- Paperback: 208 pages
- Publisher: Edward Elgar Publishing (June 26, 2006)
- Language: English
- ISBN-10: 1845429419
- ISBN-13: 978-1845429416
- Product Dimensions: 6.2 x 0.8 x 9.2 inches
- Shipping Weight: 12.6 ounces (View shipping rates and policies)
- Average Customer Review: 17 customer reviews
- Amazon Best Sellers Rank: #1,271,051 in Books (See Top 100 in Books)
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Understanding Modern Money:The Key to Full Employment and Price Stability
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`Randy Wray's book offers a fresh perspective on the issues of price inflation and employment in the macroeconomy. While consistent with earlier post Keynesian and institutionalist approaches, he nevertheless brings some new ideas to the debate. His is the sort of book that leads the reader to stop frequently to sketch out a concept or to digest some new application or theory. It is a very enjoyable read . . . Randy Wray's book is fascinating, and it already has me rethinking the "post Keynesian" portion of my intermediate macro class. The arguments are very powerful and well integrated and the support he provides for twintopt [money viewed as "that which is necessary to pay taxes"] and ELR varies from theoretical to historical. I highly recommend it.' -- John T. Harvey, Review of Social Economy `In this important book, Wray 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 `In this important book, Randall Wray argues that federal governments should act as employer of last resort . . . Wray's book clears up many misunderstandings about ELR. It presents an excellent case for its desirability and its feasibility.' -- Marc Lavoie, Eastern Economic Journal `In Understanding Modern Money, L. Randall Wray lays out a thoughtful and compelling case for a paradigm shift among economists, policymakers, and the general public. Specifically, he explains why the way in which modern economies operate forces policy makers to choose between lower rates of unemployment or higher rates of inflation and why a third alternative exists . . . Wray's work is highly recommended.' -- Shaw J. Gebhardt, Oeconomicus `This is a stimulating academic text.' -- Economic Outlook and Business Review `An highly original and well-constructed volume which promotes an innovative policy approach to achieve full employment together with price stability.' -- Aslib Book Guide `A fine and strikingly imaginative reappraisal of modern monetary theory that recovers some of its subject's long neglected political aspects by creatively reinterpreting Keynes and other older theorists.' -- Thomas Ferguson, University of Massachusetts, Amherst, US `This is the best kind of book - one that coaxes you to see the world in a new light. Old assumptions and prejudices melt away and you find yourself thinking differently, (and more hopefully), about vitally important but troublesome issues of economic and social policy.' -- Philip Harvey, Rutgers University of Law, US `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, US `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, New York, US `An excellent text containing a challenging new perspective on the role of money and the role of government. It is a very creative analysis with a new perspective which challenges the basics of conventional thinking. . . . [Wray ] clearly shows how conventional wisdoms misunderstand the basic role of money in a capitalistic society.' -- John Groenewegen, Erasmus University, Rotterdam, The Netherlands `Extremely well written and persuasively argued. . . . 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 `Understanding Modern Money breathes a whiff of fresh air over th 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 `This is a most important work, one that should be read by all serious economists regardless of their particular theoretical persuasions. Wray not only presents a most innovative study of the relationship among money, public policy, employment, and the price level, but develops a position on how a modern monetary economy works that is clear, insightful, and useful. This book, in my opinion, is the most important theoretical study in decades.' -- John F. Henry, California State University, US `An innovative and carefully argued proposal for solving the most pressing economic issue of our times - how to eliminate unemployment without reigniting inflation.' -- Paul Dalziel, Lincoln University, New Zealand `This book is to be recommended to any reader interested in both economic theory and macroeconomic policy, whether the person be an academic economist or policy maker. The book is, for the first time, exposing an original theory of money without any unnecessary controversies, in the tradition of Keynes's "Treatise on Money". . . . It is a major advancement in the elaboration of an heterodox macroeconomic theory along post Keynesian lines.' -- Alain Parguez, University of Franche-Comte, France and University of Ottawa, Canada
About the Author
L. Randall Wray, Professor of Economics, University of Missouri-Kansas City, US; Senior Scholar, Levy Economics Institute, US and Research Director, Centre for Full Employment and Price Stability, US
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I think this book is remarkable in the incite it provides by looking at government finances in a wholly new light. The book is somewhat dated, nevertheless the basic concepts seem largely applicable to today's economy. I can highly recommend Professor Wray's interesting treatment of fiat money, government finances and labor to anyone with an interest in these topics, and it would be particularly of interest to economists who who are in need of a fresh look at topics they may have thought they understood.
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
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? Will the market drive up interest rates?
Where do you get the "money" to pay your taxes from? Why isn't there a society with its own currency, no taxes and no government spending?
Furthermore, it answers these questions in different style to more mainstream books. A mainstream book would answer the first question by going into depth about the debt/GDP ratio, interest rates, demographics, consumers propensity to save and so on. On the other hand, Understanding Modern Money simply explains why the USA can not operationally default (it can only default because of political incompetence) regardless of how much it spends or China's desire to buy Treasury securities. It explains that there is no such thing as the USA "running out of money", regardless of demographics, interest rates, debt/GDP ratios, S&P downgrades and so on. Yes, inflation is a potential problem, and Wray acknowledges that - but solvency or "bouncing checks" are not problem's.
As you can see, Understanding Modern Money gets to the heart of modern economics - the operation realities of the monetary system and reserve accounting.