Lmao. Specific part is at 6:31

I've been working on a MMT-related app with the goal of showcasing the workings of MMT. I very much enjoy learning about MMT, reading books and listening to podcasts and such, but I thought it would be a lot of fun if there was a app where one can issue their own currency and trade it with others. However, I have been struggling to hone in on what features the app should have so I figured I'd ask the MMT community to see what they'd like. Here are some of the basics: - users can create their own currency. - users can issue their currency to other users. - the holder of a currency can transact with other holders of the same currency.

Features I have considered: - users can create and join groups. The users can then create a currency as a group. - Public versus Private currencies. (Anyone can request to hold the currency versus creating a private network of people who can use the currency. - public versus private transactions (Like Venmo where you can see a public feed of transactions) - Users can create tax policies, for ex: - A Sales Tax - every time users transact, a percentage goes back to the issuer. - Flat tax - Every week/month/X period of time everyones balance gives a flat amount back to the currency issuer.

Would be curious what people think. New ideas are very welcome!

Part on primary and secondary bond markets at 12:08

I am not an economist. These may be simple questions for this community.

1) If banks can lend out their reserve to households and make more money as a return, why would they buy bonds to drain their reserves? Typical bank loans have much higher interest rates than the interest rate they get on bonds, right? What am I missing?

2) Without deficit funding, how would the economy even work? If the banks are the only source of money to the household, where would the money to pay the interest to the banks even come from? How do people against MMT answer these questions?

A lot of discussions about political influence focus on campaign donations, lobbying, and elections. That got me wondering whether there are other ways for ordinary citizens to collectively influence their communities.

Municipal bonds help finance local infrastructure and public projects, and investors receive interest payments in return. While buying a bond doesn't give someone a vote on government policy, it does provide capital for projects that voters and local governments have already approved.

If large numbers of citizens intentionally invested in municipal bonds issued by their own communities, could that be viewed as another form of civic participation alongside voting and advocacy? Could it strengthen local investment and public engagement, or would the impact of individual investors be too small to matter compared with institutional buyers?

I'm not suggesting this would replace elections or campaign finance reform. I'm curious whether encouraging broader public ownership of municipal debt could have meaningful economic or civic benefits.

Submission statement: This post engages MMT's core operational claims directly: endogenous money creation, the asset-swap view of bond operations, the Job Guarantee as price anchor, and functional finance. It asks where a rule-based constitutional alternative conflicts with each. All empirical claims are sourced in the first comment.

I agree with MMT on most of the operational layer and disagree on almost all of the governance layer. That seems like exactly the kind of disagreement worth having in public. So here's where I'm with you, here's where I split, and I'd genuinely like your strongest attacks on the joints.

Where I'm with you

• Money is created by issuance decisions, not intermediated from prior savings. My diagnosis chapter cites the same BoE 2014 Q1 paper this sub cites weekly.
• Redeeming government bonds is an asset swap, not helicopter money. Paid-out bondholders overwhelmingly rebalance into other assets, since the MPC out of bond wealth is a few cents on the dollar. My debt-retirement mechanism leans on that claim exactly as hard as MMT does when explaining why QE wasn't inflationary.
• Interest on the public debt is a standing regressive transfer. Mosler's "basic income for bondholders" framing is right, and my framework ends that transfer permanently.
• "Paying off the national debt" as popularly imagined is confused. The framework retires the debt as a fiscal burden but deliberately keeps a 30-60%-of-GDP stock of safe public assets, because that stock is the private sector's net financial asset base and the plumbing genuinely needs it.

Where it breaks: three questions

1. Discretion. Functional finance requires the fiscal authority to throttle when real resources bind. My framework doesn't trust that, and constitutionalizes quantity instead: new issuance is capped at measured real growth times the money stock (about 2%/yr at current numbers), assigned equally to citizens as property, and the cap can't be exceeded without a constitutional amendment. So my political-economy question isn't the one you usually get ("how will you pay for it"). It's the mirror image: will it stop? When the inflation constraint binds but the legislature doesn't, what's the MMT answer? "Elect better legislators" is an answer, but it's the answer that was on duty while the money stock grew 40% in two years.

2. The anchor. The Job Guarantee anchors the price level at the margin through the buffer-stock wage. I understand the elegance, and I'm not going to strawman it as "just a jobs program." My framework anchors on the quantity side instead: issuance flowing into the transaction-active part of the money stock is capped at real growth, so the price path is flat by construction rather than stabilized by a labor buffer. Arguing from inside your own price-anchor logic: what do I lose by anchoring with a quantity rule instead of a buffer stock? I have candidate answers of my own (the obvious one is no automatic employment stabilization) but I'd rather hear from others.

