Macro N Cheese

The UK’s MMT Podcast has been an inspiration to us since well before we launched Macro n Cheese. As fellow MMT promoters from outside the academy, we consider the co-hosts, Patricia Pino and Christian Reilly, to be kindred spirits. So it’s always a treat to have them as guests on our show. This week, it’s Patricia’s turn to explain the behavior of our UK cousins as we seek to learn lessons from their most recent electoral debacle. When Steve spoke with Patricia, she was still feeling intense disappointment and frustration in the wake of the Tory victory. Many in the Labour Party were in shock, trying to make sense of it all. Unfortunately, the most dominant voices are the least likely to admit fault. Attempting to understand Labour’s loss requires considering a multitude of layers -- economic, cultural and political -- historic issues of democracy which have been ignored for a long time. Patricia believes that the issues of sovereignty and perhaps even national identity, may play a stronger role in the UK than they do in the US. Britain joining the European Union was a blatant step in the continued abandonment of the nation-state. The challenge to their national sovereignty may appear to be less significant to the UK than to the Eurozone nations because the British retained the use of their own currency. Patricia explains that while the UK has more autonomy than the Eurozone countries, the government portrays the neoliberal policies of the EU as if they were mandated or part of an international treaty. The EU has no means of enforcing rules regarding deficits or privatization, but it applies enough political pressure to direct policy in a certain direction, simultaneously providing cover so the government can avoid claiming responsibility for unpopular policies. In both the UK and the US, elements of the right have tapped into discontent felt by marginalized members of society and gained a new throng of voters. Patricia refers to Jeremy Corbyn as a “Euro-skeptic,” which may explain why he understood the voters’ discontent in a way that other members of Labour’s leadership did not. Just as in the US, the party that was supposed to represent the interests of working people has proven to be out of touch. Labour voters had chosen Brexit; the Labour leadership was perceived as blocking it. The rank and file stopped believing their promises. As is always the case with Steve and his guests, the discussion turns to solutions -- specifically, how to deal with those people who are supposed to be on our side yet are still spreading incorrect analysis based on ridiculous assumptions, when applying the lens of MMT would bring things into focus. In the UK, even the so-called leftwing economists engage in the same kind of fear-mongering as the most dedicated neoliberal ideologues. Patricia clarifies that not all MMTers are Brexiters, but knowledge of MMT clearly illuminates the ills of the EU and the consequences of interfering with national sovereignty. Understanding how power is wielded through control of the currency naturally leads one to be an advocate for democratic systems of government. She suggests that she’s ready to step out of the functional finance silo and plans to start working with groups who may not yet support MMT but whose causes will be advanced through knowledge of it. With 5 years of Conservative rule to look forward to, she can’t afford to sit on the sidelines. None of us can. Patricia Pino is a London-based engineer, artist, and activist. She is co-host of the MMT Podcast and a founder of the Gower Institute of Modern Money Studies.  @PatriciaNPino on Twitter https://pileusmmt.libsyn.com/ https://gimms.org.uk/

In April of 2018, Jacobin Magazine published “Why the Left Should Embrace Brexit,” which made the case for this radical break from neoliberalism. To gain perspective on Labour’s trouncing in the recent elections, we called upon our friend, Bill Mitchell, one of the co-authors. Bill has been writing and speaking about the UK’s entry into the Eurozone since the 1990s. As an outside economist, his warnings about the dangers of ceding fiscal control fell upon deaf ears. He addressed these issues in two books, Reclaiming the State -- co-authored with Thomas Fazi -- and Eurozone Dystopia. He recalls that as a young academic he was puzzled by the fact that social democratic political parties in the UK, Europe, and the US were supporting anti-labor policies and enabling the advance of the neoliberal agenda. Reclaiming the State traces the turning points -- those historical moments in the 1970s and 90s when Labour adopted monetarism, threw their support behind austerity politics and became apologists for globalization. Western governments were no longer mediators between workers and capital. The ruling elites created alternate media and think tanks while revamping the legislative structure. They reshaped the state in their own image, reflecting and serving their own needs -- and in the process the people lost the gains made in previous decades. In order to understand the recent UK elections and the significant role played by Brexit, it’s necessary to look back at the post-World