Recommended Reading: "Against Money", by J.W. Mason and Arjun Jayadev
James Keenan
Let me tempt you to read this book by quoting two paragraphs from the Introduction to this book. First,
"Somewhere in the fall of 2001, while in our first years at graduate school [at University of Massachusetts-Amherst], the two of us drove in a typically rickety graduate student car (a third-hand Ford LTD, built around 1983) across the breathtaking Berkshire mountains of western Massachusetts to Bard College, home of a think tank called the Levy Institute. There, tucked in a small liberal arts campus in the Hudson Valley, the most important figures in the Post Keynesian school of economics gathered to celebrate the life and work of Hyman Minsky, an American economist whose work on financial crises -- and especially the role of debt and speculation in their formation -- was foundational to the Post Keynesian tradition. The conference featured leading lights from academia, policymaking, and business. For young graduate students, it was a fascinating and dizzying set of discussions. It also made clear how deep questions about money lay at the heart of other debates in economics -- and how contradictory and unsettled the answers were."
Then, relating to the later 2000s,
"The intellectual developments that flowed out of that period re fascinating, if also highly contested. ...
"On the other side of the political spectrum, some economists, including those of the Post Keynesian school, resurrected thinking about money a entirely an object of the state, something controlled and generated by the government. (This was not a new idea, but certainly a dormant one, though one well understood by scholars such as Jan Kregel, who preserved and disseminated these ideas for other economists in this century.) One particularly vigorous branch of Post Keynesian theory was what became identified as modern money (or monetary) theory. A group of scholars working decidedly out of the mainstream -- Randall Wray, Stephanie Kelton, Pavlina Tcherneva, and Nathan Tankus and others -- helped revive and popularize older Keynesian ideas, from Minsky and others, and creating a genuine movement that attracted young people in universities worldwide."
This is not an "MMT book" per se but it is an important work of contemporary heterodox macroeconomic thinking. I would describe it as an in-depth exploration of Keynes's concept of the "Monetary-Production Economy." If I were an undergraduate student in economics today, this work would be a challenging read. If I were a graduate student in political economy, it would be required reading. When I was a graduate student in Political Economy fifty years ago, this book would have enabled me to better understand post-Keynesian thinkers like Piero Sraffa and Axel Leijonhufvud who were then far above my head. At the same time, it draws upon thinkers like David Graeber whose impact has only come in this century.
Co-author Mason is head of a graduate program at John Jay College, part of the City University of New York, which is now one of the leading centers of heterodox economics in the city, if not the country. Co-author Jayadev teaches at Azim Premji University in India, a very new school in India focused on training professionals in the areas of education and development.
James Keenan
Warren Mosler
--
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Jay Mills
- Government spending is not revenue constrained.
He would insist the article clearly state that a sovereign currency issuer spends by instructing the central bank to credit bank accounts. Taxes and bond sales do not operationally provide the dollars used for spending. - Taxes do not fund federal spending.
He would argue the article still uses language implying taxes finance expenditures. Mosler would say taxes create demand for the currency and remove purchasing power, but do not supply dollars to the issuer. - Treasury securities are not financing operations.
He would stress that Treasury securities are simply interest-bearing dollars. Selling bonds exchanges reserves for securities and is a reserve management or interest-rate maintenance operation, not a funding operation. - The government budget constraint is descriptive accounting, not an operational constraint.
He would reject treating the intertemporal government budget constraint as a causal limitation on fiscal policy. - The relevant constraint is inflation, not solvency.
He would emphasize that a currency issuer cannot become insolvent in obligations denominated in its own currency. The constraint is the availability of real resources and the risk of inflation. - Interest rates are a policy variable, not a market price balancing saving and investment.
He would object to any implication that the “natural” interest rate emerges from markets. The overnight rate is set by the central bank. - Higher interest rates are not necessarily contractionary.
He would argue mainstream macro assumes this rather than proves it. Higher rates also increase government interest income paid to the private sector and can raise business costs. - Banks do not lend reserves.
