Investopedia Unabshadly Comes Out in Favor of Keynesian Economics

Investopedia is a really good website to go to for the conventional economic view.  Being that, it is less than favorable to John Maynard Keynes and Keynesian economics in many of it's articles.  In many cases they state things he  supposedly got wrong or go as far as putting words in his mouth like, "the government can spend your money better than you"(note: he never suggested anything like that).  It's for that reason I had a good laugh when I read their article on Mercantilism which states(emphasis mine):

This approach assumes the wealth of a nation depends primarily on the possession of precious metals such as gold and silver. This type of system cannot be maintained forever, because the global economy would become stagnant if every country wanted to export and no one wanted to import. After a period of time, many people began to revolt against the idea of mercantilism and stressed the need for free trade. The continued pressure resulted in the implementation of laissez faire economics in the nineteenth century.

The emphasis part is exactly right.  It is impossible for every country to increase exports because those export must go to a country as an import.  If every country tries to do export and bans imports, then overall trade is reduced as nations stop importing.  The hilarious part is that this is one of the fundamental precepts of Keynesian economics.  This is almost exactly the Paradox of thrift.   It is impossible for every person to save money because that money they save must come from someone who is spending.  Your consumption is my Income.

The best part of this is how matter-of-fact it makes the point.  It offers no qualifications on the statement because mercantilism is so universally condemned.  It never occurred to me until recently that it's universally condemned for the opposite reason that market fundamentalists condemn Keynesian economics.

It's nice to see investopedia accept such an important keynesian concept.  Now, maybe a Keynesian wrote that article and would explain the apparent contradiction between the overall site and this particular article(probably not, but maybe).  Even so, I bet I could show that article to any market fundamentalist and they would not see anything wrong with that statement simply because it is used to promote "laissez faire".

The "Official" history of Economic Thought in 1000 words or less

The official history of economic thought has a surprisingly short history. As the official history this is what many people already know(or at least partly know) and is what's generally taught and passed on. Like many "official" histories, it contains many myths that are quickly uncovered after a little questioning more on those myths on another day. For now, let's just stick to the "official" history. For we cannot debunk myths without understanding the myths first.  If you knew all of the following you could sound reasonably informed in most  any conversation about the history of economics.

Our story starts about 240 years ago. A man named Adam Smith set out to discover why some countries were exceedingly wealthy and others very poor. The result of his research resulted in the first book on economics: "The Wealth of Nations". In it he laid out the laws of supply and demand and price vs. Value. He concluded that through trade, an "invisible hand" guided individuals to make decisions that caused a spontaneous order to develop. One in which great things were accomplished by everyone making smaller decisions. He opposed government involvement in the economy because centralized planning wasn't as efficient as everyone making decisions based on prices set by supply and demand. Therefore, the best economies were the ones without government involvement and where individuals were allowed to make their own decisions.

If there was a problem with Adam Smith it was his "Theory of Value". Smith made a distinction between price and value and ran into a problem he couldn't explain. The problem is known as the diamond-water problem. Why is water, necessary to life and needed everyday, was practically free, but diamonds which have no inherent worth go for a higher price.  He concluded that supply and demand set the price of an object, and that it didn't always set it to its real value. (remember this is the "official" history)

The next set of figures in our history are David Ricardo, John Baptist Say, and Thomas Malthus.  They all existed around the same time in the early 1800s, but each left their own unique contribution to economic theory.

First up is John Baptist Say.  He is famous for "Says" law.  The theory that "products are paid for with product", and therefore there can be no general glut of goods that can cause a recession because price will even out in the end.  To put another way, anything that is produced will be consumed.  This was later simplified to "supply creates it's own demand".

Then there is David Ricardo who is still mentioned in modern textbooks for his theory of "comparative advantage".  Comparative Advantage showed "unequivocally" that "free trade" benefits both countries involved in the end.  He did some other stuff that people feel occasion to mention, but this is the only important thing to remember in the official history.

Finally, we come to Thoma Malthus.  The only reason to remember him in our "official" history is because of how stupid he was.  He predicted that mankind was headed for tragedy.  Eventually the world population would outstrip ability to produce food.  Thanks to technological advances we aren't there which proves how awesome free market capitalism is, and how stupid Malthus was.

Then, in 1867  Karl Marx published Das Capital which gave capitalism it's name.  That's it.  Nothing else to see here.  Move along now.

