L. Randall Wray | November 10, 2021

If the global financial crisis (GFC) of the mid-to-late 2000s and the COVID crisis of the past couple of years have taught us anything, it is that Uncle Sam cannot run out of money. During the GFC, the Federal Reserve lent and spent over $29 trillion to bail out the world’s financial system,[1] and then trillions more in various rounds of “unconventional” monetary policy known as quantitative easing.[2] During the COVID crisis, the Treasury has (so far) cut checks totaling approximately $5 trillion, often dubbed stimulus. Since the Fed is the Treasury’s bank, all of these payments ran through it—with the Fed clearing the checks by crediting private bank reserves.[3] As former Chairman Ben Bernanke explained to Congress, the Fed

L. Randall Wray | April 4, 2020

by Yeva Nersisyan and L. Randall Wray
As MMT has been thrust into the spotlight, misrepresentations and misunderstanding have followed. MMT supposedly calls for cranking up the printing press, engaging in helicopter drops of cash or having the Fed finance government spending by engaging in Quantitative Easing.
None of this is MMT.
Instead, MMT provides an analysis of fiscal and monetary policy applicable to national governments with sovereign, non-convertible currencies. It concludes that the sovereign currency issuer: i) does not face a “budget constraint” (as conventionally defined); ii) cannot “run out of money”; iii) meets its obligations by paying in its own currency; iv) can set the interest rate on any obligations it issues.

By L. Randall Wray
This blog is based on the testimony I provided to the US
House of Representatives. My written statement will be published in the
Congressional Record (a version is also at the Levy Economics Institute: http://www.levyinstitute.org/publications/statement-of-senior-scholar-l-randall-wray-to-the-house-budget-committee.
The full statement was co-authored with Yeva Nersisyan.
I will argue that the Federal Government’s deficit and debt
are not so scary as we are led to believe.
Neither the deficit nor the debt ratio is on an
unsustainable path. In some sense, chronic deficits and a rising debt ratio are
normal.
They are not due to out of control spending—now or in the
future. They serve a useful public purpose. In any case they are largely
outside the control of Congress.

By L. Randall Wray
This blog is based on the testimony I provided to the US
House of Representatives. My written statement will be published in the
Congressional Record (a version is also at the Levy Economics Institute: http://www.levyinstitute.org/publications/statement-of-senior-scholar-l-randall-wray-to-the-house-budget-committee.
The full statement was co-authored with Yeva Nersisyan.
I will argue that the Federal Government’s deficit and debt
are not so scary as we are led to believe.
Neither the deficit nor the debt ratio is on an
unsustainable path. In some sense, chronic deficits and a rising debt ratio are
normal.
They are not due to out of control spending—now or in the
future. They serve a useful public purpose. In any case they are largely
outside the control of

By L. Randall Wray
This blog is based on the testimony I provided to the US
House of Representatives. My written statement will be published in the
Congressional Record (a version is also at the Levy Economics Institute: http://www.levyinstitute.org/publications/statement-of-senior-scholar-l-randall-wray-to-the-house-budget-committee.
The full statement was co-authored with Yeva Nersisyan.
I will argue that the Federal Government’s deficit and debt
are not so scary as we are led to believe.
Neither the deficit nor the debt ratio is on an
unsustainable path. In some sense, chronic deficits and a rising debt ratio are
normal.
They are not due to out of control spending—now or in the
future. They serve a useful public purpose. In any case they are largely
outside the control of

[ed. This was part Randy’s Talk at ICAPE.]
By L. Randall Wray
First I’ll clearly state what MMT is and then outline four
paths that lead to MMT’s conclusions: history, logic, theory and practice.
What is MMT? It provides an analysis of fiscal and monetary
policy that is applicable to national governments with sovereign currencies.
There are four requirements that identify a sovereign
currency: the national government
a) chooses a money of account;
b) imposes obligations (taxes, fees, fines, tribute, tithes) in the money of account;
c) issues a currency denominated in the money of account, and
accepts hat currency in payment; and
d) if the National government issues other obligations, these
are also payable in the national government’s own currency.

