Towards a pure state theory of money

Clint Ballinger ()

MPRA Paper from University Library of Munich, Germany

Abstract: MODERN MONETARY THEORY (MMT) notes correctly that money is a creature of the state, and that important macroeconomic and policy conclusions follow from this understanding, e.g., sovereign states are not revenue constrained and spending is primarily limited by inflation. Taxes give value to state money and maintain its value (i.e., inflation can be controlled through taxes). One (among many) key policy insight is that a job guarantee is possible. A job guarantee not only achieves what many think should for myriad social reasons be a primary goal of macroeconomics but also further creates a buffer stock (the most useful one of any imaginable given the social reasons just mentioned) that achieves an additional primary macroeconomic policy goal – stability. However, there is no state that operates under a pure state system of money. Most of what serves as money in most banking systems in the world is privately created credit money. We can compare the current most common banking system with a pure state system of money:

Keywords: The chicago plan; Full Reserve Banking; Modern Monetary Theory; 100% reserves; Alfred Mitchell-Innes; Austrian economics; Bagehot; bank reform; banking crisis; chartalism; chartalist; Circuit theory; credit money; endogenous money; financial crisis; Fractional Reserves; Georg Friedrich Knapp; Limited Purpose Banking; Lombard Street; MCT; Misesean banking; mmt; modern monetary theory; narrow banking; neo-chartalism; circuitisme (search for similar items in EconPapers)
JEL-codes: A1 A10 E0 E00 G1 G2 G21 (search for similar items in EconPapers)
Date: 2013-03
New Economics Papers: this item is included in nep-hme, nep-hpe, nep-mon and nep-pke
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https://mpra.ub.uni-muenchen.de/45101/1/MPRA_paper_45101.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/45150/1/MPRA_paper_45101.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/45150/9/MPRA_paper_45150.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:45101

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