MMT answers — Richard Murphy

I got an email overnight that I could reply to as a private mail, or I could hide the identity of the person who sent it and reply here, sending them the link. I have chosen the second option as I suspect the questions are not uncommon....

Basic stuff, but it is difficult for many people to get since they are programmed otherwise. 

In my experience (anecdotally), those who know little to nothing about economics and finance get the MMT basics of money creation pretty easily since it make sense in the absence of countervailing the assumptions. Accountants also get MMT; Richard Murphy is an expert in accountancy, for instance. As one accountant replied after I finished explaining MMT, "How else could it be?" It's just the way the accounting works.

It all really hangs on the distinction between a currency issuer and users of the currency, institutional arrangements imposed by the issuer as the prerogative of the issuer, and the availability of real resources in the economy offered in markets. This is the set up of a "monetary production economy" under a capitalistic system, e.g., as analyzed by Keynes. 

The Keynesian approach was carried forward by Post Keynesians and proponents of an institutional approach to economics and finance. MMT builds primarily on these schools of thought in contrast to neoclassical approach that dominates contemporary economics. Most people have been influenced by neoclassical economic ideas through the media, which predisposes many against MMT. (For purists, Hyman Minsky also influenced MMT, especially through Randy Wray, and Minsky, like his own thesis advisor, Joseph Schumpeter, rejected association with any school of economic thought.)

Of course, "the devil is in the details" also. But one must first grasp the basics — the general case — before moving on to the details, which are likely to be different in different jurisdictions owing to differences in institutional arrangements that set up special cases under the general case. Complications also arise from the relationship of government banking and finance and private banking and finance. Then, there is the EZ. So it would be incorrect to reduce MMT to the MMT basics, as some are wont to do. But the basics are just a prerequisite for approaching a much broader subject matter.

Still, grasp of the basics is all that many if not most people need to understand in order to engage in informed inquiry into much political discuss that involves economic and finance. Many of the common objections to MMT are based on misunderstanding of the basics.

Tax Research UK
MMT answers
Richard Murphy | Professor of Practice in International Political Economy at City University, London; Director of Tax Research UK; non-executive director of Cambridge Econometrics, and a member of the Progressive Economy Forum