Talk:Modern monetary theory

Mischaracterization of government debt

In the into, the article states “…governments do not need to worry about accumulating debt…”. This is not quite right as MMT has always posited that unchecked government debt leads to unchecked printing which leads to inflation. However, what MMT does state here is that governments that control their own currency can never become insolvent. This does not equate to no worry about accumulating debt except within non-inflationary bounds. 2600:8801:AF7E:4000:BC81:203C:73B1:3AAE (talk) 14:40, 2 January 2024 (UTC)

Indeed. In fact Warren Mosler has pointed out that increases in public debt can cause inflation via increased interest payments, particularly when accompanied by increased interest rates. So the MMT perspective is that public deficits could be "financed" by money creation, without matching bond sales, in order to reduce the risk of inflation. In the MMT view governments cannot become insolvent but they can cause inflation by "giving away" money. -- Derek Ross | Talk 02:02, 17 April 2024 (UTC)

I think the intro needs a bit of a re-write as I didn't find it very clear before reading the rest of the article. Perhaps it should be worded along the lines of MMT arguing that inflation is only a constraint on government spending once the economy reaches full employment. Until then, governments can create money without creating inflation. Consequently (and unlike household budgeting) governments do not need to worry about accumulating debt or becoming insolvent, since they can rely on their monopoly on the creation of money, as demonstrated by their creation of money for QE and during the COVID pandemic to pay for as much as they need? gilgongo (talk) 17:28, 21 September 2024 (UTC)

I rewrote the introduction to capture this in the language used by my professional MMT colleagues and added citations Andresintheory (talk) 00:49, 23 September 2024 (UTC)

The concept of "printing money" is not coherent to MMT's approach to public spending. As Stephanie Kelton and others emphasize in their work, government's always and already spend before they tax back. Deficits are simply the different between the two. The MMT literature is clear that government debt is simply a savings of net outstanding treasury securities and has nothing to do with printing money. In fact, it is a reserve drain. Andresintheory (talk) 00:48, 23 September 2024 (UTC)

I reverted your rewrite because Wikipedia prefers independent sources from reputable publishers, and you apparently cited a think tank publication you wrote yourself (essentially a selfpub source as Wikipedia defines such) and a selfpub YouTube video. MrOllie (talk) 01:42, 23 September 2024 (UTC)

I am new to editing wikipedia pages and did not know about this rule. I can correct it using other citations but the point still stands that the current introduction about this topic is wrong and misleading according to the plethora of literature on the topic Andresintheory (talk) 10:41, 23 September 2024 (UTC)

MMT vs "mainstream economics"

Before an edit today, I noticed much of this page vacillates between saying MMT is very heterodox to saying it is only 1 argument away from "mainstream" theory. Then the article goes onto try to differentiate it from "mainstream theory" in at least 5 different ways. I think some consistency on this would be good or at least a notice of conflicting attitudes in the lede Civil9095 (talk) 14:17, 4 September 2024 (UTC)

Additionally, the recent presence of MMT economists in the Senate Budget committee and in major presidential campaigns in the Democratic Party makes me question if this is still qualifies as heterodox in politics, and if the "mainstream" people are watching and playing catch-up when they feel necessary. MMT is heterodox in academic circles, but that isn't all of economics. In short, this nuance does not lend itself to black and white thinking, especially conflicting black and white thinking throughout the page without a nuance qualifier in the lede. Civil9095 (talk) 14:28, 4 September 2024 (UTC)

Wikipedia follows the best available sources, this sometimes leads to minor inconsistencies between articles or even within articles. That also means that the "mainstream" is set by the relevant experts in a field, not by politicians or other sorts of popular media. Most newspapers print horoscopes, but astrology is still not mainstream science. MrOllie (talk) 14:37, 4 September 2024 (UTC)

The page has an entire section where it lists 5 areas of disagreement https://en.wikipedia.org/wiki/Modern_monetary_theory#Comparison_of_MMT_with_mainstream_Keynesian_economics. The sentence you were re-adding was saying there is only one area of disagreement. This is not minor. It just creates confusion. If re-added how can we qualify? Civil9095 (talk) 14:42, 4 September 2024 (UTC)

