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Making Money Work for Us: How Mmt Can Save America
Is money precious and scarce, necessitating iron fiscal discipline? Must the government always balance the books or risk ruin? Or is money, in fact, a flexible tool that can be used to mobilize our collective resources to serve those who need them?
In this book, leading Modern Money Theory (MMT) advocate Randy Wray explains that the only real constraints on public policy are physical resources, technological capacity and political will: but never money. He shows how modern sovereign governments spend by keystroking money to bank accounts. While taxes serve other important purposes, they do not - contrary to popular belief - fund spending. If we recognize this, and totally reframe how we think about money and debt, we can marshal our national wealth to make us all richer, eliminate unemployment and "look after our own." We can make money work for us - the US.
This book's account shows how MMT can become a new American political and economic orthodoxy, replacing the dominant conservative framework forever. It is essential reading for all progressives.
In this book, leading Modern Money Theory (MMT) advocate Randy Wray explains that the only real constraints on public policy are physical resources, technological capacity and political will: but never money. He shows how modern sovereign governments spend by keystroking money to bank accounts. While taxes serve other important purposes, they do not - contrary to popular belief - fund spending. If we recognize this, and totally reframe how we think about money and debt, we can marshal our national wealth to make us all richer, eliminate unemployment and "look after our own." We can make money work for us - the US.
This book's account shows how MMT can become a new American political and economic orthodoxy, replacing the dominant conservative framework forever. It is essential reading for all progressives.
- GenresEconomics
ebook
Published September 5, 2022
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Displaying 1 - 4 of 4 reviews
December 29, 2022
This book is a must-read for anyone who understands the basics of Modern Money Theory (MMT). Randall Wray explains the fundamental concepts, including how money is created, what the government can and cannot do, and how the government and private sector interact. He also provides a comprehensive overview of MMT's history and current state and clear and concise critiques of the current financial system. As you read the book, you'll learn why and how our tax dollars don't fund government spending; how the $21 trillion government deficit is not a deficit but the amount of money the government has spent into the economy in the last 230+ years. You'll learn about the role of the Central Bank and how it's funded, the impact of raising interest rates to fight inflation, and why there must be a paradigm shift in how the government spends.
In a nutshell, MMT explains how sovereign government money works and why the federal government can create jobs and spend more to improve the needs of society as long as the resources are (human labor, goods and services) managed and produced.
MMT is not a legislative, economic policy; it's an approach to fiscal policy that explains how the government can fund and finance public goods and services that are in the public interest without relying on taxes. Additionally, MMT argues that government spending should not be limited by the amount of taxes collected and that taxes should not be used to fund government spending. Instead, taxes can be used to manage aggregate demand and inflation and target specific sectors or areas of the economy.
The book doesn't address well enough issues of low wages, vast wealth accumulation and disparity, and foreign trade. I recommend MMT economist Stephanie Kelton's book, The Deficit Myth, to explore more about MMT.
In short, MMT provides a framework for understanding how public and private money work together and how both can be used to benefit society.
In a nutshell, MMT explains how sovereign government money works and why the federal government can create jobs and spend more to improve the needs of society as long as the resources are (human labor, goods and services) managed and produced.
MMT is not a legislative, economic policy; it's an approach to fiscal policy that explains how the government can fund and finance public goods and services that are in the public interest without relying on taxes. Additionally, MMT argues that government spending should not be limited by the amount of taxes collected and that taxes should not be used to fund government spending. Instead, taxes can be used to manage aggregate demand and inflation and target specific sectors or areas of the economy.
The book doesn't address well enough issues of low wages, vast wealth accumulation and disparity, and foreign trade. I recommend MMT economist Stephanie Kelton's book, The Deficit Myth, to explore more about MMT.
In short, MMT provides a framework for understanding how public and private money work together and how both can be used to benefit society.