Then, circa 1870, something great happened in the world of economics.  It was called the Marginal Revolution!  Remember that whole "Labor Theory of Value" that Smith had wrong?  The Marginal Revolution fixed it.  The theory goes like this:  Everyone's needs and wants are subjective.  Additionally, each additional unit of "a thing" is less important than the previous.  For instance, a cup of water when thirsty is important.  However, the second, third, fourth, etc... cups are each less and less important as one's thirst is quenched.  That is why water is priceless because everyone has enough.  Additionally, diamonds are rare, and people subjectively want diamonds.  Adam Smith's water-diamond problem was solved and there was much rejoicing in the world of economics.

Then, something strange happens in our "official" history of economic though.  Nothing new and interesting happens for 60 years...

Then, the Great Depression happened in the 1930s:  A long run recession that "Say" said couldn't be possible.  Out of that, a rising star from Cambridge University had a thought.  "What if supply doesn't automatically create demand?  Maybe demand creates its own supply?"  That man, John Maynard Keynes then went on to write the second most important book in economics, "The General Theory of Employment, Interest, and Money".  In it he explained how "Demand creates its own Supply".  In it he said that governments should spend lots of money all willy nilly during depressions to fight unemployment, and then pay down the huge deficits in upticks so as to fight inflation. (Again, this is the "official" history as told today)  Capitalism would enter a "golden age" of growth for over 20 years.

In the 1970s, disaster struck.  Inflation and unemployment happened at the same time.  Something that the keynesians(as followers of Keynes were called) couldn't explain.  It just so happened, that there was a man, named Milton Friedman, who had predicted just such an event.  People flocked to this prophet and asked, "Mr. Friedman, what do we do, we're all so confused".  Mr. Friedman smiled and said, "you see, government is the problem.  Balance the budget and give control of the business cycle over to 'politically insulated' central bankers - they'll know what's in the nations long term interest".

It was 1981, and a form of Monetarism called "supply-side" economics was put into place.  Together they stated that Free Trade was good, remove rules and regulations because they only hamper industry, privatize public lands and utilities to increase efficiency, high taxes on the rich reduced investment and hampered growth, and only central bankers should try to control the business cycle.  The low inflation and high growth of the 80s "proved" that supply-side works.  Now we are at current day mainstream economics.

Over the next 25 years the country experienced low inflation and low(but steady) growth.  Economists called it "The Great Moderation" and patted themselves on the back for taming the business cycle.  They all rejoiced.  That is, until all hell broke loose in 2008, but that's closer to recent events than history so I won't go into it.

And so ends are fast paced journey through time in less than a thousand words(not counting the intro).  As I stated before, if you've made it this far, you're probably as well versed in economic history as most people are.  Unfortunately there are some myths in this "official" history.  Some myths are areas where the story the myth tells is flat-out wrong, and in others it leaves out important, sometimes crucial facts.

You'll note that I didn't link to anything in my "official" history.  This was deliberate.  I did it for 3 reasons.  The first reason is that the "official" history is so pervasive I don't feel required to have to justify it.  The second reason, is that links are usually required to "prove" something, and here I did nothing but repeat the common fable.  And the third reason, is that I will provide links to people repeating the common myth, and the debunking of the myth in separate posts.  I will, eventually, one-by-one, try to recreate the actual history of economic thought and compare it to the common myth.  If you're interested, I suggest you subscribe to my blog and watch for posts that start with the title Economic History debunked.

This "just in" from the Eurozone: Greeks Aren't Lazy

The unfolding crises spreading throughout the Eurozone continues to inflict unnecessary pain and poverty.  This pain has been continually made worse by the disastrous policies of those in charge of the Euro.  German Chancellor, Angela Merkel, is now starting to share in the pain her preferred policies have delivered to other Euro nations.  Today, Reuters is reporting that German manufacturing sector not only shrank last quarter, but shrank fast.

As the so-called "Sovereign debt crises" has hit several European countries, those countries have been forced to increase taxes and cut government spending.  These cuts have affected everything from social safety nets to education.  They "had to" because that was the deal when they started using the Euro.

