A Memo From MMT’s Legal Department | naked capitalism (New Economic Perspectives)

A Memo From MMT’s Legal Department; ; In naked capitalism, syndicated from New Economic Perspectives; 2017-07-18.
Devin Smith, staff, an economist, Corps of Engineers, United States Army.


  • 1st International MMT Congress, 2017-09
    to be held at the University of Missouri-Kansas City.
  • A recital of
    • affiliated persons
    • promotional events


  • Modern Monetary Theory (MMT)
  • Job Guarantee
  • Tax obligations create money
  • Tax obligations require wages.
  • Modern Money Network
    • founded 2012
  • Federal Reserve System
  • Rethinking Economics New York
    • a conference
    • Student-organized
    • Sponsors
      • Law School, Columbia University
      • Law School, New York University
      • Economics Department, The New School
  • Association for the Promotion of Political Economy and Law (APPEAL)


Has a moneyness sense

Treasury currency
Commodity Futures Trading Commission commodity
Internal Revenue Service property


<quote>“[A] renewed emphasis on a key legal insight (the government cannot default on debt it issues in its own currency) can lead to an adjustment to economic theory (MMT), which in turn informs a new legal proposal to get past the current, futile […] debate.
It’s a movement from legal insight to economic insight back to legal insight, or L – E – L.
… The legal foundations of MMT make it both scientifically, and normatively, a better theory of our economic system than the dominant paradigms of monetary policy.”</quote>, attributed to Frank Pasquale, circa 2014.

<quote>“Modern money theory explains that political and legal systems for creating, regulating, and distributing money are fundamental to economic prosperity and stability, necessarily shaping (not “distorting”) and facilitating private exchanges of goods and services.
… the economic costs and benefits of public money creation depend on the contingent, complex value-laden questions of how that money is spent and invested and how effectively taxes and other forms of regulation help steer economic and political activity toward the productivity, stability, and legitimacy that will help maintain currency value.”</quote>, attributed to Martha McCluskey, circa 2016.


  • Rania Antonopoulos, Alternate Minister for Combatting Unemployment, Greece
  • Marshall Auerback
  • David Bholat, staff, Advanced Analytics Division, Bank of England
  • Richard Clarida, (former) Assistant Secretary, U.S. Treasury
  • Mathew Forstater
  • James K. Galbraith
  • Philip Harvey
    • Professor, Law, Rutgers University
    • (author) Rep. John Conyers H.R. 1000 towards full employment
      Versions: 114th Congress and many others
  • NAME Innes
  • Stephanie Kelton
  • NAME Knapp
  • NAME Keynes (surely you jeste)
  • Martha McCluskey, Professor, Law, University at Buffalo
  • Frank Pasquale, Professor, Law, University of Maryland
  • Zoltan Pozsar, (former) Senior Advisor, U.S. Treasury Department
  • Amar Reganti, ex-Deputy Director, Office of Debt Management at United States Treasury
  • Beardsley Ruml, Chairman of the Federal Reserve Bank of New York, once upon a time (at least in 1946-01)
  • Joseph Sommer, Legal Counsel, New York Federal Reserve Bank
  • Pavlina Tcherneva
  • Alexis Tsipras, (now-)Prime Minister, Greece,
  • Adair Turner, (former) Chairman, U.K. Financial Services Authority
  • Matias Vernengo, (former) Economic Research Director, Central Bank of Argentina.
  • Randy Wray


How the Economists Got It Wrong | The Prospect

How the Economists Got It Wrong; James Galbraith; In The Prospect; 2001-12-19.

James K. Galbraith
  • Lloyd M. Bentsen Jr. Chair in government-business relations at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin
  • senior scholar of the Levy Economics Institute
  • chair of the Board of Economists for Peace and Security.
  • Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe; Yale University Press; 2016-06-21; 232 pages; Yale.; Amazon:0300220448: Kindle: $15, paper: $19+SHT.

tl;dr → So much fail. <quote>So what is modern economics about? It seems to be, mainly, about itself</quote>


The Annual Meeting, (maybe) 2000 (2000-01-07 → 2000-01-09) of the American Economic Association (AEA), in Boston, MA.


  • American Economic Association (AEA)
  • “The Golden Virtue of Eclecticism”, a talk by Paul Samuelson.
  • Other talks, not cited; by others, named below.


<quote ref=”there“>Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back </quote>

The Rant

<pull-quote> Leading active members of today’s economics profession, the generation presently in their 40s and 50s, have joined together into a kind of politburo for correct economic thinking. As a general rule–as one might expect from a gentleman’s club–this has placed them on the wrong side of every important policy issue, and not just recently but for decades. They predict disaster where none occurs. They deny the possibility of events that then happen. They offer a “rape is like the weather” fatalism about an “inevitable” problem (pay inequality) that then starts to recede. They oppose the most basic, decent, and sensible reforms, while offering placebos instead. They are always surprised when something untoward (like a recession) actually occurs. And when finally they sense that some position cannot be sustained, they do not re-examine their ideas. Instead, they simply change the subject. No one loses face, in this club, for having been wrong. No one is disinvited from presenting papers at later annual meetings. And still less is anyone from the outside invited in. Only the occasional top-insider-turned-dissident–this year the admirable Stiglitz–can reliably count on getting a hearing. </pull-quote>

No young economist better exemplifies the club spirit than MIT’s Paul Krugman.


Some academic scribbler of a few years back

  • Milton Friedman
  • Robert J. Gordon
  • John Maynard Keynes
  • Malthus
  • Karl Marx
  • Alfred Marshall
  • Mill
  • Adam Smith
  • Paul Samuelson
  • Ricardo

The Celebrity Economists, Today

  • Anders Aslund, adviser to Boris Yeltsin
  • David Card, University of California, Berkeley
  • Ping Chen
    • a “good guy” in the narrative
    • ex physicist
    • University of Texas at Austin
    • China Center for Economic Research at Peking University
  • Stanley Fischer, International Monetary Fund (IMF)
  • Alan Krueger, Princeton
  • Paul Krugman
  • Andrei Shleifer, adviser to Boris Yeltsin
  • Myron Scholes formulist.
  • Joseph Stiglitz, chief economist, World Bank
  • Lawrence Summers, Treasury Secretary, U.S.


The “missing” ideas. [the falseness of...]

  • <quote>Inflation is everywhere and always a monetary phenomenon</quote>

    • cost push
    • wage-price spirals
  • Full employment without inflation is impossible
    • Full Employment Act
    • NAIRU
    • 4% is the rate
  • Rising pay inequality stems from technological change
    • Skill-biased technological change
    • markets (in everything)
    • meritocracy
    • third way politicians
  • Rising minimum wages cause unemployment
  • Sustained growth cannot exceed 2.5 percent per year
  • Price and quantity are set in free competitive markets through the interaction of supply and demand