The confusing world of modern monetary theory.

This paper explores some of the confusions and contradictions within modern monetary theory. After providing an overview of the main themes/ participants within the field the paper will concentrate on two broad views of the issue and circulation of money. These are a bank dominated system built on debt-credit and a fiat system based on state issued money. These can be seen as two distinct money circuits (state issue/tax reflux or debt issue/repayment) or as interwoven circuits as in Keynesianism. This distinction/ relationship throws up its own confusions – which form of money circuit is dominant? Has one emerged from the other or undermined the other – for example has the dominance in contemporary economies of money issue through bank debt eclipsed state direct money issue? Is there still such a thing as high powered money or has the banking system broken free as a privatised forum of money issue? How relevant is the distinction between endogenous and exogenous money in this context? What does the recent financial crisis tell us about these questions? The paper explores contrasting proposals that have been put forward for monetary reform and suggests a way forward that sees money as a public resource. This paper builds on a number of previous publications including The Future of Money (Pluto 2010).