DTM: prestakuntza akademikoa eta ez-akademikoa

Prestakuntza akademikoa


Bill Mitchell is an Emeritus Professor in Economics at the University of Newcastle in New South Wales…


Warren and I come from totally different backgrounds, of course. I’ve come through an academic background, so I sort of work things out by looking at data and studying history and things like that. And Warren’s background was in Wall Street basically in America. He was a banker and he started the trading in the initial Chicago Futures Exchange, and so he had a sort of hands-on non-academic background. We worked out things from a totally different background. I started working it out, what’s now called Modern Monetary Theory, I started my part of it when I was a student at Melbourne University in the late 1970s.


Unemployment for the first time had really gone up and I was doing agricultural economics and we were studying the wool price stabilisation scheme. And so I understood from that that if you had a bumper stock of wool, you could get basically create full employment of wool and regulate the price. I sort of started thinking along those lines and then when the Japanese commercial property market crashed in the early 90s, I wondered how Japan had been able to escape with one negative quarter of GDP as a result of the biggest commercial property crash in history. So I started to look into Japan and its monetary system, how its central bank operated, how the fiscal policy interacted with monetary policy, how bond markets started to work and those things.

Now, Warren worked out a very detailed understanding of how banks work and how the banks interact with the central bank and how bond markets were because he was a fixed income trader, so his basic day to day life was doing deals on speculative expectations on bond market movements. He had worked out that – he did a very big trade in the Italian Lira Bond at the time, in the early 90s, when everybody was predicting it would crash. This was during the ‘91 recession when everybody was predicting that yields would rise and bond prices would fall. And he obviously worked out that the Bank of Italy basically controlled all yields if it wanted to and that there would be no real possibility of the yields rising that the government really was the issuer of the currency, couldn’t run out of money and so the bond markets were really not, not in charge. It was the government in charge, which allowed the bond markets in the space to operate.

This is when Italy had the Lira, it wasn’t part of the Euro, right?

Oh, yeah, it was early 90s. It was during that big ‘91 recession. So this was when Italy was the same as Australia and had its own currency, whereas now, of course, it uses a foreign currency, the Euro. Warren had worked out those things and we came together in about late ‘94 through a very early internet discussion list. And we realised that we were sort of on the same page coming different directions. And we started this project, which later I called Modern Monetary Theory1.

You gave it the name, did you Bill?

I did, yeah, I gave it the name during the Global Financial Crisis because up until then, we had a loose knit project. We were working together. Warren was starting to use his financial clout to fund young researchers in America and try to build up capacity in America. So more and more young academics came into the project. But for a long time we just mucked around in the normal academic way, we went to conferences and published papers. Then in 2004, I went to a seminar on IT and they were saying there’s this new technology called blogs. This was the sort of beginnings of social media. So I figured well look, no one in the academic profession is listening to us, because the economics profession is a really closed shop and it’s heavily conditioned by what we call group think and denial.

So I started a blog and that really started to proliferate the ideas out and I’d have to say, and you probably felt a bit of this the other day, on social media, but MMT, as it’s now called is probably the first economic paradigm that has grown through social media and from then, it just has grown in interest.


Lan osoa hemen: Etorri al da DTM-ren garaia? (Bill Mitchell)

Prestakuntza ez-akademikoa

Warren Mosler is one of but possibly the originator of modern monetary theory, but he did collaborate with Bill Mitchell of The University of Newcastle (…) Warren is talking to us from The Virgin Islands where he lives on the Island of Saint Croix. But the big difference with Warren Mosler is he’s not an academic, he is a fund manager, started off with a big bankers trust or a group of other banks, eventually had his own hedge fund trading bonds and essentially, put into practice his ideas that became known as modern monetary theory.

I suppose the key insight is here, that what he’s talking about is actual operations of money, not theory. He’s an operational guy and the way he approaches it is in the way the monetary system actually works. He’s really clear, really worth listening to and it’s long but really worthwhile.


Warren, it occurred to me that maybe a good place to start would be the insights you started to have in the 70s, when you were a fairly young bond trader – I can’t remember who with but at some stage, BT, and I think you moved around a bit…


I mean, those were the peak times of what we call monetarism and Friedmanism and so on, and I think you started then saying that the Emperor had no clothes. What exactly did you identify as the problem?

