May 16, 2021
Welcome to episode 76 of Activist #MMT. Today I talk with seventh-year MMT activist Bill Peeples. Bill earned a bachelors degree in mechanical engineering from the University of Texas at Austin. He then opened a retail computer store and managed his business with accounting software. This served as his introduction to double-entry accounting, for which he received some extra support from his father who is a Certified Public Accountant. Bill later worked for a major computer manufacturer, using computer programming and data analytics to determine why certain systems fail. All of this is to say, logic comes easily to Bill, and this helped him to very quickly pick up some important concepts underlying Modern Money Theory, or MMT.
(Here is a link to part 2.)
Bill wants to understand accounting all the way down to the individual transaction. In the context of economics, this is essentially the atomic level. Understanding this level of detail, Bill says, makes the aggregate become more clear. It also turns some of what is commonly portrayed as scary and complicated, into something decidedly mundane. An example is how the public is often told that China may "dump its debt“ and that this is somehow a threat or even potential act of war against the United States. A related insight I recently learned from Bill is the very concise and simple idea that only the issuer can create and delete its own money (this includes bonds, treasuries, and securities). After being created and before being deleted, the money and bonds can do nothing but change ownership. “Dumping its debt” is a hyperbolic term meaning to sell off its entire holdings of US bonds.
First of all, given the nature of the Chinese economy, it’s extremely unlikely that they would ever choose to do this. But even if they did, what Bill’s insight reveals is that China would do nothing more than exchange their bonds for cash. China would be giving up money that earns regular interest income (bonds) for money that earns no interest. In addition, because of the quantity of bonds involved, China would be very likely lose a lot of money in the process. In other words, the total amount of bonds and money in the world would remain unchanged and China would almost certainly harm itself – and not harm the United States.
You will find several sources recommended by Bill below, along with some example balance sheets he’s created during his experience of responding to common questions.
And now onto my conversation with Bill Peeples.
Resources
- Books:
- Wynne Godley and Marc Lavoie’s textbook, Monetary economics, an integrated approach to credit, money, income, production, and wealth
- James Galbraith’s 2008 book The Predator State: how conservatives abandoned the free market and why liberals should too
- 2020 book by Stephanie Kelton, The Deficit Myth
- 2010 book by Warren Mosler, The Seven Deadly Innocent Frauds of Economic Policy
- Steven Hail’s 2018 book, Economics for Sustainable Prosperity
- Interviews:
- Mark Cuban and Pavlina Tcherneva, hosted by Charles Hayden on Real Progressives
- Superstructure podcast episode The virus is the virus
- MMT Podcast interview with John Harvey on his book Contending Perspectives: Parts one and two.
- Other:
- People and organizations mentioned: Sam Levey and Deficit Owls, Nathan Becker, Charles Hayden
- New Economics Perspectives
- Bill Mitchell’s blog
- Eric Tymoigne’s Money and Banking series on New Economics Perspectives
- Steve Keen’s Minsky model
Examples of Bill’s work
https://i.imgur.com/IlRyEnq.jpg https://i.imgur.com/Bid9vkW.jpg https://i.imgur.com/SLAYS0x.jpg https://i.imgur.com/hNKMq31.jpg https://i.imgur.com/fjinGcY.jpg And finally, the mind-twisting optical illusion (that reminds Bill "of the illusion of government ‘borrowing’ ".) https://i.imgur.com/VGayolB.jpg