MMT’s divorce from reality: Jobs Guarantee and inflation fear

Modern Monetary Theory (MMT) is a cousin to Monetary Sovereignty (MS), in that both concepts acknowledge the indisputable fact that the U.S. federal government’s ability to spend is not constrained by the availability of funds.

Modern monetary theory and Monopoly money : r/wallstreetbets
Neither the federal government nor any federal agency can run out of money unless Congress wants it to. Federal “Trust Funds” are a lie to prevent you from receiving federal benefits.

In short, the Monetarily Sovereign federal government cannot run short of dollars. It cannot “go broke.” It neither needs nor uses tax dollars.

Similarly, no agency of the federal government (Medicare, Medicaid, Social Security, et al) can run short of dollars unless Congress wants it to.

Even if all federal tax collections were $0, the government could continue spending, forever.

This is true of all sovereign issuers of a sovereign currency.

Federal taxes do not pay for federal spending.

The federal government pays for all spending by creating new dollars. Federal tax dollars are destroyed upon receipt.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Quote from Ben Bernanke when, as Fed chief, he was on 60 Minutes:
Scott Pelley: Is that tax money that the Fed is spending?
Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

Statement from the St. Louis Fed:
“As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

Press Conference: Mario Draghi, President of the ECB, 9 January 2014
Question: I am wondering: can the ECB ever run out of money?
Mario Draghi: Technically, no. We cannot run out of money.

Sadly, MMT believers go astray with two false beliefs: MMT’s Jobs Guarantee and the belief that federal deficit spending can cause inflation.

Briefly, JG is just what it sounds like: The government guarantees it will find or provide (it’s not clear which) a job for anyone who wants a job.

We have published many articles describing the foolishness of that proposal. Rather than repeat the many, many reasons why the JG is naive, wrongheaded, and damaging, we’ll just provide you with these references:

How the MMT “Jobs Guarantee” ignores humanity.

MMT’s “Jobs Guarantee”: The final nail in the coffin of this naive, foolish program

One more reason why the MMT Jobs Guarantee is a con job

The MMT Jobs Guarantee con job

More proof the MMT’s “Jobs Guarantee” can’t work

The Jobs Guarantee (JG) mouse

Another word on MMT’s Jobs Guarantee and “The Rise Of Bullshit Jobs”

Life in a Jobs Guarantee (JG) World

The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)

Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem.

Will people still work if the government gives them money?

Now, circumstances have arrived to demonstrate reality in the face of MMT’s academic ignorance.

All those people quitting jobs, where are they going?
Kristin Schwab, Oct 28, 2021

You may have heard the news that last week’s initial unemployment claims fell to a new pandemic low. But even though layoffs are decreasing, it’s also true that lots of workers are leaving their jobs and lots of employers are still having trouble filling them.

So, where are the workers who are leaving jobs going?

Right now, it is statistically more difficult to become a receptionist than to get into Harvard. That’s according to data from ZipRecruiter, where Julia Pollak is chief economist.

“I have a lot of bad news for job seekers in certain occupations. Some are much more competitive even,” Pollak said.

Some of these jobs are specialized or senior roles, but a lot of them are what Pollak calls pleasant jobs with predictable schedules, such as in customer service or communications — and fields like airport security.

Guess what, MMT? People aren’t simply mindless pegs to be fitted into crap-job holes as JG would do. Human beings have desires. They want — no, demand — good jobs: Good pay, good conditions, good futures.

MMT’s JG program, designed by academics who have not experienced reality, relies on people being so desperate they will take any job offered.

When people are selective about their lives, JG falls apart.

“So, jobs where you have some degree of prestige, perhaps a uniform and a union looking out for your interests,” Pollak said.

The growing interest in jobs that are more stable and offer better pay and benefits makes sense when you compare them to jobs that require similar skills and are begging people to come back — think less predictable or less protected industries like trucking and restaurants.

Imagine that, MMT, people want stability, better pay, and better benefits, not what a federal JG bureaucracy offers them.

“If you’re a worker at a restaurant and suddenly the restaurant is short-staffed, it’s going to be that much harder for you to actually manage your shift,” said Daniel Zhao, an economist at Glassdoor.

People are tired, burned out and fed up. And a lot of them are looking for a new work-from-home lifestyle. Glassdoor said searches for remote roles is up more than 350% in the last year. Whether everyone can get one is a different story.

The paternalistic Jobs Guarantee was a depression-era solution, that is as appropriate as a hand-crank calculator in today’s computer age. Sadly, MMT still doesn’t get it.

Instead of JG nonsense, we finally are leaning toward Step #3 of the Ten Steps to Prosperity: Social Security for All.

The following article calls it, “Guaranteed Basic Income” (GBI). Different name, same fundamental concept: Instead of finding crap jobs for the poor, simply give people money.