I can only remember bits and pieces from back then. I remember being a bankers trust and the Fed had raised reserve requirements and the trading managers, Allan Rogers – and he talked without moving his mouth like this, and he said, “Why I hope the Fed doesn’t just give them the money. The money supply is too high, they need to take the $10 billion2 or whatever it is out of the economy.”

And I remember saying – I was a fairly new trader there, I was 27 years’ old – I go, “Allan, you can’t do that, you can’t just – you know, it’s just a spreadsheet, you can’t take the money out, they have to add the money. They always add the money because otherwise it’s, in the first instance, the reserve requirements are debit and so then they either have an overdraft which is a reserve-add or you have to buy securities as a reserve-add. Since the overdraft would cause the Fed funds rate to go up 100 basis points, they don’t want that to happen, they have to just do repos or add to reserves.”

He goes, “Well, they could bring back those Euro dollars, there’s 300 billion Euro dollars sloshing around.” I go, “No there aren’t. There’s a spreadsheet over there with assets and liabilities, there’s nothing sloshing around, you can’t bring those back, that’s just empty rhetoric…” He didn’t really want to hear that. One of my clients was Cliff Viner at Phoenix Mutual, who later became my partner, and he directed my attention to an article in the Wall Street Journal by Eric Heineman, “The money supply is too high, I hope the Fed doesn’t just give them the money but takes it out.” I explain it to him and he was a client of Morgan Stanley so he called them with my answer and he calls me back with their double-talk answer and I straightened that up. He calls them back and then he calls me back and he says, “They’ve retracted their statement. They agree that you have to add the reserves.” So, I don’t know, maybe that was part of the pieces of the puzzle.

Well, the point of this part of the story is that what you were doing then was about operations, not theory. I mean, you’re an actual trader and what you’re talking about was the way that the system works, not some kind of economic theory.

That’s right, exactly. The debits and credits that happen whenever there’s a transaction.


Lan osoa hemen: Diruaren istorioa (Warren Mosler)


Randall Wray

The Nature of Money: A System of Credits and Debits



Randall Wray-k DTM-z, non Warren Mosler-en garrantzia azpimarratzen duen:

Randall Wray-k DTM-ren historia

Randall Wray: DTMz, 2018an

Randall Wray-ri egindako elkarrizketa (DTMz)


Wray-k DTM-z, in The “Kansas City” Approach to Modern Money Theory

(a) 4. oharra:

…“The term “modern money theory” (also called “modern monetary theory” by some proponents) did not come along until much later (Bill Mitchell credits a commentator on his Billy Blog for the term), even though I had used the term “modern money” in the title of the first academic monograph. (I prefer to use “money” rather than “monetary” both because it was the word I had used in the title but also because the scope of MMT is not confined to “monetary economics” as that term is usually applied.”

(p. 3)

(b) “The State, therefore, comes in first of all as the authority of law which enforces the payment of the thing which corresponds to the name or description in the contracts.” He goes on to state that this has been the case for “some four thousand years at least.”14

14. oharra:

14 This is the source of the term “modern money”—which applies only to the “modern” period, the past “four thousand years at least” (Keynes [1930]1976, 4).

(p. 11)

Randall Wray-k, DTM-ren hirugarren aitapontekoak, beti horrela idatzi du: Modern Money Theory: http://neweconomicperspectives.org/modern-monetary-theory-primer.html.

Amerikar bilioi bat = mila milioi europar.

Iruzkinak (2)

  • joseba

    Randall Wray-k (in http://neweconomicperspectives.org/2020/01/alternative-paths-to-mmt.html#comments)

    Furthermore, government never needs to borrow its own currency. Bond sales by a sovereign government are not really a borrowing operation—rather they offer a higher interest earning substitute for central bank reserves.

    This was Warren Mosler’s key contribution, recognized before there was an MMT, and it made him rich because he concluded that credit ratings agencies had no idea what they were doing when they downgraded sovereign government debt.

