I saw this tweet today by the Gower Initiative for Modern Money Studies:
Deliberately misleading the public? Or do your journalists lack a basic understanding of monetary operations and government finances, #MMT ?
A complaint submitted today by our Associate, Neil Wilson.
In case you decide to ignore it... pic.twitter.com/2T05MaTDC1— Gower Initiative for Modern Money Studies (@GowerInitiative) December 22, 2020
I have pursued the Act that they refer to, which is this:
I am aware that is small print, but the text of this 1866 Act was updated in 2000 and says this:
Note subpart 2 in particular:
The Comptroller and Auditor General shall, on receipt of a requisition from the Treasury, grant the Treasury a credit on the Exchequer account at the Bank of England (or on its growing balance).
So, in other words, whenever the Treasury demands funds from the Bank of England it can have them, even if that increases its liability owing to the Bank. Which is exactly what MMT says, of course.
Subpart 3 confirms this:
Where a credit has been granted under subsection (2) issues shall be made to principal accountants from time to time on orders given to the Bank by the Treasury.
The language remains that of 1866: the accountant referred to is the person responsible for the use of the funds. But that is not the key point: the issue is that the Treasury demand and as is noted, the Bank jumps.
Again, this is exactly as MMT says.
And as is also clear, whilst the 1866 Act says that all government revenues shall be paid into this account, nothing says there must be a balance held on it to permit this payment instruction to be enacted: it can happen, come what may, even if the overdrawn balance on it is growing. So an overdraft is legislated for here, and authorised by law, come what may.
So, UK law has already enacted MMT.
Well spotted by Neil Wilson.
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Ta da!!!!
Well that is interesting. Was it the 1866 Act that was the technical vehicle that allowed the wartime Government to go on spending money on the war, and the Bofe officials, including Sir John Nairne the Chief Cashier (who was on the BofE books as the lender of a vast part of the largest bond issue in its history!) to go on pretending they actually had the funds, after the 1914, unprecented 3% War Loan issue catastrophically failed (and was kept a secret until about two years ago)?
I am genuinely not sure of the answer to that – but it would look like it from that wording
Yes that reminds me of a similar story about the MP finance committee asking the then Governor how he would find the funds to help pay for the war, apparently he said nothing but simply tapped the side of his nose in answer. Don’t ask difficult questions seems to have always been the order for the day. Money stuff is for the BoE civil servants and so best not interfere.
This is a good find by the Gower Initiative, but this kind of information is easy to bury. Politicians seldom stray into monetary policy as the above example shows, but really they have no excuse as this is a fiscal policy instruction in as plain and simple form as you could wish for.
Agreed
Excellent work!
That is the BBC bang to rights.
No excuse now – it’s the law.
Andy Haldane on Modern Monetary Theory….”I have three problems with MMT: It’s not modern. It’s not monetary and it’s not really theory”. Amen.
Bullshit from Haldane
And not even original BS at that
Maybe he got 2 out of 3 right?
That MMT might be not New – it describes how money has been created for many decades. That it is not a new fangled idea feels like a positive
That MMT is not a Theory – it describes what happens in practice. Thanks for acknowledging that
That MMT is not Monetary – surely its all about ‘money’!
As a throw away comment it seems quite contradictory. The first 2 points could be taken as positive affirmations of MMT.
🙂
On MMT being a theory or not:
Is what Ben says a bit like saying Einstein’s Theory of Special Relativity is not a theory,,,
I always thought a theory was a proof of a hypothesis?
If special relativity wasn’t real and correct, we wouldn’t have any GPS (for example). I suspect most people mix up theoretical with hypothetical (I do it too, out of laziness) and it is now endemic.
Please note: no dictionary definitions have been checked in making this comment (out of laziness, and the need to worry about remembering how to cook for other people).
Richard, I hope you have a lovely and restful festive season & have a good re-charge, ready for another interesting year ahead 😉
Thanks
Appreciated
I pursued hobby activities today….and will be
Like most modellers I always have more to build than I have time to do….
