the similar way, the $4,863bn is a burden but not net burden.
Another example. Germany as a whole is a creditor nation. However, foreigners hold a huge part of the German public debt issued. €1,244bn at the end of Q3 2011. So that is a burden in the sense my bank loan is a burden. Foreigners also hold other German assets. But all sectors of Germany combined hold more than this and Germany is not net indebted to the rest of the world. In fact it is a big creditor.
Going back to the US, the nation hasn’t started experiencing the pinch because the returns on its assets held abroad is paying more than the interest/dividend income etc foreigners make. (But it is in another sense – high unemployment). Also, that doesn’t mean the United States can afford to increase its net indebtedness to any level. Because if the liabilities to foreigners is high enough compared to assets held abroad, the net income turns negative.
In my opinion, the Chartalists extrapolate the “intuition” of a closed economy to that of open economies and like Milton Friedman argue that a nation float its currency (as if its easy!) with no official intervention whatsoever in the foreign exchange markets. If such a thing is achieved – and is easy to achieve in their view – “we do not borrow from foreigners”
My view is that of Tobin:
“…I believe that the basic problem today is not the exchange rate regime, whether fixed or floating. Debate on the regime evades and obscures the essential problem…”
Wynne Godley owed his greatest debt to him and Tobin achieved stock-flow consistency in 1980.
For some reason this reminded me of a line from The Terminator:
Skynet begins to learn at a geometric rate. It becomes self-aware at 2:14 a.m. Eastern time, August 29th.
http://www.imdb.com/title/tt0103064/quotes
Ha ha, thanks for the info about Tobin. I didn’t know he and Godley were on the same track like that.
Beowulf,
Yes Tobin was a great man. Fought hard with Milton Friedman.
His theory of asset allocation is simply superb.
Ramanan, I still don’t understand why you are comfortable saying the burden on you to your bank is the same as it is for the US to foreigners. Is this a semantics/definitional issue? Do we not all agree the US creates the USD, unlike you, and so the burden of debt is of a very different nature for the US in terms of repayment of the debt? Do you take the position that foreign holding of debt, everything else constant, is harder to serve than domestic holding?
“Because if the liabilities to foreigners is high enough compared to assets held abroad, the net income turns negative.”
What is “the pinch,” and why is that the “pinch?”
Wh10,
http://bls.gov/news.release/empsit.nr0.htm
The unemployment is the pinch.
Okay, so you’re saying it’s the drain on NFA? To be fair though, you just implied we’re not experiencing that pinch due to debt.. yet. I’d presume though that you would be okay with deficit spending now to address the balance sheet recession. Why is it not okay in the context of foreign holdings of debt? This seems to be Godley’s and MR’s position? I am most certainly interested to understand this better… specifically, to understand why it is labeled as “unsustainable.” That remains undefined to me. And I have no problem if MR disagrees with the MMT view on this and has great justification for it, but this most certainly goes beyond descriptive into prescriptive theory, on both sides IMO.
Wh10,
“so you’re saying it’s the drain on NFA?”
What is that supposed to mean, please?
“To be fair though, you just implied we’re not experiencing that pinch due to debt.. yet. I’d presume though that you would be okay with deficit spending now to address the balance sheet recession.”
Yes I _have implied that it is due to the high indebtedness of the United States that it cannot attempt to reach full employment so easily. It is restricted in keeping the net indebtedness at a sustainable level. In addition to pressures from inflation and productive capacity a nation faces hurdles in fiscal expansion if it’s foreign situation is not great.
The United States does pay foreigners $500bn annually as per line 29 of table 1 here: http://bea.gov/newsreleases/international/transactions/2011/pdf/trans311.pdf
and could easily keep increasing since a simple expansion of fiscal policy would bring a higher current balance of payments deficit.
Of course it is true that the net income is in the US’s favour, so no debt peonage till now.
” I am most certainly interested to understand this better… specifically, to understand why it is labeled as “unsustainable.””
Heard of Hungary’s problems? Okay that discussion may get digressed if someone starts quoting that the Hungarian government has debt in foreign currency (though not mentioning that the Magyar Nemezenti Bank has good amount of fx reserves) – anyway how is it relevant? (I understand it is related). The Hungarian government can make a draft at the MNB if there in an emergency but in general has to make its securities denominated in HUF itself more attractive to foreigners).
I understand that it is not going to happen soon because the US dollar is the reserve currency of the world and also due to the fact that the Euro Area faces a day of reckoning unless it moves toward higher integration. But from another viewpoint, the US dollar will remain a reserve currency by keeping its net indebtedness at a low level, which amounts to saying that fiscal policy cannot achieve full employment.
