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J.D. ALT

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DIAGRAMS & DOLLARS: Modern Money Illustrated Kindle Edition

by J.D. ALT (Author) Format: Kindle Edition

4.3 435 ratings

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This short, easy to follow book explains the basic concepts underlying the debate about the possibilities and implications of Modern Money Theory. The explanations are illustrated with simple diagrams, making the concepts easy to "see". The explanations are targeted to the "non-economist" with a serious interest in the current debate about fiscal policies and National Budgets.

Print length

36 pages
Language

English
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On Kindle Scribe
Publication date

January 12, 2014
File size

923 KB
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Product details

ASIN ‏ : ‎ B00HUF6POI
Publication date ‏ : ‎ January 12, 2014
Language ‏ : ‎ English
File size ‏ : ‎ 923 KB
Simultaneous device usage ‏ : ‎ Unlimited
Text-to-Speech ‏ : ‎ Enabled
Screen Reader ‏ : ‎ Supported
Enhanced typesetting ‏ : ‎ Enabled
X-Ray ‏ : ‎ Not Enabled
Word Wise ‏ : ‎ Enabled
Sticky notes ‏ : ‎ On Kindle Scribe
Print length ‏ : ‎ 36 pages

Best Sellers Rank: #368,629 in Kindle Store (See Top 100 in Kindle Store)
- #45 in Macroeconomics (Kindle Store)
- #67 in Money & Monetary Policy (Kindle Store)
- #117 in One-Hour Business & Money Short Reads

Customer Reviews:
4.3 435 ratings

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J.D. ALT

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My journey as an architect and writer has come to focus entirely on two goals:

First, to lay out an understanding of the operations of modern fiat money and the astonishing implications this understanding has for what we can undertake and accomplish as a collective society.

Second, to share specific concepts for Affordable Housing and Urban Architecture that are made possible by the operations modern fiat money.

These two topics intersect—with different emphasis and perspectives—on my website www.jdalt.com.

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4.3 out of 5

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Antony H

Great Explanation of MMT!

Reviewed in the United States on October 6, 2023

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Although he doesn't really refer to it as such (well, he does in his introduction), Alt very clearly describes the essential model of Modern Monetary Theory (MMT). For anyone interested in how "money" actually flows between government and the private sector, here is a great place to start. It should also be REQUIRED READING for members of government, particularly Congress! And the essentials should be incorporated into our fundamental education.

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J. Myers

Very useful guide to mostly wrong thinking

Reviewed in the United States on November 4, 2015

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Modern Money Theory is a crock. The central tenet is that "only the central government makes Money". "By law, a U.S. Dollar can only be created--printed or issued electronically--by the U.S. sovereign government. Anyone else who tries to create or issue a U.S. Dollar is a counterfeiter and subject to imprisonment...[private sector dollars] in the long run, net to ZERO."[sic]

Well, no.

Easy counterexample: I buy land for $100K, raw materials for $100K, labor for $300K, and build a $1M home for $500K costs. The county assessor comes round, says "Yes, that's a $1M house", and I can sell it for $1M the next year or keep it. Either way, I JUST CREATED $500K WORTH OF NET WEALTH TO THE ECONOMY by being an entrepreneur and CREATING valuable, desirable durable goods OUT OF THIN AIR. My BALANCE SHEET has gone up by $500K. The balance sheet of the entire nation has gone up by $500K. I never printed a single paper dollar, and yet both me and my country's economy are now worth substantially more in both wealth and value.

The author confuses money, which is just a way of measuring value, with wealth. He ignores the velocity of money:
I pay Joe Laborer $1K. Joe buys an original painting for his wife for $1K. The painter goes to the hairdresser and pays $1K for a super weave. The hairdresser goes to the grocer and buys $1K worth of oranges for a party.

Total amount of paper/electronic dollars: $1K, issued by the government OR BANKS (banks do create money/debt at will, it's called a "loan").
Total amount of value: $4K received, and $4K tallied in GDP.
Total amount of income taxes paid: ~25% of $4K, NOT ~25% of $1K, because, when you have decent velocity of money, the money flows 'round and 'round and keeps on flowing, while the value and ideally the wealth just keeps adding up.
(This is why slowing down the velocity of money during a recession is so deadly.)

If you work for a salary, every day you are creating more wealth out of thin air than you get paid, just by showing up to work and doing your thing. Or else your employer would not stand for it, and would fire you. The whole is greater than the sum of its parts, and the company creates a profit from all the workers doing their thing together. Or else the company wouldn't do it. The company's durable products or services are worth more in wealth to the consumer, even more than the price, or else the consumer wouldn't pay for them. The whole economy runs like this, pulling itself up from its bootstraps, creating wealth out of thin air when one person buys something that is more valuable to THEM than it is less valuable/mundane/boring to the person who is selling. Thus the net value / net worth of the economy as a whole magically increases, like yeast growing to make bread and beer.

MMT is completely clueless on this.

Well, the e-book is nice. The author clearly demonstrates these wrong ideas with useful flow diagrams based on cistern "pots of money" and pipes. He clearly lays out what the MMT people are thinking, and his explanations are spot on and easy to understand.