There is a fifth consideration

By L. RANDALL WRAY
In this part, I’ll resume with comments on the critical contributions to the special issue of rwer. We finished Part 2 with a discussion of the shocking lack of citations to MMT literature in the critiques—especially the dearth of citations to the more academic contributions (as opposed to the summaries of MMT written for undergrads and the general public). Let me return to the oversight of contributions made by scholars such as Fullwiler and Tymoigne—who have mostly written academic pieces.
Sawyer does cite Fullwiler (although with the name misspelled! If he was my undergrad student, I would chew him out—at least get the damned names spelled correctly!). In his piece, which is largely an exposition that parallels MMT but is disguised as a critique, he wants to

By L. Randall Wray
PART 2
In Part 1 I discussed the third annual MMT conference that was recently held at Stony Brook, and you can find the program as well as videos of the conference here: (https://www.mmtconference.org/). In this Part 2 I discuss a special issue of real-world economics review devoted to MMT (http://www.paecon.net/PAEReview/issue89/whole89.pdf). As usual, my report stretched out to become too long for just 2 blogs so there will be a Part 3, coming later this week. And who knows, maybe I’ll need a Part 4.
First, the good news. The editors seem to have played the game reasonably fairly. They invited contributions by MMT proponents and opponents. Often editors will give the opponents an advantage—for example, letting them see the contributions by MMTers in advance,

By L. Randall Wray
PART 1
As many readers know, the third annual MMT conference was recently held at Stonybrook, and you can find the program as well as videos of the conference at the link: (https://www.mmtconference.org/). In addition, real-world economics review has just issued a new volume devoted to MMT (http://www.paecon.net/PAEReview/issue89/whole89.pdf). I’ll briefly address both, in two parts. I’ll talk about the conference in this one, and about the RWER papers in the second part.
Part 1: The Third International MMT Conference
Unfortunately, I missed the first day of the conference as I was the plenary speaker at the annual ABFM (Association for Budget and Financial Management) conference in Washington DC. This invitation resulted from a chance meeting with a member of the

L. Randall Wray
In recent days the international policy-making elite has tried to distance itself from MMT, often going to hysterical extremes to dismiss the approach as crazy. No one does this better than the Japanese.
As MMT began to gather momentum, its developers began to receive a flood of calls from reporters around the world enquiring whether Japan serves as the premier example of a country that follows MMT policy recommendations.
My answer is always the same: No. Japan is the perfect case to demonstrate that all of mainstream theory and policy is wrong. And that it is the best example of a country that always chooses the anti-MMT policy response to every ill that ails the country.
Reporters find that shocking. Biggest government fiscal deficits in the developed country world?

Remarks by L. Randall Wray at “The Treaty of Versailles at 100: The Consequences of the Peace”, a conference at the Levy Economics Institute, Bard College, May 3, 2019.
I’m going to talk about war, not peace, in relation to our work on the Green New Deal—which I argue is the big MEOW—moral equivalent of war—and how we are going to pay for it. So I’m going to focus on Keynes’s 1940 book— How To Pay for the War—the war that followed the Economic Consequences of the Peace.
Our analysis (and the MMT approach in general) is in line with JM Keynes’s approach. Keynes rightly believed that war planning is not a financial challenge, but a real resource problem.
The issue was not how the British would pay for the war, but rather whether the country could produce enough output for the war

By L.Randall Wray
The attacks on MMT continue full steam ahead. Janet Yellen (former Fed chair, but clueless on money and banking)—a centrist–has joined the fray. Jerry Epstein—on the official left–has ramped up his ridiculous claims, now associating MMT with “America First” and fascism (you knew that was coming—it has always been the refuge of critics who couldn’t come up with valid critiques).
But there are some rays of light. Bloomberg published a more balanced assessment (https://www.bloomberg.com/news/features/2019-03-21/modern-monetary-theory-beginner-s-guide). The authors of that piece actually took the time to go through our new textbook (Macroeconomics, by Mitchell, Wray and Watts—now available for purchase in the USA : And in Australia).
However, here is the best response

By L. Randall Wray
MMT continues to inflame hysterical attacks. Who would have thought that it would take MMT to bring together everyone from the crazy right to the insular left to unite in common cause against an obscure theory of money and government finance? The attacks seem to be so concerted and coordinated that one starts to think there just might be a conspiracy behind them. But why?
Bill Black’s recent column The Day Orthodox Economists Lost Their Minds and Integrity exposes the dishonesty of MMT’s critics on shocking display in a newly released poll of mainstreamer economists on two questions that supposedly are based on MMT’s teachings.
The poll was put together by the Chicago Booth School of Business whose motto goes like this: “Since 1898, we have produced ideas and

By L. Randall Wray
In recent days MMT has captured the attention of anyone who can fog a mirror—even those long thought dead. The critics are out in full force—from the crazy right to the insular left. A short list includes Doug Henwood, Jerry Epstein, Josh Mason, Paul Krugman, Larry Summers, Ken “Mr Spreadsheet” Rogoff, Bill Gates, Larry Fink, George Selgin, Noah Smith, and Fed Chairman Powell. After laboring for a quarter century in the wilderness, the developers of MMT are pilloried for unleashing a theory that is “crazy”, “disastrous”, “hyperinflationary”, “nonsense”, “garbage” and just plain “wrong”.[1] Summers here; Rogoff here; Powell here; Krugman here; and here for Kelton Response
What all the critics have in common is that they have not bothered to read the MMT literature.

