The Center of the Universe

St Croix, United States Virgin Islands

MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

69 Responses to “Proposals”

  1. Ryan Sharp Says:

    Mr. Mosler,

    Your proposals under the current monetary economics are indeed quite clever. Sadly however, we will never fully be free as a people so long as the U.S. pays a premium for it’s very own currency through the Federal Reserve banking system, as long as our government is corrupt and for as long as we wage war for profit!

    In truth, I believe we have in our midst the spawning of a new era wherein we finally realize that our current socio-economic foundation no longer serves us…it never really did! We must shift our thinking towards a completely new structure that supports all life on this planet and not just the privileged few at the expense of others.

    Our current structure is inherently corrupt and as I stated earlier, we can never be free under it nor can it be “fixed”. “Problems cannot be solved by the same level of thinking that created them”.
    – Einstein

    The Zeitgeist Movement is one such organization, albeit in its infancy, that proposes radically different ideas, ideals and would create a world where “pure science” could lead us all towards a global society where everyone’s basic needs are met.

    I invite you to open your heart and mind, to explore the ideas and concepts proposed therein:

    Thank you,



  2. Seth Mosler Says:

    My guess is Obama is modeling after the Clinton years 9They have a lot of the same people)

    Large deficits in the beginning(blame them on Bush)

    Economy grows

    Gets reelected on platform of cutting deficit -fiscal responsibility
    Raises taxes in year 5, cuts spending due to more Republicans in congress
    Economy continues to grow then collapses just after he leaves office and blames the new guy


    Unforgiven Reply:

    @Seth Mosler, On track so far, dammit! Aaarrrrggggghhhh!!!!


  3. Elston Says:

    I must quote the comment above because it is so appropriate, “Your proposals under the current monetary economics are indeed quite clever. Sadly however, we will never fully be free as a people so long as the U.S. pays a premium for it’s very own currency through the Federal Reserve banking system”

    It’s a complicated subject in many ways but I will try to distill my questions to their essence. Do you support abloshing the Federal Reserve? If not, could you please explain briefly why it is better to allow a private banking cartel to issue our currency at interest than to print it ourselves at no interest to anyone (as the constitution clearly says we must)?


  4. DAB Says:

    I’m on board so far Mr. Mosler but I would like a reply to the question above. It’s one I often hear.



    all the fed does is regulate the banks and set the term structure of rates.

    it sets the marginal cost of funds for the banking system.

    It doesn’t ‘issue currency at interest’ in any way i know of


  6. rvm Says:

    Warren, do you think there are legal ways for this idea to be done?

    “Tom, something unrelated to the blog.

    This morning I was thinking if all of the MMT-people around the world invest in a newly created hedge fund or whatever money management entity, which will be operated by some of the MMT stars.

    I don’t know how many of us are there today around the world, but I am pretty sure everybody with some money will be trilled to invest and be part of such project.

    And maybe something like 50% of the returns on investments will be going directly for MMT purposes, like commercials, TV time, why not political elections. Kind of let’s make MMT work for itself.

    What do you think?”



    don’t know


    rvm Reply:

    MMT needs some kind of funding to be able to go to the next level.
    Some kind of formal organization.
    Think it is time to see how many of us are there.




    Neil Wilson Reply:


    Given that the stock market has tanked, perhaps we should all buy high yield shares.

    Than those that are causing the problem can fund the change.

    rvm Reply:

    Warren, I think the MMTers-first generation, like yourself, have to initiate something in such direction sooner or later.

    Like in the army, Generals and Officers organize and lead the solders. Now we look more like not very well organized guerrillas.

  7. John O'Connell Says:

    An interesting bit of history, on two counts:

    “Read this and know that just one person, with vision and principles, can make a difference to the world in a time of crisis, establishing the basis for decades of prosperity and growth.”

    Words of inspiration to MMTers, but also a number of proposals similar to those found on this web site, even though Eccles seems to have had a different understanding of economics.


  8. rvm Says:

    Warren, MMT has to be permanently presented in OWS movement. MMT and OWS have common interests and, as you commented somewhere already, OWS needs MMT.

    I’ve just returned from Zuccotti Park where I spent couple of hours holding your book in my hands and wearing this hat:

    I tried to spread the word, but we need a permanent spot in this park with some MMT slogans and a lot of copies of SDIFEP book.

    Are there any unemployed MMTers with some free time?



    I can have a box of books sent


    Tom Hickey Reply:


    How about quick making some short videos specifically on 7DIF to put up at YouTube, FB, etc. This is the way to have a shot at going viral.

    Dylan Ratigan’s rant is now being promoted as the one demand of OWS, for example.

    Occupy Wall Street Our One Demand

    Mike Norman’s Jones Beach video demonstrated that all it takes to set up a studio is a cheap digital camera, natural lighting, and quiet environment.


    rvm Reply:

    @ Tom Hickey

    Getting the money out of politics is a perfect demand for OWS. One person – one vote, and not $1 -one vote.

    But in order to formulate next perfect demands OWS will need MMT.

    Tom Hickey Reply:

    @Tom Hickey,

    I would recommend a series of short videos on 7DIF, proposals for reform, and why MMT is superior to the solutions proposed by Ron Paul and the Kucinich/AMI plan to get MMT in the hands of the protestors as quickly and widely as possible.

    I think that getting copies of 7DIF in the hands of key activists and following up on it is also a priority.

    beowulf Reply:

    @Tom Hickey,
    I suppose Warren could always take the whistleblower angle– like an inside source Jessie Ventura would interview on his conspiracy TV show (Matt Taibbi is in this one).

