Bernard Lietaer — The Chicago Plan Revisited, Live webcasts from the seminar in Stockholm, January 28th 2013.

Talks by Michael Kumhof and Bernard Lietaer.

Currency Solutions for a Wiser World
The Chicago Plan Revisited, Live webcasts from the seminar in Stockholm, January 28th 2013.
Bernard Lietaer

Ann Pettifor — The power to create money 'out of thin air'

Happy New Year to all PRIME readers, and welcome to my latest PRIME publication, The power to create money out of thin air. At first sight, this is a long-delayed review of Geoffrey Ingham’s book, Capitalism (Polity Press, first published 2008). However like all the best reviews, it has become a hook on which to hang discussion of the author’s contemporary pet themes. Here, these include primarily, capitalism’s ‘elastic production of money’. However, I also take the opportunity of explaining why misunderstanding about the creation of money out of thin air is so widespread, and why orthodox economists are mainly responsible for the confusion.

Out of this discussion arises a further one about ‘fractional reserve banking’ – currently at the heart of debate surrounding an IMF Working Paper by Kumhof and Benes. Then I take a pop at the theory and policy frameworks that prevent (or claim to prevent) co-ordination between monetary and fiscal authorities.
The review challenges, too, the widespread assumption (long promulgated by the enemies of labour, but also held by others) that wage claims by trade unionists caused, or led to, the inflation of the 1970s.

But Ingham’s book raises important issues which are and will be at the heart of politics and economics in 2013: with a deeper understanding of capitalism’s ability to create ever expanding amounts of credit-money, how does a democratic society once again rein in, regulate and subordinate the private finance sector to the wider public interest? How does society regain control over the public good that is credit and a sound banking system, and use both for financing society’s most important needs – including the need to tackle the threat of climate change?

And finally, how can public goods (including liquidity) avoid being confiscated by the finance economy? And how can they be restored to public accountability?

PRIME — Policy Research in Macroeconomics
The power to create money 'out of thin air'
Ann Pettifor | Director of Policy Research in Macroeconomics (PRIME) and a fellow of the New Economics Foundation, London

Note: Geoffrey Ingham is also the author of The Nature of Money.

From the comments there:

Andi
: So is PRIME advocating MMT?


Ann Pettifor: 
Andi, thanks for your query. First, this analysis is mine, and does not represent the views of all the network of economists linked to PRIME. Indeed we disagree on some points. Second, as a network we have many good friends in the MMT community, have great respect for their work, and many of our approaches are aligned. But cannot say that PRIME as a network of economists is ‘advocating MMT’. But we sure are closer to them than to the orthodox community…


Clint Ballinger — Modern Monetary Theory & Full Reserve Banking: Connected by Fiat

The fourth of a series of posts on MMT, ‘The Chicago Plan Revisited’, and related issues...

There are actually two concerns most advocates of Full Reserves have:

1. Solvency – there are few solvency issues with full reserves; not surprisingly a major concern in the 1930s for Simons, Fisher, The Chicago Plan etc.

2. (Endogenous) money creation

The second is much the more important, but the two are often confusingly conflated.
Partly this is because the significance of the fact that the loanable funds model is wrong and there is no money multiplier is not always fully appreciated by Full Reservers.
Banks do not make loans based on reserves or loanable funds but based on demand, perceived profitability, and the capital they hold. The government covers reserve requirements later. Raising reserve requirements can raise costs but does not stop money creation. Even the focus on sight deposits (i.e., PositiveMoney) misses the point – not only do reserve requirements not stop money creation, neither does stopping lending based on sight deposits. Banks loans pull money from the central bank, with the limit being the ratio of capital to risk-weighted assets.

So, unless Full Reservers are only worried about bank solvency, which is doubtful, they are really addressing concerns that have their root in endogenous money.

Clint Ballinger
Modern Monetary Theory & Full Reserve Banking: Connected by Fiat

Andrew Jackson on Positive Money v. the Chicago Plan Revisited and Full Reserve Banking

More on monetary systems. This post compares and contrasts the Chicago Plan Revised full reserve proposal with Positive Money's credit plan, which is based, I believe, on Richard Werner's credit theory.

