Shades of MMT in the Blogosphere

Modern Monetary Theory continues to make inroads. The latest example is the successful conference in Rimini on the weekend. Michael Hudson has offered his reflections. But what the newcomer to MMT may not yet appreciate is that there are many shades to MMT. Sure, the work of the academics is pretty much homogenous. But this is not always the case in the blogosphere, where we feel free to mix things up. Out here, we don’t necessarily agree that we are discussing economics, let alone MMT. Some of us are not even willing to concede that we blog. With this in mind, I think it is time we had a Glossary that clarified the many nuances of wider MMT. On the surface we may seem identical, but underneath there are almost differences. Perhaps such a Glossary was not needed in the past, but this is 2012. I am not actually qualified to compose a Glossary, but what’s done is done.

A short historical note may be in order before allowing “analysis” to go completely off the rails. Prominent MMTers include Warren Mosler, Randall Wray, Bill Mitchell, Stephanie Kelton, Scott Fullwiler, Pavlina Tcherneva, Mathew Forstater, Rob Parenteau and a few others. I am not exactly sure if Jamie Galbraith is a proponent or fellow traveler. I can’t be expected to be accurate. In recent years, the number of Modern Monetary Theorists has exploded beyond the half dozen, with some prominent Post Keynesians lending support and a new generation of young Modern Money geniuses emerging from UMKC. Even with these reinforcements, the theoretical approach appears to remain clearly defined among the academics. It is just as well, then, that the rest of us can pretend to confuse matters. Otherwise there would be no call for this post.

GLOSSARY OF TERMS – Part A: Academic

MMT. 1. Modern Monetary Theory. Known in academic circles as Neo-Chartalism. It is represented by the following macroeconomic accounting identity:

MMT = Monetary Operations + Stock Flow Consistency + Minskian Financial Instability + Functional Finance + Job Guarantee

MMT. 2. Modern Money Theory. An alternative approach sometimes adopted at UMKC. It is the same as Modern Monetary Theory in every way except that “Monetary” is replaced by “Money” in the name of the approach, which makes all the difference.

[As far as I can tell, this exhausts the shades of MMT in academia. Things are more diverse in the blogosphere. In the following list, there is plenty of overlap. Many of us are in more than one of these groupings, or switch between them from one day to the next without meaning to, or just to keep things interesting.]

GLOSSARY OF TERMS – Part B: Bloggers

MMR. Modern Monetary Realism. At first it was thought that this approach could be represented by the accounting identity:

MMR = MMT – Job Guarantee

But it is now known that there is more to it than that.

Platinum MMT. Members of this school like really big coins. For instance, a trillion dollars – or more – just in the one coin.

C-MMT. MMT for creditors. Opposed to a zero interest rate policy. Maybe this school doesn’t exist yet, but surely it will once MMT really catches on.

Neoclassical Synthesis MMT. In this approach, a role is found for a natural rate of interest, liquidity trap, money multiplier and other notions considered no-no’s in MMT proper. Its founders developed it in an attempt to woo Nobel laureate Paul Krugman into the fold. (Yes, I realize it is not a real Nobel Prize, but that’s the best they give the economists.) The gambit hasn’t worked, but the approach is here now, and no one’s bothered specifically to debunk it.

Non-Consolidationists. Members of this school are sometimes sympathic to aspects of MMT but reject consolidation of Central Bank and Treasury balance sheets in the general depiction of monetary operations.

Austrian MMT. Combines an understanding of monetary operations with some Austrian stuff.

Ancient MMT. In this approach, archaeological records and ancient religious texts are examined in light of MMT.

Spiritual MMT. The Spiritual Neo-Chartalists will focus on MMT when they absolutely have to, but otherwise read more widely and reflect on deeper philosopical or spiritual questions.

Neo-MMT. This is my suggestion. It is just a shell at the moment. Marx fits in somewhere. But mainly I just wanted to start an approach that could be known as Neo-Neo-Chartalism. For the accounting identity, I’m thinking:

Neo-MMT = MMT + (Neo-MMT – MMT)

However, I will need to obtain copyright permission.

Loose Cannon MMT. This is a blogging approach that threatens at any moment to distort MMT while at the same time attempting to disseminate it to a wider audience. This Glossary is an example of the approach.