May I suggest you completely forget the US for some moments and consider other nations? Then come back to the US – for thinking that the US can do whatever it wants has a hidden assumption that it cannot face a run on its currency. There is a huge literature on the empirical observation that a growth of a nation can be sufficiently explained by the performance of its exports relative to import penetration.
[Some of this is my own personal view and you should be careful in distinguishing several views here]
Cullen, this is off topic, but what is the MR reasoning for the falling dollar over the past decade? Super low rates and a trade deficit?
FX is all relative. Two sides to that coin….
This is true. Then why in a relative sense? I am mainly asking this because of people misguided perception that the dollar is falling because of all the “printing” the fed is doing.
I have a MR based model which helps explain the relative weakness of the USD. It broke in 2008, but appears to work across currency pairs. Work in this sense means “seems to be a stronger relationship than PPP”.
It hasn’t been fully fleshed out yet, it draws heavily on Mosler’s insights.
I am also reading a book by John Harvey which should help me improve the model. I don’t know if I want to share it – it looks like it makes money as long as we don’t have a flight to quality scare.
I really hope this website doesn’t turn into a pissing match between MMT advocates and MR advocates. You need to shut that down before it starts Cullen. MR is the rational and logical approach. If people want to theorize about big government on other websites then let them do it.
I won’t let that happen. The JG arguments are coming to an end. That debate is over. We’ve moved on.
Cullen, do you view Monetary Realism as a brand?
If so, do you have a strategic plan to develop it?
These were some ideas I was thinking about in the past.
What is the ultimate goal of marketing the brand?
To bring about a political environment where monetary and fiscal decisions can be made based on how our economic/currency system actually works.
What is the core value and driving passion of the brand?
The core value of Modern Monetary Reality (or Monetary Realism) is transparency of the global economic system.
These are things that I imagine will develop with time. But for now I like your statement “The core value of Modern Monetary Reality (or Monetary Realism) is transparency of the global economic system.” We should seek to spread the truth. Not some theory based on personal politics. Everything else will take care of itself.
Am I the only one who thinks the JG sounds like communism?
Am I the only one who thinks the anti JG rhetoric sounds like a bunch of McCarthyist neoliberal free-market Ayn Randian propaganda?
Sorry. Was supposed to stop talking about the JG.
Yes, I am in favor of trillions more in federal spending and I am Ayn Randian. Do you live on a different planet than everyone else because this is reaching a level beyond absurd. If you are so far left on the political spectrum that someone who is in favor of massive spending looks right then you need to come back down to earth. This is ridiculous. I am so tired of being called an ideologue by people who are so ideological that they seem to not even know what the word means. For heavens sake. I am in favor of most of the things you guys want. But go against the JG and all of the sudden your only defense is to pull the political card and claim that I am the one being irrational, political and extremist. You have to be kidding me with these retorts.
Good riddance to MMT and those followers who are the political equivalent of Austrian econs Rothbardian following. This sort of ridiculous political bias is why MMT hasn’t gone anywhere in 20 years. You JGers need to bring a more rational and reasonable perspective to the negotiating table. They’re so politically biased in their thinking that they’ve now alienated themselves from people who are largely on their side! It’s really incredible. Talking about shooting yourself in the feet with both guns drawn. Pardon my tone, but these baseless attacks have gotten really old.
You stole that from me. Most of the JG supporters are exactly that. The cultish far left equivalent of the Rothbards. They’re poisoning their own ideas through excessive politicization. I don’t even think they know it though.
Cullen, my Ayn Rand McCarthyist comment was not a response to you. It was snark back to New Guy who descended into calling the JG communism. It may be socialism but it sure ain’t communism since most of its proponents believe in a market economy.
As I said above we’ll just have to disagree on the JG. But as you pointed out we mostly agree on everything else, especially on the descriptive aspects of MMT.
Keep it lit.
Thanks for clarifying hoops. Sorry for the emotions running hot. I’ve been getting the same argument from people for two weeks straight though. I’m wearing thin repeating the same comments again and again….
I’m sure you’re not the only one who thinks the JG “sounds” like communism but since communism is actually a system of social organization advocating the abolition of all private property the two have absolutely nothing in common.
Like it or not, Mitchell was influenced by Marx and Wray was influenced by Minksy (a long time socialist). It’s not unfair to say the Job Guarantee is a socialist policy because that’s exactly what it is. Created by socialists for socialists.
And I’m not even entirely against socialism, but if it walks like a duck and quacks like a duck then you can’t start calling it a bear.
If you could stop with the personal comments it would really help me reduce the tension in these talks. Thanks.
Sorry. It’s the truth though.
