Another #FAKEMMTer goes 0 – 4


1) “Taxes don’t fund spending.”

Swing and a miss…The MMT pillar is that, operationally, “Taxes ARE NOT NEEDED to fund spending (not that they don’t.)”—Warren Mosler, final comments, MMT Conference, Sept 2017

2) “Taxation destroys money. Physical notes are shredded, and in accounting terms, the liability represented on paper is cancelled (-100 + 100 = 0).”

Swing and a miss…When paying taxes, physical cash is shredded, checks for federal taxes due made payable to the US TREASURY are cancelled, any other dollars used to pay federal taxes are debited from the money supply; AND, at the same time, an equal & opposite amount is credited (is ‘created’) into the Daily Treasury Statement (the exact same account where all federal gov’t spending is drawn).

3) “I’ll let Ben Bernanke explain it.”

Swing and a miss…In that clip Ben Bernanke was talking about dollar creation for the Fed’s Large Scale Asset Program (aka QE) to ‘buyback’ (read: ‘unprint’) bonds to lower long-term interest rates (a swap that doesn’t add dollars to the private sector); and NOT talking about dollar creation for federal gov’t deficit spending (an outright addition of dollars into the private sector)—two totally separate things that the MMT kiddie pool routinely conflates; and why, even though there is no financial ‘funding’ constraint, #FAKEMMTers in the MMT Party continue to be frustrated by the modern monetary formality (the political ‘funding’ constraint) that, albeit unnecessary, still gets in the way of the modern monetary theory.

4) “That taxes don’t fund spending was one of the lessons learned by the FDR administration which lead one former chairman to publish a paper with the title ‘taxes for revenue are obsolete.'”

Swing and a miss…In that brilliant 1946 article, NY Fed Chair Beardsley Ruml wrote that the federal gov’t is “free of money worries and NEED NO LONGER levy taxes for the purpose of providing itself with revenue”. SEE #1


P.S. Beardsley Ruml, the guy that wrote ‘Taxes For Revenue Are Obsolete’ in 1946 which is quoted by every single ‘prescription’ MMT ‘academic’ from Pavlina Tcherneva to Bill Mitchell, also said this: “The corporation income tax must go, taxes on corporation profits have three principal consequences and all of them are bad.” As chairman of the Federal Reserve in New York, Mr. Ruml insisted that the case for ending the corporate tax was overwhelming. “It is evil…it should be abolished,” he said.

Which begs the question: Why don’t the same MMT ‘scholars’ that love to quote Beardsley Ruml, ever mention that, or ever give the current administration any credit for dropping the corporate tax rate to 21% from 35% which Beardsley Ruml would have approved of (?)

…because they are #FAKEMMTERS (!)


Thanks for reading,


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“Not Worth A Continental”


No, that’s not quite exactly how they did it in the late 18th century.

Our own central government issued paper money ($241,552,780 in Continental currency) when the Continental Congress printed Continental Dollars from May 10, 1775 to January 14, 1779 during the Revolution.

By the end of the war, they had become worthless (“not worth a continental”) which left the colonists with a searing memory (read: a legitimate fear) of ‘printing money’.

Price stability depends less on whether money is issued by fiat (‘created out of thin air’) or fixed (with a convertibility rate ‘created out of thin air’) and more on the credibility of the fiscal and monetary authorities to manage the price stability of the economy’s money supply in a responsible manner.

To explain price instability leading to hyperinflation, you don’t need to go all the way to Wiemar, or Zimbabwe. Nor do you need to go all the way back in time, just look at what is happening right now in Turkey (a monetary sovereign, a net-importer, using a free-floating, non-convertible currency).

Pure MMT For The 100%…Beyond The Memes

It was interesting to see that at the end of the same week when many had (yet again) gotten all excited about a brand-new, easy-to-remember, catchy meme that smugly checkmates fiat ‘money printing’ (deficit spending) causing higher inflation; or fiat money printing causing bond vigilantes (speculative short selling) driving interest rates up; or fiat money printing causing losing confidence in the currency; can now all be pooh-poohed by the (fake) ‘academic’ MMT community, by simply saying “JAPAN”…which…like most of the dopey memes always regurgitated…is not necessarily accurate…and why…(?)…because….”TURKEY”.