    The certain way to build a rapport with any political audience, left or right, is to hate on the Federal Reserve. So one approach is to go with the flow– get the crowd on your side first with that and then dive into the pecifics ways Warren’s proposals would thwart the dark plans of the Fed (Bernanke gets enough grief, so I wouldn’t single him out by name).
    A future episode of Jessie Ventura’s show could be promoted with:
    “A Wall Street legend blows the whistle and speaks out about the Federal Reserve’s secret plan to drain your wallet with something insiders call a”reserve drain”.

    Or,if you really want to be mean, align the Fed with animal abuse and then take the other side!
    “Our political system is a dogfighting ring, Jessie, its run for the gamblers. The Democrats, the Republicans; they’re just the poor animals trained and fed to tear each other part. Meanwhile its people like Michael Vick and the Federal Reserve who are pulling the strings and making the money ["making the money" is literally true in the legal tender sense].

    Mario Reply:

    @Tom Hickey,

    Tom your time has come my friend.


    You have all the knowledge to speak for MMT, you have an edge that OWS people will FEEL and RESONATE with…you’re normal and ordinary and accessible. You can articulate this in both complicated economic language as well as in ordinary PEOPLE talk. OWS needs YOU Tom. You can also articulate the types of proposals we need. You can talk about the banking system and how “evil” it is and how we need to tax the rich (rentier) class, etc, etc, etc.

    THIS IS YOUR TIME TOM. All that you have done before now culminates at this very moment. Don’t try to reject this Tom. This is your mission. Please choose to accept it.

    As you yourself have already stated:

    Mike Norman’s Jones Beach video demonstrated that all it takes to set up a studio is a cheap digital camera, natural lighting, and quiet environment.

    There are no more excuses Tom. It’s time for you to get out there and share the information….the medicine….the balm….the fire.

    DO IT!!!!! (and do it NOW Tom). Yes you marched this weekend for OWS Iowa City…but these videos Tom….your videos Tom….they have more power and potency than any marching you could ever do anywhere. Do this Tom. Make your videos. Make them now.

    beowulf Reply:

    @Tom Hickey,
    I should clarify for new readers that yes I meant the conspiracy angle tongue-in-cheek.

    Tom Hickey Reply:


    Just cut to the chase and recommend formally consolidating the Treasury and Fed under the Treasury secretary since they are already informally consolidated.

    Tom Hickey Reply:


    Thanks for the vote of confidence, Mario, but Warren has the cred. He’s been there and done it.

    Mario Reply:

    @Tom Hickey,

    Thanks for the vote of confidence, Mario, but Warren has the cred. He’s been there and done it.

    Of course all cred goes to Warren and co of course! He is THE MAN and the “high-priest” of MMT. He’s also been a mentor and major influence for me in my professional life to boot!

    I don’t think it really matters who does the vids…in fact anyone and everyone could do MMT vids!!! What I’m seeing is some quick 5-10 min. videos with a few bold main MMT points/statements in text on the screen and then followed up with a easy-to-grasp explanation of that MMT point. Each main MMT point gets a video. It just needs to be in accessible language so that people can get the full message without an economics textbook.

    Heck maybe I’ll do them….even though I don’t feel qualified enough and familiar enough with all the intricacies of the material to really be doing vids, but the fact is they need to be done and it takes absolutely nothing to make them. Not to speak for Warren or anything but I’m sure there’s no objections to people making MMT vids so long as the info is correct and accurate.

    Well that’s just my two ticks for ya’ll and I’ll leave it at that. But an MMT channel on youtube would be a great idea whoever puts it up (that knows the information at least).


    Tom Hickey Reply:

    @Tom Hickey,

    It does matter who makes the vids and how they are presented. They have to counter Ron Paul and Dennis Kucinich, celebrities of the left and right.

    Paul and Kucinich have to be met on the same level to get cred. Among MMT proponents, only Warren has that cred. He’s a successful “Wall Street’er” who has figured out how the system works and how it can be used to achieve public purpose instead of being hijacked.

    Neither the Paul nor the Kucinich plans will accomplish what their proponent think. This needs to be spelled out precisely and concisely. Moreover, the presenter has to have the background to field objections. In addition, 7DIF is there for immediate follow up. Warren is the clearly the point man here.

    Mario Reply:

    @Tom Hickey,

    well then I’d say we need to help out Warren do whatever it takes to get these videos up!!!

    Warren is there anything I (we) can do to help you get some videos made?

    Cheers to all!!!


    back in the office tomorrow. will try to get to it, thanks

    Tom Hickey Reply:


    Warren needs to be the front man, but he needs an organization behind him promoting the MMT narrative. That’s where we come in.


    i’ve started more than once but somehow never got it done

    BFG Reply:


    They have their own library and address you can send them to.

    Contact Us


    The UPS Store
    Re: Occupy Wall Street
    Attn: The People’s Library
    118A Fulton St. #205
    New York, NY 10038



    got a couple of people taking my books there

    rvm Reply:

    @ Warren

    That would be great. I can help to distribute them but only on the weekends, as I can’t take any vacation.


  9. John O'Connell Says:

    My local newspaper, published every Tuesday and Friday, prints every letter to the editor it receives, unedited even for grammar, spelling and punctuation, but only up to 300 words, and only once per week per author.

    Would it be possible to package some MMT principles in 300-word bites for publication in papers like mine? I would try, but I think it would be more effective coming from the likes of Warren, or Randall.

    Not a really wide audience, but a grass-roots start. Once created, these short epistles could be collected on a web site and used by others in their own local papers. And they do have longer guest op-eds, too.


  10. John O'Connell Says:

    Well, no comments on my last post here, so I claim plagiarism rights as necessary. Here’s a draft of my first installment. Comments, corrections, suggestions welcome. It’s 288 words. In particular, I would like for Warren or someone else knowlegable to validate the statement in the 6th paragraph:

    Our politicians seem all to be ignorant of some basic economics.

