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Chartalism

Chartalism

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Chartalism is a descriptive economic theory that details the procedures and consequences of using government-issued tokens as the unit of money. The name derives from the Latin charta, in the sense of a token or ticket. The modern theoretical body of work on chartalism is known as Modern Monetary Theory (MMT).

MMT aims to describe and analyze modern economies in which the national currency is fiat money
Fiat money
Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.Fiat money originated in 11th...

, established and created exclusively by the government. In MMT, money enters circulation through government spending; Taxation is employed to establish the fiat money
Fiat money
Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.Fiat money originated in 11th...

 as currency, giving it value by creating demand for it in the form of a private tax obligation that can only be met using the government's currency. An ongoing tax obligation, in concert with private confidence and acceptance of the currency, maintains its value. Because the government can issue its own currency at will, MMT maintains that the level of taxation relative to government spending (the government's deficit spending
Deficit spending
Deficit spending is the amount by which a government, private company, or individual's spending exceeds income over a particular period of time, also called simply "deficit," or "budget deficit," the opposite of budget surplus....

 or budget surplus) is in reality a policy tool that regulates inflation and unemployment, and not a means of funding the government's activities per se.

The theory was presented by German statistician and economist G.F. Knapp in 1895, with important contributions also by Alfred Mitchell-Innes
Alfred Mitchell-Innes
Alfred Mitchell-Innes was a British diplomat, economist and author. He had the Grand Cross of the Medjidieh conferred upon him by Abbas II, Khedive of Egypt.-Family:...

. It was influential on the 1930 Treatise on Money
A Treatise on Money
A Treatise on Money is a work on economics by English economist John Maynard Keynes. In the Treatise Keynes drew a distinction between savings and investment, arguing that where saving exceeded investment, recession would occur....

of John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...

, which approvingly cited Knapp and "Chartalism" in its opening pages. Chartalism experienced a revival under Abba P. Lerner
Abba P. Lerner
Abba Ptachya Lerner was an American economist.Lerner was born on October 28, 1903 in Bessarabia . He grew up in a Jewish family, which emigrated to Great Britain when Lerner was three years old. Lerner grew up in the London East End. From the age of sixteen he worked as a machinist, a teacher in...

, and has a number of modern proponents, who are broadly denoted as post-Keynesian economists.

Vertical transactions


MMT labels any transactions between the government sector and the non-government sector as a vertical transaction. The government sector is considered to include the treasury and the central bank, whereas the non-government sector includes private individuals and firms (including the private banking system) and the external sector – that is, foreign buyers and sellers.

In any given time period, the government’s budget can be either in deficit or in surplus. A deficit occurs when the government spends more than it taxes; and a surplus occurs when a government taxes more than it spends. MMT states that as a matter of accounting, it follows that government budget deficits add net financial assets to the private sector. This is because a budget deficit means that a government has deposited more money into private bank accounts than it has removed in taxes. A budget surplus means the opposite: in total, the government has removed more money from private bank accounts via taxes than it has put back in via spending.

Therefore, budget deficits, by definition, are equivalent to adding net financial assets to the private sector; whereas budget surpluses remove financial assets from the private sector. This is represented by the identity: (G-T) = (S-I) – NX (where G is government spending, T is taxes, S is savings, I is investment and NX is net exports). It is important to note that this identity is not unique to Modern Monetary Theory; it is an identity used throughout all macroeconomic theories, because it is true by definition.

The conclusion that MMT necessarily draws from this is that private net saving is only possible if the government runs budget deficits; alternately, the private sector is forced to dis-save when the government runs a budget surplus.

MMT therefore does not support the notion, as some Keynesians do, that budget surpluses are always necessary in periods of high effective demand. According to the framework outlined above, budget surpluses remove net savings; in a time of high effective demand, this may lead to a private sector reliance on credit to finance consumption patterns. Rather, MMT suggests that continual budget deficits are necessary for a growing economy that wants to avoid deflation. MMT only advocates budget surpluses when the economy has excessive aggregate demand, and is in danger of inflation.

Interaction between government and the banking sector


MMT considers that understanding reserve accounting is crucial in understanding interactions between the government and the private sector. Thus, MMT pays considerable attention to the operational reality of interactions between government, the central bank, and the commercial banking sector.

