* This originally appeared as a comment on Mike Norman’s website regarding this silly Job Guarantee (JG) disagreement among the MMT crowd as a response to questions raised by Tom Hickey.  

Tom, you said:

“If Cullen doesn’t write it up as a professional paper fleshing out his argument, no professional economist is going to take his blog comments seriously.”

I’m not in this to validate or invalidate “theories”. I am not an economist and I have zero interest in winning awards or taking credit for MMT (as some MMT economists are clearly self motivated in this regard based on their reactions to my receiving publicity at times).

I am here to offer the public a way to understand modern money and the world we live in. That was the ONLY reason I started pragcap. In 2008 I saw a world in total disarray and entirely misunderstood.  Meeting Warren Mosler changed that perspective and the message here at Pragcap to an even greater degree than before as he gave me a unique understanding of inside operations within our monetary system (and I am eternally thankful to him for everything he’s taught me).   My goal has always been the same though.  To help educate, provide a better understanding and provoke ideas and discussion. I am not trying to solve the world’s problems or fix the politics involved. My only goal is to provide people with a better understanding of the world they live in so they can make better decisions.  If they want job guarantees or no government or an end to the Fed or anything else then that’s their right as private citizens to decide.  That’s the beauty of this country.  You get to decide.  My only goal is to help provide people with the understanding that is required to digest information and make better decisions. That’s all.

It is my opinion that the JG is not an essential component of understanding modern money, the economy or anything really. It is not my responsibility to prove MMT wrong and I am not interested in trying to discredit MMT because it would be a self inflicted wound. It is also not my responsibility to publish papers validating positions (though I do so at times). It is my responsibility to stick to what my message has always been and that is offering readers a clear understanding of the world we live in. There are parts of MMT that do that and there are parts that are slapped on as nothing more than policy fixes. The latter is a clear theoretical part. And yes, the JG is ENTIRELY theoretical (which could be ENTIRELY right – I don’t know).

If the MMT economists want to sell MMT and “modern money” as part of a massive government labor program then that’s fine. It’s my opinion that no one in the world needs to understand large government labor programs in order to understand modern money. Instead, I think we should focus on giving the world a better understanding of modern money by focusing on the proven factual pieces of MMT (monetary operations, monopoly supplier function, etc). If we offer policy proposals then that’s fine, but that’s secondary. I would expect the MMT economists to do that and it should be encouraged that they use their expertise in doing so! But the JG is a very clear case of embedding a policy proposal on top of operational aspects of MM(t) – JKH has rightly noted this on several occasions. In this regard, it really is entirely theoretical and I appreciate and understand that the economists have built it this way.  But there’s a difference between reality and theory and educators have a responsibility to very specifically differentiate between the two so as to avoid misleading those they are teaching.

I had long been under the impression that there were two components to MMT – the descriptive and the prescriptive.  Readers had always been perplexed by the name “Modern Monetary Theory” because what I taught them (by removing the JG) did not appear so theoretical at all.  MMT has always been described to me as having a descriptive and the prescriptive component, but it is clear that this is not the case.  There is only the “theoretical” under the MMT umbrella.  And that’s great. I think it’s a fantastic theory (even though I disagree with parts of it).  But there’s a big big difference between the theory and the truth.   Parts of MMT are entirely factual (the operational aspects, monopoly supplier, etc) and then there are parts that are entirely theoretical (like the JG).  I guess the name alone makes that clear enough (though it never occurred to this idiot)….

In my writing I like to stick to the facts even though I am guilty of veering from that goal at times.  What you want to do with those facts is entirely up to you.  It is not my job to force you to use that understanding in a certain way even though I might, at times, interject my opinion on policy.   But what we need to be very clear about in the future is that MMT is in fact theoretical in its current form.  I won’t spend my time shooting down MMT because I respect those involved in it far too much.  But I won’t be spending my time selling it to readers as though it’s fact.  It is in fact theoretical and I hope to use the parts of it that are factual to further the public’s education.

Cullen Roche

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

More Posts - Website

Follow Me:


  1. Warren does shoot himself on the foot by emphasising the coercive nature of taxation. The truth is that in a democracy we can ultimately choose the desired level of taxation. Once this is done, it is written in to law and each individual is obliged to pay their share.

