Economics

Review: “The Deficit Myth” by Stephanie Kelton

Before getting into my review of Stephanie Kelton’s new bestseller, “The Deficit Myth: Modern Monetary Theory and How to Build a Better Economy”, it’s important to stipulate a few things. That the public discourse about debt and deficit in Western media, politics and academia is deeply, profoundly stupid. That advanced democracies - including Australia - face essentially no challenge to their ability to finance their fiscal deficits. That in the midst of what will no doubt be the opening stages of a second Great Depression, it’s inevitable that public debt should increase rapidly. And that the decision of the Australian federal Labor Party to launch a scare campaign against debt in the middle of a pandemic is at best questionable and at worst political malpractice. It is possible to believe all these things to be true, and remain strongly critical of Modern Monetary Theory (‘MMT’).

Deficit hawks - economists, journalists and politicians - who wring their hand at the size of government deficits are not now, nor have they ever, acted in good faith. It’s a right-wing propaganda exercise that has been so successful as to dominate the strategic imagination of almost all modern political leaders. Professor Kelton is quite right when she points out that the legal and budgetary manifestations of this ideology - debt ceilings, pay-as-you-go rules, efficiency dividends etc. - are arbitrary procedural constraints on our ability to build a better, more just world. But here’s the obvious question raised by Kelton’s career: is MMT also an exercise in propaganda? Do she and her colleagues genuinely believe that it’s only “bad reasoning [that’s] led to bad policy” and that MMT worldview will improve the quality of government decision-making? Or will her legacy be that of a highly effective communicator and propagandist? In the end, does it matter is MMT is true if it succeeds in demolishing ‘The Deficit Myth’ and encouraging political leaders and activists to ask more from their government?

Kelton is an effective and persuasive writer, and she’s written a popular and accessible introduction to MMT. The first four chapters of her book, outlining some of the key ideas of the MMT theory (that is: chartalism, a jobs guarantee, monetary financing and sectoral accounting) are succint, witty, well-argued and powerful. Kelton is also direct and up front in tackling some of the most common criticisms of MMT. Unfortunately, the back half of the book fares less well - it’s more-or-less a shopping list of ‘wouldn’t it be nice’ progressive policies that anyone who’s read a popular left-wing book in the last ten years (by Paul Mason, Rutger Bremen, Naomi Klein or the like - hell, even my first book) will be familiar with. Isn’t climate change terrible? Isn’t inequality bad? Shouldn’t someone do something about declining access to health, jobs and education? The limits of Kelton’s brand of politics are here on full display - as a former Democratic Party staffer, the last four chapters are as dry as you’d expect a staffer’s policy wish list to be. The book is similarly peppered with personal anecdotes and touching stories about the ordinary people she’s met outside Washington in the Real World(TM) - persuasive to the cocktail set, maybe, but not a manifesto for political revolution.

An Economist of Bravery & Renown

Kelton begins her book by tackling the conventional story about how governments fund their activities. Modern governments traditionally raise revenue in one of two ways - they either tax or borrow from the private sector. Kelton builds this picture into something of a straw man before commencing her attack upon it - that the government must raise revenue before it spends [i.e. a government can’t spend a dollar it doesn’t have]. Kelton made her bones as an economist by demonstrating that this isn’t accurate (you can read Nathan Tankus’ restatement of this article in a recent blog post here). The short version is that the Treasury can spend whatever it wants, whenever it wants, and Central Banks adjust the monetary reserves held by financial institutions to ensure that private savers can lend funds to the government. This is what MMT advocates mean when they say their theory is merely a description of the status quo: in their minds, government spending is already being financed by money creation - just with a few extra steps.

You can do several creative things with this insight. You can ignore the independent institutional existence of various government entities to claim that the Treasury and central bank are are single accounting entity, called the ‘federal government’, which creates money by spending it into existence. You can go down a chartalist rabbit-hole, arguing that the value of money is a result of demand for government-issued currency generated through taxation And, finally, you can argue that the middle men in the financial sector are unnecessary, and that the central bank’s ability to create money should just be plugged directly into the Treasury’s veins - monetarily financing government spending without deficits being covered by the issuance of government securities [i.e. bonds]. Kelton is upfront on a point that most MMT advocates - who are keen to downplay any radical implications of their theory - avoid: that is, that government’s choose to issue bonds to cover their debt, and could just as easily choose not to.

The Chartalism Fallacy and the Ontology of Money

I take issue with the Kelton’s account of money creation on several grounds. In the first instance, it’s misleading to claim that traditional budgeting says that governments can only spend dollars on hand: only that these accounts balance over an arbitrarily decided period of time. Tax revenue does not flow into government coffers evenly, and spending is spread out over the whole year. It’s just good financial practice to calculate all your incoming and outgoing, and identify any shortfalls. The decision of when the books must balance is arbitrary. Secondly, and perhaps more importantly, the value of money is not simply derived from its role in the payment of taxes. Money has value to consumers as a stable medium of exchange - destabilising expectations of stability could make prices and wages unpredictable. But beyond that, money has value as a standard of deferred payment - a way of measuring imbalances in the inter-temporal flows of currency. Treasury bonds have value because they’re a record of the government’s promise to one day balance its books.

Moreover, all those middle men and financiers that MMT dismisses - the bond purchasers, the secondary dealers and primary financial institutions - are not merely there to take a cut of government spending [although they do that too!]. They generate resistance in the system, ensuring the flow of currency into the real economy doesn’t exceed the capacity of the private sector to handle it. I like to think of the difference between traditional government financing and MMT as akin to the difference between AC and DC power. In both instances, the central bank is generating monetary reserves which supply the operations of the Treasury. But in the ‘AC’ system, the bank is adding and taking away a fraction of the bank reserves of private financial institutions every day [‘oscillating the money supply’], which is passed on to those bank’s institutional customers, which is passed on to lenders and savers and eventually to the government in the form of either taxes or loans. In the MMT ‘DC’ system, money would flow directly from the central bank to the Treasury - without the resistance and accountability provided by the financial sector and with no guarantee that the real economy can handle the volume of currency being delivered safely.