    If the world is divided into government (the US Federal variety) and non-government, then if one of them saves money ($US) the other must dissave it. In other terms, if one has a “surplus” in its budget, the other must have an equal “deficit”. There is no other place where savings can go or come from, because these two categories encompass the entire universe.

    The US Federal Government is the monopoly producer of dollars. There is no other place that the dollars saved by non-government can come from. Government produces dollars by spending, and destroys them by taxing. Net production is a budget deficit, and net destruction is a budget surplus.

    Non-government can be divided into two sectors, domestic and foreign. When the domestic non-government sector saves money, we call it “private savings”. When the foreign sector saves $US, it is called the Trade Deficit. The way the foreign sector gets $US to save is by selling more goods and services to us than they buy from us.

    We have a trade deficit because the foreign sector wants to save $US (by buying T-Bills), just like we do. If they didn’t want to save $US, they could buy US goods and services, or exchange their $US for other currencies. They don’t. They prefer to save $US.

    Since we do have a trade deficit, and we do have net private savings, it is a mathematical certainty, not a policy option, that (if the economy is in equilibrium) we must also have a Federal Budget deficit, and it must be equal to the sum of the other two surpluses.

    More about equilibrium next time.

    For more information, see


    ESM Reply:

    @John O’Connell,

    It looks fine, but as I’ve said many times on this blog, I think the real disconnect is caused by the (mistaken)mainstream belief that the issuance of Treasury bonds saps aggregate demand by forcing deferral of consumption.

    If people recognized that a Treasury bond is effectively the same thing as a dollar bill, then they would understand that there is no inflation sword of Damocles hanging over our heads.
    The very fact that $10T of Treasuries, plus $2T of reserves, plus $1T of currency exist without sparking high inflation is convincing evidence that the non-governmental savings desire is at least $13T.


    JCD Reply:

    @ESM, If we could get the Fed to do Operation twist ad infinitum, we could prove the point. When every treasury trades at a yield of say 5 bps, what is the difference between treasuries and cash?

    It would seem to be the easiest idea on earth to explain to an economist.

    It’s enough to make me ashamed of my bachelors degree in economics.



    i like to put it this way

    the reason the govt can deficit spend in the first place without causing ‘inflation’ via excess demand is because the economy has a net savings desire for whatever reason.

    so govt doesn’t deficit spend first, and then, quick, offer some rate to keep those funds from causing inflation.

    the govt buys things when it deficit spends, and that they are offered for sale is the evidence that the economy wants the net financial assets.

    yes, the term structure of rates figures into that savings decision, but looking at the interest income channels and econometric evidence I suspect that higher rates reduce savings desires, and vice versa.


    ESM Reply:


    “the govt buys things when it deficit spends, and that they are offered for sale is the evidence that the economy wants the net financial assets.”

    I agree in principle, but a big part of government deficit “spending” actually consists of transfer payments, right?


    yes, but at the margin they buy things

    JCD Reply:


    Perhaps you’re missing my point.

    My point is ZIRP and Mr. Twisty combine to form a natural experiment.

    Imagine the Fed did both, until the entire term structure was at 5bps, flat as a board. And of course, Treasuries would retain their infinite liquidity because the Fed was willing to purchase or finance without limit at a given price/yield.

    What would be the practical difference between a Benjamin and a bond? Nothing. It would be as if the treasury had never issued a bond, and just printed greenbacks. Economists would tell you that if they just printed greenbacks we would have massive inflation.

    Well guess what? Two year treasuries are trading at $99.40 or there abouts. They are infinitely liquid. And the fed has said that rates will be near zero for two years. The Fed *HAS* turned bonds into Benjamins. And yet no inflation.

    It makes you want to shake an economist by the lapels. The truth is staring them in the face. The Fed turned every treasury from two years and in into cash, and …. wait for it …. inflation went nowhere.

    We are so going to be Japan.


    and the main stream economist is telling us the Fed just hasn’t done enough…

    John O'Connell Reply:


    “the real disconnect is caused by the (mistaken)mainstream belief that the issuance of Treasury bonds saps aggregate demand by forcing deferral of consumption.”

    Mainstream among economists, maybe, but I don’t think the general public (my target) thinks in those terms. I think people generally believe that deficits cause inflation whether bonds are issued or not, and whether the Fed buys them or not. It’s just “deficit=bad”.



    congrats, you’ve come a long way in a short time


  11. John O'Connell Says:

    I’ve been meaning to ask this for a while, amd now the flat yield curve discussion is my chance.

    Occasionally, the Fed engineers an inverted yield curve, driving short term rates above longer rates. They did it in 2006, and before that in the late 1990′s. Every time they do it, a recesion follows.

    This is widely believed to be a causal relationship. How does MMT view the effects of the inverted yield curve?


  12. John O'Connell Says:

    Second letter to the editor, for your review and comment (292 words):

    In my last letter I explained why we have a Federal Budget deficit, and why we MUST have one, if the economy is to be in equilibrium.

    Equilibrium is when all production is just barely consumed. If there is any stuff left over, producers will reduce production to clear the market. That means laying off workers. If the stuff is all gone, and people are still looking to buy it, then producers will hire more workers and produce more stuff.

    Equilibrium is not a very good goal for us right now. Unemployment is very high, and growth is too low. We need to advance, not to stay the same. The way to advance is for somebody to buy more stuff, and then producers will hire more people. Economists call that “increasing aggregate demand”.

    Government can influence the economy by spending more (or taxing less, and then consumers will have more to spend) to make it grow, or by spending less (or taxing more) to reduce its growth rate, or even make it shrink (i.e., recession). The policy question is always whether the deficit is too big, too small, or just about right.

