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MMT history and overview




Gold standard and fixed exchange rates – myths that still prevail






Canada's Trillion Dollar Coin



Surpluses and Depression


With one brief exception, the federal government has been in debt every year since 1776. In January 1835, for the first and only time in U.S. history, the public debt was retired, and a budget surplus was maintained for the next two years in order to accumulate what Treasury Secretary Levi Woodbury called “a fund to meet future deficits.” In 1837 the economy collapsed into a deep depression that drove the budget into deficit, and the federal government has been in debt ever since. Since 1776 there have been exactly seven periods of substantial budget surpluses and significant reduction of the debt. From 1817 to 1821 the national debt fell by 29 percent; from 1823 to 1836 it was eliminated (Jackson’s efforts); from 1852 to 1857 it fell by 59 percent, from 1867 to 1873 by 27 percent, from 1880 to 1893 by more than 50 percent, and from 1920 to 1930 by about a third. Of course, the last time we ran a budget surplus was during the Clinton years. I do not know any household that has been able to run budget deficits for approximately 190 out of the past 230-odd years, and to accumulate debt virtually nonstop since 1837.


The United States has also experienced six periods of depression. The depressions began in 1819, 1837, 1857, 1873, 1893, and 1929. (Do you see any pattern? Take a look at the dates listed above.) With the exception of the Clinton surpluses, every significant reduction of the outstanding debt has been followed by a depression, and every depression has been preceded by significant debt reduction. The Clinton surplus was followed by the Bush recession, a speculative euphoria, and then the collapse in which we now find ourselves. The jury is still out on whether we might manage to work this up to yet another great depression. While we cannot rule out coincidences, seven surpluses followed by six and a half depressions (with some possibility for making it the perfect seven) should raise some eyebrows. And, by the way, our less serious downturns have almost always been preceded by reductions of federal budget deficits.


Twentieth-Century Chartalism

Georg Knapp, The State Theory of Money (1905)

A. Mitchell-Innes, Credit and State Theories of Money: The Contributions of Mitchell-Innes (Collected writings from 1913 – 1914)

John Maynard Keynes, The Economic Consequences of the Peace (1919)

John Maynard Keynes, The General Theory of Employment, Interest and Money (1936)

Michael Kalecki, “Political Aspects of Full Employment” (1943)

Abba Lerner, “Functional Finance and the Federal Debt” (1943)

Beardsley Ruml, “Taxes for Revenue are Obsolete” (1946)

Abba A. Lerner, “Money as a Creature of the State” (1947)

Alfred S. Eichner, Collected Papers

Hyman Minsky, “The Reconsideration of Keynesian Economics” (1970)

Hyman Minsky, “The Financial Instability Hypothesis” (1992)

Wynne Godley, “Seven Unsustainable Processes” (1997)

Chartalism v. Metallism: Historical Debates

Mike Wright, “Chartalism: What is Money and from Whence it Comes”

Geoffrey Ingham, “Further Reflections on the Ontology of Money: Responses to Lapavitsas and Dodd” (2006)

Benjamin Franklin, “A Modern Enquiry into the Nature and Necessity of a Paper Currency” (1729)

Edward Kellogg, Labor and other capital: the rights of each secured and the wrongs of both eradicated (1849)

Alexander Campbell, The True Greenback: Or the Way to Pay the National Debt Without Taxes, and Emancipate Labor (1868)

William Jennings Bryan, “Cross of Gold Speech” (1895)

Daniel Carey, “Locke’s Species: Money and Philosophy in the 1690s” (2013)

L. Randall Wray, Stephanie A. Bell, and John F. Henry, “A Chartalist Critique of John Locke’s Theory of Property, Accumulation, and Money” (2000)

Bruce G. Carruthers & Sarah Babb, “The Color of Money and the Nature of Value: Greenbacks and Gold in Postbellum America”

Geoff Tily, “Keynes’s Monetary Theory of Interest”

L. Randall Wray, “Paul Samuelson on Deficit Myths”

Bill Mitchell, “Gold standard and Fixed Exchange Rates: Myths that Still Prevail” (2009)

Christine Desan, “From Blood to Profit: Making Money in the Practice and Imagery of Early America” (2008)

Christine Desan, “Money as a Legal Institution” (2013)

Christine Desan, “Creation Stories: Myths About the Origins of Money” (2013)

William Keegan, “So now Friedman says he was wrong” (2003)

Ann Pettifor, “Why I Disagree with Martin Wolf and Positive Money”