Kelton truthfully admits that chartalism could be exploited by political conservatives to argue for widespread tax cuts. She herself often seems skeptical of taxation (like her intellectual mentor, Warren Mosler), describing it at various times as a burden, and is half-hearted in her condemnation of Republican giveaways to the elite. She also deliberately distances herself from what she describes as the ‘Robin Hood’ policies of Bernie Sanders and Elizabeth Warren. Kelton does helpfully provides a list of reasons why taxes might be needed: for the government to requisition resources, to manage inflation, to engage in redistribution of wealth and income, and, as with the use of ‘sin taxes’, to control behaviour. One could argue that bonds have a similar set of purposes - for the government to requisition savings that aren’t being used, as a ‘sin tax’ on wealth that is not being productively invested, and as an equality-boosting measure to invest that capital for the benefit of those with the least access to it. And most importantly of all, to control inflation by removing liquidity from the private market in proportion to the liquidity injected by public spending.

In summary, then, MMT advocates a revolution in public finance. Either governments stop issuing bonds (and allow those already issued to be paid off gradually over time), or we anticipate that at some point in the future central banks will simply ‘delete’ their holdings of Treasury securities - a possibility that has already been floated by some as a response to massive balance sheets central banks have built up via quantitative easing. In some ways, this would be the ultimate debt ‘jubilee’ - governments unilaterally writing off their own prior promises to pay. But to destroy the bond market would be to un-moor a key tool of managing market interest rates and determining the value of country’s currency. Without information on market conditions, expectations of short and long run inflation could fluctuate wildly.

Despite its claims, MMT doesn’t end the debate over ‘how will we pay for it?’ - it simply resurrects a technique [monetary financing] that more conservative economists and politicians long assumed was anathema. To paraphrase Ian Malcolm, just because the government can do something, doesn’t meant it should.

The Last Word on Inflation?

Kelton’s chapter on inflation is appropriately cautious and realistic, given that inflation concerns are frequently levied by MMT critics. Conventional monetary theory predicts that monetary financing without debt issuance will increase inflation, outside of unusual economic conditions like demand shock we are currently living through. MMT advocates must tackle this topic head on, and Kelton does so by making the entirely valid point that no one, really, has any good idea of what causes inflation, and that the experts and institutions we rely on to manage inflation today have poor tools for the job. Shemakes the point that MMT only says that money is unlimited, not ‘real resources’, and that inflation can and will occur if government spending exceeds the capacity of the real economy to deliver goods and services. Fair enough [such a view is widespread among Keynesians], but if money quantises the power of currency users to call upon real resources, then expanding the money supply will also alter the capability of both public and private actors to access real resources - most likely reducing private purchasing power [i.e. causing inflation].

Kelton claims that inflation is only a risk when an economy is already operating at it’s ‘speed limit’, and that the existence of unemployment and other inefficiencies in the market economy suggests we are a long way from hitting this limit. I’ll address the unemployment question in the final part of this review, but Kelton goes on to claim that rather than worrying about debt and deficit (the measurable component of the currency flowing in and out of government) governments should concern themselves with balancing the supply and demand of real resources in the economy. Kelton’s vision is one of active and continuous tweaking of tax and spending levels to balance economic output and consumption, a herculean - perhaps utopian - and certainly politically impossible task. How these things are to be measured, and how governments should make policy under these conditions is anyone’s guess [MMT-er Brian Romanchuk labels this the ‘Noble Lie’ critique of MMT, and it’s also discussed in this review of Kelton’s book].

An economy’s ‘speed limit’, is in large part a function of the composition of its capital base, the skills and knowledge base of its workers, and its supply of natural resources and environmental goods. Moreover, these things are unevenly distributed between different geographical regions, across classes and among ethnic groups. It’s implausible that these things should be - or could be - meaningfully ’balanced’. The market will always be inefficient in some way or another, always operating at less than ‘full speed’ [in other words, structural unemployment is real] and to suggest that inflation is not a risk, or that it’s a risk that can be managed in a technocratic fashion, under these conditions seems positively Soviet in its ambition.

In the Dark Future of the 41st Millennium, there is only the Jobs Guarantee

It’s only towards the end of ‘The Deficit Myth’ that the beating technocratic heart of the MMT vision is on full display. Kelton knows and recognises that politicians who are barely able to make their accounts balance would never be able to make the finely-tuned tax and spending decisions necessary to regulate inflation in an unconstrained monetary environment. So in response she advocates taking policy-making out of the hand of legislators, of putting in place automatic spending programs - those designed by MMT economists, of course - that would algorithmically dispense funds and set taxation levels to ensure the economy was always running at ‘full speed’.

The MMT prescription for a jobs guarantee is emblematic of this way of designing public policy. Kelton argues, accurately I think, that central banks lack the conceptual and policy tools to fulfill their mandate of full employment, and instead set an arbitrary level of unemployment they judge ensures price stability. In the place of these technocrats, MMT argues, we should have an entirely different set of technocrats managing a universal jobs program, that would determine a minimum wage at which they would offer unlimited public jobs to anyone who wanted them with the objective of controlling inflation and maintaining full employment at all times. What these public jobs would entail is left largely unspecified and up to the reader’s imagination (but don’t worry, they’ll only be good, productive things, Kelton assures us!).

Kelton disavows the idea that a jobs guarantee would be a panacea for our economic and social ills, but she sure does come close to arguing that. Rather than acknowledge the democratic deficit that underlies the trade policies of modern capitalist states, and which have driven much of economic anxiety and dislocation that drove Brexit and the rise of Trump, Kelton merely promises us that a jobs guarantee would more than compensate for the losses of employment that follow trade liberalisation. Oh, and by the way, the job guarantee wage would be the minimum wage, competing directly with the most exploitative part of the labour market for workers while miraculously matching matching people with jobs that best suit their skills with zero friction.

As a leftist, I’m all for nationalising things in principle, but the jobs guarantee would represent nothing less than the nationalisation of the majority of the labour market. Which again, sounds very Soviet. Why any of this would be better than a guaranteed minimum income without any obligation to work is beyond me. In the last few days, MMT guru Bill Mitchell has become increasingly open about the authoritarian impulse that lies behind the jobs guarantee - but as Matt Breunig has helpfully pointed out over at the People’s Policy Project, the notion of replacing the current welfare system with a ‘duty to work’ has a deep roots among MMT advocates, including in Kelton’s own work. Maybe MMT is a fair and accurate description of how an economy that has solved the communist Calculation Problem could work [as one unfriendly review has pointed out, a recipe for permanent War Communism]. And in the meantime, if individuals have to put to work doing make-work tasks to ensure that the government ‘printing press’ doesn’t run the economy off the rails, well that’s just the price to pay for a rationally-organised economy.