You're comparing apples and oranges. The 'Comparison of MMT with mainstream Keynesian economics' section is not limited the specific principles enumerated in the 'Principles' section. I don't see the conflict. MrOllie (talk) 14:45, 4 September 2024 (UTC)

The section lists 5 areas of disagreement that go beyond interest rates. The sentence you are re-adding without qualification for reasons you have still not articulated says there is only one and about interest rates. That has nothing to do with apples and oranges analogy Civil9095 (talk) 14:47, 4 September 2024 (UTC)

You are misreading the sentence you are attempting to remove, which is about disagreement with the specific list of principles in that section. It is not addressing the same topic as the other section you highlight. MrOllie (talk) 14:49, 4 September 2024 (UTC)

The idea of there being 6 first or main tenants which constitute that section is not sourced in that sentence. It is an assertion with sources that support each 6 being important but not the first or only 6 tenetsCivil9095 (talk) 14:51, 4 September 2024 (UTC)

I've opened a report about this at the edit warring noticeboard. MrOllie (talk) 14:53, 4 September 2024 (UTC)

Additionally, none of the sources say those are the only or even the main tenets so wtf?? Civil9095 (talk) 14:51, 4 September 2024 (UTC)

I logged out for a week and noticed I was blocked rather than responded to here. Please address the following if it is important to establish a "6 main tenets of MMT". Which source shows that there are 4 or 6 main tenets of MMT and that those are the specific ones? Additionally, which source shows that MMT's interest rate is the only theory that diverges from "mainstream theory" referencing those alleged *main tenets in particular*?. This is used to further claim that "x is the only main tenent out of 4 of the 6 main tenents "diverging from mainstream theory", thereby making a claim about how mainstream or not the theory is. I looked through all sources in that section and none establish 6 core tenets of MMT. This is at most WP:SYNTH essaying, but still not enough in the sources to establish a synth of there being "6 main tenets" from which to draw further conclusions. If a source claims that interest rates theory in MMT is one of the only or primary way to differentiate from mainstream theory, given we also have sentences and sources which conflict with this, there should be an addition that notes that. But we would also first need what source says any of this as I cannot find it in the sourced articles. Civil9095 (talk) 14:16, 10 September 2024 (UTC)

I found a source in the lede saying Paul Krugman differs from MMT on interest rates. He is undeniably mainstream so fleshed it out in the lede. Additionallly, prior to coming here, Gregory Mankiw was used as one of a few sources to claim MMT is not mainstream. I have no clue of Mankiw is mainstream but his primary objection was about solvency without consideration of interest rates. There is also the point about how "many mainstream economists" have explicitly stated they do not understand MMT as well as a separate secondary source in the lede already stating that. Civil9095 (talk) 16:07, 10 September 2024 (UTC)

Source verification, sentence in lede

This sentence in the Wikipedia lede asked for source verification. It was the 2nd or third sentence. I am verifying it for accuracy and notability.

MMT also argues that inflation can be controlled by increasing taxes on everyone, to reduce the spending capacity of the [[Sectoral balances|private sector]].<ref name="Wray2015">{{cite book | last= Wray | first=L. Randall | title=Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems | publisher= Palgrave Macmillan | location=Houndmills, Basingstoke, Hampshire New York, NY | year=2015 | isbn=978-1-137-53990-8 | pages=137–41, 199–206}}</ref><ref name="MMT_Beginners_Guide">{{cite news |url=https://www.bloomberg.com/news/features/2019-03-21/modern-monetary-theory-beginner-s-guide |work=Bloomberg Businessweek|last1= Coy|first1=Peter |last2=Dmitrieva|first2=Katia |last3=Boesler |first3= Matthew|title=Warren Buffett Hates It. AOC Is for It. A Beginner's Guide to Modern Monetary Theory|date=21 March 2019}}</ref>{{Verification needed|date=July 2024}} -- Wikipedia lede

