Uncovering the truth about the magic money trees
Nice metaphor. As for education, one can hardly forget to recommend the excellent billy blog from Prof William Mitchell, who basically invented teaching people about MMT over the Internet :) http://bilbo.economicoutlook.net/blog/
Here for more analogies about gatling guns and fantasy creatures!
Paul: I'm fairly certain Fahdel Kaboub has produced some material re: monetary sovereignity among African nations. He is well worth checking out on that aspect of MMT at any rate.
also I think a few of the core MMT:ers would insist on saying that MMT isn't a set of economic policies for governments as such to adopt, apart from the Job Guarantee as an automatic stabilizer. Sure, you might adopt it as the theoretical framework through which you design specific economic policies.
Sentences like "the decision to speak Squirrelese rather than Entish is a political one" and others in this article causes the impression that you are claiming that those in power know better - they know that public finance works like MMT tells us - but they deliberately feign that they don't. I'm finding that this is a pretty common claim in the MMT community.
I'm pretty sure that this isn't the case. I personally know many people working in the banking industry and in the public sector, and they legitimately don't know any better. They indeed think that the government works like a private company in the sense that it is a money user not an issuer. The reason why they are ready to bail out banks and spend in the military is because they have their own interests in doing so.
I saw that you tweeted (forget Musk's name) this recently - I hadn't come across your substack until now!
As a convert to seeing the world through an MMT lens, the issue I often see is that the existing narrative is so strong that it makes explaining an alternative view to lay people hard to impossible. Smart people I know, throw up their hands like it's a conspiracy theory! Elsewhere, excited conversations are held in what are effectively echo chambers.
So, as an educator, my question surrounds how to get this message out in a way that allows lay people to not run in horror. That is the only way I think we will break the current narrative. Thoughts??
And, do you mind if I use parts of this post and your tweet (fully attributed of course) to try and reach more people?
Great work, by the way....
Ha, ha. I love this metaphor, and it work brilliantly with the "money doesn't just grow on trees" belief. I have tried to write about MMT using Smurfs and I also tried inventing a new word: Econsplaining. It's inspiring to see how you have done it since it's hard to convince people that their idea of the structure of money is faulty in a short article!
I liked the post , thanks.
MMT is interesting but it seems like a top-down centralized approach. You mentioned the nuance of individual banks creating their own credit, If I am not mistaken, the Bank of England published a paper in 2014 stating that over 90% of total purchasing power is in fact private company credit extended by banks. If that is the case, why would there be a need for one big tree in the center rather than many small and medium trees all around?
Professor Werner, a man who, among many things coined the term QE, wrote this interesting paper showing how we do not need central banks but instead can rely on a decentralized banking system.
Squirrelese uses acorn-concept-thinking to hide, that there are no more acorns for squirrels as they knew them and squirrels are no more the ones to handle acorns. They themselves are derivatives of the real squirrels (=banks) handling only derivatives of the real acorns (=reserves).
Fantastic article. The metaphors really helped me. As a UBI enthusiast i’m curious as to how a clear-speech nation or state can operate with ‘straight’ MMT when all about are continuing to spin the facts and mislead their populace. Any thoughts?
Useful - https://gimms.org.uk/mmtbasics/
Not a bad way to describe money - I'll use that! Thanks. On MMT my feeling is that only governments with currencies in demand can practice MMT - obvs the $. If the £ tried alone I suspect there would be a run on the £. More importantly for me is what you think might happen if the Mozambican Central Bank issues Metacaix as a basic income to its population? I value MMT as a better way to think about money but am sceptical as to how far it can be used internationally.