by Although I've taken issue with various MMT claims in the past (see, e.g. here and here), I've grown to respect several Modern Monetary Theorists. Far from being ill-informed, people like Eric Tymoigne and Nathan Tankus (the list is by no means exhaustive–these happen to be two whose work I know best) know a lot more than many orthodox economists do about the workings of the U.S. monetary system. Knowing this, I'm not inclined to accuse Modern Monetary Theorists of being ignorant just because I disagree with many of the school's positions and arguments. But on the subject of bank runs, at least, Warren Mosler shows no signs of being well-informed. Although his talk is laced with knowing chuckles, along with disparaging references to "so-called neo-liberals" who are so foolish as to
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Mike Norman considers the following as important: Finance, free banking, money & banking
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Although I've taken issue with various MMT claims in the past (see, e.g. here and here), I've grown to respect several Modern Monetary Theorists. Far from being ill-informed, people like Eric Tymoigne and Nathan Tankus (the list is by no means exhaustive–these happen to be two whose work I know best) know a lot more than many orthodox economists do about the workings of the U.S. monetary system. Knowing this, I'm not inclined to accuse Modern Monetary Theorists of being ignorant just because I disagree with many of the school's positions and arguments.
But on the subject of bank runs, at least, Warren Mosler shows no signs of being well-informed. Although his talk is laced with knowing chuckles, along with disparaging references to "so-called neo-liberals" who are so foolish as to think markets work in banking, his attitudinizing is so much bluff and bluster. The truth is rather that, so far as knowledge of runs is concerned, Mosler is no less destitute than some of the banks whose demise he so heedlessly laments.George Selgin disputes Warren Mosler's assertions about the dire consequence of free banking, namely, bank runs.
I would have no problem with allowing free banking for institutions that are not members of the central bank's payments system and have no recourse to either the lender of last resort function or government guaranteed deposit insurance. This would mean that such institutions would have to either issue their own private notes as liabilities of the institution or get currency from raising capital or deposits. A sovereign government would be advised not accept such liabilities in payment of obligations to it in place of the currency that the government issues, since this would be ceding sovereignty.
Alt-M
Warren Mosler and the Great American Banking Myth
George Selgin | senior fellow and director of the Center for Monetary and Financial Alternatives at the Cato Institute and Professor Emeritus of Economics at the University of Georgia.