There are many moving pieces that have caused Japan’s lost decades (mainly demographics), so it’s disingenuous for #FAKEMMTers to say that what is happening (or more specifically, what ISN’T happening) in Japan is ‘because MMT’ (or that Fed rate hikes will cause the dollar index to weaken ‘because MMT’).

Similar to the U.S., Turkey is a monetary sovereign. Similar to the U.S., Turkey is an importer. Similar to the U.S. Dollar (USD), the Turkish Lira (TRY) is a free floating, non-convertible currency (Turkey adopted the free-floating exchange-rate regime between 2002 and 2007). Once a currency is no longer backed by gold (or fixed to another currency), then the currency, just like the USD or just like the TRY, is now ‘only’ backed by the full faith and credit of the gov’t that issues it.

In other words, once you change from a fixed-currency regime to a floating-currency regime, the ‘value’ of the currency changes from whatever it was backed by, to other moving pieces like the ‘value’ (real and perceived) of the federal gov’t, the issuer of the currency. Note that this is just one, of many, fundamental BIASes, meaning one of many moving pieces that affects floating-currency valuations that shouldn’t be ignored (which is presently costing USD short sellers like Mike Norman and his subscribers dearly).

MineThis1 (correctly) reminds his followers over at IMMT that it is important for Pure MMTers to remember that just because a monetary sovereign can never ‘run out of money’, you can run out of something else, so MMT doesn’t mean you can print print print…because “JAPAN” (…because ‘MMT’).

So, what are they (Turkey) going to do now?

That’s a good question.

The answer (and fully grasping MMT) goes beyond the memes.

Thanks for reading,




Deficit Owls (that lost their glasses)

Accounting 101 was never a strong suit over at the ‘Deficit Owls’ (that lost their glasses), nor for their followers, and here’s yet another demo:

“All money created has two parts: Asset & Liability”

Accounting (reality) translation: All transactions (including all money created) have two parts: Credit & Debit.

“Federal spending: Recipient gets asset, Gov’t keeps liability.”

Better: ‘Federal spending: Recipient gets asset (tax credit), Recipient gets liability (federal tax liability).

“When returned, both liability and asset are destroyed.”

Better: ‘When returned (when the Recipient pays federal taxes) both liability and asset, OF THE RECIPIENT (on the Recipient’s balance sheet), are destroyed; but only those who are fully grasping MMT know that the amount of dollars in the banking system (the amount of net financial assets) are unchanged.

Fake MMT: ‘Taxes don’t fund federal spending.’

Pure MMT: Operationally, taxes are NOT NEEDED to fund federal spending (not that they don’t at all).

Fake MMT: When Recipients pay federal taxes, those dollars are ‘destroyed’.

Pure MMT: When Recipients pay federal taxes (when Recipient’s dollars are debited) there is NO CHANGE in the amount of dollars in the banking system because those federal tax dollars ‘drain’ (are credited) to the Daily Treasury Statement, the exact same account where all federal spending is drawn.

(Don’t take our word for it, ask any plumber, and they will confirm, that the water, after it goes down a drain, is not ‘destroyed’.)

Thankfully, most folks are now seeing that these silly ‘deficit owls’ (just like the dopey ‘REalproGRESSIVES’) are pushing fake ideological ‘prescription’ mmt under the guise of promoting Pure ‘description’ MMT. It’s becoming more obvious by the day that these kids are not happy that the American economy is strong and would rather dismantle capitalism (to replace it with a post-modern neo-marxist cradle-to-grave welfare state).

It’s a good thing that these #FAKEMMTers have no idea how ridiculous they sound when they tell the person looking at a brand new dollar bill (or one of the 2000 employees of the Bureau of Engraving and Printing) that ‘we don’t print money anymore’; or when they tell the football player that he doesn’t know how the game is played (that his touchdown didn’t put the 7 points on the ‘scoreboard’); or when they tell a lawyer who wrote the US appropriations law that ‘federal taxes don’t fund spending’ (because ‘there’s no such thing as a taxpayer or taxpayer dollars on the federal level’); or when they tell the bookkeeper that a debit is a ‘destruction’ (without a simultaneous creation, aka credit, on another ledger). Hopefully they’ll remain as clueless to how ridiculous they sound to anyone outside their choirs (to the accountants, to the lawyers, to the bankers, to the policymakers, and to the hard-working, patriotic, law-abiding American constituents) as they are about PURE MMT.


