Related:
Bank of England: Money creation in the modern economy
Bank of England: Banks are not intermediaries of loanable funds — and why this matters
Deutsche Bundesbank: How money is created
Deutsche Bundesbank: The Role of Banks, Non-Banks and the Central Bank in the Money-Creation Process (German only, remove the automatically added space near the end of the link)

I intentionally did not list any of the UMKC material nor any of Mosler's work, because people seem to ignore this stuff unless it comes from people/institutions they consider to be authorities in the field. Ergo two of the most important central banks.

Or if you prefer a short video, here's Greenspan taking Paul Ryan to school: There is nothing to prevent the government from creating as much money as it wants and paying it to somebody."

Well, cheers for sticking with it anyway, I really appreciate it.

It's a one hour talk on the deficit in particular, and most of what she says is based on MMT principles that would add another 5 hours to her talk if she were to explain them. With neoclassical economics, you can sort of jump right in, given how they are taught at schools and regurgitated by talking heads and politicians, day in and day out. MMT runs contrary to many pieces of "common sense" and since you can't really give 10 hour talks everytime, this is what you end up with – bits and pieces that require previous knowledge.

I'd offer talks by other MMT proponents such as William Mitchell (UNSW), Randy Wray (UMKC) or Michael Hudson (UMKC), but they are even less comprehensible. Sorry. Eric Tymoigne provided a wonderful primer on banking over at NEP, but it's long and dry.

Since I'm significantly worse at explaining the basics of MMT, I'm not even going to try to "weave a narrative" and instead I'll just work my way through it, point by point.

@notarobot

"Let's address inequality by taking on debt to increase spending to help transfer money to large private corporations."

You don't have to take on debt. The US as the sole legal issuer of the Dollar can always "print more". That's what the short Greenspan clip was all about. Of course, you don't actually print Federal Reserve Notes to pay for federal expenses. It's the digital age, after all.

If the federal government were to acquire, say, ten more KC-46 from Boeing, some minion at the Treasury would give some minion at the Fed a call and say "We need $2 billion, could you arrange the transfer?" The Fed minion then proceeds to debit $2B from the Treasury's account at the Fed (Treasury General Account, TGA) and credits $2B to Boeing's account at Bank X. Plain accounting.

If TGA runs negative, there are two options. The Treasury could sell bonds, take on new debt. Or it could monetise debt by selling those bonds straight to the Fed – think Overt Monetary Financing.

The second option is the interesting one: a swap of public debt for account credits. Any interest on this debt would be transfered straight back in the TGA. It's all left pocket, right pocket, really. Both the Fed and the Treasury are part of the consolidated government.

However, running a deficit amounts to a new injection of reserves. This puts a downward pressure on the overnight interest rate (Fed Funds Rate in the US, FFR) unless it is offset by an increase in outstanding debt by the Treasury (or a draw-down of the TT&Ls, but that's minor in this case). So the sale of t-bonds is not a neccessity, it's how the Treasury supports the Fed's monetary policy by raising the FFR. If the target FFR is 0%, there's no need for the Treasury to drain reserves by selling bonds.

Additionally, you might want to sell t-bonds to provide the private sector with the ability to earn interest on a safe asset (pension funds, etc). Treasury bonds are as solid as it gets, unlike municipal bonds of Detroit or stocks of Deutsche Bank.

To quote Randy Wray: "And, indeed, treasury securities really are nothing more than a saving account at the Fed that pay more interest than do reserve deposits (bank “checking accounts”) at the Fed."

Point is: for a government that uses its own sovereign, free-floating currency, it is a political decision to take on debt to finance its deficit, not an economic neccessity.

"Weimar Republic"

I'm rather glad that you went with Weimar Germany and not Zimbabwe, because I know a lot more about the former than the latter. The very, very short version: the economy of 1920's Germany was in ruins and its vastly reduced supply capacity couldn't match the increase in nominal spending. In an economy at maximum capacity, spending increases are a bad idea, especially if meant to pay reparations.

Let's try a longer version. Your point, I assume, is that an increase in the money supply leads to (hyper-)inflation. That's Quantity Theory of Monetary 101, MV=PY. Amount of money in circulation times velocity of circulation equals average prices times real output. However, QTM works on two assumptions that are quite... questionable.