A sovereign government will typically have a cash operating account with the central bank of the country. From this account, the government can spend and also receive taxes and other inflows. Similarly, all of the commercial banks will also have an account with the central bank. This permits the banks to manage their reserves (that is, the amount of available short-term money that a particular bank holds).

So when the Federal government spends, Treasury will debit its cash operating account at the central bank, and deposit this money into private bank accounts (and hence into the commercial banking system). This money adds to the total reserves of the commercial bank sector. Taxation works exactly in reverse; private bank accounts are debited, and hence reserves in the commercial banking sector fall.

Government bonds and interest rate maintenance


Virtually all central banks set an interest rate target. If they are to maintain this target, MMT argues that a central bank has no choice but to actively intervene in commercial banking operations.

In most countries, commercial banks’ reserve account with the central bank must have a positive balance at the end of every day; in some countries, the amount is specifically set as a proportion of the liabilities a bank has (i.e. its customer deposits). This is known as a reserve requirement
Reserve requirement
The reserve requirement is a central bank regulation that sets the minimum reserves each commercial bank must hold of customer deposits and notes...

.
At the end of every day, a commercial bank will have to examine the status of their reserve accounts. Those that are in deficit have the option of borrowing the required funds from the central bank, where they may be charged a lending rate (sometimes known as a discount rate) on the amount they borrow. On the other hand, the banks that have excess reserves can simply leave them with the central bank and earn a support rate from the central bank. Some countries, such as Japan
Economy of Japan
The economy of Japan, a free market economy, is the third largest in the world after the United States and the People's Republic of China, and ahead of Germany at 4th...

, have a support rate of zero.

When a bank has more reserves than it needs to meet the reserve requirement, banks will try and sell their extra reserves to banks that are in deficit. This buying and selling is known as the interbank lending market
Interbank lending market
The interbank lending market is a market in which banks extend loans to one another for a specified term. Most interbank loans are for maturities of one week or less, the majority being overnight. Such loans are made at the interbank rate...

. The surplus bank will want to earn a higher rate than the support rate that the central bank pays on reserves; whereas the deficit bank will want to pay a lower interest rate than the discount rate the central bank charges for borrowing, which is typically high. Thus they will lend to each other until each bank has reached their reserve requirement. In a balanced system, where there are just enough total reserves for all the banks to meet requirements, the short-term target interest rate will be in between the support rate and the discount rate.

However, MMT points out that government spending has an effect on this procedure. If on a particular day, the government spends more than it taxes, then net financial assets have been added to the banking system (see Vertical Transactions). This will lead to a system-wide surplus of reserves. In that case, the attempted selling of excess reserves would force the short-term interest rate down to the support rate (or alternately, to zero if a support rate is not in place). This is due to the fact that when there is a surplus in the system, and all banks can meet their reserve requirements, there would not be any demand for these surplus reserves.

The interest rate the banks charge on reserves would therefore fall to the support rate - at that point, the surplus bank will simply keep the reserves with their central bank and earn the support rate. MMT therefore concludes that the mainstream theory of crowding out
Crowding out (economics)
In economics, crowding out occurs when Expansionary Fiscal Policy causes interest rates to rise, thereby reducing private spending. That means increase in government spending crowds out investment spending....

 (where government spending is said to put upward pressure on interest rates) is necessarily incorrect. Government spending, according to MMT, drives the short-term interest rate down. MMT does, however, insert one caveat: that long-term government bonds can affect the term structure of interest rates. For example, in times of uncertainty, long-term debt may not be desired by the market, leading to high interest rates for that particular type of debt, and therefore affecting the yield curve
Yield curve
In finance, the yield curve is the relation between the interest rate and the time to maturity, known as the "term", of the debt for a given borrower in a given currency. For example, the U.S. dollar interest rates paid on U.S...

. MMT proponents therefore tend to argue that government should limit itself to short-term bonds.

The alternate case is where the government receives more taxes on a particular day than it spends. In this case, there may be a system-wide deficit of reserves. As a result, surplus funds will be in demand on the interbank market, and thus the short term interest rate will rise towards the discount rate.
Thus, if the central bank wants to maintain a target interest rate somewhere between the support rate and the discount rate, it must manage the liquidity in the system to ensure that there is the correct amount of reserves in the banking system.