Clint Balinger
Can Full Reserve Banking actually even stop credit-money creation? The Chicago Plan v. Positive Money
Andrew Jackson | Positive Money

Clint Ballinger — Post Keynesianism, MMT, & 100% Reserves Project, Post No. 2

Taken from the comments on my last post on MMT/Chicago Plan/FRB & several similar pages the Questions below seem to be the central questions/objections between Full RB & MMT (or Post Keynesian, or MR).

Answering them clearly I think could reduce “talking past” each other. These Qs touch on the most fundamental differences, avoiding digressions.

Help in answering these is greatly appreciated. (PS Is using the comment section below uncomfortable? I may try to set up a wiki if enough people want).

Clint Ballinger

Post Keynesianism, MMT, & 100% Reserves Project, Post No. 2

Comment there, here, or both.

Clint Ballinger — Post Keynesianism, MMT, & 100% Reserves Project: Question #1

[This is part of an ongoing effort to understand and explain differences and points of agreement between Modern Monetary Theory, Full Reserve Banking, Post Keynesianism, Steve Keen’s work, and related approaches in as simple of terms as possible (difficult, as the debates hinge on complex and subtle concepts at times, but I will try). The goal is to create a resource for the general public to better understand these areas of study and why neoclassical economics fails, and to foster clearer communication between MMT, FRB, and PK proponents.]

If this is of interest, check out the comments over there, too. CB clarifies in light of some off-blog responses.

Clint Ballinger — On good urbanism, sane economics, & problems in the social sciences
Post Keynesianism, MMT, & 100% Reserves Project: Question #1
Clint Ballinger
(h/t Matt Franko in the comments)

JKH — Banking in the Abstract – The ‘Chicago Plan'

JKH analyzes Jaromir Benes and Michael Kumhof's "The Chicago Plan Revisited." JKH also compares and contrasts Benes-Kumhof (BK) with Warren Mosler's MMT-based plan.

Monetary Realism
Banking in the Abstract – The ‘Chicago Plan'
JKH

Ralph Musgrave — Bank balance sheet changes on converting to full reserve

Two IMF authors, Benes and Kumhof, set out their ideas on the changes to the consolidated balance sheet of commercial banks that would take place on converting to full reserve banking. I expressed reservations about their ideas here. 

Now for something more positive: some ideas as to what the balance sheet changes WOULD look like....

Ralphonomics
Bank balance sheet changes on converting to full reserve
Ralph Musgrave

Steve Keen — The IMF goes radical?

First in a series of posts by Steve Keen on the "The Chicago Plan Revisited" by Jaromir Benes and Michael Kumhof.

Steve Keen's Debtwatch
The IMF goes radical?
Steve Keen
(h/t David in the comments)

Here is a direct link to the article that is not behind a paywall.

Anatole Kaletsk — Is a revolution in economic thinking under way?

The radical idea of depriving banks of their money-creating function, like the idea of helicopter money, was first proposed by conservative Chicago economists – Henry Simons and Irving Fisher – in 1936. A distinguished conservative pedigree will not make the loss of seignorage rights acceptable to bank lobbyists any more than it makes helicopter money acceptable to conventional central bankers. But if global economic stagnation continues, public patience with conventional responses will run out – and ideas that now seem revolutionary may become conventional wisdom.

Reuters
Is a revolution in economic thinking under way?
Anatole Kaletsky

As deleveraging drags out and neoliberal nonsense fails to distract, the natives are getting restless.

Marshall Auerback — ‘The Chicago Plan’ does not deserve to be revisited

Marshall Auerback sets forth an MMT-based viewpoint.

Pinetree Capital | Macrobits
‘The Chicago Plan’ does not deserve to be revisited.
Marshall Auerback

(h/t Kevin Fathi via email)

Ambrose Evans-Pritchard — IMF's epic plan to conjure away debt and dethrone bankers

So there is a magic wand after all. A revolutionary paper by the International Monetary Fund ["The Chicago Plan Revisited"] claims that one could eliminate the net public debt of the US at a stroke, and by implication do the same for Britain, Germany, Italy, or Japan.

The Telegraph
IMF's epic plan to conjure away debt and dethrone bankers
Ambrose Evans-Pritchard
(h/t Andy Blatchford via email)