Conclusion
Socialists agree with Kelton and the MMT crowd that government’s are neither good nor evil, and that distributional outcomes across the economy are what matters. So why then do we need MMT at all? Socialists have been arguing for social and economic redistribution for hundreds of years now. It’s hard, often brutal work that won’t be completed in our lifetimes. If the claim of MMT advocates like Kelton is that their theory will make winning redistribution easier, then they must also knowledge that it also makes life easier for the bad kind of government spending - enormous tax cuts, reckless foreign wars, insane subsidies for the already-well-off - and lays a rhetorical framework for the end of most tax-and-transfer programs as we know them. Ultimately, I think MMT has some value to the left as a rhetorical cudgel, to dispel the Deficit Myth once and for all. And in playing that role alone, Kelton’s success can be [carefully] applauded.

The perils of sectoral accounting

I have Stephanie Kelton’s new book, “The Deficit Myth” on pre-order, partly because I continue to be interested in Modern Monetary Theory (MMT), and partly because MMT proponents are worse than Marxists in insisting that one ‘does the reading’. While I wait, I watched Kelton’s talk yesterday at the Australia Institute, a progressive Canberra-based think tank (video embedded below). Kelton said little I disagree with, and I continue to sympathise with Richard Dennis, who long ago influenced my thinking on fiscal policy. Dennis has been pushing this particular anti-deficit hawk cart for so long it feels all he has left is (like a a good lib) to gesture towards the imagined hypocrisy of the conservatives. But for conservatives, the hypocrisy is the point. They discovered long ago that combining deficit hawkery with reckless giveaways while in power is a winning electoral formula.

One of the most frustrating things about MMT advocates, including Kelton, is they they claim, on the one hand, to merely be describing the monetary system (where they make some valid points), and on the other, to advocate for expansive progressive policies like a job guarantee, UBI or green new deal (which are good and desirable). But when a critic points out that using monetary financing (i.e. having the central bank directly fund government expenditure) for these programs is economically reckless and less equitable than using traditional tax-and-transfer, we’re told that these are totally separate spheres of activity and the validity of one does not affect the other. So why not just raise taxes to fund social programs and study the banking sector in obscure economic journals without engaging in high profile public advocacy? Kelton at least is honest - it’ll be simpler to get what we want if convince people deficits don’t matter. But my greatest fear is that some future social democratic government will be blamed for hyperinflation in the same way that UK Labour was in the 1970s, Australian Labor was in the 1980s, or many Latin American left-wing governments have been over the years. MMT is not a good leftist project, and yes, I recognise I’m engaging in in-group cringe when I say that.

Living in Hume’s gap

The best way I’ve found to call out and identify this conceptual jump is to ask MMT advocates a simple question: should governments issue bonds (i.e. obtain loans from private capital) equivalent in value to their fiscal deficit? The question sidesteps any debate over specific policies, while at the same time identifying a practice so at odds with how governments have financed themselves since the invention of the Bank of England that the answer can be shocking and revealing. Kelton’s answer is here, at 28:00.

Kelton’s analogy draws upon one of the key [and insightful] analytical tools of the MMT movement. When a government is in surplus, it has taken more money out of the economy than it has put in - and it’s unclear why any government or politicians would ever want to do this. This is termed ‘sectoral accounting’, and it’s just a way of seeing the economy as a closed system in which one agent’s deficits must necessarily represent a surplus for some other agent. In Kelton’s analogy, the government cannot - or should not - ‘borrow’ from the private sector because private sector surpluses have necessarily been first created by government spending.

The flaw in this reasoning is plain. Sectoral accounting is a powerful tool for helping us think about how resources circulate in the economy. But it’s not obvious why we should privilege the government and lump the rest of the economy together as a single conceptual unit. By the same logic, any private company - or individual - who borrows funds is putting money in everyone else’s pocket. In a sectoral accounting sense, this is true. But that doesn’t mean that any private company or individual debtor is creating money, or even creating value, by doing so. Kelton argues that when the government goes into debt and borrows $10, sectoral accounting suggests that the $10 it borrows was given to the private sector by government spending. But if I go to the bank and ask for a $35,000 car loan, I can’t just say “well, I’m spending $35,000 into the economy-that-is-not-me, and since you [the bank] are part of the economy-that-is-not-me, I have given you the funds you’ll use to give me the loan. So we’re even.” Money circulates in the private economy too, not just between private actors and the state.

The state and distribution

MMT does not simply rely on sectoral accounting - it privileges the state as an economic actor in at least two ways. The first is to claim a unity between the central bank and the treasury, such that the state is seen as sovereign over the supply of money in the economy. The second is to rely on neo-chartalist arguments that the state’s power to tax (underpinned by its monopoly on force) is the basis on which money is given value through the creation of demand for its currency. The key theoretical claim of MMT - that the government is the engine room of the economy - is baked in to the sectoral balance approach. But the reality is that money is also created by private financial institutions when they make loans (unless MMT advocates want to move to positive money, in which case, yikes), and the value of currency is significantly influenced by its role as a stable unit of exchange, and a stable unit of account. Until we live in fully automated luxury space communism, non-state actors will continue to play a significant, perhaps even dominant, role in the economy.

Let’s look at Kelton’s analogy more closely. When I take out a car loan, the car dealership (perhaps a business with tight margins) receives funds, while banks (which either have or can call upon surplus capital) lose funds. The purchasing power of the car dealership increases, the liquidity of the bank decreases, and I enter a relationship with the bank that gives them power over me greater than their loss of liquidity. Government borrowing is the same way: surplus value (which, if invested in government bonds, was not otherwise doing anything productive) is mopped up, whereas the social power of individuals and institutions that receive government funds increases. In other words, the way that governments fund themselves has distributional consequences.

In most everyday circumstances, the government calling upon surplus private capital to fund social spending offers a net distributional benefit to the economy and society. Most government borrowing is not only equity-enhancing, but also pro-growth: capital that otherwise would be invested in offshore savings accounts or wasted on luxuries is instead used for productive purposes, or to increase aggregate supply and demand in the real economy. Kelton’s analogy only works if government spending is, in whole or in part, going directly into the pockets of the rich. There’s certainly an argument that the many trillions of dollars that governments have pumped into stock and debt markets since the start of the coronvirus pandemic meet this criterion, and there’s an argument that this kind of capital bubble can be financed through monetary creation without triggering inflation. Maybe defence spending is the same. But if you’re hoping to inject funds into the real economy (as you would be through a job guarantee, UBI or green new deal), doing so without mobilising those funds from capital surpluses is inequitable at best and inflationary at worst.

