Sustainable Government Finance is not a cult

In a recent post on the Tax Research blog I quoted Richard Murphy’s* own words because he seemed to be rather distressed that progressive economists didn’t seem to support Modern Monetary Theory (MMT) calling it a cult! Perhaps it is time to notice that ProgressivePulse readers have better christened it ‘Sustainable Government Finance’ (SGF).

“And yet many on the left seem to have no understanding on this. For them affordability is constrained. And debt repayment remains paramount. ”

I replied along these lines:
So what do these so called left of centre economists think the economy is for then?
So we can all spend our lives in debt bondage?
If that’s the case then either they need changing or the economy does.

If people don’t think that the purpose of the economy is something like ‘to enhance the well-being of everyone, in order to enable them to live full and interesting lives by using resources in common – while having regard to climate sustainabilty’ then I suggest they’re not of the left at all.

The beauty of simple plain manilla SGF is that it shows that the existing economy can much better enhance the well-being of everyone just by changing the way we explain and think about that same economy.

If people who are radical are going to constrain their radicalism on the basis of voluntarily incurred nominal debt then they are not properly radical.

When you are the monopoly issuer of a currency and you have persuaded people to lend to you in that currency then it is not really a loan at all.

In that contest worrying about debt that you can repay at will when you’re the only one to create the credit that cancels it is literally the last thing that should concern us.

*For the sake of clarity and openness I should indicate that Richard Murphy is also the publisher of ProgressivePulse.


  1. Andrew Dickie -

    Morning, Peter, your link to SGF doesn’t take readers to the relatively recent post where the term emerged from the discussion, but to a much earlier, but also ad rem, post.

    1. Peter May -

      Thanks, Andrew. Now, with a certain inexplicable difficulty, rectified I think.
      It must be that the powers that be think the idea was too good….

  2. Sean Danaher -

    Thanks Peter
    readers might find this recent episode of the David McWilliams podcast interesting It has an extended interview with Prof. Stephanie Kelton who is a leading American supporter of MMT.

  3. Helen Schofield -

    Mmm … not sure about the use of the word “sustainable” since private banks appear to most citizens as having been in the business of supplying loans for a long time. Indeed most citizens assume that a big loan like a house mortgage loan can only come from a private sector bank. Maybe the creation of money should be broken down into “Sovereign Government Financing” and “Non-Sovereign Bank Financing” at least it gives cause for people wondering what the use of the word “sovereign” is all about.

    1. Peter May -

      But surely private banks aren’t the government? And if by chance they do buy long dated gilts – so what? that’s sustainable isn’t it?

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