If the article discusses bank lending in conventional terms, Mosler would reiterate that banks create loans first and obtain reserves afterward if needed. - Sectoral balances deserve a central role.
He would argue the accounting identity
- Government deficit = Private domestic surplus + Foreign surplus
should be a primary analytical framework rather than a peripheral observation. - Unemployment is evidence the deficit is too small.
Rather than treating unemployment as equilibrium or structural, Mosler would argue it indicates the government has not supplied enough net financial assets to satisfy the private sector’s desire to save. - The Job Guarantee is a price anchor, not merely social policy.
He would emphasize that the Job Guarantee is designed to stabilize the price level by establishing a fixed wage buffer stock of employed workers, replacing the mainstream reliance on a buffer stock of unemployed workers. - The article likely concedes too much to mainstream terminology.
Mosler frequently criticizes language such as “government borrowing,” “taxpayer money,” “debt burden,” and “paying for spending.” He would replace these with descriptions of the actual balance-sheet operations. - The sequence of operations matters.
He would stress: - Government spends first.
- Reserves are created.
- Taxes drain reserves.
- Bond sales exchange reserves for securities.
He considers getting this chronology correct foundational. - The monopoly issuer analogy is missing.
Mosler often begins with the observation that the federal government is the monopoly issuer of the U.S. dollar. Many implications, including the inability to “run out” of dollars, follow directly from that fact. - Mainstream models start from the wrong place.
He would argue that macroeconomics should begin with actual institutional operations of the Treasury, Federal Reserve, and banking system, not with representative-agent optimization or intertemporal budget constraints.
Best,
On Jul 10, 2026, at 7:06 PM, James Keenan <jke...@pobox.com> wrote:
After writing this post, I learned that Jayadev and Mason commented on MMT at greater length in an INET working paper back in 2018: "Mainstream Macroeconomics and Modern Monetary Theory: What Really Divides Them?".
Warren Mosler
I’d imagine Warren would say:
- Government spending is not revenue constrained.
- He would insist the article clearly state that a sovereign currency issuer spends by instructing the central bank to credit bank accounts. Taxes and bond sales do not operationally provide the dollars used for spending.
- Taxes do not fund federal spending.
He would argue the article still uses language implying taxes finance expenditures. Mosler would say taxes create demand for the currency and remove purchasing power, but do not supply dollars to the issuer.
- Treasury securities are not financing operations.
He would stress that Treasury securities are simply interest-bearing dollars.
- Selling bonds exchanges reserves for securities and is a reserve management or interest-rate maintenance operation, not a funding operation.
- The government budget constraint is descriptive accounting,
- not an operational constraint.
He would reject treating the intertemporal government budget constraint as a causal
- limitation on fiscal policy.
- The relevant constraint is
- inflation,
- not solvency.
He would emphasize that a currency issuer cannot become insolvent
- in obligations denominated in its own currency. The constraint is
- the availability of real resources
- and the risk of inflation.
- Interest rates are a policy variable, not a market price balancing saving and investment.
He would object to any implication that the “natural”
- interest rate emerges from markets.
- The overnight rate is set by the central bank.
- Higher interest rates are not necessarily contractionary.
He would argue mainstream macro assumes this rather than proves it.
- Higher rates also increase government interest income paid to the private sector and can raise business costs.
- Banks do not lend reserves.
If the article discusses bank lending in conventional terms, Mosler would reiterate that banks create loans first and obtain reserves afterward if needed.
- Sectoral balances
- deserve a central role.
He would argue the accounting identity
- Government deficit = Private domestic surplus + Foreign surplus
should be a primary analytical framework rather than a peripheral observation.
- Unemployment is evidence the deficit is too small.
Rather than treating unemployment as equilibrium or structural, Mosler would argue it indicates the government has not supplied enough net financial assets to satisfy the private sector’s desire to save.
- The Job Guarantee is a price anchor, not merely social policy.