The European Union is set up in a way that guaranteed that eventually, one of its members was going to have a debt crisis.  What makes the Euro so unique is that it was setup almost like a gold standard.   Each nation in the Eurozone does not issue it’s own money.  Money is always borrowed.  That borrowing must come from someone who has Euros.  This is very different from most other modern countries like the U.K., United States, Canada, or Japan.  The reason this becomes important is not during economic booms, but during the busts.  From my last Euro tirade:

During an economic bust – or recession – people are out of work and pay less taxes.  Therefore the nation brings in less tax money.  Additionally, the increasing unemployed add to the costs of the social safety net.  Therefore as the recession goes on, countries bring in less tax dollars, but are obliged to pay out more benefits.  This becomes a problem when you cannot have a budget deficit.  The U.S. states are having that problem right now.  Greece and other Euro zone nations aren’t supposed to have budget deficits greater than 3% of GDP.  That is impossible during a deep enough recession.
During a deep recession, a Sovereign nation like Japan or the United States could run a large budget deficit to counter-act the recession.  Eurozone nations cannot do that.  They must cut back along with the rest of their private sector.  Well, when a recession is caused by people cutting back, and then the government cuts back… it’s only going to make the recession worse!

Sure enough, as nations like Greece, Italy, and Ireland cut back their spending, it only exacerbates the problems with their economy.  No matter how much they cut, they still find themselves with large budget deficits.  And each time, the other Eurozone nations - especially Germany - have forced more austerity on them to try and enforce fiscal discipline.

Now those years of bad policy are coming home to roost in Germany.

Markit's manufacturing Purchasing Mangers Index (PMI) fell sharply to 46.3 from March's 48.4, according to a flash estimate released on Monday, well below the 50 mark which would sign al growth in activity.
It marked the fastest rate of contraction since July 2009 in the sector, which has been hit by a decline in some exports as the debt crisis in the euro zone has choked demand from key trading partners.

Wow, years of recession and forced austerity on their trading partners is hurting German imports.  Who could've predicted that?(answer: anyone with a brain)  I wonder when Germany starts hurting if Chancellor Merkel will try to enforce the same amount of austerity. I also wonder if there will be a vicious campaign to call German factory workers "lazy" and "overpaid" like there was against Greek workers during the early days of the Greek crises.

I don't blame the German people for their predicament.  Even on their government I cast only partial blame.  The root of the cause is bad economic policies driven by really bad economic theory.

Inflation Chicken Little Bill Fleckenstein

I read an article on MSN yesterday from February 3rd  about how we're at the "inflection point" where all that "quantitative easing" the Fed has been doing is going to start causing inflation.

And, if we are finally at that inflection point, the world will then slowly begin to concern itself with stagflation and inflation, and eventually the world's bond market participants will start to demand more in interest-rate comapensation due to real rates being negative, which will shut down the central bankers' printing presses. No one will accept negative real rates and just getting their monaey back if they are no longer worried about a deflationary collapse.
In sum, I believe we are approaching (if not at) that inflection point and that deflation is about to become very old news until sometime down the road, potentially when the printing press is taken away from the central banks.

Wow!  Buckle in everybody, that inflation-stagflation is finally coming.  Bill Fleckenstein, noted investor has called it.  Just out of curiosity, I checked some of Bill's past predictive calls and found it enlightening.

Back in January, a month before this article, Bill predicted inflation and a gold rally.

The month before that  in December he made the following prediction:

Eventually, as fear of default fades -- and investors demand a return on their capital, not just return of their capital -- the bond markets will take the printing press away from the central bankers because of inflation and currency debasement.

I'll skip over another dozen articles where he complains about so-called money printing and go all the way back to February 2011, "Ben Bernanke seems to have won his imaginary battle with deflation, but he (like many others) seems oblivious to the real threat of inflation."

Back in late 2010 he predicted growing interest rates in 2011 because of all that "money-printing" and to expect lots of inflation.

His oldest article available on MSN was from September 03, 2010 and guess what?  In it he predicts inflation!

As I said two weeks ago, I believe it is more likely that we are in for a period of stagflation, which is an entirely different world from deflation. With stagflation, interest rates eventually rise, and bonds do poorly. Companies benefit when they have pricing power and barriers to entry that keep potential competitors away, as do companies that are growing rapidly.

Unfortunately I can't go back to 2009 because his articles aren't available.  However, I found 2 blog posts from 2009 each referencing a different Fleckenstein article in which he was warning people about coming inflation.  See here and here.

Since this guy has been warning us about coming inflation for at least 3 1/2 years, I'm going to take his latest warning with a grain of salt.