Oddly enough, here’s former BofE Governor Mervyn King saying almost exactly the same. This is really a strange peice as he professes to consider MMT an exercise in money printing and actually cautions against it using the Weimar, Zimbabwe and Venezuela as examples. Sheesh! He says the following: “It costs almost nothing to print money: the cost of printing banknotes is negligible compared with their face value, and even lower when the Bank of England creates money electronically through its so-called ‘quantitative easing’ programme (QE). That money could be given to the public – either directly or indirectly via the government – to enable people to spend more, so raising output and employment. We are all better off.” Sooooo… does he really not get it or is this simple and deliberate misrepresentation? Weird either way. He speaks too of the BofE as being independent, as though it were. Someone tell me this is a spoof!
https://www.spectator.co.uk/article/the-ideological-bankruptcy-of-modern-monetary-theory
I have been meaning to write a response to that…
It is a very odd piece indeed
I wonder, is there some way Osborne can be summoned to court (the Hague for choice, obvs) in order to explain his frequent declarations along the lines of “The country’s running out of money”, a statement which he used to justify austerity?
I am sure the answer is no
Kudos to Neil Wilson for hunting down the small print and kudos to Owen Jones of the Guardian for hitting Sunak and Johnson right between the eyes today:-
https://www.theguardian.com/commentisfree/2020/dec/22/rishi-sunak-private-sector-lockdown-covid#comments
Here’s the Wikipedia definition of the UK Consolidated Fund:-
The Consolidated Fund is the Government’s general bank account at the Bank of England. Payments from this account must be authorised in advance by the House of Commons. The Government presents its ‘requests’ to use this money in the form of Consolidated Fund Bills.
I’m sure though the right-wingers will be arguing because the BoE’s a bank the government will need at some stage to pay off its “overdraft” or “credit card” as John McDonnell would have it. As the shallow nostrum old adage ridiculously says “Never a lender or borrower be!”
But that legislation specifically says that is not required…and the Ways and Means Account allowed for that pre 2008
A task for the Good Law Project to pursue, perchance?
Interesting idea
“But that legislation specifically says that is not required…and the Ways and Means Account allowed for that pre 2008”
You mean the “Exchequer and Audit Departments Act 1866” or the “Government Resources and Accounts Act 2000” Richard?
Both
The latter updates the former
Perhaps we should think of the Exchequer and Audit Departments Act 1866 as the MMT ‘smoking gun’; neoliberalism lying prostrate in the library, a crumpled copy of the household budget in its lifeless, grasping hand …..
Executed by a cobweb-riddled Treasury Act; how very British.
So, the deliberate change in legislation occurred in the year 2000. That would be in the time in government of New Labour.
Tony Blair and Gordon Brown are still around and available for questioning. I wonder who will get round to attending to this little detai?
legislation.gov.uk has the clause as enacted in 1866, which said: https://www.legislation.gov.uk/ukpga/Vict/29-30/39/section/13/enacted
“The Comptroller and Auditor General shall grant to the Treasury from time to time, on their requisitions authorising the same, if satisfied of the correctness thereof, credits on the Exchequer accounts at the Banks of England and Ireland, or on the growing balances thereof, not exceeding the amount of the charge in the aforesaid quarterly account of the income and charge of the Consolidated Fund remaining unpaid. The Comptroller and Auditor General shall also grant from time to time to the Treasury, on similar requisitions, supplemental credits for services payable under any Act out of the growing produce of the Consolidated Fund, and not included in the aforesaid quarterly account; and the issues or transfers of moneys required from time to time by the principal accountants to enable them to make the payments intrusted to them shall be made out of such credits on orders issued to the said banks, signed by one of the Secretaries of the Treasury, or in their absence by such officer or officers as the Treasury may from time to time appoint to that duty, and in all such orders the services for which the issues may be authorised shall be set forth. A daily account of all issues or transfers made from the Exchequer accounts, in pursuance of such orders, shall be transmitted by the said banks to the Comptroller and Auditor General.”
So in broad terms the legislation was much the same as today: when the Treasury asks, the Bank of England must (a) grant credits from the Exchequer accounts or from the Consolidated Fund and (b) issue or transfer money to the “principal accountants” (defined somewhat elliptically in section 3 as “those who receive issues directly from the accounts of Her Majesty’s Exchequer at the Bank of England ” – so issues are made to … the people who receive the issues.)