War 2 era of nation-building and economic growth, the gains that were made by working people, and the point at which capital had had enough. Compared to the US, the UK maintained a fairly robust social safety network in spite of the capitulation by “New Labour” in the 1990s. When it comes to the question of British membership in the European Union, both Labour and the Tories have been conflicted. Ultimately, accession into the EU was pushed through as a consequence of the rising concepts of globalization and monetarism. After the great financial crisis, the hollowing out of the state proceeded apace in the UK. The Tories inflicted harsh austerity by de-funding local governments, thus shutting down the most basic services that people relied upon. Traditional Labour constituencies in the mining and industrial regions in the North and the Midlands were hard hit by the free trade treaties, deregulation, and the destruction of the manufacturing sector. Meanwhile, the increased financialization of the economy had turned London into a huge international hub which benefited the urban residents who enjoyed access to freedom of travel and relatively high paying jobs. If you’ve forgotten the history of the Brexit vote, Bill sums it up for us here. Both British parties underestimated the seething discontent brought about by membership in the European Union, but the divide within Labour turned out to be fatal. In the latter portion of the episode, Steve and Bill bring it around to the US presidential race, comparing the treatment of Jeremy Corbyn and Bernie Sanders -- not only by the mainstream media but by their own political parties. They speculate on Sanders’ chances for success and talk through potential strategies for future action. Are there lessons to be learned from what we’re seeing in the UK? Bill Mitchell is Professor of Economics at University of Newcastle, Melbourne, Australia, and creator of the first blog devoted to MMT. He is the co-author of Macroeconomics and Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World, and author of Eurozone Dystopia: Groupthink and Denial on a Grand Scale. http://bilbo.economicoutlook.net/blog/ Twitter @billy_blog https://www.jacobinmag.com/2018/04/brexit-labour-party-socialist-left-corbyn https://www.macmillanihe.com/page/detail/Macroeconomics/?K=9781137610669

We admit that Macro n Cheese can be quite wonky. We interview an impressive array of scholars and a typical episode looks at functional finance on a granular level. This episode is a treat for the rest of us, with a guest who makes a point of speaking in plain English. Clint Ballinger’s book, 1,000 Castaways: Fundamentals of Economics, is meant to be a primer, bringing macroeconomics to those with no special background in the subject. Its title - and dominant model - is a reaction to the Austrian school’s hypothetical society consisting of 10 people or Paul Krugman’s “babysitters co-operative.” Clint expanded his model to more accurately reflect reality. Let’s face it: 10 people is reductionism, not simplification. “A renegade band of Modern Monetary Theorists has overturned mainstream economics in part by emphasizing that there is not one, but two systems of modern money, the ‘vertical’ and the ‘horizontal.’ They conclusively demonstrate how unifying our understanding of these is crucial for grasping modern economics.” Clint’s jumping-off point for the book is Warren Mosler’s quote: “The key to understanding Modern Monetary Theory is this vertical-horizontal relationship” On his island of castaways, Clint creates simple scenarios that illustrate the need for, and development of, the two money systems. Horizontal money is bank credit, ideally used to provide capital to improve productivity. On the island, a fisherman realizes he could catch more fish by using bigger nets, so he hires others to help weave them. A primitive payment system develops into the use of IOUs, and eventually a ‘trusted group of citizens’ begin making those loans. The hypothetical community determines a need or desire for goods and projects that will add to the wellbeing of the citizens. For example, a road will improve access to lumber and a school will educate the children. Thus, vertical, or government-issued money, is born to fund projects that will directly improve their lives or will amplify private industry. To the citizens, it’s a seamless system: a dollar is a dollar. But in reality, the government-issued dollar remains in existence until it’s taxed out. Banks just operate as accounting ledgers, providing the promise to pay. In the private system, it nets to zero. Simple and elegant, it’s also crucial; Clint believes that voters, public servants, and students of economics need to understand how these basic systems operate. In the later chapters, 1,000 Castaways addresses how we can use these principles for real-world solutions. As Steve points out, it all comes down to real resources and the island is a great illustration because it’s a confined system where you easily see cause and effect. There is so much misinformation about economics. The mainstream uses confusing terms, leaving people ill-equipped to defend themselves. The