It's just the theory itself that is based on government self-centered thinking.

Even more looney-tunes ideas: "U.S. Tax moneys paid are destroyed (and thus do not flow into the Treasury)". I am sure all those accountants at the Treasury are happy now that they can go home, 'cause their work is not needed. The Treasury's balance is always 0! Wow! "The only REAL value of a dollar is paying U.S. taxes; it's a TAX certificate." "People only PRETEND to use them for everyday money, because eventually they're going to have to pay their taxes with them." Ha! Won't China be surprised! All this time they thought they were investing and buying trillions of future dollars, but because China doesn't have to pay any U.S. income tax, they are actually COMPLETELY WORTHLESS!!! China and Russia should start their own bank, and issue real MONEY that is not based on the I.R.S.!!

actually, that last one is not so funny.

Here are some things the book gets right:

1) A sovereign government that owns/controls its own central bank is PROFOUNDLY AND COMPLETELY different from a captive government that cannot issue its own currency, such as U.S. state or local governments or Greece. In this case, surplus and deficit budgets become mere score-keeping, instead of vital survival issues, as the central bank can, at least in theory and to a first order of approximation, print its way out of any external debts. That is, as long as inflation is under control, and people still believe in the worth of the currency. Thus, and this is important, an independent SOVEREIGN government should not concentrate on balancing its budget, but rather allocating stimulus properly.

So NONE of the theory of the book has ANY relevance to state or local governments. Don't Try This At Home.
...Whether the complex relationship between the Treasury and the U.S. Fed actually qualifies is a knotty issue TBD.

2) Sovereign governments are limited by the quality and quantity of the people, raw materials, technology, and energy they can get for projects. Funding can be a secondary issue, limited mainly by having to keep inflation under control.

3) Federal Budget surpluses drain the private sector. This can eventually result in a recession or a private debt crisis. The job of the Federal government is to inject money wisely into the economy, not to be balanced. Many people miss this.

4) Federal Budget deficit spending increases net savings in the private sector, and can increase investment and growth. (Note unfortunately that this needs to be targeted better, as current deficit spending goes largely to banks--which, technically, are part of the private sector--and not private individuals or tech companies.)

The author therefore proposes renaming the Deficit as "Net Spending Achievement", and the National Debt Clock as the "National Savings Clock". He has a good write-up on these. These are all interesting ideas that should be weighed thoughtfully. Just for this reason alone, it is probably worth it to buy this e-book and think about all the questions that it raises.

Anyway, remember, entrepreneurs create wealth. People who treasure the wealth are willing to pay more for it, and that creates value. And the money is only used to track the value, and indirectly the wealth. Start screwing with these basic concepts, and you'll come up with very wrong conclusions.

2 people found this helpful

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richard

This book should become a classic

Reviewed in the United States on June 2, 2017

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The book could – and I hope it will – become a classic for 2 reasons: (1) It provides an clear description of our federal money system, and (2) It provides a good introduction to “system dynamics.”

My education in system dynamics began back in the 1960s working as a civilian engineer for the US Air Force. At that time, digital computers were too large and too slow to be used for navigation and bombing calculations on-board our aircraft. Instead, we used analog computers, and these had all the elements needed for system dynamic models. The differences were simply different names for the elements, for example, mathematical integrators correspond to the stock tanks or dollar storage tanks of this book.

Since that time, I've used system dynamic concepts to develop Monte Carlo simulations for a missile (Maverick), economic development of petroleum production fields, and an analysis of a proposed research process. It is a useful tool for better understanding many complex processes.

My only complaint about the book is that the author ignores fractional reserve banking, which seems to indicate that dollars are, in fact, created in the private sector, but his analysis is still correct because the federal government must supply the reserves making those new dollars possible.

Some of the comments seem to confuse dollars and value. We are used to thinking of value as being measured in dollars, but they are not the same. When we say an object has a value of so many dollars, we usually mean it cost that many dollars to create, or it could be exchanged for that many dollars. Value is indeed created in the private sector, and the dollars are there only to facilitate that creation.

9 people found this helpful

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Amazon Customer

How modern money really works

Reviewed in the United States on May 22, 2014

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Well worth reading. This book provides a clear and lucid explanation with lots of diagrams as to: 1. why a national government with its own sovereign currency is the ultimate source of value for a nation's economy; 2. why federal government spending is not constrained by the taxes the government receives; 3. why the federal budget deficit is equal to the amount of money in private sector savings, investment, production, and consumption; 4. why balanced federal budgets hurt the private sector economy; 5. why surplus federal budgets harm the private sector economy; and, 5. why deficit spending by the federal government promotes a prosperous economy. A breath of fresh air, common sense, and reality in a field filled with magicians of theory and charlatans. Modern Monetary Theory is also explained by Warren Mosler, Stephanie Kelton, and Michael Hudson. This book is a dose of wake-up medicine in the political argument over the federal budget and deficit.

6 people found this helpful

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N. Peterson

Absolute clarity about MMT

Reviewed in the United States on September 2, 2019

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A great little book. Loved the diagrammes and the explanations were just as clear, more so really. I would not have understood the diagrammes without the explanations but would love how progressively they explained the situation clearly, from how politicians and public misunderstand how things work to how modern money works to how it really works. BUT....what was missing was a clear link with bank created money.

