Please join me in this exploration into the complicated relationship between Modern Monetary Theory (MMT) and the Green Party of the United States (GPUS), from my perspective as a member of the Green Party of Washington State. We will be investigating the contrasts between MMT and the current GPUS monetary reform platform position of “Greening the Dollar”; why MMT should be embraced in the GP platform in its place; and the importance for the framework of MMT to be understood by Green Party members.
To begin, it is of the utmost importance to understand that MMT is not an economic policy to be “implemented.” Modern Monetary Theory is a non-partisan description of our current economic reality in the United States. It decries the notions of both monetary system reformers and orthodox macroeconomic thinkers, and peels away decades of myths that have obfuscated our understanding of our sovereign fiat currency—the U.S. Dollar. MMT is the only lens to truly recognize and understand how currency creation and issuance, federal taxation, inflation, and employment actually function in our economy and it reveals bold truths with a few of the following key concepts
- Congress and Congress alone, agrees to the creation of entirely new money into existence each and every time they approve a budget by vote.
- As such, federal taxes do not fund the Federal Government’s spending.
- Meaning, the U.S. government can never run out of money nor can it ever “go broke.”
While this all may sound inflationary at first glance, it is because for decades there has been a deadly stranglehold on our collective thought process that we must rid ourselves of immediately. Realizing where our money actually comes from is paramount to administering the Green Party’s progressive agendas.
A constant topic of debate on the national stage has been, “How can we possibly afford our military expansionism, our steadfast fossil fuel reliance, or trillions of dollars in bank bailouts?” Yet when progressive agendas finally make it to the spotlight, nearly all liberals are shutdown when simply asked the same question, “How are we going to pay for it?” Most are continually caught up in a fixation on a combination of wealth and/or carbon taxes and cutting expenditures to fund these programs. MMT reveals that these antiquated notions should be put to rest for the following reasons:
- We do not need to tax billionaires and corporations, nor cut military spending to fund federal programs such as, Universal Healthcare and a Green New Deal, which will include a Federal Job Guarantee.
- The reason why we need to tax billionaires, major corporate polluters, and drastically reduce military spending, is because those are all appropriate actions to take in response to the decades of wealth hoarding that’s caused massive income inequality; the capitalistic plundering of our environment, its resources, and our people for profit; and the destabilization by U.S. imperialism in regions all over the world.
There is no constraint to the amount of money that can be created to run the progressive programs we desperately need, as long as we can continue to maintain the real world resources and employment that are tied to the creation of these programs.
There’s also this idea that we borrow from foreign nations, such as China, to fund anything. This has no basis in fact. No nation, but the United States, is capable of issuing U.S. dollars. They are only capable of one thing, using what U.S. dollars they’ve collected from business transactions to turn them into U.S. Treasury Bonds or Securities, which will eventually be paid back with interest, in U.S. dollars only. The U.S. does not and cannot borrow or issue money in foreign currencies, period.
These Treasury Bonds and Securities are often thought of as debt that the United States government “owes” to the lender, whomever “bought” the bond. In actuality, this is a function that operates in the same way that taxation does. By issuing bonds, the United States is removing money from the supply, but in this case giving out an IOU to be paid at a later date. Why would the United States want to sell securities as a way to “borrow money” that it already creates on its own?
The U.S. dollar is a sovereign fiat currency. The United States government is the sole issuer of the U.S. dollar, and no one but the United States Treasury, via Congressional approval, can create U.S. dollars into existence, which are then distributed by the 12 Federal Reserve Banks to depository institutions. It would be a mistake to assume that the creation of new money equates to a tangible dollar moving from one place to another. In reality, most money in existence is simply keystrokes, numbers moving up in one account, and down in another, until deletion, aka, taxation.
As a sovereign fiat currency, the U.S. dollar also holds no intrinsic value. Its existence has not been pegged to a real world commodity, like gold, since the 1970s, nor is its value explicitly pegged to the value of any foreign currency. Its only value is that which we have agreed on based upon the backing of the United States government.
The truest expectation of money creation is to obtain the full employment of willfully seeking laborers, and must crucially, ensure accessibility to the resources required to maintain the proposed budget and the spending capacity of the public sector. The truest expectation of taxation and issuing bonds is to remove excess money when full employment has been achieved and resources are limited.
To say federal taxes are “revenue” for the government, and are used to “fund” federal spending is a completely incorrect depiction of why our federal taxes exist in the first place. The notion that our federal taxes fund anything, is a fabrication that has stalled progressivism and stagnated generations. As such, it is fundamental for members of the Green Party not to fall victim to neoliberalism and the furthering of austerity measures to dispel these myths once and for all.
Federal taxation comes in as a means to incentivize the use of the U.S. dollar as a currency, as well as to control the supply of money in circulation that may otherwise have been left unused in the economy. The United States government issues the U.S. dollar as the sole currency to pay all debt types within the United States, and in turn, incentivizes its use by accepting only the U.S. dollar for taxes. Federal taxes exist to drive unemployment, control inflation and to remove the vast pockets of wealth that unnecessarily burden our economy.
Now, it’s important to delve into the background of the Green Party’s current monetary reform platform position.
