Who Figured Out MMT? When? How?

The first published book describing how our modern economy works was published in 1993.

The title is Soft Currency Economics: What Everyone Thinks That They Know About Monetary Policy is Wrong. The author is Warren Mosler.

Who is Warren Mosler?

Warren Mosler is identified as an Economist, when it seems that’s true now in retrospect.

Warren Mosler obtained a BA in Economics from the University of Connecticut in 1971, but never pursued more economics degrees. In 1982 he founded a hedge fund company named Illinois Income Investors where he was made President.

Illinois Income Investors used several investment strategies involving government securities, mortgage backed securities, LIBOR swaps and LIBOR caps, and financial futures markets.

It appears that while trading in US Government bonds, Mosler came to realize the way we understand US Federal Government monetary operations, and their influence on the overall economy, was wrong.

In 1993 he published his first book on MMT (see above) and has been a vocal proponent ever since of what is now called Modern Monetary Theory or sometimes Modern Money Theory.

In recognition of his contributions to the field of Economics, Mosler was granted an honorary doctorate in Economics from Franklin University Switzerland in 2014.

Whether someone with “only” a BA in Economics is an Economist or not is a matter of semantics, but with the granting of the honorary doctorate, he most definitely earned the title of Economist.

His twitter handle is @wbmosler.

How Did He See What Others Had Missed?

As I understand it, and it seems so simple in hindsight, he saw that the US Treasury sales of Treasury Bonds was not needed to allow the US Government to spend money.

That in fact, bond sales did not precede government spending, but rather government spending preceded bond sales.

If you think about this for a minute, it makes sense. If it was necessary to sell bonds to raise money in order to spend money, where did the money to buy the bonds come from?

If you roll this back to when US Dollars first came into existence, you can see that before Treasury Bonds can be sold, US Dollars have to exist with which to buy them.

From a monetary perspective, this was simply a shift in perspective, but it made all the difference to understanding how Government, Money, Taxes, and Coercion (punishment for not paying taxes) all fit together and work together.

For those of you who are scientifically minded, this was both as small and as big a shift in perspective as when Nicolas Copernicus wondered how the solar system would work if the Sun was at the center. Or as when Albert Einstein wondered what would be the implications of the speed of light BEING an absolute constant.

A very small shift in perspective that fundamentally changed what we know about the world.

Who Else Gets This?

There are many more MMT Economists (and others) than I list below, but these are the ones I’m currently following. At least one (indicated below) doesn’t come straight out and claim to be an adherent of MMT, but he talks about economics in terms that are familiar to anyone with knowledge of the basic ideas of MMT.

Stephanie Kelton

Stephanie Kelton is an American Economist and professor of Public Policy and Economics at Stony Brook University on Long Island.

I saw a reference somewhere (which I can’t find now) that either as an Economics graduate student or a newly minted Ph.D., she was exposed to the ideas being proposed by Warren Mosler.

At first she was skeptical because it looked weird. It had to be wrong. Then a colleague of hers, L Randall Wray, challenged her to prove it wrong.

She set off to, and in the process came to same model of how modern economies work that Mosler was proposing.

Stephanie Kelton is now sometimes referred to The Queen of MMT.

In December of 2014 she became the Chief Economist of the Democratic Minority Staff of the Senate Budget Committee, and she left that post in early 2016 to become an economic advisor to the Bernie Sanders campaign for President.

And yes, Bernie Sanders DOES appear to have failed to absorb every lesson.

Her twitter handle is @StephanieKelton.

L Randall Wray

L Randall Wray is a professor of economics at Bard College. He publishes in the areas of full employment policy and fiscal policy.

He is a proponent of Hyman P. Minsky (who I have not yet read), who appears to have influenced all the MMT folks.

Wray’s most recent book is titled Why Minsky Matters: An Introduction to the Work of a Maverick Economist.

He is also the author what is considered the definitive text on MMT, a book titled Modern Money Theory: A Primer On Macroeconomics For Sovereign Monetary Systems.

Right now you’re probably think “Maverick economist? Is that a thing?”. Well apparently it is.

He doesn’t seem to have a twitter handle.

Mariana Mazzucato

Maariana Mazzucato is a Professor of Economics of Innovation and Public Value at University College London (UCL), and the Founder and Director of UCL’s Institute for Innovation and Public Purpose.

Her work focuses on how wealth is created via a symbiotic relationship between Government, Universities, and Industry.

Her arguments are very compelling. She points out how there are many instances of direct federal government spending that have created useful innovations and enormous wealth.

The smart phone is one such example.

The GPS network was not only developed by the US Federal Governemtn but is still to this day owned and operated by the US Navy.

The Internet started as a US Federal Government funded research project.

Touchscreens were also invented by the US Navy.

She is the author of the book The Entrepreneurial State.

Her twitter handle is @mazzucatoM.

Pavlina Tcherneva

Pavlina Tcherneva is an American Economist working as an associate professor and director of the Economics program at Bard College. She is also a research associate at the Levy Economics Institute and an expert at the Institute of New Economic Thinking.