Finally, there’s the point Kelton makes - which she credits to Stiglitz - that a government’s debtors gain power over that government in a way that is deeply undemocratic. This is true. Government bonds are interest-bearing and increase private wealth in the long-run. Here’s how I put the issue in my first book, “Politics for the New Dark Age: Staying positive amidst disorder”:

“The rate of interest on government debt constitutes a long-term source of revenue for the holders of capital wealth. . . .[I]n the long term, government debt effectively contributes to an increase in private wealth. Because those who can afford to lend to governments typically have large asset holdings, government interest payments tend to accelerate the accumulation of private capital and increase inequality while depressing the incomes of those at the bottom of the socio-economic scale. Government debt, therefore, actually serves the interest of those at home and abroad who have surplus wealth to lend to governments. Whether debt should be used to enhance equality, therefore, depends on whether the net redistributive benefit of government spending outweighs the corresponding wealth transfer to elites over the lifetime of the debt. Furthermore, high levels of government debt may allow the holders of that debt to exert influence over governments and shape policies to their liking.”

In this then, Kelton and I are in agreement. We should avoid government borrowing as much as we can. But we diverge on the details. As a socialist, I’m all about tax-and-transfer - let’s get those resources out of the hands of those that hoard them and into the hands of those that need them. Kelton, who is an experienced political operator, has a different proscription. In her experience, raising taxes is politically impossible. So then we should just rely on monetary financing to get the good things we agree need to be done, done. That’s a valid theory of change. But I fear it’s been tried before, and with the disastrous political results. Kelton’s tactic is especially problematic when MMT theory relies on fine-tuning of tax rates in order to control inflation - which, if your politics is founded on a core experience of political deadlock over tax, suggests you might have a problem. In fact, this combination - expanding social welfare spending while being unable or unwilling to meaningfully redistribute social resources - lies at the root of many historical and ongoing inflation episodes, in the view of Marxian economics.

I’ll chime in with a review of Kelton’s book when I’ve had the time to digest it!

Pandemic economics does not validate MMT

One of the more-or-less less irritating things about this pandemic is the unrelenting smugness of the MMT (‘Modern Monetary Theory’) crowd. Central banks have shown absolutely no hesitation in turning the taps on to support markets in a financial crisis that – lucky for capitalism – was exogenously driven. And governments worldwide are experimenting, as they usually do during recessions, with jobs programs and direct cash payments to try and prime the economic pump for when lockdowns are lifted. These shifts in macroeconomic policy are massive, unprecedented, and will carry ramifications for years to come. What they have not (yet) done, however, is validate the ambition of MMT proponents to make use of such operations for routine financing of government - the pursuit of which I believe to be toxic to the left’s broader redistributive goals.

I wrote in a previous blog that: “The best evidence MMT proponents have is that [ten years of post-GFC] supply-side quantitative easing (QE) has been neither inflationary nor stimulatory; their ideal outcome is that demand-side 'peoples' QE is also not inflationary but does a better job at stimulating growth.”

I’m not an economist, nor have I worked in public finance. But even a bit of cursory and preliminary reading suggests that pandemic economics provides little, if any, theoretical, political or economic support for the utopian claims of MMT advocates. In my first book, “Politics for the New Dark Age: Staying Positive Amidst Disorder” I supported the approach of counter-cyclical fiscal expansion in an economic downturn, and for credit expansion in a credit crunch. Unlike the GFC, this time more governments are following Kevin Rudd’s advice on recession prevention: go hard, and go early. Central banks have gone very hard indeed, as we shall see. But two questions would need to be answered for MMT to be shown ‘correct’: why has QE not been inflationary until now, and will it become so at the scale currently being undertaken?

What are central banks actually doing

The core claim to fame of MMT economists is that they provide a descriptive account of central bank operations that is more sophisticated and realistic than mainstream economists. This is, I think, true and has been repeatedly acknowledged by bank governors themselves. Central banks are notoriously – perhaps even deliberately – opaque institutions with economic power vastly disproportionate to their level of accountability. Broadly speaking, a central bank underwrites the financial system of an economy through its influence over the money supply and interest rates. They have many tools for performing this function, which can be broadly categorised as conventional (routine functions that are essential to the economy), unconventional (functions that central banks can do to a limited extent and cognisant of risks), and taboo (functions that central banks don’t want, and shouldn’t want, to do). The core policy claim of MMT theorists, as I understand them, is that unconventional and taboo central bank operations are in fact, safe and effective and/or no more or less safe and effective than conventional operations.

A central bank usually regulates the economy by setting its own interest rates, including the rate it lends to other banks at and the interest it pays to depositors. Under ordinary economic conditions, this is sufficient to influence the amount of liquidity in the economy, but following the GFC interest rates have been near-zero in developed economies for nearly a decade and have dipped into negative territory for some purposes in Japan and the EU. Negative interests rates – where the central bank pays you to loan money and you pay it to deposit funds – are an unconventional monetary policy. However, negative interest rates are deleterious in the long-term, as they establish deflationary expectations and erode the value of savings.

The other main tool of conventional central bank operations are so-called ‘open market operations’, the dominant form of which are short-term ‘loans’ against the value of securities (usually, but not always, government bonds). Put very simply, a bond-holder agrees to sell it to the central bank in exchange for newly-created ‘cash’, on the understanding that after a short period of time (sometimes overnight, usually after a week, and rarely after a month or more) they will repurchase the bond. Through the use of such ‘repo’ markets, the central bank can control the availability of government bonds, and thus the interest on them. In unconventional times, central banks can dramatically extend market liquidity by expanding the scale and scope of such loans (‘expanding their balance sheet’), and who they are available to, as well as offering longer-term repayments (as the Reserve Bank of Australia has done). The central bank may also be willing to lend against a more diverse range of assets, including mortgage-backed securities (as the US did during the GFC), other forms of private debt, real property and even equity in firms.

