CounterPunch Magazine Volume 21 Number 8 2014
Dispelling Common Folktales of Government Spending, Taxation and Deficits
How Modern Money Works
by ALAN NASSER
President Obama made a remarkable claim at the December 3, 2009 “jobs summit” about government’s responsibility to citizens in times of severe economic crisis. He admonished those who push for a government jobs program “to face the fact that our resources are limited….It’s not going to be possible for us to have a huge second stimulus, because frankly, we just don’t have the money.”
There it is, a major pillar of the austerity agenda: “we just don’t have the money.” The trouble started with the “welfare state,” which made us think government could “spend beyond its means.” Obama has told us countless times that a government is no different from a household; neither must spend more than it takes in, its income. Households better not spend beyond the wages and salaries they earn, and government must not spend more than its tax receipts. The ideal budget is a balanced budget. 1920s fiscal conservatism is back with a vengeance.
The claim was suspicious from the start, because for decades government and private elites had encouraged the vast accumulation of debt by private households. Private deficits were since the 1970s the economy’s salvation. But public debt is regarded as a cardinal sin, so grave and habitual as to require severe penance. But it is not too late to redeem ourselves. The wages of budgetary sin is fiscal austerity.
From this the neoliberal agenda follows. The sweeping scope of “we just don’t have the money” is breathtaking. Social Security and Medicare are threatened with bankruptcy unless we get our financial house in order. It gets worse. Our past government social spending has created a problem for our children, who will be saddled with the repayment of the public debts their parents have encouraged. We have bequeathed to our children a lower standard of living. Shame on us.
The terms of this common argument for austerity depend upon a certain conception of our monetary system and how it works. It appears that a great many Leftists share this conception. If the conception is erroneous, and it is, the entire discussion of the deficit and all the issues related to it -from the status of Social Security, Medicare and other social programs to large-scale public investment in jobs- will need to be rethought.
A constructive starting point is a misleading prescription, an alternative to austerity, heard repeatedly from large segments of the Left. It has been argued that much of the deficit is accounted for by the revenues lost to government as a result of the historically low tax rates on the wealthy. And a very large portion of the government budget is military spending. Were the rich to be taxed progressively at, say, Eisenhower’s 92 percent, and the military budget substantially reduced, government would then “have the money” to fund much needed social spending on health care, Social Security, infrastructure, green energy research, etc.
Many on the Left are thus in accord with conservative and liberal economists that federal government spending needs to be financed from somewhere, namely tax revenues. The Left claims that spending tax money plus borrowed funds, i.e. deficit spending, is normally unproblematic; the Right would restrict federal spending to tax receipts. But both believe that federal spending is constrained or limited by tax receipts. This assumption is treated as self-evident and common-sensical.
But what if the assumption is false? What if it rests on a fundamentally misconceived model of our monetary system and a basic misconstrual of the role of taxation in our system. This is the argument of Modern Monetary Theory (MMT), a position adhered to not only by distinguished economists like Michael Hudson and James K. Galbraith, but also by every central banker. That MMT has not become standard teaching among both Left and mainstream economists is testimony to economists’ general ignorance of the workings of the monetary system, and the political power of those with an interest in limiting government social spending.
What Are the Functions of Modern Taxation?
We are supposed to think that taxation exists in order to finance government spending and to regulate the economy. In fact, it is only the second of these that describes an authentic function of taxation. Fiscal policy does attempt to regulate the economy by lowering taxes when growth is sluggish and raising taxes when inflation threatens. But taxation has nothing to do with “financing government expenditures.”
The appeal of the notion that it does is based on its half-truth. State and local governments do indeed need to get the money they spend from somewhere, namely from tax revenues. Neither state and local governments, nor private firms, nor households have the power to issue or create money, so they have to acquire it from somewhere else. State and local governments get money by taxation and borrowing, firms get it from sales revenues and borrowing, and households get money by earning wages and salaries, and borrowing. But the federal government, because it is the issuer of the national currency, does not have to “get money” by taxation or any other means. As MMT puts it, the federal government neither has nor does not have money. There is no finite sum of monetary value which the federal government “gets” and “keeps” or has somewhere, e.g. in Al Gore’s “lock box,” in order to draw upon when it spends. (1)
Our monetary system does not specify how much money the federal government, through its central bank, can issue. The amount depends, if the central bank is doing its job as a genuine public bank, on what is required to serve the public interest. The federal government can create as much money as it needs to create in order to meet the needs of its citizenry. Contrary to widespread belief, tax revenues are no part of this story; they place no operational, required monetary-systemic limits on what government can spend. A government can indeed stipulate that it will spend no more than it receives in tax revenues, but this is a politically motivated choice, not a requirement of the monetary system. The political incentive in question is of course to fabricate an allegedly apolitical and objective limitation on government’s ability to spend for social purposes.
