The proposal is for the ECB to create and then distribute trillions of euros annually to the national governments on a per capita basis. The per capita criteria means that it is neither a targeted bailout nor a reward for bad behavior. In fact, as the largest economy, Germany would get the largest distribution of euros from the ECB. This distribution would immediately adjust national government debt ratios downward, which eases credit fears without triggering additional national government spending. This serves to dramatically ease credit tensions and thereby foster normal functioning of the credit markets for the national government debt issues.
– June 28, 2012
This speech has been causing consternation amongst economists and investors. I suppose it is because Soros is telling the truth of the situation as he sees it stripped of wishful thinking. You will see that Europe is likely to experience an eventful three months at the end of which things will have changed fundamentally – whether for better or worse is impossible to say. I think that Soros smart as he is, may not have spotted a third outcome – that of the recognition of the Euro as a social commons and the ECB as its trustee. The ECB can provide the money supply that is needed to eliminate the great debt mountain in a modern day Jubilee as per Richard Douthwaite of Feasta (Deficit Easing) and the independent minded economist, Steve Keen and MMTers Marshall Auerback, Warren Mosler and our own Philip Pilkington. Citizens beneficiaries of the Euro trust would receive a disbursement of trillions on an objective or per capita basis – no German taxpayer transfer or guarantee necessary. It would mean the reinvention of the Res Communa of ancient Rome,or ‘commons property’ as we know it. The concept of the ‘commons’ is growing in the youthful Occupy movement and in the likes of the unexpectedly emerging Pirate Parties of Northern Europe. In their hearts and minds lies the final outcome of the Euro story.
– June 6, 2012
Link to weekly newsletter on MMT or Modern Monetary Theory Modern Monetary Theory
– May 20, 2012
New blog source Corrente I found that is spreading MMT ideas. It gives a well recorded account of a Fiscal Counter Summit with all of the MMT big hitters. The second part includes Bill Mitchell which I excerpt here to give some southern hemisphere balance on our Smart Taxes blog. Hes ays in short “the sustainable goal of the economy should be the zero waste of the people in the economy… . as a consequence of the way we structure our economy and the way that policy intervenes to manipulate the economy.”
— “And then from my point of view, that means, we – the state – should be responsible for maximizing employment: making sure everybody who wants to work can work, with decent working conditions and wage levels that provide them with a sustainable life in the cultural and social setting that we live in.”
– May 20, 2012
TV3 Tonight with Vincent Brown 19th April 2012 Link to 3player here Steve Keen aided and abetted by Constantin Gurdgiev on TV3 outlines what it will take to solve the current debt crisis – nothing less than a distribution of trillions of euro to people – NOT to the banks. Richard Douthwaite dubbed it ‘deficit [...]
– April 19, 2012
The New Economic Perspectives blog has been hosting a series discussing the Job Guarantee which is a major tenet of MMT or Modern Monetary Theory. Professor L Randal Wray has authored these blogs responding to questions and criticism posted by his myriad readers. We post his last piece here which deals with the practicalities of [...]
– April 16, 2012
Philip is a member of Feasta and the Environmentla Pillar Economic Workign Group. He blogs in Naked Capitalism and is a leading young MMT advocate in Ireland. Here he writes about the danger of inflation where a Job Guarrantee in a under developed country stimulates the importation of fancy goods thta causes inflation and the devlauation of the floating currency. This coudl be true for Ireland as we make very little stuff here. He says to do what De Gualle did in France after the War – find out what people want and incentivise its production locally. All becomes possible once the neoliberal blindfolds are removed.
– April 10, 2012
Philip Pilkington has worked with Smart Taxes and the Economic Working Group of the Irish Environmental Pillar on the Green Job Guarantee. Here he has partnered with MMT economist and market maven Warren Mosler and convinced the prestigious Levy Institute to publish their idea for Tax-Backed Bonds. The ‘tax-backed bond’ or ‘Mosler bond’ is based on the MMT idea that fiat money gets its value because the government accepts it in the payment of taxes. As the MMTers have been saying since the Eurozone crisis began the reason that the European periphery nations are having such a hard time with their sovereign debt burdens is because they do not issue their own currencies. The policy note we have just published outlines a new approach to the problem. The country will issue new tax-backed bonds that in the event a sovereign proves unable to meet its financial obligation to its creditors can be used to repay taxes in the country in question.
