Modern Monetary Theory

The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

by Stephanie Kelton  · 8 Jun 2020  · 338pp  · 104,684 words

their content) that are not owned by the publisher. Library of Congress Cataloging-in-Publication Data Names: Kelton, Stephanie, 1969– author. Title: The deficit myth : modern monetary theory and the birth of the people’s economy / Stephanie Kelton. Description: First edition. | New York : PublicAffairs, [2020] | Includes bibliographical references and index. Identifiers: LCCN 2019059417

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options than we realize, but we desperately need to see through the myths that have been holding us back. This book uses the lens of Modern Monetary Theory (MMT), of which I have been a leading proponent, to explain this Copernican shift. The main arguments that I present apply to any monetary sovereign

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here to learn more. Alex Trebus Photography Stephanie Kelton, a professor of economics and public policy at Stony Brook University, is a leading expert on Modern Monetary Theory and a former chief economist on the US Senate Budget Committee (Democratic staff). She was named by Politico as one of the fifty people most

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book is to free us from defunct orthodox thinking about fiscal deficits rooted in the bygone era of the gold standard. Her theoretical canvas is modern monetary theory. At its core MMT offers a simple proposition: In a fiat currency world, the finances of we the people ain’t the same as a

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22, 2012, ftalphaville.ft.com/2012/02/22/892201/why-mmt-is-like-an-autostereogram/. 18. Sally Helm and Alex Goldmark, hosts, interview Stephanie Kelton, “Modern Monetary Theory,” Planet Money, NPR, September 26, 2018, 22:00, www.npr.org/templates/transcript/transcript.php?storyId=652001941. 19. It’s important to remember that taxes

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. John T. Harvey, Currencies, Capital Flows and Crises: A Post Keynesian Analysis of Exchange Rate Determination (Abingdon, UK: Routledge, 2009). 26. Bill Mitchell, “Modern Monetary Theory in an Open Economy,” Modern Monetary Theory, October 13, 2009, bilbo.economicoutlook.net/blog/?p=5402. 27. Predictably, the Volcker shock also devastated US workers, shutting down factories in the

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, “Media Go Trumpian on Trade,” Beat the Press, CEPR, August 24, 2019, cepr.net/blogs/beat-the-press/media-go-trumpian-on-trade. 33. Mitchell, “Modern Monetary Theory.” 34. Pavlina R. Tcherneva and L. Randall Wray, “Employer of Last Resort Program: A Case Study of Argentina’s Jefes de Hogar Program,” Working Paper

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,” Working Economics Blog, Economic Policy Institute, December 9, 2013, www.epi.org/blog/naftas-impact-workers/. 39. Bill Mitchell, “Bad Luck if You Are Poor!,” Modern Monetary Theory, June 25, 2009, bilbo.economicoutlook.net/blog/?p=3064. Chapter 6: You’re Entitled! 1. US Senate, “Glossary Term: Entitlement” (webpage), www.senate.gov/reference

Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, and the Road Ahead

by Kenneth Rogoff  · 27 Feb 2025  · 330pp  · 127,791 words

can always choose to issue debt and make payments to anyone it wants, and the Fed can buy up the debt. (We will come to “modern monetary theory,” an extreme variant of this approach, in the next chapter.) If the Fed were to try helicopter money on its own, central bank independence would

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spending could be used to substantially help pay for her Green New Deal. Kelton later described AOC’s endorsement as having an “Oprah effect” on modern monetary theory.26 To be fair, Kelton did note that inflation could eventually ensue, even if the media blitz had smothered this qualification. The empirical question is

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hand, it will likely stimulate significant further research, and on the other, it may not be the last word. 25. Stephanie Kelton, The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy (New York: Public Affairs, 2020). 26. Scott Horsley, “This Economic Theory Could Be Used to Pay for

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middle-income trap, 96–97 Miller, Chris: Chip Wars, 61 Miller, G. William (Chair, Federal Reserve Board), 252 Mnuchin, Steven (Treasury Secretary, United States), 270 modern monetary theory, 270, 271, 273, 328 n.25 Modigliani, Franco, 175 Mohamad, Mahathir (Prime Minister, Malaysia), 136 Monetary Authority of Singapore, 322 n.9 CBDC contest, 205

The Politics of Bitcoin: Software as Right-Wing Extremism

by David Golumbia  · 25 Sep 2016  · 87pp  · 25,823 words

have mentioned, the majority of expert economic theory simply defines money as currency that is issued by a sovereign government. This theory is known as “Modern Monetary Theory” (MMT) or “neochartalism” and has its roots in economics going back at least to John Maynard Keynes, whose views have perpetually been a major target

