Draft for Oct. 26 Rome Presentation

See here for Rome presentation.

Comments welcome!

(Mario Draghi may be on the panel with me)

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113 Responses to Draft for Oct. 26 Rome Presentation

  1. Jim says:

    Re: “marketing say don’t say never : “Here’s why it’s WRONG (=NEGATIVE),” because it’s an accusation to our audience and they close their pride.

    It’s better to say : “Here’s why it’s possible IMPROVE (=POSITIVE) current policy changing view”…
    I think MRW has got it right: “Here’s what and where that thinking leads to.” I think this gets the rhetoric right. Of course there are different ways to express the idea, which is to point out that this way leads to result x, whereas this other way leads to result y, which presumably is the desired one.

    And that’s the rub: the difficulty here is that the greater public weal and the immediate interests of the power-entrenched financial-banking establishment almost certainly do not coincide. Hence the elements of demagoguery and hypocrisy encountered. The way out is to show these interest that their way is ultimately self-destructive; farsightedness and a wider horizon of interest should trump shortsightedness and a narrow horizon.

    The great question: is a successful european union in fact in the interest of the public weal? A fiscal union solves the financial difficulties, assuming an MMT point of view regarding austerity and the like; but does that mean it is a political plus in the long run? Europe’s heterogeneity has always been its weakness. That will not change, however much the uniformization entailed by corporate modernity tends to plaster over the differences. Uniformity is not unity, and it is unstable in nature. The center-key of a true unity cannot lie on the same plane as the differences, but this is just what the Union tries to achieve with its idealeology.


    Piero from Italy Reply:


    Hi Jim… simply…

    if telling Improve I get result X with probability A
    and telling Wrong I get result Y with probability B

    and X * A > Y * B (because the Pride of the Audience)

    then I prefer Improve


  2. MRW says:

    Mr. Mosler,

    This isn’t a criticism of your paper, but it is an observation to help you underscore the immense talent and clarity you have on the subject, and hence to help you posit that realization in your audience’s heads. So please excuse me if I rush in with the ‘you shouldas’.

    You should do more of a three-prong approach. Anchor it first with your searing understanding of how your audience see things. Get into their heads. They don’t know MMT from the back of their chairs.

    (1) “This is how the majority of people currently understand [it].” Lay it out. “You think it works this way and that way, therefore you think X and Y are the way to go to create wealth/prosperity/full employment for your people. You have honorable aims and I understand your frustration.” Whatever. Show you know what they know, and that YOU understand that they just want to do the best job they can. Even if they are from the ECB.

    (2) “Here’s why it’s wrong,” or “Here’s where you’re getting tripped up,” or “Here’s what and where that thinking leads to.” Then lay it out. You have a genius ability to make things simple. So, stress the un-benefits of their thinking and approach.

    (3) Then, “Here’s how it really works.” And throw on that trowel of ‘I’ve been in the business for 40 years, I’ve worked with ______, and ________, and ________. I’ve been on the inside of ______ trades, _______ policy decisions, and Federal Reserve __________’s. I know how this sausage is made, and I know the information that is being kept from you. That’s why I’m interrupting an incredibly pleasant lifestyle to inform people, and the lesser among us, who have been lied to.’

    You don’t toot your own horn enough.

    Speech writers call it “Getting to Yes.” Every statement has got to produce a fist-pumped Yes! inside your audience’s heads.

    Hope this might help.



    good thoughts, thanks!
    will take a 10th look after with all the suggestions in mind


    Piero from Italy Reply:

    for Warren Mosler:

    marketing say don’t say never : “Here’s why it’s WRONG (=NEGATIVE),” because it’s an accusation to our audience and they close their pride.