Doug Henwood has posted up at Jacobin an MMT critique that amounts to little more than a character assassination. It is what I’d expect of him in his reincarnation as a Neoliberal critic of progressive thought. (https://www.jacobinmag.com/2019/02/modern-monetary-theory-isnt-helping). It adopts all the usual troll methodology: guilt by association, taking statements out of context, and paraphrasing (wrongly) without citation.
According to Henwood, MMT is tainted by Warren Mosler’s experience as a hedge fund manager. Beardsley Ruml (father of tax withholding and chairman of the NYFed, who argued correctly that “taxes for revenue are obsolete”) is dismissed because he was chair of Macy’s (and Director of the NYFed—Macy’s still has a director on the NYFed) and because he argued that the

Invited Presentation by L. Randall Wray at the UBS European Conference, London, Tuesday 13 November 2018
Q: These questions about deficits are usually cast as problems to be solved. You come from a different way of framing the issue, often referred to as MMT, which—at the risk of oversimplifying—says that we worry far too much about debt issuance. Can you help us understand where fears may be misplaced?
Wray: First let me say that I think the twin deficits argument is based on flawed logic.
It runs something like this: the government decides to spend too much, causing a budget deficit that competes with private borrowers, driving interest rates up. That appreciates the currency and causes a trade deficit.
The budget and trade deficits are unsustainable as both the private sector and

L. Randall Wray | November 13, 2018

(These remarks will be delivered today at the UBS European Conference in London.)
Q: These questions about deficits are usually cast as problems to be solved. You come from a different way of framing the issue, often referred to as MMT, which—at the risk of oversimplifying—says that we worry far too much about debt issuance. Can you help us understand where fears may be misplaced?
Wray: First let me say that I think the twin deficits argument is based on flawed logic.
It runs something like this: the government decides to spend too much, causing a budget deficit that competes with private borrowers, driving interest rates up. That appreciates the currency and causes a trade deficit.

My remarks for the 2018 MMT Conference September 28-30, NYC
L. RANDALL WRAY
I was asked to give a short presentation at the MMT conference. What follows is the text version of my remarks, some of which I had to skip over in the interests of time. Many readers might want to skip to the bullet points near the end, which summarize what I include in MMT.
I’d also like to quickly respond to some comments that were made at the very last session of the conference—having to do with “approachability” of the “original” creators of MMT. Like Bill Mitchell, I am uncomfortable with any discussion of “rockstars” or “heroes”. I find this quite embarrassing. As Bill said, we’re just doing our job. We are happy (or, more accurately pleasantly surprised) that so many people have found our work

L. Randall Wray | October 1, 2018

My remarks for the 2018 MMT Conference, September 28-30, NYC.
I was asked to give a short presentation at the MMT conference. What follows is the text version of my remarks, some of which I had to skip over in the interests of time. Many readers might want to skip to the bullet points near the end, which summarize what I include in MMT.
******************************************************************************
As an undergraduate I studied psychology and social sciences—but no economics, which probably gave me an advantage when I finally did come to economics. I began my economics career in my late twenties, studying mostly Institutionalist and Marxist approaches while working for the local government in Sacramento. However, I did

By L. Randall Wray
A few weeks ago, a video of a lecture that Hyman Minsky gave at Westminster College on Oct 30, 1991 was made available. Although the Levy Institute has some audio of Minsky, this is the only video I know of. The audio of this one is not great, but you will get some flavor of his style. In truth, it was always a bit hard to follow his presentations as he had a tendency to lower his voice and mumble near the end of sentences as his mind raced ahead to the next point. He usually did not script his talks (he walked into many of his university lectures with nothing more than a copy of the Wall Street Journal), but he would read some brief sections of papers—while riffing the rest–and it appears that this is what he was doing that evening.
During the period 1991-93, Minsky was preparing a new book manuscript. He had started to heavily revise his 1986 Stabilizing an Unstable Economy book, but shifted gears and instead was revamping more recent Levy working papers as chapters for an entirely new book. I suspect that this speech was based on one or more of those papers. At the Levy Institute we have been editing his manuscript for (I hope) eventual publication.
After viewing Minsky’s talk, some have concluded that Minsky’s views are not consistent with MMT—and have even argued that Minsky was not a forefather.