Guaranteed basic income is coming
By Alice Yin and John Byrne Chicago Tribune, The Tribune’s Gregory Pratt contributed

Thousands of struggling Chicago residents will receive monthly cash payments from the city of Chicago as it becomes home to one of the largest guaranteed income programs in the U.S.

Mayor Lori Lightfoot’s $31.5 million basic income program is just a sliver of the total $16.7 billion budget, which will be buoyed by federal COVID-19 relief funds and won City Council approval Wednesday.

Few details of the pilot have been hammered out yet, except that 5,000 households will receive $500 per month for a year — with no strings attached. The lowest-income residents who suffered financial blows from the COVID-19 pandemic will be the focus.

When the funds go out, Chicago will join a contingent of American cities that have warmed up to the concept of guaranteed income.

Once deemed a pipe dream in mainstream politics, the idea of handing unconditional cash directly to those in need has particularly gained steam during the coronavirus-fueled recession, when most Americans saw multiple rounds of stimulus checks and other temporary social safety net expansions.

However, guaranteed income pilots have launched before the pandemic too, such as in Stockton, California, under former Mayor Michael Tubbs.

The program doled out $500 monthly payments to a small subset of low-income families. In June 2020, Tubbs started the coalition Mayors for a Guaranteed Income, which now has more than 50 mayors on board, more than two dozen of whom are piloting the concept in some form.

Though Lightfoot has touted her proposal as the largest in U.S. history, Los Angeles is in the process of implementing its own guaranteed income pilot targeting 3,000 households with $1,000 a month for a year.

Andrew Yang, a Democratic presidential candidate in 2020, has also championed a more far-reaching version of cash assistance known as universal basic income, which would go out to all adults regardless of means.

Rather than insisting on the Puritanical demand that people must labor in order to survive (i.e JG), more enlightened city governments recognize that at least at some basic level, poverty is harmful to the whole nation, and Americans have a right to live.

The irony is that monetarily non-sovereign cities (which are financially limited) are doing it rather than the Monetarily Sovereign federal government, which is financially unlimited.

But that is why the efforts are so small, with just a few thousand households receiving benefits.

Not all Chicago aldermen were on board with Lightfoot’s plan. Her overall budget passed 35-15, with some of the opposition pointing to the basic income program.

Southwest Side Ald. Matt O’Shea said after the vote that the pilot won’t work because “in two years, we won’t be able to afford it.” He’d rather see resources spent on boosting child care and “getting people back to work,” he said.

“Just giving money out to people when there’s tens of thousands of jobs in our city right now, that’s not something I can support,” O’Shea said.

But that is the whole point. There are “tens of thousands of jobs” people don’t want. Arrogant academic snobs claim the “underclass” should be grateful to work crap jobs for crap wages.

Those are Gap Psychology words. They serve only to widen the Gap between the rich and those below. JG is cruel and ignorant. It dooms people to failure. It is bad economics.

Giving people money turns them into consumers whose spending helps the entire economy.

Apparently, people are tired of the “work ’til you drop” routine. They have the strange desire to lead pleasant lives, no matter what the rich tell them. If people won’t work, it’s not because of laziness, as the rich love to claim. It’s because the jobs are unattractive.

Back in March, when aldermen held a hearing on a proposal over direct monthly checks, caucus chairman Jason Ervin said it would be a “slap in the face” to proceed with guaranteed income before setting up a reparations programs for descendants of slaves.

That’s a perfect example of the old, “We can’t do this before we do that” stalling routine.

It’s like this: “We can’t feed them until we clothe them, and we can’t clothe them until we house them, and we can’t house them until we educate them, and we can’t educate them until we give them free healthcare, and we can’t afford to give them free healthcare until we raise taxes — and we can’t raise taxes because no one wants that.

“So we can’t do anything. Sorry.”

One of City Council’s loudest voices for direct cash assistance has been Northwest Side Ald. Gilbert Villegas, who said his mother received a monthly $800 stipend through the Social Security survivors death benefits program after his father died.

Villegas introduced a proposal ordinance this spring that largely resembled Lightfoot’s plan of $500 monthly payments to 5,000 households, but it did not pass.

Villegas’s mother received benefits from a federal agency, that is funded from an unlimited source. City governments are not unlimited sources.

Still, Villegas said he’s prepared to go all-in on helping work out the details of Lightfoot’s program. He wants an eligibility threshold of households earning 300% or less of the federal poverty level, and Chicago Public Schools families should be prioritized, he said.

The problem with income eligibility programs is they are expensive to administer, unfair to those who barely miss out, and subject to cheating.

Though most guaranteed income programs are still nascent, researchers have examined the effects — with limitations. The current pilots in place are narrow in size and duration, said Carmelo Barbaro, executive director of the University of Chicago Inclusive Economy Lab.