Clearly the 2000 amended wording would not have applied in 1914, as John S Warren asks, but the 1866 version (or an amended version of it) should have been in force. I suspect further specific legislation may have been required at the time, though.
To answer Andrew Haldane’s put down – indeed, this is not “modern”, or Edwardian, or even Victorian. Since they have existed, when has it not been the case that governments create the money they need, in one way or another? And it is not “theory”: it is a description of the actual practice. But it definitely is about money.
Thanks
This is a step forward
Perhaps there was an expectation when the 1866 Act was passed is that an amount paid out to the “principal accountants” would not exceed the amount already credited to the account in one way or another (either by receipt of taxes, or by issue of bonds) but that is clearly not the case any longer. You press the button, and bingo, credit to draw (and debt to repay)
Agreed
And the law permits the overdraft
Does “if satisfied of the correctness thereof” mean the accuracy of the quantum, or of the final destination of the money? ‘Correctness’ is a curious term to use; it presumably cannot mean either ‘lawful’ or ‘allowable’, since that already seems clear; but in the wording of an Act it may be expected that the accuracy of its application is given. It is a matter for the operational bureaucratic system and its regulation.
In the Comments Section of the Bill Mitchell article referenced below Neil Wilson says about the Exchequer and Audit Departments Act 1866 “Note there is no legal option for the Bank to say ‘no’.”
http://bilbo.economicoutlook.net/blog/?p=46425
In a further comment to this Bill Mitchell article Sandra Crawford says that whilst Anneliese Dodds accepts MMT is right there still needs to be a fiscal rule. Since it would appear such a rule in Parliament’s legislation doesn’t exist this must be pure whim on her part. She needs to be challenged on it!
Also
Agreed
Fiscal rules have b t one role – to constrain spending to appease money markets whose power i already broken
@Helen Just above the comment you referenced from Sandra Crawford, there’s a quote from Neil Wilson which bears repeating –
“In short, the fact that some particular asset that serves as money in this or that case is not very interesting. What matters is the balance sheets. Money is just a means of recording changes on balance sheets, of making transfers between ledgers. If we take the ledger view, then there’s no difference between physical currency and an instrument like a check. In either case the social ledger maintained by the banking system has a certain credit to you. You want to transfer a part of that to someone else, for whatever reason. So you give that person a piece of paper with the amount written on it, and they take it to their bank, which adjusts the social ledger accordingly. It makes no difference whether the piece of paper is a dollar or euro bill or a check or a money order, any more than it matters what its physical dimensions are or whether it is one sheet of paper or two.”
One of my hobbies is searching Bill Mitchell’s blog for comments by Neil Wilson. 😉
Plus the mysterious Mr Shigemitsu!
I am afraid Neil’s indifference to tax havens is what made me wary of him – he really does not get tax
But the above is right and is what I argued in recent threads – money is just double entry
I don’t think one “enacts” MMT….. it just “is”.
Galileo had a theory that the sun was at the centre of things, not the earth. It explained what we could see far better than an earth centred theory and, as a consequence, was adopted as “true” by many but the Church resisted the idea for a long time. They did come round eventually but what the Church did or did not think did not make Galileo’s ideas any less or more true.
The government, via QE, is clearly spending without taxing or borrowing (and, as you observe) explicitly allowed to do so by legislation. In short, the ACTIONS of the government tell us they know MMT to be true….. but their WORDS still deny it.
Virtually everyone in the bond market knows MMT is true as a mechanical explanation of the way the things operate. If they deny its truth it is because they recognise that its adoption is likely to be redistributive…. and many are not so keen on that. Easier to say “it won’t work” rather than “I won’t share”.
OK….there is legislation that approves the reality that is MMT….
Haldane makes an issue of MMT as “theory”. MMT has always claimed to be a description. It is actually a simple description of the absolute nature of sovereign power. It is perhaps time to scrap the word “theory”; because the ‘T’ really meant is was a ‘theory’ of description. So it is a description – of sovereign power; whether used or merely latent is neither here nor there; it is always available, one way or another.
To keep the title modern money transactions
@ John S Warren
The battle is clearly between Sovereign Money Power and Private Money Power!