    Libertarians will always say that taxation is violence. But then again they dislike democracy, belive in mystical/religious notions of ‘natural law’ and think that only gold is really money. So…..

  2. I want a JG supporter to tell me why 95% of the country should pay more in taxes and inflation to support 5% of the population?

    • Of course if there wasn’t popular support for higher taxes then there wouldn’t be higher taxes.

    • Well, the JG proposal as developed by MMT does not call for higher taxes, and argues that the program will not be inflationary.

      But personally, I would be willing to pay higher taxes if it meant that all of my fellow citizens who want to work would have a job.

    • fdo15: 1st, it is clear that there’s isn’t necessarily more inflation or more taxes. Likely you will get one or the other but certainly not right now.

      And, maybe you could tell us why 95% of the population have the right to deny the other 5% the use of its resources if they are ready, willing and able to be a productive member of society?

  3. What a shitstorm. At one time in my career I was expected to give presentations to a large, diverse group of people. I learned that if you speak the truth as best as you can estimate it, it has a good chance pissing off 95% of the people in the room. You must be very close to MMT truth, Cullen.

  4. A long thread: being a compulsive list-maker I gathered up (hopefully) the gist of Cullen’s views here (helped me to understand where he is coming).

    I’m not in this to validate or invalidate “theories”. I am not an economist and I have zero interest in winning awards or taking credit for MMT.

    My goal has always been the same though. To help educate, provide a better understanding and provoke ideas and discussion. I am not trying to solve the world’s problems or fix the politics involved.

    It is my opinion that the JG is not an essential component of understanding modern money, the economy or anything really.

    And yes, the JG is ENTIRELY theoretical (which could be ENTIRELY right – I don’t know).

    Parts of MMT are entirely factual (the operational aspects, monopoly supplier, etc) and then there are parts that are entirely theoretical (like the JG).

    But what we need to be very clear about in the future is that MMT is in fact theoretical in its current form

    History shows that merely imposing a tax is not a reason to pay taxes. The currency users have to want to pay the tax.

    Why does anyone obtain a monopoly in the first place? Because people want their products! The monopoly is not only a function of the issuer. It is a function of the user!

    The govt is a creature of the people. Therefore, the money and the monopoly is ultimately a creature of the people. They decide.

    There has never been any appreciation for productivity.

    Unemployment is a creature of the state. But that doesn’t mean it is the role of the state to hire all of the workers.

    But I am clearly not an MMTer based on all of this since I disagree with what are pretty glaringly core aspects of
    the MMT originally envisioned.

    Behind every man in uniform with a gun is 100 Americans with guns. This has played out hundreds of times throughout history. The state is not a tyrant and if it acts as one it will be demolished.

    The goal is finding that balance where the state does not infringe on the living standards of the currency users to an undue extent.

    I am not saying taxation does not create demand. I am simply pointing out that the relationship is more complex than the traditional MMT explanation states. Therefore, the traditional MMT argument is incomplete and leads to incomplete conclusions (such as the JG).

    Life is an evolution of living standards, not a static college 4 year environment in a vacuum.

    Money is always debt.

    The govt has debt. It just doesnt need to pay it off.

    You might believe that the JG is the best buffer stock and you might even believe it’s the best thing for the world. Honestly, it might be. But I can’t prove that and neither can anyone else. So, in this regard, the JG is pure theory.

    In fact, before I joined the MMTers there was almost no hint of appreciation for productivity. No proper explanation of what causes hyperinflation. And no appreciation for the fact that currency demand is a function not only of taxes, but productivity….

    Productivity matters. Capitalism makes socialism viable. Not vice versa.

    And none of this is personal to me. It’s all about other people and future generations. That’s what it’s ALL about.
    It’s the theory in all of this that bothers me. And I feel like there’s a certain political aspect to it all that makes my skin crawl.

    I am the only one who has built productivity into the model at all. The rest just assume it will always be there. It is, perhaps, the camel that breaks the old MMT’s back because ultimately, it leads to faulty conclusions like the JG….

    You think the govt could keep rates pinned if productivity sank and hyperinflation began to spiral out of control?
    The key point that MMTers miss is that productivity matters A LOT! More than taxes in my opinion….In fact, the base case for any environment is having productivity that can be taxed to begin with. So naturally, productivity precedes taxation, not vice versa as Warren’s base case states….