Still, there is promise in further investigating the results because unlike other safety-net programs, direct cash assistance is simpler to implement, he said.

Broadly accessible and unconditional cash transfers like Chicago’s guaranteed income pilot are intended to address those limitations of existing programs,” Barbaro wrote in an email. “The cost of such programs is higher, but the benefits could also be higher.”

No deductible, comprehensive Social Security for All is affordable for the federal government (as are all federal expenses). It would be simple to administer, and massively beneficial to the economy.

University of Pennsylvania professor Ioana Marinescu, an economist who has also studied such programs, said the early signs show that some of the outcomes feared by critics may not have materialized.

A 2014 research review on the effect of cash transfers on alcohol and tobacco purchases, for example, found virtually no change in or even a decrease in spending on these so-called temptation goods.

“There’s advantages to cash in terms of flexibility,” Marinescu said. “There could be drawbacks if you’re worried that people misuse the cash. But that doesn’t seem to be the case based on the empirical evidence.”

The rich like to portray the poor as ignorant sloths who will use any extra money for drinking, gambling, smoking, and drugs. That gives the rich a fake excuse to widen the Gap and thereby make themselves richer. Republicans, the party of the rich, invariably vote against money for the poor.

(The Gap is what makes the rich rich. Without the Gap, no one would be rich. We all would be the same. The wider the Gap, the richer the rich are.)

The lack of money is the biggest problem in any economy. The best way to cure that problem is to give people money.

The rich hate it, and invent excuses for not doing it, because they don’t want the Gap between the rich and the rest to be narrowed.

III Inflation
Contrary to popular myth, inflation never is caused by “too much” federal deficit spending. Inflation always is caused by shortages of key goods and services.

There is no correlation between federal deficit spending (blue line) and inflation (red line).

Today’s inflation is related to shortages of energy, labor, food, and computer chips.

Inflation actually can be cured by additional federal spending to pay for scarce goods and services.

In Summary

  1. The Monetarily Sovereign federal government has infinite access to dollars. Neither the government nor any agency of the government can run short of dollars unless Congress wants that to happen.
  2. Federal taxes do not “pay for” federal spending. Federal spending is paid for by the creation of new dollars, which the government has the infinite ability to do.
  3. Federal spending does not cause inflation. Inflation is caused by the scarcity of key goods and services. Federal spending can cure inflation by paying for scarce goods and services.
  4. America is not short of jobs. America is short of good jobs. Modern Monetary Theory’s Jobs Guarantee will solve zero problems, and in fact exacerbate a “crap jobs” economy.
  5. Poverty, the lack of money, is bad for the American economy. Poverty is not cured by bad jobs, but rather by putting money in the hands of the impoverished. This creates new consumers, whose purchases grow the economy,  which grows businesses that are able to provide attractive jobs.

It all begins putting with money into the hands of the people, which the U.S. federal government has the infinite ability to provide.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell



The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

  1. Eliminate FICA
  2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
  3. Social Security for all
  4. Free education (including post-grad) for everyone
  5. Salary for attending school
  6. Eliminate federal taxes on business
  7. Increase the standard income tax deduction, annually. 
  8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
  9. Federal ownership of all banks
  10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.


Economic Bonus (EB) and the comparative morals of two nations

The Ten Steps to Prosperity, which is at the end of most posts on this site, includes:

Step 3: Monthly bonus for all Image result for generous

This step proposes we give a monthly Economic Bonus (EB) to every man, woman, and child in America, regardless of any other income or wealth they may have.

You would receive the same EB as the poorest receives and as Bill Gates receives.

No need to go through the convoluted steps our gigantic tax code demands, to determine what is “income,” and what kind of income it is, and when you received it and how you received it, etc., etc.

If you live in America, you receive your monthly EB.

The whole economy benefits by receiving dollars from the government, but the poorer would benefit proportionately more from this direct infusion.

It’s just more dollars for the economy, and it costs no one anything — not you, not me, not even our federal government, which creates dollars, ad hoc, by paying bills.

How much should the EB be? My early thought is $1K per month for each person above the age of 21, and $500 per month for everyone below that age.

Why not more? Or less? I wish I could give you a strong reason, but there is none. The U.S. government already has done something similar.

In a weak attempt to moderate the Great Recession of 2008, the government mailed each taxpayer a check for as much as $500, depending on their tax return.

Had the government sent every person $5,000 rather than the $500 maximum per family, the recession likely would have ended immediately.

Starting with $1K and $500 per month allows time to evaluate results. The program could be stopped during the first year, modified, or extended indefinitely.

Perhaps sending money to the “lazy” poorer, goes against our Puritan grain and our self-image of deserving what we get. But we should move past that notion.