A debt is, and always has been, a minor financial miracle. If I lend you a dollar, I have in effect doubled its value – because now you have the original dollar (minus interest), and I now own a dollar of debt (plus interest) that I can exchange for value with others. When the central bank ‘lends’ against an asset, it swaps that asset for cash (which it ‘creates’ by depositing the funds in the corresponding institutions accounts at the bank), increasing the overall money supply. This provides liquidity to firms at a time when they may need it. But when the balance sheet contracts, those loans are repaid, the debt is cancelled, and the money supply shrinks once again. MMT is suffused with what is often termed neo-chartalism, the fringe theory that taxation is the origin of the value of money. Chartalism argues that taxation creates demand for a government’s own currency, which it meets through fiscal spending - it’s a clever but misleading hypothesis. As both the financial and anthropological literature have repeatedly shown, debt is a more important source of the value of money (the ‘standard of deferred payment’). Unless we think in terms of whole-of-economy balances, as MMTers do, government spending is not debt (i.e. I don’t owe the government anything if I receive healthcare benefits) and taxation is not a repayment for services rendered. But MMT is suffused with this kind of libertarian thinking.

Next, central banks can regulate the money supply through the direct purchase of assets – this is what is usually meant by ‘pure’ quantitative easing (QE). Although some direct bond purchases may be part of conventional open market operations, quantitative easing differs in that central banks acquire a significant percentage of a nations net capital with no obligation for the assets to be returned. Unlike other measures which temporarily expand liquidity, asset purchases have proved hard to reverse. After 11+ years of off-and-on QE, central banks in the US and Europe owned assets worth close to 30 per cent of GDP (and in Japan, 50 per cent) prior to the current pandemic. In other words, QE has become a permanent feature of monetary policy under late-capitalism, a massive subsidy to the capital sector financed directly by monetary creation. It is this result, more than any other, than MMT proponents lean on in public debate to argue that monetary financing is not inflationary.

Breaking taboos

Finally, we come directly to ‘helicopter money’ or direct monetary financing, the most taboo form of central bank operation. When the central bank makes loans, those loans are secured against assets. When it buys assets, they will sit on its balance sheet until sold back. But central banks could also simply credit the bank accounts of its depositors with funds (without taking on any sort of collateral) - including, most notably, the accounts of the national government. It could, in theory, do the same in the bank accounts of every citizen, and this is usually what UBI proponents advocate. Expanding the money supply in this way is probably inflationary; its unconstitutional in Germany (of course) and most developed country banks swear up and down that it remains anathema. However, the scale of central bank intervention unleashed in response to the coronavirus pandemic suggests that some countries (though probably not Australia) have moved from the realm of merely unconventional QE to break the taboo of de facto debt monetization - in other words, the direct financing of government spending by ‘printing’ money.

The allegation (including from Germany’s Constitutional Court) is that by purchasing government bonds in the secondary market, central banks are monetizing government debt, albeit in a roundabout way, using only a thin veneer of capital markets to launder what it’s doing. Rather than owing private lenders, governments are using centrals banks to ‘re-nationalise’ bonds and print money instead. Even prior to the pandemic, the European Central Bank (ECB) had purchased more than two trillion euros of government debt between 2015-2019. In other words, though there’s still strong private sector demand for public bonds, if this demand is underwritten by a central bank guarantee that such bonds can always be offloaded for a profit, then there are perhaps no limits on the government’s ability to raise funds from private lenders. Oh, and private sector middle men make a tidy profit along the way. One has to trust that central banks have institutional safeguards against that outcome – Germany’s Constitutional Court essentially ruled this month that the ECB was operating without sufficient oversight to ensure that trust existed.

The pandemic has taken this practice from ‘cheeky and maybe a little suspicious’ to mainstream central bank policy overnight. Macroeconomics has moved from life support to death’s door. The US federal reserve monetized almost the entire initial US bailout in March, and although it has slowed its pace dramatically, the US may monetize trillions more in additional government stimulus over the remainder of 2020. The ECB and Bank of Japan haven’t slowed down much at all, and some developing economies are following suit. This activity is truly unprecedented in both scale and ambition and it remains an open question whether it’s been a necessary tool to prevent a worse financial crash, whether it will trigger a wave of inflation, or both. One suspects that we might have been better off forcing the markets to chip in more for their own rescue, if only as a way to mobilise excess savings from the top end of town.

The debt’s the thing

So now we return to the question raised in my previous blog. Why didn’t QE (supply-side money creation) generally lift inflation over the last ten years – which quite frankly governments and central banks had been counting on? Part of the answer lies in the failure of supply-side economics in general – what capitalism is suffering from – as a result of decades of austerity, rising inequality and now the novel coronavirus is a catastrophic collapse in demand. Any attempt to inflate the economy by providing the wealthy and large corporations with extra liquidity only inflates a capital bubble, and lowers the marginal cost of funds, encouraging hoarding, consolidation and wasteful consumption that doesn’t enter the real economy and benefits only the 1%. Labour productivity and GDP has diverged; the velocity of money has decreased; companies have been historically profitable since the GFC despite real wages stagnating; and stock prices, even after the pandemic panic, have been positively buoyant.

But the theoretical reason why inflation has remain stubbornly low may be more straightforward - and may suggest why the current round of debt monetization may be different When a central bank buys an asset, or loans funds to the private sector using a bond or other collateral, it exchanges newly-created money for a legal title or obligation. In essence, a real resource in the economy has been swapped for a virtual currency, and when the loan is paid back the currency disappears and the asset re-enters the economy in its place. As far as I know, and unlike a commercial bank, central banks do not re-invest or loan against the value of their balance sheet. In other words, when the central bank removes a real resource from the economy, it’s sequestered in much the same way that a sovereign wealth funds attempts to sequester excess profits from the economy. In my book, I describe wealth as un- or under-utilised capital (in much the same way that un- or under-employed people represent unutilised labour). In undertaking QE, a central bank essentially exchanges such assets for more fungible resources [i.e. currency].

This suggests a theory. QE has not reliably produced to inflation so far because it merely adjusted the mix of capital assets in the economy, and did not change the total ratio of available money to real production and consumption. This suggests that under normal conditions QE is not necessarily inflationary (i.e. related to the size of the money supply), but may have adverse distributional effects (i.e. related to the composition of the money supply). Increasing the liquidity of capital markets may help lubricate the economy in a credit crunch; but at other times, it provides opportunities for existing capital owners to expand and diversify their portfolios. And more liquid capital means more capital flight, and asset purchases and inflation in developing markets (again, much like sovereign wealth funds). This might help explain why academic studies can find no consistent inflationary effects from ten years of central bank QE in the developed world.

