1Dime Radio Modern Monetary Theory: The Fundamentals (Ft. L. Randall Wray)
May 23, 2025
L. Randall Wray, a pioneer of Modern Monetary Theory and an influential voice in economics, dives deep into the mechanics of money in this engaging conversation. He demystifies how modern money operates, explaining the roles of central and private banks and dismantling misconceptions about taxes and spending. Wray also tackles the fascinating debate between a Job Guarantee and Universal Basic Income, advocating for the former as a means to secure dignity and targeted public purpose. The discussion also touches on the history of central banking and critiques gold and cryptocurrency.
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Government Spending Comes Before Taxes
- The US Treasury spends by Fed crediting bank reserves and banks crediting deposits before taxes are collected.
- Taxes mainly drive demand for the currency and control behavior, they do not 'fund' government spending.
Two Degrees Between You And The Treasury
- Everyday payments involve two degrees of separation: your private bank and the central bank between you and the Treasury.
- So household 'money' is a private bank liability enabled by central bank reserves.
Why Crypto Isn't Money
- Cryptocurrencies lack the institutional backing and tax-driven demand that define modern money, making them speculative assets.
- Bitcoin's value is more like tulip-mania than a functioning currency, in Wray's view.