Whilst gold-smith bankers have issued “paper” credit money for centuries the use of the “precious metal” specie money, silver and gold, for the England’s currency meant that it was always disappearing, especially silver, to be melted into bullion if the “precious” metal price exceeded the nominal coin value as a medium of exchange unit of account. (Very likely the gold-smith bankers were involved in this trade.)
The 1694 Bank of England Act (Tunnage Act) over came this problem with “paper” issue in the form of bank bills and banknotes. Naturally the gold-smith bankers and the wealthy wanted part of the “action”!
Perhaps we need collectively to start referring to the MMT description/observation model.
I have been following Richard’s blog since June 2019 and this thread is a great way to round of what has otherwise been a truly miserable year. The Gower Initiative for Modern Money Studies and Richard may have really put the cat amongst the pigeons!
I came across this briefing note relating to the Comptroller and Auditor General (C&AG) and you may all find Paras 7 to 10 of particular interest:
https://www.parliament.uk/globalassets/documents/public-accounts-commission/03b-TPACMemo-BRANAApprovals.pdf
Apologies if I go slightly off topic here, but the C&AG and the NAO should be holding the government to account and challenging any misrepresentation of government finances. I do wonder if the current C&AG or any of the directors at the NAO are aware of Richard’s blog? Does the UKs public spending watchdog have a proper understanding of how government finance works (particularly borrowing) or are they part of the game of obfuscation and pretence? My feeling is that the NAO’s annual audit of the Whole of Government Accounts would not stand up to a rigorous peer review by Richard.
Thank you Richard for all your hard work and Merry Christmas all.
Thanks
Useful
https://www.patreon.com/posts/money-matters-44838523
This provisional second chapter of Steve Keen’s forthcoming book is a brilliant read.
Using his software suite, Minsky, he can model the flows and accounting of money.
If too long, scroll or search for the sub heading of “Modelling Fiat Money in Minsky”.
Crucially he explains that:
“the deficit itself creates money, regardless of whether or not bonds are sold to cover the deficit.”
The thread you have referenced on Twitter was followed up by Julian Jessop and Frances Coppola.
When I linked and quoted the above, Frances refused to engage or countenance Prof Keen’s assertion through his modelling and unilaterally shut the conversation down rather comically…
Jessie was predictable
Coppola has blocked me, but her blocked list must be one of the longest on Twitter
“but her blocked list must be one of the longest on Twitter“
You must run her close!!!
It might be worth noting that the Act appears to have become law on 28 June 1866 (according to Appendix I in Henry Higgs (1914) The Financial System of the United Kingdom), two days after the fall of the Russell government and the day when the Derby government came into being (according to Wikipedia). As the Chancellor of the Exchequer in the Russell government was Gladstone, it seems that the Act was introduced under probably the most notable Chancellor of the 19th C, and amended under the longest continuously serving Chancellor of modern times. Higgs (a Treasury civil servant who was Campbell-Bannerman’s Private Secretary as PM) describes the Act as ‘the keystone of our present financial system’ (p. 18). https://dspace.gipe.ac.in/xmlui/bitstream/handle/10973/23663/GIPE-003433.pdf?sequence=3&isAllowed=y
So clearly it is no insignificant piece of legislation.
Thank you
well spotted
Yes, introduced by Gladstone as Chancellor in February 1866, and passed through the Lords in May that year, I think. Royal Assent on 28 June 1866, and came into force on 1 April 1867 (section 47). Apparently drafted by Hugh Childers and William Anderson at the Treasury, with input from Charles Macaulay at the Board of Audit, to implement recommendations of a Parliamentary committee from about 10 years before. From a little reading it was intended to increase the scrutiny of public accounts and expenditure, and make sure someone was responsible for keeping it all under review. (At the time, the Commons was quite busy considering a Reform Bill – the government fell, and the Second Reform Act passed the next year)
Among other things, the 1866 Act merged the Comptroller of the Exchequer and the Commissioners of Audit together under a Comptroller and Auditor General, which later evolved into the National Audit Office.
There were subsequent Exchequer And Audit Departments Act in 1921, 1939, 1950 and 1957.
More here: https://books.google.co.uk/books?id=5waTDQAAQBAJ&pg=PA124
And here: https://api.parliament.uk/historic-hansard/commons/1866/feb/08/bill-presented-first-reading
“…. the 1866 Act merged the Comptroller of the Exchequer and the Commissioners of Audit together under a Comptroller and Auditor General, ….”
