MMT

MMT seems to have become popular recently and I can't really see why. Whilst they may state several true things that many people do not realise, they also make many misleading, useless or downright false claims, for example:

MMT claim: The government is the source of all money

The proponents of MMT will place huge emphasis on the role of governments in the determination of the money supply but as already shown in this chapter it is private banks that create and destroy the vast majority of our money supply.

MMT claim: All money must be somebody's liability

Proponents of MMT insist that all money must be someone's liability, i.e. money is always an IOU. The problem with this idea is that it precludes the idea of everlasting tokens. Indeed L. Randall Wray, a leading MMT advocate, described the use of everlasting tokens as money as a non-sequitur. So according to MMT, banknotes must be an IOU. Read here for why banknotes are not an IOU. For a more academic discussion of this issue see Central Bank Money: Liability, Asset, or Equity of the Nation?

MMT claim: Bitcoin is simply not money

Whilst bitcoin may be poor quality money because it is not accepted in many places in return for goods and services, it is by no means "not money" because it certainly accepted in some places.

The odd concepts of "net savings", and "net financial assets"

Proponents of MMT are fond of talking about "net savings" as if this was a really useful concept. Let us consider for a moment a society in which a great many people have invested their savings into new machinery in new factories that will generate new goods in the future, then it is reasonable to assume there is plenty of saving going on in this society... but if we then went on to say that the owners of these factories are doing the exact opposite of saving (i.e. borrowing), and the net saving is therefore zero. This gives a totally misleading idea about what is happening.

MMT claim: Government bonds are money

Whist it is true that on occasions government bonds are used to purchase things, it is not so common. Goods and services are not widely on sale in return for bonds. This makes government bonds poor quality money so to just label them as "money" or "money equivalents" is misleading.

MMT claim: QE does not increase the money supply

As already explained in chapter 1, QE does increase the money supply.