    (It matters what kind of spending government does. Some things are more effective than others, and some can be harmful to certain individuals, but any spending helps the economy, even if it is not the spending we would prefer.)

    So, today, is the deficit too big, too small, or just right? If you like the current unemployment rate and growth rate, then it’s just right. But, if you want higher growth and lower unemployment, the way to do that is with a bigger deficit, not a smaller one.

    But, don’t deficits cause inflation? Next time.

    For more information see


  13. Giuseppe Says:

    No mention here of your economic program for Italy, Warren.
    I’m not sure the italian program you signed really reflects your ideas and not just Paolo Barnard’s ones. Did you read it (in english translation of course)?

    Do you know that this ME-MMT program says:
    1) The state must eliminate the financial sector (???)
    2) There will be no devaluation at all of lira vs euro, on the contrary lira may revalue vs euro (??)
    3) The state will force the rich to invest and to spend in the way it is more suitable for the public interest (!)
    4) There will be higher taxes than today (!) on luxury items and the rich people will be stimulated to spend on ordinary items (!)
    5) The state will discourage savings (!)

    and also other (totalitarian and socialist) things that I disagree and I mentioned here:
    (it is in italian language)

    I really didn’t know you for being such a socialist and totalitarian economist, so i suppose there could have been a few misapprehension between Paolo and you. I was wondering if you could be so kind to tell us if you know of every portion of the ME-MMT program for Italian salvation you signed, or if the final version is mainly Paolo’s own work (or the other 2 minor economists I do not know). In case you do know, then I would like to know if you would live here in Italy should the country apply 100% of this program (so that you should change your activities I suppose…).



    Haven’t read it yet.

    Yes, the financial sector supported by state policy is limited to that which serves public purpose.
    Yes, as with my similar Greek exit proposal, the currency floats and is likely to initially be stronger.
    Yes, all states have policies like zoning, permitting, regulatory and environmental requirements, etc. (no oil refineries in downtown Rome for example)
    Yes, resource allocation will be done more by using taxation to discourage undesired consumption and less by attempting to tax income as discussed in ‘soft currency economics’
    Yes, in that the state won’t use the tax structure to promote savings.

    I don’t know the ‘tone’ of the document but the substance as you relayed it seems ok?

    And yes, if it’s as it’s been represented to me, and i can only go by translations, it is exactly the type of place I’d like to live!


    Giuseppe Reply:


    well, it’s not exactly that “the financial sector supported by state policy is limited to that which serves public purpose”, but it is told that the “bank sector is limited to what serves public purpose”, while “the financial sector will simply be CUT OUT”. It’s not explained what you mean by eliminating the financial sector, but I suppose there will no more be any chance to invest in equities or in bonds, not even outside the italian market (which will simply stop existing I suppose). As a matter of fact it is this the meaning that I have to get when I read: “since the government has taken away the speculative financial sector the rich will only have 2 investment options: either they invest in ORDINARY items or they invest in productive activities”.
    I have to be honest, I like MMT and I thought you, the father of MMT would have been less totalitarian. I’m a rich and a financial trader (I hope this is not a guilt for you like it is for Paolo), if I won’t be free to invest wherever I want to invest (of course not in illegal activities) I prefer to go away from your programmed Italy, unless you think the “public interest” will prevent me to do that (cause maybe when you sayed there will be no capital flight you meant that capital won’t be allowed to fly?).
    Also, about devaluation, our friend Giovanni Zibordi said he cannot believe you really think lira could revaluate vs euro, I will tell him you really believe this, maybe we could bet against lira and you vs euro together? (Not that I think a weaker lira will be a problem for the country)
    Giuseppe Trucco



    appreciate your comments. again, I can’t read Italian, so I have to comment based on translations.

    Yes, much of the financial sector can be ‘cut out’ by, for example, eliminating tsy securities as I’ve proposed for a long time.
    But private sector debt would continue, with corporate bonds and other forms of debt as alternatives to bank loans. Europe has traditionally had a far larger share of lending to corps coming from banks, for example, which can continue to the extent that public purpose is served by allowing that kind of lending. And, again, Europe has made that case for a very long time, so I suspect the legislature would continue to allow its banks to lend to corporations. And while I have proposed US govt. insured pension funds not be allowed to buy equities or other ‘speculative’ investments, because govt. insurance means its govt. directed investment, I don’t think that applies to Italy as my understanding is the public retirement institutions are ‘pay as you go’ and don’t accumulate investments?

    Nor do I see any of this totalitarian? For one thing the representative govt. remains as such with ‘reforms’ to make it more so.

    And with, for a given size govt, taxes low enough for full employment means a virtually unlimited opportunity for business to compete for consumer dollars, with consumers having sufficient dollars to spend to keep everyone willing and able to work employed in a job that supports a decent standard of living. And that standard of living, of course, comes from both public goods and services, and the purchase of private sector goods and services. What more could business possibly/responsibly want than sufficient spending for full employment?

    And yes, you can invest in any legal investment! Domestic or foreign! You won’t be able to invest in cct or btp because there won’t be any, not because you aren’t allowed to! And you probably won’t be able to build an oil refinery in downtown Rome, or a meat processing factor in a residential neighborhood, etc, etc. And if income taxes are replaced with property taxes, for example, you won’t lose your income tax deductions for expenses, etc. but they will be moot! etc.

    Bottom line, look for a 50% + increase in real output within 5 years from where it would have been otherwise, largely from maybe a 20%+ increase in the number of people gainfully employed.

    hard to believe you get hurt by that???

