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Soft Currency Economics II
The author has been called "one the brightest minds in finance" CNBC 2010 The book
119 pages, Kindle Edition
First published October 25, 2012
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583 people want to read
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Displaying 1 - 16 of 16 reviews
July 17, 2019
I am seriously trying to understand "modern monetary theory." A friend who is doing the same recommended this book to me, on the grounds that it is short and clear. It is short, and it is quite clear, but it was still a little over my head. I think it was helpful to me in grasping more of the basic concept (which is, very roughly, that governments that issue money must operate at a deficit, because the government deficit is what makes money circulate in the private sector). If the MMT theorists are correct, the whole "balanced budget" argument for national governments is completely wrong-headed.
Mosler is a money man, and not at all a political radical. He thinks clearly, defines his terms, shows his work, and is quite convincing. I just need to understand more of the underlying system to make up my own mind.
I am more and more coming to beliee that money is almost entirely fictional, and all the questions about money are really "why do people believe this?" and "what will change what we believe?"
Mosler is a money man, and not at all a political radical. He thinks clearly, defines his terms, shows his work, and is quite convincing. I just need to understand more of the underlying system to make up my own mind.
I am more and more coming to beliee that money is almost entirely fictional, and all the questions about money are really "why do people believe this?" and "what will change what we believe?"
September 22, 2021
Great book, I’m slowly connecting the dots on how the modern financial system works. I really wish MMT (at least the descriptive side of it; less the prescriptive) would rebrand into something as bland as Modern Monetary Operations. I get it, MMT is better for PR but the term gets misconstrued as a political ideology - it’s really just trying to explain the modern fiat system.
Mosley breaks it down in clear English and while the book is short, to truly comprehend it you have to validate the cause/effect with your own thinking until the intuition is crystallized. Will def need to read it again.
At its core, you can’t argue what is being delivered: a sovereign nation that can spend & print their own money can never go insolvent. Taxes create the demand for currency and fiscal policy is what puts currency in circulation (along with defining the cost of money).
That said, where does this system go wrong? Centralization & dependency on the Fed to control the markets (we’re close to Chinas model then politicians will let you know). With ZIRP asset prices tend to rise (inflation?) creating inequality.
I removed a star as some of the policies around the Fed are out of date which can create confusion for the reader (not the authors fault).
Mosley breaks it down in clear English and while the book is short, to truly comprehend it you have to validate the cause/effect with your own thinking until the intuition is crystallized. Will def need to read it again.
At its core, you can’t argue what is being delivered: a sovereign nation that can spend & print their own money can never go insolvent. Taxes create the demand for currency and fiscal policy is what puts currency in circulation (along with defining the cost of money).
That said, where does this system go wrong? Centralization & dependency on the Fed to control the markets (we’re close to Chinas model then politicians will let you know). With ZIRP asset prices tend to rise (inflation?) creating inequality.
I removed a star as some of the policies around the Fed are out of date which can create confusion for the reader (not the authors fault).
August 14, 2013
Fascinating read about reserve banking and what can be done. Ill have to re-read because of the content was vast but short.
December 5, 2017
there are clearer explications out there
December 30, 2025
Warren Mosler’s book Soft Currency Economics was a refreshing dive into the monetary policies of sovereign currency issuing govts and a timely reminded of what the real constraints are in these systems.
The book starts out with Mosler analyzing the sovereign debt crisis that emerged in Italy in the early 90s. Markets had severely discounted Italian sovereign debt on the errant belief that market forces could force nations into default on debt payable in their own currency, and that austerity was the only solution. This was contrary to Warren’s understanding of what are called fiat currencies, where governments always have the ability to meet all obligations in those currencies in a timely manner.
The Italian bonds did not default and Warren Mosler’s understanding of fiat monetary systems was proven to be sound. This started a movement that was eventually called Modern Monetary Theory (MMT). MMT has since been used as a lens for looking at sovereign monetary systems in a way that ensures that govts act for the public purpose and achieve their stated goals of full employment and price stability.
Despite this book being written over 30 years ago, the information is more relevant than ever. The neo-classical economists from the days of gold backed currency still dominate the discourse about monetary policy and are still recommending austerity as the solution. We need Mosler’s MMT lens more than ever!
Technical and financial limits imposed by the federal budget deficit and federal debt are a vestige of commodity money. Today’s fiat currency system has no such restrictions. The concept of a financial limit to the level of untaxed federal spending is erroneous.
This not to say that deficit spending does not have economic consequences. It is to say that the full range of fiscal policy options should be considered and evaluated based on their economic impacts rather than imaginary financial restraints.
If more people learn about MMT, current macroeconomic policy can begin to center on how to more fully utilize the nation’s productive resources. True overcapacity is an easy problem to solve. We can afford to employ idle resources (like unemployed labor).
Mosler reminds us that obsolete economic models have hindered our ability to properly address real issues. Our focus has been directed away from issues which have real economic impacts to meaningless issues of accounting. Our collective attention on issues of income, inflation, and unemployment have been overshadowed by the conversation about the national debt and deficit.
Warren Mosler urges us to stop restricting the range of possible policy actions that we can deploy. The major economic problems facing the United States, and other sovereign currency issuing nation states, are not impossible to deal with. Only a misunderstanding of money and accounting prevents us from achieving a higher quality of life that is readily available.
The book starts out with Mosler analyzing the sovereign debt crisis that emerged in Italy in the early 90s. Markets had severely discounted Italian sovereign debt on the errant belief that market forces could force nations into default on debt payable in their own currency, and that austerity was the only solution. This was contrary to Warren’s understanding of what are called fiat currencies, where governments always have the ability to meet all obligations in those currencies in a timely manner.