Socialism is ownership of the means of production by the proletariat. The JG may be many things, but it doesn’t transfer ownership of anything to anyone and it isn’t socialism.
Im all for anything which gets the important ideas out there and I hope this side project of yours does it.
In addition to the four you mentioned at the top I think its important to expunge the neoclassical lexicon from our economic discourse. The word “deficit” should never be allowed to be used when talking about a currency system like the US’s. How can you be deficient in something you have an unlimited amount of? Personally I think free should be eliminated when using markets , properly maintained or improperly maintained should be the question. These are just a couple to start but there is much more to be purged from our economic discourse.
Id also like to see you guys have a motto for your paradigm, something along the lines of Warrens;
“There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it”
You guys might use something like . “If you dont get the accounting right there is no way you can get the economics right”
Good luck, I cant wait to see your new site.
Very interesting move.
It seems reasonable to separate the job guarantee from the other aspect of the theory. The job guarantee is not an operational reality, but rather just a policy. I support it though, as I believe it could potentially be the best economic policy in history, but I understand why it should be separated from the operational realities (the facts). MMT comprises a bunch of facts/realities and a few policy options – which new readers seem to misunderstand. Two distinct parts will make it all the more understandable.
Cullen, this sounds promising. A framework for describing current monetary reality, that doesn’t propose an economy-wide demand control mechanism that can cripple grassroots private initiative.
If MMT is correct, that understanding and functioning according to the real world monetary reality will eventually lead us to accept the JG, then so be it. But for as long as such a program goes against people’s existing risk-return mindset, and discourages free initiative, it shouldn’t be forefront for reform.
Hi Rogue. I think we can take this thing mainstream by eliminating the politics. If it results in a JG one day then great. But it’s not our job to push a policy agenda on people as though it’s inherent in modern money. Doing so undermines the whole effort. I’ve had a fair amount of success getting this out to the public and I think this is the step that will take it to the next level.
Rogue – I agree, but not sure why a scheme that is basically ‘no work, no training – then no welfare cheque’ with admin contracted out to the private sector would necessarily ‘cripple grass roots initiative’ or ‘discourage free initiative’. Arguably it could encourage risk taking – it all depends. Also it seems a better alternative to the current system of sending out welfare cheques whcih has serious long term consequences.
Let’s just keep an open mind on the range of policy methods – including tax cuts – used to stimulate demand directly at the low level real economy that do not compete with potential private sector activity or risk-taking.
It is great that Cullen is using MR to explore where all this lead. As has been said before – the first over-riding task is to get the basic operational messages out there.
Rogue,
That’s a good point. Further awareness of the operational realities *may* compel the JG.
I see a need for, and fully support the development of, an approach at the level of ‘the global economic system’ able to address issues of current account balances and the role of a reserve currency from that perspective (and share a sense of the deleterious effects of the continuing US imbalances).
I regret that the JG issue should be the cause of secession from the original MMT approach, but in any case, would concur with not according it a central place. As statements by you and Carlos above suggest, if a full operational understanding based on ‘monetary reality’ were applied to policy, any need for an effective ‘buffer stock’ might be met through more limited measures.
My position remains on the ‘left end’ of the spectrum, in that a)I believe the interests of those less advantaged under prevailing conditions have been given short shrift for far too long; and b) the most critical factors constraining economic considerations in the future will be ones of resource limitations and threats to the global environment.
That said, a focus on ‘productivity and innovation’ of the right kind could be consistent with those priorities.
I wish you, Carlos, and Mike all success in this endeavor, and believe it could be of the greatest import.
A non-comprehensive list of the many ‘realisms’ that have graced the stage of human culture up until this point (all real):
Naive Realism
Direct Realism
Representative Realism
Critical Realism
Hyper-Realism
Transcendental Realism
Platonic Realism
Moderate Realism
New Realism
Organic Realism
Australian Realism
Truth-Value Link Realism
Cornell Realism
Quasi-Realism
Christian Realism
Mystical Realism
Constructive Realism
Entity Realism
Modal Realism
Scientific Realism
Socio-Political Realism
Legal Realism
Left Realism
Right Realism
Classical Political Realism
Liberal Realism
Defensive Realism
Offensive Realism
Neorealism
Structural Realism
Post-Realism
International Realism
Subaltern Realism
Artistic Realism
Kitchen Sink Realism
Social Realism
Poetic Realism
American Realism
Classical Realism
Literary Realism
New Realism
Romantic Realism
Aesthetic Realism
Nazi Heroic Realism
Socialist Realism
Photorealism
Pseudorealism
Surrealism
Magic Realism
Tactical Realism
Depressive Realism
Ethnographic Realism
Anti-Realism
Fantastic Realism
Irrealism
Monetary Realism (Jenkins)
And now
Monetary Realism (Roche, Mucha, Sankowski, et al)
Yeah, I can’t say I’m a huge fan of the name monetary realism. Then again, non-convertible fiat, state monopoly on currency issuance monetary theory doesn’t exactly have the marketing ring to it…
Not only did you bring down something publicly which the MMTers have been fighting for for a long time(indeed for some of them its their lifelong dream), you did it in the worst way possible, by stating they’re not being heterodox enough…
I think you’ve pinpointed the crux of the matter exactly. MMT is less than 20 years old, Warren Mosler published Soft Currency Economics in 1994. If a Job Guarantee is MMTers lifelong dream, either (a) they’re young enough they really should be focused the SAT and where to go college or (b) their lifelong dreams are independent of MMT because they existed prior to 1994.