The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future

by Jeff Booth  · 14 Jan 2020  · 180pp  · 55,805 words

have many different forms. Let’s look at the two sides one at a time. Continued low or negative interest rate environment, central bank printing, modern monetary theory, or other guarantees to keep the party going The greatest irony of this camp is that it has the highest belief in a free-market

Milton Friedman: A Biography

by Lanny Ebenstein  · 23 Jan 2007  · 298pp  · 95,668 words

us with broad policy recommendations,” and “Friedman’s monetary framework has been so influential that, in its broad outlines . . . , it has nearly become identical with modern monetary theory and practice.”22 According to Alan Greenspan, Bernanke’s predecessor, “There are very few people over the generations who have ideas that are sufficiently original

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis

by Martin Wolf  · 24 Nov 2015  · 524pp  · 143,993 words

-led effort to escape from a more severe crisis. All these are very important lessons, to be considered further in Chapter Eight. Lerner, Chartalism and Modern Monetary Theory A final school of thought, which is called ‘chartalism’ (from the idea that money is just a token, for which the Latin word is charta

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the associated risks of sharp declines in the value of the currency against other currencies. Today’s proponents of this set of ideas call it ‘modern monetary theory’.54 An essential point is that the private sector can be a net accumulator of financial assets if and only if the government runs a

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latter deficit will need to be financed by the creation of bank credit, which may ultimately prove destabilizing. A crucial and unquestionably correct point in modern monetary theory is this: banks do not lend out their reserves at the central bank.55 Banks create loans on their own, as already explained above. They

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between banks and the central bank as being identical to the one between the public and the banks. The central bank is the banks’ bank. Modern monetary theory poses another fundamental challenge to the official orthodoxy. It argues that in an economy based on fiat money, the job of the central bank and

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exchange rates. This is not only what many in the Chicago School would have accepted. It is also the recommendation of those who believe in Modern Monetary Theory (see Chapter Six above). Meanwhile, control over the quantity of money to be printed would be left with the central bank, which would create the

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Full Employment: Lessons from Lerner for Today’, Working Paper No. 272, The Jerome Levy Economics Institute, July 1999. 54. See, in particular, L. Randall Wray, Modern Monetary Theory: A Primer on Macroeconomics for Sovereign Monetary Systems (London: Palgrave Macmillan, 2012), and Warren Mosler, Seven Deadly Innocent Frauds of Economic Policy (Valance, 2010). See

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-82df-00144feab49a.html. Woodford, Michael. Interest and Prices: Foundations of a Theory of Monetary Policy (Princeton and Oxford: Princeton University Press, 2003). Wray, L. Randall. Modern Monetary Theory: A Primer on Macroeconomics for Sovereign Monetary Systems (London: Palgrave Macmillan, 2012). Wren-Lewis, Simon. ‘The Two Arguments Why the Zero Lower Bound Matters’, Mainly

The Social Life of Money

by Nigel Dodd  · 14 May 2014  · 700pp  · 201,953 words

credit that places greater emphasis on the banking system. The leading exponent is the American economist, Randall Wray, whose approach is usually referred to as “modern monetary theory.” Wray’s work is premised on the “post-Keynesian” argument that the effective quantity of money within the economy is determined by its own internal

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pitfall is likely to be price deflation (and, in extremis, hyperdeflation), not inflation. This would be the conclusion reached about Bitcoin from the perspective of modern monetary theory, as discussed in Chapter 3. As the blogger “Lord Keynes” notes, “without relative price stability and an elastic supply, Bitcoins are not a viable monetary

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, 129, 252, 254, 255, 261, 263, 265, 270; and financial crisis, 1–2, 4, 76–77, 127, 388; independence of, 20; and inflation, 132; in modern monetary theory, 107; and monetarism versus Keynesianism, 192; and monetary disturbances, 54n11, 70; and monetary governance, 69–70, 115, 246; and monetary policy, 121–22; in Proudhon

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–6, 108, 111, 121, 248, 353–54, 359 mobile money, 14, 315, 377–79; versus the state, 379 mobility, 226, 240, 333 models, 21, 227 modern monetary theory, 106 monetarism, 73n30, 120, 121, 192, 330 monetary base, 58, 69, 70, 73, 78–79, 131n59, 213 monetary circuit theory, 105n18, 106n19, 108n23 monetary circuits

