Finishing to review a couple of papers on MMT related topics and this leads me to share a few things. If you equal MMT to QE, fiscal dominance and/or a push for monetary financing to accommodate its other policies, then you need to improve your understanding of MMT. 1/ MMT proponents are explicitly against QE, they want to keep the central bank balance sheet small and nibble (See for example Fullwiler and Wray 2010 paper on QE) 2/

Koopman:"Money is not a uniform but a dualistic phenomenon:'medium of exchange' or 'medium of payment' on the one hand and 'unit of value' [...] on the other hand are not two 'functions' of one and the same thing,'money',but rather two different objects of knowledge." CORRECT Translation in English: There can't be a means of pay and medium of ex without a unit of account first (because the first two r denominated in the latter). So "money" is not a list of functions that is either this or that. Monetary system = unit of account + monetary instruments

Knapp's State Theory of Money quick summary (leaving aside exchange section):
1-There are /= payment systems ("pay-society") that may or may not use the same unit of account (UA) & means of payments (MP). Banks & state are two main ones.The state has“the oldest society of payers” 2-“Money always signifies a Chartal means of payment”, Charta = token/ticket defined by law. Banks issue private chartal means of payment, the state issues its own. They circulate by tale ("chartality") instead of weight ("pensatory")

Have been working on a specific topic of the history of thought of monetary theory: nominalism and financial approach (instead of functional approach) to monetary systems. The goal is to trace back the origins of these ideas all the way back to the Greeks. 1/ Got to say to say it is not easy because most of the authors that work on these topics are usually completely ignored in well-known "Money" treatises so you've got to go off the beaten paths and hang of a few references here, or luck, to hopefully get something 2/

Creditworthiness is the expected ability and willingness to make timely payments on a debt in full. Let's look at Fitch's decision in terms of 3 risks that CRAs use to grade:
Economic risk: ability to pay
Political risk: willingness to pay
Inflation risk: loss of purchasing power Economic risk: the Public Debt is the debt of the US Treasury (T). It is currently denominated in USD not in a foreign currency. Given that T has the financial backing of the Fed and its own extensive monetary power, ability to pay is easily met. There is zero economic risk.

The wrong way to frame the issue. Dealing with an aging society is not done by having the gov "save" USDs (something it can't do and his meaningless) but rather by investing today in preparing the economy to meet the needs of such society. The challenge is not financial, it is productive: How to make sure that the goods and services needed by an aging society can be met with a relatively smaller labor force.That means more investment today(training nurses,building infrastructure that accomodate an aging society...)

Deficit financing in the context of a consolidated gov that is monetary sovereign does not make sense. 1/

https://twitter.com/David_III_L/status/1653002155790331904

The technique of consolidating gov is a widely use technique in economics. It consists in merging the central bank and treasury and calling that "the gov". Where things go wrong is in the public finance analysis that follows. 2/

The proper way to look at the retirement problem in France is not through the finance side but through the productive side: do we have the necessary real resources to take care of dependents. First clue is the dependency ratio Then look at worker productivity trends (french workers have a high productivity), labor unemploylent (spare labor av as ilable) and needs of an aging population to know how to allocate labor.

Had a stimulating discussion on here a few days ago regarding Desan's work and more broadly state & credit theories. I'll pursue this a bit more here along the line of coinage and acceptance a nominal or commodity value overtime. Remember that the main point of S/T theories on monetary system is that everybody can create monetary instruments of any forms (coins, notes, electronic entry, etc). The form does not matter for the nature of what is created, the main hurdle is creating acceptance.

Presented at the @AFEP_EcoPo: Avoiding doomsday: financing the transition to a sustainable society. A thread
Paper lays out the challenges (climate is only one), the policy key issue, if it can be done, and the financing.
Main point: financing (private or public) is easy part 1/ Challenges: There are (at least) three big issues on the environmental side (paper focuses on env sustainability)
1- Pollution of water, land, air: major killer today (as much as HIV and malaria combined)
2- Habitat destruction/degradation: The main threat today for most animals

This is the crux of the problem with bitcoiners. They want to separate governance from monetary systems + they conceptualize a fair/ideal monetary system as something purely mechanical that operates independently of human aspirations. Several issues with this.

https://twitter.com/saylor/status/1525154872496164865

1-Monetary systems are tools of systems of governance, a viable monetary system must be flexible to meet the needs of these systems.

