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Outside Money: The Advantages of Owning the Magic Porridge Pot

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  • L. Randall Wray

Abstract

Over the past two decades there has been a revival of Georg Friedrich Knapp's "state money" approach, also known as chartalism. The modern version has come to be called Modern Money Theory. Much of the recent research has delved into three main areas: mining previous work, applying the theory to analysis of current sovereign monetary operations, and exploring the policy space open to sovereign currency issuers. This paper focuses on "outside" money--the currency issued by the sovereign--and the advantages that accrue to nations that make full use of the policy space provided by outside money.

Suggested Citation

  • L. Randall Wray, 2014. "Outside Money: The Advantages of Owning the Magic Porridge Pot," Economics Working Paper Archive wp_821, Levy Economics Institute.
  • Handle: RePEc:lev:wrkpap:wp_821
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    References listed on IDEAS

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    1. L. Randall Wray (ed.), 2004. "Credit and State Theories of Money," Books, Edward Elgar Publishing, number 3204.
    2. L. Randall Wray, 2015. "Modern Money Theory," Palgrave Macmillan Books, Palgrave Macmillan, edition 2, number 978-1-137-53992-2, December.
    3. Warren Mosler, 1995. "Soft Currency Economics," Macroeconomics 9502007, University Library of Munich, Germany.
    4. L. R. Wray, 1990. "Money and Credit in Capitalist Economies," Books, Edward Elgar Publishing, number 474.
    5. Knapp, Georg Friedrich, 1924. "The State Theory of Money," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number knapp1924.
    6. Ingham, Geoffrey, 2004. "The nature of money," economic sociology. perspectives and conversations, Max Planck Institute for the Study of Societies, vol. 5(2), pages 18-28.
    7. Goodhart, Charles A. E., 1998. "The two concepts of money: implications for the analysis of optimal currency areas," European Journal of Political Economy, Elsevier, vol. 14(3), pages 407-432, August.
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    Cited by:

    1. Aloys L. Prinz & Hanno Beck, 2021. "Modern Monetary Theory: A Solid Theoretical Foundation of Economic Policy?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 49(2), pages 173-186, June.
    2. Kristijan Kotarski & Luka Brkic, 2017. "Political Economy of Banking and Debt Crisis in the EU: Rising Financialization and its Ramifications," Review of Radical Political Economics, Union for Radical Political Economics, vol. 49(3), pages 430-455, September.

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    More about this item

    Keywords

    Central Bank Independence; Chartalism; Fiat Money; Functional Finance; Innes; Keynes; Knapp; Modern Money Theory; Outside Money; Sovereign Currency; State Money;
    All these keywords.

    JEL classification:

    • B1 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925
    • B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
    • B3 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals
    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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