Monetary financing, including the current pandemic response and other policies advocated by MMT acolytes, is arguably an entirely different beast. Directly crediting bank accounts (including the bank accounts of the government) with newly-created currency without removing a corresponding volume of capital from the economy does change the ratio of money in circulation to real production and consumption. Money becomes less valuable, even as the wealthy hang on to the legal right to control and profit from their existing holdings. As has been widely noted, a monetised UBI would merely increase rents and other prices. Even if monetary financing were employed fairly and in ways that offset its severe distributional consequences, we still could not ignore the inflationary risk.

MMT is not a progressive policy

It will be months, and perhaps years, until we know the macroeconomic fallout from the current crisis. Just because central banks may be engaging in large scale debt financing, doesn’t meant that they should, or that there won’t be consequences from doing so. It’s possible - perhaps even likely - that at least some countries will end up with 1930s or 1970s-style stagflation. But even if by some miracle massive central banks interventions save capitalism, the long-term distributional consequences of monetary financing benefit the current owners of capital at the expense of workers, students, retirees and we on the left should want no part in them.

There’s no evidence, following ten years of on-and-off QE in the heart of the capitalist world that increasing market liquidity improves market conditions for consumers. When real economic growth is anemic, major financial institutions do not use additional liquidity to extend lending to small businesses or consumers. In fact, evidence suggests that central bank policies to make loans conditional on the funds being recycled into the real economy simply leads to those loan programs going unused - if investing in the real economy were profitable, banks would already be doing so. It’s hard to know where the money is all going but the fact that US billionaires have - personally! - increased their wealth by nearly half a trillion dollars since the pandemic began hints that most is being gambled on stock prices, used to buy-up distressed assets (including overseas), or otherwise entrench the economic power of the largest firms. Trickle down economics, unsurprisingly, is bullshit in such a heavily financialised economy.

Another major risk of QE on this scale is that government bonds eventually have to be repaid. Even if it looks like an accounting trick, those bonds on the central bank’s balance sheet will one day come due. The credit expansion has to be unwound, which means either the government voluntarily deleting vast quantities of its own revenues, or owing vast sums to private actors who buy the (possibly heavily discounted) bonds back. The inevitable political consequence, either way, is another age of austerity in which social programs are cut, regressive taxes rise, and wage labour remains in acute distress. MMT advocates will argue that they reject the fiction that issuing bonds are necessary to finance government spending, but if that fiction is all that stands between us and stagflation, the ultimate effect for the worker is the same: living standards will inevitably decline.

Could QE have been done in a fairer way? In the US, progressives have talked about using the central bank to buy up vast sums of student and medical debt, monetising distressed labour instead of distressed capital. That would certainly have been a strongly stimulatory, once-off transition policy, had the left any real political power to speak of. But as a socialist, who thinks that individuals should not have to go into debt to enjoy access to their fundamental economic and social rights, we should be using this crisis to organise people to fight for permanent, universal public programmes, not telling them that their financial problems are a macroeconomic illusion.

From bad to worse

MMT acolytes are wrong to say they’ve been vindicated by the response to the pandemic. The evidence just isn’t there yet - and if I were a betting man the widespread consensus that this level of monetized government debt will lead to inflation, austerity or both seems more plausible than a miraculous escape from hundreds of years of economic history. MMT’ers always emphases that money matters less than money’s power to control access to real resources in the economy. I agree. But by this very metric, if the sorts of financial policies MMT supporters envisage got off the ground, the unequal distribution of real resources in the economy would remain unchallenged, and there’s a high chance that access to those resources would become even more unjust as prices inflate and currencies devalue.

Disaster Socialism

Australia is on fire. There’ve been bigger bushfires in the past, to be sure; bushfires that have killed more people or burned more hectares or done more damage. But the scale of the current crisis is hard to understate. Amidst an ongoing severe drought and the hottest December on record, most of the east coast is burning; significant towns have lost power and all connections to the outside world. Major cities from Melbourne to Brisbane are choking on ash, highways are closed and the summer tourist industry has been devastated. Canberra, which has so far been spared the fires themselves, had the worst air pollution in the world this week thanks to the ambient smoke and haze.

Regardless of whether any one extreme weather event can be proved to be caused by climate change, the 2019 bushfires foreshadow things to come. This year may (or may not) be a statistical outlier, but we know for certain that there will be more years like this - and with increasing frequency. This is not a once-in-a-generation natural disaster, it’s a generational disaster. Whatever costs the opponents of taking action on climate change imagine would come with switching to low-carbon energy generation, the cost in terms of lives, healthy, property and foregone economic activity from this year’s bushfire’s alone is almost certainly higher. The question is not, and has never been, how much will climate change will cost us - but who will pay for the sins of our past.

And here’s the bad news. I think it’s time we all finally acknowledged that green, left-liberal politics have conclusively failed to prevent or manage the crisis. We’ve spent more than a decade arguing over carbon pricing; and yet another UN climate conference (COP25) collapsed in acrimony just a few weeks ago. Sure, there are a few bright spots where having fair-minded people in positions of government or corporate power has made a difference, but it’s time to admit that more protests, more marches, and begging for more virtuous leaders is just wasting everybody’s time. For all I admire Greta Thunberg, and I really do, her style of activism offers no solution other than the failed liberal education fallacy - a giant exercise in consciousness-raising rather confronting the structural barriers to change head on.

It’s time to try something new. It’s time to try something different. It’s time to try ‘disaster socialism’.

Disaster Socialism for beginners

Most readers of a progressive persuasion are likely to be familiar with Naomi Klein’s theory of ‘disaster capitalism’, from her seminal (and prescient) 2007 work “The Shock Doctrine”. Klein noted that capitalist structures rarely let a good disaster go to waste; that in crisis mode people will tolerate radical political and economic steps that would have previously been unthinkable or impractical; allowing conservatives to ratchet society another few steps to the right every few years. Attached as they are to norms and institutions, left-liberals appear flummoxed and ineffective. Rather than being threatened by the natural disasters which its reckless exploitation makes more likely, Klein argued that capitalism ultimately benefits from them - a thesis with terrifying implications are we face more recurrent climate change-caused disaster events. As the dirtbag left might say, if you think a political right who ignores the climate emergency is bad, just wait until you have a right-wing that recognises and responds to the threat seriously.