  • joseba

    Bill Mitchell-en DTM-k korronte nagusiko ekonomiaren fikziozko mundua lehertzen du

    MMT blows the cover on the fictional world of mainstream economics that serves class interests

    Given I presented a full analysis of the National Accounts release yesterday, I am calling today Wednesday and not writing much by way of blog posting, to give me more time to write other things that have to be done. But there is one issue that I will deal with today and regularly comes up and indicates that we are making progress. And after that we can all ‘Rise and Shine’ with some beautiful music.
    We agree with everything but don’t want anybody to know anything!
    That is where the evolution of Modern Monetary Theory (MMT) is heading at the moment.
    The critics started off just shouting insults – getting as many nasty epithets into an Op Ed as possible – in between sniping about ‘printing money’, Zimbabwe, chaos etc.
    That showed they were realising that their dominance was under threat.
    Then the criticisms were along the lines that what is old in MMT is correct and what is new is incorrect and variations on that argument.
    The variation ranged from ‘we knew it all along’ claims to denial that there was anything interesting to know – which always amused me.
    More recently we are hearing the story line – MMT is correct (although they don’t express it that way) but god save us if anyone finds out.
    An MMT understanding allows us to appreciate that most choices that are couched in terms of ‘budgets’ and ‘financial constraints’ are, in fact, just political choices.
    Given there are no intrinsic financial constraints on a currency-issuing government, we understand that mass unemployment is a political choice.
    Imagine if citizens understood that.
    An MMT understanding lifts the ideological veil imposed by mainstream economics that relies on the false analogy between an income-constrained household and the currency-issuing government.
    Households always have to finance their spending choices, through earned income, savings, asset sales or through borrowing. A currency-issuing government spends by instructing its central bank to type numbers electronically into relevant bank accounts.
    All the elaborate accounting structures and institutional processes that are put in place to make it look as though tax revenue and/or debt sales fund spending are voluntary smokescreens, which serve the purpose of imposing political discipline on government spending.
    Insiders know this, but actively decline to share that knowledge with the public.
    Renowned British journalist Martin Wolf, commenting on MMT, recently wrote in his Financial Times article – Summer books of 2020: Economics:
    In my view, it is right and wrong. It is right, because there is no simple budget constraint. It is wrong, because it will prove impossible to manage an economy sensibly once politicians believe there is no budget constraint.
    And I have provided this historical quote before – famous US economist Paul Samuelson saying something similar during a 1988 interview with Mark Blaug for the program – John Maynard Keynes – Life – ideas – Legacy (the statement starts at 52:50 minutes with the ‘aahs, ums’ taken out):
    I think there is an element of truth in the view that the superstition that the budget must be balanced at all times. Once it is debunked takes away one of the bulwarks that every society must have against expenditure out of control. There must be discipline in the allocation of resources or you will have anarchistic chaos and inefficiency. And one of the functions of old fashioned religion was to scare people by sometimes what might be regarded as myths into behaving in a way that long-run civilised life requires.
    We have taken away a belief in the intrinsic necessity of balancing the budget, if not in every year in every short period of time. If Prime Minister Gladstone came back to life he would say oh oh what you have done and James Buchanan argues in those terms.
    I have to say that I see merit in that view.
    These are profound statements of how a ‘fictional’ world is promoted by mainstream economists to serve as a brake on political volition. While MMT exposes these fictions many economists still think it is better to keep the public in a state of ignorance.
    This sort of reasoning – MMT is right but the politicians cannot be trusted narrative – was most recently rehearsed in the Sydney Morning Herald article (August 29, 2020) – We’re edging towards a big change in how the economy is managed – written by their Economics Editor, Ross Gittins.
    My research centre – Centre of Full Employment and Equity (CofFEE) used to hold an annual ‘Path to Full Employment Conference’.
    At the third edition of that Conference held on June 14-15, 2001, Ross Gittins appeared as a discussant on the panel – The Job Guarantee Versus The Five Economists.
    The Five Economists were are group who proposed supply-side solutions to the chronic unemployment and underemployment of the day, claiming that demand-side solutions would unlikely reduce unemployment below seven percent.
    They represented the mainstream orthodoxy.
    They claimed that wage restraint (real wage cuts) and making it harder to stay on unemployment benefits.
    They advocated a reduction in the rate of wage increases relative to the rate of productivity growth via a four year freeze on award wages.
    Tax credits would be used to compensate low wage earners in low-income families while lower effective marginal tax rates would improve the incentives for low-income families to pursue employment opportunities.
    My paper with Martin Watts contested that view, saying that it was just a modern version of the classical wage cutting approach, with some equity insurance being provided by the state. It also invoked the classical Say’s Law which assumed all the demand issues (insufficient spending) could be assumed away.