The only way it can do this is by a vertical transaction – by buying and selling government bonds on the open market. On a day where there are excess reserves in the banking system, the central bank sells bonds and therefore removes reserves from the banking system, as private individuals pay for the bonds. On a day where there are not enough reserves in the system, the central bank buys government bonds from private individuals, and therefore adds reserves to the banking system.

It is important to note that the central bank buys bonds by simply creating money – it is not financed in any way. It is a net injection of reserves into the banking system. As a result, MMT necessarily implies that the central bank of a country is not able to influence a government’s spending decisions. If a central bank is to maintain a target interest rate, then it must necessarily buy and sell government bonds on the open market in order to maintain the correct amount of reserves in the system.

Horizontal transactions


MMT considers any transactions within the private sector (which includes the commercial banking system) as horizontal transactions. Specifically, MMT focuses on loan creation within the banking system.

MMT states that as a matter of accounting, loans will always necessarily create a liability and a deposit equal in magnitude. Thus the net amount of financial assets (deposits – liabilities) cannot be changed via banking actions. Of course, the deposits created certainly expand the money supply; subsequently, these deposits may flow away from one bank and into another, and this must be balanced at the end of the day to meet reserve requirements (see Interactions between government and the banking sector). But banks cannot create net financial assets without an attached liability. Only the government sector - specifically, the reserve bank - is able to do this (see #Vertical transactions).

As a result, MMT rejects the mainstream notion of the money multiplier
Money multiplier
In monetary economics, a money multiplier is one of various closely related ratios of commercial bank money to central bank money under a fractional-reserve banking system. Most often, it measures the maximum amount of commercial bank money that can be created by a given unit of central bank money...

, where a bank is completely constrained in lending through the deposits it holds, and its capital requirement. MMT does not argue that an individual bank’s reserve position is completely irrelevant to its decision to extend credit; clearly, an individual bank will weigh the benefit of lending money beyond its reserve position, and the cost of borrowing funds from the interbank market (or the central bank) in order to meet its capital requirements (see #Interaction between government and the banking sector). However, what MMT does argue (in opposition to the mainstream) is that there is no real constraint to a bank in creating any loan it likes. The decision will be based purely on creditworthiness and profitability – the reserve requirement is simply one aspect of profitability.

Imports and exports


MMT analyses imports and exports within the framework of horizontal transactions. It argues that an export represents a desire on behalf of the exporting nation to obtain the national currency of the importing nation. The following hypothetical example is consistent with the workings of the FX market, and can be used to illustrate the basis of the theory:
”An Australian importer (person A) needs to pay for some Japanese goods. The importer will go to his bank and ask to transfer 1000 yen to the Japanese bank account of the Japanese firm (person B). After looking up the relevant exchange rates for that day, the bank will inform him that this will cost him 100 dollars. The bank removes 100 dollars from the importer’s account, and goes to the FX market. It finds an individual (person C) who is willing to swap 1000 yen for 100 dollars. It transfers the 100 dollars to that individual. Then it takes the 1000 yen and transfers it to the Japanese exporter’s bank account.”

Thus, the transaction is complete. What made the transaction possible (i.e. acceptably priced to the importer) was person C in the middle of the FX swap. Thus MMT concludes that it is a foreign desire for an importer’s currency that makes importing possible.

MMT concludes that imports are therefore an economic benefit to the importing nation because they provide the nation with real goods it can consume, that it otherwise would not have had. Exports, on the other hand, are an economic cost to the exporting nation because it is losing real goods that it could have consumed.
MMT does not, however, ignore the fact that the importing nation has given some of its currency to foreigners. This currency ownership represents a future claim over goods of that nation, which, as outlined above, are a cost.
Similarly, MMT does not ignore the fact that cheap imports may cause the failure of local firms providing similar goods at higher prices, and hence unemployment. Most MMT commentators label that consideration as a subjective value-based one, rather than an economic-based one: it is up to a nation to decide whether it values the benefit of cheaper imports more than it values employment in a particular industry.
Lastly, MMT does not ignore the effect of an over-reliance on imported goods (such as oil) with highly inelastic demand. It is consistent with MMT theory that a nation overly dependent on imports may face a supply shock if the exchange rate drops significantly. As an operational matter, central banks can and do trade on the FX markets to avoid sharp shocks to the exchange rate.

