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Understanding Modern Money:The Key to Full Employment and Price Stability

4.6 out of 5 stars 16 customer reviews
ISBN-13: 978-1845429416
ISBN-10: 1845429419
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Editorial Reviews

Review

'An important book, one that should begin a new discussion of full employment and price stability. (Wray) shows that the basic presumptions of mainstream macroeconomics were and are flawed.... Both the analysis and the policy proposals in this book deserve wide dissemination. It is time for a new approach to these questions, and this book opens the door to new ways of thinking.' -- Ed Nell, New School for Social Research

'Extremely well written and persuasively argued.... it turns economics from a dismal science into a positive science, capable of clear policy recommendations that cut the gordian knot of the unemployment-inflation tradeoff.' -- Jan Kregel, Universita degli Studi di Bologna, Italy

'In this innovative new work, Randy Wray has convinced at least one reader that full employment and price stability are fully compatible goals in today's world....Pivoting on his fresh rereading of the history and nature of money, Wray generates insight after insight, and will change forever the way in which we think about key macroeconomic variables and relationships.' -- John Adams, Northeastern University

'Understanding Modern Money breathes a whiff of fresh air over the desert of unimaginative, and only too often irrelevant though lofty sophisticated technicalities, in which macroeconomic writing has landed us in the last decades.' -- Y.S. Brenner, University of Utrecht, The Netherlands

... accomplishes a difficult task indeed, managing to offer both a critique of key mainstream macroeconomic views and a plausible alternative. -- - Teodoro Dario Togati, The Economic Journal --This text refers to an out of print or unavailable edition of this title.

About the Author

L. Randall Wray, Professor of Economics and Research Director, Center for Full Employment and Price Stability, University of Missouri â€" Kansas City, US
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Product Details

  • Paperback: 208 pages
  • Publisher: Edward Elgar Publishing (June 26, 2006)
  • Language: English
  • ISBN-10: 1845429419
  • ISBN-13: 978-1845429416
  • Product Dimensions: 0.8 x 6.2 x 9.2 inches
  • Shipping Weight: 12.6 ounces (View shipping rates and policies)
  • Average Customer Review: 4.6 out of 5 stars  See all reviews (16 customer reviews)
  • Amazon Best Sellers Rank: #1,077,996 in Books (See Top 100 in Books)

Customer Reviews

Top Customer Reviews

Format: Paperback Verified Purchase
Quite simply, the book is an important read given current economic debates ( government deficits and debt etc) and is very good.

Following a brief introduction, the book contains a few chapters on the history of money. This part of the book, while perhaps important for an academic, is boring, irrelevant, and in my opinion, too philosophical for a general reader. There are many quotes from Keynes and Smith in the drawn out chapter(s), and to be honest, they are difficult for an ordinary reader to understand. I ended up skipping to the end of the "history of money" chapter once I was halfway through it - and I still don't regret doing so.

Apart from that, providing you have some basic knowledge of monetary operations and reserve accounting, he book is fantastic . It clearly explains the operational realities of government spending, the issue of government securities, bank lending and so on.

The question remains: Why does this book deserve five stars if part of it wasn't worth reading, and part was fantastic?

Answer: Because this book answers the fundamental economic questions that no other book answers. Many other economic books are based on "The US is screwed - lots of debt, hyperinflation, aging population, China etc" - these type of books best resemble propaganda, and are ignorant the operational realities of the monetary system. Understanding Modern Money couldn't be more different - it is a beginner to intermediate or above guide to the fundamentals of monetary economics. It answers the big questions such as:

Will a USA government check bounce? Can the USA operationally default?

Why does the federal government issue Treasury securities? How does this affect the overnight interbank lending rate?
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Format: Paperback Verified Purchase
Read Wray's Blog at New Economic Perspectives.. Very helpful/aid to grasping MMT.

Basic concepts which have totally changed my thinking how the Federal Government functions (1) Federal debt is money (2)Taxes drive demand for currency (3) The federal Government can't go bankrupt...and the big one..(4) FEDERAL DEFICITS = PRIVATE SECTOR ASSETS
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I'm an MBA from a "Top 10" school and this book has completely changed my thinking on the monetary system and the macro economy. Wray clearly and concisely explains modern fiat currency and why a government that issues its own fiat currency can never be finance constrained. He also ties money to the real economy and discusses how to maintain price stability and full employment. Highly recommended.
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This powerful text is my most valuable. It should be required reading for every macroeconomics 101 class. Wray explains how the monetary system works according to Modern Monetary Theory. Reality proves Modern Monetary Theory (MMT) correct every day. You need to read this book if you ever wondered why Treasury auctions do not fail while pundits wail that nobody will buy US bonds because the debt is too high. The author answers so many questions in this short book. For me, it offers the only credible explanation for the real world.
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Format: Hardcover
Wray makes the the concepts of the chartalist theory of money, functional finance, and employer of last resort understandable and interesting to even someone with no prior knowledge of the issues.
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For those in the early stages of being introduced to Modern Monetary Theory, you can't do much better than this book. It is not bogged down with jargon yet it is serious, insightful and shatters a number of myths both about the origins of fiat money and how it changes the debate in areas like the deficit, trade and unemployment. The job guarantee component of MMT (or at least some schools of MMT) is introduced and discussed. Also recommended for those looking for exposure to MMT is the short but brilliant The 7 Deadly Innocent Frauds of Economic Policy and Free Money: Plan for Prosperity
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Format: Paperback
Understanding Modern Money presents the essentials of an alternative to current economic theory, Modern Monetary Theory (MMT), also termed "chartalism". It then proposes a method for achieving full employment, by making the government the Employer of Last Resort (ELR). Unfortunately, Randall Wray's book shares the characteristics of many books which try to prove an alternative to accepted "doctrine", selectively interpreting evidence, ignoring contradictory evidence, and using changing definitions or arguments to suit the point being made

Mr Wray provides an extensive description of MMT and a shorter description the ELR proposal. Unfortunately I don't find these descriptions backed up by convincing or consistent arguments. No hard evidence is provided (e.g. charts or graphs showing evidence of the MMT interpretation), though I didn't expect any in this type of book.

I'll start with a brief summary of MMT:

MMT says that all money is fiat money issued by the government. There is no such thing as "hard money" (as people normally think of gold and silver coins), and the idea that gold and silver were used in coinage because of their value is never acknowledged.

Money is created when the government spends. It is destroyed by paying taxes. Money only has value because people must use it to pay taxes ("taxes drive money"). Taxes do not pay for government, the government can spend anything it wants to. Instead taxes are required to reduce the money supply and avoid inflation.

This system depends on a very specific definition for the "government". In the United States, the Federal Government and Federal Reserve are the "government", everything else (private companies, individuals, states, counties, and cities) is not the government.
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