Warren Mosler is a former hedge fund manager turned academic economist who’s known as the father of Modern Monetary Theory. He’d like to remind us that “MMT is descriptive, not prescriptive." As he explains to Mike Green of Simplify Asset Management in part one of a two-part conversation, the key to understanding MMT is the sequence of state imposition of a coercive tax rate, state spending, and the payment of taxes and purchase of state securities. The basic effect is the state currency becomes a public monopoly. Because the economy needs the state’s currency, state spending determines terms of exchange. The bottom line is prices are a function of prices paid by the state when it spends. Mosler illustrates this general framework with reference to brief histories of fixed and floating exchange rate regimes. Of note, when it comes to labor, a “job guarantee” is a realistic policy choice in a state that uses a floating exchange rate. Mosler and Green also touch on policy choices that benefit exporters as well as mechanisms of real wealth creation. Read Mosler’s “Framework for the Analysis of the Price Level and Inflation” here: https://rvtv.io/363Qjwm. To explore more of his work visit www.moslereconomics.com. And be sure to tune in for part two of the interview tomorrow. Recorded on March 7, 2022.