The Comptroller of the Exchequer authorised the issue of Treasury funds to departments. The NAO usefully provides a summary of its history, here:
https://www.nao.org.uk/about-us/our-work/history-of-the-nao/
The NAO proposes that the purpose of the 1866 reforms was to enhance Parliamentary control and scrutiny of public spending, which was weak. Gladstone, the Chancellor drove the reforms, which were the “first major steps towards proper financial accountability to Parliament” to be taken. The NAO continues: “Initially, the C&AG and his staff were required to examine every transaction. This became more unrealistic as the level of government activity expanded, particularly during the First World War.”
I notice two features here. First, the purpose is to serve Parliament, not the Government (allegedly). Second, the volume of business led to changes, especially the exigencies of a major crisis: WWI. Notice also that the outcome seems to be that in this coalesence of covenant happenstances (or manipulations) Government loses it central place in the purpose of the operation. Government secrecy appears to close over everything.
The change is consistent with the history of audit in general, which I am researching
In 1866 it was transaction checking
Gradually (in the 20th century) it moved to sampling and substance, not just form
Auto-correct? Auto-gobblydegook! Th final sentence is incoherent. It should read:
“Notice also that the outcome seems to be that in this coalesence of convenient happenstances (or manipulations) Parliament loses it central place in the purpose of the operation. Government secrecy appears to close over everything.”
When you look into the reasons for the founding of the privately owned Bank of England four strong reasons start to emerge.
Firstly, the need to enlarge the quantity of the medium of exchange (currency) in circulation. (We know that basing the currency on specie, silver and gold, meant that when the bullion price of these metals exceeded the nominal unit of account currency value the medium of exchange shrank in quantity as coinage disappeared for melting into bullion. England faced major difficulties in regard to this in the 17th century because of wars and the acceleration of what became the Industrial Revolution and global trade.)
Secondly, the desire of the wealthy to increase their wealth especially the gold-smith bankers who were accustomed to creating medium of exchange in the form of loan credit.
Thirdly, the desire of the wealthy to reduce their tax burden by having tax revenue used to pay interest on their BoE joint-stock company evolving credit to the government.
Fourthly, the desire of the wealthy to maintain the value of their wealth especially in a period when England was involved in inflationary wars with rival European nations. The BoE was also able to lend to non-government borrowers including subsidiary banks since no Parliamentary clauses in the Tonnage Act limited the issue of BoE paper to the private sector.
By linking their savings to the need for enlargement of the medium exchange in new forms of BoE created bank bills and notes but controlling the rate of their production the wealthy found a way to satisfy all four reasons.
I think though with the last three reasons we can start to see why there’s so much push-back against MMT amongst the establishment.
It’s helpful to read up on the background for the establishment of the Bank of England and the terms it was established on. Chapter 8 “Reinventing Money” in Christine Desan’s book “Making Money: Coin, Currency and the Coming of Capitalism” is MMT orientated. There are many other non-MMT papers and articles out there on the internet. Here are two:-
https://repository.upenn.edu/cgi/viewcontent.cgi?article=1011&context=phr
https://wcfia.harvard.edu/files/wcfia/files/471_01-05broz-grossman.pdf
I am reading Zachary Carter’s The Price of Peace: Money, democracy and the Life of John Maynard Keynes. published 2020 ( I have ways of having fun) It is an American book.
on page 326 I read
Under the gold standard, it was possible for a government to run out of money; there was only so much gold in the vaults. But a government that controlled its own currency, Keynes observed, could not go bankrupt. Under the fiat currency that had prevailed in Great Britain since 1931, the government could easily print its way out of excessive debt. Taken to extremes, the consequence of that strategy would be inflation, of course. And so the purpose of taxes-or deferred savings or any similar instrument -was not to “pay” for government services but to regulate the value of money.
I know nothing of the author except he writes for the Huffington Post and might be influenced by Wray, Kelton , Hudson, Galbraith et al, but it does seem to be what we are saying here.