I would therefore offer the following working definition of disaster socialism: the practice of taking advantage of a major disasters to promote socialist policies that a population would be less likely to accept under normal circumstances. It hardly needs noting that in the phenomenon of (largely volunteer) firefighters risking their lives to protect others against nature, we already have a sphere of human social and economic life in which altruistic, pro-social behaviour is the norm. Disaster socialism is not just good politics - it’s an absolute necessity to prevent the damage wrought by these bushfires being used as an excuse for further loss of community in rural Australia, the disenfranchisement of indigenous communities and the transfer of public lands into the hands of private developers.

So rather than another wasted decade attempting to legislate a carbon price from the top down, progressive parties should adopt a platform that re-orients Australian civic and economic life around the prevention, management and response to natural disasters. The sad reality is that this is a transformation that will happen to us regardless - climate change makes it so. Liberal and neoliberal politics will be unable to achieve this end without relying on increasingly militarised and authoritarian solutions. We have an opportunity here, and now, to orient our climate change adaption policies instead around spontaneous self-organisation, community solidarity and social cohesion. If you want climate action, in other words, it has to be a ‘Green New Deal’ that blends climate mitigation and adaption with socialist organising - you cannot be a green and support the maintenance of the economic status quo.

High, high hopes

What might a programme of disaster socialism look like? To begin with, I’ll note that I’m not qualified to talk about how firefighters are recruited and paid in Australia - a topic that has long been fraught with political landmines. But I will suggest that it become foundational tenet of labour law that every employee in the country - and not just federal public sector workers - be entitled to a minimum of four weeks paid leave every year to participate in firefighting or other emergency services or disaster relief public work. In this way, every employer contributes to the defence of the broader economy. We need to build-up a core of well-trained and well-equipped professional firefighters, and support them with a massive cadre of willing and able civilians. We need to have permissive social structures in place such that tens, if not hundreds, of thousands of men and women can mobilise themselves out of the cities to defend the countryside from disaster. Like an army reserve without the military overtones, we need to set up policies and programs that bring familiars people with the Australian demi-wilderness, teaches them how the land floods, how it burns, and how we’ll need to live as our continent continues to get hotter. Wherever possible, indigenous communities and indigenous knowledge should be involved in that effort.

We can also use disaster socialism to fund a program of massive re-investment in Australia’s rural and peri-urban communities. The reality is that the almost total urbanisation of our country is a legacy of more than half a century of underinvestment in our regions. A massive, whole-of-nation effort will be required to rebuild after each disaster, and to pre-adapt our rural towns to the threats they face, and to better connect them to national infrastructure so disasters can be responded to more effectively. Funding and workers for such efforts will in turn create a demand for more rural housing and infrastructure, leading to a virtuous cycle of development. Subsidies that make solar panels and better insulation accessible for middle-class homes in the suburbs are one thing, but public programs that make environmentally-friendly living the norm across the country should be our goal.

Disaster socialism also provides more opportunities to regulate. Acknowledging that each of these areas is politically sensitive, shifting our political narratives away from economic growth towards disaster prevention could help ease the passage of stronger regulation of land-use, the approval process for resource extraction projects and the management of water. The state needs to have an active, ongoing presence in disaster-affected communities across the country - progressives cannot become stereotyped as urban elites who descend on the regions only to protest economic developments that offend our aesthetic sensibilities - or worse, to promote mega-projects over the objections of residents. We need to work with local progressives to provide them the tools they need to manage and defend their communities on their own, from the bottom-up.

The movement in society

Finally, and I cannot emphasise this enough, we do not have to wait to capture the state to begin implementing our programme of disaster socialism. Progressive leaders have done a good job in responding to these bushfires, but I would humbly suggest that Anthony Albanese buying supplies for volunteer firefighters in his personal capacity, while good optics, is not a sufficient institutional response. The Labor Party - and other progressives parties and movements - should play leading role in connecting members in cities with disaster-affected communities, and in managing the flow of aid and volunteers. The union movement is also critical here, and I’ve actually seen the unions take a high profile role over the past several weeks in supporting their members who have been on the front line in fighting the fires.

The world is changing around us. As an Australian, you just have to open your eyes or smell the wind to see that current circumstances are not normal. To all my fellow progressives who put a higher value on the climate than on economic transformation, I would ask you this: what have you got left to lose? Social democratic government has been tried, it failed. Liberalism offers you no hope and a whole bunch of centrists are going to ultimately endorse authoritarian solutions to the climate crisis. Why not try socialism? We might fail - the scale of the problem may be too large and too complex for any conventional political movement to handle. But we have a theory of the case - that by building community solidarity we can not only respond more effectively to shared threats, but that we can also act more decisively to reform those social structures which have contributed to the current crisis in the first place.

Sovereign Money in Switzerland (MMT Part 3)

Living in Switzerland, one of the local oddities is the quarterly referenda on every conceivable topic. In the highly decentralised Swiss political system, voters are frequently asked to resolve policy debates that the weak and uncoordinated central institutions can't or won't deal with. The frequency of referenda, however, means that voter engagement is extremely low and the whole process lies open to manipulation by niche interests. The next vote is scheduled for June 10, and the top issue is a constitutional amendment on "pleine [or 'Sovereign'] monnaie". Yes, folks, modern monetary theory (MMT) has arrived in Switzerland and given my previously expressed scepticism towards MMT, it's time to take a look at what that looks like practice. 

In 2015, the allegedly non-partisan "Vollgeld Initiative" collected the required 100,000 signatures necessary to put a constitutional amendment directly to voters. The way this is being gone about is quite simple, and rather clever. The Swiss constitution, like many others around the world, establishes a National Bank (the 'SNB') with the sole authority to issue coins and banknotes. Among other minor changes, the proposed amendment inserts 'and electronic money' into the relevant clause of the Constitution. The change may be minor, but the implications for the Swiss monetary and financial system are most definitely not. MMT proponents have found a neat trick: pose simultaneously as defenders of the original intent of the constitution by protecting the Central Bank's monopoly over the creation of money and as reformers who are just 'updating' the constitution to deal with the modern era of electronic finance. 

Sovereign Money and Horizontal Money

In order to know what this seemingly minor change would mean in practice, it's important to know how the money supply is defined. Physical notes and coins (the M0 money supply) represent only a fraction of all currency in circulation; much more is held as bank deposits or loans which are recorded electronically (the M1/M2 money supply). MMT proponents are closely related to monetary circuit theorists (MCT), who describe how private banks increase the supply of "horizontal money" in the economy by issuing loans and creating debt: since both the amount loaned and the debt are units of exchange and account, they are currency. All forms of the same currency are convertible into one another, and under fractional reserve banking financial institutions can loan out (read: create money) in multiples of the deposits or other assets it holds (up to regulatory limits). So long as all its debts aren't called due simultaneously, the system expands the supply of capital and thus economic activity. 

