Governments Are Not Households

Implications of Monetary Sovereignty & Stock-Flow Consistent Accounting

Sep 25, 2012


This seminar will examine the legal and institutional structure of the current global monetary system, with a particular emphasis on the economic freedoms afforded to nations such as the U.S., U.K., Japan, Canada and Australia that use a non-convertible fiat currency with a floating exchange rate. Questions to be addressed include:

  • How does a fiat currency with a floating exchange rate differ from other types of currencies?
  • How does government spending and taxation work?
  • Why is accounting important for understanding the economy?
  • How can monetarily sovereign nations address their current economic problems?


  • JONATHAN BRICE: Seminar Introduction 0:00
  • THOMAS EDSALL: Opening Moderator Remarks 1:33
  • WARREN MOSLER: Presentation – Warren Mosler 2:25
    • WARREN MOSLER: Background: Who Understands Monetary Operations? 2:25
      • WARREN MOSLER: “Where did the dollar in your pocket come from? Deficit spending.” 3:51
    • WARREN MOSLER: Introduction 4:37
      • WARREN MOSLER: What is the monetary system? A scorekeeping system. 4:37
        • WARREN MOSLER: If you paid your taxes in cash, the government would shred the cash. 5:20
      • WARREN MOSLER: How does the government make payments? 6:12
      • WARREN MOSLER: How do banks create deposits? 8:40
      • WARREN MOSLER: How do banks get reserves? 11:15
        • WARREN MOSLER: The Money Multiplier and Fractional Reserve Banking have been dead since 1934 12:32
        • WARREN MOSLER: All assets and liabilities net to zero 13:13
    • WARREN MOSLER: Government Deficit = Non-Government Surplus 15:18
      • WARREN MOSLER: What happens when the governmenty deficit gets too low? 20:43
        • WARREN MOSLER: Ever period of budget surplus in the U.S. has been followed by depression 21:09
      • WARREN MOSLER: What’s the right size for the government deficit? 24:12
  • STEPHANIE KELTON: Presentation – Stephanie Kelton 26:25
    • STEPHANIE KELTON: Inroduction: We should be doing so much better 27:40
      • STEPHANIE KELTON: The only way out is for the government to spend money 28:50
    • STEPHANIE KELTON: Money is no object 33:19
      • STEPHANIE KELTON: The U.S. government is a currency issuer; households are currency users 34:14
    • STEPHANIE KELTON: The budget deficit is not our enemy 36:20
      • STEPHANIE KELTON: *A note on stock and flows 40:01
    • STEPHANIE KELTON: What is fiscal responsbility? Hawks, Doves, and Owls. 42:58
    • STEPHANIE KELTON: China is not our banker 48:14
      • STEPHANIE KELTON: Alan Greenspan checks Paul Ryan 49:32
      • STEPHANIE KELTON: Ben Bernanke on Fed Spending 51:58
    • STEPHANIE KELTON: We aren’t like Greece 52:28
    • STEPHANIE KELTON: We can have full employment and low inflation 55:26
  • THOMAS EDSALL: Moderator Question: Why Don’t Politicans Embrace Modern Money? 1:00:40
  • THOMAS EDSALL: Audience Questions 1:15:52
    • WARREN MOSLER: Do we need to tax the rich? Can we have low taxes for everyone? 1:15:56
    • WARREN MOSLER: What is the right level of inflation? 1:16:43
    • WARREN MOSLER: Can the U.S. become Weimar Germany? 1:19:25
    • WARREN MOSLER: What about imports and exports? 1:20:33
    • WARREN MOSLER/STEPHANIE KELTON: What about the foreign exchange rate? 1:33:30
    • STEPHANIE KELTON/WARREN MOSLER: What about speculation? 1:43:20


Stephanie Kelton
Professor of Economics
University of Missouri-Kansas City
Warren Mosler
Valence Co, Inc
Thomas B. Edsall
Joseph Pulitzer II and Edith Pulitzer Moore Professor of Journalism
Columbia University

Core Reading

Soft Currency Economics

Mosler, Warren B. Soft Currency Economics., 1995.

Stephanie Kelton

2013 And The Fiscal Cliff

Kelton, Stephanie 2013 and the Fiscal Cliff. C-Span, 2012.

Stephanie Kelton On Getting Past Our Oversimplified Understanding Of Money

Corbin, Mary K., and Stephanie Kelton. “Stephanie Kelton on Getting Past Our Oversimplified Understanding of Money.” Journal of Financial Planning (2012).


