Talk:Modern monetary theory

criticism

Any criticism available?

There seems to be a great deal of confusion on Wikipedia as a whole as to whether chartalism represents the dominant monetary theory, with circuitism as an alternative, or whether there is some third theory (referred to on various pages as "mainstream" or "classical" monetary theory) which is the dominant view. It seems that if chartalism is the dominant view, this would be a good place to say so. If it isn't, some mention should be made of what the dominant view is.

After doing some reading, I now believe that what is referred to here as the "mainstream" view is "metalism." Since there is no "metalism" page, I guess I will create one. I'll try to keep it strictly NPOV since I am actually a chartalist. RaulGroom (talk) 01:35, 9 October 2009 (UTC)

RaulGroom (talk) 03:41, 7 October 2009 (UTC)

National Accounting Identity

There is a long and dry looking section called 'Deriving the National Accounting Identity from the Expenditure Model of GDP'. A Google search for "National Accounting Identity" chartalism returns one hit, besides Wikipedia. This looks like original research. I will remove it if no sources are provided. - Crosbiesmith (talk) 18:29, 5 October 2009 (UTC)

Not only that, but the deriving of the national accounting equation is completely incorrect. As such I'm going to remove it now. Matthew 18:15 10 october 2009 —Preceding unsigned comment added by 115.70.133.89 (talk) 10:11, 10 October 2009 (UTC)

Seconding request for criticism

I'd like to see it on an even more basic level than the first commenter, since I'm not an economist. This sounds to me like an economics version of a perpetual motion machine. It's counterintuitive to the rank amateur that money creates money in some kind of infinite loop. That doesn't mean it couldn't be right. Only that some of us need it explained and/or critiqued more clearly. In my limited view, money has value because it buys things, not because some government printed it so that I could pay taxes. If a government just prints money (late Tsarist Russia, current Zimbabwe) without regard to underlying goods, it becomes worthless no matter how many taxes people pay. I don't get it. —Preceding unsigned comment added by Quixote9 (talk • contribs) 20:27, 6 June 2010 (UTC)

A chartalist would argue that (fiat) money can only buy things because a merchant is willing to accept it, i.e. he has a demand for it; and it is the demand of governments that taxes be paid in fiat money that creates that demand, as opposed to the merchant demanding that you exchange goods of equal value for his goods (a barter system). Historically speaking the chartalist view is an accurate description both of how money came into existence in the first place (in ancient Egypt and Mesopotamia, it's pretty clear that money was the result of state accounting and tax practices) and how the use of money entered "primitive" economies in the colonial era; the french/british/australians etc would show up and demand that the inhabitants of a region pay an annual tax in francs/pounds (usually on pain of corvee, goods seizure or death if they didn't pay up). The inhabitants discovered that the only way they could get the money to pay the tax was by working in the colonial plantations/mines/other industries. They usually "earned" an excess over their tax requirements and would seek to exchange this excess for goods they wanted; hence a commercial economy would spring up. Money is basically "company scrip" where the "company" is the state.

"Printing money" is about the ratio between gold and paper currency in a gold-standard economy. It doesn't really apply as a concept to a modern fiat currency economy.

This doesn't mean that crediting accounts in excess of the real amounts of goods and services in the economy won't cause inflation. HOWEVER, it will only cause inflation after currently un- or under-used resources have all been brought into circulation by the increase in demand. Since people are a resource, this basically means that you won't get significant inflation until you reach the point of full employment. We are all a very long way from that point right now. James Haughton (talk) 05:34, 2 July 2010 (UTC)