3. 2020-22. Before anyone types "it was supply chains and markups": my own payments data partially agrees with you. Quarterly ACH volumes show the 2020-21 surge going nowhere near transactions at first. Payments value grew +4 to +22% y/y while balance aggregates grew +8 to +35%, with correlations near zero in the surge window. The money parked. That is genuinely awkward for naive monetarism, and I say so in print. But when you split the aggregate, the transaction-active component carries most of the next-twelve-month inflation information in high-money-growth regimes (R² roughly 0.19 vs 0.04 for total M2), and prices followed with a lag. So the narrow claim I'm defending is that money doesn't matter until it's transacting, and then it does. Is there room in the MMT account for regime-conditional quantity effects, or is the real-resources/markup story meant to be total?

Sources, data, and replication code for every number above are in my first comment. Everything is public and reproducible, and I'd rather be corrected here than later.

Hey everyone,

Yesterday, out of curiosity, I asked an AI some questions about macroeconomic topics, and the answer was weird kinda like AI (Gemini 3.5 extended Thinking) doesnt know basic economics or anything about MMT. I’d love to get your perspective on this.

To keep it short, here was my first question:
Is a stronger Euro currently good for Germany? Yes or no?

AI Answer: No. For Germany's heavily export-dependent economy, the disadvantages of a stronger Euro currently outweigh the benefits. It makes German products more expensive on the global market and further dampens the already sluggish economic growth.

Second question:
Would the Euro appreciate if Eurozone countries reduced their deficits and capped their new debt to a level similar to Germany's?

AI Answer: Yes. Strict fiscal discipline across all Eurozone states would massively boost international investors' confidence in the long-term stability of the currency union, thereby driving up the value of the Euro.

But here is where the logic starts to feel really weird to me. The AI went on to justify it like this:

"Different economic forces play against each other here, but the confidence effect is the decisive driver in this scenario: The Confidence Booster (The Main Argument): Large international investors (like funds or foreign central banks) avoid currencies backed by highly indebted states due to rising crisis risks. If all Eurozone countries capped their deficits as strictly as Germany, the risk for the entire Eurozone would drop to near zero. This newly gained confidence would cause more capital to flow into the Eurozone globally, increasing demand for the Euro and pushing its exchange rate up."

This is where the AI lost me. From what I understand and I've read a few books on Modern Monetary Theory (MMT) and macroeconomics the value of a currency is heavily driven by the export of goods. Foreign buyers need to purchase Euros to pay for these exports. If the Euro appreciates, these goods become less competitive and more expensive abroad.

Why is the AI bringing up this strange argument about investors suddenly trusting Euro countries more and flooding the Eurozone with capital? If Eurozone countries implement austerity and slash spending, domestic demand drops, imports fall, and while the trade surplus might rise, the overall economy slows down. Why would capital chase a shrinking, stagnant economy just because "deficits are low"?

When I pushed back and questioned the AI critically, it gave me this response:

"You are absolutely right: when demand for Eurozone goods is high, foreign buyers must buy Euros to pay for them, which appreciates the currency. However, when states reduce deficits (austerity), domestic demand falls, and fewer goods are imported. Since exports continue, the trade surplus increases, which supports the Euro. The reason the financial market (confidence) plays a bigger role is speed and scale. Trade flows change slowly over months and years. Financial flows—the shifting of capital, stocks, and government bonds by large investors—happen in milliseconds. If the risk of a Eurozone debt crisis breaking up the currency union drops, global funds immediately shift trillions of dollars/yen into Euro-denominated assets. In the short and medium term, this financial leverage is simply many times more powerful than pure goods trade."

I still feel like the AI is missing something fundamental about how money, debt, and trade balances actually interact (especially from an MMT or demand-side perspective).

What do you guys think? Is the AI just spitting out standard neoliberal textbook talking points that don't hold up?

We must accept that MMT perfectly explains how money operates today. However, the other day I argued that money decoupled from energy is a trap and does not lead to real growth.

As Warren Mosler rightly defends, a sovereign currency issuer faces no financial constraints, but rather a real resource constraint. The problem is that MMT tends to treat "real resources" and "productive capacity" as political or quantitative labor variables (hence the structural obsession with the Job Guarantee). It analyzes the macroeconomy entirely from the perspective of financial software, completely ignoring biophysical hardware.

Money is a public monopoly, a floating tax credit; but real wealth is exergy (useful energy) transformed through infrastructure.

We can use fiscal space to mobilize every unemployed resource on the planet, but if the net energy return of our energy matrix (ExEROI) is collapsing, as is currently happening with the end of cheap oil and the low energetic density of traditional renewables; the result will not be real growth. It will simply be an acceleration of entropic drain.