I have not read Keynes’ General theory and from the description , it might be best left to others but perhaps Keynes was leading the way even then
You remind me that I got distracted from that book…
Keynes was right – but a late convert and not clear enough
@ Ian Stevenson
I think you got the page reference wrong I can’t find reference to Keynes on the Gold Standard on that page in my hardback copy of Carter’s book. Certainly Keynes was on the road to being MMT after the years he spent researching the origins of currency which he explained as his “Babylonian Madness” because he initially found it hard to figure out what Christine Desan now eloquently explains in her publications. When I say “on the road” I think he was still held back by lack of full knowledge on the causes of hyper-inflation.
Helen
It is page 326 in mine
The quote suggests Keynes got tax right to
The c text is a discussion on ‘How to pay for the war’ – possibly his most important work
Richard
OK I get it. I thought the focus was on the inadequacy of the Gold Standard to allow sufficient circulation of currency but it’s the use of taxation to dampen down abnormal wartime inflation.
At least in part, yes
It should not be forgotten that Keynes was a close adviser to the Chancellor Andrew Bonar Law, during WWI, although not Chancellor in 1914. Keynes respected Bonar Law; but few later Tory Chancellor’s, like Bonar Law’s own later bumbling Chancellor, Stanley Baldwin. It is possible, perhaps likely that Keynes and Bonar Law were among the inner secret cabal who would have knowledge of the 1914 3% War Loan scandal. It is hard to believe that the Chancellor, and his prime economic advisor would be kept in the dark, at thevry top of the Treasury hierarchy in the middle of WWI.
Or do I underestimate the Byzantine secrecy of British government processes? What I wish to emphasise here is what I take to be the profound, formative impact of WWI in the Treasury on Keynes thought; one way or another. How could it be otherwise as the economic data, and the casualty figures arrived, each day?
The suggestion is that Keynes did know ….
Just an observation before we get too carried away here. It is common knowledge that the govt can spend before it receives taxes. It is seldom the case that govt expenditure exactly matches tax revenues on any given day for various reasons. There will be days when a budgeted payment has to be paid before matching taxes arrive on account. So there has to be some sort of working overdraft so to speak.
The Ways and Means account is an example. But this usually involves relatively small amounts of money to cover reasonable eventualities, otherwise we would be having regular cliff edge budget debates like they do each year in the States. This does not condone political spending sprees above and beyond what the govt has already agreed nor promised in its political mandate. So the increase in QE that has paid for this years rounds of increased spending would not have sat comfortably in that W&M account,ity being an exceptionally large amount of money for a crisis/unplanned situation. Hence they did not use it, they went a different route and used the BoE’s APF company instead,
But there can be an overdrfat – it clearly indicates that
And QE did not need to be done the way it was -0 it could have been by W & M account – which was once much bigger than it is now
So I am not at all sure I agree
Richard,
The W&M reached £20bn in 2008/09 then came dowm to the current £0.4 bn and has flatlined ever since. So this is nowhere near enough for what the govt has “borrowed” this year. Apparently this was a BoE competence until 2000 ,when the overdraft facility moved to the Treasury’s Debt Management Office.
The opinion seems to be that this facility was extended in April this year but that has never been touched despite much play on it then. It seems they had it as a back up but decided not to use it. Possibly because they said it had to be repaid within the year.
https://think.ing.com/articles/bank-of-england-and-treasury-announce-temporary-monetary-financing/#:~:text=The%20%27Ways%20and%20Means%27%20account%20The%20Bank%20of,allowing%20the%20government%20to%20smooth%20its%20cash%20flow.
https://www.bankofengland.co.uk/news/2020/april/hmt-and-boe-announce-temporary-extension-to-ways-and-means-facility
QE was zero in 2008 and is £800bn now
Your argument does not extrapolate
My point is that this is ancient law is not a big deal.
QE itself should be more than sufficient proof that the state can create money without having to ask any one or borrow from anyone. It being far larger figure than the W&M ever was, and more contemporary.
Mr Cave,
Thank you for the forensic historical insight. Higgs was and expert on the French-Irish physiocrat-banker Richard Cantillon; who made his wealth from John Law’s Mississippi Scheme (hedging it). Little is known about Cantillon, save his influential economic ‘Essai’ (see Richard Hyse, ‘The Economic Journal’, Dec., 1971). I have an instinct (no more that that) that the devious Cantillon (he was apparently Law’s personal banker, which placed him in an extraordinary position of inside knowledge), saw the capacity for exploitation of Law’s scheme (which was breaking radical ground in a pre-captitalist age to bring wider access to money and credit to grow the economy); which led him to draw the wrong conclusions about the significance of Law’s underlying ideas on the importance of credit; and for Cantillon to develop ideas that more easily bacame conventional wisdom, but were themselves flawed, probably in deeper, enduring and more pernicious ways.
