This is a re-post from the 22nd April 2012.
The Civilized Money View (aka MMT, or Modern Monetary Theory) has historical precedents:
First, the notion—developed by Adam Smith—that the wealth of a nation is measured not by monetary values, but by its capacity to produce goods and services.
Understanding Modern Money Operations is Easy
1. Dollars are created when government (and their central banks) spend. Contrary to popular belief, governments DO NOT NEED to collect taxes or to borrow before they spend. They can simply create dollars from thin air.
Before we begin, I must say we will not actually be discussing policy. This is another critic engagement piece. It follows on from a tweet with Matt Cowgill, an economic policy analyst for the Australian Council of Trade Unions.
It could be argued it also a conversation with Noah Smith and Brad Delong. It is worth noting that Delong is getting closer to the MMT framework.
This conversation is continued from Part 2.
MMT called the meltdown more than a decade ago
— Australian MMTer (@AusMMT) February 2, 2012
This conversation is continued from Part 1.
@andyshastings It’s not adding to debt, meaning less has to go to interest repayments in the future and more to spend on other things
— Possum Comitatus (@Pollytics) February 2, 2012
In a Conversation with Possum Part 1, I used the Accounting Identity for a closed system as if Australia for example was isolated from international trade and did not have open trade with other nations which as we all know it does. Even when the Identity is extended to include trade, it does not subtract from the argument I made. The only difference it makes is where I stated “private sector” in part 1, it should now be read as the non-government sector (private sector + foreign sector).
This conversation occurred on the 1st of February 2012
@pollytics which situation is that? Do you really believe that there is too much wealth in our economy at the moment?
— Andrew Hastings (@AndySHastings) February 1, 2012
and the basis for today’s Modern Money Operations. This is a short clip with Warren Mosler, the man many herald as the founder of MMT.
It is so simple anyone can understand it.
This is lifted from the Modern Money Primer blog by Randall Wray and is now available as a book from Amazon.
This video is from the series of seminars in Rimini, Italy – February 2012
You may wish to fast forward to the 5.00 minute mark.