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●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
●Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●Austerity is the government’s method for widening the gap between rich and poor.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Everything in economics devolves to motive, and the motive is the Gap.
Do proponents of Modern Monetary Theory (MMT) and Monetary Sovereignty MS) really hate each other?
One might think so, based on the tone of the comments below the post, “Another word on MMT’s Jobs Guarantee and ‘The Rise Of Bullshit Jobs’,” Wednesday, Feb 4 2015
But, nothing could be further from the truth. Our disagreements are more like wrestling matches between twins. I very much like and respect Warren Mosler (the father of MMT), Stephanie Kelton, Randy Wray and all the folks at UMKC (the heart of MMT academics).
I mention this, because reader “tetrahedron 720” recently commented on the above-mentioned post:
“I somehow think this should be MS and MMT working together to complement each other’s strengths, not one OR the other in a battle to the finish. MS provides the demand and subsequent employment followed by the JG to capture what the private sector cannot. No?”
To the degree these sister philosophies can be summarized in a few, short sentences, here is what I see:
In describing the facts of federal and non-federal finances, MS and MMT are essentially the same. I know of no important differences.
Both schools agree that the federal government cannot run short of dollars, federal taxes do not fund federal spending, federal deficits are necessary for long-term economic growth, and federal “trust funds” (example: the Social Security “trust fund”) are nothing more than accounting conveniences and not real repositories of dollars.
Where MMT and MS differ most is in some of the recommendations, based on those very same facts.
MMT appears to believe that unemployment and price instability are our primary economic problems. They even created a “Center for Full Employment and Price Stability” at UMKC.
MS believes that the growing income/wealth/power Gap and the slow-growing overall economy are our primary problems. So MS focuses on narrowing the Gap, and growing the economy.
While MMT welcomes low-paying jobs as an improvement over unemployment, MS believes low-paying jobs are a trap — the rich’s method for increasing wage slavery and widening the Gap.
While MMT would seek directly to provide low-paying jobs as a partial cure for unemployment, MS would seek directly to provide funds to the “not-rich” as a partial cure for the too-wide Gap.
While MMT asks for more direct government control over employment, MS asks for more government funding for private sector employment.
While MMT believes inflation should be controlled by government balancing of deficits, MS believes inflation should be controlled by government balancing of interest rates.
While MMT is discussed and presented in academic terms (except for Warren’s excellent book), MS is discussed and written in lay terms.
The are many exceptions to the above. For instance, MS believes all banks and utilities should be federalized, and I suspect some in MMT may agree. We all agree on the elimination of FICA.
Interestingly, despite overwhelming similarities, each philosophy was created separately. MMT was created first, and later, MS was created without the knowledge that MMT existed.
One could think of it as “convergent evolution” (the process whereby different organisms, independently evolve similar traits, based on facing similar problems).
So in answer to the question, “Do proponents of Modern Monetary Theory (MMT)and Monetary Sovereignty (MS) really hate each other?,” the answer is most assuredly, “No.”
We stand side-by-side in the fight against the widespread economic ignorance, fostered by the rich and powerful.
Rodger Malcolm Mitchell
The Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Federally funded, free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually. (Refer to this.)
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
Initiating The Ten Steps sequentially will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.
THE RECESSION CLOCK
Vertical gray bars mark recessions.
As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.