There are many reasons people don’t have money, and unwillingness to work isn’t anywhere near the top of the list.

There have been three primary objections to EB:

  1. It would cost the federal government and taxpayers too much.
  2. It would cause inflation.
  3. It would encourage sloth and discourage people from working

Readers of this site understand that as a Monetarily Sovereign nation, the U.S. government never can run short of dollars, and so does not need or use tax dollars to fund its spending.

Those readers also know that our Monetarily Sovereign government has absolute control over the value of its sovereign currency, the U.S. dollar, so federal deficit spending does not and has not ever caused inflation.

Finally, moral readers understand that a nation can be considered great only if it is willing to care for the poorest and least powerful of its people.

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.

Here is an article describing Finland’s experiment with something similar to EB, and the attempt to care for anyone who lacks sufficient income for a healthy productive life:

New Scientist Magazine, Feb 16, 2019
Universal income study finds money for nothing won’t make us work less
By Joshua Howgego

For the last two years the Finnish government has been giving 2000 unemployed people a guaranteed, no-strings-attached payment each month.

It is the world’s most robust test of universal basic income, and the preliminary results, released this morning, seem to dispel some of the doubts about the policy’s negative impacts.

Universal basic income comes in different flavours, but the essence of the idea is to give everyone a guaranteed income that covers their basic needs, like housing and food.

Here it differs from Step 3., Monthly Bonus for All, in that it has the specific goal of covering listed needs rather than merely to give everyone money.

But merely giving everyone money has the advantage of eliminating all argument about what “basic needs” are, and how much is “basic.”

(What kind of food? How much food? What kind of housing? What housing location? Is education basic? Etc.)

Crucially, the income is the same for everyone all the time – it does not get reduced if, for example, a person gets a job or a salary increase.

This approach is the same as for Step. 3.

The Finnish results were hotly anticipated because the experiment’s careful design promised robust evidence on UBI.

This is an exceptional experiment, both socially and globally,” said Pirkko Mattila, Finland’s minister of social affairs and health, at a press conference.

The experiment began in December 2016. Kela, the Social Insurance Institution of Finland, randomly selected 2000 people aged between 25 and 58 from across the country who were on unemployment benefits.

It then replaced those people’s unemployment benefits with a guaranteed payment of 560 euros a month. They would continue receiving the payments whether they got a job or not.

Continuing to receive payments, whether or not employed, is similar to what EB would offer.

The experiment ended on 31 December 2018 and compared the income, employment status and general wellbeing of those who received the UBI with a control group of 5000 who carried on receiving benefits.

The surveys also showed that the UBI group perceived their health and stress levels to be significantly better than in the control group.

“This is early data but nonetheless a significant moment as global interest gathers in basic income,” says Anthony Painter at the RSA think tank, which is working with the Scottish government to scope out a possible trial of UBI in Fife.

Supporters of UBI say that it frees people’s time for social goods like looking after children or serving their community, although this wasn’t measured in the Finnish trial.

Additionally, requiring unemployed people to continually prove they are looking for work creates a lot of stress for them, which is bad for their health and may mean they are less likely to be able to find work.

The above are just two of the many criticisms of the Modern Monetary Theory’s “Jobs Guarantee” (JG)proposal.

It also creates bureaucracy for the state.

The above is another of the many weaknesses of the JG proposal.

Not only would JG necessitate a huge bureaucracy, but the bureaucracy constantly would have to change with changes in the economy. As more or fewer people were unemployed, at any given time, they would need service.

On the other hand, basic income is expensive, even if it replaces existing benefits. And some say it could encourage people to work less.

“The criticism levelled at basic income that it would disincentivise work is not supported by [the Finnish] data,” says Painter.

There was no difference between the two groups in terms of the number of days in employment in 2017.

The fact that UBI and EB would be “expensive” (however that term is defined) is a feature, not a flaw — at least in the case of the U.S. government.

“Expensive” by any definition merely means that the government pumps more growth dollars into the economy.

Interestingly, Finland is monetarily no-sovereign. They use the euro, which is not their sovereign currency. Finland does not have the unlimited ability to create euros. It can run short of euros.

Yet it was Finland, and not the U.S., that felt the moral and economic needs to run the experiment. It makes one wonder about the comparative morals of the two nations.

UBI is a concept that originated at least 200 years ago. But over the past few years it has become a fashionable policy idea, with many countries exploring pilot studies.

One reason for the increased interest is the fear that automation might displace large numbers of people from employment – essentially robots taking our jobs.

There have been several other trials of the idea, but none were definitive. Take for example the Mincome experiment, in which the 10,000 citizens of Dauphin in Manitoba, Canada, were guaranteed a basic level of financial security in 1975.

Recent analysis of public records from the time showed that it was only young men and young women who spent less time in work during the trial, and this because they were either in college or looking after babies.