Foreign sector and commercial banks


It follows, according to MMT, that a net importing nation will be creating foreign ownership of its currency. But it is important to note that the currency will never actually leave the importing nation. The foreign owner of the local currency can either (a) spend them purchasing local assets or (b) deposit them in the local banking system. In each scenario, the money ultimately ends up in the local banking system. (Individual banks may, however, compete to attract these funds to their specific bank by offering bank bonds to overseas investors. This is typically labelled “offshore funding”.)

Foreign sector and government


Using the same application of vertical transactions MMT argues that the holder of the bond is irrelevant to the issuing government. Whether the bond holder is foreign or not, governments can never be insolvent when the debt obligations are in their own currency; this is because the government is not constrained in creating its own currency. Similarly, according to the FX theory outlined above, the currency paid out at maturity cannot leave the country of issuance either.

MMT does point out, however, that debt denominated in a foreign currency certainly is a fiscal risk to governments, since the indebted government cannot create foreign currency. In this case the only way the government can sustainably repay its foreign debt is to ensure that its currency is continually and highly demanded by foreigners over the period that it wishes to repay the debt – an exchange rate collapse would potentially multiply the debt many times over asymptotically, making it impossible to repay. In that case, the government can default, or attempt to shift to an export-led strategy or raise interest rates to attract foreign investment in the currency. Either one has a negative effect on the economy. Euro debt crises in the "PIIGS" countries that began in 2009 reflect this risk, since Greece, Ireland, Spain, Italy, etc have all issued debts in a quasi-"foreign currency" - the Euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...

, which they cannot create.

Prescriptive use


Based on the descriptive aspects of MMT outlined above, proponents and theorists prescribe a number of methods to manage the economy. These prescriptions range across the political spectrum
Political spectrum
A political spectrum is a way of modeling different political positions by placing them upon one or more geometric axes symbolizing independent political dimensions....

, from left-supported job guarantees to traditionally rightwing-supported tax cuts. Some of these are outlined below.

Fiat money


Many proponents of chartalism argue that a fiat system is preferable to a commodity money
Commodity money
Commodity money is money whose value comes from a commodity out of which it is made. It is objects that have value in themselves as well as for use as money....

 system, particularly because it allows for government deficit spending for fiscal stimulus in ways not possible under a commodity money system. In addition, proponents of MMT argue that single currency systems such as the gold standard or the modern day construction of the Euro, create trade imbalances which result in economic instability which ultimately result in the currency system being unworkable.

Full employment


For Chartalists, a preferred method of achieving full employment and price stability is the Job guarantee. Under the notion of Job Guarantee
Job guarantee
A job guarantee is an economic policy proposal aimed at providing a sustainable solution to the dual problems of inflation and unemployment. Its aim is to create full employment and price stability...

, the pool of unemployed workers is guaranteed a job by the government – typically at minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...

 – and this would act as a buffer stock and automatic stabilizer to the wider economy. By decreasing in size it would lower deficits and deflate booming economies, and by increasing in size, enlarge deficits and stimulate depressed economies.

Tax cuts


Some leading proponents of MMT such as Warren Mosler
Warren Mosler
Warren Mosler is an American economist, president and founder of Mosler Automotive, and co-founder of the Center for Full Employment And Price Stability at the University of Missouri-Kansas City. He briefly ran for President of the United States as a member of the Democratic Party in the 2012...

 advocate a large tax-cut or a complete tax holiday
Tax holiday
A tax holiday is a temporary reduction or elimination of a tax. Programs may be referred to as tax abatements, tax subsidies, tax holidays, or tax reduction programs. Governments usually create tax holidays as incentives for business investment...

 when unemployment is high and economic growth is low. According to MMT, this would allow consumers to start spending again, increasing output and therefore increasing hiring.