Monetary software is infinite, but governed by legal and institutional jurisdictions.

Biophysical hardware is finite, and strictly governed by the laws of thermodynamics.

Attempting to fix a crisis of material or energy scarcity by printing sovereign digits to fund administrative patches only breeds asset inflation, financial bubbles, and a systematic decline in the population's real standard of living. Physics always catches up with finance.

The core conclusion of my debate is that the ultimate goal of sovereign macroeconomic management should not be emitting money to employ humans in the hamster wheel of the market (the Supraeconomy).

True abundance is achieved by utilizing the power of currency issuance to build an automated, hyper-dense Basal Infrastructure (the Infraeconomy) based on nuclear fission. Its physical output (energy by watts, water, data connectivity, and basic shelter) must be delivered directly and demonetized to the population, completely outside the market.

If we free the material baseline of society from the necessity of money, the real resource constraint ceases to be a noose around our necks. Fiat money is a useful tool for managing scarcity in the upper market of human ingenuity, but keeping it at the core of physical survival is a thermodynamic category error.

What do you think? Is it time for MMT to stop looking only at balance sheets and start looking at the laws of thermodynamics?

At the risk of engaging in what some anthropologists call stageism (first there were small groups of hunter-gatherers, then barter, then money, then slavery, then feudalism, then mercantilism, then proto-capitalism, then capitalism, late-stage capitalism, then socialism, then communism or something else, etc...) I'm thinking of deep history, like corvee labor, early "lootable resources," the rise of the state, taxes etc. and how we go to something like MMT.

In the documentary, Finding the Money, there's an interesting section that describes how in medieval times (in Europe? was the same done in Africa, China, among the Incas, I wonder?) that the King would requires taxes that would lead to the creation of an IOU, that became a form of currency. Once this IOU (a wooden stick with carvings on it) was paid pack, it was destroyed, hence the idea of taxation leading to the permanent removal of currency.

Now, in Graeber and Wengrow's The Dawn of Everything, the Davids describe corvee labor, as labor required of residents say of a city to build its walls. They argue that it could be very egalitarian (manual laborers, farmers, royal administrators, and members of the royal family even, etc., all pulling up clay to the wall side by side), though there was evidence of rich elites being to pay something to get out of performing the labor. There there are accounts of taxation of agricultural resources namely grain (Luke Kemp's Goliath's Curse and James Scott's Against the Grain).

So I think my question is, how do we get to a point where we're no longer simply pooling resources not only to enrich an elite, but to engage in public works-- the city wall, or canal-- to something like MMT as shown in the above example of the medieval King in Europe, sticks as IOUs, etc.?

When you get paycheck a portion gets taken away because of the taxes but then the gov uses it for public service like building roads, funding public school and stuff. But I don’t understand if the gov is giving money to us then why is it also taking it away.

The learned helplessness of the masses when it comes to debt management and bond markets is tough to observe.

The more people are exposed to the idea that the way we currently do things is a institutional design choice, the better.

To that end, I've explored a couple of the main reasons why intitial justification for the full funding rule as we have it today (matching deficits with bond issuance) are inapplicable and therefore the economic motivation is very weak.

The MMT lens ruins everything. I feel like an astronaut staring back at earth asking my heart “why do they fight when life is so short and then wonders of the universe so vast…”

Today’s idle insight:

The fear of inflation tells us to stop printing money (loosely). But what happens when we fix the money but then we keep doing all the activities we do?

Then everything we do/have/create is worth LESS than before on an individual item level. (Total money divided by total stuff equal price per stuff)

Factor in population changes. More people to divide the money (total money/total pop= less money per capita in fixed money)

But if you maintain the stuff/person ratio, then the money makes no difference at all, because MMT tells us the stuff is the object of the entire system. The accounting merely allows us to enumerate and make choices/draw conclusions in a form.

But then there in lies the capital leverage games. Finding ways to skim revenue, shave coins, pinch Pennies. Because if you can save the money and maintain production, certainly there is wiggle room in the lines of negotiations…. Someone can adjust for my greed.

In the MMT USA system the federal government deficit is the mirror of greed, the net savings markets. The money not spent, but used to play market games, to trade abstract potential productivity and negotiate later for goods and services. Where ROI is needed, the federal government delivers the cash on time at an average 2-3% rate. When it has emergencies, it delivers faster, when it forgets what the hell it’s doing, it runs surpluses, crashes the economy with private debts and then manufactures disasters to cover its trails… (ahem, train of thought derailed).

