This being the Christmas season, many people think primarily about shopping and secondarily about THE greatest story ever told—the birth of Jesus. For billions of people the story of Jesus Christ is an historical fact, not fiction. His story gave faith, hope and justice to all human beings, not just a few, for all time.
However, I want to tell a different story. One that is secular not religious but has everything to do with faith, hope, and justice for all. That second greatest story is one of the operational facts about money as detailed in an academic body of work known as Modern Monetary Theory (MMT). It is a factual story told by a growing contingent of heterodox economists who are smack dab in the middle of the continental United States at the University of Missouri, Kansas City (here), in Australia (here) and across the world. They teach a story that a sovereign country that issues its own currency, with a floating rate of exchange against other currencies, and is not convertible at a fixed rate of exchange into a commodity such as gold can never be insolvent. It can always pay its bills.
This story of a sovereign, fiat currency issuing government has even been affirmed by such orthodox economics voices as Alan Greenspan and Marriner Eccles. Both men are Republicans and former Chairman of the Federal Reserve.
The insights of this true story come from Warren Mosler, noted investor and economist, who wrote the book, the Seven Deadly Innocent Frauds of Economic Policy, supporting the veracity of the story. A story rooted in the practical economic teachings of Abba Lerner, Wynne Godley, and others.
So in this Christmas season that finds its spiritual hope in the greatest story ever told, also remember that there is worldly hope in what I call the second greatest story ever told. That the US or any other monetarily sovereign country can never be insolvent involuntarily and money is not scarce as long as there is production capacity, people, and natural resources to apply. A wonderful story known as MMT.