Criticism


Chartalism and Modern Monetary Theory has garnered wide criticism
Criticism
Criticism is the judgement of the merits and faults of the work or actions of an individual or group by another . To criticize does not necessarily imply to find fault, but the word is often taken to mean the simple expression of an objection against prejudice, or a disapproval.Another meaning of...

 from a wide range of schools of economic thought. New Keynesian economist
New Keynesian economics
New Keynesian economics is a school of contemporary macroeconomics that strives to provide microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of New Classical macroeconomics.Two main assumptions define the New...

 and Nobel laureate Paul Krugman
Paul Krugman
Paul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times...

 has stated that the MMT view that deficits never matter as long as you have your own currency is "just not right"..

The main response by MMT economists to the abovementioned criticism is to point out that the positions taken by critics betray a misunderstanding of MMT. Although critics often represent MMT as supportive of the notion that "deficits don't matter", MMT authors have explictly stated that that is not a tenet of MMT.

Austrian economist
Austrian School
The Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...

 Robert P. Murphy
Robert P. Murphy
Robert P. "Bob" Murphy is an Austrian School economist and anarcho-capitalist.-Education and personal life:Murphy completed his Bachelor of Arts in economics at Hillsdale College in 1998. He then moved back to his home state of New York to continue his studies at New York University. Murphy earned...

 states that "the MMT worldview doesn't live up to its promises" and that it seems to be "dead wrong". Daniel Kuehn of the Urban Institute
Urban Institute
The Urban Institute is a Washington, D.C.-based think tank that carries out nonpartisan economic and social policy research, collects data, evaluates social programs, educates the public on key domestic issues, and provides advice and technical assistance to developing governments abroad...

 has voiced his agreement with Murphy, stating "it's bad economics to confuse accounting identities with behavioral laws [...] economics is not accounting."

Murphy's critique specifically employs a hypothetical example of Robinson Crusoe living in a world without a monetary system, and shows that it is in fact possible for Robinson Crusoe to save by foregoing income, thereby illustrating that despite what MMT economists argue, government deficits are not necessary for individuals to save. However, MMT economists have pointed out that the central tenets of MMT theory only aim to describe the economy of a society with a monetary system, that employs a fiat currency and floating exchange rate.

Murphy also criticises MMT on the basis that savings in the form of government bonds are not net assets for the private sector as a whole, since the bond will only be redeemed after the government "raises the necessary funds from the same group of Taxpayers in the future". In response to this, MMT authors point out that the repayment of bonds does not necessarily have to occur from taxes; a central bank attempting to hold an interest rate target must necessarily purchase government bonds. These purchases occur through the creation of currency, rather than taxation.

New Keynesian Brad DeLong
J. Bradford DeLong
James Bradford DeLong commonly known as Brad DeLong, is a professor of Economics and chair of the Political Economy major at the University of California, Berkeley. He served as Deputy Assistant Secretary of the United States Department of the Treasury in the Clinton Administration under Lawrence...

 has suggested MMT is not a theory but rather a tautology
Tautology
Tautology may refer to:*Tautology , using different words to say the same thing even if the repetition does not provide clarity. Tautology also means a series of self-reinforcing statements that cannot be disproved because the statements depend on the assumption that they are already...

. Still others have said MMT "ignores the lessons of history" and is "fatally flawed."

Economist Eladio Febrero argues that modern money draws its value from its ability to cancel (private) bank debt, particularly as legal tender
Legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....

, rather than to pay government taxes.. However it is unclear how this is a critique, since banks rely entirely on the monetary services of the state and its chosen currency, via the central banking system.

Modern proponents


Economists Warren Mosler
Warren Mosler
Warren Mosler is an American economist, president and founder of Mosler Automotive, and co-founder of the Center for Full Employment And Price Stability at the University of Missouri-Kansas City. He briefly ran for President of the United States as a member of the Democratic Party in the 2012...

, L. Randall Wray and Bill Mitchell
Bill Mitchell (economist)
William Francis "Bill" Mitchell is a professor of economics at the University of Newcastle, New South Wales, Australia, and a notable proponent of Modern Monetary Theory.-Early life:...

 are largely responsible for reviving the idea of Chartalism as an explanation of money creation
Money creation
In economics, money creation is the process by which the money supply of a country or a monetary region is increased due to some reason. There are two principal stages of money creation. First, the central bank introduces new money into the economy by purchasing financial assets or lending money...