Her research focuses on on employment and job creation.

She is pushing the interesting idea of a Job Guarantee.

She uses the analogy of the US maintaining strategic reserves of stuff (oil, grain, etc) which seems like a good idea to everyone. What the US does not do is maintain a strategic reserve of skills, of labor.

Per her research, the job guarantee will do the following:

  • Mitigate the effects of economic booms and busts by providing income to people who would otherwise be unemployed. This maintains a higher level of consumer spending than would occur during mass layoffs.
  • Keep people employed so that when the economy turns up again, their skills have not become rusty.

She is the author of numerous papers on this topic, and a book titled Full Employment and Price Stability: The Macroeconomic Vision of William S. Vickrey.

Her twitter handle is @ptcherneva.

Michael Hudson

Michael Hudson is an American economist, was Professor of Economics at the University of Missouri-Kansas City, and a researcher at the Levy Economics Institute at Bard College. He’s a former Wall Street analyst, political consultant, commentator and journalist.

He is also a contributor to The Hudson Report, a weekly economic and financial podcast produced by Left Out.

Some consider him to be the best contemporary economist.

I have personally learned some really interesting stuff from Michael Hudson.

He wrote a book titled J is for Junk Economics – A Guide to Reality in an Age of Deception, in which he claims the phrase “free market” was redefined around WW1 to mean almost the polar opposite of what it used to mean.

He also wrote a book titled “… and forgive them their debts – Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year“, in which he proposes that if you consider Jesus Christ to be an economic activist seeking debt forgiveness from the creditor class, the narrative of the New Testament stays intact.

He doesn’t seem to have a twitter handle.

Steve Keen

Steve Keen is an Australian economist who recently retired from the position of the Head of Economics at the Kingston University in London. Before that he was an associate professor of economics at the University of Western Sydney.

He is purported to be the first crowd-funded economist throughh his channel at Patreon. He also has a YouTube channel with more videos than I can easily count, which he started in 2011.

He is a very entertaining economist who is a constant critic of neoclassical economics as empirically unsupported, inconsistent, and unscientific.

His twitter handle is @ProfSteveKeen.

Mark Blythe

This dude is my absolute favorite. Not because he necessarily knows the most, or is the best at explaining complex concepts in simple terms (although he is pretty good), but because he’s so damn entertaining.

I read somewhere he used to do stand up comedy. I read someplace else that someone just made that up. Either way, he would make a great Stand Up Economist, were he to want to.

He’s also the one I mentioned earlier who does not straight out identify as an MMT economist, but definitely talks MMT concepts in his lectures.

Mark came to fame when he accurately predicted both the outcomes of the UK Brexit election and the US election of Donald Trump several months prior to those elections occurring.

He claims they’re both symptoms of a broader economic dynamic he calls Trumpism (Trump being the most well known example).

His analysis is sufficiently compelling that he seems to be the economic darling of both Tucker Carlson of Fox AND Jimmy Dore. Both of them have said he’s one of the smartest people they’ve ever interviewed.

Technically, he’s not an economist, as all his degrees are in political science.

He is currently a professor of international political economy at Brown University’s department of political science.

He is the author of a well-known book titled Austerity: The History of a Dangerous Ideaand regularly lectures on this topic.

His twitter handle is @MkBlyth.

David Graeber (not an Economist)

David Graeber is not an economist. He’s an anthropologist who teaches at the London School of Economics.

He comes across as a bit of weird guy for what one might call an “establishment academic”, which is a label he might reject.

He is considered an incredibly good anthropologist, although I’m so far removed from anthropology that I have no idea what that even means.

He gets a VERY special mention in this blog because it was while watching a video of him talking about a book he wrot about the history of debt (Debt, The First 5,000 Years) when I had a Eureka moment, and all the bits and pieces of information I had heard about MMT suddenly snapped into a coherent framework.

It’s the video at the bottom of the home page of this website.

He was involved in the Occupy Wall Street movement in 2011 from at or near the beginning, before the movement setup their occupy camp in Zuccotti Park.

I heard someone else (wish I could remember who) credit him with one day throwing out the phrase “We are the 99%”.

His twitter handle is @davidgraeber.

Nick Hanauer (not an Economist)

All of the people on this list, Nick Hanauer might seem the person who belongs here the least.

Nick is not an economist. Nick is a pretty hard core capitalist. He was the first non family investor in Amazon, has since started and invested in multiple companies, and has a net worth of around $1B.

Having said that, he is a progressive billionaire, who explains in simple terms why:

  • income and wealth inequality is bad for capitalism.
  • raising the minimum wage is good.
  • regulation is good for capitalism.
  • rich guys need a strong vibrant middle class

He gave a TED talk in 2014 titled “Beware, fellow plutocrats, the pitchforks are coming“.

He hosts an economics podcast titled “Pitchfork Economics“.

His twitter handle is @Nick Hanauer.