    I don’t happen to think handing men shovels, guitars and pay checks is the optimal approach. But even then, I am veering into my own theory (which as of yet is undeveloped!).

    Ding ding ding! The JGers think we NEED govt to fix all of our problems….issue a man a job digging holes and a decent wage and all of the sudden his family issues are fixed, he is happy, prosperous, etc etc. Blasphemy!!!!!!!!!!!!!

    Don’t give a man a mundane job. Give him schooling. I don’t know how to fix this exactly and I’d have to do a lot more research, but we know govt can “afford it”….

    “The taxman can use his power to collect his share of pie, but the taxman can’t use his gun to motivate you to bake a bigger pie.”

    Money is a creature of the state. But the state is a creature of the people. So really, money is always a creature of the people. A social construct. The entire idea of the state theory is misleading.

    And how do you keep people happy? You give them an increasingly better standard of living. Hence, the need for productivity, innovation, etc. Clear? I am still thinking much of this through myself though….

    Part of my thinking is to keep the path a centrist one. I don’t want the capitalists rampaging around defrauding everyone (which is why I am in favor of such harsh bank regs), but I also don’t want the govt giving handouts to everyone (which is why I am against becoming a JG worker

    It’s about better output leading to better living standards. There’s a delicate balance there. I plan on finding it.

    I think the traditional MMTers are mixing facts with theory (and that some of them have strict and at times extreme political agendas). I just can’t do that….Sorry.

    Education is key. Give our kids an education. But don’t think you can give a man’s life meaning by handing him a shovel so he can start digging his own grave….

    All money is a social debt between parties.

    We pay into a system that binds us through social agreements. When the govt bails out banks they’re stabbing us in the back (extreme, but I hope you get my point).

    This is why I’ve now realized that MMT is wrong. It’s not about coercion and the power of the state. It’s all about the power of the people and the social construct they create. Money is not about state control. It’s about the control of the people. MMTers think of state money as this exogenous form of money. And while specific, it is not that different from any other type of money. The whole starting point of MMT is wrong!!!!

    Taxes are not based on coercion. They are based on the social construct. If the state oversteps that social construct then the state gets crushed. The MMT idea of taxes drive money is wrong.

    I’m not saying govt shouldn’t intervene altering NFAs. But there are varying degrees of intervention….

    MMTers are double talking. They’re saying the democratic process chooses how we proceed, but operationally, there is only one choice that optimizes economic outcomes (setting prices). I think that’s wrong.

    MMT provides us with a set of principles and understandings that guide us. The foundation of that is that the currency issuer is the monopoly supplier and that therefore they are the price setter. This leads them to conclude that policies like the JG make sense because it helps set prices. I am saying there is more to the story than this. That it’s not so black and white as “monopoly = price setter”. There’s another side to the monopoly argument.

    I know it sounds like all of this is coming out of my disagreement with the JG, but it actually goes back much further to the basic root of the state theory and taxes as a binding force. I am the only one who ever emphasized the idea that productivity and living standards matter as much if not more than the tax component. I never connected the dots on that until I realized that the JG was embedded in the coercion and price setting argument….

    It’s my personal opinion (I know I’ve veered off into the theoretical now) that the best way to increase living standards is to give people more time (so they can do whatever it is they prefer to do with their lives that maximize their personal living standards).

    Warren is saying that we have the choice, but that the monopoly supplier using its coercive powers is the optimal choice.

    However delicately or politically you want to phrase it – the real point MMT makes is that the monopoly supplier has a responsibility to be the price setter to create the optimal outcome. Call it distribution of wealth or whatever. The purpose is clear. It’s a command economy. Which might very well work. I say it’s not the optimal approach and is based on the myth that the govt has a full monopoly.

    What MMTers don’t want you to know is that they have just as much in common with Marx as they do with Keynes. This is clear once you connect the dots between their idea of the full monopoly to the JG….which could be a good thing for all I know, but let’s stop pussy footing around the truth.

    State money is not driven primarily by taxation. It is driven by a personal desire to improve living stds. Therefore, policy should be focused not on how the monopoly can best set prices, but hiw the state can best influence living stds. I say productivity is the only logical focus since reducing labor hours to obtain goods and services is the best way to imlrove living stds….so, from start to finish its quite different.