January 8, 2023
A decent quick overview of MMT
April 16, 2023
A BOOK FOR THOSE WHO WANT TO ‘DIG A BIT DEEPER’ IN MMT
Economist L. Randall Wray wrote in the Preface to this 2022 book, “Many think we claim to have invented some stand-alone, entirely new, approach to money. That is false… Modern Monetary Theory [MMT] is an integration … this integration provides a new framework for analyzing monetary and fiscal policy in what we call sovereign currency nations… This current book is positioned in between the primer and an academic text, for those who already know the basics of MMT but want to dig a bit deeper.” (Pg. ix)
He explains in the first chapter, “For most people, the greatest challenge is MMT’s claim that a sovereign government’s finances are nothing like those of households and firms. While we hear all the time … that ‘if I ran my household budget the way that the federal government runs its budget, I’d go broke’… MMT argues that this is a false analogy… a sovereign, currency-issuing government is NOTHING like a currency-using household or firm. The sovereign government cannot become insolvent in its own currency; it can always make all payments as they come due in its own currency. Governments spend first, then tax. That means tax revenue is not needed for spending… government’s spending is never constrained by taxes or by ‘bond market vigilantes’ who might refuse to lend. To put it as simply as possible, governments today spend by ‘keystrokes’ that they cannot eve run out of.” (Pg. 2-3)
He continues, “The money is always created ‘out of thin air’… There’s no theoretical limit to the government’s ability to create its money … and no limit to banks’ ability to create bank money (deposits). You may find that shocking, and maybe even scary. This book will explain how money creation works and how we can use that knowledge to improve the functioning of our economy.” (Pg. 4)
He outlines, “perhaps the most important original contribution of MMT has been the detailed study of coordination of operations among the treasury, the central bank and private banks that is now required anytime the government spends or collects taxes… Despite the greater complexity involved, we lose nothing of substance by saying that government spends currency into existence and taxpayers use that currency to pay their obligations to the state.” (Pg. 22-23)
He asserts, “when we hear politicians proclaiming ‘the government has run out of money,’ as President Obama did on many occasions, we can be sure that they are wrong. Sovereign government cannot run out of its own keystrokes.” (Pg. 45) He adds, “Keystrokes. What do they represent? … Tallying. Accounting. Today’s banks operate in the same manner. Where do the deposits come from? Keystrokes.” (Pg. 53)
He goes on, “Since abandoning the gold standard, there are no physical limits to money creation. We cannot run out of keystroke entries on bank balance sheets… As such, the biggest question facing us is this: how can we use finance to promote capital development of the economy? Finance is not a scarce resource. We can have as much as we want. The problem in recent years has been that our governments wrongly think they’re financially constrained, while our private financial system has directed much of its efforts to self-enrichment through speculation rather than to capital development.” (Pg. 57)
He argues, “private spending, financed by bank money creation, COULD be inflationary. However, the greater danger of ‘too much money creation’ by banks is typically NOT inflation, but rather financial crisis. Too much PRIVATE money often means too much risky debt. The risks build until a crisis erupts.” (Pg. 69)
He reports, “The global COVID-19 pandemic generated an even deeper recession to several rounds of ‘relief’ packages… The upside of such interventions is that we have … avoided another great depression. The downside is that every intervention by government … validates the behavior that helped to create the crisis (by preventing widespread bankruptcies of financial institutions)… successful rescues promote more risk-taking.” (Pg. 71)
He states, “we can spend more than last year’s income… How can we keep doing this year after year? The key, of course, is credit. Private financial institutions create money to finance spending, and government creates money to finance its spending. Together that creates income. And growing income allows us to make the payments on the debts from the past.” (Pg. 98)
He argues, “MMT answers that if there are unemployed resources, government ought to spend more… Government ought to create more jobs for the unemployed… involuntary unemployment is extremely costly, both for the individuals who are unemployed and also for society as a whole… MMT proponents have their own preferences regarding what else government ought to do---some might want Medicare-for-All; others might want Green New Deal spending… MMT, by itself, doesn’t lead to any particular position on these policies---it just makes clear that we can financially afford them.” (Pg. 110-111)
He notes, “we’ve experienced chronically high unemployment for decades… [this] meant we did not use them to increase capacity. Further, private firms were not incentivized to increase capacity because slower growth and higher unemployment reduced in impetus to invest…. The output lost over decades of relatively high unemployment is so large that we have trouble contemplating it… we could have made a huge dent in world poverty. That we didn’t is in large measure the fault of economists spreading the falsehood that ‘there’s no such thing as a free lunch’… It is … perhaps the biggest of all economic lies.” (Pg. 113)
He suggests, “there is no point in taxing the rich before keystroking the poor. Linking the two operations only reduces public support for helping the poor… Progressives must stop linking the two---that only plays into the hands of conservatives. Progressives should instead focus on taxing the rich to reduce inequality and the threat to domestic currency.” (Pg. 129)
He explains, “The … policy [that] is by far the most important for MMT: a universal job guarantee that would provide jobs at decent pay … for anyone who wants to work… [Capitalism] has long entertained a false presumption that the ‘market’s not, and never has been, true. Under capitalism, firms … hire workers only if they think they can profit from the employment. This always leaves a substantial part of the potential labor force unemployed.” (Pg. 153-154)
He concludes, “modern cognitive science teaches that we think through the use of stories that integrate words and audio-visual-sensory memories. Stories engage the reader are easier to remember… We’ve told a different money story in this book to reinforce the main ideas… While lots of economists like to parade around with their complex math, their models simply add a patina of sophistication to the simple stories they tell. Stories win the debate, not math. And we’ve got the better stories.” (Pg. 158-159)
This book will be of keen interest to those studying MMT.
