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The Minsky Models of Modern Monetary Theory 12 #TMMOMMT

Twelfth of twelve videos showing the construction of models of the monetary aspects of Modern Monetary Theory in Minsky. Download Minsky from and support Minsky's development at for as little as a month

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Twelfth of twelve videos showing the construction of models of the monetary aspects of Modern Monetary Theory in Minsky. Download Minsky from and support Minsky's development at for as little as $1 a month
Steve Keen
Steve Keen (born 28 March 1953) is an Australian-born, British-based economist and author. He considers himself a post-Keynesian, criticising neoclassical economics as inconsistent, unscientific and empirically unsupported. The major influences on Keen's thinking about economics include John Maynard Keynes, Karl Marx, Hyman Minsky, Piero Sraffa, Augusto Graziani, Joseph Alois Schumpeter, Thorstein Veblen, and François Quesnay.


  1. Looks elaborate, but all I hear is haze. Governments are best kept out of free markets, central banks need to go the way of the dodo, and sound money ie. Gold/silver backed currency needs to be introduced.
    Coolidge was a success precisely because he did f all. He let free-markets correct itself. If people make poor investments, tough.

    • Go back to the 20s.

    • But Coolidge wasn't a success though. And free markets didn't correct themselves.

    • Lmao. Admitting you don't understand it and then being condescending about it. Welcome to youtube

    • Central banks were introduced because of the utter chaos caused by 'free' markets (see Michael Hudson for how the meaning of 'free market' has been effectively inverted after the classical economists, namely from an economy free of unearned income to an economy 'free' of any democratic control). Yes the Great Depression, but many financial crises before that which most people have never heard of. Central Banks need to have the correct policy goals (i.e. including full employment) and be run properly, not be captured by the financial sector. Eliminating central banks is throwing the baby out with the bathwater. In the US, before the Federal Reserve was established in 1913, the different notes issued by different banks were not always accepted at face value, e.g. if you had $100 of bank notes from Bank A, Bank B might only accept them at $50. Somehow the 'free' market never figured that one out, among other things.

      Commodity money just imposes a needless restriction on public policy (employment, education, transport, housing, healthcare, energy, water, communications, etc). Which makes sense if you are part of the 1%, endeavoring to make the rest of the of society indebted to you. If you are part of the 99%, that policy space is essential to general prosperity and democracy itself.

    • @John Lenin He needs to tread the monetary history and time series for that, and I think he is unlikely to do that. Such is the power of idelogical blinders…

  2. Big mistake releasing them all at the same time! Look at your video views!

    • You could be right there… One at a time goes against my academic background, but as a marketing/viewing issue, you're probably right.

    • @ProfSteveKeen thanks for dropping them all at once. I've been waiting to see this modeling.

    • @ProfSteveKeen Video dumps will net you a lot less views than incremental releases sadly. Not just due to the YT algo but also how it appears in people's feeds.

      This is great content, I think doing one every day or two would allow for more even views. The algo likes people that upload frequently but you can cheat and just spread out batches on content by publishing at different times.

      You can also make the most of your time interacting with viewers by using the premier function and be in a live chat with everyone watching the video when it first drops. Too late now but for any future content at least space it out every day or two. It'll give more consistent numbers.

    • Watched all of them 🙂

    • @webfreakz me too!

  3. This series was absolutely amazing! I have wondered in the past about bond purchases being required for new money creation from gov spending, and it was great to see that come out “live” from your model.

    I’ve been meaning to start playing with Minsky for a long time… this has kicked me enough in the rear to get started.

  4. Fascinating to watch this model come together and see its outcomes. Thanks for releasing these.

  5. I love your stuff, but the production quality just makes this unwatchable.

    • Which aspect? It's just a screen recording.