  14. Giuseppe Says:

    (didn’t find the “reply” bottom on your last comment so I write mine here)

    In the greek exit strategy you told “Freedom to transact is the source of that substantial contribution to real wealth”, and I thought that your program for Italy would have been aimed to freedom from taxes slavery that are now applied to all workers and entrepreneurs (up to 65% of income!), but I see no speak about freedom, just constraints in the name of the public purpose (and since I read all Ayn Rand’s romances when I see too many references to public purpose I feel distrustful.
    This gap between your “freedom to transact” and the program “public purpose contraintes is probably because of the statalistic view of your co-author and his demonization of everything involved with “finance” (and I can also understand his reasons). But I believe that individual freedom comes first than the public purpose, until it doesn’t involve unlawful things of course. I may be wrong but the financial sector that is eliminated in Paolo’s view is not just treasury bonds, otherwise why it is told: “since the government has taken away the speculative financial sector the rich will only have 2 investment options: either they invest in ORDINARY items or they invest in productive activities”? Why do I have to buy ordinary items and not Mosler cars? Because it is in the public purpose! And what about my freedom? Because in the public purpose I may think it is proper to close night clubs, casinos, tobacconists, financial markets, liquor stores, etc. but I prefer to leave the choices to the individual freedom not to the government!
    If you had the chance to read the whole translation of the program maybe you too would find that it has got a socialistic/totalitarian tone in many parts. And for this reason there is not any hope it could be welcome by any political forces but the extreme left. This is what I got hurt by. Then of course there are other thoughts about inflation and devaluation that I simply don’t buy, but that’s not a problem, if you believe lira will be the next swiss franc it’s ok, you are just wrong.
    On the contrary I will work, together with Giovanni, at a program “MMT-inspired” ways more simple, that any political party member could share, and then let’s hope we find one who does.

    One more curiosity: do you also think greek dracma will appreciate vs euro like the lira? I want to look Giovanni Zibordi’s face when I told him you think so :-)



    It might not directly speak of ‘freedom’ but it’s certainly what it’s all about?

    The unemployment is a major anti-freedom condition that is eliminated.
    Removing govt. bonds is a move towards less govt. where it’s serious damage.

    Yes, I have no way of getting the ‘tone’ as you rightly suggest.

    But there is no freedom and there are no markets without institutional structure of some sort, as even the
    most die hard heads up libertarians fully understand. And you don’t have freedom to shout fire in a crowded theater when there isn’t a fire, etc. etc. ‘no govt’ freedom quickly deteriorates into war lords and constant strife, as witnessed in many places even today.

    The currency itself is a creation of the govt, and limiting its govt. sanctioned application as I have suggested clearly falls under the category of ‘limited govt’ contrary to what you are suggesting? Isn’t it about limiting govt. to public infrastructure for pubic purpose, including the protecting fundamental rights to ensure freedom? Are you saying there should be otherwise useless govt. bonds to provide ‘investments’ for you? That kind of govt. welfare makes no sense at all?

    Yes the govt, by eliminating govt. bonds, for example, will remove those ‘speculative’ investment options and their derivatives.
    And banks won’t accept financial assets as collateral which also reduces speculative investment. What’s wrong with that?

    Yes, that will leave ‘ordinary’ investments like real businesses that produce real goods and services.
    And yes, you can buy a Mosler, because it gets 30 mpg on the highway. ;). The question is whether you
    can buy something that uses up the nation’s fuel supply purely for your entertainment. And that’s a question
    all govts always deal with regarding public purpose. Questions along the lines of, does the winner of the national lottery have the ‘right’ and the ‘freedom’ to, for example, buy a forest, cut down all the trees, and build a big fire for his entertainment?

    Is there currently a problem in Italy where people with money are overly restricted as to what they can buy and consume? If so, I’ve never heard mention of it?

    So this proposal simply starts with the structure in place, makes fiscal adjustments etc. for continuous full employment,
    eliminates the likes of govt. bonds (a form of govt welfare) and bank lending that doesn’t suit public purpose, and then lets representative govt. take it from there, presumably representing the will of the same voters as today, including you. ;)
    here is no mention implied or otherwise about govt. taking over any means of production, confiscating anything from anyone, socialist or anything else-ist. And there’s every reason for the right and the left to embrace it- everyone wins (apart from a few bond traders) from full employment. And, for example, why would the stock market not double in a year, if not sooner, from its current, depressed levels? Who gets hurt by that? And what makes people with money more angry, taking it away from them as the current govt. is doing, or allowing them to make more but continuing to limit what it can be spent on?

    And yes, my guess is that the lira will initially be strong, as taxes will immediately be due in lira and the only ‘net supply’ will come from govt. spending. And with a fully employed, growing economy with virtually unlimited real business opportunity the FDI will be enormous as well.

    The same would be true of Greece if they executed by Greek exit strategy, but not necessarily if they used the alternative exit strategies I’ve seen.


  15. giovanni zibordi Says:

    Hi Warren

    if you increase the gov deficit from 2% to 7% of GDP you get 80 billions euros in Italy right ?

    If the transition to the lira creates an artificial demand of liras to pay taxes this will not last. Business expect the lira to go down and need a lira at 90 cents to the dollar, 30% lower. We import 460 billions a year of stuff and export the same, have a reputation of weak currency and if we use the exit from the euro to spend another 5% of gdp in public programs the Forex will SHORT LIRA. If we exit the euro together with Greece, Portugal and Greece and we use the exit from the Euro to increase public spending by 80 billions will go down A LOT. Because everybody that has some business or capital will be scared, nobody trusts the gov to spend another bunch of money, bringing public expenditure to 57% of GDP and keeping taxation at 60-65% of income for a business will not incourage business people, unless the Lira devalues a lot and this gives inflation. How can you think that an “argentinian-style” policy of big deficits and big gov programs will push up the lira ? We had a weak lira, big deficits and big gov programs all through the ’70s and ’80s. We had MMT in Italy ! And it works with a weak has already been done.