The realities of federal budgeting are in this respect entirely different from those of household, firm and lower-government spending. This is best illustrated by examining the origins of the following three elements: the establishment of a national currency, i.e., government’s power to issue currency, taxation, and federal government spending. Imagine a sovereign nation state coming into existence and establishing a national currency with its own value. A real-world example is found in the practices of European colonizers who established new currencies, gave those currencies value and compelled the colonized people to use those currencies to meet their needs. How were the colonizers able to do this? By levying taxes. (2)
The tasks facing colonizers were formidable. The colonized must be made into wage laborers, they must accept their wages in the colonizer’s currency and they must acquire what they want by spending that currency. Prior to colonization, the indigenes produced and distributed what came to be called “goods and services” by all sorts of customary means which may have required little or no buying and selling, virtually never required wage labor and never involved the use of the colonizer’s currency. European colonizers needed to replace native subsistence production and internal forms of exchange with modern money and the correlative capitalist practices and institutions. They accomplished this by imposing on the local population a tax obligation denominated in the colonizer’s currency. The effects of this single strategy were economically transformative.
The function of taxation is in this case apparent. It has nothing to do with financing government spending. The levying of a tax obligation effects the transformation of traditional economies into modern money economies by forcing colonized populations to need and use the colonizer’s currency in order to meet their tax liabilities. Taxation establishes the colonial government’s currency as the standard unit of exchange for all goods and services, making it the basis of the country’s monetary system. The establishment of a national monetary system requires not merely that citizens want money, but that they need money as well. There must be an arrangement that guarantees that citizens possess and use the one and only national currency. The same process created a growing population of wage laborers. The locals would get the newly required money by growing cash crops and/or by becoming wage laborers. That state currencies are tax-driven was understood by Adam Smith, John Stuart Mill and J.M. Keynes, among others.
Taxation also ensures that the State can acquire the goods and services it needs in order to operate from the private sector. The state and its central bank need equipment and workers. By levying a tax liability on the population, government also creates a demand for public spending for goods and services available from the private sector, namely structures, equipment and workers. How else will households obtain the money needed to pay taxes unless government provides that money by spending it in the private sector? Thus, federal government spending precedes, systemically speaking, tax collection and private production. In the beginning was public spending.
Unless the private sector agrees to sell to government, to exchange goods and services for government-issued money, households and firms will lack the means to pay their taxes. Put differently, government, unlike private business, is able to guarantee the demand for its “output” by requiring that taxes be paid in the national currency, which only government can provide through its spending. Once taxation is in place, government spending is necessary if tax obligations are to be met. Public spending is thus built into capitalism at its foundation. Government spending is the Let There Be Light of capitalist economic activity. (Investment is required to keep the light burning.) We shall see below that many self-styled Keynesians underestimate, as Keynes himself did not, the quantity of government spending necessary to avert economic depression. Historically, only deficit spending has averted economic crisis in the United States.
The economic transformation created by taxation naturally results in markets of all kinds, most of them not including government as a participant. The proliferation of secondary private-sector markets makes government money the standard means of payment, the established unit of account and the universal means of exchange. When government establishes that it will accept only the currency it issues in payment of taxes, government establishes itself as a monopoly creator of the national currency. (3) This does not mean that private banks cannot create money, as the central bank does, out of thin air. It means that only the federal government, through its central bank, can constitute the money all banks create as the one and only national currency.