P.S. Although the gold-standard era ended and the financing function of federal gov’t revenue took a back seat to other, more important, functions (mostly to maintain price stability and to maintain demand for the currency); the pure MMT enlightenment is that, operationally, any monetary sovereign, issuing its own fiat currency, no longer needs to collect federal taxes or sell Treasury bonds to fund spending (not that they don’t at all). That modern monetary ‘formality’ (albeit unnecessary) is still getting in the way of the modern monetary theory (is still frustrating the Deficit Owls). MMTers would be able to follow those seesaws (debits & credits) much easier if they just tried to keep it simple (to keep it pure).

Thanks for reading,


Now if you say ‘printing money’ the #FAKEMMTers get triggered as well

First it was saying ‘federal taxes fund spending’, then it was saying ‘federal taxpayer’ or ‘federal tax dollars’ and now if you say ‘printing money’ the #FAKEMMTers get triggered as well…

Agreed that “a misinformed public believes ‘printing money’ will create inflation”, or even worse, “a misinformed public believes that when the government ‘prints money’ it will eventually create hyperinflation” (Ellis Winningham), but that doesn’t mean you should be reprimanding them for saying ‘printing money’ (unless you want to convince experts in the field outside your choir that you are not fully grasping how the federal gov’t works)…

When the federal gov’t deficit spends, meaning that when there is an addition by the federal gov’t of net financial assets, of dollars, being added to the banking system, this ‘net issuance of currency’ (Ellis’s preferred way to say it) ADDS TO AN OUTSTANDING FLOAT OF FIAT DOLLARS. That is the paradigm difference since 1971, that unlike before, during the gold-standard era, when federal gov’t deficit spending added to an actual debt denominated in (a limited amount of) gold-backed dollars; now, federal gov’t deficit spending instead adds to an outstanding float denominated in (an unlimited amount of) fiat dollars. Granted that this deficit spending DOES NOT have the same dilution that can be measured with the same precision as a net issuance a stock does to all the rest of the current stockholders, but printing money does have an inflationary BIAS. The key word there is BIAS because that inflationary (dilution of fiat dollar) bias of newly-printed money, unlike newly-printed stock, can evaporate on impact (as an aging demographic all worldwide now well know). Rather than scolding people for saying ‘printing money’, the MMT enlightenment is that what the mainstream should be more worried about is NOT ENOUGH money being printed by the federal gov’t, or wrongly thinking the federal gov’t should be surplus spending, which would have a deflationary bias, or even worse, thinking we should have sustained federal budget surpluses, which would cause hyperDEFLATION….

Until that day comes when society is 100% cashless (trust me it’s coming), you are only insulting people’s intelligence and hurting the MMT cause by saying things like “We don’t print money anymore! You need to catch up to the 20th century!” (Geoff, You need to catch up! We’re in the 21ST century!). Instead of over seasoning your MMT, just keep it simple and perhaps try this approach:

In the post-gold standard, modern monetary system, since the federal gov’t (any monetary sovereign) is now spending its own fiat currency (since it doesn’t need to be funded anymore), when the gov’t is ‘printing money’ (deficit spending), it only now means that they are ‘supplying’ a growing economy with more currency needed to accommodate that growth. Same as you constantly needing to add more cans of oil to your hard-working car every 3 months to keep all those moving pieces inside the engine lubricated otherwise they will seize up.



Thanks for reading,




The permanent Job Guarantee proposal (a hijacked version of Mr. Mosler’s 2010 7DIF ‘Transitional JG’ proposal) was yet another Big Lie from today’s #FAKEMMTers who are desperately trying to fool us into thinking that we have a jobs shortage problem (that we need the gov’t to create jobs)…


The biggest lie was that their JG solved an actual problem (like Mr. Mosler’s JG that would have solved an actual jobs shortage problem which we had in 2010). The #FAKEMMTers, along with other MMT academic ‘scholars’ (who apparently forgot that they received degrees in economics, not politics) lie to you about ‘tens of millions’ of ‘involuntary unemployed’; or that ‘taxes don’t fund spending’; or that there is ‘no such thing as federal taxpayers’; or there is ‘no such thing as tax dollars on the federal level’; or push their nonsensical conspiracy theory that the Fed (and the Congress that the Fed is instructed by) are ‘intentionally targeting unemployment’. Just like those ‘lying’ ‘evil’ ‘neo-liberal’ ‘murderers-by-proxy’ that all #FAKEMMTers like to point their fingers at, the #FAKEMMTers constantly take advantage of their financially-ignorant choirs…


