Modern Monetary Theory (MMT)

Under the JG scheme, the government continuously absorbs workers displaced from private sector employment. The “buffer stock” employees would be paid the minimum wage, which defines a wage floor for the economy. Government employment and spending automatically increases (decreases) as jobs are lost (gained) in the private sector. The approach generates full employment and price stability. The JG wage provides a  floor that prevents serious deflation from occurring and defines the private sector wage structure.

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In this paper I develop the argument that the NAIRU is a costly and unreliable target for policy makers to pursue. It is argued that full employment demands that policy emphasise the number of jobs rather than some politically acceptable (though high) unemployment rate. Many commentators who are otherwise sympathetic to the goals of full employment are skeptical of a policy approach that chooses along the lines of the JG to endogenise the budget deficit. There is a fear that it will make inflation impossible to control. To answer these claims, the inflation control mechanisms inherent in the JG model are outlined. The final section indicates other issues that are relevant but not addressed.

Undated, with the usual quotes plus quite a few that are new to me.

According to the Bank of England;

"... Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.
The reality of how money is created today differs from the description found in some economics textbooks.".

This is  a  discussion  of how  best  to  reconcile  the demands  of War  and  the  claims  of private  consumption.

We already have the financial wherewithal needed to afford whatever is technologically possible. We do not need to go hat-in-hand to rich folks to get them to pay for it. We do not have to beggar our grandkids to pay for it. We do not have to borrow from China to pay for it. We do not have to get the Fed to “print money” to pay for it. All we need to do is to remove the self-imposed constraints, the myths, and the misplaced morality; then budget for it, approve the budget, and spend. No new spending process is required. Follow the normal procedures that the Fed and Treasury have developed. That is how you pay for it.

As the great J. Fagg Foster (1981) said, “Whatever is technologically possible is financially feasible.” There is really no other reason to have a financial system. If you know how to build houses but your financial system cannot find a way to make them affordable, then you must replace that system with one that will.

It is possible that we will need to constrain domestic consumption in order to release resources for the GND effort in a noninflationary manner. The problem is not that we cannot financially afford the GND—government can always bid resources away from private use by paying higher prices—but spending on the GND will generate private income that can support higher bids in competition with the government for scarce resources. This is the real reason that tax hikes might be desirable: to reduce private income and thereby remove competition for resources.

The purpose of this white paper is to publicly present the fundamentals of MMT

What is MMT?

MMT began largely a description of Federal Reserve Bank monetary operations, which are best
thought of as debits and credits to accounts as kept by banks, businesses, and individuals.
Warren Mosler independently originated what has been popularized as MMT in 1992. And while
subsequent research has revealed writings of authors who had similar thoughts on some of MMT’s
monetary understandings and insights, including Abba Lerner, George Knapp, Mitchell Innes, Adam
Smith, and former NY Fed chief Beardsley Ruml, MMT is unique in its analysis of monetary
economies, and therefore best considered as its own school of thought.

Oh, FFS! Currency issuing governments do not — and as a matter of brute accountancy can not — "pay for" anything through tax revenue!

New Zealand’s new government will scrap the country’s world-leading law to ban smoking for future generations to help pay for tax cuts – a move that public health officials believe will cost thousands of lives and be “catastrophic” for Māori communities.

In 2022 the country passed pioneering legislation which introduced a steadily rising smoking age to stop those born after January 2009 from ever being able to legally buy cigarettes. The law was designed to prevent thousands of smoking-related deaths and save the health system billions of dollars.

The legislation, which is thought have inspired a plan in the UK to phase out smoking for future generations, contained a slew of other measures to make smoking less affordable and accessible. It included dramatically reducing the legal amount of nicotine in tobacco products, allowing their sale only through special tobacco stores, and slashing the number of stores legally allowed to sell cigarettes from 6,000 to just 600 nationwide.