narrative becomes the rule and the rule becomes how we structure society, rightly or wrongly. In Clint’s view, the problem that led to the 2008 recession was that the FIRE section (finance, insurance, real estate) was allowed to become too bloated. There’s a simple fix. We give public licenses to banks; we can take them away. Meaningful regulation would limit banks to funding productive enterprises and running our payment system. Period. Could combining a sensible, boring, banking system with robust funding for the public purpose turn our modern world into an ideal society? You decide. Clint Ballinger got his MA in Political Science at the University of North Carolina at Chapel Hill, where he focused on modern uneven economic development and went on to specialize in the interpretation of global econometric data for his PhD in Geography at Cambridge University. His interest in developing economies has led him to live in China, Costa Rica, and the former Soviet Republic of Georgia. https://clintballinger.wordpress.com/2019/01/14/1000-castaways-fundamentals-of-economics/ @ClintBalllinger on Twitter

Steve’s guest, Emma Caterine, is a consumer rights attorney with special interest in predatory lenders like loan sharks and payday loan companies. She begins by talking about credit as a social construct, To fully grasp the causes of Great Recession we must understand the difference between consumer debt, with a high risk of default, and federal spending, which is new money and can never default. When our economy grows through private debt, it’s unsustainable and leads to crises like the Great Recession. MMT economists, including Wynn Godley, Stephanie Kelton, and L. Randall Wray, have shown that the idea that public “debt” and the deficit are inherently evil and to be avoided at all costs, or that financial crises are caused by “imbalance in the economy” are all myths. What we see then is that cutting public spending -- austerity -- is a political choice. Emma asserts that private household debt and private corporate debt have similar consequences on different scales, though the households bear more of the burden. Private equity firms load companies with tons of debt to be serviced by cutting labor and selling real estate holdings, which is detrimental to surrounding local communities -- people of color and the working poor in particular. This growth model based on private debt proves that lessons weren’t learnt from the Great Recession. It’s a more intense and modern version of basic capitalism. The data underscores how undemocratic it is. It’s actually about who gets the power to make these decisions. Emma boils down the increasingly neoliberal method: austerity politicians deregulate and cut funding, then the private financial sector fills the gap with privatization. Nearly everything in our lives has private equity behind it, prepared to strip all value with no regard to long-term sustainability. Emma expresses the hope that politicians like Warren and Sanders can and will stop the Wall Street looting. Steve and Emma then turn to the effects of austerity, from abandoned malls and virtual ghost towns to shorter, more brutish lives, and an ever-growing private debt bubble from payday and title loans -- death traps for the already suffering. The average family cannot afford a $400 emergency but are forced to turn to these predatory forms of credit. Steve, as someone who suffered the ill effects of the recession, and Emma, a consumer rights attorney whose clients are working-class and mostly people of color, discuss how we cannot simply talk about income inequality but must actively choose to reverse austerity and the neoliberal paradigm to end the punishment of poverty. Emma advocates increasing public investment, regulating private corporations and the financial industry. She supports the Loan Shark Prevention Act, putting a cap on interest rates. This regulation would counter any inflationary risks of the Green New Deal and Medicare For All. Plans are not enough here; an organized, people-led movement is essential for any paradigm shift. Emma doesn’t trust “professional middle-class experts” to solve the problem but instead focuses on community groups, agitation, organizing, and allying with labor. The movement needs to be people-powered, and groups like DSA are there to hand out the (metaphorical) torches and pitchforks. Emma Caterine is a consumer rights attorney on the board of the Modern Money Network, a decades-long writer and advocate of economic justice, LGBTQIA+ racial and feminist justice movements - and a proud member of Democratic Socialists of America.@EmmaCaterineDSA on Twitter Sign the manifesto at https://jobguaranteenow.org/ https://lpeblog.org/category/piercing-the-monetary-veil/