Here is the relevant portion in the cited Bloomberg article

The reason the government doesn’t need to sell treasury securities, or levy taxes, to spend money is that the central bank, under the control of the treasury, can pay for everything by conjuring up electronic money. In MMT’s ideal world there would still be taxes, but their main purpose, aside from lessening inequality, would be as “offsets” to keep inflation under control. Taxes would drain just enough money from consumers and businesses so total spending in the economy won’t be excessive.

https://archive.is/NCUwn#selection-5796.0-5796.1

This does not establish "raising taxes on everyone" Civil9095 (talk) 13:41, 10 September 2024 (UTC)

Source verification on last citation in there

From Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems p 137

What, you mean government does not need tax revenue in order to

spend? Precisely, Sherlock. Is that an outrageous statement? For anyone who has lived in the USA since its inception, it should be obvious. Except for seven brief periods, our government has always spent more than it received in taxes. And that would mean what? That the revenues were not needed for the spending. Now, since we’ve established that government can spend without revenue, what is the danger of spending more than revenues? The first that comes to mind is the potential for inflation – if the economy is driven beyond full capacity. Indeed, inflation can be fueled even before full employment if government spending is directed toward sectors with little capacity to expand output. Hence, one response to such dangers could be to raise taxes. Another could be to cut spending. There are other responses that we won’t go into here – wage and price controls, rationing, importing, targeting spending to sectors with excess capacity, and encouraging more production would all help to attenuate inflation

pressures. In Chapters 7 and 8, we will deal with specific MMT proposals

This is the only part of those pages dealing with the sentence. It lists taxes, cutting spending, wage controls, price controls, ationing, importing, targeting spending to sectors with excess capacity, and encouraging more production to attenuate inflation. Singling out taxes as the primary method to control inflation is not stated. Therefore, the sentence warrants deletion or addition to another section in the page in an altered, more accurate way. I have already removed "increase taxes on everyone", the on everyone part, as neither source supports that. Civil9095 (talk) 13:56, 10 September 2024 (UTC)

@Avatar317: while doing source verification fixes you accused me of changing article POV, and that that was worth reverting tons of new citations and additional source verification fixes. What exactly do you have an issue with so you we can work it out? I don't have a dog in this economic school. I was trying to be neutral. 98.118.249.192 (talk) 23:40, 10 September 2024 (UTC)

Neutral Point of View is NOT what most new editors think it is. Please see WP:NPOV: "which means representing fairly, proportionately, and, as far as possible, without editorial bias, all the significant views that have been published by reliable sources on a topic." - and in economics articles like this, that means what the majority of mainstream economists think about this topic, similar to "standard/accepted medical practice." MMT is a WP:FRINGE topic. ---Avatar317^(talk) 23:50, 10 September 2024 (UTC)

What specific sentences do you have an issue with and why. ;edit it seems I am not getting an answer. WP:IDONTLIKEIT and casting aspersions are ways to divert from improving the page, which is my only goal. If Wikipedia does not want article improvements I think it is their loss. 98.118.249.192 (talk) 23:51, 10 September 2024 (UTC)

@Avatar317: you are continuing to revert without stating a reason, hoping to get me banned by lying about how I present myself on here, please join this page, which you have not done so yet 98.118.249.192 (talk) 23:49, 10 September 2024 (UTC)

You're evading the block on your account, User:Civil9095. That alone is reason enough to revert you. MrOllie (talk) 16:22, 20 September 2024 (UTC)

BTW when I read the intro, I thought the phrase "increase taxes on everyone" was rather strange - what is the reason to add "on everyone"? Is that some reference to something in the article? If so I can't immediately see that. gilgongo (talk) 17:35, 21 September 2024 (UTC)

It is sourced to the WSJ source (at the end of that sentence), which says: "But MMT prescribes that if tax rises are needed to slow demand, billionaires wouldn't be the target: The rest of us would. "It makes more sense to have a broad-based tax that would reduce demand across the broader economy, especially people who have a propensity to spend of 98%, which is the majority of Americans," Mr. [Randall] Wray said. Other MMT ideas have infiltrated their way into the heart of the establishment, but the idea that the government should raise taxes on ordinary Americans, let alone that it should do so to control inflation, is exceptionally unlikely to be accepted." ---Avatar317^(talk) 18:48, 21 September 2024 (UTC)