Economist L. Randall Wray wrote in the Preface to this 2022 book, “Many think we claim to have invented some stand-alone, entirely new, approach to money. That is false… Modern Monetary Theory [MMT] is an integration … this integration provides a new framework for analyzing monetary and fiscal policy in what we call sovereign currency nations… This current book is positioned in between the primer and an academic text, for those who already know the basics of MMT but want to dig a bit deeper.” (Pg. ix)
He explains in the first chapter, “For most people, the greatest challenge is MMT’s claim that a sovereign government’s finances are nothing like those of households and firms. While we hear all the time … that ‘if I ran my household budget the way that the federal government runs its budget, I’d go broke’… MMT argues that this is a false analogy… a sovereign, currency-issuing government is NOTHING like a currency-using household or firm. The sovereign government cannot become insolvent in its own currency; it can always make all payments as they come due in its own currency. Governments spend first, then tax. That means tax revenue is not needed for spending… government’s spending is never constrained by taxes or by ‘bond market vigilantes’ who might refuse to lend. To put it as simply as possible, governments today spend by ‘keystrokes’ that they cannot eve run out of.” (Pg. 2-3)
He continues, “The money is always created ‘out of thin air’… There’s no theoretical limit to the government’s ability to create its money … and no limit to banks’ ability to create bank money (deposits). You may find that shocking, and maybe even scary. This book will explain how money creation works and how we can use that knowledge to improve the functioning of our economy.” (Pg. 4)
He outlines, “perhaps the most important original contribution of MMT has been the detailed study of coordination of operations among the treasury, the central bank and private banks that is now required anytime the government spends or collects taxes… Despite the greater complexity involved, we lose nothing of substance by saying that government spends currency into existence and taxpayers use that currency to pay their obligations to the state.” (Pg. 22-23)
He asserts, “when we hear politicians proclaiming ‘the government has run out of money,’ as President Obama did on many occasions, we can be sure that they are wrong. Sovereign government cannot run out of its own keystrokes.” (Pg. 45) He adds, “Keystrokes. What do they represent? … Tallying. Accounting. Today’s banks operate in the same manner. Where do the deposits come from? Keystrokes.” (Pg. 53)
He goes on, “Since abandoning the gold standard, there are no physical limits to money creation. We cannot run out of keystroke entries on bank balance sheets… As such, the biggest question facing us is this: how can we use finance to promote capital development of the economy? Finance is not a scarce resource. We can have as much as we want. The problem in recent years has been that our governments wrongly think they’re financially constrained, while our private financial system has directed much of its efforts to self-enrichment through speculation rather than to capital development.” (Pg. 57)
He argues, “private spending, financed by bank money creation, COULD be inflationary. However, the greater danger of ‘too much money creation’ by banks is typically NOT inflation, but rather financial crisis. Too much PRIVATE money often means too much risky debt. The risks build until a crisis erupts.” (Pg. 69)
He reports, “The global COVID-19 pandemic generated an even deeper recession to several rounds of ‘relief’ packages… The upside of such interventions is that we have … avoided another great depression. The downside is that every intervention by government … validates the behavior that helped to create the crisis (by preventing widespread bankruptcies of financial institutions)… successful rescues promote more risk-taking.” (Pg. 71)
He states, “we can spend more than last year’s income… How can we keep doing this year after year? The key, of course, is credit. Private financial institutions create money to finance spending, and government creates money to finance its spending. Together that creates income. And growing income allows us to make the payments on the debts from the past.” (Pg. 98)
He argues, “MMT answers that if there are unemployed resources, government ought to spend more… Government ought to create more jobs for the unemployed… involuntary unemployment is extremely costly, both for the individuals who are unemployed and also for society as a whole… MMT proponents have their own preferences regarding what else government ought to do---some might want Medicare-for-All; others might want Green New Deal spending… MMT, by itself, doesn’t lead to any particular position on these policies---it just makes clear that we can financially afford them.” (Pg. 110-111)
He notes, “we’ve experienced chronically high unemployment for decades… [this] meant we did not use them to increase capacity. Further, private firms were not incentivized to increase capacity because slower growth and higher unemployment reduced in impetus to invest…. The output lost over decades of relatively high unemployment is so large that we have trouble contemplating it… we could have made a huge dent in world poverty. That we didn’t is in large measure the fault of economists spreading the falsehood that ‘there’s no such thing as a free lunch’… It is … perhaps the biggest of all economic lies.” (Pg. 113)
He suggests, “there is no point in taxing the rich before keystroking the poor. Linking the two operations only reduces public support for helping the poor… Progressives must stop linking the two---that only plays into the hands of conservatives. Progressives should instead focus on taxing the rich to reduce inequality and the threat to domestic currency.” (Pg. 129)
He explains, “The … policy [that] is by far the most important for MMT: a universal job guarantee that would provide jobs at decent pay … for anyone who wants to work… [Capitalism] has long entertained a false presumption that the ‘market’s not, and never has been, true. Under capitalism, firms … hire workers only if they think they can profit from the employment. This always leaves a substantial part of the potential labor force unemployed.” (Pg. 153-154)
He concludes, “modern cognitive science teaches that we think through the use of stories that integrate words and audio-visual-sensory memories. Stories engage the reader are easier to remember… We’ve told a different money story in this book to reinforce the main ideas… While lots of economists like to parade around with their complex math, their models simply add a patina of sophistication to the simple stories they tell. Stories win the debate, not math. And we’ve got the better stories.” (Pg. 158-159)
This book will be of keen interest to those studying MMT.
February 6, 2025
Source Internet MMT, excellent read, should be read in tandem with Deficit Myth.
Displaying 1 - 4 of 4 reviews