The Great Recession was a maelstrom that hit many Americans hard - lost jobs, lost homes, for some everything but the clothes on one’s back. Despite the stock market, real recovery has been glacial at best. Yet many don’t know just how deep the crisis' roots go when it comes to the Black community. Keeanga Yamahtta-Taylor explains the origins of the systemic discrimination behind the housing policies that skipped over, then exploited, Black families trying to find a safe, sound, and affordable place to raise their families.   Keeanga's newest book, Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership, evolved from her organizing and activist work as a tenant advocate to protect tenants from eviction. The Great Recession hit while she was in grad school and she saw the parallels between her research on the origins of segregation and the subprime lending market as she studied the relationship between the federal government and housing programs over the decades.   Steve notes the changes wrought by neoliberalism and the shift of power from public to private sector; Keeanga adds that though neoliberalism was always there in some form, it became a distinct and rising ideology during the late 60s to early 70s.   Contributing factors to “include” Black people in housing were a market opportunity that arose with white homeownership’s saturation of the market; demand that increased with the Black exodus from South to North, and their growing incomes; and urban uprisings like the Watts riots which pushed the federal government to find a solution to quell the rebellion - the idea was that if more Black people owned their homes, they’d be less likely to burn them down.   Between FHA guaranteed loans to blacks and a $2 billion pool raised by the top 300 insurance companies, cracks began to appear in redlining and housing discrimination, but the ensured inclusion of Blacks in the housing market instead became predatory, as real estate operatives and speculators jumped into the mix - buying houses for pennies on the dollar, quickly flipping them and selling them high. New methods of exploitation like these were developed to take advantage of Black people.   Conditions created by those decades of discrimination became "evidence of risk" to allow creditors, bankers, and realtors to devise a different set of rules for Black would-be homeowners and business owners. Black families went from being refused housing to bending over backward to get it - only to find conditions deplorable and forcing them to walk away, while real estate brokers and lenders got away with the loot between commissions, closing costs and the eventual foreclosure. One official called it “business in heaven - you can’t lose money.” A supposed step up for the Black community became a stumbling block and another source of corporate profit. Steve refers to Michelle Alexander, who called the situation “a horror story in racial capitalism” and Keeanga concurs: in the course of her research, it became ever clearer that "the issue is not the system failure of capitalism or American system of governance" but that the system works perfectly fine - just not for Black people.   In closing, Keeanga is inspired by the fact that thanks to Bernie Sanders and the Squad, housing as a human right is now being debated and discussed, which provides another shot to do things right this time. There must be boots on the ground to force the Republicans and centrist Democrats to do the will of the people they’re elected to serve.   Keeanga-Yamahtta Taylor is Assistant Professor of African-American Studies at Princeton University. She writes and speaks on Black politics, social movements and racial inequality in the US. http://www.keeangataylor.com/   https://uncpress.org/book/9781469653662/race-for-profit/ @KeeangaYamahtta on Twitter

“How do you pay for The Green New Deal?” is a serious question in today’s political environs -- though as Nathan Tankus clarifies, not for the reasons you might think. In Part 3 of his interview with Steve Grumbine, he recognizes that MMT and the US Bond market don’t finance spending in financial terms but shows us how non-fiscal “pay-fors” can give the US economy resource room to reallocate workers and energy through financial and environmental regulation. This can be accomplished without interest rate management and raising taxes to appease those who still believe the US is constrained by debt.   The Green New Deal and a Job Guarantee will make it possible to identify which areas in the US need more resources allocated to them simply by analyzing how many citizens sign up for the program. While the state of the US economy is oft described as a whole, the number of people entering the job guarantee program can show what counties are affected more by poverty and unemployment and allow them to remain in their home regions rather than flock to major urban centers to seek employment.   He also notes that the largest American cities are coastal and would be first affected by the rising waters due to climate change. Rather than drive people to those regions, we should be planning escape routes when those cities become uninhabitable. Describing a recent video narrated by Alexandria Ocasio-Cortez, Nathan points out how an army of workers is going to be needed to help rebuild areas that are destroyed by natural or man-made disasters.   