It remains to be seen below how most of the money in circulation is created at the local level, by the ordinary banks with which we deal. It suffices to say at this point that government’s sovereign power allows it to guarantee that its currency will be needed for all market exchanges and will therefore constitute the basic unit of the nation’s monetary system. This is automatically accomplished by virtue of the sovereign’s ability to issue currency, to impose tax liabilities and to specify how those obligations are to be satisfied. That no household, firm or lower government can do this entails that households, firms and lower governments are constrained in their spending by their need to get money from somewhere else, and that the federal government is under no such constraint in its spending. (4)
Dispelling Common Folktales of Government Spending, Taxation and Deficits
The modern banking system evolved in response to the virtual monopoly once held by private entities such as lords and kings over access to finance. Modern nation states and their central banks democratized finance by creating public oversight of financial institutions and by mobilizing finance for national development, which, for the central public bank, was aimed at promoting the general interest. There is no connection at all between the general welfare and the means to advance it, and whether the government’s books exhibit a surplus or a deficit. In a fiat money system the government has just as much money at its disposal under a budget deficit as with a budget surplus.
Individuals, households and firms can indeed borrow their way into bankruptcy, but government cannot. This is because government borrows in the same currency that it issues. The federal government spends what it wants on what it values. Rosa Luxemburg remarked that the social values and political priorities of any government are evident in its budget. Suppose social spending is a declining proportion of a government’s budget, and war spending and handouts to the wealthiest an increasing percentage. That’s all you need to know about whom that government is governing for.
The going mythologies of money and taxes function to veil the true character of the State, and to enable government owned by elites to rationalize austerity as budgetary prudence. To see through this, we need only look at the facts of government budgeting, at what government actually does when it spends, taxes, writes Social Security, Medicare and Medicaid checks, builds public housing, makes war and bails out banks. The federal government, unlike households and firms, does not retain a stock of cash on hand, nor does it have a credit balance “at the bank” or anywhere else to enable it to spend. As the issuer of the national currency, it does not need these things.
Begin by looking first at the central bank’s, the Fed’s, operations, not the Treasury’s. The Treasury’s activities take place in its accounts at the Fed. Every household, firm, corporation, sovereign government has an account at the Federal Reserve Bank. Every entity that deals with banks, and the banks themselves, have accounts at the Fed. The Fed’s bank book is the massive spread sheet located in its computer. How does it work?
When you pay your taxes, you are not purchasing government services, as you might purchase a widget from a private firm. Government’s ability to provide such services as it does bears no systemic or operational relation to tax receipts. When the government gets your tax payment, the Fed simply debits the balance sheet of your bank in the amount of the check you sent, and your bank correspondingly debits your checking balance in the same amount. That is what happens when the federal government accepts a payment. When the federal government makes a payment, say to Dell for computers used in government offices, it merely credits Dell’s bank account in the amount of the payment.
In the first example -paying your taxes- money is wiped out; in the second -government purchases from the private sector- money is created. Each happens by electronically reducing or increasing a private bank account. In one case the numbers in the column go down; in the other, the numbers go up. That’s it. This is the only sense in which the money in either case “goes anywhere.” The numbers in the Treasury’s reserve account, its account at the Fed, have no bearing whatever on the transactions just described. The money in question consists in nothing more than spread-sheet entries. (5)
To be sure, in the end Dell has more money, i.e. the numbers in its account have been moved up, and to that extent a financial constraint on a private firm has been lifted. But the government does not in the same sense have more money after you pay your taxes. Again, this is because the government can spend on what it chooses to spend on, and its deficit or surplus tax position imposes no systemic constraint on that spending. Our monetary system establishes no operational connection between federal spending and tax receipts.
The realities of federal accounts are difficult to grasp because we are told to think of government bookkeeping and taxation the same way we think of private account-keeping. We write a check to the grocer and that tangible piece of paper goes to the vendor, who now has that much more to spend or save. It is as if something real, like an ounce of gold, were transferred to a seller in exchange for his wares. He now literally has something that he can use to accomplish his economic ends. Most importantly, what you once had and he now has is a material token of a finite kind. One can run out of gold. But the example is inappropriate to federal government spending; a modern government’s counterpart to gold, money, is not something it can run out of. It is nothing more than an entry in a book, or a number on an electronic spreadsheet.
Back when wealthy persons with surpluses to spare were the lenders, the lender had a real, tangible asset that went to the borrower. But because government is the creator of the national currency, and makes and receives payments electronically (before computers, by typing or inscribing a number into a book), it makes no sense to say that the federal government “gets” something real and then gives what it got to someone else, e.g. to pay Medicare benefits. Material tokens of money, such as bills and coins, are decreasingly significant in monetary transactions, and constitute only 3-4 percent of the money we deal with. The rest is intangible bank money created largely by local banks with the stroke of a computer key and originating, as we shall see below, in credit/debt. (There has been talk in the business press of the possibility of doing away entirely with all non-electronic means of payment.) There is no limit to the amount of money banks can create to help create the kind of society we want to live in.
