Tuesday, August 20, 2019

Modern Money and the War Treasury — Sam Levey

Abstract: Using historical sources, we attempt to unravel and elucidate the economic worldview held by the United States Treasury Department during World War II. We analyze the Treasury’s view of taxation, bond sales, and interest rates. We consider whether and in what ways this worldview is compatible with Modern Monetary Theory, finding that, in most regards, the two align closely, the differences being primarily attributable to the peculiarities of war finance. Finding a less clear view of national debt, an interpretation is offered based on Treasury’s statements. We also offer evidence that this view had a foothold in the era’s news outlets.
Global Institute for Sustainable Prosperity
Modern Money and the War Treasury
Sam Levey | Global Institute for Sustainable Prosperity Graduate Student, University of Missouri – Kansas City


Bob Roddis said...

The conclusion is consistent with Austrian and libertarian theory. Moving away from a strict gold and silver coin money system allows the .1%, the mass murderers and the war criminals more "policy space" with which to fund mass killings, terror, wars and economic looting. Libertarians, being profoundly moral, are outraged. MMTers, being completely amoral and immoral, cheer it on and call for more.

Further, modern money is all so anti-democratic. The purpose of "modern money" is to get around the complete lack of consensus in the populace so that the thugs who run the government can spend on stuff that they want to spend on while the true costs of those decisions remain unseen by an oblvious public.

And we can blame it all on the "free market"!

hoonose said...

A book I found very interesting:


Calgacus said...

Bob, we can't move away from strict gold and silver. They never had anything to do with money. The idea of trying to pretend they are is entirely anti-democratic and immoral, unlike democratic and non-inflationary and moral modern money.


Good paper. If he hasn't already, he should look at The Minuteman, the journal of the War Bond salesmen, James Kimble's Mobilizing the Home Front_ War Bonds & Domestic Propaganda- Texas A&M (2006) and Esther Rogoff Taus's Central Banking Functions of the United States Treasury, 1789-1941- Columbia (1943) for a contemporary look.

Basically, they knew it all back then, just expressed themselves clumsily sometimes. The biggest innovation of MMT is understanding anti-inflation, the buffer stock, price anchor of guaranteed employment. And saying everything more simply and directly, linking it with Minsky's perspectives on finance, and developing the Keynesian understanding on accounting identities into Godley's sectoral balances.

In undeveloped sciences like economics people are always searching for factitious novelty, so demonstrating historical roots, how nothing is new under the Sun can be taken as criticism. In math, like Barbie, people understand "math is hard". So pushing things just another crucial - but revolutionary - epsilon or searching for roots is celebrated, and sometimes wins a Fields Medal or the approbation of a Fields Medallist.