He would emphasize that the Job Guarantee is designed to stabilize the price level by establishing a fixed wage buffer stock of employed workers, replacing the mainstream reliance on a buffer stock of unemployed workers.
- The article likely concedes too much to mainstream terminology.
Mosler frequently criticizes language such as “government borrowing,” “taxpayer money,” “debt burden,” and “paying for spending.” He would replace these with descriptions of the actual balance-sheet operations.- The sequence of operations matters.
He would stress:
- Government spends first.
- Reserves are created.
- Taxes drain reserves.
- Bond sales exchange reserves for securities.
He considers getting this chronology correct foundational.- The monopoly issuer analogy is missing.
--
Mosler often begins with the observation that the federal government is the monopoly issuer of the U.S. dollar. Many implications, including the inability to “run out” of dollars, follow directly from that fact.- Mainstream models start from the wrong place.
He would argue that macroeconomics should begin with actual institutional operations of the Treasury, Federal Reserve, and banking system, not with representative-agent optimization or intertemporal budget constraints.Best,
JasonOn Jul 10, 2026, at 7:06 PM, James Keenan <jke...@pobox.com> wrote:After writing this post, I learned that Jayadev and Mason commented on MMT at greater length in an INET working paper back in 2018: "Mainstream Macroeconomics and Modern Monetary Theory: What Really Divides Them?".--On Wednesday, July 8, 2026 at 4:44:49 PM UTC-4 James Keenan wrote:Let me tempt you to read this book by quoting two paragraphs from the Introduction to this book. First,
"Somewhere in the fall of 2001, while in our first years at graduate school [at University of Massachusetts-Amherst], the two of us drove in a typically rickety graduate student car (a third-hand Ford LTD, built around 1983) across the breathtaking Berkshire mountains of western Massachusetts to Bard College, home of a think tank called the Levy Institute. There, tucked in a small liberal arts campus in the Hudson Valley, the most important figures in the Post Keynesian school of economics gathered to celebrate the life and work of Hyman Minsky, an American economist whose work on financial crises -- and especially the role of debt and speculation in their formation -- was foundational to the Post Keynesian tradition. The conference featured leading lights from academia, policymaking, and business. For young graduate students, it was a fascinating and dizzying set of discussions. It also made clear how deep questions about money lay at the heart of other debates in economics -- and how contradictory and unsettled the answers were."
Then, relating to the later 2000s,
"The intellectual developments that flowed out of that period re fascinating, if also highly contested. ...
"On the other side of the political spectrum, some economists, including those of the Post Keynesian school, resurrected thinking about money a entirely an object of the state, something controlled and generated by the government. (This was not a new idea, but certainly a dormant one, though one well understood by scholars such as Jan Kregel, who preserved and disseminated these ideas for other economists in this century.) One particularly vigorous branch of Post Keynesian theory was what became identified as modern money (or monetary) theory. A group of scholars working decidedly out of the mainstream -- Randall Wray, Stephanie Kelton, Pavlina Tcherneva, and Nathan Tankus and others -- helped revive and popularize older Keynesian ideas, from Minsky and others, and creating a genuine movement that attracted young people in universities worldwide."
This is not an "MMT book" per se but it is an important work of contemporary heterodox macroeconomic thinking. I would describe it as an in-depth exploration of Keynes's concept of the "Monetary-Production Economy." If I were an undergraduate student in economics today, this work would be a challenging read. If I were a graduate student in political economy, it would be required reading. When I was a graduate student in Political Economy fifty years ago, this book would have enabled me to better understand post-Keynesian thinkers like Piero Sraffa and Axel Leijonhufvud who were then far above my head. At the same time, it draws upon thinkers like David Graeber whose impact has only come in this century.
Co-author Mason is head of a graduate program at John Jay College, part of the City University of New York, which is now one of the leading centers of heterodox economics in the city, if not the country. Co-author Jayadev teaches at Azim Premji University in India, a very new school in India focused on training professionals in the areas of education and development.
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