With all the extra demand the government has been pumping into the economy, eventually it is eventually going to heal, start growing, and may someday start causing inflation, but at over 8% unemployment and a federal government that keeps threatening austerity and deficit reductions(thankfully it's only half-a*** these things), that day is not near.  If and when it does happen, then we can start following their austerity advice.

MMT and the Job Guarentee

I don't like to do Meta posts, but there's a debate raging in the MMT world that offers some insight into MMT and it's Job Guarantee(JG) policy proposal.  Modern Monetary Theory is a relatively new school of economic thought and I think it is experiencing it's first growing pains as more and more people accept it's fundamental points.  So what is the debate?  There is a debate raging on whether or not the JG proposal is central, peripheral, or even part of, MMT.

On the one side is the "old guard" who come mostly from academia.  This group includes the founders, their students, and their large following on the internet.  They argue that the JG is central to MMT.  The two were created at the same time.  On the other side of the debate is savvy investors who understand MMT.  This group is mostly represented by John Carney of CNBC fame and Cullen Roche of Pragmatic Capitalism fame.  They argue that there are core tenets of MMT that are undeniable, and that the JG proposal is just an idea that some might advocate and show is possible once you understand MMT.

Cullen has been making several posts questioning the wisdom of the JG proposal.  There of course have been counter blog posts firing back.  I come down firmly on the side of  "I see both sides".  Technically, I think Carney, Roche are right in their assertion that the JG does NOT have to be a part of MMT.  In my view is a policy proposal, not an explanation of how a macro economy works.  However, the JG flows directly from the MMT understanding of the way the world works.  Once one understand MMT, the JG proposal becomes a very obvious and desirable policy.

To suggest that the JG isn't a part of MMT is like saying that "Aggregate Demand Management isn't part of Keynesian Economics" or "Gold Standard isn't part of Austrian Economics" or "Market Promotion isn't part of Neoliberalism" or that "Socialism isn't a part of Marxian economics".  In all of these cases, the policy isn't *technically* part of the economic framework.  However, once you understand and accept that economic framework, the policy normally associated becomes obvious and desirable.  To reject the policy strongly (but not definitively) suggests that the person either doesn't understand the framework, or rejects it.  After all, I suppose it wouldn't be unheard of to find an Austrian that doesn't advocate for a gold standard or a Marxist Economist that rejects Marxist politics.  But those exceptions are extremely rare because the policy idea is so strongly suggested by the economic framework.

While I admit that Carney and Roche may be "technically" correct, I am beginning to think that they either don't fully understand or fully accept the entire MMT framework.  I know this to be the case of Carney because in his writings he seems to reject aggregate demand in his analysis.   See Letsgetitdone's third post on this topic for Carney's assertion and why it's wrong.

For Roche, he mostly seems to reject it on political terms.  Perhaps Cullen will be that one guy for MMT  that just reject the JG because he wants to.  See Letsgetitdone's first post on the topic for more on that.

The Cost of Labor SHOULD be High

Conservative politicians and commentators repeatedly assert that employers need to reduce “labor costs” to stay competitive(Examples here and here).  They assert that lower wages will be better for the country by creating more jobs and cheaper products.  These assertions do not stand-up well against 30 seconds of critical thinking.  Putting aside the morality of lowering wages, The cost of human labor should be high for very practical reasons.  High labor costs is what drives employers and customers to find new ways to automate everyday jobs.

Despite the current depression we are in, the manufacturing capability of U.S. factories is greater than it’s ever been.  This may go against conventional wisdom that says manufacturing is dying in the country.  That is simply not true, it just quit hiring as many people.  Of the people who still work in U.S. factories, their productivity is so great that even with fewer workers, they are able to produce more than their counterparts of 50 years ago.  By automating factories, employers can produce more with fewer people and the result is cheaper prices.  In a perfect economy, those no longer needed to work in a factory would get different jobs and produce something else and we’d all end up with more overall wealth. Now this is progress that liberals should cheer(Of course, in today’s economy, those employees have no where else to go. The reasons of which are far beyond the scope of this post)

Employers automated all those factory jobs because it was cheaper than continuing to pay workers for the same work.  If their cost of labor had been low, as conservatives want it to be, that automation would never have occurred and auto workers would be putting together Ford cars the same way they assembled Model Ts.  Conservative policies of lower wages holds society back.