– March 30, 2012
The Austrians Randall is talking about are not to be found on skiing trips in the Alps. We don’t have many of them in Ireland. But this is also a good intro to Randall’s next series of discussions on the Job Guarantee. MMP Blog 38: MMT for Austrians by firstname.lastname@example.org By L. Randall Wray ….Anyone [...]
– February 27, 2012
I foresee two great parallel trends.
Firstly, resolution of unsustainable mortgage (land-based) debt into a new generation of stock based upon rental values in a debt/equity swap on a massive scale.
Secondly, transition to a sustainable economy through direct ‘energy stock’ investment and the Big Trade of the 21st Century will be the exchange of intellectual value for the value of energy saved: Nega Watts and Nega Barrels.
Adoption of an Energy Standard leads to a new calculus forming the basis of all economic decisions. Dollar Economics becomes Energy Economics.
– February 25, 2012
Writing in the Asian Times, Chris Cooks gives a very useful and to my mind accurate description of the evolution of our current money system. He predicts a crash in oil and other commodity prices in the first quarter of 2012. He ws also bold enough to predict the form of the new economy to emerge post the mayhem of this crash. Here I think he strays a little into wishful thinking. His preference is for Peer to Peer and Peer to Assets forms of credit creation. No doubt these will emerge but what unit of account will be used? Chris suggests that the universal unit of account will be a unit of energy. Certainly that is a distinct possibility and energy units will play an important part in an energy constrained world.
But its universality goes against the story that he so masterfully set out in his introduction where two kinds of money/credit evolved together – the first a form of barter where real things are exchanged, the second a simple tally or record of a promise that is backed by unreal things such as trust and reputation and sometimes physical force. This second kind of money is that described and promoted by modern money theorists (MMT) – government money backed by the requirement to use it to pay taxes. There are very many positive reasons for this kind of money to persist not least as it carries with it a sense of social understanding that allows for debt forgiveness when the economy or political climate requires it.
Energy units are likely to be just as unforgiving as gold.
– December 21, 2011
By Warren Mosler, an investment manager and creator of the mortgage swap and the current Eurofutures swap contract and Philip Pilkington, a journalist and writer based in Dublin, Ireland. Cross posted with Naked Capitalism. Philip is also a member of Feasta, the Smart Taxes Network and the Economic Working Group of the Environmental Pillar. The [...]
– November 22, 2011
The Irish economy needs stimulus and the most effective way to do this is to implement an immediate jobs program backed by newly issued, low-yield tax-backed Jobs Bonds. This will provide the financing necessary for such a program without adding to Ireland’s already substantial interest burden. If the newly issued Jobs Bonds have a guaranteed clause that, in the case of default and only in the case of default, they can be used to extinguish tax liabilities within Ireland, this will provide an effective floor below which the value of said bonds cannot drop. This provides investors with 100% confidence that their investment will always be realised so that a moderate rates of return is acceptable.
– November 8, 2011
.In a non-convertible floating rate monetary system, the currency issuer is not constrained operationally. The only constraint is real resources. If effective demand outruns the capacity of the economy to expand to meet it, then inflation will result. If effective demand falls short of the capacity of the economy to produce at full employment, then the economy will contract, an output gap open, and unemployment will rise. It is important to note that MMT economists are NOT recommending the adoption of a Treasury-based monetary system. Rather, they are asserting that the present monetary system is already Treasury-based operationally, even when governments choose to impose political restraints that mimic obsolete practices and create the impression that these are operationally necessary.
– August 23, 2011
First, the euro funding issue/crisis could vanish with a simple announcement, like: The ECB hereby guarantees all the debt of the national governments. But they won’t do that. They are worried about their ability to subsequently enforce the Growth and Stability Pact, which has already proven unenforceable.
In fact, the only enforcement tool for austerity seems to rest with the ECB, which conditions its funding on austerity.