    • @ProfSteveKeen Maybe I'm nitpicking here, but its the fps of the screen recording, the tracing behind the mouse cursor, and the fps on the webcam footage seems even lower. In terms of audio, there is low frequency humming, and generally the mic isn't that good ofc. There are good open source screen capture solutions out there such as OBS. The humming might stem from the sound card of your device. Using and external sound card + mic, or a USB mic with built in sound card can fix that. Again, I don't want to whine, I'm only saying this because I care about your stuff.

    • @Berend Mosch Thanks: I appreciate that. I'm stuck for the meantime, but I might see if I can get an external sound card. This is an Alienware, and I must admit I'm disappointed by the soundcard side of the machine (the rest is top notch). I have a RODE mic for input because the internal mic sucks (though not as badly as low end Dells!)

    • @ProfSteveKeen The 50-60Hz ground loop hum in the audio track (need to filter this out, if you can't remote it from the audio-installation set-up you using) &, very low volume of your voice (a better microphone with better positioning would do wonders along with a sligth audio volume compression in the post-editing before upload). Not a criticism, just an observation. Great videos, thanks!

    • @Berend Mosch
      Try using Audio Equalizer Add-on for firefox with a +6dB Pre-amp, -12 dB cut at 64Hz (for the ground loop hum) and additional boost of +3 – +6dB in the 0.5 – 4kHz speech (intelligibility) frequencies. Works for me, although a nuisance to set it up. But you can save your FR edits as configs in the add-on.

  6. The Three Lies of Capitalism: 1) Government Debt, 2) Wage Inflation, 3. the Invisible Hand of the Market.

    • Danil Thorstensson

      John Lenin All three do exist, I don’t know why you are calling them myths? None of them are reasons to abandon left policies.

    • Danil Thorstensson MMT proves government debt is a lie. The collapse of Capitalism we’re in the middle of proves the hand of the market is a lie. (The market is the biggest government funded socialist black hole of all — and that also proves the point about debt.) And wage inflation is the corollary to the moronic idea that Capitalists create jobs (which I should add to the list.) Consumers with money in their pockets create jobs -— and Capitalists are nothing but parasites on the economy. (Again, going back to MMT, which proves that all Capital can be traced back to the government.) You can’t have a Revolution without identifying the internal contradictions of the ideology you’re trying to overthrow.

    • Danil Thorstensson

      John Lenin I agree with most of that, I just have a problem with you calling those things “lies.” They all exist to some degree but not in the way that neoclassicals think. Wage inflation can happen, like in the 1970s in Britain. Government debt is just the value of bonds out in the world and isn’t debt, but something called “government debt” exists. It’s just not anything to worry about that much for the reasons you and I explained. And the invisible hand exists because capitalism exists — the problem is that it can lead to economic disaster which then causes the government to step in to save everything.

      If you want a revolution, whatever that means, you have to be more precise in what you are talking about. Otherwise no conservative/liberal/neoclassical is going to take you seriously.

  7. The government doesn’t need to issue bonds, and we don’t need private banks — just Government grants.

    • That's correct, government doesn't issues bonds for any reason relating to public purpose. It's solely for the benefit of capital markets, which demand the products. And of course, there's no mystery as to why government serves capital markets.

  8. You shouldn’t even call it a deficit. Government doesn’t need to track the relationship between income and outflow. Taxes exist solely to redistribute wealth. Not to fund the government.

    • I mean, we shouldn't, but he should. That is the syntax already in use and so is what we have to use if we are to be understood in the context of already existing systems no?

  9. Great series. Really interesting. I'd love to see the effects of foreign currency borrowing in this model as that is the bit I don't understand, and something that modelled the Euro from the differing perspective of say, Germany and Greece. Just if you have a spare month or two!!! I'd love to learn more about the whole thing, as I'm a little short on understanding, any recommendations of where to start in your video back catalogue for a beginner?

  10. Hello Professor Keen, thank you for this series of videos!

    To make it just a bit better to understand I'd like to have seen: Before we start a written thesis and written review at the end of key MMT principles.