I think Cullen has gotten a lot of grief for making a reasonable point; just as something like a JG can exist with or without MMT, something like MMT can exist with or without a JG.
It’s the way he reasons it. Let’s face it, for something like the JG and for someone just touching on the subject for the first time like Cullen, it is impossible to make an objective statement on whether the JG is a good or bad program unless you have an ideology behind it. and its FINE to have an ideology behind it, it would have been easier for all of us if he just came out and said it from the start. Instead he makes statements like MMT doesn’t take enough into account(which is ridiculous because he probably doesn’t know any(in an in-depth way) heterodox literature other than MMT), and he speaks with an objective flair that is completely disingenuous.
Note that nobody ever told Cullen that he couldn’t talk about MMT if he didn’t talk about the JG(indeed, controversy would have erupted long ago if it had). This controversy could have been completely averted if he was generous and simply said he doesn’t believe in the JG, and that he’s sure those that support it have good reasons for it, but that he personally believes MMT should go without a JG for now for political reasons. No, he went out of his way to express his complete opinion on it and throw outlandish claims. He brought this on himself, period. If you want proof, look at the conversation we had with Rodger Mitchell on the MMT club on facebook(who is also against the JG), it was completely respectful and without anything outlandish from Rodger. When there’s more than a few people claiming Cullen is being disingenuous, including Scott Fulwiler at one point(I don’t care if he apologized), that says something.
The other grad students at UMKC who have been following this conversation also know this to be true.
anyway, none of this matters anymore. Cullen is going his way, and its good that he is continuing to educate the people who come on his forum. I even gave him a link to help him with all the stuff he’s been mentioning but he can’t seem to accept it without thinking every single comment has been personally attacking him.
You’re funny Payam Sharifi. In one comment you admit that you aren’t even familiar with my work, but then you come here and write ridiculous comments claiming to know the breadth of my understanding. You said:
Yet you claim to know me on Facebook (which was a flat out lie) and you claim to know my level of understanding even though you don’t know me and don’t read my work. So it turns out that you’re really nothing more than a bold faced liar. You don’t know me. You’re not friends with me. I don’t even know you. I literally have no idea who you are. But you come here trying to give the impression that you know me, my character and my level of understanding. And then you admit flat out that you don’t even read my work. Honestly, how can you write such ridiculous things?
You’re acting as though I debunked the whole JG in a weekend. If that’s what you really believe then the JG is even weaker than you think. You’re so threatened by someone who you claim doesn’t even understand MMT….Something doesn’t add up there Payam. Maybe you need to rethink your attack and try a more objective and less hate filled approach.
I know you’re a very young guy like Tschaff and you guys can’t really control your emotions, but please, try to get a grip. Or, if you’d like please continue writing these personal rants of yours that totally discredit every word you say. It’s making you look like a stand-up guy. And it’s really helping the JGers look good in the meantime as well. Hell, with your name splashed all over the site your childish rants might even start showing up on google searches considering the size of my website. Wouldn’t that be lovely for you? You’re just winning all around here. Making MMT and the JGers look bad and making yourself look even worse while you’re at it. And yes, blame me for your actions naturally. That would be par for the course….
I didn’t say I wasn’t familiar with your work, I simply said I don’t visit your site THAT often and I certainly don’t read through the 100+ comments on the ones I visit. I never said i was friends with you on facebook rofl, please I mean you seriously seem to read too much into everything.
I said you don’t understand the whole field of heterodox economics, NOT MMT. I am not responding to you anymore, because as bad as I can be in spitting out the ad hominems and sometimes make statements claiming what you may or may not know, at least I know how to read.