    In his comments on both papers (as a discussant), Ross Gittins opposed the Job Guarantee, claimed MMT was nonsensical and largely supported the view expressed by the Five Economists.
    19 years or so later he wrote in his weekend article that:
    But here’s the scoop: the idea that, rather than borrowing to fund their budget deficits – thus incurring big debts and interest bills – governments should just create the money they need has been anathema to economists for the past 40 years, but this may be changing.
    There is a growing debate among economists, between the proponents of what they call “modern monetary theory” and more conventional economists and econocrats over whether governments should just create the money they need.
    The defenders of the conventional wisdom have had to concede a lot of ground. Whereas a decade ago MMT was lightly dismissed as a crackpot idea, as this radical idea has gained more attention its opponents have had to admit it would be perfectly possible to do. They just think it would be a really bad thing to do.
    So he is now really admitting we were correct.
    He also said (by way of revising history):
    As sensible economists always knew, it was never true that creating money always leads to greater inflation. It does so only when the demand for “real resources” – land, labour and physical capital – exceeds the supply of real resources. Only then do you have “too much money chasing too few goods”.
    Where in any mainstream textbook will you find that clearly stated?
    But then he pulled out what the critics are now relying on as their trump card.
    He acknowledges that the leading proponents of MMT do not claim that:
    … governments would be free to create (or “print”, to use a misleading metaphor) as much money as they needed, without restraint. The restraint is the same one it always was: the limited supply of real resources.
    This is what’s really worrying the opponents of MMT (and me). If you let the politicians off the leash to spend as much as they liked up to a point, how would you ever get them to stop once that point was reached? …
    why risk letting the pollies start creating money when the government can borrow from the public at interest rates that are pathetically low.
    So there you have it.
    1. The politicians are deliberately left in the dark by the technicians (the economists) who know that they are pushing a fiction but use it to keep the politicians doing things they determine rather than other things that the economists might think are less worthy.
    That means unemployment remains at elevated levels – because the economists think it is necessary to discipline inflation – poverty rates increase and income is redistributed to profits away from the workers.
    The economists know the government could do something about these problems but tell their political masters otherwise.
    2. The politicians know damn well they are lying and use the fictional world developed by economists to provide the authority (cover) to pursue politics that serve their own interests and those of their mates (funders etc).
    There is clearly truth in both options.
    I can tell you that most ‘economists’ do not actually know what is actually going on. They go to university, rote learn the mainstream dogma, and then take it into their professional lives.
    Clearly, there are some who do have more awareness that they are creating a fictional world to serve particular interests.
    I can also say that most politicians really do not have a deep understanding of the way the monetary system works and take the mainstream litany as gospel.
    But either way, it is the citizens who are being kept in the dark.
    Clearly those who espouse this view that it is better people do not know the truth believe it stops us making demands on politicians that the economists prefer not to be pursued.
    They never extend the argument to consider the implications for the quality of democracy. Yet it asked they would extol the virtues of democratic systems over their alternatives.
    Not only do those who support this deliberate deception want to deny reality but they also want to pervert the choices available to people when electing their governments.
    It amazes me that they can keep a straight face when doing so.
    But then politicians have been lying ever since.
    Irish writer – Jonathan Swift – wrote an essay – The Art of Political Lying – for the Tory publication The Examiner, which was published on November 9, 1710.
    Swift explains that politicians apply the art of lying “to the gaining of power and preserving it, as well as revenging themselves after they have lost it.” In other words, they lie all the time.
    But is this sufficient reason to set out fictional constraints on them to constrain their ability to, for example, spend freely?
    And do the constraints we put on politicians through these deficit and debt fictions actually ensure they use their ‘constrained’ fiscal capacity to serve generalised well-being?
    That is the crux of the issue.
    We might be offended but willing to support the continuation of these voluntary fiscal rules (derived from the fictions) if the policy outcomes were advancing well-being for all.
    But the neoliberal reality is that, even within the fictional world we operate in, governments use their fiscal capacity to serve special interests at the expense of the rest of us.
    So these disciplines that are placed on them by the ‘fictional world’ really just serve class interests.
    There is never a shortage of currency when a bankster needs to be bailed out or some invasion of another country is pursued.
    MMT blows the cover on that scam.
    And that is the real reason there is so much hostility towards our work right now.

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