This is also the disciplinary principle behind my proposed ECB annual revenue distribution of maybe 10% of euro zone GDP to the national govts on a per capita basis- The ECB would have the right to withhold future distributions to members who fail to comply with deficit rules. But this proposal isn’t even a consideration, so not likely to happen. Mosler bonds (in the case of default they can be used for payment of taxes) for individual euro nations offer real hope, but time is short and the political process long.
– August 22, 2011
Warren Mosler has found signs that the ECB is beginning to collect the right kind of data. Their interpretation of it is still problematic though.. Current policy responses continue to support the same repressive fiscal policies that again look to be driving the otherwise prosperous euro zone into negative GDP growth. The glimmer of hope [...]
– August 18, 2011
From Mike Norman here copied in full so there is no excuse not to read and fully understand this crucial issue concerning government spending v bonds sales and inflationary risk. Monday, August 15, 2011 Warren Mosler critiques Paul Krugman’s “MMT, again” Paul Krugman’s post is italicized in block quotes. Warren Mosler responds point by point [...]
– August 17, 2011
I missed this when it was first posted in NEF. It proposes what Feasta has always held; that a single currency however efficient for market is not optimal when other considerations such as systemic risk is taken into account. It is nice to see that we are not alone and that these ideas are finally getting into to the mainstream.
– August 1, 2011
This is a long post in New Economic Perspectives setting out patiently and exhaustively why minting trillion dollar coins is not inflationary in itself… Coin Seignorage and Inflation Monday, August 01, 2011 By Scott Fullwiler Solving the debt-ceiling issue via proof platinum coin seigniorage—an idea that began and was nurtured within the MMT ranks, mostly [...]
– August 1, 2011
This site is titled ‘Smart Taxes’ so why ask some, do we spend so much space discussing monetary and financial affairs. The short answer is that without taxes, there would be no modern money – they are two sides of the same coin so to speak – pun intended. The long answer is set out here by Dr Randal Wray in his 8th lesson on MMT called ” Taxes Drive Money”.
– July 26, 2011
The biggest fear and objection to MMT ideas of non debt based government spending is – inflation. Even progressive cite inflation as the reason why a ECB distribution of debt free money on a per capital basis should not be attempted no matter how attractive it appeared. When one asks why these words are intoned in a very serious voice ” the quantity theory of money’. To non economists the words sound impressive but harmless. But belief in the power of this mantra is pervasive in the political classes and because it is believed it has power much like the witch doctors magic. This article by Maddog in Money and Public Purpose on the Daily Kos blog goes to the trouble to give us an antidote to the power of these words by explaining the even bigger juju formula it relies upon. He then explains the circular logic used by the witchdoctors, oops, I mean neoliberal economist to make the formula deliver the outcome he wants. Maddog concludes thus..
– July 22, 2011
Nat O’Connor of Tasc which partnered Smart Taxes recent conference “Lessons from the Crisis” that introduced MMT ideas to Ireland, writes in Social Justice Europe to advocate a Job Guarantee. He usefully scopes what the JG would mean for Ireland. We hope this is the start of a serious debate of this option. The Environmental [...]
– July 1, 2011
Green Job Guarantee : Smart Taxes &Environmental Pillar Economic Working Group: Emer O’Siochru The Job Guarantee was formulated as the counterpart of Modern Money Theory (MMT) fiscal policy under a fully sovereign sate i.e. one still in control of its own currency. It is more difficult to explain and deliver where the currency is issued [...]
– June 11, 2011
Will Greece let EU Central Bankers Destroy Democracy? Monday, June 6, 2011 Will Greece let EU Central Bankers Destroy Democracy? By Michael Hudson (cross-posted with CounterPunch) The Greek bailout provides an opportunity for privatization grabs When Greece exchanged its drachma for the euro in 2000, most voters were all for joining the Eurozone. The hope [...]
– June 7, 2011
Martin Wolf says : The eurozone confronts a choice between two intolerable options: either default and partial dissolution or open-ended official support. The existence of this choice proves that an enduring union will at the very least need deeper financial integration and greater fiscal support than was originally envisaged.
– June 1, 2011