The Big #FAKEMMTer Lie is that, with their ‘JG’, you will be happy, doing an assigned ‘job’, getting a ‘guaranteed’ income, and PRESTO, all of your problems would be solved; PLUS, not to worry, all will be well everywhere, because a ‘buffer stock of employed’ gets our economy to ‘full employment’. However, the reality would be, while #FAKEMMTers are putting ‘full employment’ lipstick on a pig feasting on garbage inflation, YOU, while inside THEIR Job Gulag, are becoming a sharecropper, toiling away on a modern gov’t job plantation, scraping gum off sidewalks, watching the world go by, even faster than ever before (meaning you become more dependent, faster than ever before, on the future empty promises of #FAKEMMTers)…


The chance that #FAKEMMTers will get you happily employed into a ‘guaranteed’ job is about the same chance that the gov’t (or any other organization) can ‘guarantee’ that you will get into heaven. There’s an old saying, ‘God helps those who help themselves’ and I’m not just talking about America’s unemployed (or underemployed) helping themselves. I’m also talking about America’s employers helping themselves as well, with an initiative grounded in economic need and designed to get economic results (not one grounded in politics, designed to get votes)


The #FAKEMMT ‘Job Guarantee’ was Dead On Arrival because we don’t have a jobs shortage problem like we did in 2010. The JG is product marketing, not economics. Today, the economic facts, data and math clearly show that we instead have a job SKILLS shortage, or more specifically, a jobs SKILLS mismatch between the employer and the potential employee. The #FAKEMMTer JG was DOA because it didn’t sound like this:


In July 2018, President Trump signed an executive order to prioritize and expand workforce development so that we can create and fill American jobs with American workers (or in other words, a White House initiative for a federal JOBS TRAINING program, or more specifically, ‘Training for the Jobs of Tomorrow’ to tackle the challenges technology poses to the workforce).


“One of those causes of stagnant wages is stagnation of educational achievement (the leveling out of educational attainment). When US educational attainment was rising, technology was coming in, which needed more worker skills and people were getting them. So you had productivity rising, you had incomes rising and you had inequality declining. US educational attainment flattened out in the 1970s, while everywhere else in the world it has been going up. The only way for real incomes to go up over a longer period of time is through higher productivity. Higher productivity is in part a function of higher education, better skills and increased aptitude of the workforce.”—Chairman Jerome H. Powell, 07/17/18, Semiannual Monetary Policy Report to the Congress before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, Washington, D.C.


“Nearly 1 in 5 working Americans has a job that didn’t exist in 1980. Such rapid change is one reason 6.6 million U.S. jobs are currently unfilled. Many of these jobs require skills training, not a college degree. Yet for too long, both the public and the private sectors have failed to develop innovative and effective training programs.”— Ivanka Trump, 07/18/18, Advisor to the President, in a Wall Street Journal op-ed.


“To continue this economic miracle, we must invest in job training and vocational education. The task is to develop a strategy to equip workers at all stages of their career with the skills they need to thrive in the modern economy. Whether it is a high school student looking to land their first job or a late-career worker who wants to learn a new trade, we want every American having the chance to earn a living with a great job THAT THEY LOVE DOING. We have been asking businesses across the nation to sign our new pledge to America’s workers. Today 23 companies and associations are pledging to expand apprenticeships (I can’t get away from that word ‘apprentice’, it’s a great word) for on-the-job training and vocational education. They signed the pledge committing to train, re-train and upskill more than 3.8 million American students and current workers for new jobs and rewarding careers. This is only Day 1. In the days and months ahead, we hope that hundreds of businesses will join us in this effort. I want to thank all the companies who are about to sign the pledge. I applaud your civic leadership.”—President Trump, 07/19/18, before signing an Executive Order that establishes the National Council for the American Worker, which includes top administration officials and industry leaders tasked with developing a national strategy to address workforce development and to help expand the number of apprenticeships available to Americans today.


