AFJM Coffeehouse Study Stack
TOPIC: "Debunking Modern Monetary Theory (MMT)"
with Jeff Eder
Content: Link / Introduction / About the Speaker / Highlights / The Study Stack / Appendix
Recording of the June 7 Coffeehouse is here
In his presentation Jeff explained the inaccuracies of MMT’s STAB hypothesis (Spending comes before Taxes and Borrowing). For a deeper understanding, go to his website link for several videos and papers.
ABOUT THE SPEAKER
Jeff Eder is the founder of Progressive Money in Canada. The October 2020 Study Stack provides an extensive background of Jeff’s work.
- On one hand Jeff would like MMT to recant on STAB and he provides the proof by going through the cash flow process of our national money system. On the other hand he sees MMT’s social policies like a job guarantee as important and valuable. His position is reflected in this short video which could be the first major step into fixing the monetary system. His position is similar to Congressman Wright Patman’s proposal almost 80 years ago to fund government debt at zero interest rates. Joe Bongiovanni describes Patman as the best politician on monetary reform, but warns that a transition strategy might never lead to a complete fix.
- Dan Sullivan added to concerns about MMT by including the Georgist perspective. He said MMT accepts taxing the producers of real goods and services, while not addressing the rentier institution of banking which is permitted to create money out of thin air and charge us interest on the use of that credit.
- Jeff has been pleased about connecting with like-minded groups such as AFJM. Zarlenga saw Georgists as like-minded, and Jeff feels there could be some connection with MMT… but a recant sounds like a deal breaker. Govert Schuller later commented that we might have better luck with the followers than the leaders.
- Virginia Hammon pointed out that other groups like MMT have different narratives and vocabulary and jargon which may or may not be insurmountable in striving for a productive dialogue.
- With his research experience Steven Walsh was able to provide interesting insights into Michael Hudson, Mosler and Wray. Hudson is aligned with MMT, yet at times he sounds more like an AFJM member:
Note: Hudson may seem like an MMT anomaly, but the highly respected Bill Mitchell has made some similar comments about direct funding and land price inflation:
THE STUDY STACK
- While it is sensible for governments to increase spending and substitute increased non-government debt with increased government debt, it is even more sensible for governments to refrain from any further debt issuance and draw on the central bank’s unlimited capacity to credit relevant bank accounts in the currency of issue to match its spending program. Once you understand that it is only real resource availability that constrains government, then all the rest of the discussions about the impacts of computerization and the room for government to move become clearer.
Currency-issuing governments have unlimited financial resources to fight recession
- It is here that a Land Value Tax (LVT) drawn from the foundations that motivated George to propose his Single Tax might have a role to play and would be consistent with MMT teaching. The basic principle of taxing the economic rent (the payment excess over what is needed to keep the resource in its current use) would help stabilize land prices. Such a tax, would clearly reduce the inequity that arises from the ability of landowners in high demand metropolitan areas to capture unearned income. In this way, the multiple goals of government might be achieved – to free up real resource space by reducing the incomes of land owners and reducing socioeconomic inequality. The ability to retain the unearned surpluses also stimulates further speculative behaviour, which reinforces the inequality and introduces increased risk of financial instability arising from property market crashes.
Henry George and MMT - Part 2
A. Sources written by or mentioned by Jeff Eder
1. Debunking Modern Monetary Theory: The Descriptive Analysis
2. Jeff’s YouTube channel which we should all visit, like, and subscribe: Progressive Money Canada
3. Bank of Canada resources: Bank of Canada assets and liabilities: Month-end (formerly B1)
B. Sources mentioned by participants (also in the chat & found by editor)
1. Mike Holden suggested this research publication:
2. This was the link that prompted the discussion about Patman: Wright Patman's Proposal to Fund Government Debt at Zero Interest Rates: Lessons for the Current Debate on the US Debt Limit
Typology of currencies in Spanish-speaking and Portuguese-speaking countries
- Eurozone (Spain / Portugal): need to coordinate strategies with other Euro-zone countries (Austria, Finland, Germany, the Netherlands etc.)
- US, Puerto Rico: coordination with AFJM
- (Almost) dollarised countries or countries whose money is backed with dollar / euro (Ecuador, El Salvador, Panama, Cape Verde, Equatorial Guinea, Guinea Bissau, São Tomé and Príncipe, Timor Leste): Sand Dollar in the Bahamas is very interesting. Other similar countries / economy: CFA Franc countries (Africa), Middle-East. Hong Kong, Cambodia etc.)
- Countries with its own stable national currency (Brazil, Chile, Colombia, Mexico, Peru etc.): Other similar countries / economies: Malaysia, South Africa
- Countries with its own unstable national currency (Argentina, Cuba, Venezuela): People distrust national currency and only trust US dollar. A proposal should be made like the Petro in Venezuela, but it should count with international warrant so people do trust this money.
Caveat: The views and opinions expressed in AFJM Coffeehouses are those of the presenters and participants and do not necessarily reflect the official policy or position of the Alliance of Just Money.