A Mea Culpa and Some Comments on MMT and Fiat Currency Economics

It has recently been pointed out to me that some of my writing on monetary economics has not given proper attribution to the intellectual tradition behind the ideas that I present and that this gives the impression that these are my ideas. I’m embarrassed to admit that the criticisms are spot on and I have made a major misjudgement in how I wrote these articles (one in The Conversation and one in The Guardian). I apologise unreservedly to those who may have felt aggrieved by my actions.

I have a history in public policy activism and I have approached my recent popular political and economic writing somewhat from an activist standpoint where I viewed the main game as advocating and causing public policy change and increasing public awareness. The branch of monetary economics known as modern monetary theory (MMT) has something of an activist element to it where a minority who hold an accurate view of how things are and, perhaps to a lesser extent, how things should be, are vying for airtime against the overwhelming majority who hold (or at least communicate) a false perspective on monetary economics and public finance.

I thought that I could add a new voice and a new strategy to that struggle by simply writing about monetary economics from an MMT perspective but as if it’s just the uncontroversial (among economists) truth about monetary economics rather than a minority view among economists. I think the complexities of intra-discipline disagreement are impenetrable for newcomers and will put most people off investing the effort to understand the arguments.

Taking this line of thinking led me to make a serious misjudgement in what I wrote and how I wrote it because MMT is more an intellectual and academic discipline than it is an activist movement and, as such, people’s careers and their professional profiles are at stake. Again, I apologise to the people whose work has inspired some of my writing who have not been properly acknowledged including Warren Mosler, Perry Mehrling, Bill Mitchell and Steven Hail.

I wrote to the Guardian editors requesting a couple of additions. They agreed to add attribution to a line early in the article that credits Warren Mosler but not to make further edits post-publication. I’m a strong believer in owning up to mistakes and trying to remedy them when others are affected.

I believe MMT faces serious challenges in part because of its name and the way it is usually presented. A better name would be something like Fiat Currency Economics because MMT is not a theory but is primarily just a description of reality and the clear consequences that flow from that reality. No economist that I’ve found has any clear and well reasoned refutation of MMT to offer. All attempts at refutation appear to rely on misunderstandings or misrepresentations. This is why I took the approach of not referring to MMT at all in the pieces that I wrote. Nevertheless, I still should have referred to the people whose work contributed to or provided the ideas for the articles and I greatly regret that I did not. I promise I will not make this mistake again.

Below is a list in rough descending order of significance with respect to influencing my views on monetary economics.

Perry Mehrling’s Coursera course The Economics of Money and Banking
Warren Mosler’s book The Seven Deadly Frauds of Economic Policy
Various presentation given by Steven Hail
University of Newcastle’s CofFEE report on the Job Guarantee
Professor Bill Mitchell’s blog – this is the most comprehensive of the sources here but it’s low on my list because I came to it quite late in the formative period of my thinking on money and finance.

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5 Responses to A Mea Culpa and Some Comments on MMT and Fiat Currency Economics

  1. Pingback: Kelton story in Forbes, attribution | The Center of the Universe

  2. Tim Thornton says:

    Hi Warwick

    Very gracious of you to seek to placate anyone’s concerns. However, in your defence it seems only fair to say that an op-ed piece is not an academic journal article – op-eds are a format where it can be difficult to make attribution to particular authors or intellectual traditions. The article was clearly written from a modern monetary theory perspective – this would be obvious to most economists, particularly most heterodox economists (who know who all the leading figures are). Furthermore, at no point do you give the impression these are ideas have been created by you.

    Given all this, I would hope that all MMTers should not miss the main point in all this: that you have publicised these important and interesting ideas so clearly and so well. Nobody should be too hard on you, and you shouldn’t be too hard on yourself, if you didn’t manage to cite particular authors or intellectual traditions in this particular instance.

    Well done on this article and the other fine articles you continue to write.

    Tim Thornton

  3. Steve Wierhake says:

    I’ve learned a lot from Warren Mosler in the past five years reading his blog and articles. I strongly recommend reading Cullen Roche’s blog as well: http://www.pragcap.com

    Cullen has moved away from MMT and has developed something he calls Monetary Realism (MR). People familiar with MMT will see that it has much in common with MR – which Cullen acknowledges.

  4. John Lawless says:

    Personally, I sort of understood why you pitched the articles the way you did. Keep banging the drum; we need this to go mainstream.
    As an aside, your suggestion that Fiat Currency Economics is a better name than Modern Monetary Theory is spot on.

  5. Steven Hail says:

    Surely no-one minds, Warwick? I certainly don’t, and don’t really deserve the billing you have given me. On the naming front, Warren Mosler’s book title ‘Soft Currency Economics’ always appealed to me. I think we are stuck with MMT now, though. Regards, Steven Hail

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