So far, so good. Fractional reserve banking is an established practice with well appreciated risks. Risks that regulators try to manage by imposing reserve requirements and capital adequacy ratios. Can this be done better? The evidence of the Great Recession suggests undoubtedly so. Are there historical precedents for centralising control of money creation to alleviate financial risks? Absolutely: in the middle ages (and still in Scotland today!) banks commonly issued their own bank notes, a function which modern central banks took over for good reason. But the Swiss Sovereign Money initiative goes much, much further. If the central bank has a monopoly on the creation of 'electronic money', then fractional reserve banking would cease to exist (although it would no doubt be resurrected in more opaque and risky forms). Instead, if a bank wanted to issue a loan to a business or investment, it would have to rely on its own deposits or (and here's the kicker) borrow from the central bank, which would create 100 per cent of money which the bank loans out.

From an accounting perspective, transactions appear largely the same under either system; but the risk inherent in expansionary spending is transferred from the balance sheet of the bank to the balance sheet of the central bank, and thus the state. All debt - both public and private - would then carry sovereign or public risk. Now, given the post-GFC bank bailouts and the political imperative to stabilise the economy when the banking sector crashes it, it may be true that horizontal money is in some sense always a liability for the state. Sovereign Money would make that implicit assumption explicit and unavoidable. But if your policy concern is the risks posed to people's livelihoods by the selfishness of the finance sector, then your problem is with capitalism - not they monetary system. Changing the latter does nothing to alleviate the risks posed by the former. 

MMTs true face?

I've said before that there is a vast disconnect between the theory of 'modern' money (which is interesting) and the sorts of policies its proponents advocate. If MMT is just a description of how horizontal finance operates, then why is it being outlawed by constitutional amendment? If sovereign money means governments can already create and spend money more than present, why is a radical restructuring of the finance sector necessary to allow that to occur? The Swiss initiative is rolling out all the usual MMT canards in an effort to sway voters: sovereign money means more spending for things like a UBI, lower taxes, more jobs or more infrastructure [take your pick]! The SNB has called out the Initiative's backers for advocating the funding of public spending through seignorage - exactly the issue I highlighted in my previous blog post on MMT. 

The Swiss initiative is also playing a dangerous game with populist and nationalist talking points. One of the campaigns key slogans is that voters want 'real francs', not merely promises to pay from banks. Rather than educating voters about the complexity of the financial system, the Initiative aims to force finance to behave in accordance with the naive picture voters have of it in their heads. The Initiative is also obsessed with talking about debt, which is an odd position for a economic movement which tells policy makers to massively expand public spending. Voters are being told that sovereign money will 'eliminate' private debt [which sits at more than twice GDP] - which is true only in a very technical sense. Private debt isn't a risk if [most] businesses that are lent to remain solvent and have the ability to repay their loans over time. The Initiative is weaponising conservative talking points to pursue a policy that would socialise private debt and give Switzerland a higher public debt-to-GDP ratio than Greece. 

Best Case Scenario

The best case scenario for Sovereign Money is that it works as advertised and that the disruption to the Swiss monetary system is primarily technical. As a result, the SNB would become the dominant actor in the economy, with vast powers to set the direction of economic and fiscal policy by deciding which economic activities are funded and on what terms. Swiss debt would be 100% backed by the state's printing presses, making the country an attractive destination for foreign capital fleeing systemic risks in the global economy. Banks would be almost totally prevented from adding to systemic economic risks on their own, with the caveat that those risks would be distributed throughout the economy and depend almost entirely on consumers (and international money markets) continued faith in the value of the Swiss franc. 

Now, I'm all in favour of a heavy regulatory hand on banks, and a public option for private banking, but jumping immediately from laissez-faire finance to central economic planning is a bit too much of a leap, even for me. The central bank, and by extension the government, would own all debt - for both good and ill. Anything and everything that goes wrong in the economy will be the state's responsibility, by definition. Whether the economy performs well or performs badly will be seen rightly, as a judgement of whether the government has lent too much or too little. And yet, capitalism and all its structural flaws would remain in place. As I've said before, Sovereign Money is not a panacea that let's us make an end-run around the actual hard work of regulating and reforming capitalism. As the Keynesians discovered in the 1970s, if your only policy tool for managing a downturn is inflation, you're going to eventually encounter a catastrophic collapse of economic activity. 

Worst Case Scenario

The worst case scenario, to me, would appear more likely. Like most government agencies under capitalism, the Central Bank would not use its new powers to tame private markets for the good of voters, but instead become captured by private interests and use its powers in furtherance of private agendas. No government will be able to say no to printing the funds for whatever project enters a key constituency's fancy; banks, in turn, would enjoy unrestricted and completely risk-free access to the public's piggy bank in order to pursue their own private profits - including investing overseas, offshoring local manufacturing or by buying up highly risky or speculative asset classes. In effect, a Sovereign Money system would formalise the kind of developmental capitalism that is still prevalent in some parts of the world where big businesses enjoy privileged or corrupt access to public funds and use those funds to invest in capital-intensive projects of self-aggrandisement with little or no assessment of its benefits for national productivity. And when such projects fail, as some always must, or drive up inflation without producing sustainable economic activity, it's the state that's left to clean up the mess. 

A run on a bank may collapse that bank, if it has structured its debts unwisely and regulatory oversight has been lax in preventing excessive risk. A bank collapse or a bad investment means that excess capital, or at least some of it, is written off and the economic activity supported by that money deflates and self-corrects. But a run on a sovereign currency would mean the [digital] printing presses went to work with all the inflationary implications that entails: every debt, public or private, would *have* to be redeemed, in full, or the national currency would become immediately worthless. Capital could only ever expand, and unprofitable or risky economic activities could continue indefinitely without any mechanism for self-correction ('creative destruction') other than, well, central economic planning. 

For those reading at home worried about all this, I say: don't panic. Almost the entire Swiss establishment opposes the Sovereign Money initiative and I've read interviews with its backers where they say they don't expect to win and are merely testing the public appetite for this sort of policy. But the Swiss referendum provides a preview of the sorts of policies, and tactics in support of those policies, that we might anticipate MMT advocates pursuing elsewhere in the world when given an opportunity to do so.