You might think, “Sure, that works in factories, but you can’t automate services or retail jobs– their wages must stay low for my benefit.”  This is not true, automation in retail has already occurred and will continue to occur.  Think of how much time is saved by bar code scanners.  How much time is saved by a clerk no longer needing to manually type in the price of a product.  Add to that automatic inventory tracking.  Also Security tags that sound alarms when leaving a store reduces the cost of having to hire an army of security guards to prevent shop lifting.  If the cost of labor was low to hire these people, employers would never have been interested in investing in these things.  And These are just the things that have already been automated.  Heaven only knows what else might be automated if the cost of labor was higher.  Maybe automatic baggers at the grocery store.  Maybe carts that restock the shelves.

With higher labor costs even services that seem impossible to automate might be ripe for an enterprising entrepreneur.  It is not unheard of for services to be automated.  The number of household with maids went down considerably with the invention of things like the washing machine and dishwasher.  If the cost of hiring a maid was low, these inventions would not have caught on because it was still cheaper to just hire someone to do it.  Just like in retail, there are still several services that could be automated.  For instance, there are already robotic lawn mowers.  How long will it be before owners of golf courses or other owners of other large tracts replace yard workers with automatic mowers and leaf baggers.  The answer, of course, is as soon as the machine costs less than labor.  If the cost of labor was higher, this automation would happen sooner.  If we continue to follow conservative policies of low wages, progress like that will never occur.

I don’t mean to belittle or down play the suffering caused by people who have their jobs replaced by a machine.  However, I think that calls for a much stronger social safety net, and does not justify holding back progress.  Technology and putting it to use by investing in new automation is what helps increase overall wealth in the economy.  Conservative policies of low wages are not only heartless, but hold back the economy and our country from greatness.

Reframing Money

You probably all know about the story of Copernicus.  In the 1500s he spread the idea that the Sun - and not the Earth - was at the center of our solar system.  Despite fierce resistance from the Church, the idea caught on and changed the way scientists think about our place in the Universe.  One part of the story you may not know is that there was such a thing as a pre-copernican astronomy.  It involved complex theories to explain the movement of planets that involved things like "epicycles" and "coils".  Believe it or not, they did a fairly decent job of predicting the movement of plaanets and forecasting eclipses.  However, as accurate as those models may have been, Copernicus's model was much simpler to understand and ended up being even more accurate.  When Copernicus changed the frame of reference from the Earth to the Sun, suddenly everything else fell into place and was much easier to understand.  To understand modern economics, we need a similar change of perspective from the old.

Most of us have a 19th century view of money.  That is, the view that money and dollars are nothing more than a unit of exchange that is representative of something concrete like gold or silver.  Granted, most people know that the gold standard has been over for over 40 years now.  However, when talking about money, we still carry the thinking and language of money as gold.  We think of dollars in terms of being physically limited, like gold.  Also like gold, we think of in terms of supply and demand - if there is more of it, it is automatically less valuable and vice verse.  We think of the government "saving" dollars like it saves gold in a vault.  We think of the government needing to hoard dollars today so that they can be used tomorrow.  This view of money comes with a (unsubstantiated) story of money that goes like this:  A long time ago humans used barter to exchange goods.  This was inconvenient so they decided to find a common unit of exchange.  Gold and Silver were settled on because they were rare and one piece of gold(or silver) was just as good as another.

An increasing number of economists are taking a different approach to understanding money and that is called Modern Monetary Theory or MMT that I've been writing about for almost a year.  Rather than thinking of money as purely a unit of exchange created spontaneously, MMT economists take a different approach. The approach was proposed, most famously, by Knapp.  He viewed Money as "a creature of the state".  MMT economists view is that money is how the government of a capitalist country brings resources to the government.  Here's how the story goes:

Say you are the head of your own country.  You want to build a new highway for your people.  To do so, you must convince people to work for you and sell you the concrete and tools you'll need to build your road.  You therefore decide to create a new currency and give it a name... say iCoin.  You offer your iCoins to people to work for you or to sell you construction equipment, but nobody accepts your offer because nobody wants an iCoin.  Therefore, as head of the government, you impose a tax on all your people of 10 iCoins that must be paid by next April 15th or be faced with jail time.  Suddenly, people need iCoins and are willing to work or sell the government equipment in exchange for iCoins that they will eventually give back to the government.  (A by product of this is that people start exchanging it with each other.)

