What’s the state of MMT ? · Rebel Economist (Free)

What’s the state of MMT ?

I understand that some Skool members attended the 2024 MMT Conference at Leeds in the UK - feedback from their experience of that event would be interesting to hear, I suggest.

I confess to feeling disheartened that the MMT movement doesn’t seem to be making a bigger splash in the media. It’s surely good that some fundamental issues about State fiat money, and ways of explaining and describing its freedom from debt to a third party, have been explored here at Skool. But I’m somewhat surprised that these issues, emerging here at Skool from recent discussions, don’t obviously seem to have already come to light and been popularised by the MMT movement. Can it really be the case that outsiders, such as ourselves at Skool, are trying to expand the boundaries of MMT’s message more energetically than the movement itself is doing? Or is it simply a matter of my flawed perceptions, because the movement has already explored just those same sorts of ideas and insights long ago, but without widespread publicity?

For one example, see - https://www.skool.com/debunking-economics-7964/more-from-physics-mea-culpa-bond-behaviour-and-two-suggestions?p=f5a52866 and in particular other related comments by Challenger Skool members Kevin and Chris.

Of course I’m just one guy, with inherently limited knowledge, experience and awareness, so I might have blithely missed this particular boat entirely. Has MMT somewhere, somewhen pointed out that conventional accounting practice assumes an unspoken truth so universal that, conventionally and in the past, there was never the least need to mention it explicitly? Are there documents and references to show that the MMT movement has not only mentioned it already, but has engaged in making a mighty song-and-dance about it - since it seems to touch so closely on MMT’s key message about the reality of modern government spending and debt?

The almost universal truth I’m thinking of is that, for all individuals and companies, financial accounts deal with money that enters the accounts from outside. Historically, back in the days when State money was strictly backed by a precious commodity (that may well, of course, be a long time ago …), the idea that the source of money was external to State’s account (by deposit of the precious commodity) was also true. Everyone’s financial accounts fitted that bill, back in the day, it seems. But there’s a big ‘but’.

A non-commodity State money, that arises by fiat, does not fit this bill. That money arises inside the account and isn’t the result of depositing anything of external value into that account. Money arises without debt to any external depositor - there is no such agent and no such commodity. The consequences of this shift might look like a minor technicality, yet surely it has profound consequences that seem to underlie, explain and justify the core MMT message.

The habitual practice in accounting, of writing assets and liabilities in matched pairs, which is a practice so universally accepted as indisputably necessary to correct double-entry book-keeping, doesn’t seem to make logical sense when applied to fiat money creation. If that practice is continued during fiat creation without amendment, the only ‘escape route’ seems to involve saying that liabilities are debts almost everywhere and all the time for everyone, except during fiat operations that create money internally - when liability isn’t debt but the ownership of negative financial value.

Why not make a special exception, matching the precedent already in place through a fiat money authority’s capacity to sustain and survive holding negative financial equity. Such an accounting-rule exception could allow the creation of matching pairs of assets, or pairs of liabilities - one negative and the other positive - without the concomitant respective creation of liabilities or assets. Is such an idea too scandalous, outrageous or revolutionary for the world of accounting?

I tend to see such an amendment as something of a paradigm change, albeit a remarkably small one. But then I’m neither an accountant, nor banker nor economist. And I'm not a 'hot-off-the-press' follower of MMT either, so maybe I've missed all this action.

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