BTW, it’s not as if I was trying to hide who I am. Also, I’ve filed a claim against the state of Oklahoma for civil rights violations back when i was undergraduate, and i’ve done other things to that affect(I also wrote a post for naked capitalism and was mentioned on al-jazeera) so if you think I’m concerned about what I’ve done or said, well, you’d simply be wrong.
Okay. Let’s see what you said:
http://pragcap.com/monetary-realism/comment-page-1#comment-98428
I haven’t published much work. And I don’t write anywhere else. So, if you don’t read my site then how are you at all familiar with my work? Can you explain that? Or was it a flat out lie? That’s right. It was a lie. Because the website is the only place where I publish my work. So if you don’t read the site, well, do the math.
And no, you’re not hiding who you are. There’s no hiding out here. Everyone knows who you are. I’m big on accountability and owning mistakes. It’s the story of my life. But please, keep slandering me. Keep attacking me, admitting that you don’t know me, and then trying to back track to cover up your series of ridiculous comments that make you look like a child. It’s nice to see a young graduate student puffing his chest out so everyone can see how bad ass he is. You’re just a common internet troll trying to tear other people down so you can make yourself feel better about yourself. It’s too bad really. I was that young and immature once also. I made some stupid mistakes, grew up, became accountable and the rest is history. But don’t worry, I don’t hold grudges and I’m not a bad person contrary to your opinion. We all make mistakes. So, consider it water under the bridge. One day you’ll look back at conversations on the internet like this and just shake your head. It’s character building I guess. Maybe you’ll learn not to do it in the future? Good luck in whatever you do Payam. Hopefully it will be more productive and less personal than this…
Cullen, best of luck on the new venture. It sounds intriguing. I’ve always felt that conceptualizing the balance of payments for a sovereign currency issuer is the biggest weakness in MMT theory. It’ll be interesting to follow along.
Thanks Mountaineer. It’s certainly no small mountain we’re trying to climb here. I hope to focus primarily on the operations side and help people understand the basics better. That’s step 1. But Mike and Carlos have tons of good ideas on the other stuff also. We’re psyched. Also, I noticed you have a site. It will be nice to see you write some. I think you’ll enjoy it. I never thought I would, but there are so many intangible benefits….I’ll look forward to talking to you in the future….
I’m not sure if the site will develop or not, to be honest. The potential is exciting, but things are hectic even without the added burden. I’m hoping it might help me order and develop my thoughts and work, maybe get some feedback from some of the people whose own work I respect. Appreciate the kind words. We’ll certainly talk.
If you ever start writing consistently I can always give you a boost with exposure. I know you’re a very bright guy so I’d be honored to have you write here if you ever get the urge. The invite is always there whether you need it or not. Have a good weekend. I’m in bed at 10 on a weekend which means something has gone wrong.
I appreciate the offer, Cullen. I’ll certainly take you up on it when I get something together.
Cullen until u explain how your full productivity pro leads to lower unemployment you are viewed as being for the status quo in unemployment& being for status quo is the very definition of conservative
u say prescriptive stuff of MR comes later so until u outline it u r a conservative. things like gay marriage doesn’t even comeinto the discussion
pro-proposal
It’s nice to know that you’ve now changed the definition of “conservative” so you can justify your continued baseless ad hominems. It’s now clear that the extremist left position on the JG is based solely on political grounds and nothing more. Your argument has become so weak that you’re now redefining things to justify your failing position. That might work on a facebook group, but it won’t work in public and it definitely won’t work in the halls of Congress. You guys are just dying to pin me as a conservative so you can try to discredit me on political grounds. Sorry, it’s not working because it’s a blatant lie and horrible misrepresentation.
The irony is, I am being called dishonest, ideological and all sorts of other names by people who epitomize those very things. It’s really been a stunning display over the last few weeks. If I posted every ad hominem from a major MMT proponent it would embarrass the hell out of many thinkers. It’s stunning how you people treat even your closest allies. Really stunning. If you’re trying to make an enemy in someone with a very loud megaphone then you’re doing a pretty splendid job. You all could really use a public relations rep to stop some of you from spouting off like you do….
The onus is not on me to prove that the JG works. So please stop trying to turn the tables on me as if I am the one who has something to prove. It’s not my job to build workable theories. That’s the role you and the other academics play. Thus far, I haven’t found the evidence very convincing. You all asked me to stop using MMT. I did. So stop worrying about what I do. Worry about the flaws in your own theory. You have nothing to gain by continually attacking me. You need to build up the walls in your own theory so that it is not so easily torn down by the public if and when it goes mainstream. I mean honestly. If a hedge fund manager can cause this big of a stink in camp MMT then you have another thing coming when the mainstream starts to dive into this. You have no idea. I wish you luck. I want MMT and at least its core principles to become mainstream as badly as anyone else. But the theoretical parts need some serious work. If your argument was really strong then someone like me wouldn’t be able to cause such a fuss for you all….And I really hope the politically motivated personal (anonymous like yours) attacks will cease. It’s really not helping your cause. In fact, it’s tanking it.