“We need this national commitment to embrace the rapidly, ever-changing job demands to ‘reskill’ and ‘upskill’ our workforce. I love the phrase ‘in-demand skills’, we call it ‘in-demand education’. Education where community colleges respond to what is being demanded by businesses. They teach not just any old skill, but in-demand skills. That’s what this inititative (pledges just signed by companies to provide educational opportunities and apprenticeships to almost 4 million American workers) is all about.” —U.S. Secretary of Labor Alexander Acosta, 07/19/18


In a major bipartisan win, the Carl D. Perkins Career and Technical Education Act aimed at bolstering skills training for technical jobs in various industries unanimously passed the House on July 25th afternoon after passing the Senate on July 23rd.


On 07/31/18 President Trump signed the Perkins Career and Technical Education Act into law at Tampa Bay Technical High School in Tampa, Florida. The Perkins CTE Act provides crucial funding toward training programs for American students and workers. Perkins CTE provides more than $1 billion each year to states for vocational and career-focused education programs. These programs, tailored toward secondary and post-secondary students, will help employers fill the high-skill jobs of tomorrow.


P.S. Don’t hold your breath waiting for any #FAKEMMTer to give this administration any credit for this job training and vocational education initiative (nor any of the other MMT-compliant results delivered so far).



Thanx for reading,


ATTN: Real Progressives (those wearing the ‘taxes don’t fund spending’ floaties in the mmt kiddie pool):

ATTN: Real Progressives (those wearing the ‘taxes don’t fund spending’ floaties in the mmt kiddie pool):

What Ellis is still not grasping is the difference between surplus spending (a ‘swap’ where there is no addition of dollars, or Net Financial Assets, going into the banking system) v. deficit spending (where there is an ‘outright’ addition of dollars, or Net Financial Assets, going into the banking system).

More specifically, #FAKEMMTers love the ‘there is no financial constraint’ part of the Modern Monetary Theory, but hate the ‘there still is a political constraint’ part of the Modern Monetary Formality.

The Fed is the federal gov’t ‘swap’ desk. The Fed can create dollars only if it receives something in return, like Treasury bonds or Mortgage-Backed Securities (like during ‘QE’ which did not add NFAs to the banking system); or another example, the Fed can only create dollars if it receives some collateral, like toxic assets (like when the Fed loaned dollars to AIG in setting up the ‘Maiden Lane’ holdings which also did not add NFAs to the banking system). So, similar to any other bank that can create dollars only if it receives a signature on an IOU, the Federal Reserve Bank cannot create dollars if it is not a ‘swap’.

The Treasury is the federal gov’t ‘outright’ desk. If the Fed is not getting anything in return, then the Fed must be instructed by the Treasury (like when the Fed handed over $125B to the banks to bail them out, the Fed was instructed by the Treasury to ‘outright’ create those TARP dollars which did add NFAs to the banking system).

@28:15: “Let me show you where the money comes from Stephen. Right here, you see this little keyboard? This is where the money comes from. ‘How are you gonna pay for it?’, this keyboard, right here”—Ellis Winningham

(No, that’s #FAKEMMT. The dollars come from federal taxation or Treasury bond sales and without either taxes or bonds, no keyboard can prevent a government shutdown. Those are the only two ways that the ledgers of the Daily Treasury Statement accounts, where all federal spending is drawn from, gets filled with entries of dollars. That’s the law. Operationally, it DOESN’T NEED to be that way. That’s the Pure MMT.)

“The money the gov’t is collecting in taxes is being deleted, that’s it, it’s not paying for anything.”

(The money that is collected in taxes is debited from the money supply and is credited to the Treasury, or in other words, taxes are ‘funding’ the same Daily Treasury Statement account at the Treasury where all federal spending is drawn.)

“The Treasury will debit that account, the taxes are removed, the net money supply will drop just a bit.”

(…while an equal and opposite amount of dollars that is credited to the Treasury causes their reserves to increase just a bit, meaning that there is no change of Net Financial Assets in the banking system.)

“The Federal Reserve goes to the Treasury’s operating account and types the number into that account.”

(and because the Fed is the ‘swap’ desk, they cannot do that without knowing, or being instructed by the Treasury, that the same amount of taxes was received.)

“But the problem is there’s nothing in that Treasury account that counts towards the stock of money because it’s not money.”

(but those reserves in the Treasury account ARE still NFAs, they ARE still dollars in the banking system.)

“The gov’t has to spend it to become money, so the Treasury then credits an account and the Federal Reserve creates brand new liabilities by typing a number, they emit currency.” 