A government that acknowledges the right to health care will contribute what it must, however much that may be, to maintain the population’s health. There would be a national health program, as there is now a national defense program. That government would spend on the elderly, the sick, the disabled, the way it now spends on military equipment and interventions. But it is unlikely that a State whose most important purposes include ruling the world will spend in the real interests of its citizens. This is not because war spending “crowds out” the tax receipts available for other purposes, but because a State commandeered by and for the wealthy is hardly likely to prioritize the needs of the unwealthy.
Nor is the federal government constrained in its ability to make Social Security payments by the amount in the Social Security “trust fund.” My Social Security payment is nothing more than a number that appears every month in the Deposit column in my checking account. The federal government has credited my account in that amount. It gives not a fig for Treasury’s tax receipts. The Social Security administration can pay in whatever amounts necessary to provide a just standard of living. The trust fund was concocted lest people form the habit of expecting that government is in the business of providing for their welfare. The 1935 debate over how FDR’s Social Security Act would be funded is revealing.
Roosevelt wanted to design Social Security in such a way,in his words, as “to preserve the system of private enterprise for profit…[and] compete as little as possible with private enterprises.” Roosevelt insisted that a plan for social insurance must conform as closely as possible to the existing system of private insurance. Thus, government pretends that it must get its money from somewhere else, just as private insurance companies get their money from premium payments.
Many prominent New Dealers rejected this assumption, and regarded a “wage tax” (FICA) in the midst of a Depression to be unconscionable. But Roosevelt feared that were government to assume the entire responsibility for Social Security payments, recipients would be afforded “relief,” and FDR believed that relief -what is today called “handouts”- erodes moral character. These political considerations are no part of the monetary system. The more radical New Dealers, and there were plenty of them, understood that even in a Depression there was no limit to what government could spend to bring economic security to the entire working class. (For detailed discussion of this issue, see http://www.counterpunch.org/2013/11/12/how-franklin-d-roosevelt-botched-social-security/)
It is economically impossible that Social Security or Medicare could “go broke.” Take Alan Greenspan’s word for that. At a 1997 conference at the St. Louis Fed the former chairman remarked:
“A government cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the one we have today, can produce such claims without limit.” (http://fraser.stlouisfed.org/docs/historical/greenspan/Greenspan_19970800.pdf)
Or, as the economist James K. Galbraith puts it, “[A] U.S. bank will always cash a check issued by the U.S. government, whatever happens.” (6)
You are not supposed to know this. It is the responsibility of a democratic press to inform its readers of this elementary feature of government accounting and to expose the nonsensical portents of Social Security’s and Medicare’s future insolvency as propaganda designed to reduce public expectations of government’s responsibility to promote, to the fullest possible extent, the welfare of the citizenry. Instead, mainstream media serve to reinforce the pernicious notion that only the market, the private sector, can provide material security in these neoliberal times.
Bankers know the realities of government finance, but they must pretend they don’t know. Sometimes they slip up. The habit of disingenuous talk of government’s spending taxpayers’ money is so second nature to policymakers that they sometimes flat-out contradict themselves. In a March 15, 2009 interview on 60 Minutes Scott Pelley asked Ben Bernanke about the bailout: “Is that tax money that the Fed is spending?” Bernanke replied
“It's not tax money. The banks have-- accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed.”
Yet moments earlier in the same interview, shedding crocodile tears over the “necessity” –lest the entire financial system collapse- of bailing out AIG, Bernanke said
“It's-- it's just absolutely-- I understand why the American people are angry. It's absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets..” (http://michaelreinstein.blogspot.com/2009/03/ben-bernanke-on-60-minutes-complete.html)
Oops. “taxpayer dollars”? But you just said “It’s not tax money.” Did Pelley call Bernanke on this inconsistency? Not a chance.
It’s worth mentioning that you’d live like a king if you had a nickel for every radical you’ve heard denounce the Fed’s bailout as having been carried out “at taxpayers’ expense.” There is only one sense in which this is true: the money that went to finance capital should have gone to rescue Americans from a catastrophe they had no part in bringing about. But the phrase is usually misunderstood to mean that tax funds were diverted to bankers’ pockets.