Again, the Puritanical “sloth” concern did not emerge.

Yet there was no control group. And it wasn’t a true basic income, because the money wasn’t given unconditionally — people’s earnings were topped up when they dropped below a threshold.

Painter points out that, because the Finish experiment chose people randomly from across Finland, it can’t tell us about any regional differences in the effects of UBI. “There is a strong case for further experiments,” says Painter. “It would be good to see ‘saturation’ pilots where everyone in an entire area receives a basic income.”

Today, the U.S. debates various, insufficient versions of Step 2, Federally Funded Medicare –Parts A, B & D, Plus Long Term Care — for everyone, and has not even addressed the easily-taken Step 1, Eliminate FICA — all because of non-existent cost issues.

Other nations, that do not have as much financial ability as the U.S. to support social benefits, recognize the need and move forward with experiments and actual implementation.

Meanwhile, the wealthy and Monetarily Sovereign U.S. focuses on how to reduce Social Security, reduce Medicare, and pay for walls and other ways to keep out refugees.

Yes, it makes one wonder.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell


The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.


How the MMT “Jobs Guarantee” ignores humanity.

Modern Monetary Theory (MMT) and Monetary Sovereignty (MS) are united by the understanding that a Monetarily Sovereign government cannot unintentionally run short of its own sovereign currency.

Thus, the U.S. federal government, unlike state and local governments, which are monetarily non-sovereign, neither needs nor uses tax dollars to fund its spending.

Federal taxes may find purpose in helping to direct the economy by making some products and services more or less attractive, but federal taxes do not provide spending funds.

Even if federal tax collections were $0, the federal government could continue spending forever.

Further, being sovereign over the U.S. dollar, the federal government has the unlimited ability to set the value of the dollar i.e. control inflation.

Yet a leader of MMT, Professor Randall Wray  has written: “Taxes or other obligations (fees, fines, tribute, tithes) drive the currency.”

This forces one to ask, “Specifically, what does ‘drive’ mean?” Does it mean:
1. When taxes are reduced, the value of money falls?
2. If taxes were zero, the value of money would be zero?
3. Do cryptocurrencies, which are not supported by taxes, have no value?

The answers: No, no, and no.

Professor Wray also claims, “the Jobs Guarantee (JG) is a critical component of MMT. It anchors the currency and ensures that achieving full employment will enhance both price and financial stability.”

Specifically, what does “anchors” mean?
1. Since JG does not currently exist, is the U.S. dollar “unanchored”?
2. Does providing college graduates with low-intelligence, ditch-digging jobs enhance price and financial stability?
3. Is forcing people to work morally and economically superior to giving them money and benefits?

Again, no, no, and no.

We often have criticized the JG here, here, here, and elsewhere.  JG is an impractical, obsolete concept, more suited to the Industrial Age than to the current and future Artificial Intelligence (AI) age.

Reader John Doyle wrote, “Professor “Bill Mitchell (no relation) goes to considerable lengths to diss most ideas of what passes for a Jobs Guarantee. I feel one should take careful note of his views:”

The essence of Bill Mitchell’s article can be found in this line:

Image result for people as robots
“We are buffer stock. We must labor to receive benefits.”

The MMT Job Guarantee . . . is a buffer stock mechanism which unconditionally hires at a fixed priced in order to redistribute labour resources from an inflating sector to a fixed price sector or from a zero bid state to a fixed price state.

Translation: JG sets salaries at a single, low level, where raises are not allowed, but provides jobs at those levels where none are available.

Is this what our nation needs?

According to Randall Wray, the essence of MMT is JG, and according to Bill Mitchell, the  JG is a buffer stock (of human labor) mechanism to control inflation.

Thus Modern Monetary Theory adherents believe the central economics problems addressed by MMT primarily involve employment and unemployment.

Supposedly, the Jobs Guarantee (JG) and a “buffer stock” control over inflation are the key solutions to what ails an economy.

By contrast, Monetary Sovereignty (MS) suggests that providing a job to each person who wants money already is an outmoded view, as robotics augmented with Artificial Intelligence (AI) increasingly demonstrates every day.

The notion that humans must labor in order to receive the fruits of an economic system reflects a combination of biblical work ethic applied to increasingly obsolete manufacturing methods.

On the horizon lurks the day when very few people will be “employed,” as we now understand the term. Machines will do the vast majority of the work, and people will reap the benefits, without human labor.

Why focus on work when we should focus on benefits?

In short, employment is not what people crave. Rather, they crave money, or more specifically people crave what money can buy.

The central economics problem addressed by MS, is the widening income/wealth/power Gaps between the richer and the poorer, and it is the Ten Steps to Prosperity (below), not JG, that addresses those gaps.