MMT Basics: You Cannot Consider The Deficit In Isolation

Kelton, Stephanie MMT Basics: You Cannot Consider the Deficit in Isolation., 2012.

Why You And I Can’t Spend More Than We Bring In, But The Government Can – And Probably Should

Kelton, Stephanie Why You and I Can’t Spend More Than We Bring In, But the Government Can – And Probably Should., 2011.

What Happens When The Government Tightens Its Belt? (Part I)

Kelton, Stephanie What Happens When the Government Tightens Its Belt? (Part I). New Economic Perspectives, 2011.

What Happens When The Government Tightens Its Belt? (Part II)

Kelton, Stephanie What Happens When the Government Tightens Its Belt? (Part II). New Economic Perspectives, 2011.

Limitations Of The Government Budget Constraint: Users Vs. Issuers Of The Currency

Kelton, Stephanie. “Limitations of the Government Budget Constraint: Users vs. Issuers of the Currency.” Panoeconomicus. 1 (2011): 56-66.


Warren Mosler

MMT To Washington: There Is No Long-Term Deficit Problem!

Mosler, Warren B. MMT to Washington: There Is No Long-term Deficit Problem!. Huffington Post, 2013.

Seven Deadly Frauds Of Economic Policy

Mosler, Warren B. Seven Deadly Frauds of Economic Policy. Valence Co, Inc, 2010.

An Interview With The Chairman: Taxes, Spending, Deficits, Inflation: The Workings Of Federal Finance

Mosler, Warren B.. “An Interview with the Chairman: Taxes, Spending, Deficits, Inflation: The Workings of Federal Finance .” Center for Full Employment and Price Stability (2007).

Full Employment And Price Stability

Mosler, Warren B. Full Employment and Price Stability., 1997.

A General Framework For The Analysis Of Currency And Commodities

Mosler, Warren B., and Mathew Forstater. A General Framework for the Analysis of Currency and Commodities.” Full Employment and Price Stability in a Global Economy. Eds. Paul Davidson, and Jan Kregel. Cheltenham, UK: Edward Elgar Publishing Limited, 1999. 166-177.

Comments On The Current U.S. Budget Debate

Mosler, Warren B. Comments on the Current U.S. Budget Debate., 1996.

Related Materials

How QE Works And What This Means For Asset Prices And Credit

Keen, Steve How QE works and what this means for asset prices and credit. Credit Writedowns, 2013.

The Deficit: Nine Myths We Can’t Afford

Parramore, Lynn The Deficit: Nine Myths We Can’t Afford. Huffington Post, 2010.

The Balance Sheet Recession In The US

Wolf, Martin The Balance Sheet Recession in the US. Financial Times, 2012.

Macroeconomic Balance Sheet Vizualizer

Econviz, “hbl” Macroeconomic Balance Sheet Vizualizer., 2012.

The Basics Of Macro Accounting

L. Wray, Randall The Basics of Macro Accounting. New Economic Perspectives, 2011.

Monopoly Money: The State As A Price Setter

Tcherneva, Pavlina R.. “Monopoly Money: The State as a Price Setter.” Oeconomicus. V.Winter 2002 (2002).


Fifteen Fatal Fallacies Of Financial Fundamentalism A Disquisition On Demand Side Economics

Vickrey, William Fifteen Fatal Fallacies of Financial Fundamentalism A Disquisition on Demand Side Economics. Kansas City, MO: Center for Full Employment and Price Stability, 2000.

Functional Finance And Full Employment: Lessons From Lerner For Today?

Forstater, Mathew Functional Finance and Full Employment: Lessons from Lerner for Today?. Annandale-on-Hudson, NY: The Jerome Levy Economics Institute, 1999.


Introduction: Robert Eisner’s Common Sense Commitment To Full Employment And Activist Fiscal Policy

Forstater, Mathew. “ Introduction: Robert Eisner’s Common Sense Commitment to Full Employment and Activist Fiscal Policy.” Journal of Economic Issues. XXXIII.2 (1999).


Budget Deficits: Rhetoric And Reality

Eisner, Robert. “Budget Deficits: Rhetoric and Reality.” The Journal of Economic Perspectives. Vol. 3.No. 2 (1989): 73-93.

Functional Finance And The Federal Debt

Lerner, Abba P.. Functional Finance and the Federal Debt.” Selected Economic Writings of Abba P. Lerner. 1943.

 lerner functional finance.pdf