Thread by @NathanTankus

This paper's analysis of the MMT position isn't very serious.

THREAD:
1) It randomly cites a hodge podge of historical examples without any discussion of one. It relies on readers ignorance and kneejerk reaction that a"token"like a cowrie shell must be"debt free".It's a shell!

https://twitter.com/jvtklooster/status/1332713793227550720

2) the discussion of government bonds related to MMT is barely worth commenting on its so bad. No one who says that government securities are a form of money says that they are literally exactly identical to other forms of money.

This criticism is also inconsistent with the criticism that immediately follows it which is trying to de-emphasize the immediate role of an instrument because there is an interrelation of financial instruments that leads to payment clearing. One can say the same of T-Bonds

3) On this point, their argument that money is defined by "general acceptability" is also an argument against CB settlement balances being money.They can't have it both ways with deemphasizing the role of settlement balances in payments but claiming they're "generally acceptable"

3) what makes central bank settlement balances valuable is certainly it's ability to be used to legally settle dollar payments. Their attempt to elide this by focusing "tax paying" with commercial bank deposits is not at all convincing (and elides how receivability supports BD)

If the Federal Gov began to no longer accept settlement balances in payment and declared that it wasn't a "legal tender" in court payments,they would certainly be destabilized&ultimately demonetized.Indeed, we know this from the charter revocation from the second bank of the US!

4) The crux of their argument is based on reducing MMT's receivability argument to "acceptability in payment of taxes". This is very tiresome and annoying as there is voluminous literature from MMTers emphasizing they focus on taxes because taxes are a macroeconomically important

variable not that it is the only liability imposed by the government. Having set up this strawman, they follow through with the idea that their hypothetical government imposes no taxes but redeems their currency through "sales of public land".

All this means is that the "backing" the currency has is the that you can accept the currency in payment and turn around to buy public lands- or make payments to others who will buy public lands. They have no explanation for how this money would start to be valued otherwise

Of course, these IOUs could be issued without the promise to accept them in payment of public lands. But without such a promise, why would they be accepted?

There is no way that you could rely on this money's fiscal backing, and thus any attempt to engage in private exchange with them would be paralyzed. Hypotheticals can't substitute for historical examples, especially hypotheticals with such obvious logical holes.

MMT scholars (as well as other scholars) have documented numerous examples throughout literally millennia of history where acceptability in public payments was necessary to provide a backing to public money.

More importantly, there are also plenty of examples of governments defaulting on their promise to accept a money in payment of public dues and thus seeing that money destabilized and demonetized

5) Their final argument is that money can't be a liability because to an end user living under an already existing and stable monetary system it has value greater than its acceptability in payment of public dues.

In other words, general acceptability is not reducible to acceptability for public dues so acceptability for public dues is irrelevant, ergo publicly issued monies are not liabilities.

The MMT answer is, of course, that acceptability for some obligations, probably public dues, is necessary to get a public money going but that doesn't preclude a "premium" put on its "fiscal value" by private actors.

This is the history of all currently existing government currencies as far as we're aware, which would seem to be a historical fact that is worth acknowledging. Christine Desan discusses this point at length in similar work, calling this extra valuation a "cash premium".

No one denies that such a premium exists in reality, but the reproduction of this premium requires the reproduction of this underlying "fiscal value" and thus its acceptability of payment of taxes, other governmental payments and court-ordered monetary payments.

So we've reached the point that governmental promises to accept a form of money in payment- regardless of whether the payment is a tax, a public land sale or a court-ordered monetary payment- 'backs' that money and are required in some form to reproduce that money.

Sounds like public money is a liability of the government and its legal nature as a liability is relevant to the ongoing reproduction of public money to me! Of course this obligation is different from the private obligation to "repay dollars", but no one claimed otherwise!

6) Finally, it's really remarkable how the section on MMT has no citations- of any kind! Let alone a citation to MMT literature to substantiate any of their claims about MMT's argument. This is part of a larger pattern of lack of scholarly standards when it comes to MMT

It's especially disappointing coming from legal academics as MMT gains prominence in the world of legal scholarship on money. Would they treat Professor Christine Desan- who makes the same arguments they criticize here- this way? I think not.