Btw, there is absolutely nothing on my end that requires me to justify my thinking to any of you. I am not a theorist. I am not in the business of building theories. If you guys want to be taken seriously then strengthen your own theory. You all seem to forget that many of you asked me to stop using MMT. I did. Now it’s time for you all to move on also.
And don’t assume that I now have to prove something to you in order for you to be able to prove MMT right. You seem to have the entire thinking backwards here. I could do absolutely nothing for the rest of my life and as long as you all fail to strengthen the JG argument, it will remain as weak as it ever was. That’s your reality. Personally, I hope you all build a more convincing case. Like I said, I am not even entirely against the JG. I’m just not convinced it is the optimal choice. So please, stop worrying about me and start worrying about yourselves.
Status quo in unemployment? Cullen cites upthread Nobel Laureate Bill Vickrey’s ideas to provide full employment, a stable price level and yes, higher productivity. If you’re not familiar with Vickrey, no one ever accused him of “being for the status quo in unemployment”.
The last time we had in peace time, what I would consider an acceptable level of employment, was in 1926 when it is estimated that unemployment in terms of the currently used definition was about 1.8 percent for the year as a whole. We have not had anything like that since, except in war time. Unemployment did get down to 1.2 percent at the height of World War II
http://findarticles.com/p/articles/mi_hb6413/is_n1_v22/ai_n28645797/?tag=content;col1
Actually that 1.2% would have been less than 1% if the German and Italian POWs working as farm hands were counted in the labor force (Now THAT’S a job guarantee).
)
which is ridiculous because he probably doesn’t know any(in an in-depth way) heterodox literature other than MMT
I guess the writers of heterodox literature (names you’ve heard of) who’ve emailed Cullen to say they agree with him don’t count?
)
Cullen hasn’t said anything about that because (I surmise) he doesn’t want to cause any academic politics grief for those economists with the good sense to agree with him.
Payam will just have to wonder who in the MMT club (on facebook or otherwise) is really a crypto-MMTer secretly on Team Cullen.
Yes, I almost splashed that one back in his face, but I restrained myself. If he only knew some of the people I’ve been talking to about all of this in recent weeks he’d feel quite foolish. But it’s better to keep the cards close to our vest. What the MMTers don’t know can’t hurt them and certainly can’t help them.
“Yes, I almost splashed that one back in his face, but I restrained myself. If he only knew some of the people I’ve been talking to about all of this in recent weeks he’d feel quite foolish.”
I have absolutely no idea why anyone would talk to you about anything with your constant threat of “outing” people. You’ve been beyond antagonistic with anyone who supports the JG as though this proposal was thrown in over the Christmas vacation and no one got your approval. And have called them every name under the sun in the process. Rhetorically, what didn’t you understand about MMT that you claim to be an expert in? But suddenly your outrage and indignation knows no bounds. Yet when anyone defends a program that has been worked on for over a decade and written extensively about, they are being childish and ad-hominem. If you’re quoted, you’re being “taken out of context”. When you do it, you’re the “adult in the room”.
And no, you didn’t debunk the JG over the weekend as you say, you did it while “eating a burrito”. And somehow you can’t understand how that can come off as even slightly condescending. You’re nothing but a bully, and a stereotypical “conservative” one at that.
So go ahead and “quote” me and “out” me or “threaten” to do so. Or anyone else as you are so eager to do. Because that’s what “sells”. You always say you’re not interested in being a politician, but you’d make a fantastic one.
I’m sorry you feel that way. It’s really too bad that this all became so personal. I didn’t attack a single core MMTer. I QUESTIONED a concept. This was never personal to me. But you all acted like I pissed on the MMT bible and flicked off the high priests. And for that I have been personally attacked relentlessly. Your comment is just the latest in the series that contain zero substance and all hate. And suddenly im the “bully” for responding at all despite the fact that comments like yours have pretty much become the norm over the last week. I’m sorry that no JGer can write a comment here that isn’t streaming with insults and attacks. Have a good one Trixie. Never meant any harm.
You QUESTIONED? How is this for “questioning” a few days into the “debate”…
You say: “Btw, I recommend no one take the other side of me in the JG debate. A little birdie told me I am right. Consider this an insider trading tip if you’d like. But this will all play out in due course.”