First, it assumes full employment (max output, Y is constant). Or in other terms, an economy running at full capacity. Does anyone know any economy today that is running at full capacity? I don't. In fact, I was born in '83 and in my lifetime, we haven't had full employment in any major country. Some people refer to 3% unemployment as "full employment", even though 3% unemployment in the '60s would have been referred to as "mass unemployment".

Second, it assumes a constant velocity of circulation (V is constant). That's how many times a Dollar has been "used" over a year. However, velocity was proven to be rather volatile by countless studies.

If both Y and V are constant, any increase in the money supply M would mean an increase in prices P. The only way for an economy at full capacity to compensate for increased spending would be a rationing of said spending through higher prices. Inflation goes up when demand outpaces supply, right?

But like I said, neither Y nor V are constant, so the application of this theory in this form is misleading to say the least. There's a lot of slack in every economy in the world, especially the US economy. Any increase in purchases will be met by corporations with excess capacity. They will, generally speaking, increase their market share rather than hike prices. Monopolies might not, but that's a different issue altogether.

Again, the short version: additional spending leads to increased inflation only if it cannot be met with unused capacity. Only in an economy at or near full capacity will it lead to significant inflation. And even then, excess private demand can easily be curbed: taxation.

As for the Angry Birds analogy: yeah, I'm not a fan either. But all the other talks on this topic are even worse, unfortunatly. There's only a handful of MMT economists doing these kinds of public talks and I haven't yet spotted a Neil deGrasse Tyson among them, if you know what I mean.

The thumbnail image for this video has been updated - thumbnail added by ReverendTed.

@longde

A study arguing that jury composition is sometimes unbalanced doesn't excuse us from needing to know whether or not THIS jury was unbalanced. Or we might need to awkwardly explain why a jury like this would be racist against her.

Even if the jury was all White and Latino, it should be curious to us that they'd take the side of a violent African American male with 5 baby mommas. That's who they're supposed to be biased against, not for, particularly when it comes to firearms used for self-defense.

More details are needed, and journalists are only conveying one narrow side.

Tags for this video have been changed from 'buzzer beater, basketball, threepointer' to 'buzzer beater, basketball, threepointer, 3pointer, chicago, state, CSU, win, beat, UMKC' - edited by my15minutes

Cryptographix has replied to many (though not all) of Yaroslavvb's errorneous comments. I reply to his last one.

The jury has power to judge both the law and the facts. The purpose of drawing a jury from one's peers, i.e., from the general public, is to provide a final check to bad laws. (Prior checks would be the refusal of the executive OR judicial branches of government to prosecute OR hear cases based on bad law.)

Jury nullification means that the jury yields a verdict of "non-guilty" in spite of the facts in order to nullify the law.

See: http://en.wikipedia.org/wiki/Jury_nullification
and: http://www.law.umkc.edu/faculty/projects/ftrials/zenger/nullification.html
and: http://www.friesian.com/nullif.htm

After a jury nullification, i.e., after a declaration of "not-guilty", it is too late for a judge to eject the offending jurors. He might declare a mistrial, but to do so based on jury nullification is an abuse his power; just as his arrogation of final authority, when he states: "you must follow my instructions on the law, even if you thought law was different or should be different" is an abuse of his power.

(Given the poor reasoning skills of most jury members, it is understandable that judges want juries to just follow their directions, but I still prefer the common sense judgment of 12 common men to the absolute authority of judicial autocrats.)

...they were all wounded, one not mortally-No middle name recognition for a president wounder....Public pressure resulting from the Hinckley verdict spurred Congress and most states into enacting major reforms of laws governing the use of the insanity defense....

...The Hinckley trial highlights the difficulty of a system that forces jurors to label a defendant either "sane" or "insane" when the defendant may in fact be close to the middle on a spectrum ranging from Star Trek's Mr. Spock to the person who strangles his wife thinking that he's squeezing a grapefruit. Not to mention the reactionary Brady bill,....no more streetsweepers!

http://www.law.umkc.edu/faculty/projects/ftrials/hinckley/hinckleytrial.html