MMT and Notional Money


As a devotee of Modern Money Theory (MMT), it sometimes bothers me how much ignoring of reality can come from the people who claim to be just explaining reality.

The Gower Initiative for Modern Money Studies has the article Gilts and Bonds. In their Facebook intro to this article, they write the following:

The only place that net financial assets or financial wealth can come from is the government. The currency-issuing government, via its own central bank, uses its taxing and spending powers to create and destroy (spend and tax) net financial assets into and out of the non-government sector.

My response to that comment is

How about the trillions and trillions of dollars of notional money that disappeared when the real estate derivative market crashed? Notional money may not be real, but it has a giant impact on the economy.

Investopedia has an article Notional Value that explains this concept of notional value.

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