You have done nothing but provoke. And the above is a really good example of it. Not only do you take complete control of the entire internet debate, you “warn” people of your “little birdie”. Who is your “little birdie”? Your burrito? Do tell, and stop throwing down the “victim” card and how YOU are being “attacked” whenever someone disagrees with you about an economic theory you have absolutely NOTHING to do with developing. No one has ever HIDDEN anything from you. Have you read the founders’ proposals and primers? I simply do not get where your outrage is all of a sudden. Other than to promote yourself.
Let’s stop cherry picking one or two comments out of thousands to try to make me look like some big bad evil “bully” who is storming around terrorizing the internet (as if I even have that much power to begin with!).
Here’s how things actually went down. I learned MMT from Warren and Scott many years ago. Now, Warren and Scott have a bit of a different approach than the others do. Warren’s a market guy and Scott teaches entrepreneurship among other things so their approach is a bit more open ended, flexible and perhaps market tilted. Warren always called the JG an “option” as he says in SCE. Scott also has a primer in which he’s very clear about the descriptive vs the prescriptive. Hell, even Bill Mitchell has written that recently:
Then, literally over the Xmas break, that all changed as this debate began to rage. Mitchell drew his line in the sand saying the JG is “central” and totally contradicts his past statements in the process. There is no longer a descriptive and prescriptive aspect. It’s VERY clear that the prescriptive component is “central” to MMT. Now the JG is not a “policy proposal”. IT IS THE THEORY!!! Clearly, the core MMTers were not all on the same page on this as Warren emailed or mentioned in comments here that the JG is not necessary in MMT, but the academics almost all came down on the other side. That’s where this schism started. And that’s the actual timeline of events. It might have been sparked by my QUESTIONS. But clearly, there was a lot of confusion about prescriptive and descriptive. Even the founders weren’t all clear. But it’s clear now. The JG is central. It’s not a policy proposal at all. In order to understand MMT you have to understand a political position and you have to understand the JG. “There is no alternative” as many of them like to claim. Clearly, that’s totally misleading though as the JG is not necessary to achieve full employment or price stability. There are indeed other options and many of them exist in this thread….Perhaps more important though, no one in the world needs to understand the JG in order to understand modern money. And anyone who tells you they do is dishonest and disingenuous. The bottom line is, MMT really is just a theory. And it’s a fairly political theory as it stands. That’s fine. But it should never be sold as “modern money” or implying that you can’t understand the system without understanding all of MMT and its political or policy proposals.
Now, I don’t feel misled. I don’t think it was intentional. I just think some MMTers have different views on all of this and I gravitated towards those MMTers who offered the MMT that I felt most comfortable promoting. But there was a very clear misunderstanding regarding the above. Very clear. Now, I do think that certain MMTers try to hide the fact that their approach is poisoned with politics and they try to cover that up by giving MMT this very apolitical perspective. That’s fine. People are free to do whatever they want. Hell, I am probably a bit to blame for pushing MMT as this entirely apolitical approach. I should have known better since I know the politics of many of the founders. And it’s all out in the open now. But I can’t be a part of it and I won’t promote it as such.
I’ve respected the requests of several MMTers to stop using the name MMT. That’s perfect because I don’t want to promote something that refers to itself as “modern money” when there is absolutely positively nothing in modern money that requires an understanding of the jog guarantee. You might be here to promote and push a policy agenda. We both know where you stand on the political spectrum. And that’s fine. I’ve never come down on your for your politically charged comments. But it is not my role to be political. I am here to teach and help people understand how the monetary system works. How they use that knowledge is ENTIRELY up to them. I am NOT taking sides in a political debate. It’s 95% operations for me. I have to stay objective and unbiased. And the JG throws a huge stinking wrench in that. So I won’t have it.
That’s how this all REALLY went down. I know you don’t have the inside track on all of this, but your attacks and rants are totally unjustified and over the top. You don’t know how this all happened and developed. So try to be a bit more understanding and a bit less presumptuous. And again, none of this is personal so please stop taking it so personally. It’s all about the operational aspects of the monetary system. I don’t care what you call that. But the world desperately needs us to teach it to them. And embedding a political agenda in there is a great way to never get the message out. Call me evil if you want. I don’t particularly care….But please don’t come here ranting and raving and acting like you have the inside track on how this all went down because you obviously don’t.
Indeed. Certain of the “founders” of MMT went straight political and sort of off the reservation. The glory of MMT was that it was correct, it was right.
The jg in its hyper liberal forms (one guy was arguing for up to $24you per hour guaranteed) is not factual , or (_ in hyper forms) even defensible.
Anyway, MMR, …. could I suggest adding the second M, its more memorable and catchy, is now the state of the art school of thought and I’m so glad you 3to are working together.
