New Economic Perspectives has an article that points to an article in Renewal titled Modern money and the escape from austerity by Joe Guinan.  The New Economic Perspectives author L. Randall Wray called the Renewal article:

Here’s one of the best and fairest summaries of MMT that I’ve seen:

Before realizing there was more to the Wray article, I immediately followed the link to the Guinan article.  The article is eye opening in a lot of respects even for me who has been reading about and blogging about MMT for quite some time now.

On 2 January 1879 the United States returned to the gold standard. Specie payments had been quietly suspended in 1861 to meet the costs of the Civil War, with Congress authorising the issuance of $450 million in ‘greenbacks’ – legal tender treasury notes – that greatly increased commercial liquidity and triggered an economic boom. But with wartime exigencies over, banking interests demanded a return to financial propriety and redeemable hard money. ‘Though the Civil War had been fought with fifty-cent dollars’, historian Lawrence Goodwyn explained, ‘the cost would be paid in one-hundred-cent dollars. The nation’s taxpayers would pay the difference to the banking community holding the bonds’ (Goodwyn, 1978, 11). What followed was one of the most extraordinary and creative episodes in the history of popular democratic understanding of money.

You need to read his description of the history of what happened at that time to get an appreciation of how wrong is your current understanding of how money works.  If you think that MMT goes against every notion you have about how money works, then this history tells you that what you think you know cannot possibly explain what happened in 1879 and the following years.  MMT explains it quite well.  So rather than thinking that MMT has no historical precedent, you will learn that historical precedent explains exactly what is wrong with today’s orthodox theory.

As further proof  of what is wrong with the orthodox theory that the public is told, is the following excerpt from the article:

That there was an alternative can be glimpsed in the operations of central bankers. Even as public budgets were being slashed, central banks were pumping staggering sums of new money – hundreds of billions in the UK alone – into the financial system to repair the balance sheets of commercial banks through bailouts and quantitative easing (QE). These central bank operations are not new, but their scale is unprecedented – central bank balance sheets are now three times their pre-crisis levels (Streeck, 2014, 39) – and not a penny had to be ‘paid for’ through taxes or borrowing. ‘It’s not tax money’, former Federal Reserve Chairman Ben Bernanke explained in a TV interview: ‘The banks have accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed’ (Pettifor, 2014, 24). Free money, in other words, was made available to those who caused the crisis in the first place, but not to the vast majority who continue to suffer its consequences. The only reason governments have been able to get away with this is because of public ignorance, fostered by politicians of all stripes, of the basics of banking and money creation. ‘It is well enough that the people of the nation do not understand our banking and monetary system’, Henry Ford once said, ‘for, if they did, I believe there would be a revolution before tomorrow morning’ (Greider, 1987, 55).

The aforementioned New Economic Perspectives article is uselessly named Odds and Sods: Some Good Reads For a Cold Winter Friday.  It has lots of good stuff in it besides the link to the Renewal article, but it is badly enough named that I almost didn’t bother to read it.