Hello, World!!

This is a blog that will explain how the modern monetary “fiat” system works.  We will endeavour to explain the mechanics of modern money.  This will not be based on theory but fact.  Make no mistake about it that this is an economics blog.

Whilst we will attempt to keep it simple for the average non-economist, a basic understanding of early high school algebra will be necessary.

This school of thought is known by many names, Modern Monetary Theory (MMT), Chartalism/Neochartalism, Modern Monetary Dynamics or as we have called it Modern Money Mechanics.  These are all essentially the same thing.  It is considered a post-Keynesian school of thought.

Once modern monetary theory is understood, the ramifications of the system can be explored. For example, many MMT proponents take the view that the national government which issues the currency as a monopolist has a charter to advance public purpose (welfare) at all times even if, in doing this, specific private interests are impeded. In general, the advancement of public interest will provide a sound basis for private benefit also. But at times this will not be the case. (Bill Mitchell)

Some of our blog posts will be our own work but most will be adaptation of others work on MMT.   Comments will be restricted on some of these posts (not all) and you will be directed to a link to the source document when a commenting facility is available.

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8 responses to “Hello, World!!

  1. Here am I, ready to rock

  2. Well as a lay person Senexx I may have trouble following your topics, but I shall give it a shot.
    Cheers Eb.

  3. Cool wordpress widget for you. $ NON-GOVERNMENT SAVINGS CLOCK

    [gigya src="http://oddhammer.com/tutorials/debt_clock/US_debt_clock_dynamic.swf" quality="high" width="340" height="155" flashVars="topString= US NON GOVERNMENT&bottomString=SAVINGS"]

  4. Thank you, I’ve found it quite useful.

  5. World partly here. It seems to me that before one starts to manipulate theoretical flows of money, for purposes of proving certain theories in macroeconomics and in MMT, that the way these flows are related is a vital first step. In order to understand this, it is necessary to prepare in ones mind’s eye a picture or model of what is going on. Unfortunately or otherwise, the model we need to prepare is difficult to contain without it changing, and for each of us it may well be different. Therefore such a model must meet certain criteria:

    1. It must properly represent the all of the parts and relationships within a country’s social system.
    2. It must be as simple as possible (by Ochham’s Razor or Prof. A.Einstein’s criteria for maximum simplification.)
    3. For all its simplicity it must be fully comprehensive (a kind of graphic oximorgan!).
    4. We should all agree on using the same model, so as to properly understand each other.
    5. Of necessity the parts of the model will need definition about which we too should agree.

    Is this too hard a requirement before some really useful and solid macroeconomics theory, science and knowledge are generated? Having visited so many other models (starting with that of F.Knight in 1933) which I find to be incapable in meeting these criteria, I sometimes wonder whether our science will ever become sufficiently exact!

    • What you didn’t include is that evidence must be neutral to be used as criteria. In economics a lot of the evidence is disputed (Volcker), so it is not possible to come to agreement even over the facts. Social science is not hard science for the reason that evidence in hard sciences is based on quantification of changes in extension, which are accurately measurable in terms of space-time-mass-energy based objective standards. That is not (yet) the case in the social sciences and it does not promise to be anytime soon. We are still at the narrative stage, often with mathematical models masking this. Maybe in a few hundred years we will know how molecular changes influence behavior either deterministically or in a random fashion.

      • Thats always the feeling, that Macroeconomics is so complicated that we will never know what is REALLY going on. However this situation should not last if we begin to look at macroeconomics in an engineering way. The model that I recommend has a bit more in it than Keynesian Theory uses but it is still managable in that it has bit 6 entities and 19 mutual money flows with goods, services and valuable documents returning. See Google Images: DiagFuncMacroSyst.pdf
        and then by relatively simple computational means (I have even approximated by hand-analysis) one can investigate the effects of policy change.

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