    1)A Job Guarantess program means that politician will have another 80 billions to manage on top of the 800 billions they already have of public expenditure. The money will be wasted, we did a thing like that for 30 years in Southern Italy, we had MMT-like-job-programs in the South between 1970 and 1990, to give jobs at any cost to people… at the time there was no costrain on the Treasury because it was financed directly by the Bank of Italy…It has already been done!… and on a grand scale, the result was more employment, yes, but enormous waste and little to show for after 30 years

    2) in Italy a small company, that is not able to “triangulate” among jurisdiction like Luxottica or Benetton (95% of Italian companies), pays above 60% in total taxes, state and local and a self employed, programmer, artisan, restaturant, hotel, small shop etc.. pays around 65% in total taxation. Why should I work and invest here ? You pay 4% !!
    A study that just came out shows that Italy has taxes 9 PERCENTAGE POINTS above the OCSE average.
    As you know S&P 500 companies have an effective tax rate around 23% and koreans, singapore, taiwan, hong kong, malesia, russian… companies pay even less. Everybody I know is giving up, only banks and multinationals survive this kind of taxation (and we have no more tax evasion to speak of because we have the elaborate system of tax documentation compliance in the world, everything is measured, in the USA a small restaurant can avoid reporting cash payments not in Italy, I filed taxes in America and in Italy and in NY or LA I can avoid some, here I can’t

    MMT in Italy should be used to cut taxes, cut taxes, cut taxes. Also on payrolls, because you pay 100,000 euros and the employee get to keep 40,000 euros… WE HAVE TO CUT TAXES BY AT LEAST 80 BILLIONS euros, 1/2 on companies and 1/2 on payrolls, better 100 billions euros

    The MMT program that Paolo Barnard put together does not even mentions in 30 pages cutting taxes! The fact that the gov will hire a bunch of people will help sales, sure, but Italian companies need to breath first. The Italian MMT program looks like a Chavez-like gov expansions that Southern politicians around here will just love, because they will have a bunch of money to distribute. You have to realize that we already had this policy, but at the time taxes were lower and there was some escape with tax evasion. If we do the same, but keeping taxes as they are will be a mess



    Yes, net financial assets go up with higher deficit spending. With the lira, those will be held by either residents or non residents.

    I agree the initial demand for lira ‘will not last’ as you state. That’s why I said it will initially be strong, and not immediately go down as other fear.

    Business needs to sell it’s goods an services, and with the initial tax cuts and spending increases to sustain full employment with a minimum JG pool I expect a sharp increase in sales by most all businesses. (I agree some, like bankruptcy lawyers and bond traders, may suffer…)

    Yes, fx traders may short the lira, which of course immediately makes them buyers hoping for other sellers to cause them to profit.
    But yes, that could temper the initial tendency for appreciation.

    Yes, people will be scared, just like they are today, which has made, in my opinion, the euro under valued. Recall my buy recommendation on this blog when it was about 120 to the dollar in late May/early June when Trichet first proposed the ECB support national govt. debt. Because of this the lira will be ‘priced to worst’, much like the euro when it first started.

    As for the increase in the deficit, not that it matters but just for reference it still won’t be anywhere close to Japan. And show me one nation with full employment and a growing economy and a floating fx policy that has a currency depreciation problem? In fact, full employment and growing economies tend to have strong currencies, right? And remember, the increased deficit is only accommodating savings desires that have gone unfulfilled and not ‘pumping in spending’ beyond that, as evidenced by the size of the jg pool.

    Sorry, I’m not familiar with the past jobs programs in the south. The jg is a minimum wage transition job, with taxes set low enough to ensure there is enough private sector demand to keep the jg pool as small as possible as it needs to be to function as the kind of ‘price anchor’ that unemployment does today.

    And again, as for business, all businesses want is a backlog of orders at prices where they can make a profit.
    All business taxes are ‘passed through’ to consumers, directly or indirectly (which is why I don’t like any of them, but that’s another story) so business taxation is in fact about relative prices for consumers. So while I more than share your desire to cut taxes I don’t see them as the ‘lead story’ for returning to the lira. The idea is to switch back to the lira ‘seamlessly’ for the purpose of restoring aggregate demand/full employment with the legislature retaining the options open to get to a full employment fiscal stance.

    Hope this helps!


  16. giovanni zibordi Says:

    Italy lost 1 million jobs since 2007 and is about 3 millions jobs short of full employment so a JGB has to hire at least 2 millions people at minimum wage of around 30k euros per person (total employers cost) which comes to at least 60 billions for 2 millions jobs, and 90 billions if you want real full employment. GDP is 1.6 trillions so a 5% GDP budget deficit increase will be 80 billions. So if you do the JGB where is the money to cut taxes ?

    But the point is that a 5% GDP budget deficit increase in a country that already has a very high gov expenditures and 60 to 65% taxation on business that all goes into more gov expendtures is crazy. You live in America where companies are profitabile, here they are not! why don’t you propose the US companies pay a 60 to 65% total tax rate ?

    Nobody trust the gov to hire 2 or 3 millions people. It has already been done and even the politicians said it was not good to let them create job. Italy has a history, only with lower taxation and gov expenditure we did OK, what you propose is exactly what was done in the ’70s and ’80s, but now with much higher taxation. And on top we have already have terrible regulations, everything you want to do is costrained, you cannot restructure a room in your own house without a permit, to set up a gymn takes a year or two only to get a permission and you propose a program to regulate more. We do not have multinationals that produce only in China and a huge military, health care, university and financial sector (and prison sector) like the USA. Italy ha small companies that export tools and machines in niche markets. If we let them go bust what do we do ? start a system of private hugely expensive health care, military, prisons and education like the US to create jobs financed by the Bank of Italy ?