Hey Avatar317, this secondary source does not get the context of Randall Wray's quote which is describing a particular situation in which taxes would be needed to slow demand. However the primary literature emphasizes a suite of policy tools are disposable to address inflation concerns depending on the circumstances additionally noting that demand issues are rarely the cause of price instability. Andresintheory (talk) 11:13, 23 September 2024 (UTC)

This article is incredibly flawed and inaccurate - likely vandalized.

I've fixed some minor stuff up but will clarify a few things about MMT.

In MMT, taxes are a method of recycling currency, whilst showing fidelity to that currency. They create a sort of "original need" for that sovereign currency (we all need currency X, because we have to pay taxes in currency X). Randell Wray covers this, in this video here. [1].

Contrary to what the current lead states, full employment isn't required for inflation to occur under MMT. Under MMT inflation is caused by the government (controller of the sovereign currency) using it's ability to print money, to compete with private bidders for limited internal resources.

So if a construction company gets into a bidding war with a the government over the timber of the nation, obviously, the government can spend more in this war, so there's a real risk of inflation there. If it were just a bidding war between two construction companies, both using their limited amount of the same currency - that adds to GDP, and raises the profile, and value of that currency - which whilst bad for the price of timber; has a benefit for the nation, the GDP, economic growth, and as a flow on effect, the currency.

It's because the currency is being used for something in the real world, that represents genuine work (the work of the timber industry) that it's good. That's the thing about MMT, it's about the interaction of Macro economics, with micro (business) economics, and how that relates to the value priced into currency, in a (specifically fiat) sovereign currency.

Anyways, there are other issues with the article, I'll list some good quality videos for explaining MMT here:

The Randall Wray video mentioned above: https://www.youtube.com/watch?v=E5JTn7GS4oA

1Dime's series on it looking at MMT: https://www.youtube.com/watch?v=75udjh6hkOs&list=PLyytc2-LIrN7kIRyPXghWjeb4MV_DDqBK

The PEGS institute videos on it: https://www.youtube.com/watch?v=3IhxYSImsW8&list=PLMUzeMKhbl10X-XzH-6q4iU0Ysul7cC4c&pp=iAQB

...and anything by Stephanie Kelton talking about, eg: https://www.youtube.com/watch?v=cyXfr11g7So

Hope that helps someone get started. 101.115.129.232 (talk) 14:17, 2 November 2024 (UTC)

Wikipedia follows what reliably published, independent sources have to say about a topic. There's really nothing we can do with YouTube videos posted by proponents. MrOllie (talk) 14:28, 2 November 2024 (UTC)

You don't have sources for the reverting statements I altered. You've reverted to a less accurate version. Lower down in the article you'll find two of the names I linked to:

Economists Warren Mosler, L. Randall Wray, Stephanie Kelton,[26] Bill Mitchell and Pavlina R. Tcherneva are largely responsible for reviving the idea of chartalism as an explanation of money creation; Wray refers to this revived formulation as neo-chartalism.[27]

So the article is saying they're largely responsible for reviving these ideas, I've included them on talk (never tried to use them as refs on the page) as proof that the lead is misrepresenting the topic... and that my edits, which you reverted, are the more accurate version. Why are you fighting a copywriting effort to make the article more accurate? Can you stop. 117.102.133.36 (talk) 05:40, 3 November 2024 (UTC)

You need reliable secondary sources as "proof", not Youtube videos from proponents of the theory. We don't care much those ""responsible for reviving the idea" have to say about their idea, instead we care what others who've looked at their revived ideas have said. If these people have gotten it wrong, so be it, but it's better because people often misrepresent or mislead or are confused about their ideas or at the very least present them in a way that requires people to accept or at least have some understanding of their ideas. Nil Einne (talk) 10:30, 3 November 2024 (UTC)