    I wake up in the morning and say “I need dollars because they’ll help improve my living standards”. Not, “I need dollars to stay out of jail”.

    I don’t think the currency’s value rests solely on the state’s ability to set prices. It ALSO rests on the people’s ability to expand the size of the pie through productivity and improve their living standards.

    I see MMT’s monopoly argument as being an excuse for an increasingly authoritarian govt (i’m not calling anyone a communist or implying that so please don’t read into that too much).

    The govt can help and I am in favor of the govt helping, but we blur the lines here when we start advocating programs where the govt hires up to 30MM people by directly intervening in labor markets via wage setting. That’s not just a CDC or FDA. It’s a massive expansion in the role of govt in our society.

    But what I haven’t heard is a single good explanation countering my points.

    Bill Mitchell drew a line in the sand and I am very clearly on the other side of him. So be it.

  5. Cullen, sorry obviously I am getting to this conversation late. And also obviously you are trying to put a fair amount of distance between your views and the original MMTers. I think there is some disagreement over what MMT means and how it is implemented but I am not interested in that. Want to see if I can push your thinking forward a little bit.

    jrbarch summed up some of your statements from this thread. I want to pick one out that seems important to me and one that I think I agree with: “I say productivity is the only logical focus since reducing labor hours to obtain goods and services is the best way to improve living stds.”

    So, yes, increased living standards is the ultimate goal of society. Better than FE and PS, IMO. But in doing this through increased productivity, you are reducing the amount of labor hours necessary to complete the basic functions of society.

    So, my question becomes: how to do this without leaving a significant percentage of the population behind? And, importantly, how do you accomplish that without massive state intervention regarding working hours, pay, etc?

    Thanks for being host to a terrific piece of political philosophy. Great comments throughout from you, DanK, BarbaraNH, Phil and all the others.

  6. More potted history from wikipedia:

    “An early form of fiat currency were “bills of credit”.[9] Provincial governments produced notes which were fiat currency, with the promise to allow holders to pay taxes in those notes. The notes were issued to pay current obligations and could be called by levying taxes at a later time.[9]

    Since the notes were denominated in the local unit of account, they were circulated from person to person in non-tax transactions. These types of notes were issued in the British colonies in America, particularly in Pennsylvania, Virginia and Massachusetts. Such money was sold at a discount of silver, which the government would then spend, and would expire at a fixed point in time later.[9]

    Bills of credit were controversial when they were first issued, and have remained controversial to this day. Those who have wanted to highlight the dangers of inflation have focused on the colonies where the bills of credit depreciated most dramatically – New England and the Carolinas. Those who have wanted to defend the use of bills of credit in the colonies have focused on the middle colonies, where inflation was practically nonexistent.[9]

    Colonial powers consciously introduced fiat currencies backed by taxes, e.g. hut taxes or poll taxes, to mobilise economic resources in their new possessions, at least as a transitional arrangement. The repeated cycle of deflationary hard money, followed by inflationary paper money continued through much of the 18th and 19th centuries. Often nations would have dual currencies, with paper trading at some discount to specie backed money.

    Examples include the “Continental” issued by the U.S. Congress before the Constitution; paper versus gold ducats in Napoleonic era Vienna, where paper often traded at 100:1 against gold; the South Sea Bubble, which produced bank notes not backed by sufficient reserves; and the Mississippi Company scheme of John Law.

    During the American Civil War, the Federal Government issued United States Notes, a form of paper fiat currency popularly known as ‘greenbacks’. Their issue was limited by Congress just slightly over $340 million. During the 1870s, withdrawal of the notes from circulation was opposed by the United States Greenback Party. The term ‘fiat money’ was used in the resolutions of an 1878 party convention.[10]”

    “The Greenback Party (also known as the Independent Party, the National Party, and the Greenback-Labor Party) [1] was an American political party with an anti-monopoly ideology[2] that was active between 1874 and 1884. Its name referred to paper money, or “greenbacks,” that had been issued during the American Civil War and afterward. The party opposed the shift from paper money back to a bullion coin-based monetary system because it believed that privately owned banks and corporations would then reacquire the power to define the value of products and labor. It also condemned the use of militias and private police against union strikes.[3] Conversely, they believed that government control of the monetary system would allow it to keep more currency in circulation, as it had in the war. This would better foster business and assist farmers by raising prices and making debts easier to pay. It was established as a political party whose members were primarily farmers financially hurt by the Panic of 1873.”