    It’s better to say : “Here’s why it’s possible IMPROVE (=POSITIVE) current policy changing view”…

    about your audience :

    * Mussari => see my comment above : he is the worst of all, a politician inside bank able only to manage political alliance and destroy money without pay responsability ;

    * Marcello DeCecco : it’s an old economist, he doeen’t understant tecnicalities of modern finance, but he is clever, he understand the substantial macro point, and he know that with olny austerity the economy will go down

    * Mario Draghi is very very clever, he is over the class, he understand all the tecnicalities, he was head of BankItalia before of BCE, he was the coordinator of the secret plan to remove Berlusconi (in alliance with our Republic President Giorgio Napolitano) and commissioner Italy like in 1992 when we was at risk. You can help Draghi give him some instrument to demonstrate to Merkel/Germany that MMT it’s in the interest also of Germany and not only of Piigs. THIS FOR ME WOULD BE THE REAL AIM OF YOUR PLAN.

    * Paolo Savona is clever, he was a honest banker (a ararity in our enviroment), and now he is counter the Euro, he want exit and return to Lira to gain flexibility with currency&printing ; but hte head of the joike is Draghi&his friend, so for me it’s better if you help Draghi to convince Merkel to print instead of the exit strategy.

    * Cippolletta is head of Center of Study of Confindustria (Associacion of Italian Indistry), he is clever, he don’t understand the tecnicalities of moder finance => inside Confindustria ih this day the ise an hide division => the Majiorirty have understand the power of Draghi&Monti&Company and endorse them, and aim to Strong European Union, and have accepeted that in 2013 we will force to ask aid to BCE and pay more tax&cut (the political price to convince MErkek) in exchange, in practice is the less bad => a little Minority guided from Marcegaglia (the ex Head of Confindustria near to Berlusconi) don’t want Monti in 2013 (in spring there will be political election) because they fear a Tar for Rich People (we call them Patrimoniale), but for me they did’nt have real possibility considering the ratio of power ;

    * Lanzillotta is of Bilderberg like Draghi&MOnti&C.

    * La Malfa is an old politician of the parties of Republican, but the clever men was his father, and he is only the son, about tecnicalities of finance


  3. JKH says:

    Two monetary operation questions, inadvertently designed for MMT to answer:



  4. Andy says:

    Think you may need to provide a bit more meat on the monopoly price setting. paragraphs at the end Warren. I read it 4 or 5 times and am still not sure I’ve got it.



    it’s for the central banker types who will be there.
    it pulls the rug out of the ‘inflation expectations’ theory that they’ve been relying on


  5. Jose Guilherme says:

    According to Marc Lavoie, the main contribution of MMT to economic theory is that it forced economists to dwell into the details of the clearing and settlement system and to take into consideration the role of government in the payment system, whereas before even heterodox economists had focused exclusively on the relationships between commercial banks and the central banks.

    This important step forward in economic theory was mainly due to the path breaking work of Warren Mosler in the 1990s, followed up later by Wray, Bell-Kelton, Fullwiler et alia.

    Their work was naturally targeted on the U.S.system, but some MMTers did enlarge the scope of study to other countries. See for example the excellent paper of Felipe Rezende on the nature of government finance in Brazil.

    Unfortunately, the same curiosity did not extend to the eurozone.

    Indeed, the main studies on the payment system of the EMU – technically very good, btw – have been produced by economists outside the sphere of MMT, such as Peter Garber, John Whittaker, and Karl Whelan – and also Bindseil and Konig, at the ECB.

    I think it’s about time the MMT theorists delve into this key subject. Europe is in turmoil, particularly its southern part, with the situation deteriorating by the hour and MMTers are hard put to come out with specific policy proposals – probably because they basically do not feel much at ease with the way the payments system really works in the eurozone.

    For instance, the European authors mentioned above claim any government inside the eurozone can go on deficit-spending by using Target2.

    If this is so, then austerity could be overcome tomorrow by a government willing to use the rules of Target2 – and this while keeping the euro as the official currency.

    Let’s suppose Spanish demonstrators manage to force the present government’s resignation. A new government could then put Spain back on a growth track by simply deciding to spend more via publicly-owned financial institutions.