(There you go again, whether you call them ‘liabilities’, or ‘money’, or ‘reserves’, still doesn’t change the fact that from the point of federal taxation to the point of federal spending, they are all Net Financial Assets, they are all dollars in the banking system.)

“By authority of gov’t the Treasury is giving instructions to the central bank to inject reserves into the banking system.”

(In other words, the Fed is only a swap desk, the Fed can only ‘outright’ inject reserves to the banks after the Treasury, the ‘outright’ desk, instructs the Fed that the Treasury has been injected with taxes)

All gov’t spending is money creation, all national gov’t taxation is money destruction.”

(Surplus spending is a ‘swap’, meaning no change in Net Financial Assets from the banking system; deficit spending is an ‘outright’ addition of NFA, an increase of dollars in the banking system; and only when taxation goes towards paying off national bonds is there a ‘destruction’ of NFA.)

“There’s no taxation proceeds funding anything.”

(The federal gov’t is funding us and we are funding them right back…MMT isn’t ‘taxes don’t fund spending’…MMT is that, unlike the gold-standard era, the gov’t doesn’t NEED our taxes first…MMT is that, in the post-gold standard, modern monetary system, federal taxes are NOT NEEDED to fund spending—not that they don’t.)


P.S. Don’t just take my word for it: “I DON’T LIKE TO SAY ‘TAXES DON’T FUND SPENDING’ because the word fund is ambiguous, it means different things to different people and even though you can be right, you can be dead right, but it’s better to say the gov’t DOESN’T NEED your money to be able to spend…not that it DOESN’T FUND IT…taxes ARE NOT NEEDED to be able to spend.” Warren Mosler, at the MMT conference, September 24, 2017.  ATTN ELLIS: What Mr. Mosler meant by saying “the word ‘fund’ means different things to different people” is that, beyond the MMT kiddie pool, ‘fund’ means more than just ‘finance’ (to people like bankers, lawyers, accountants, policymakers and other experts in the field).

Sincerely yours,

Ellis Winningham on getting Progressives to UNDERSTAND ECONOMICS

The long awaited return of Ellis Winningham comes at the perfect time as we head into a season where progressives must understand economics and how to get past the objections lobbed by neoliberals and neocons who despise progress.Please help our Real Progressives efforts and become a monthly donor!At Patreon for Real Progressives our pagesFollow us on Facebook: us on YouTube: us on Periscope: us on Twitter: us on Instagram:

Posted by Real Progressives on Sunday, July 1, 2018


7DIF#5: “Exports are a ‘real’ cost”


Q) Is invading China the best way for the United States to fix its debt problem?

A) “The US does not have a debt problem. On the other hand, China has a big ‘tangible goods’ problem, so let us hope they do not decide to invade us to get their stuff back.” —Craig Foster, Teacher & retired CSFB trader

A monetary sovereign can keep handing over pieces of paper off a printing press all day long, but they can’t keep handing over (‘real’) tangible goods all day long. That’s what Warren Mosler (in 7DIF#5) means when he says “Exports are a ‘real’ cost” (when making the argument that trade deficits are not a problem either)…
However, Pure MMTers should be aware that ‘exports are a real cost’ oversimplifies the many other moving pieces involved in trade differentials. When saying that, you may get some push-back. Just like Steve Keen correctly did in that recent (05/06/18) Real Progressives broadcast:

Mosler: “Having a trade deficit doesn’t constrain investment.”

Keen: “(When Australia runs a trade deficit, it means) a lot of our (Australian) assets have gone overseas…it is going to foreigners.”

Mosler: “Assets are not going overseas by running trade deficits. If you sold your Australian Opera house, are they going to dig it up and take it away?”

Keen: “I’m talking about the financial transactions paying for imports that lead to the foreign sector then buying our assets. They have claims on our assets. You are saying that is good and that exports are the real costs, that by being a net exporter (running a trade surplus), that sending real goods for receiving credit balances at the central banks is bad.”

Mosler: “There is a only nominal payment for trade deficits.”

Keen: “There is nothing ‘nominal’ about foreigners owning our assets.”

Keen had a good point. Since there are both costs AND benefits, both bad AND good, for both importer AND exporter, in both trade deficit AND surplus, we should consider a qualifier to go along with ‘Exports are a real cost’ like ‘Trade deficits are the position of strength’.