  7. I enter this discussion after 378 earlier exchanges.
    That is a bit presumptuous.
    Let me first of all state that I enjoyed every contribution and that various subtleties, in theory, emphasis, tone, have not escaped me. (If that makes sense.)
    Yet I am a bit worried.
    I discovered MMT a month’s ago, after having found Steve Keen first in a struggle to understand what is happening with me and Europe.
    Gradually, through browsing the internet, I found three quarters of all relevant economic sites, really scores of them, and re-read some old economics literature.
    I found out about MMT through L.R Wray, Godley,B. Mitchell, C. Roche.
    Taken together MMT provides an excellent explanation of the role of fiat money, the nature (and solvency) of the monetary authority, government spending and taxing, deficits and surpluses. Europe’s problems become much clearer, although D. Farouvakis (implicitly making use of some MMT like thinking), was very helpful too.
    Now there is an interesting discussion with respect to the question to what extent a monetary authority, a state, can enforce a currency upon its citizens through taxing, when citizens can always reject the state through disobedience/revolution. There must be some form of acceptance of a currency by other mechanisms than force. Clear. But the chartalist argument does not seem to be intended to be anything other than thinking things through to the “bitter” end. Practically speaking there is a state (US 20% of GDP, France 50%?) with some acceptance. If it does not manage the currency badly, if “money” serves its purpose, why would anyone want to attack the currency from the inside? It is just a convenient mechanism (about which a lot can be said).
    Much more important is that citizens may operate with multiple currencies. If there is expectation of too much inflation of the sovereign currency, with respect to exchangeable alternatives, citizens may transfer their wealth to it. For instance we see this happen with gold right now. The consequence I do not know exactly, but it undermines the monopoly of the sovereign currency and it certainly must have all kind of effects. The conclusion can only be that spending and taxing must be very carefully managed in order to avoid inflation. I feel MMT is a bit sketchy about this issue.

    But the the thing that worries me, is the “schism” that now seems to develop around JG.
    Once the conclusion has been reached a state spends and taxes, and some abstraction concerning relative proportions over time have been addressed, it is natural to start working on the question what actually to spend and tax.
    Opinion here may diverge. How big should the state be relative to the private sector? What is the role of unemployment? Scores of policy decisions.

    Now I read through the discussion about descriptive and prescriptive aspects of MMT. P. Tcherneva is very outspoken they cannot be separated. Perhaps.

    All I want to say is, that the contributions of C. Roche have fascinated me, just as much as those from others, irrespective of differences of opinion about such issues.
    I would be unhappy if this coherence is lost by “drawing lines in the sand”, by futile, and shrill, debates about doctrine.
    Is there any of your excellent earlier writing you now wish to retract on the basis of your rejection of JG, Cullen?
    Frank Lansdorp

  8. Planet-brained physicist Lee Smolin describes how his friend reacted when the SU(5) unified theory finally failed experimentally (due to the lack of proton decay.) “I would have bet my life – well not my life, but you know what I mean – that protons would decay. SU(5) was such a beautiful theory, everything fit into it perfectly – then it turned out not to be true.”
    Smolin himself says, “Even after 25 years I still find it stunning that SU(5) doesn’t work.”

    The JG may be more theory based than the rest of MMT. It makes sense to me, but the only way we will know if the JG works is if we can get some (more?) real world experience, and do the best “experiments” we can.

    I thought one of the virtues of the USA was that different states could try different things? Historically in the UK, if we want to do something that may go horribly wrong, we try it out in Scotland first.

    (By the way Randall Wray has quoted some research (by a right leaning group, I think) that the JG would costs on the order of 1-2% of GDP. (Haven’t got the link, sorry.))

  9. (Obviously a state’s JG would have to be federally funded.)

