[P2P-F] Conference invitation and information on Modern Monetary Theory (MMT)

Fri Apr 8 17:35:25 CEST 2011

thanks Kevin!

On Fri, Apr 8, 2011 at 7:08 PM, Kevin Flanagan <kev.flanagan at gmail.com>wrote:

>
>
> ---------- Forwarded message ----------
> From: Feasta News <website at feasta.org>
> Date: 8 April 2011 12:42
> Subject: Conference invitation and information on Modern Monetary Theory
> (MMT)
> To: Feasta News Subscriber <kev.flanagan at gmail.com>
>
>
>  <http://www.feasta.org>
>
> *(Mailing list information, including unsubscription instructions, is
> located at the end of this message.)*
>
>
>  *Lessons from the Crisis: Money, Taxes and Saving in a Changing World*
>   [image: Tasc logo] <http://www.tascnet.ie>  [image: Smart Taxes logo]<http://www.smarttaxes.org>
> *conference co-hosted by the Smart Taxes Network <http://smarttaxes.org>and
> TASC <http://www.tascnet.ie/>.*
>   *Date :* 9th May 2011
>  *Venue :* Croke Park, Dublin
>  Entry is free but booking is required (via contact at tascnet.ie<http://mailto:[email protected]>
> )
>
>  *Have Economists Learnt Anything from the Crisis?*
>
>  The dawning realisation that conventional economic thinking that did not
> foresee the crisis cannot help solve the problems we now face means that we
> must be open to exploring new economic ideas. It is time to move beyond
> criticising the clear shortcomings of our country’s economists and
> politicians and consider - with open minds - economic ideas that are being
> developed outside of the mainstream. Such a new macroeconomic model has been
> developed by a pioneering community of heterodox economists based in the
> University of Missouri, Kansas City. Their Modern Money Theory (MMT)
> approach predicted the current crisis and so, unsurprisingly, their analysis
> and economic solutions have attracted intense interest amongst economic
> commentators including Nobel-Prize-winning Paul Krugman.
>
>  MMT will inform some of the economic policies to be presented and debated
> in a conference entitled “Lessons from the Crisis: Money, Taxes and Saving
> in a Changing World” co-hosted by Smart Taxes, (Fiscal Policy for
> Sustainability Network) and TASC (Think Tank for Action on Social Change) on
> the 9th of May at Croke Park, Dublin.  Policy suggestions from Tasc have
> been developed within a critical progressive perspective, and Feasta's
> analysis is based on the role of cheap fossil fuels, particularly oil,
> within a complex and interdependent financialised economic system.
>
>  *What does Modern Money Theory have to offer us that is different?*
>
>  Although Modern Money Theory describes the money creation and management
> system of a fully sovereign (i.e. currency-issuing) state, MMT is still
> relevant to Ireland in formulating strategy and its negotiating stance with
> the European Central Bank and European Parliament to address the debt
> crisis.
>
>  MMT tells us that the ECB can issue currency or liquidity at no cost to
> itself, nor to its constituent central banks, nor to the national economies
> of the eurozone. The ECB already tacitly acknowledges this fact because it
> has declined to turn its liquidity support to the Irish banks - currently at
> €70b - into a medium term loan. Such a loan is actually unnecessary and not
> in Ireland’s interest as it would carry a substantially higher interest rate
> than the current 1% charged for the liquidity. The ECB provides the
> liquidity by simply crediting it to the accounts of the banks. The pretence
> that the liquidity given to Irish banks was provided in exchange for
> valuable assets has been shown up to be a non-essential requirement and
> notional fiction because the ECB has permitted the Irish central bank (a
> subsidiary of the ECB) to also credit the Irish banks without a matching
> transfer of bank assets of equal or greater value.
>
>  Under the MMT perspective, a central bank should not be concerned by the
> mounting sum in the sovereign government’s deficit account as it does not,
> despite ‘common sense’ claims to the contrary, represent a debt analogous to
> that of a household, business or bank debt. Instead the central bank should
> watch intently for signs of inflation – of which there are few at present in
> our struggling economies – as its overarching guide for money creation and
> taxation levels. Taxation both destroys money, by removing it from
> circulation, and gives it value, as only a national currency is ever
> accepted in payment of taxes. Once it is understood that money can be safely
> issued by a central bank without repayment of capital and interest and does
> not have to be first borrowed in the bond market or raised in taxes (yes,
> that means given free), new policy options open to tackle unemployment and
> inflation - not forgetting resource pe ak and climate change.
>
>  Furthermore, MMT suggests that instead of making liquidity available to
> the banks, the ECB could just as easily, and probably more safely, give it
> directly to member state governments. It can write a metaphorical cheque for
> immediate and annual distributions of for instance, 10% of GDP on a
> per-capita-basis to pay down member state outstanding debts. It should, at
> the same time, impose national deficit ceilings sufficiently high to promote
> desired levels of aggregate demand.
>
>  This positive attitude to government deficits is another
> counter-intuitive aspect of MMT compared to conventional analysis and goes
> beyond promoting deficits to counter liquidity traps in a depression. Once
> you accept that all non-government money i.e. bank money is matched by
> liabilities, it follows then that for the private sector to net save, the
> government has to be in net debt. Even though a sovereign government does
> not have to sell bonds to raise money, MMT tells us it should still do so to
> a certain extent, in order to provide secure interest-bearing saving
> vehicles for its citizens.
>
>  Another important policy of most MMT economists is the Job Guarantee,
> i.e. that the government should act as an ‘Employer of Last Resort’. A job
> guarantee is a permanent job offer from the government to all citizens of a
> certain age who are ready, willing, and able to work, for a basic wage. Some
> MMT economists suggest that the ECB could directly fund a Job Guarantee
> Programme in Ireland and in any other EMU state that requested it. Or if
> general EU agreement cannot be got, a national government could fund a Job
> Guarantee out of their allocation of ECB-issued liquidity.
>
>  The banks of Member States would still benefit from a Job Guarantee that
> was directly or indirectly funded by the ECB as the newly employed lodged
> their salaries in their accounts and paid off their mortgages. The exchequer
> would benefit as people came off social supports and paid income and
> indirect taxes out of their wages. The resulting increase in circulating
> money would transfuse the economy to provide the confidence that is so
> lacking and which no amount of direct liquidity injection into the banks
> appears to be able to create.
>
>  The Irish Environmental Pillar contends that the jobs provided in the Job
> Guarantee programme should ideally be Green Jobs and should address the most
> important challenges of our time; resource peak- especially fossil fuels,
> climate change and biodiversity loss. In addition to the obvious need to
> tackle these issues, a Green Job Guarantee programme would have no real
> impact on the public or private sectors as these environmental resources and
> systems are not yet priced (i.e. are accounted as externalities) in the
> marketplace.
>
>  *Who will Present Papers at the “Learning from the Crisis” Conference?*
>
>  US-based MMT economists from the University of Missouri, Kansas Dr.
> Randall Wray, Dr. Stephanie Kelton and Roosevelt Scholar, Marshall Auerback
> will present and debate Modern Monetary Theory and the Job Guarantee
> Programme with participants and fellow presenters Richard Douthwaite and
> David Korowicz from Feasta, Prof Gerry Hughes from TCD Pension Policy
> Research Group, Sinéad Pentony and Tom McDonnell from TASC and Michael Taft
> from Unite Trade Union.
>
>  The conference is free and open to anyone whose mind is also open.
>
>  ------------------------------
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