    Why should we let the politicians hire 2 millions people instead of bringing down taxation to the OCSE average ? And we do need to export 450 billions to 500 billions a year, never in its history Italy was able to have permanent trade deficits, even with a weak lira. Except for Australia, UK and US there are no countries that can afford permanent trade deficits.

    We will not be able to sell a lot of Italian financial assets abroad if you hire 2 millions people in government programs and keep taxation at these levels. There is monetary theory and there is reality



    First, a JG offers a job to anyone willing and able to work, so if 3 million opt for it those are the approximate numbers.

    Second, if the JG pool is deemed to be too large for price stability (I think about 3% of the workforce will be about right, but just a rough estimate), it means for a given size govt. a tax cut is in order to ensure enough private sector demand to hire the excess (transitional) jg workers. It just means the deficit will be that much higher, at least for a while.

    And remember many of those hired as transitional jg workers will be giving up at least some other forms of public assistance as they will be deemed ‘employed’ and therefore some will lose some benefits. So the spending will be somewhat less than you calculate.

    But in any case, also remember, as the JG workers find private sector jobs due to higher consumer and business spending, the govt. deficit will quickly fall from fewer JG workers to pay and from higher tax revenues. At that point the govt. needs to be mindful of the deficit getting too small, as would evidenced by the JG pool, at some point, expanding, and be ready to respond accordingly.

    And it’s not about trusting the govt to spend the funds instead of the private sector, but hiring temporarily at a fixed, capped, wage, in order to assist the transition from public sector to private sector employment as the private sector responds to increased sales by hiring people away from the JG.


    Giuseppe Trucco Reply:


    “It just means the deficit will be that much higher” ???

    Warren, if you spend 100 billion euros to cut income taxes, 100 billion euros to employ unemployed workers (so that you will have some 75-80% public workers in the southern districts on average (maybe too many for the private sector to hire them away???) and 130 billion to cut 100% of VAT (the tax cut that is written in the program actually), then the deficit will REALLY be that much higher. Are you sure this won’t be a problem? I don’t think so. It would be too big a “free lunch” this way!



    The right size deficit is the one that coincides with full employment.

    So you forgot to tell me about the vat cut!!! Shame shame shame. ;)

    Anyway, the jg won’t add anywhere that much net spending as previously described,
    And with the economy doing better cutting tax rates won’t reduce actual revenues by anywhere near as much as you say either.
    And the vat cut will help sales and keep prices in check as well.

    So cheer up!

  17. Danny Says:

    I am really interested as to what MMT’ers think on this issue and correct me if Im wrong. You propose a payroll tax holiday as stimulus which has a similar effect as increasing monetary stimulus but I see this proposal as imbalanced because not everyone receives stimulus including retirees, students the disabled and unemployed. Also if the people are directly involved in monetary policy with the central bank the system will become more democratic and participatory and remove some of the responsibility from the executive government making governing easier.


    Ed Reply:

    @Danny, danny, i’, no mmt expert yet, but like engaging in the conversation where i can.

    i like warrens payroll tax cut stimulus idea, i like yours too. my belief is govt spending put directly in peoples pockets provides the most direct way to stimulate economic activity. Spending is easy, cutting taxes is easy, both make people happy and help grow the economy.

    The single biggest obstacle to your idea and all of warrens great ideas is that they require continued, and in most cases, significant growth in govt debt. now as warren has reinforced many times, operationally – debt is not a problem.

    the reality is – that debt is a functional problem, in the sense that it causes our political will to impose all kinds of self constraints which seek to limit, in some cases severely limit, growth of govt debt. and they do it in the name of “austerity”.

    debt causes what i call the “diametrical monetary conundrum”, and that is: for the private sector to grow, the govt debt must grow. if we reduce debt, then private sector shrinks.
    everyone likes lower taxes, and everyone hates looking at ginormous levels of govt debt….unless you understand mmt

    now i took a look at your website, and you raise some points that i agree with and are very similar to a previous blog post warren put up:
    It was a tough read because of translation from italian, but seemed to hit on some points of your website. things like:
    - the govt is sovereign owner of it’s currency and should not be subject to paying private banks a vig to spend it
    - the govt should not have to borrow it’s own money to spend
    - the govt should not have to pay interest to spend its money
    - the govt should issue money direct from trsy instead of fed
    - by issuing money direct, the govt could own private debt and collect the interest, freaking out bankers

    as warren pointed out to me, those points just above are all things the govt “chooses” to do, under current institutional arrangements. so, if it chooses to do those things, it could choose not to as well. so, why don’t we implement those changes? maybe because banks scare us not too? maybe the system would collapse? maybe we really need cb’s and private banks to issue govt money via debt? maybe we’re just afraid of change? i don’t know.

    but what we do know, as i mentioned in a different post, is Lincoln in 1861 took the u.s. off the gold standard for the first time and straight up printed $450m and spent it. no fed, no debt, no interest, no problem. this, understandingly, completely freaked out the banking establishment. so they lobbied with all their might to repeal the effort as soon as possible, which they did.

    however, i find the historical significance of this event is epic. we found out we could use fiat money without being backed by gold OR govt debt, and make it work. god forbid… bankers might have to perform labor to earn an income or even worse, use their own money to fund their banks…:-)

    so,even though debt doesn’t constrain the govt operationally, it does provide the venom to which debt/deficit hawks use political will to constrain the efforts which are needed to further advance our monetary endeavors for full employment and continuous prosperity. and oh, btw, debt makes bankers pretty wealthy regardless.