Using the example of how Syria endured years of drought which drove rural workers to city centers to find work, Nathan shows us how many poor & unemployed young people are now basically housed in prisons and argues that they should be emptied, primarily for moral reasons, but also to increase the productive capabilities of the United States. He cites the example of inmates being utilized as (unpaid) firefighters in California to show that we already do this to a limited extent and in an immoral way.   The remainder of the interview deals with Balance of Payments. Nathan explains that countries can have either a balance of payments deficit or surplus, depending on outflows such as payments for exports, interest payments and dividend payments netted with payment inflows. The addition of all balances of payments from all countries will, therefore, theoretically be zero. Monetary Sovereignty is a spectrum. Most countries in the world pay globally in US dollars because the large sums of debts and treaty obligations are denominated in dollars -- which in turn lead to exports and imports "invoiced" in dollars, which prevents countries from using their own currencies in payments. Thus, dollar exchange rates and interest rates are very important.   Nathan and Steve then examine the concept of the International currency hierarchy and the two elements that determine a country’s standing: Financial Strength and Physical Resources. A country can have a large current account deficit and a pegged currency but be rich in physical resources -- and be in equal or better standing than a country with a current account surplus and full monetary sovereignty but with few physical resources.   In closing, Nathan compares how US states have current account positions with one another, similar to those between Eurozone states. However, understanding this relationship is difficult because no records have been kept - and the data could be distorted to criticize states with large deficits as lazy or delinquent, simply because they have fewer jobs or lower incomes. Such data could be used by ‘bad actors’ who wish to divide people based on race.   Armed with this information, America could do some amazing things using the Green New Deal and the Federal Job Guarantee   Nathan Tankus is Research Director at Modern Money Network.   @NathanTankus on Twitter

Public banking is a hot topic in progressive circles. We at Macro n Cheese support it as long as it serves the public purpose, but not all visions of public banking are equal. Luckily, we have Nathan Tankus to help us navigate the shoals. In this second episode of a three-part series, Nathan begins by addressing the overall question of banks as public institutions. All banks, whether private, public, or democratic cooperatives, are given government charters and must abide by regulations. There may be similarities in the structure of governance, but when it comes to incentives, they are very different creatures. Nathan compares the different kinds of banks, including China’s state-owned banking system and looks at possibilities for regulations and services. Steve brings up proposals for infrastructure banks and the concept of financing public spending through a network of public banks. Some of these ideas don’t necessarily jibe with the MMT perspective; Nathan, Raul Carrillo and Andres Bernal recently wrote an article in Business Insider making the case that the federal government must pay for the Green New Deal. Full stop. The power of the federal purse is far superior to public-private partnerships or, worse, nudging the private sector to finance local public projects. Public banks can and should provide much-needed services -- at present, state and local governments keep their funds in, and make payments through, private banks that charge astronomical fees for the privilege. (We’re looking at you, Wells Fargo.) Nathan explains what it means to be “unbanked” or “underbanked,” as with individuals and communities who are denied services by the private banking industry. Much of this is taken for granted by those who have always had access. Banks provide a place to cash a check or receive automatic deposits from one’s employer, not to mention mortgages and car loans. In the US, the poor are crowded out of the banks and pushed towards predatory actors like check-cashing and payday lenders -- the high cost of poverty. Public and postal banks would provide normal banking services for those who are traditionally excluded. Nathan suggests that rather than simply making loans, public banks should award grants and emergency funds to individuals. In the second half of the episode, Steve and Nathan turn to a positive vision of the future. Steve refers to the combination of the Green New Deal, Medicare for All, a Federal Job Guarantee and a universal right to housing as an end-to-end, 360-degree plan to address inequality. Nathan looks at different aspects of each and how they are interconnected. For example, right now people migrate to a handful of metropolitan areas because that’s where they can find employment. With the job guarantee, previously abandoned communities can be revitalized, housing can be refurbished and retrofitted, and choices can be made based on preference rather than necessity. Nathan points out that a minimum wage is a leaky wage floor; it’s meaningless for those who don’t have a