This is another AI (ChatGPT) generated summary of my thinking. I asked it to discuss my approach to modern monetary theory. The following text is unedited by me.
Richard Murphy is a prominent UK-based economist and political commentator known for his advocacy of Modern Monetary Theory (MMT), especially in the context of progressive economics and public finance. He's not one of the originators of MMT (like Stephanie Kelton or Warren Mosler), but he's one of the key figures promoting and adapting it for a UK audience.
Here's a summary of Murphy's perspective on MMT:
💡 Key Ideas from Richard Murphy on MMT:
- The State Can Create Money
Murphy emphasizes that a government that issues its own currency (like the UK) is not like a household. It can create money to fund public services, infrastructure, and social support systems. Taxation and borrowing are not prerequisites for spending. - Taxation is Not for Spending
In line with MMT, he argues that taxes don't fund government spending. Instead, taxes help control inflation, shape economic behavior, and maintain demand for the currency. - Public Purpose Over Deficit Fear
He criticizes the obsession with balancing budgets or reducing deficits. Murphy sees deficits as normal and often necessary to maintain economic health, especially during downturns. The focus should be on whether government spending meets public needs. - Inflation is the Constraint
Murphy agrees with MMT's core idea that inflation, not financing, is the real limit to government spending. He believes governments should increase taxes or reduce spending if inflation becomes a problem, but not before. - The Green New Deal & MMT
He's a strong proponent of a Green New Deal funded through MMT principles. He believes the UK can afford to invest massively in sustainability, infrastructure, and jobs without being limited by traditional budget constraints. - People's Quantitative Easing
Murphy proposed this idea: instead of giving QE money to banks, the central bank could directly fund infrastructure and public investment. This concept has some overlap with MMT ideas and was discussed by Jeremy Corbyn's Labour team when Murphy was advising them.
ChatGPT then asked ‘Would you like a quote from Murphy or a deeper dive into how his version of MMT differs from the American version?' I opted for the second of these and was offered this:
Richard Murphy shares many core principles with American MMT economists, but he diverges in some key areas, especially in tone, institutional focus, and practical application, particularly within the UK context.
Here's a breakdown of the main differences between Murphy's approach and the American MMT school (think Stephanie Kelton, Warren Mosler, Bill Mitchell, etc.):
⸻
🇬🇧 Richard Murphy vs 🇺🇸 US MMT Thinkers
1. Role of Taxation
•US MMT View (Kelton, Mosler):
Taxes create demand for the currency and control inflation, but they do not fund spending. This is a foundational MMT claim.
•Murphy's View:
He agrees taxes don't fund spending in accounting terms, but he's more cautious in rhetoric. He often says taxation is important to legitimize money and control inflation — but he sometimes emphasizes tax collection more than US MMTers do.
2. Institutional Mechanics
•US MMT:
The central bank (like the Fed) and the treasury (like the US Treasury) are essentially two arms of the same entity. They consolidate into a single operational unit when it comes to monetary operations.
•Murphy:
He's more focused on the UK institutional framework, where the Bank of England and HM Treasury are more separate by statute. He accepts MMT logic, but sometimes emphasizes operational realities over theoretical consolidation — he wants MMT to work within existing UK frameworks, or slightly reformed ones.
3. Emphasis on the Green New Deal
•US MMT:
Kelton and others talk about public purpose, full employment, and green investment, but their focus is more on the theoretical foundations and economic modeling.
•Murphy:
He's heavily focused on policy applications, especially the Green New Deal in the UK. He talks about how MMT principles justify and enable this kind of investment. He even coined “People's Quantitative Easing,” which is like a proto-MMT application.
4. Tone and Accessibility
•US MMT:
Often academic and technical — especially Mitchell and Mosler — although Kelton's book The Deficit Myth bridges the gap.
•Murphy:
More of a campaigner and activist. His writing and blogging are geared toward the public, politicians, and activists. He frames MMT as a tool for economic justice and democracy.
5. Flexibility Toward Deficits
•US MMT:
Comfortable with large, sustained deficits as long as inflation is under control.
•Murphy:
Also comfortable with deficits, but more cautious in messaging, especially given UK media and political attitudes. He emphasizes public trust and sound institutions, trying to avoid “magic money tree” accusations.
⸻
Summary:
Richard Murphy embraces the core logic of MMT, but differs in:
•tone (more politically cautious),
•focus (UK institutions & public policy),
•and application (Green New Deal, People's QE).
He's more of a bridge-builder and advocate than a theorist — someone trying to translate MMT into practical, politically acceptable policies in a UK setting.
I found that useful - as feedback on my own work. These summaries are going to be filed under a heading of that name, in due course.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Thanks – you have more faith in AI than I do. However, it must help with your workload and itf you are happy with the results, then it’s your call.