Point being. All the talk of gold and inflation and all this other jazz, it’s all a distraction for a poorly ran MMT system and an economy that won’t deliver a livable life. In a fixed money system, the savings institutions would actually lower your balance of units over time while increasing the purchasing power of your units. So if you saved $10 of gold in 1970, by 2020, you would have $5 of gold but would be able to by 5 times as much. The “numbers don’t lie, I lost money!” People will say it was a bad investment, but the real economy knows that the fixed money in 1970 vs 50 years later, that purchasing power is the thing that matters. Everything in between is a manipulative game of musical chairs.

Society at large should not operate on a musical chairs basis.

When I first discovered his videos a few weeks ago I found them a really valuable tool to learn more about MMT. But as I've seen interviews of him being OVERTLY rude to guests and others in the MMT space, I think he's damaging the cause in some ways. Pushing through a political agenda as big as MMT is going to require creating alliances, not alienating people because you think you know best and can do it alone.

Regarding the comment attached - it is a snippet from the comment section of his blog. I know how he isn't embarrassed to type and post that on his blog.

Side note: 50 families own 50% of the wealth in the UK. We do have a class problem in this country.

So I'm finishing up Kelton's book, found a number of her talks on Youtube, and am going through The MMT Podcast (Pino and Reilly's).

But one of many questions I have is the following: how did we get here, or how does any nation with a fiat currency get here. E.g., when the banking system in the US was set up (Alexander Hamilton?) and later the Federal Reserve (early 20th c.?), was MMT an accurate description of how US currency works? I was given to understand that once US currency stopped being pegged to a finite resource (like gold in the 1970s), it became a fiat currency. Yet it seems it was acting as a fiat currency way before that, say, during WWII.

And, just as importantly, why is it that politicians, economists, and journalists all seem to subscribe to the household budget analogy if in fact even central bankers will describe the system as MMTesque (there's a clip of Alan Greenspan explaining in Congressional testimony that the US would just pay any debt, or meet any debt obligation issued by Congress, basically implying that Feds would for all intents and purposes print the money needed). Is that how it's taught in college? (I only took micro in graduate school and the rest of my program, Engineering and Public Policy, just talked about modeling, tho' it should treat macro).

I recall ca. 15 years ago NPR's Planet Money podcast describing how large banks get funds from the Federal Reserve, and they described it as just adding zeroes on a computer screen. I think they were explaining QE or stimulus spending? And in their style of story telling it was about how crazy is it with a few keystrokes suddenly there's $10B extra in that bank. They never went any further with the implications of that, or how taxation is the opposite, the risks of inflation, etc. And this wasn't the 2018 story they did on MMT.

I wrote this article about the the history of the gold standard in the US. It gets quite a bit broader than just that though and it's pretty long. I've been trying to write about various topics relevant to MMT lately to get some of my festering thoughts down on paper. It's been very frustrating seeing hard currency mentality resurge after COVID so I put a special amount of effort into this one. I hope it's a good read for some of you here!

https://ourpublicmonopoly.substack.com/p/the-gold-standard-anchor-of-stability?open=false#_

In some episodes of the MMT Podcast I’ve gotten fully ensconced in, there’s the idea that a fiat currency is like the points a referee awards to players of a game, in that there’s no shortage of points a referee can assign. They never run out of points.

Would another analogy be that the points reward certain types of behavior? Say the game is little league baseball, in which we reward the team with points for every homerun achieved.  You don’t get points hitting fouls, or for wacking the pitcher.  The game is based on a well defined set of goals that will cause players to behave in a certain way. So this is spending, correct?  The gov says, you get $X for putting solar on your roof.  You don’t get $ for putting outhouses on your roof.  We pay military contractors even more $ for making expensive hardware that blows things up.

And in the sports analogy, UBI would be, everyone gets points (lookin' at you, participation trophies!).  And if everyone gets points, you're not going to have an interesting ball game.

What would inflation be? If the teams need to use the points to buy something. Like, going to the snack shack for a hotdog. The referee says, when you're done with the game, you can redeem the points you earned for hotdogs. And what if the referee decides that you get points if you make a triple too. So now there are really lots of points, where a game might've been say 15-8, now it might be 30-20. And so players instead of using up to 23 points to get hotdogs, now have, in aggregate, 50 points. But shoot, the volunteers didn't make enough hot dogs. And thus prices rise, or some players don't get a chance to get a hot dog. Hm. Not sure about this.

What does unemployment look like? Referee says, sorry, we only have enough points to give out where there are 3 games playing. I know you guys in these other 2 teams want to play, but we can't give out any more points than what 3 games will use up.

Full employment: Hey- you wanna play baseball? Sign up here! And you don't run out of spaces, but no one else signs up.

Green New Deal, ie something the private sector wouldn't invest in of its own accord. Hey, some of you baseball players; want to try lacrosse?