    What do MMTers have to say about this specific scenario that could become reality in a very short time frame?

    Basically, not much.

    Perhaps the time has come for Mosler & others to quickly concentrate on the subject “EMU payment mechanism” in order to come out with practical policy recommendations – for otherwise MMT may be unfairly condemned to irrelevance at the exact moment when it will be needed most.


    J Jordan Reply:

    @Jose Guilherme,
    Thank you very much Jose
    That was the answer i was looking for.
    It seems like the HPB giving out new, better kredits is way to go.



    been writing specifically on all that since at least 1995. check out some of the older stuff at http://www.mosler.org


    Dan Kervick Reply:

    @Jose Guilherme, Indeed, the main studies on the payment system of the EMU – technically very good, btw – have been produced by economists outside the sphere of MMT, such as Peter Garber, John Whittaker, and Karl Whelan – and also Bindseil and Konig, at the ECB.

    Will you please post some of the links Jose?


  6. John Horkin says:

    http://www.youtube.com/watch?v=1hsDn2kNriI Warren, I have criticized you for a decade for being the world’s worst marketer and salesman. You didn’t listen at me during your senate run against schiff and you lost that one, don’t you get tired of losing and wasting your time, life, and money?

    Show them this Video, all 5 minutes, and tell them if they don’t listen to you, the explosions coming over Europe in WW3 is going to make WW2 look very small. Slap them over the head HARD, now is not the time for them to be lulled into sleep with your usual boring monotone delivery and shy uncertain forceless demeanor, show some ballz and aggression and assertiveness and take this constructive criticism with positive feelings.


    Monica Smith Reply:

    @John Horkin, History is written not by winners, but by observers who prefer to write and describe, rather than participate. Writing is a hobby for the leisured class and relies on a whole lot of productive enterprise that goes unrecognized. Also, although writing is linear, many of its practitioners seem deficient in the ability to accurately relate cause and effect. So, for example, the neocons were convinced that because Europe was rebuilt better than before it was destroyed, all that was necessary to revitalize the “cradle of civilization” was to bomb it to smithereens. They call it “creative destruction,” never realizing that, unlike the Creator’s, human artifacts are not the product of magic. The intent to create does not justify smashing everything in sight.
    Oh hopes that, in future, electronic media will be enough to sublimate these irrational urges. Perhaps if Dubya had had a game boy………..


    John Horkin Reply:

    @Monica Smith, Monica, our CIA have used gender movements to demotivate the enemy armed forces, do you think what is going on in the middle east with women’s rights is just a matter of CHANCE? LOL! War is hell, and nothing is off limits to win!


    I have sometimes wondered if introducing feminism to an enemy country would be good psychological warfare and tend to reduce morale, at least among the men. The following is interesting:

    “Anna Ardin/Bernardin is a self-described feminist activist who has made accusations before – against her own students – and was thrown out of Cuba for her involvement with a right wing, CIA-supported feminist group.”


  7. MamMoTh says:

    I say it this way- the price level is necessarily a function of prices paid by the government of issue when it spends, and/or collateral demanded when it lends.

    What this means for the euro zone is that inflation control ultimately comes down to limiting government spending by limiting selected prices member nations are allowed to pay when they spend. Like central banking, it’s about price, and not quantity.

    So what does this mean for the EZ countries? They are not the monopolists of their currency, so they can’t be the price setters.



    Price setting is pushed down by the issuer to the member nations, who also compete with each other.

    that’s a radical change from the issuer of the currency doing it himself.

    it’s like the water monopolist having ‘sub stations’ in different districts who set their own prices,
    with some room for ‘arbitrage’ but not a lot in short time frames. And with the sub stations not knowing they
    are price setters but instead thinking markets set their prices.

    I agree it’s a very peculiar arrangement.

    I first went through this back in 1995-96 in the early days of the euro discussions,
    so it’s probably in some paper or presentation I did back then.


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