For example, you (a nation running trade deficits) are the guy paying someone else to make stuff for you. In addition you (running trade deficits) are working in the Research & Design suite innovating the products instead of on the factory floor.

That said, imports are a ‘cost’, too. Free trade can become unfair trade. Or more specifically, can morph into unfair trade practices that pressures the transfer of sensitive intellectual property to overseas governments, undermines your proprietary technology by depriving you of the ability to license it at full value and weakens your global competitiveness. Not to mention that trade deficits dangerously depletes your manufacturing base wiping out millions and millions of middle class jobs.

Until you get to the point (US manufacturing less than 12% of GDP) when you say ‘enough is enough’ (hence the present ‘trade war’ by Trump and a separate filing of a WTO violation case against China by US Trade Representative Lighthizer).



THE HUBBUB ABOUT GITHUB is that the Microsoft Corporation is buying a champion of open-sourced platforms (an ethos of the free-sharing code movement) called GitHub, which is used by over 28 million programmers. The more programs on a company’s platform, the more software apps are created, attracting more customers and even more developers—a flywheel of growth and profit. Microsoft will acquire GitHub for $7.5 BILLION IN MICROSOFT STOCK.

What is Modern Monetary Theory?

Another good way to think about it, is that Microsoft had two choices how to pay that $7.5B. Microsoft, a user of dollars, could either go into debt and pay with borrowed dollars (similar to the state & local gov’t); or, Microsoft, also a sovereign issuer, could create fiat, a.k.a. ‘shares’ and pay with Microsoft stock (similar to the federal gov’t).

Those newly-created Microsoft shares will be liabilities, yes (they will be assets of the new shareholders); those Microsoft shares will be obligations, of course (Microsoft will give those new shareholders dividends and voting rights); but will those newly-created Microsoft shares ‘spent’ for GitHub be a ‘debt’ (?), no.

Don’t take my word for it. Ask any accountant and they will confirm to you that all debts are liabilities but not all liabilities are debts.

If you ask any of Microsoft’s accountants, or any publicly-traded corporation’s accountant, how many dollars that the company has borrowed (how much debt in dollars that the company is in), or how many dollars that the company has budgeted (for spending) this year, he or she can give you a figure to the penny.

However, ask that same accountant how much of their own stock that the company has ‘borrowed’ (how much in ‘debt’ of their own stock that the company is in), or how many shares that the company has ‘budgeted’ to issue (to create for spending) and they can’t answer those questions because there’s no such thing.

That paradigm difference between those two ‘currencies’ used by either the Microsoft ‘state & local government’ division or the Microsoft ‘federal government’ division…is MMT.

NOTE: The distinction between the ‘user of currency’ and the ‘issuer of currency’ is that when deficit spending, a user is adding to an outstanding amount of debt; while an issuer, when deficit spending, is instead adding to an outstanding amount of float.

Where it gets tricky for the ‘hyperinflation-sensitive’ mainstream to grasp is that when issuers of currency add to their outstanding float, it doesn’t necessarily ‘dilute’ the float of currency with the same precision that it would dilute a float of stock.

For example, if there are ten shares of Microsoft stock outstanding (each share equals 10% ownership of Microsoft), and Microsoft issues 10 more shares, then the previous outstanding float was diluted exactly 50% (each share now only equals 5% of IBM). Currency is a different story. There are many other moving pieces involved that determines whether the previous outstanding float of currency has diluted (has lost purchasing power, or more precisely, the holders of the currency have suffered inflation).

Why are federal gov’t deficits (additions of currency) sometimes inflationary and other times not? One answer is “it depends on productivity,” as per Jim Boukis, a co-creator of Pure MMT for the 100%. Another is that those deficit spending dollars are going into the ‘non-functional’ economy (blowing savings asset bubbles) which may have little effect on overall consumer price inflation in the real, ‘functional’ economy. “For example, in 2008 and 2009 deficits were 10% of GDP, and then every year the deficits decreased to 9%, 8, 7, 6, 5, etc, but the dollar didn’t weaken, there was no inflation,” Jim Boukis adds.

Other examples, if the prevailing economy is soft, if demographic changes are weakening the economy, if geopolitical events are creating deflationary winds against the economy, then the inflationary bias of those additions of federal gov’t deficit-spending dollars may not be causing any inflation at all because it is vaporizing on impact.

What is Modern Monetary Theory (MMT)?