job. The FJG provides a true floor, forcing employers to compete with wages and benefits. Creating a “just transition” for unemployed coal miners will require more than FJG jobs. With the other social insurance in place, compensation will more nearly approximate their lost salaries. They will need childcare, supplemental income through an expanded Social Security or basic income, affordable housing, and free education. In the heat of this presidential campaign season, candidates are competing for our attention with complicated proposals. After listening to this episode you’ll be equipped to unpack their promises and assess them through a true MMT lens. https://www.businessinsider.com/green-new-deal-climate-change-government-spending-no-private-money-2019-9 Nathan Tankus is Research Director at Modern Money Network. @NathanTankus on Twitter

If you follow the financial press you’ve probably noticed some recent hysteria about the “repo market.” Since this involves the dealings of the Federal Reserve, it falls under our purview here at Macro ‘n Cheese. Because unraveling the strands of this dense subject requires someone more knowledgeable than we are, we called upon friend-of-the-podcast Nathan Tankus to help us out. Nathan is Research Director at Modern Money Network and can often be found on Twitter, educating the world about MMT. “Repo” simply refers to the repurchase of bonds. Banks and bond traders sell Treasury bonds back to the Federal Reserve with the understanding that they (the banks) will buy them back the following day. As Nathan points out, this is always spoken of from the point of view of the central bank as buyer; it could just as well be called the resale market. Why does this matter? Why do the banks sell back their Treasurys for such a brief period of time? When banks buy them back the price is higher due to the interest charged. So why do it at all? It turns out to be the mechanism by which banks ensure that they have enough balance reserves to ensure that their payments clear. To do this they need to deal with liquid assets, which can quickly be bought and sold and converted to "money" (or at least change the balance in their account). Nothing is more liquid than a Treasury bond. See? Perhaps the banking industry isn’t just lawlessness and anarchy after all? Well, they certainly want us to believe the system is self-regulating so we won’t demand that the lawmakers rein them in and protect the public. As Nathan explains it, concern about the repo market is much ado about nothing. The central bank has been doing these repurchase agreements since 1917 and during some periods they are a normal part of the Fed’s toolbox. But the 2008 financial crisis put a halt to the practice for a while. In response to the liquidity crisis (ie, the lack of liquid assets), the Fed created trillions of dollars of what most of us think of as bail-out money, which was distributed to all the banks. At that point, banks didn’t need to sell bonds to meet their reserve balances because they all had plenty. Thus, no need for repo. When repo agreements started up again, some in the media thought that, since it hadn’t been done since 2008, it must be a sign that there’s a new crisis at hand. It doesn’t help that the FDIC, headed by Trump appointee Jelena McWilliams, is investigating the central bank, insisting that the repo market is actually another bank bailout by the Fed. Somehow, people have forgotten that these have historically been normal activities. In this interview we learn the meaning of the liquidity trap -- and liquidity itself. We learn about settlement balances, quantitative easing, and overnight interest rates. We learn of regulations like Dodd-Frank and international banking agreements like Basel III. We learn how these things are connected to such far-flung historical events as Bretton Woods, the Yom Kippur War, and German postwar reparations. We learn why MMT economists have promoted a detailed understanding of monetary operations and argue that the banking system does not serve the public purpose. The next time you get spooked by a headline in the financial press, tune into this episode again. It all makes so much sense when explained by someone who knows what he’s talking about.  Nathan Tankus is Research Director at Modern Money Network. modernmoneynetwork.org @NathanTankus on Twitter

This 2017 interview features a younger Steve Grumbine speaking with a younger-still Brad Voracek. Brad was in the first graduating class of the masters’ program at the Levy Economics Institute of Bard College. His real-world experience as a teacher and mentor in Arizona is vastly different from Steve’s, a father of nine in Pennsylvania, who has had to cope with the medical challenges and expenses faced by his late father -- and now, his own. It’s refreshing to hear a young person explain how MMT makes sense based on his own observations and point of view. Rather than engaging in arguments about politics and economics, Brad tells us that he approaches each issue with simple questions: what is our purpose/what do we want? In his view, rather than battling over a basic income, let’s determine how to meet people’s