Been reviewing several articles on non-bank instruments being money or near money (repos, derivatives, MMMR, etc.).Lots of the discussion turns around the means of payment functions:if used more widely as means of payment then closer to money, with a hierarchy of means of payment "MMMF"
While the analysis are interesting and I tend to encourage publication to further discussion, I am not particularly into this way of looking at moneyness.
I start from the liquidity characteristics without looking how the instrument is used.

Understanding the valuation of monetary instruments requires three actors: one issuer (simplest case: issues and redeems instrument at face value), 2 bearers (circulate instrument at price P>=<FV). Mechanics that ensure, or prevent, P=FV are a core elements of monetary study. Note, there are 3 levels of analysis:
1-what goes on among the public (why does Paul accept monetary instrument from Joe at a specific value P?)
2-what goes on between public and the issuer (channels of redemption, price at which redemption occurs)
3-interaction between the two.

I was asked to ask a reply to Drumetz and Pfister who pack a short article with now standard claims about the inadequacies and fallacies of MMT. Probably my last "reply to critiques" article.
college.lclark.edu/live/files/328…

Below is a quick summary. 1/ Due to space constraint, the reply focuses on the monetary policy and fiscal policy aspects of their critiques (a more thorough reply to all other aspects is available on my webpage) 2/

Thinking about clean teaching alternative to IS-LM. Ditch LM for monetary policy rule: i = a(Y - Yfe) + b
Yfe is fixed (later removed), level model and of course fixed prices.
Prior to working the model, one can spend a week talking monetary policy, role of liquidity preference. Then talk about policy effectiveness and coordination of policies too. Thoughts from anyone?

Just finished a piece on secular stagnation and interest rate. Developed version of what I send a few month ago to Trust and Estate magazine. Here are the main points:
1- key driver of interest-rate trend is monetary policy. It is not inflation, fiscal balance, or credit rating. 2- to make sense of what interest rates will do in the future, need to make expectations about what FOMC will do
3- low-growth + high leverage economy makes it difficult for FOMC to raise rate quickly and much + low inflation will persist no incentive to raise policy rates much.

This "bitcoin is better than gold" statement going around once more show that bitcoiners have no clue about monetary history and what the purpose of a monetary system is. A thread. 1- Metal standards were never inflexible; they could not in order to operate properly. Qty of metal was changed, usually lowered, to accommodate for changing economic conditions: price of metal, scarcity of coins, financial needs of economic units (state and private), etc.

@dr_nrl @ShaneOliverAMP @bitterlion @stf18 @StephanieKelton @rch371 @NathanTankus @rohangrey @RaulACarrillo @billy_blog Quick comments on the "Keypoints"
1- MMT is not pro-monetary financing. We don't want to change central bank-treasury financial relation. We show that current/routine/normal financial relation ensure no financial constraint & that, as such, deficits are a financially sustainable. @dr_nrl @ShaneOliverAMP @bitterlion @stf18 @StephanieKelton @rch371 @NathanTankus @rohangrey @RaulACarrillo @billy_blog 2- Yes below full emp there are free lunch/no opportunity cost. Unemp ressources are left unused. MMT did careful analysis of JG, GND, & student debt relief. Cost of JG is small in normal times GND is manageable if we start now (costlier the longer we wait). Benefits are large.

Ok. In the mood of sharing a recipe:

Ham and Cheese Cake:

Ingredients:
4 eggs
200g of flower
300g of ham
200g of shredded cheese
1/2 expresso cup of milk
1 expresso cup of oil
One soup spoon of yeast
One loaf pan that is buttered and floured 1- Shred the ham
2- Beat the eggs
3- Mix flower and yeast and add bit by bit to eggs
4- Add ham and cheese and mix well
5- Put in loaf pan
6- Cook at 230F for 15 min
7- Cook at 390f for 45 min
Done.

An animated GIF of the financial balances through time. OECD countries. DPB: Domestic private sector balance, GB: Government balance, FB: Foreign balance.
DPB + GB + FB = 0 It looks to me that we can detect a cycle that reflects the business cycle. Start NE, goes SW, goes E, goes N. Start again. May be I am reading too much into it.

The sectoral balance identity, 2015-2019 average (2018 for some), % of GDP. Source: OECD
DPB + GB + FB = 0
DPB: Domestic Private Balance
GB: Government Balance
FB: Foreign Balance For more on how the graph is constructed: nakedcapitalism.com/2010/03/parent…