L. Randall Wray
The following text reproduces my notes for my talk on the final night of the conference; I think there is a video of the entire panel that will be posted up on the conference site later
This conference is dedicated to the memory of Landon Rowland, a local Renaissance man. You have heard both Robert Skidelsky and Chancellor Leo Morton speak of his accomplishments.
Over the years, Landon regularly invited Bill Black and me to lunch to discuss our view of the state of the world. We’d meet at a local restaurant where all the wait-staff knew Mr. Rowland by name, and knew where he wanted to sit and what he liked to eat.
He’d praise the work of our department and ask how the university was treating us. Well, we don’t have to go into that now, on this joyous occasion. He always promised to put in a good word with the Chancellor. I’m sure he did.
He was a major contributor to the last three meetings of our conference. He expected nothing in return but stimulating presentations.
His generosity and enthusiasm were critical to the success of the last conference and to the existence of this one. I was ready to hang it up. He and Lord Skidelsky conspired to talk me into one more. Both of them found funds to ensure there would be a conference in 2016. Robert paid the costs of setting up the internet site. Landon paid the costs of bringing in the Keynote speakers.

Randall Wray, Bard College
For months now, the Hillary campaign has vigorously argued that Bernie supporters have to fall in line to support the Democratic National Committee’s favorite candidate. Anyone not willing to jump to Hillary is a “Bernie Bro”—not willing to vote for anyone but Bernie. Why? Because, Trump. Forget the will of the people, the democratic process, or “voting one’s conscience”—Trump trumps all hesitation. We simply cannot afford to give Trump any chance of winning.
We need a Trumpbuster. Who you gonna call?
Hillary Clinton or Jill Stein?
Before reading any further, please first watch (or read) this debate between Bob Reich and Chris Hedges:
Who Should Bernie Voters Support Now?  Democracy Now! 27 July 16
Bob makes the best case I’ve seen in support of the argument that Bernie supporters must vote Hillary. Trump is truly scary. He’s unhinged. Hillary’s not all that bad. We need to work within the system. Once she’s in office we’ll hold her feet to the fire of liberalism. Bob says he’s going to keep doing what he’s been doing for the past half century: vote for the Democratic candidate and then bang his head against the wall when that candidate turns right and favors War and Wall Street over progressive ideals.

By L. Randall Wray
The drumbeat is quickening as Hillary’s surrogates insist that Bernie’s supporters fall in line. Bernie’s chances are said to be hopeless. Continuing to run only plays into the hands of truly despicable Republicans.
And forget about trying to pressure the Democratic Party’s establishment to let Bernie play a role in formulating the convention’s platform. That also would just play into the hands of the Republicans.
Time to unite behind Hillary, and let her move further to the right. No more talk of revolution, of trillions of dollars of new spending, of significant increases to the minimum wage. Let’s talk about Hillary’s issues: regime change abroad, downsizing dreams at home, and protecting Wall Street from the pitchforks.
Some Hillary surrogates are even talking about retribution for Bernie supporters. I saw the following blog by a supporter:
After yesterday the word–and the obvious thing–is to stand down. Mind you: The day will come when it will be time to gleefully and comprehensively trash people to be named later for Guevarista fantasies about what their policies are likely to do. The day will come when it will be time to gleefully and comprehensively trash people to be named later for advocating Cominternscale lying to voters about what our policies are like to do.

By L. Randall Wray

Bernie Sanders has an ambitious agenda. Too ambitious, insist his critics (including, especially, surrogates of Hillary Clinton). He would break up the big banks, reverse the redistribution of income and wealth to the top (that accelerated under the triple whammy of the Bush-Clinton-Bush administrations), restore and improve our nation’s infrastructure, and provide employment and better wages at the bottom. The critics proclaim that his programs cannot “pay for themselves”.

Using conventional macro models, Professor Gerald Friedman at UMass showed that they would. He was then attacked for using the conventional models that all conventional economists use. Apparently, these models are fine when they support austerity, but are out-of-bounds for use when they support progressive policy. Adam Davidson (of NPR’s “Planet Money”) has noted that in spite of the empirical results, even Friedman admits that perhaps only 4% of economists believe that Bernie’s programs can pay for themselves.