Yes, your are correct, I don’t have the inside “scoop”. Therein lies the problem. For instance, in this same thread, out of nowhere you initiate an attack on the Buckaroo system at UMKC. Perhaps there is some “history” there too, but to a casual reader like me, it comes across as an over-the-top and unnecessary taunt. Because where the hell did THAT come from? And after doing some research as to what this program is all about, I find it to be a clever and original way to proactively teach students about the monetary system in an attempt to make a positive difference in the way we think about deficits. Yet you turn it into some “brainwashing” scheme. I WISH that had been a required program at the university I attended. No doubt I would have somehow cheated or intentionally crashed the system, but then I wouldn’t have been in a position 20 years later scrambling around on the internet trying to figure out what the hell is going on with our economy. Much to my dismay, thank you Tea Party and debt ceiling fiasco! Up until then, I never even paid any attention to monetary ops or FOMC meeting minutes. And I don’t think I’m alone. I see that, more than anything, as a reasonable explanation in the gaining momentum of MMT, unrelated to the JG. For the last 20 years not many cared about debt and deficits since not many had a reason to care. That’s changed for enough of us. And the JG just doesn’t freak me out like it does others. In fact, I am completely indifferent to it. I just want to live in a good economy again regardless of how we get there. Since I’m confident that’s an area we can agree on, let’s focus on that. Or I will kick you in your evil shin.
Trixie, I’m not trying to be over the top or demeaning. My ONLY goal is to help people better understand the monetary system. That’s it. Like you, I want a better economy, better world. You might disagree with my approach, but we’re aiming for the same goal.
Though I have great appreciation for the work of Mosler, Wray, Fulwiler, Kelton, Mitchell and so on, I have to honestly say Cullen Roche is by far and away the best person to lead the effort in promoting the understanding of monetary operations to the general public. Wray, Fulwiler and the rest of UKMC will always be there to provide much more theoretical, academic, mathematical and rigorous explanations of the topic, but in terms of marketability, Roche is by far and away the best.
The rest of the MMT crowd has made great headway in promoting their ideas, but they have also made numerous mistakes – in particular Mosler. His dabble in politics did little to promote MMT, and will hurt his credibility as an economist forever. I no longer ever link a new reader to Mosler’s site, because as soon as they read he made a run in politics, all credibility is lost – not just Mosler’s credibility, but that of the subject as well. They assume he is just another politician with yet another agenda. I know this from experience. Furthermore, for a guy as successful in business as he is, he should realize that his website image (graphics etc) is rather poor, and not bothering to use punctuation when commenting is unprofessional.
Bill Mitchell, however, is an excellent writer. It’s a shame he spends most of his time dissecting newspaper articles and repeatedly making politically biased comments. Nonetheless, I will still buy his new textbook!
All in all, “Monetary Realism” seems to be the best way forward from my point of view, and given he is not politically biased or motivated, Cullen Roche is the best person to lead the movement.
Besides that, Good luck!
$$%&&* yes. Congrats and bless you guys.
I’ve posted here on pratfall maybe a couple dozen times to argue from the perspective of an employer, biz owner, and such.
Anyway, this is fantastic, the 3 best (my view) economic bloggers going team up and take (again in my view) all the right stances.
I will honor my previous offer of financial support for the effort if you guys are interested. Does anybody even read threads this old.
“Pragcap” … autocorrect.
Some of the JG supporters should be embarrassed by some of the comments being left here. I know it’s a touchy subject, but the JG position has turned less about the merits of the JG and more about the personal attributes of Cullen. If that’s the basis of your argument then you shouldn’t even bother arguing. You just look bad.
I can’t believe people are still going on about the JG. It should be pretty obvious by now that pragcap isn’t interested. The motivation may be critical, pragmatic, tactical, theoretical, political, ideological, whatever. The point is pragcap won’t promote the JG and is more interested in considering possible alternatives. End of, really.
Ok if pragcap isn’t interested why keep going on about MMT?
All the MMT guys seem to have left the building
I know it’s hard but try babysteps. First thing is to try and get through one blog without mentioning MMT
Try and drill. MMR into the public consciousness
Good luck
You haven’t seen MMT in a post in a while. Its the MMTers coming here dragging it back up….its done on my end. No more. All MR from here on.
That’s not to say that pragcap is necessarily correct, but the situation isn’t going to change just because people hurl a whole load of insults and accusations of “treachery”. Time to move on.
Isn’t the power of the Internet something that is truly amazing………..
Cullen, here’s another critique from a JGer. Their argument is now so weak that it has basically come down to trying to pin you as a “right libertarian” and a hater of full employment. http://heteconomist.com/?p=4064