Richard Murphy says:
December 23 2020 at 9:25 am
OK….there is legislation that approves the reality that is MMT….
……validates…..?
Bill Kruse says:
December 23 2020 at 6:49 pm
Perhaps we need collectively to start referring to the MMT description/observation model.
Modern Money Description…………..MMD
At the same time perhaps we need a name and acronym to describe the current way of thinking that is so dominant. As has often been discussed here, breaking the hegemony of the current model is a big part of the challenge.
A task for the Christmas break perhaps!
My family have just brainstormed this
We failed
But we thought abstract a good word to include
Hmm.
Badly understood money (BUM)
Borrowing or tax theory of money (BOTTOM)
Money under false theoretical interpretation (MUFTI)
Very good
You definitely share a mind set with my eldest
He tried ruder versions
We might describe the orthodox view as Flat Earth Economics, FEE 🙂
🙂
One thing’s for sure there’s a Constitutional or Sovereign Money Description and a Vested Interests Money Description!
Vested Interest Monetary Theory & Operations
VIMTO
Ho! Ho! I can see what you’re drinking for Christmas! Very good!
“We might describe the orthodox view as Flat Earth Economics, FEE”
That makes MMT its opposite:
NO FEE.
That seems right; no fee, no contract.
🙂
* Jeff @ December 23 2020 at 7:49 pm
I like this. (MMD – Modern Money Description)
Whatever the new name is for what we are saying has to meet certain criteria. You can start with the criteria or go the brainstorm route and hope to get there in one, or near enough and then adapt. But it is the criteria which decide. Ask Cummings.
So, off top of head, both our acronym and the moniker for the old idea have to be:
a) simple and graspable, so no jargon, nothing for the mind to trip over
b) memorable
c) pithy, i.e. short and get to the nub of the thing
d) accurate, to a degree
e) non-provocative, non-irritant, especially to the unengaged listener / reader
First three are related.
Are there others??
So . . .
“Modern Money Description” I think fits quite well. Note how “Money” is easier on the ear and the brain than “Monetary”. Ditto “Description” rather than “Theory”.
“Theory” also intrinsically invites people to debate. and that debate will be, well, theoretical.
Whereas “Description”, is much more neutral, not gloves up, “go on, have a go,” but just “there”. It says to a listener who might wish to engage: ‘well, does this describe what happens or not.’ It takes you straight to the right place.
On many counts MMD – Modern Money Description is good. But it falls down on b) memorable. It certainly lacks pizazz.
Keep playing . . .
VIMTO – brilliant! Used to love that stuff when I were a lad. According to Wiki, it is alleged to be the most popular drink during the holy month of Ramadan in some Arab countries
On the subject of drink preference I said earlier:-
“In her comment to this Bill Mitchell article below Sandra Crawford says that whilst Anneliese Dodds accepts MMT is right she still believes there needs to be a fiscal rule.”
http://bilbo.economicoutlook.net/blog/?p=46425
So there you have it. The effective choice of the current Labour Party isn’t PIMM No. 1 (Public Interest Money Making) but PIMM No. 2 (Private Interest Money Making). This of course lays bare the historical money making battle which Keynes could never bring himself to say existed.
https://www.researchgate.net/publication/325297121_Keynes%27s_view_of_deficits_and_functional_finance_a_Modern_Monetary_Theory_perspective
I fear so….
So what is it to be:
NO FEE PIMMS, or VIMTO?
Failure to Understand Kelton’s Tract ?
As I sign off for Christmas, a big thank you to Richard and all the others on this blog who have provided education and challenge, and stimulated my thinking, mostly in a friendly and respectful way.
Happy Christmas all!
And to you
Best wishes to all for a much better year in 2021.
Poor Ptolemaic Economics – PPE? (you may put an extra P in front, but it spoils the allusion)
🙂