On one hand, anyone who understands sovereign government finance knows that a program’s ability to “pay for itself” is not an important consideration for undertaking programs that are in the public interest. Government is not like a firm that needs to focus narrowly on recovering costs and making profits.

By L. Randall Wray

In Part Three I argued that the government issues currency as its liability and imposes tax liabilities on its subjects/citizens that can be paid in that currency. When taxes are paid, both the government and its taxpayers are “redeemed”. I cited Innes’s argument that the universal law of credit is that the issuer of a debt must take it back. This is the fundamental notion behind redemption of debts.

To be sure, debt is much older than money. No human has ever escaped debt. At birth, you are indebted to your parents, your kin, and your gods. You spend your lifetime incurring new debts and repaying old debts and accumulating credits that are the debts of others. If you earn enough credits, you join the Redeemer and make it to the Promised Land after death; if you don’t you join Satan—the original tax collector–in hell.

Our modern rituals and accounting and terminology evolved from these ancient origins. Debts began to be monetized and recorded at least six millennia ago. The monetization probably grew out of the Tribal practice called Wergild–the assessment and collection of fines paid for transgressions—with the rise of class society and the emergence of authorities. Writing was apparently invented to keep track of debts; in other words, it was an accounting invention.

Sorry that it has taken me a while to get back to my multi-part series on debt-free money. This is the third part of the current series, although I had previously written several other blogs on the related topics of debt-free money, positive money, and 100% money. See links at the bottom.
This post will focus on the concept of “redemption” as the most fundamental requirement of indebtedness. This seems to confuse readers. For example, Eric Lonergan calls this a “fantastic linguistic contortion”, a “pure semantic confusion”, a “hidden definition slipped in between dashes”.
I’ll demonstrate that my use of the term redemption is consistent with the use both in scholarship and American law. I note that Lonergan has written his own book on Money, so it is surprising that he is unfamiliar with the proper use of the terms debt and redemption—which even predate religion and civilization. See, for example, the great book Margaret Atwood, Payback: Debt and the shadow side of wealth for a short history of the subject (and serious scholars should of course read David Graeber’s Debt: the first 5000 years.)
The most important point is that the debtor must redeem himself. I suppose Lonergan does not get out much—at least not enough to have ever “redeemed” his airline’s debt to him in the form of frequent flyer miles.

By L. Randall Wray
My previous blog sparked a lot of discussion, especially over at Naked Capitalism. I do pity Yves Smith! There’s enough nonsense in the commentary to populate a large nation.
As I have argued, it is very hard to figure out what the debt-free money folks want as they are confused on the accounting, vague on the terminology, and rarely provide details on their proposal. However, a reader has directed me to a fine published article that has mostly got the accounting right, lays out a detailed proposal, and contrasts the proposal against alternatives.
I’ll get to that in a minute. First let me quickly respond to comments on the first piece. I’ll limit my response to two complaints that have been made about Part One of this series.
1. Responses to comments on Part 1
The biggest complaint was that I did not take advantage of a teachable moment that the radio program producer had offered for me to explain MMT to the hosts and audience. Instead I just made fun of debt-free money supporters and insulted the producer.
The critics fail to notice that the producer wrote to me to come on the show to talk about debt-free money. There was no invitation to discuss MMT. Producers can and usually do perform a “background” before inviting a guest. I suppose the producer found that I had written pieces AGAINST debt-free money but still wanted me to discuss the topic.

By L. Randall Wray
Some time ago, I labeled the “debt-free money” campaign a non sequitur in search of a policy. (See here.) However, this non sequitur refuses to die. I went on to joke that if they want a debt-free money, they ought to propose that government issue bananas as currency.
I frequently am asked to do interviews and I almost always accept them. However, when I was asked last week to participate in a radio show devoted to debt-free money, I struggled mightily to get out of it. As you’ll see, the program’s producer took my idea of banana republics and ran with it. I thought readers might get a kick out of this exchange (the producer’s emails are in italics, my responses are in bold). After the exchange, I’ll summarize my objections to the notion of debt-free money.

>>> Subject: debt based money
>>>Dear Mr. Wray,
I would like to invite you to our weekly radio show.  The show will discuss how to eliminate our debt money system and replace it with a wealth based money system. The basis of the theory is to have governments SPEND money into circulation as opposed to borrowing money into circulation.  We would like to hear your views on the matter.
>> On 12/1/15 10:24 AM, L. Randall Wray wrote:
>>> This sounds confused to me. If bananas were money wealth, government could spend them into existence. Otherwise, I cannot make any sense of what you’ve written.