“This game is a practical demonstration of the present system of land-grabbing with all its usual outcomes and consequences, as it contains all the elements of success and failure in the real world, with the object being the same that the human race in general seems to have, ie, the accumulation of wealth.” Elizabeth ‘Lizzie’ Magie, 1903, creator of the ‘Landlord’s Game’ (the predecessor of the ‘Monopoly’ game).

What is Modern Monetary Theory (MMT)? Well, like most people, if you’ve played ‘Monopoly’, then you’re already familiar with the core concepts of MMT, and you are already an ‘MMTer’.

MMT is a currency analysis, it describes how our federal gov’t creates fiat money. The federal gov’t, the issuer of fiat dollars, creates money the same way as the Monopoly game does.

The Monopoly game rules were written around the same time when President FDR initiated our country’s switch from gold-backed dollars into fiat dollars (ending the gold standard era). As per the Monopoly game rules, “The Monopoly Bank never goes broke, if the Monopoly Bank runs out of money, the Monopoly Bank may issue as much as needed by writing on any ordinary paper.” Which is the same as our federal gov’t today, the federal gov’t, the issuer of fiat dollars, is the same as the Monopoly Bank. The federal gov’t (the Monopoly bank) simply prints “$1”, “$5”, “$10”, “$20″, $50” and “$100” on pieces of paper, or the more prevalent, most modern way, they just tap them into electronic existence with a keyboard.

In addition, there is absolutely no mention in the Monopoly game rules about the Monopoly Bank going into ‘debt’ when it creates the Monopoly Money; nor is there any mention whatsoever in the rules about the Monopoly Bank having to ‘borrow’ Monopoly Money. Which is the same as our federal gov’t today, or any monetary sovereign issuing their own non-convertible, free-floating, fiat currency. Anyone who says otherwise doesn’t understand the rules. Anyone who has played Monopoly and does understand the rules easily grasps that rather than ‘borrowing’ or going into ‘debt’ like a household that needs to balance its budget and maintain prosperity; the Bank (the issuer) is merely supplying the Players (the users) with more needed currency to balance the Game and widen prosperity.

Unlike the Monopoly Players (the users of Monopoly money), the federal gov’t (the issuer), is not going to ‘run out’ of its own Monopoly Money. No Monopoly game that you ever played ever ended because the Monopoly Bank ran out of Monopoly Money. The Monopoly game only ended for Monopoly Players (households like you & me), when WE ran out of money.

In 1903, Elizabeth ‘Lizzie’ Magie, a bold and progressive woman, created two sets of rules for her ‘Landlord’s Game’: An anti-monopolist set, in which all were rewarded when wealth was created (to pay homage to Lizzie’s political hero, economist Henry George); and a monopolist set in which the goal was to crush opponents (to highlight the contradictions between the opposing ideologies).

Three decades later it was the cutthroat version that players preferred. Her monopolist version eventually caught on with a community of Quakers in Atlantic City, who customized it with the names of local neighborhoods, and in 1932 it found its way to Charles Darrow.

The next year, in 1933, FDR began the process of ending the gold standard era of ‘sound money’ and replacing it with fiat currency. Darrow dusted off Elizabeth Magie’s patent, created another game based off her monopolist version, and incorporated the monetary concepts of modern fiat currency in the rules of the game.

When Darrow’s ‘Monopoly’ game started to take off in the mid-1930s, Parker Brothers bought up the rights to his game plus all other related games created by Elizabeth Magie. However, Elizabeth Magie got nowhere near what Charles Darrow got (for the patent to the ‘Landlord’s Game’ and two other game ideas of hers, Lizzie reportedly received $500 — and no royalties). Lizzie, who felt cheated and became distraught, was afterwards quoted in The Washington Post saying, “There is nothing new under the sun.”

To this day Hasbro (a Parker Brothers subsidiary), still downplays Magie’s status. Hasbro credits the official Monopoly game produced and played today to Charles Darrow, and on Hasbro’s website, a timeline of the game’s history begins in 1935.

“The Monopoly case opens the question of who should get credit for an invention, and how. Most people know about the Wright brothers (who filed their patent on the same day as Lizzie Magie), but don’t recall the other aviators who also sought to fly. The adage that success has many fathers rings true, but says nothing of success’s mothers. Like Lizzie’s original innovative board, circular and never-ending, the balance between winners and losers is constantly in flux.”

Happy Mother’s Day