    Perhaps what we could all agree on is
    1) that the conventional affordability constraint on a JG does not exist – at least in the short term. (i.e. “Where is the money going to come from?” is not a valid question.)
    2) opponents of the JG say that moral/psychological issues will ultimately lead to less productivity, wealth and wellbeing than would be otherwise be the case. Proponents of the JG claim the opposite.
    3) the only way we will know who is right is if we see what happens in the real world. While the JG has to be financed at the national (currency issuer) level, it could be implemented on a national scale, or, if politically preferred, on a trial/experimental and localized basis.

    • I agree with your 3. As to #2, I really don’t get all of the hand wringing about a guaranteed job somehow hurting someone’s physche. It also seems like a lot of anti-JG people think it is a forced job…. it’s a fall back if you’ve got nothing else – is it not? How does a non-forced job hurt a man? Finally, I don’t get the statism and socialism/marx comments… maybe I haven’t read the other MMT bloggers enough…. is that really what they want? I did read some other MMT blog today and it was so convoluted and anti-Cullen that I couldn’t get through it. So maybe there are marxist/socialists out there, but most of the pro-JG arguments here are anything but IMHO.

      Personally I’m not in favor of the JG because it would seem that there would be very little need for it if we had a well run economy and much smarter taxes and regulation. We may need a JG right now, but right now is the product of 30 years of misguided “free” market crony capitalism. Let’s fix that first. First by educating the general public about “modern money” or “money realism” or whatever the heck we’re calling the descriptive part. And second, by arguing over what the tax code and regulations should be.

      • The big MMT insight is that we should spend to offset the unemployment. We’re all on the same page there! But do we need to do that spending through massive and potential costly govt labor programs? I think we could make govt spending much more efficient than it is. And I don’t necessarily think a JG is the right path in that direction….

      • Hi, I pretty much agree with you. I think I haven’t expressed myself clearly.

        My own view is that in a hundred years time, when MMT is universally accepted, the opposition to a JG will be viewed in the same way we now view the opposition to abolishing slavery, or child labour, (or universal health care!)

        However, given the strength of feeling on this issue, we can at least agree that sovereign currency issuers can easily afford to experiment and see what happens with a JG on a small scale – perhaps starting on Warren Mosler’s island!

  10. I think having a currency that gives as much price stability as possible is crucial for a functioning economy. You just need to see the loss of production, poverty and chaos that comes from severe inflation or deflation to see that. Money is working best when people don’t need to think at all about possible inflation or deflation (of assets or consumables). If what makes business sense in terms of producing what people really want and need is also what makes financial sense then the monetary system is doing its job IMO. The colossal waste of the FIRE sector we have now is an artifact of our deranged monetary system IMO.
    What would be a sensible price anchor in order to have price stability? A JG wouldn’t work because it wouldn’t be viewed as credible that the government would stick to the anchor. As many people have said, a gold/silver standard tends to only work whilst massive gold/silver mining is successfully taking place, otherwise it just hits the buffers and gets abandoned. In Babylonian times they pegged together the shekel currency, silver and barley by law. The link to barley was crucial for the functioning of the system because it meant that hoarding of silver did not create a deflation spiral. In this day and age though, even agricultural commodities can and do get hoarded by financiers (eg as in the 2008 financial crisis and resulting famine). I think there is a potential “better than gold” price anchor a bit like the JG but credible. If the USD was redefined as 1/1400th of a starting low rank soldier’s pay then perhaps that could be such a credible price anchor. It could be extended such that there was a fixed ratio between that pay and the pay of a five star general (perhaps 5x as much?) and the president and any federal employee they decided to peg (perhaps all).

    The crucial difference between federal employees and say private sector car mechanics is that the government has total power over how much to pay their own employees and also it is the government that creates the USD (in “net financial assets sense”). If the peg were made to private sector car mechanics then disaster would ensue because the private sector car mechanics would constantly be changing their pay so as to keep ahead of the government in a cat and mouse spiral. The government its self pays the federal employees so no such event can occur.

    The reason to choose military pay (rather than the president’s pay or whatever). Is because military pay is such a large amount that it can not be messed around with and also, as WildAboutHarry said, the military are not going to be messed around with. Everyone relies on them being on our side. That would give international credibility to the idea that the government would not devalue the USD and just let the military suffer. That would make the USD a very strong, trusted and sort after reserve currency even in a (near) zero interest rate environment as I guess we are heading towards.

    • The anonymous comment about using military wages as a price anchor was from me. I’d forgotten to login