The first argument to be won is the consolidated government. Mainstream theory is about treating the Treasury as *separate and distinct* from the Federal Reserve and requiring the Treasury to operate in Fed dollars by selling Treasury liabilities in exchange for them.
To mainstream the Fed is outside the government sector. It is outside …
The first argument to be won is the consolidated government. Mainstream theory is about treating the Treasury as *separate and distinct* from the Federal Reserve and requiring the Treasury to operate in Fed dollars by selling Treasury liabilities in exchange for them.
To mainstream the Fed is outside the government sector. It is outside the Treasury's 'currency area'.
Mainstream want a floating exchange rate between Treasury and the Fed (government and the central bank in the round) and a fixed exchange rate with the rest of the world. MMT sees the internal exchange rates between institutions as fixed, with the float pushed out to the borders of the currency area.
This battle is about whether the country operates with the Treasury's money, or some nebulous 'international money' that the Treasury has to obtain.
The first argument to be won is the consolidated government. Mainstream theory is about treating the Treasury as *separate and distinct* from the Federal Reserve and requiring the Treasury to operate in Fed dollars by selling Treasury liabilities in exchange for them.
To mainstream the Fed is outside the government sector. It is outside the Treasury's 'currency area'.
Mainstream want a floating exchange rate between Treasury and the Fed (government and the central bank in the round) and a fixed exchange rate with the rest of the world. MMT sees the internal exchange rates between institutions as fixed, with the float pushed out to the borders of the currency area.
This battle is about whether the country operates with the Treasury's money, or some nebulous 'international money' that the Treasury has to obtain.