The Italian bonds did not default and Warren Mosler’s understanding of fiat monetary systems was proven to be sound. This started a movement that was eventually called Modern Monetary Theory (MMT). MMT has since been used as a lens for looking at sovereign monetary systems in a way that ensures that govts act for the public purpose and achieve their stated goals of full employment and price stability.
Despite this book being written over 30 years ago, the information is more relevant than ever. The neo-classical economists from the days of gold backed currency still dominate the discourse about monetary policy and are still recommending austerity as the solution. We need Mosler’s MMT lens more than ever!
Technical and financial limits imposed by the federal budget deficit and federal debt are a vestige of commodity money. Today’s fiat currency system has no such restrictions. The concept of a financial limit to the level of untaxed federal spending is erroneous.
This not to say that deficit spending does not have economic consequences. It is to say that the full range of fiscal policy options should be considered and evaluated based on their economic impacts rather than imaginary financial restraints.
If more people learn about MMT, current macroeconomic policy can begin to center on how to more fully utilize the nation’s productive resources. True overcapacity is an easy problem to solve. We can afford to employ idle resources (like unemployed labor).
Mosler reminds us that obsolete economic models have hindered our ability to properly address real issues. Our focus has been directed away from issues which have real economic impacts to meaningless issues of accounting. Our collective attention on issues of income, inflation, and unemployment have been overshadowed by the conversation about the national debt and deficit.
Warren Mosler urges us to stop restricting the range of possible policy actions that we can deploy. The major economic problems facing the United States, and other sovereign currency issuing nation states, are not impossible to deal with. Only a misunderstanding of money and accounting prevents us from achieving a higher quality of life that is readily available.
May 5, 2019
Brief, breathless, long on claims and short on rigor. But this is an influential strain of thinking and it will likely leave a mark. 'This Time Its Different' (Reinhart/Rogoff) suggests that we don't really know what the limits of Public Debt/GDP are (they make some quantitative guesses). MMT seems to argue there are no limits. And while R/R wrestle with how large magnitude public debts are liquidated (either through inflation or default), MMT treats it as a residual that falls out - doesn't seem to consider default as an option. More generally, at first glance it is extrapolating outside of observed parameters (a modeling peril) and not treating expectations (possible loss of trust that is enjoyed inside observed parameter limits). Makes me think.
April 30, 2020
Interesting
Obviously a hedge fond manager figured it all out. And if one can say one truth about hedge fond managers: they are mosly extra ordinary smart! Yes I hate to say this, since I don’t like those professionals with red Ferrari‘s and huge Condos in major cities, but they are damn smart. So they must have something right here.
The good thing is, MMT, if used the right way, could be like quantitative easing for the less well off and might bring more justice to society.
Obviously a hedge fond manager figured it all out. And if one can say one truth about hedge fond managers: they are mosly extra ordinary smart! Yes I hate to say this, since I don’t like those professionals with red Ferrari‘s and huge Condos in major cities, but they are damn smart. So they must have something right here.
The good thing is, MMT, if used the right way, could be like quantitative easing for the less well off and might bring more justice to society.
June 11, 2020
A book about the MMT which is expressed from a perspective of a money manager. I think that the book lacks academic rigor and fails to reference history of other countries that have endured hyperinflation or currency default. That said, I considered the explanation of the workings of the Fed to be plausible and thus logical to describe his MMT theories, though I still have doubts about the latter.
February 25, 2021
Very short
Warren mister can communicate his knowledge in a clear way. Don't know if I buy what he sells. He demonstrates how money has changed from being based on gold to one being based on fiat it is not scary as it sounds. Money is a creature of the state being that money gets its' value from the fact u.s. requires taxes be paid in u.s. dollar. Warren Modeler argues hyperinflation is a risk but unlikely to happen soon. I t is a good start.
Warren mister can communicate his knowledge in a clear way. Don't know if I buy what he sells. He demonstrates how money has changed from being based on gold to one being based on fiat it is not scary as it sounds. Money is a creature of the state being that money gets its' value from the fact u.s. requires taxes be paid in u.s. dollar. Warren Modeler argues hyperinflation is a risk but unlikely to happen soon. I t is a good start.
June 6, 2019
Two thumbs up
Excellent for understanding how the current (2019) U.S. monetary system functions. Mr. Mosler's descriptions allow for easy understanding, especially for a novice like myself.
Excellent for understanding how the current (2019) U.S. monetary system functions. Mr. Mosler's descriptions allow for easy understanding, especially for a novice like myself.
January 22, 2021
Libro muy breve sobre MMT. Recomendado por Kelton (2020), quien considera a Mosler como la persona que cambió su perspectiva sobre el déficit en economía. Si bien no es técnico, es denso teóricamente, especialmente en el funcionamiento entre las tasas de interés.
April 18, 2020
Probably doesn't pay enough attention to the role of interest rates, but worth a read.
January 28, 2021
I really wish I could grasp the discussion on financial institutions better. This is a book that will take years to really understand, but well worth the investment
April 2, 2021
Excellent background into how our monetary system works and how it could be much better.
May 12, 2021
Short textbook of sorts on MMT. Not a bad overview but some of the explanations could have been fleshed out. Also some of the concepts are a little over my head.
January 15, 2021
Great short book on the fiat monetary system and the myths about the deficit.
Displaying 1 - 16 of 16 reviews