Just discovered this post on Taxpayer's Money over at labour list of all places.
Surely the Chartalist ideas have got to go viral soon.
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7 comments:
It is one of the best posts that I have read.
However people will find it hard to believe it.
There are many countries where Public Credit transfers dwarf Private Credit transfers and where the Sovereign is also Monetary Sovereign. However most people do not want to live in such countries and most are not economic success stories to put it bluntly.
It is amazing how these things go in cycles. There needs to be some way of selling this where people understand that money (on aggregate) is provided as a public good/service but that its allocation will be minimally-political.
We have just seen the rape of economies where public credit has been created to bail out banks with no real consequences on the industry.
This has shocked many so it should be an easier sale now.
A great article indeed, even though it made my amateur head hurt a bit.
And, for amateur me, if it's not too difficult, can you explain how it relates to the bond vigilantes? Here we have countries struggling to finance themselves - yet the article asserts that countries have no need to sell bond/gilts.
Or am I comparing apples and oranges?
@gastro,
The key is money sovereignty. In other words where are you in the hierarchy of money. Are you the boss, or just an underling currency wise.
Countries like the UK, US and Japan are monetarily sovereign. Nobody can tell them how much money they can issue or what they can use it on.
These countries have no need for bonds, and in fact the bonds they do issue act more like deposit accounts, or savings certificates - they pay a higher rate of interest than just leaving the money in the bank.
Bond vigilantes can have no effect on a sovereign government's bond market because the central bank can just set a price and offer to buy any bonds at that price for cancellation.
These countries effectively have a super platinum credit card with no limit and no repayment terms issued by themselves. They can buy what they like when they like anywhere the credit card is accepted.
Countries like Ireland, Greece, Germany, Ecuador suffer in the same way as the individual States of America.
You can think of these countries has having a debit card with a strict overdraft limit. They are beholden to a higher monetary authority for their funds who can take their debit card off them if they misbehave.
HTH
OK, thanks (I had to check Ecuador - I see that it uses the US dollar as currency, not it's own currency).
Great article
Followed your links from your comments over at billy blog Neil.
I really like your site
Chris Cook is no sign that MMT is going viral. He is one of the original Gang of 8 chartalist economists and good friend of Michael Hudson, one of the economists at U of Missouri KC, and thus belongs to roughly the same perspective as Mosler, Wray, and other MMT'ers.
Accurate then. Good.
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