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, 110; and the financial crisis, 2; and financial markets, 246; in Fromm, 337; in Ingham, 109–10; in Knapp. 103; in Marx, 57; according to modern monetary theory, 107; in Polanyi, 281; and the quantity of money, 122n; and securitization, 121–22, 123; and sovereignty, 262 monetary production economy, 108 monetary realism, 198

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, 231; and demurrage, 349, 371; in the Eurozone, 252, 254, 255, 257; evasion of, 329; and the financial crisis, 127; and modern capitalism, 217; in modern monetary theory, 106–7, 110; and the poor, 327; and public debt, 64, 126, 127; and sacrifice, 25–26; and sovereignty, 219, 261–62; and the state

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tragedy, 145 transcendental apperception X, defined, 82 transcritique, defined, 83 treasury, 106, 109, 115, 178; and central banking, 109; and the Eurozone, 107, 255; in modern monetary theory, 107. See also fiscus; United States Treasury Treasury bill standard, 99 treasury bills, 124 tribute, 16. 17, 23–24, 53, 353 true prices, 356–57

Money and Government: The Past and Future of Economics

by Robert Skidelsky  · 13 Nov 2018

is related primarily to the operations of public finance, not of markets. Promises come before coins: coins are merely tokens of promises. Neo-chartalists of ‘modern monetary theory’, such as Warren Mosler and Randall Wray, go further: the state doesn’t need to tax in order to spend; it needs to spend in

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to it as tax revenue. As Anwar Shaikh rightly notes: ‘There is no such thing as a money of no escape.’55 The value of modern monetary theory is not in trying to prove that government can issue debt without limit, but in emphasizing that the ‘bonds of revenue’ are far looser than

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, 261 Keynes’ view of, 1, 25, 36, 115, 119, 121 law of ‘diminishing marginal utility’ of, 290–91, 292 and Mill, 19–20, 21, 36 ‘modern monetary theory’, 26 ‘money illusion’, 36–8, 182, 206 as most liquid form of wealth, 36 origins of, 20, 23–5, 39 ‘real’ analysis of classical school

Shocks, Crises, and False Alarms: How to Assess True Macroeconomic Risk

by Philipp Carlsson-Szlezak and Paul Swartz  · 8 Jul 2024  · 259pp  · 89,637 words

structural demand insufficiencies, triggered calls to expand the already turbocharged tactical-stimulus machine.12 Specifically, proposals for a universal basic income (UBI) and advocacy for modern monetary theory (MMT) illustrate how far this debate went.13 During the Democratic presidential primaries in 2020, both concepts moved from the fringes of the policy debate

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costly, that it is poorly targeted for those in need, that it disincentivizes work, and that it comes with the risk of inflation. Proponents of Modern Monetary Theory (MMT)—such as Stephanie Kelton of Stony Brook University—argue (in part) that government deficits should be the size needed to reach full employment and

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.nytimes.com/2019/02/25/opinion/running-on-mmt-wonkish.html. Philipp Carlsson-Szlezak and Paul Swartz, “MMT, AOC, OMG—What Investors Should Know about Modern Monetary Theory,” Sanford C. Bernstein, April 9, 2019. Reprinted in An Economic History of Now, vol. 2, September 2019. Chapter 12 1. Volcker’s successor as chair

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mindsets, 8, 18 history-is-destiny, 196, 197 history-is-history, 196–201, 203–205 Mississippi stock bubble, 182 MMM. See master-model mentality (MMM) modern monetary theory (MMT), 134–135 monetarism, 21–22, 151–152, 152f monetary objections to tactical stimulus, 128 monetary policy bubbles and, 110 cyclical vs. structural inflation and

Angrynomics

by Eric Lonergan and Mark Blyth  · 15 Jun 2020  · 194pp  · 56,074 words

. Today, functional finance, a left-wing version of Friedman and Abba Lerner, has been revived as a fringe ideology in the US under the misnomer, modern monetary theory (MMT), but in practice there appears to be no serious ideological parallel in the current era with which to reboot angrynomics. We believe that we

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very strong claim and sounds similar to some of the ideas held by a number of US economists who advised Bernie Sanders and known as modern monetary theory (MMT). They argue for aggressive fiscal spending given structurally low inflation. ERIC: In the absence of inflation, it is true that we have a great

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9, 13–14, 160 migrant crisis 7, 111 Milanovic, Branko 52, 80 minimal group paradigm 21 Minsky, Hyman 128 mobile phones 53, 96, 97, 142 modern monetary theory (MMT) 118, 128–9 money, printing 78, 128, 145 monopolies 142, 143, 144 moral outrage 8, 13, 15, 35–6, 57–8, 117, 130, 161

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