basic needs -- after all, we already know how to pay for it. Steve and Brad take the discussion of a job guarantee away from the usual talk of a transitional buffer stock of labor and delve instead into a broader range of human values. In redefining work we can find a kind of fulfillment that we don’t always associate with minimum wage jobs. Whether we find that fulfillment in creative fields, caring for the vulnerable, or public service in general, the possibilities are endless. Brad is less riled by anti-MMT cynics than some of our older colleagues. This may be because of his early exposure to the concept of sectoral balances. It boils down to basic double-entry accounting; a debit on one side is a credit on the other. It’s always a two-sided transaction between humans. A government deficit means a private surplus. Join us for this intergenerational conversation. You might see something in a whole new light! Brad Voracek got his master’s degree at the Levy Economics Institute of Bard College. In 2017 he worked in AmeriCorps VISTA, observing how direct job creation programs work in practice. Now he is a high school teacher at Phoenix Coding Academy and lead mentor for the robotics team.@bradvoracek on Twitter

Modern Monetary Theory is often accused of only being relevant to the US. While this is a ridiculous claim, some of us might be a bit guilty of lacking in-depth knowledge about Africa and developing nations. That ends today. We’re excited to introduce our listeners to Ndongo Samba Sylla, whom we met at the 3rd International MMT Conference where he delivered the keynote on “Money, Imperialism, and Development.” Fadhel, an old friend of this podcast, needs no introduction. Ndongo is an expert on the CFA Franc, a currency imposed on the former French colonies in Africa, who cannot achieve monetary sovereignty until they rid themselves of it. To provide context, he and Fadhel talk about the meaning of monetary sovereignty from an MMT perspective. It is important not to confuse it with political sovereignty. Political independence is limited without it. For full monetary sovereignty, a country must issue its own currency, tax the population in its own currency, be able to issue debt in the national currency (in other words, they don’t have to borrow and repay in another currency), and they don’t fix their exchange rate to gold, or dollars, or any other nation’s money. Not all countries are equal. There are those with full monetary sovereignty, like the US, Japan, or China, and there are countries that have given up their national currency. Some, like the 14 nations that use the CFA Franc, did so involuntarily. Others gave it up willingly. Most developing nations fall somewhere in this spectrum. Developing nations have structural weaknesses, like the inability to produce enough food or energy to meet the population’s needs. They tend to import, in addition to food and energy, capital goods, and export low value-added content, like manufactured consumer goods. Thus, they have trade deficits, placing downward pressure on the exchange rate of their currency. If their money is devalued, everything they import will be more expensive. In a very real sense, they’re importing inflation. When prices go up on essentials such as food, energy, and medical resources, it leads to social and political unrest. When discussing the economic problems of developing nations, we must look at the role of international institutions like the IMF and the World Bank, set up between World War I and World War II, to manage global financial activities. Remember that in 1945 when they were created, there were no developing nations; they were still colonies. Their economic concerns were not considered. But in the 1950s and 60s, as these countries achieved independence, economic problems began to emerge between the developing and developed nations. In the ensuing half-century, solutions prescribed by the IMF and World Bank have proven to be spectacularly harmful to the developing world. MMT focuses on the reality of econ activity, unlike the global financial institutions. When a country exports, these resources don’t go to the citizens. When looking at trade surpluses and deficits, the IMF and World Bank do not consider quality but limit their attention to monetary value. MMT allows us to consider root causes and craft solutions that address them. To that end, Ndongo and Fadhel announce an upcoming conference in Tunisia, November 6-9. “The Quest for Economic & Monetary Sovereignty in 21 Century Africa: Lessons to be Learned and the Way Forward” (see link below) will assemble economists, historians, Marxists, political scientists, to build on the advances of MMT in developing a plan to benefit Africa and the developing world. MES-Africa.org live-tweeting: @mon_sovereignty Dr. Ndongo Samba Sylla, a Senegalese development economist, is a Senior Research and Programme manager at the West Africa office of the Rosa Luxemburg Foundation in Dakar  @nssylla on Twitter Dr. Fadhel Kaboub is an Associate Professor of economics at Denison and President of the Global Institute for Sustainable Prosperity @FadhelKaboub and @GISP_tweets on Twitter