The take away from the story is that taxes are what gives a currency value and the purpose of the currency is to make private resource public.  These concepts give us a new approach to understanding money in a modern economy.  Just like when Copernicus put the Sun at the center of the solar system, this new approach simplifies our understanding and reveals once obscure truths that now seem obvious.  I'll briefly go over a few of them, although each deserves their own blog post.

What gives Fiat money value.

As far as I'm concerned, there has never been a really good explanation of why fiat money(money with no gold backing) has value.  The traditional approaches have been less than satisfactory.  The one traditional explanation is that all fiat money grew out of gold or silver certificates and that even when the exchange was closed, people keep accepting the certificates out of habit.  The second traditional explanation - the one still taught at places like Harvard - is even less concrete.  It goes something like this "As a hair stylist, I accept dollars from my customers because I know that I can use them to buy a hamburger at my favorite restaurant which accepts my dollars because they can use it to pay their waiters who also accept dollars because they know they can use them to get a hair cut at my salon."  Both of the traditional explanation requires a leap of faith by currency users every time they accept dollars.  In the MMT approach, it is real simple why people accept dollars as a payment: "I need dollars to pay my taxes."

Extended Recessions

There are several possible causes for temporary, short-lived recessions that no economic understanding can always prevent.  However, the MMT approach provides a simple understanding of extended recessions like the one we're in now, or the ones in the early 80s and 90s.  A long term recession is caused by the government not providing enough dollars for everyone to meet their tax requirements and dollar savings desire.  Where-as the traditional approach requires understanding everything from sticky prices and wages, IS-LM charts, and Phillips curves.

Currency Value and Inflation

The traditional approach to understanding how a government can control the value of a currency is based on interest rates - The idea being that if you raise interest rates the currency becomes more valuable-, "quantity theory" if the amount of money in the system goes up then the value of the currency must (eventually) go down, and reserve levels(the amount of money banks must keep in their vaults).  The MMT approach views it differently.  MMT views that the only way a government can control the value of their currency is by the level of taxation and spending level(i.e. fiscal policy).

New Insights

In the previous 3 examples comparing the different approaches one can see that neither approach is definitively wrong or right.  Just like the ancient astronomers vs. Copernicus,  MMT just offers a different approach that makes things easier to understand.  MMT also makes a few things obvious that aren't obvious in more traditional approaches.

The first is the limits on federal spending.  Those trapped in the traditional approach believe that a government can only spend what money it gets (or will get) from taxes.  The MMT approach suggests that tax level isn't the limitation - the ability of the economy to create the resources the government wants to buy is the only limitation.  If the government deficit spends too much it'll hit resource limitations which manifests itself as inflation.  Therefore, inflation is the only limitation on government spending - not tax revenue or even borrowing.

Recessions and Inflation

Another thing MMT shows is an explanation of why governments can spend more during a recession without raising taxes.  In the traditional approach, a large budget deficit is thought to automatically cause inflation based on the "quantity theory of money".  Therefore, even during a recession when tax revenue drops and unemployment rises, it is recommended to cut spending so as not to cause inflation.

However, the MMT approach shows why that is wrong.  During a recession, people are out of work.  If the whole point of money is to bring resources to the government... then people being out-of-work means that the government has MORE room to spend because there are more resources available.  In fact, the government should not only spend more, but even tax less.  As long as the unemployed resources are available, the government has no reason to cut back during a recession.  That's why we can have 3 years of trillion dollar plus deficits and still have very low inflation.

Final Remarks

There are of course numerous other things that your understanding of is changed once money ise viewed as how the government of a capitalist country brings resources to the government.  There are too many to cover in a single post.  Not the least of which is the relationship (or lack there of) between inflation and unemployment, trade deficits, interest rates, and many more.  All these topics need their own posting to due them any justice.  I won't get into it now, but the point of this is to acknowledge that MMT completely reframes the role of money and that the reframing makes it easier to understand the real world mechanics of modern economies.

You don't have to accept MMTs reframing of money to understand all these concepts mentioned above, but just like with reframing the Earth moving around the Sun helps to understand astronomy, so does MMTs reframing of money.  Otherwise, to explain everything that we've seen just in the last 3 years we have to accept things like sticky prices, an ever-changing Phillips curve, and maybe even Ricardian equivalence.