    I have a few questions:
    Prof Richard Werners suggests the idea that banks should only create loans (and thus create money) for things that increase GDP. So not for example for housing (mortgages). Other "financial institutions" should be used for such lending. Can that be integrated into these simulations and how would that affect the economy?

    Can QE be modeled into these charts? The idea is that it creates great amounts of reserves for normal banks, but banks then don't lend from reserves. Just trying to find a way if we can see whether QE was a bad idea or theory.

    I'm confused about the set of operations when normal banks create money and buy governments bonds. Why do we need central bank bond buying if as you said the banks get more on interest for bonds than they get on excess reserves at central bank. As it is a no-brainer for them. They can already do this infinitely then? Or are we guarding them from bankruptcy if we have another future economic collapse?

    Can we model and find a good interest rates for an economy? Or add the effects of negative interest rates?
    Can we model whether we need to split interest rates into two separate ones: for lending, another for deposits?

    "Workers paying tax" was not added in this simulation. But it was there for firms. Was it not needed since it does not change much in the simulation?

    In the Debt ratios chart I can see it is decreasing. Do we still need a debt jubilee if we implement the idea of MMT?

    If you run the simulation long enough, things go steeply exponential. Is this realistic?

    • Too many questions to answer here–try using my Patreon site. Sorry, but I am so busy as it is that I use Patreon to filter feedback. But on the last point, yes: If I scaled by GDP, everything would head to constant ratios.

    • "Why do we need central bank bond buying?"
      In the modern money (i.e. fiat currency) era, we don't, and OMO/QE has refocused on other types of assets capital markets prefer to sell, e.g. corporate bonds.
      There used to be two rationales for CB's playing in the Tsy bond market:
      1. In a gold-standard economy, governments held limited gold reserves, and had no alternative but to borrow from private markets to fund deficit spending.
      2. Before CB's paid interest on reserves, they believed throttling the bond supply was the way to target interest rates, although whether this actually worked is highly debatable.

  11. Narcissco Capital

    Fabulous channel and great video! I love your work and in a world where the vast majority of 'experts' and 'professors' cannot be trusted given their vested interests and political agendas it's so refreshing to have one professor that can actually be relied upon not only for integrity but also to actually provide sound advice.

  12. Glad to have you on board the MMTeam!

  13. Harry Kiralfy Broe

    This is an excellent series of videos on the subject of economics – This is 120 years ahead of the orthodox rubbish they teach in most universities.

    • So true. I can just imagine Paul Krugman watching this. Would he even get it?

    • Harry Kiralfy Broe

      No he wouldn't.

    • @Harry Kiralfy Broe It's a testament to the power of a priori committing yourself to an ideology. Krugman has literally read and written things about Minsky, Fisher's debt deflation, etc, and he still didn't get it. Not a lack of intelligence, but ideological blinkers.

  14. Thanks, very enjoyable.

  15. Christian van der Stap

    What has me confused is there seems to be no value creation over the interest payed for the loan of the capatilists. Was this left out to focus on the mmt monetary side of things, or something else?

  16. I really hope you change this world for the better! Your efforts and commitment deserve this, apart being of inspiration to the many 🙂

  17. Thank you for posting this series of videos. It is a priceless counterpoint to the prevailing economic dogma that has been ruling and ruining the U.S. economy.

  18. @ProfSteveKeen
    An Excellent presentation (as always from you) and easy to follow (enough details explained). Also this appears to be a modern credit theory proof of Richard C. Koo's "Holy Grail of Macroeconomics" thesis (book by same name), if I understand this correctly.
    Now to model the growing-in-size non-investing capital rentier class, that only tries to live by rent-seeking income, while using increasing debt leverage (in a zero/negative interest rate environment) to grow their income AND capital, while trying to minimize their own spending (to companies, to wage earners, to central bank to private banks and to government as taxes) to as close to zero as possible. What happens? ?

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