; Wray refers to this revived formulation as .

Bill Mitchell, from the Centre of Full Employment and Equity (CofFEE
Centre of Full Employment and Equity
The Centre of Full Employment and Equity or CofFEE is an official research centre of the University of Newcastle, New South Wales, Australia, and has operated since 1998...

), at the University of Newcastle, Australia
University of Newcastle, Australia
The University of Newcastle is an Australian public university that was established in 1965. The University's main and largest campus is located in Callaghan, a suburb of Newcastle in New South Wales...

, refers to modern Chartalism as in the body of work he has developed in the field.

Scott Fullwiler, Ph.D., is Associate Professor of Economics and James A. Leach Chair in Banking and Monetary Economics at Wartburg College. Dr. Fullwiler has made significant contributions to MMT via his expertise in banking operations and the monetary system.

Rodger Malcolm Mitchell's book Free Money (1996) describes in layman's terms the essence of Chartalism.

Cullen Roche, a California based investment manager, published one of the most widely read pieces on MMT titled "Understanding The Modern Monetary System." Roche has become one of MMT's most vocal proponents and has engaged Paul Krugman in several debates on the subject of MMT.

Some contemporary proponents, such as Wray, situate Chartalism within Post-Keynesian economics
Post-Keynesian economics
Post Keynesian economics is a school of economic thought with its origins in The General Theory of John Maynard Keynes, although its subsequent development was influenced to a large degree by Michał Kalecki, Joan Robinson, Nicholas Kaldor and Paul Davidson...

, while Chartalism has been proposed as an alternative or complementary theory to monetary circuit theory
Monetary circuit theory
Monetary circuit theory is a heterodox theory of monetary economics, particularly money creation, often associated with the post-Keynesian school....

, both being forms of endogenous money
Endogenous money
In economics, endogenous money refers to the theory that money comes into existence driven by the requirements of the real economy and that banking system reserves expand or contract as needed to accommodate loan demand at prevailing interest rates. It forms part of Post-Keynesian economics...

, i.e. money created within the economy, as by government deficit spending or bank lending, rather than from outside, as by gold.

In the complementary view, Chartalism explains the "vertical" (government-to-private and vice versa) interactions, while circuit theory is a model of the "horizontal" (private-to-private) interactions.

Hyman Minsky
Hyman Minsky
Hyman Philip Minsky was an American economist and professor of economics at Washington University in St. Louis. His research attempted to provide an understanding and explanation of the characteristics of financial crises...

 seems to favor a Chartalist approach to understanding money creation in his Stabilizing an Unstable Economy, while Basil Moore
Basil Moore (economist)
Basil Moore is a Canadian Post-Keynesian economist, most known for developing and promoting endogenous money theory, particularly the proposition that the money supply curve is horizontal, rather than upward sloping, a proposition known as horizontalism...

, in his book Horizontalists and Verticalists, delineates the differences between bank money and state money.

James K. Galbraith
James K. Galbraith
James Kenneth Galbraith is an American economist who writes frequently for mainstream and liberal publications on economic topics. He is currently a professor at the Lyndon B. Johnson School of Public Affairs and at the Department of Government, University of Texas at Austin. He is also a Senior...

 supports Chartalism and wrote the foreword for Mosler's book Seven Frauds in 2010.

See also


  • Demand for money
  • Functional finance
    Functional finance
    Functional finance is an economic theory proposed by Abba P. Lerner, based on effective demand principle and chartalism. It states that government should finance itself to meet explicit goals, such as taming the business cycle, achieving full employment, ensuring growth and low inflation.-...

  • Quantity theory of money
    Quantity theory of money
    In monetary economics, the quantity theory of money is the theory that money supply has a direct, proportional relationship with the price level....

    , or Monetarism, the principal non-Keynesian theory of exogenous money
  • Monetary circuit theory
    Monetary circuit theory
    Monetary circuit theory is a heterodox theory of monetary economics, particularly money creation, often associated with the post-Keynesian school....

    , or Circuitism, a complementary Post-Keynesian theory of endogenous money
  • History of macroeconomic thought

External links