Tag Archives: Modern Money Theory

Trying to Clarify Modern Money Theory

coinsmedievalModern Money Theory is about how our monetary system works in the complicated real world – with a central bank, government spending of new money, private bank lending leveraged off the government “base” money, and the central bank and government kept separate by complicated rules allegedly to ensure “sound” money.  It is such a convoluted subject that there are about as many accounts of how it works as there are “experts”.  MMT cuts through a lot of that to a story that makes good sense and is quite contrary to a lot of things said by politicians and mainstream economists.  So MMT seems to be a very good thing.

Yet the most accessible book on the subject, Modern Money Theory by L. Randall Wray, concludes with the Chapter What is Money? that I find to be convoluted and confusing.  Much of it is built on the assertion that “goods cannot buy goods”, which I find mystifying.

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