(There’s an old line that goes something like this: “Not many people die whispering,  ‘I wish I had spent more of my life in the office.'”).

JG doesn’t address fundamental human desires. It ignores them.

Here is Wray’s summary of his JG version:

1. The JG should pay a living wage with good benefits.
In line with other progressive proposals, the JG wage should establish a national minimum wage at $15 per hour, with free Medicare-style healthcare. It should also provide free childcare to enable parents to participate in the program.

Image result for ignoring a beggar
Because you don’t work, you get no money.

A “living wage” is not, and never can be, “a national minimum wage” of any specific amount. A “living wage” (whatever that term may mean) in Manhattan or San Francisco is considerably different from a living wage in a Mississippi town.

Further, while adding Medicare and childcare makes JG more palatable, they are not intrinsic parts of JG. They are parts of the Ten Steps to Prosperity.

What about free education, and why not offer “Medicare-style” benefits to those not participating in JG? Is there a moral objection?

2. Congress will appropriate the necessary funds to pay program expenses. No additional taxes will be levied.

Correct: Federal taxes do not fund federal spending. No federal program ever requires taxation.

3. The JG should be universal in the sense that it serves every community, offering jobs where people live and providing real benefits to their communities.

Here is where the academic ignorance of reality comes to play.

Exactly how will the government be able to “offer jobs where people live”? How will JG offer jobs in every city, every town, every village and every hamlet in every state in the U.S.?

I may have missed it, but I have not seen an MMT description of the department structure and mechanism by which the U.S. government can accomplish this task.

It’s a pie-in-the-sky wish, not a plan.

4. The JG should not devolve to either workfare or welfare. The social safety net should not be dismantled; no existing social services should be eliminated.

Individuals should be able to continue to receive existing benefits if they do not want to work in the JG program.

But workfare is exactly what JG is. You must work at a minimum-wage job, to get money and many social benefits are contingent on employment and income.

All those laws would need to be changed, somehow.

At the same time, the JG should not provide income support to those that do not work in the program. The JG should be seen as an employment program in which workers are paid for work.

The program should have visible benefits to communities so that the workers in the program are recognized as making positive contributions in return for their wages. The program’s purpose is to provide paid work, not welfare.

Do communities really feel that minimum-wage workers — street sweepers, fast food workers, Walmart greeters — must make “positive contributions”?

Workers can be fired for cause—with grievance procedures established to protect their rights, and with conditions on rehiring into the program

Visualize millions of minimum-wage workers spread all over the 50 states, each working in different jobs. Who will supervise each of them? What are their rights and who will protect their rights? What are the conditions for firing and rehiring them, and who will do the rehiring?

It’s all very nebulous, as though these human “details” don’t really matter.

5. However, there should be room in the JG for time-limited training and education.

While on-the-job training should be a part of every project, proposals can be solicited for specific training and basic education programs that will prepare workers for jobs in the JG — and, eventually, for work outside the JG. It is important that these are time-limited and that the training is for jobs that actually exist.

Who will do the training?
Who will train and supervise the trainers?
Who will create and conduct the basic education programs?
Why “time-limited” and what is the time?
And this is the big one, visualize trying to figure out which jobs “actually exist” and are wanted by each trainee in America.

6. Project implementation and management will be decentralized. There should be diversity in the types of employments and employers —- to help ensure there are projects that appeal to workers and their communities.

Projects should go through several layers of approval before implementation (local, state or regional, federal) and be evaluated at these levels once in progress.
Decentralization helps to protect the program from whatever political winds emanate from the du jour occupant of the White House.

The above is so ridiculous it was difficult to keep from laughing as I read it. Think about bureaucrats making sure there is:
–Diversity of types of employments
–Diversity of types of employers
–Several layers of approval (local, state, regional, federal)

Surely, this cannot be serious. It describes the largest bureaucracy in American history. It would dwarf the military. In of itself, it would eliminate unemployment in America.

7. Where possible, proposals should scale-up existing projects with proven track records and with adequate administrative capacity to add JG workers. Federal spending should not subsidize administrative expenses.

Scale up existing projects? That’s like growing companies. Who in the U.S. bureaucracy would do that?

How would these government funded businesses not compete with the private sector that is not blessed with federal funding?

And if administration is not federally funded, who would do the administering?

8. The JG should not be used to subsidize the wages of workers employed by for-profit firms. This distorts markets and is not likely to generate substantial new employment.

Image result for mathematician
According to my formulas, JG should work if you’re buffer stock.

Private business is already heavily subsidized by all levels of government. The JG should not be used as yet another corporate welfare program.

However, private firms will benefit indirectly (and greatly) from the program as it provides a pool of hirable labor and as it contributes to economic growth that improves markets for firms.

Are the workers employed by the government or by private industry. If by the government, that competes with private industry.

