This is the macroeconomic policy management gospel that Abba Lerner preached during and after World War II under the name of “Functional Finance“. From these readings (including a 1943 piece on “functional finance” by economist Abba Lerner), we assume that the key insight of MMT is not that debt doesn’t matter, as mistaken stereotypical views seem to assume, but rather that governments that issue their own fiat currency have no funding constraints insofar … In some settings online or off, the phrase ‘debt-free money’ generates resentment. You probably won’t be surprised to learn that it’s not my cup of tea. It has also been used to refer to the money that would exist with a central bank … In order to better understand the MMT model I’ve been reading “Macroeconomics”, an undergraduate textbook written by William Mitchell, Randall Wray and Martin Watts. This proposition dates back to the work of Abba Lerner on “functional finance” in the 1940s. MMT also draws on the “functional finance” work of the Russian-born British economist Abba Lerner, who wrote in the 1940s that government should spend what’s required to achieve its goals, deficits be damned. – come straight from Maynard Keynes, Abba Lerner, and Wynne Godley. And I see his views as augmenting or even replacing Keynes' views for MMT. Amidst the chaos, a guest post on Alphaville from three MMT authors stood out: the piece responded directly to various criticisms while discussing the policy challenges associated with controlling demand and inflation … Much of this idea comes directly from Abba Lerner, whose functional finance has heavily influenced MMT fiscal policy prescriptions (Forstater1999). The core of MMT is a synthesis of Mosler and Wray’s ideas about government money with elements such as Abba Lerner’s “functional finance”. I pushed back, situating modern monetary theory in a broader intellectual history. It is a good gospel—much better than the ravings of those yahoos who nearly a decade ago denounced Ben Bernanke for debauching the currency and risking an explosion of … The misunderstanding arises from the discussion within MMT on the role of taxes, which has its roots in the functional finance literature developed by Abba Lerner in the 1940s. He is the father of functional finance. MMT is rooted in the work of economists such as Hyman Minsky, Abba Lerner, and Wynne Godley during the 20th century. Instead, the government should judge its actions on the basis of real outcomes, such as the … Finally, in theoretical terms, MMT offers little in the way of radical innovation. Whatever you accuse the MMTers of saying, they can find a … In my view, the most interesting part of the article is that it contradicts the commonly made assertion that there is very little new in MMT (which Krugman hints at in the article as well). Abba Lerner’s functional finance and later Modern Money Theory (MMT) have been the theories of fiat currency which have as yet not been self-consciously utilized within government policy or integrated into the mainstream economic teaching which still views money as a commodity among other Abraham "Abba" Ptachya Lerner (also Abba Psachia Lerner; 28 October 1903 – 27 October 1982) was a Russian-born British economist.. Born in Bessarabia, Russian Empire, Lerner grew up in a Jewish family, which emigrated to Great Britain when Lerner was three years old. Instead, he declared that MMT was pretty much just the economist Abba Lerner’s “Functional Finance” approach from the 1940s and offered a critique of Lerner that he maintained was effectively a critique of MMT. Title: FUNCTIONAL FINANCE AND THE FEDERAL DEBT Created Date: 20190212220639Z Positive Money has used the term to refer to the money that would be created if the central bank carried out monetary financing of government spending or helicopter money. MMT does not win much respect from economists, but investors should pay attention. The MMT debates continue apace. Lerner grew up in London's East End and from age 16 … MMT’s job guarantee proposal is one more stabilizer which could be a modest helpful supplement to the system which exists. Randall Wray and Eric Tymoigne have offered probably the most thorough reply to Thomas Palley’s critique, but none of the substance of their response makes it into Henwood’s … Here’s how Stephanie Kelton described his view in 1999: MMT (Modern Monetary Theory—a form of post-Keynesian economics) is everywhere these days. And while subsequent research has revealed writings of authors who had similar thoughts on some of MMT’s monetary understandings and insights, including Abba Lerner, George Knapp, Mitchell Innes, Adam Smith, and former NY Fed chief Beardsley Ruml, MMT is unique in its analysis of monetary economies, and … He is the father of functional finance. He is the father of functional finance. In fact, the basis for MMT started in the 1940s. ... (a “creature of the state” in the words of Abba Lerner… Abba Lerner was a 20th century Russian-born British economist who studied at the LSE under Friedrich von Hayek. MMT has merely tacked on a federal job guarantee. This paper explores the intellectual history of the state, or chartalist, approach to money, from the early developers (Georg Friedrich Knapp and A. Mitchell Innes) through Joseph Schumpeter, John Maynard Keynes, and Abba Lerner, and on to modern exponents Hyman Minsky, Charles Goodhart, and Geoffrey Ingham. And I see his views as augmenting or even replacing Keynes’ views for MMT. Here's how Stephanie Kelton described his view in 1999: New critiques — the good, the bad and the ugly — appear daily. 1. MMT is more than fiscal stimulus; it is a model of the macroeconomy. Basically, it's always been one country = one currency. Functional Finance is largely associated with the Old Keynesian Abba Lerner, and is one of the key intellectual roots of Modern Monetary Theory (MMT). Lerner argues that government finances are not appropriate targets for government policy. He begins by saying, “MMT seems to be pretty much the same thing as Abba Lerner’s ‘functional finance’ doctrine from 1943.” Krugman then sets out to critique Lerner’s functional finance, which he says “applies to MMT as well.” You can boil down MMT, as James Montier did in Barron’s last week, to a few handy precepts. 14 Abba Lerner, an inspiration for MMTers, argued that the most efficient way to deal with inflationary pressures was the use of price controls. Here's how Stephanie Kelton described his view in 1999: What you call currency zones is what more usually is called, what Abba Lerner (& MMT afaik) calls "countries". MMT is emphatic that an intrinsic characteristic of a fiat currency system is that tax revenue is not required to fund government spending. Agnosticism regarding the deficit is evident in statements like “the government may find itself collecting more in taxes than it is spending or spending more than it Back then, Abba Lerner coined the term “functional finance”. OK, so now deficits don’t matter anymore. Indeed, the ideas about government spending date back to the economist Abba P. Lerner’s concept of ‘functional finance’ in the 1940s. Abba Lerner was a 20th century Russian-born British economist who studied at the LSE under Friedrich von Hayek. The first is that money is the government’s creation, not society’s. The stakes are higher for all who live under the influence of the 20th-century progenitor of MMT, the economist Abba Lerner. Rather it is a variant of traditional Keynesianism, drawing heavily on the functional finance approach of Abba Lerner (1943), and rejecting both the Hicks-Samuelson neoclassical synthesis and (even more strongly) the ‘New Keynesian’. In common with Abba Lerner’s theory of functional finance, MMT argues that governments should coordinate monetary and fiscal policy to ensure full employment. Abba Lerner was a 20th century Russian-born British economist who studied at the LSE under Friedrich von Hayek. 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