How Local Banks Create Money From Nothing
It is not just the Fed that creates fiat money. Local banks do the same. Most people believe the textbook story, still put forward by Paul Krugman and company. Banks are claimed to be intermediaries between savers and borrowers. When you borrow from a bank, the bank is said to lend you money previously deposited in someone else’s savings account. Every central banker knows this is false. Here is Graham Towers, Governor of the Bank of Canada (1935-1955):
“Banks create money. That is what they are for. .. [Making] money consists of making an entry in a book [computer: AN]. That is all…Each and every time a bank makes a loan, new bank money is created – brand new money.”
The Governer of the Bank of England stated, in a 2012 speech in South Wales, “[M]oney is primarily created through the extension of bank credit… The commercial banks can create money themselves.”
More recently the Bank of England spelled this out in its first-quarterly Report for 2014, which contained a pdf titled “Money Creation in the Modern Economy,” which states
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.
The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.”
When you take out a loan at your bank, the bank electronically credits your checking account in the amount of the loan. Your new spending power didn’t come from anywhere; new money was created from thin air. Money is originated at local banks by the extension of credit. Deposits, then, are created by loans. The money loaned was not in the bank when the borrower got the loan. Almost all bank deposits consist of repaid loans plus the interest extracted by the bank in return for its stroking a computer key to change the numbers upward in the debtor’s checking account.
A salient feature of the going misconstrual of how banks work claims that banks are limited in the number of loans they may extend by reserve requirements imposed by the central bank. “Fractional reserve banking” means that banks must hold in reserve a certain fraction of their loans. But this is not how reserves function. Reserves never leave the banking system and bear no relation to the amount banks lend. They are held at the central bank and are available to commercial banks on demand without limit. The banks need these reserves on a daily basis, but not in order to make or cover loans.
Reserves are used by banks in their relations with other banks, e.g. to settle accounts. You borrow from your bank; the bank credits your checking account in the amount of the loan. As you spend what you borrowed, i.e. as you write checks against your checking account, that check may be deposited at an account at another bank. In order that the check be cleared, your bank must obtain reserves from the central bank. The nature of these transactions leaves all reserves within the banking system as a whole, and does not change the amount of reserves in circulation. As with the Fed, nothing in or out of the system, nothing that is not self-imposed for political reasons, limits the amount banks can lend.
I have described the financial system in its “natural” state, absent political or democratically mandated regulations. Such regulations need not limit the amount banks can loan. But they can prohibit, in the public interest, bubble-generating speculative loans unrelated to production or beneficial research. And the absence of regulation can, as we have seen in the course of the current crisis, limit both the amount banks are willing to lend to one another, and their willingness to lend to financially hobbled households and businesses. But these limits reflect banks’ prudential responses to crisis conditions, created by the banks themselves, under which it becomes irrational for them to lend. The genuine socialization and democratization of the banking system as a public utility would prohibit speculative gambling and do away with any limitations on the financial system’s ability to provide money for socially beneficial transactions.
The Bogey of Inflation
The going script says that large scale government spending is hazardous because it promotes runaway inflation. Inflation resulting from imprudent lending is possible, but in deflationary circumstances such as those that prevail in almost all the developed capitalist countries, forewarnings of inflation are disingenuous. In fact, there are very few historical instances of inflation, under conditions similar to those of post-2008 capitalism, caused by promiscuous government spending.
Why, after all, does a rational government issue significant quantities of new money? Because there are too many idle machines and workers. Think of the WPA under the New Deal and the present crisis. In each case the private sector was unwilling to provide work for legions of un- and underemployed. Government expenditures to train and employ workers directly addresses the core of such a crisis. This would of course add to the money supply but when the additional liquidity is used to provide employment and spending power to households and thereby induce the sale of excess inventories and bring idle capacity into production, the money is circulated through the system, bolstering employment and output. Nothing in this scenario threatens hyperinflation.
“The Deficit” As a Reactionary Conceit
Talk of deficit spending should, in the light of the realities of the monetary system, completely disappear. Two considerations are pertinent. First, as we have seen, there is no monetary-systemic operational connection between federal spending and tax receipts. Second, what has been called “federal deficits” have always, long before the Great Depression and Keynes, been essential in preventing severe economic downturns.