I would love a second diagrammes book on how the banking system works and how bank created money ties into the sovereign money creation process. I think I understand that central bank reserves are sovereign money but this does not appear on the diagrammes. .

7 people found this helpful

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TimG

simple answers for your understanding of the economy

Reviewed in the United Kingdom on September 16, 2023

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Simple plain language and pictures unveil the economy. The things that they don’t want you to understand. Explaining tax and money in a format anyone can follow.

Amazon Customer

... to understand how money flows through economy and very good supplement to Modern Monetary Theory

Reviewed in Canada on December 1, 2016

Verified Purchase

Highly instructive help to understand how money flows through economy and very good supplement to Modern Monetary Theory. Here is how it works. Must read for all.

Alan Longbon

An educational and enjoyable read with a practical application of macroeconomic principles.

Reviewed in Australia on November 23, 2017

Verified Purchase

This book is a fun and fascinating examination of macroeconomics using stock flow diagrams to build an accurate representation and explanation of the economy.

I have given this book the highest rating because it is a hard hitting combination of clear easy to read text supported by clear easy to follow diagrams that delivers a clear easy to understand message to the topic of political economy that is bathed and cloaked in neoliberal myths and half truths and false assumptions.

This quick and easy to read book should be standard issue to every elected official when seeking public office and also for all government employees upon employment. Further this sort of material should be taught in schools, colleges and universities everywhere.

tomomori

モダンマネタリー理論（MMT）の初歩。

Reviewed in Japan on October 24, 2016

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本職は建築家であらされる著者氏が、社会におけるマネーフローを「建造物」に見立てて考察する一冊。「常識」とされる一般的理解のマネーフローは「欠陥建築」であり、誤解に基づくマネー配分（国家予算議論）が如何に社会にダメージを与えるかを訴える。ここに描かれるマネーと国家財政と国民経済の姿は固定概念を破壊する真理なのか、とんでもない勘違いなのか、私には判断が出来ないが、緊縮財政派や均衡予算派に真っ向から立ち向かうマネー像がここにある。この本に従うと、米国は永遠に国債残高を積み上げられ、JGB崩壊を叫び続ける人々は喉を枯らしたまま死ぬことになる。という訳で、だいたい以下のような事がマネーフローのダイアグラム付きで書いてある。
国家とは何か。通貨発行権を持ち、その通貨でもって税金を徴収する権利を有する組織のことである。政府が懸念すべきはインフレのみで通貨発行は自由。マネーを創造するのは国家のみ、民間部門ではない（銀行とは国家発行のマネーにレバレッジをかける組織）。国家は民間部門から財とサービスを購入し、マネーを民間部門に流入させる。そして民間部門に満ちたマネーを徴税という形で吸い上げ、「破壊する」。「税収」というが、税金は国家の収入ではない。国家はマネーを創造できるのだから「収入」など必要ない。マネーとは実際のところ「国家による約束」である。何の約束か。「この通貨で税金を受け付けます」って約束。この「約束」があるからこそ、国民通貨は国民通貨たり得ている（脱税すると獄に下るってペナルティ付きだ）。そして国債を売るということは、「国家が借金する」ということではない。国家が民間部門の中のドルをspendingからsavingに移行させることである。そして国家は国債の金利を払うことによりドルを民間部門のspendingに再移行させる。「National Debt」は国債残高のことであるが、これは相方の民間部門から見れば「National Savings」である。よって、予算を均衡させるという考え方自体がナンセンスなのだ。国家の歳出は税収の制限を受けないのだから。むしろ予算を均衡させたら国家が民間部門に流し込むマネーが滞るのだからよろしくない。この構図では、国家が懸念すべきはインフレのみなのである。
これが真実なら私のJGB投資は安泰…というのは置いといて、「あるべき姿」ではなく「現実のマネー機能」を描き出したらこうなる、という感じなのかもしれないが、これが現実ならば、「財政政策と金融政策分離」という面妖な構造でもって成り立つEUが「大いなる勘違い」によって作られたカタストロフェ装置だったということが明らかになるのである。「当時の欧州エリートたちはいったいナニを考えてた？」と後知恵で唖然とするのが大勢であろうが、おそらく、モダンマネーについて「知らなかった」ってな単純な話であろうと思う。しかし後半に行くに従って目が点々化したのだが、シロートの私としては一応、金本位主義者の方々に「ゴールドで税金が払えます？」ってな反論が可能になったかもしれない、くらいの感想である。それから通貨量の話ばかりで流通速度に関する考慮がないのはちょっと心許ない。ちなみに本書を読んだせいで、本書主張とは真逆を行く「Money is gold」派のジム・リカーズ氏の『The New Case for Gold』を衝動買いしてしまった。

3 people found this helpful

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miguel navascues

sumamente aclaratorio

Reviewed in Spain on February 27, 2015

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La claridad de conceptos es lo mejor del libro. Para el neófito, es un libro muy útil para no dejarse engañar por los talibanes de la economía.

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J.D. ALT

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