Wikipedia doesn't allow for interpretation of WP:PRIMARY sources; that's why we prefer WP:SECONDARY sources. Exactly as Nil Einne and MrOllie said. ---Avatar317^(talk) 01:51, 7 November 2024 (UTC)

It's worth noting there has not been consensus on the last 2-3 talk page topics, WP:RS sources (and I'm not discussing non-RS youtube videos, although I agree with his arguments which happen to be supported by RS) are very clear that MMT supports a zero interest rate policy, and there is no reason to remove that. Additionally, both the primary and secondary sources are clear that, from an MMT perspective, increasing taxation is a tool to address demand-pull inflation or other rare events, not some sort of best-possible or primary go-to for every possible source of inflation. The wording pushed by Avatar et al clearly are trying to paint a picture of MMT advocating inflation through interest rates and then using universal taxation to reduce that inflation. This is clearly politically motivated wording, not to mention false, and not what Wikipedia is supposed to be for. 108.44.242.138 (talk) 15:13, 14 November 2024 (UTC)

Claiming a lack of consensus (not actually true, by the by) is not a reason for you to edit war. MrOllie (talk) 15:22, 14 November 2024 (UTC)

There is not consensus, you've even had a professor come here to try to get it through your skull. 108.44.242.138 (talk) 15:26, 14 November 2024 (UTC)

The ONUS is on you to get consensus for your changes - which you will likely not get by making personal attacks and accusing people of being vandals as you have been above. If there is 'not consensus' as you claim, we leave the article as it is. MrOllie (talk) 15:33, 14 November 2024 (UTC)

Making threats about defamation in edit summaries [2] is strictly prohibited (see WP:LEGAL) and will not help you get your way here either. MrOllie (talk) 15:37, 14 November 2024 (UTC)

How many more professors need to come to the talk page before you actually read more than 2-3 secondary sources 108.44.242.138 (talk) 15:38, 14 November 2024 (UTC)

False statements and implications in lede, staff disinterest in reading WP:RS source material, article WP:OWN from Avatar317, Ollie, and Yamla, WP:UNDUE focus on fringe right winger

@Yamla: and others watching this page. This lede is making at least 3 statements and implications that are trying to paint an exaggerated negative picture of MMT. Instead of being valid criticisms, these statements make no sense, some are WP:BLUE false, and a few are contradicted by primary and secondary sources already cited in the exiting lede. These false and misleading statements take up a majority of the lede.

1. First, it is falsely implied that MMT supports a universal tax increase and is mostly dependent on readers simply agreeing that this would be so and is not based in sources. 4 nuclear bombs could also solve inflation but this is not put into the lede because well, as MMT also does not argue for this, similarly it does not argue for a universal tax increase as any sort of common approach. At least one MMTer supports a broad tax increase during rare instances of demand-pull inflation as Professor Andres Bernal explained two talk sections above after he was reverted.

this secondary source does not get the context of Randall Wray's quote which is describing a particular situation in which taxes would be needed to slow demand.

— Professor Andre Bernal

Even relying entirely on the Wall Street journal secondary source, the definition of broad means "ample distance", not "full distance". Demand-pull inflation is also not the only possible form of inflation, in fact it is rare due to the fact we are rarely at full employement. Additionally, the source the lede currently lists at least 5 ways MMT details combating inflation, which states that inflation can be attenuated through any of the following.

cutting spending[...] wage and price controls, rationing, importing, targeting spending to sectors with excess capacity, and encouraging more production would all help to attenuate inflation pressures.

— Professor Randall Wray

The above from Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems p 137]

As an aside, the poor quality of this exact Wikipedia article and layperson disinterest in understanding its source material has become a nationally televised butt-of-a-joke

2. Second, the lede falsely states that MMT does not care about expansionary negative consequences of interest rate payments, and falsely states that MMT proposes solving potential negative consequences of interest rate payments through federal budget deficits.

The second part of that is not sourced anywhere, and this whole implication is contradicted by the fact that MMT considers excessive interest rate payments to be inflationary and to be dealt with via a 0-interest rate policy, not through budget deficits.