Consider the only periods -six of them- in American history when government attempted to balance the federal budget and reduce the national debt: 1817-21, 1823-36, 1852-57, 1867-73, 1880-93 and finally 1920-30. Each of these periods was followed by a major economic depression. From the end of the Second World War to the mid-1990s there was no systematic debt reduction. This was also the longest period in U.S. history without a severe depression.Then, for the first time since the 1920s Bill Clinton balanced the federal budget and in fact produced a public-sector surplus. It is a tautology of national income accounting that if the public sector runs a surplus, the private sector must run a deficit, i.e. debt must accumulate among households and firms. The stage was set for the crisis of 2007 ff.
Government must always spend more than its tax revenues if the economy is not to collapse. Taxation reduces consumer demand and contributes to economic contraction. In order to offset this tendency to economic slowdown, government must not merely replace the lost spending power, it must create more effective demand than taxation has reduced. Thus, even if there were no taxation, government would have to spend in order to avert economic depression.
Note that this way of describing “deficit spending” does not imply that tax revenues are any part of what government spends.
Now if “deficit spending” by government is a necessary condition for averting economic collapse, what is the point of the very idea of “deficit spending”? Why characterize federal spending at all by its relation to tax receipts? Let government spend whatever needs to be spent to meet the legitimate needs of the people. But let’s not deceive ourselves into thinking that budgetary and accounting constraints place limits on what government may spend. Linking federal spending to tax receipts is entirely arbitrary and serves only the needs of that class whose needs should be foiled by all means.
The category of deficit spending has no place in rational economic discourse. A central bank owned by the public -and the Fed is not such a bank- will record the democratically determined social needs of the people and provide the monetary means of meeting those needs. It will properly disregard the surplus or deficit position of the Treasury, understanding these to have no bearing on the matter at hand. There will therefore be no talk of not being able to “afford” a public jobs program, public housing, Social Security, single-payer health care, et al. The money to do what needs to be done is always available. As Keynes put it, “Anything we can actually do we can afford. Once done it is there. Nothing can take it away from us.” (7)
There is no reason for the federal tax burden. It should be eliminated. Government borrowing is equally otiose; it is an unnecessary public subsidy to private investors.
There is no rationale for private banks charging interest for loans. We have seen that there is no limit to the amount of credit that can be created by commercial banks. Since credit is not a scarce good, then, even by mainstream standards, credit is a free good. There need be no charge for borrowing money. As Keynes put it in the Treatise On Money
“[I]f the banks can create credit, (why) should they refuse any reasonable request for it? And why should they charge a fee for what costs them little or nothing?” (8)
The implications of a realistic understanding of modern money are, I think, far more radical than we have imagined. They are incompatible with capitalism and point to some form of democratic socialism. The Left has conceded too much to the prevailing monetary ideology. We should think twice the next time we hear the exhortation to raise taxes on the rich in order to lower “the deficit.” By all means expropriate the expropriators. But let’s not give the wrong reasons for doing so.
Alan Nasser is professor emeritus of Political Economy and Philosophy at The Evergreen State College. His website is: http://www.alannasser.org. His book, United States of Emergency American Capitalism and Its Crises will be published by Pluto Press later this year or early next year. If you would like to be notified when the book is released, please send a request to firstname.lastname@example.org
(1) L. Randall Wray, Modern Money Theory, Palgrave Macmillan, 2012; Understanding Modern Money:The Key to Full Employment and Price Stability, Edward Elgar, 2006
(2) Pavlina Tcherneva, “Monopoly Money: The State as a Price Setter,” Oeconomicus, Winter 2002, Vol. 5: 124- 143. And cf. (1) above.
(3) Tcherneva, “Monopoly Money…”
(4) Warren Mosler, The 7 Deadly Innocent Frauds of Economic Policy, Valance Co. Inc., 2010
(5) Warren Mosler, Soft Currency Economics II: The Origin of Modern Monetary Theory (Volume 1) CreateSpace Independent Publishing Platform; 2nd edition 2013
(6) Introduction, Mosler, The 7 Deadly Innocent Frauds of Economic Policy, p. 2
(7) John Maynard Keynes, The Collected Writings. Activities 1940–1946. Shaping the Post-war World: Employment and Commodities. Vol. XXVII, ed. Donald Moggridge. London: Macmillan. 1980, p. 270
(8) John Maynard Keynes, The Collected Writings. A Treatise on Money. Vol. VI, 1971, p. 196