If employed by a private industry, that subsidizes the wages of that industry.

The notion that private industry is “heavily subsidized” by the government, is mysterious. Does being “subsidized” mean being a vendor? I wouldn’t call that a subsidy.

Or does being subsidized mean receiving tax credits, i.e. being penalized less, which also is not a subsidy.

9. Direct employment by the federal government for the JG should not dominate the program. Most employment should be administered at the local level -— where the workers are, in the communities where they will work.

So, it’s partly government workers and partly private workers. So who will hire for the government and in what departments?
And who will be the employment agency for private jobs?
Who will “administer” employment at the local level, in the thousands of communities across this vast nation?

The JG program will probably need to create 15 million new jobs—six times greater than the number of federal employees today.

The federal government is going to supervise 15 million new jobs all over America?? Who is qualified to do that? How will they do it?

If all 15 million were to join the federal workforce, supervision of all these new workers would, alone, require hiring a large number of additional federal employees. This would be politically difficult even if the massive scaling-up of the federal workforce were administratively possible.

Politically difficult” is the understatement of the year. It would be functionally a disaster.

The federal government’s role in the direct provision of jobs should be focused on providing projects to underserved communities and workers—after not-for-profits and state and local governments have employed as many as they can.

“Underserved communities” are communities with few jobs. But Professor Wray wants the government to find most of the nonexistent jobs in the private sector.

10.Inclusivity and experimentation should be encouraged. The federal government should solicit proposals for novel approaches to job creation. For example, workers’ co-ops could be formed to propose projects in which wages, benefits, and limited materials costs would be covered by the federal government for a specified time period.

I have no idea what this means, and I suspect Professor Wray is similarly at sea.

11.Consistent with point 10, project proposals put forth should not be summarily dismissed simply due to political bias.

You’ll have to go to the original proposal to figure this one out. I can’t.

12. With decentralization, the types of projects permitted would take account of local laws and rules, including prevailing wage laws and union wage rates. With the JG paying $15 per hour, this means that in many states and localities, rules and laws will prohibit various types of work, including construction. In those areas, JG workers will not build infrastructure, for example.

As if the job weren’t complicated enough, the federal bureaucrats would have to keep track of, and follow, “local laws and rules.” That should prove interesting.

13.Exceptions to the uniform wage should be considered, but this should not become the norm. For example, state or local governments might want to subsidize (at their own costs) the federally paid wage of $15 per hour in order to increase wages to some higher level. This might be because of high living costs locally. Or some JG employers might want to offer additional benefits (at their own cost) to workers, including housing allowances for high rent areas.

And of course, the federal bureaucrats would be expected to allow for these exceptions when offering federal jobs in each locality. What could possibly go wrong.

14. Limited pilot programs that experiment with different models deviating from what is described above might also be considered. For example, a pilot program run by the federal government, with all participants hired as federal employees, might be tried before the JG is imple-mented on a national scale

According to the the 2012 US Census Bureau there were 90,000 local governments of all types in the United States, each with different sets of laws that an employer must consider.

Learning, keeping updated with, and following those myriad laws should be quite a challenge, something the JG folks have not even begun to consider.

Bottom line: JG is a program created by economists who are hoping that “some devil” will be able to figure out the details because these business-ignorant folks don’t bother with such trifles.

The sad part is the thousands of hours MMT people have devoted to the academic side of economics, without understanding business realities.

I personally have spent 50 years managing and owning businesses. The MMT professors, some of whom know me, could have asked for my thoughts before wasting all those years on naivete jobs and “buffer stock,” rather than on human needs.

I resent all those brilliant men and women, who are blind to the facts that jobs are not a human goal, and that no one wants to be buffer stock. These economists have focused on their charts, graphs, and mathematics, and have overlooked the personal element of their science.

The human problem is not jobs; the problem is the income/wealth/power gap between the rich and the rest. Not only does JG not solve the gap problem, but it exacerbates the gap by enticing people and families into a minimum-pay existence.

I have only two good things to say about JG:

  1. It would be expensive, requiring the federal government to pump many billions of stimulus dollars into the economy.
  2. It wouldn’t cost taxpayers one cent, because no federal spending requires or uses tax dollars.

Otherwise, the Ten Steps to Prosperity (below) is a far better, and easier-to-implement program, than JG, and it would narrow that damn Gap.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell


The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.


MMT’s “Jobs Guarantee”: The final nail in the coffin of this naive, foolish program

In previous posts (here, here, here, and others) I have given you many reasons why Modern Monetary Theory’s (MMT) “Jobs Guarantee” is naive foolishness.

For instance:

1. Jobs are not hard to find. Millions of jobs are available. It’s the right jobs that are hard to find. (Right skills, right pay, right location, right benefits, right working environment, right opportunities for advancement, right learning potential)

Image result for overburdened bureaucrat
“And I’m supposed to find them good jobs?