From Warren Mosler Explains Why High Interest Rates Might Fan Inflation - Bloomberg

Another argument that some MMT adherents make is that the conventional path to fighting inflation (higher interest rates by the Federal Reserve) can actually be inflationary, because the coupon payments made by the government to Treasury holders constitute a form of government spending or fiscal expansion

— Bloomberg

Vox also explains the zero-interest rate policy as "key operational recommendation".

I don’t see some of the key operational recommendations of MMT being adopted anytime soon. Committing to a zero interest rate policy permanently, for instance, would be a dramatic move by the Fed.

— Vox

The founder of MMT (among other MMTers) explicitly advocates a zero interest-rate policy to deal with the inflationary worries about interest payments. Again, the founder of the school in Bloomberg.

I had a discussion with Paul Krugman a few years ago, and that's when he and Stephanie Kelton were going at it with dueling editorials, remember that? And I said to him, I said ‘What's wrong with the job guarantee? You know,’ and he says, ‘Well, if you deficit spend for the job guarantee, the deficit could get so large that, if we get inflation, the Fed won't be able to use interest rates as a tool because the interest expense will be so high that that itself would cause inflation[...]And I [The founder of MMT] said, ‘And in any case, you know, I support, as, you know, a permanent zero rate, in which case it's moot. You know, you could deficit spend for job guarantee without worrying about whether raising rates is going to do anything and not, because you're not going to do it. You're going to just leave him at zero.’

— Founder of MMT Warren Mosler

Notice the MMT founder response is not "and we should simply deficit spend to deal with interest rates", the solution presented is a zero interest-rate policy. And as noted before the Vox article backs this up as a key MMT operational recommendation.

3. Also, third, the lede falsely states that fringe right-wing economist Murray Rothbard has commented on "MMT" practices before his death in 1995. This is comically false POV pushing as this own article establishes that MMT was not even a thing during 1995. The lede begs the question, which practices, and why is it considered proper to include the founder of a fringe, right-wing economic school as a final word on MMT, when he died before MMT was even a thing? Additionally, including Rothbard as half the lede of a subject in which he has no relationship to is WP:UNDUE.

Even if for some reason all of this could be weaseled away through hitjob cherrypicking, how could anyone consider this an informative or source-accurate description of MMT? A disinterest in dealing with this source material I consider to be malicious, it is also not valuable to simply chase actually knowledgeable people like the professor and Alexandria Ocasio Ortez advisor away on his talk page with big warning notices just because someone who advocated removing the criticism section of the capitalism article (Avatar317) wants to WP:OWN this article.

Proposed solutions

To address these issues with the English Wikipedia MMT lede which this talk page is supposedly supposed to address, I propose the following:

• Accurate reflection of sources: Alter the lede to incorporate the full range of tools MMT suggests for managing inflation, as outlined by the existing Wray source in the lede, taking into consideration Professor Andres Bernal's criticisms on this talk page of Avatar and Ollie's approach here. While I don't think someone being a professor automatically makes them more appropriate for altering Wikipedia, I simply trust Bernal's guidance more than Avatar317, who has a side-obsession with trying to remove the criticism section from the capitalism article.
• Correction of misrepresented positions: Remove unsourced or inaccurate claims about MMT’s stance on interest payments and deficits. Replace them with sourced explanations of MMT's actual attitude toward interest rates, including the zero-interest rate policy it promotes as the appropriate solution to issues with interest payments. And as highlighted by the Bloomberg secondary source and also the Vox secondary source.
• Removal of the undue weight of Rothbard in lede: Exclude the undue focus on a hypothetical critique from the lede due to the historical and contextual inappropriateness of making half the lede about... Rothbard.... He is a long dead, far-right-winger presented as some sort of valuable commentator and he was not even alive during the founding or development of MMT.

So far none of this has been done for years. In fact, the patrollers seem to currently prefer to guard the public from the article than engage with the above to keep the article unnecessarily confusing and negative, which has been reiterated by multiple different people, reflecting a systemic issue with Wikipedia.

108.44.242.138 (talk) 10:09, 16 November 2024 (UTC)