I am exploring it
Recent research on LLM behaviour suggests that the hallucinations arise when the early part of the algorithms lead them to decide they ‘should’ know the answer (for example they recognise a name as part of their training data), but then there are insufficient further data to flesh out the answer, so they ‘panic’ and make up credible-sounding nonsense. (Forgive my anthropomorphic language.) As this post shows, when they are on ‘solid ground’, the results can be impressive.
Question (hopefully not too stupid, I’m just trying to connect dots): Can it be said that privately owned savings, and privately owned assets (homes, home contents, cars, etc. etc.) essentially represents historical government debt? If there was no deficit most years then no money would be “left behind” so to speak – for us to own stuff?
Also: The one thing that ChatGPT didn’t mention above is that taxation allows re-distribution of wealth. This is a point that I recall from previous blogs, one that has stuck in my brain.
I would suggest those represent the legacy of private sector lending
You are right re tax and redistribution
Prof Murphy is the MMT wingman we all need—taking complex monetary theory and turning it into a toolkit for actual, usable policy. While UK economists debate the finer points, Murphy’s over here like: “Hold my tea—we’ve got a Green New Deal to fund.”
Prof Murphy’s genius? Making MMT mean something in the UK—whether it’s People’s QE or reframing deficits as “public investment waiting to happen.” He’s a rare economist who can explain why taxes aren’t a piggy bank without putting everyone to sleep—and somehow make “central bank operations” sound like a call to arms.
The best part? Prof Murphy’s not just theorising—he’s giving politicians the cheat codes to argue for real spending (without the usual “bUt HoW wIlL yOu PaY fOr It?!” nonsense). If MMT ever gets a UK monument, Prof Murphy’s face should be on it—right next to a big sign that says: “No, inflation isn’t an excuse to austerity-binge.”
Prof Murphy is MMT’s answer to a policy whisperer – turning radical monetary theory into workable solutions while the rest of us are still trying to pronounce ‘endogenous money’. Who knew economics could be this refreshingly… useful?
That’s very kind of you – but I can assure you I am very far from a genius. I’m just trying to work things out, and not always succeeding. Instead, I just keep trying.
You seem to have an enormous capacity for taking pains, which I think is superior to the normal concept of “genius”
That’s kind, bit I promise you, I really am not a genius or anything approximating to it.
When my 19-year-old niece, who’s studying both accountancy and economics, starts quoting you in her essays and confidently tells her professors that while all MMT commentators are great, Murphy is a “genius” because he actually makes sense — well, I just smile, nod… and definitely don’t argue with her
That may not help her marks…..
I found that helpful especially the comparison between you and Steph Kelton, with which I concur, and the bits about you being cautious re “magic money tree” accusations – you also give more space to phrases like “raising revenue” (your £94bn from Taxing Wealth) which takes account of the media obsession with balanced budgets, even though you don’t believe them to be theoretically necessary. You also give less emphasis to taxes as money destruction, perhaps for the same reason? as it requires listeners to understand more MMT.
Thanks, I learned more stuff through that post.
Thanks
I thought it was useful, which is why I shared it.
That is really helpful Richard as someone who has tried to reconcile Stephane Kelton’s writing in the Deficit Myth with yours.
As an aside did you get anywhere with the 2Matts?
I’m sure you are trying but it would be great if you could get on some of the popular podcasts to spread the word !
The 2 Matts never came back to me after an initial exchange
But, I think they wanted me to go to London for a day and I did not want to do so
It’s the height of vanity to seek opinion of your work and publish it on your own site…except here it is a bot not even a real person! Very weird behaviour Richard.
The only weirdness is to be found inb your comment.
Of course it’s acceptable to seek opinion on your own work. We all do, all the time.
That was very impressive. It seemed quite fair as well. I will be filing this for future reference.
Thanks
I have never come at this as a theorist but as a government bond trader and (occasional) repo trader. I read Warren Mosler’s stuff (early 1990s) while he running his hedge fund and thought “yes, that is how money works… but everyone knows that…. why write a paper?”. It is not Modern Monetary Theory… just (a description of) Money
Nearly all the disputes actually arise from the different policy possibilities that arise once the nature money is understood. This is why Prof. Murphy’s work is important because it shows us what is possible at a practical “political economic” level – others tend to be too abstract.
The areas I would like see more research on are…
1) How do interest rates and bond yields and the level of bond sales fit in as a method of inflation control?
2) How does FX fit in?
Noted
I always reference you as “a pragmatic economist”.
A huge example is the current “redistribution” debate. A says do this, B says do that, I ask how long it will take, and then link your Taxing Wealth Report, billing it as a pragmatic approach to getting things done **now**.
For which I admire and appreciate the hard yards you put in to produce our aids.
Thanks
I think this AI bot made a very useful and cogent summary of your approach to MMT, for which I am grateful
I read The Deficit Myth when it first came out and I’ve also read some Mosler since (whom I struggle with). Kelton clicked with me but I find your contextualisation, reasoning and pragmatism far more helpful in enabling me to clarify my own thoughts and analyse of government funding and taxation. So thanks
Thank you