2. The federal government bureaucrats are ill-prepared to:

a. Find or create jobs,
b. interview,
c. hire,
d. supervise,
e. promote and demote,
f. switch jobs, and
g. fire the millions of people who should be fired.
h. while determining pay scales

for every kind of job in every city, suburb, and hamlet all over America.

3. The federal government is ill-prepared to provide healthcare, maternity leave, vacation days, IRAs and myriad other benefits appropriate to different employees all over the nation.

4. If people are hired only because they need jobs, rather than because the jobs need people, nothing prevents those jobs from being make-work.

Image result for workers standing around
“Good news! We just found you an interesting job. Stand around and look interested.”

And now comes proof, if more proof is needed, of the federal government’s incompetence in the whole “jobs” area:

The $1.7 Billion Federal Job Training Program Is a Massive Failure
The program’s goals might be admirable, but the reality is a whole different story.
Joe Setyon, Aug. 28, 2018

The Department of Labor’s Job Corps program is supposed to teach disadvantaged young people the skills they need to get good jobs. But the program, which costs taxpayers about $1.7 billion per year, is apparently a failure.

O.K., it doesn’t cost taxpayers one cent.

A Monetarily Sovereign government has the unlimited ability to create its own sovereign currency, which it does by the simple act of paying creditors.

Federal taxes do not fund federal spending. (See link.)

But even that isn’t the most important point.

About 50,000 students enroll in the program each year, about two-thirds of whom are high school dropouts, according to The New York Times. Results aside, the program’s goals are admirable. As The Wall Street Journal reported in April:

Launched in 1964, Job Corps works with 16- to 24-year-olds who grew up homeless or poor, passed through foster care, or suffered other hardships.

The goal is to equip these young adults with skills for careers in advanced manufacturing, the building trades, health care, information technology, business and more.

Unfortunately, that’s not what’s happening. A March audit from the Labor Department’s Office of Inspector General sampled 324 Job Corps participants who were five years removed from graduation.

The median annual income of 231 of those participants (wage records weren’t available for the rest), was just $12,486 as of December 2016.

The audit acknowledged that “Job Corps could not demonstrate beneficial job training outcomes.”

And that is the point. The federal government bureaucrats were supposed to do what high school “Workplace Preparation” courses accomplish — and predictably, they failed.

(Workplace preparation courses prepare students to move directly into the workplace after high school or to be admitted into select apprenticeship programs or other training programs in the community.

Courses focus on employment skills and on practical workplace applications of the subject content.

Many workplace preparation courses involve cooperative education and work experience placements, which allow students to get practical experience in a workplace.)

That’s not all. Job Corps spends about $50 million a year on “transition services” to help graduates find jobs.

But in 94 percent of the cases sampled, “Job Corps contractors could not demonstrate they had assisted participants in finding jobs.”

A 94% failure rate: These are the same federal bureaucrats who are supposed to find jobs for millions of people all over the country — millions of people who don’t have the “benefit” of federal jobs training??

A terrible waste of time for the job-seekers.

One former North Texas teacher, who quit in 2015, says the entire program is failing. “Job Corps doesn’t work,” the teacher, Teresa Sanders, tells the Times. “The adults are making money, the politicians are getting photo ops.

But we are all failing the students.

No surprise there. It’s what I’ve preached for years.

Labor Secretary Alexander Acosta admits the program “requires fundamental reform.”

“It is not enough to make changes at the margins,” he tells the Times. “We need large-scale changes.”

If a small program fails, the government’s approach is to make the program biggere, so that the failure can be bigger.

Despite its shortcomings, Jobs Corps is popular among both Republicans and Democrats in Congress (to Democrats, it’s a government program aimed at reducing poverty; to Republicans, it incentivizes hard work), so there’s only so much Acosta can do. “

Does that sound familiar, MMT? Reducing poverty and incentivizing work are two of MMT’s goals (i.e. excuses) for its Jobs Guarantee.

But why do we need to incentivize work? Why has sweat become a moral imperative?

You have a program with a rich and complicated history that’s one of the biggest leftovers from the war on poverty, and it is enormously complicated to make any significant changes,” Eric M. Seleznow, a former deputy assistant secretary for the Labor Department’s Employment and Training Administration during the Obama administration, tells the Times.

He notes that “competing interests from Congress, program operators, advocates, as well as complex legal requirements present a lot of challenges.”

If Job Corps is salvageable, then it can do some real good. But if real reforms aren’t going to happen, Congress should shut it down.

So let this be the final nail in the coffin of the “Jobs Guarantee, and instead, let us begin to focus on the Ten Steps to Prosperity (below).

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell


The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.