    Nihat Reply:


    for the private sector to grow, the govt debt must grow. if we reduce debt, then private sector shrinks

    Observe that the math implied by this statement is, the outstanding govt debt is equal to the sum of all deficits up to now, which is false. Debt payments occur regularly with interest costs figuring in as govt expenditures in a given fiscal term, but these payments do not subtract anything from the non-govt sector balance. (I guess, formally, some tied up financial asset can be said to become freed. Don’t forget: there is also the interest payment added to the non-govt sector balance as a side effect of the whole exercise.) Subtraction from the non-govt sector balance occurs when the govt runs a budget surplus.

    I agree with your general observation that debt is a functional problem, except maybe I’d call it a political problem due to our –apparently– inbuilt resistance to accepting the concept of monetary sovereignty.


    Ed Reply:

    @Nihat, hey nihat, my math was more of a simplistic high level statement. but once we start getting more specific, it always comes down to one thing. under the current way of doing things, govt is saddled with more debt than money it spends. this is because of 2 things. discounts off the face amount of the bonds (which never seems to be talked about much) and the interest it pays on the bonds.

    whether we call debt a functional problem or a political problem, debt is the core of the problem (as mentioned before, i acknowledge with mmt view it’s not an operational problem….:-).

    so what are the possible solutions to the debt problem? This is the real brain teaser.

    will people embrace the reality that govt debt really is ok?
    do we implement severe austerity measures to reduce it?
    do we make systemic changes that allow sovereign govts to spend more then the debt that they create?
    does govt just issue money with no debt?

    personally, i’m ok with govt debt, i just think the govt should be able to spend an amount equal to the debt+interest+discount today, then payback the face amount+interest over time… it a workable compromise.

    I keep referring back to Lincoln because history has provided us with an excellent monetary point of reference to draw upon for ideas to solutions for our current monetary issues. Its fascinating stuff, but too bad it’s been relegated to a fleeting moment in time by most.

    for example, he took us off gold standard. the establishment freaked out, put us back on, and it took another 110 years to accept that we really didn’t need it. and today, people still prophesize to our demise because of it.

    Lincoln was offered loans from europe to fund the war, only catch was they wanted 25-35% interest. He refused to indebt our nation that much, told’em to bug off, used the sovereign power and printed us money!

    The argument seems to be that if govt issued it’s own money directly, it would go binge crazy, print too much and remove the scarcity of it, so therefore we must bequeath that sovereign privilege to private bankers for the control and regulation of it….and pay them hefty fees for their service.


    the problem is unemployment.
    if you want to argue debt causes unemployment feel free to do so

    dannyb2b Reply:

    “The single biggest obstacle to your idea and all of warrens great ideas is that they require continued, and in most cases, significant growth in govt debt.”
    My idea doesn’t require continual growth in government debt or any government debt at all if the gov chooses to have no outstanding bonds. The monetary system would not require bonds for any aspect of monetary policy. Not for collateral for OMO’s or for expanding the money supply. The central bank would be completely separate from the other arms of government as if the central bank is the fourth arm of government. All newly created money isn’t debt based either.



    Either way, no matter what you call it, the debt/deficit spending is just $ deposits at the fed.

    Ed Reply:

    @dannyb2b, hey danny, took another look at your webpage and see what your saying.

    Let’s straight up print the money and put it in peoples pockets, no debt. sort of the greenback thing with a twist for distribution of the benefit. i’ve also suggested similar thoughts in different posts here.

    My thought is, to do what you suggested, we would have to rearrange the current institutional arrangements. as warren points out, we issue money backed by debt that pays interest because congress chooses to, so i guess if there was the political will, we could choose to change it as well.

    Funny part is most of what you have suggested, which i too have been thinking, has already been proposed in congress. Take a look and google, HR2990, go to and read the text of the bill. let me know what you think.

    Also, as interim step to HR2990, is a movement for states to create their own banks with funds they already sit on to act as the reserves, then create very low cost loans to the state for infrastructure improvements etc, saving millions in state taxpayer money, and probably generating a nice income for the state. North Dakota has done it for 100 years. check it out at:

    curious of your opinion on this one too.

    at the end of the i believe the govt for several years has severely under funded what the private sector needs cheers


    need to be wary of moral hazard when ‘giving out the money’

    ok to give it to those unable to work, like the elderly, for example.

    but better to offer paid work than give handouts to the unemployed,
    as the value of the currency is a function of what the economy has to do to get it, at the margin.
    so if you have to at least sell your time to get it the value reflects how one values that time.
    that means you can spend without limit without inflation if it’s in ‘return for value’ as just described.
    otherwise the give aways have to be limited.


    just my personal preference to increase the take home pay of people working for a living who are actually producing the goods and services we all depend on, and who have seen real wages stagnate for going on half a century.

    i also support a 2,000 minimum for social security and a federally funded $10/hr transition job for anyone willing and able to work to facilitate the transition from unemployment to private sector employment.


    all in detail on this website


    dannyb2b Reply:


    A payroll tax cut is good, but I think a more balanced arrangement is one that includes the broad spectrum of society, including of course students, pensioners, disabled etc… Besides you could also make the moral argument that all citizens have equal right over the new created currency if that is the method of stimulus..

    I try to separate monetary policy and fiscal policy in order that these get managed by their own specialized agency and their is less confusion and more accountability. Monetary policy is quantitative in nature and should focus on things like the CPI level and quantity of money in circulation and maintaining the most stable and efficient currency system to underpin real activity.

    Fiscal policy should task itself with qualitative issues like employment, investment, R&d, productivity, education, growth.



    The same moral right applies to all gov spending
    I call it public purpose

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