In 2010, the Green Party National Voting Committee initially approved what is now section IV. Economic Justice & Sustainability, subsection N. Monetary Reform (Greening the Dollar).
The GPUS monetary reform platform, as it reads now, may seem like a sound policy position for those Greens that may be uninitiated in the teachings of MMT. It calls for the reduction of the national debt by taxing large corporations, polluters, etc., and by decreasing certain expenditures (i.e., military, etc.), and to “pay off” the national debt “as it comes due” with implementation of Greening the Dollar.
Greening the Dollar is the name for the Green Party’s current monetary reform policy which calls for
- Nationalizing the 12 Federal Reserve banks and transferring the administrative functions of the Federal Reserve Board of Governors to a Bureau of the U.S. Treasury.
- Creation of a permanently circulating, debt-free currency to be issued by the Federal Government and distributed directly to state and local governments for public purpose.
- Establishment of a Public Monetary Authority under the Department of Treasury with autonomy and independence of political influence (with specific reference to the NEED Act for guidance).
There is an important notion within the platform to nullify. The “national debt”, as it is generally referred to, is over 27 trillion dollars. While yes, that is a near inconceivable number, the scare tactic that this amount shall become due to the taxpayers is grotesque and false. This number represents a receipt for every dollar that has been created and issued by the U.S. government in its entire history, and that has not been taxed out of existence. This “debt”, or deficit on the books of the Federal Government, aka the public sector, is in fact a surplus for the private sector. Quite unsurprisingly then, we haven’t even reached the peak of how far we could take our spending. Yet we have been too consumed in our fear of this “debt” to enact the necessary measures to ensure our planet continues to prosper for humanity’s sake.
Another poor piece of GPUS’s monetary reform platform position is the intrinsic tie to the NEED Act. The NEED Act, or National Emergency Employment Defense Act of 2011, was sponsored by former Ohio Rep. Dennis Kucinich (D), and was heavily influenced by the American Monetary Institute (AMI), a non-profit charitable trust established in 1996 by Steven Zarlenga. Zarlenga was a monetary reformer whose previous texts had helped draft the proposal, as well as the Green Party’s current monetary reform positions. After failing to gather any co-sponsors beyond former Michigan Rep. John Conyers (D), the NEED Act has since stalled before ever making it to the floor for vote.
Unfortunately, monetary reformers like Zarlenga, the AMI and now the GPUS’s BMRC, have misinterpreted our monetary system entirely, and call for reforms that are truly abolitionary rather than reformatory. These overhauls of our monetary system are nearly impossible to perceive ever passing a vote in our political climate in the United States nor in the few years we have left to effectively enact impactful change like a Green New Deal and a Federal Job Guarantee. Not only that, these monetary system reforms are completely unnecessary to engage our economy to its true potential.
Should our monetary system work effectively for each one of us, rather than the 1%? Yes, absolutely. Should we attempt to tear down our monetary system without recognition of the consequences, knowing the dangers that are imminent on our horizon? Absolutely not.
The Green Party’s Banking and Monetary Reform Committee (BMRC) was formally adopted by vote in December 2018. The BMRC has continually endorsed the NEED Act, the failed proposal introduced nearly a decade ago. Perusing their website’s “Problem,” “Solution” and “Transition” pages will lead to a number of cartoonish slideshows meant for education. Being well aware of the Green Party’s funding hardships, one can forgive the childish depictions. However, to forgive the rather derogatory “conversations” of a monetary reformer perpetuating a myriad of myths regarding our monetary system and advocating for the NEED Act is much harder to swallow.
In the 10 years since introduction, the NEED Act has still gone nowhere. The last action to take place was in May 2012, a subcommittee hearing under the House Financial Services Subcommittee on Domestic Monetary Policy and Technology; while the U.N. Intergovernmental Panel on Climate Change reported in 2018 that we had only 12 years left to reverse the damage we’ve done to our planet.
The Green Party has often been on the forefront of discussing the urgency that is needed to combat the climate crisis. It’s curious that as we’ve entered 2021, the Green Party continues to parade around a decade-old bill as a saving grace and refuses to acknowledge the importance of MMT. How exactly does GPUS plan on enacting any monetary system reform in the nine years we have left to enact programs like a Green New Deal without MMT? They have zero political leverage on neither Congress, nor the sitting Democratic Party President who may very well control the Oval Office for the next eight years. Especially as President Biden has already begun to stack his cabinet with status-quo neoliberals.
Yet despite the official stance of the Green Party, there have been and still are many Green Party members advocating for spreading the message of MMT. As a matter of fact, in July and August 2018, just a few months prior to the adoption of the BMRC, six proposals, (917, 918, 921, 922, 923, & 924,) were sponsored by the Nebraska Green Party and written by Nebraska GP member Shane Fry, with the assistance of Dr. Joe Firestone and Dr. Fadhel Kaboub. These proposals sought to amend the GPUS’s platform in favor of aligning the Green Party with MMT. All six failed in their respective votes by rather wide margins. (For further context, also see Dr. Joe Firestone’s thoughts and comments on GPUS Monetary Reform vs. MMT published by Real Progressives in 2017 here and the Activist MMT podcast in 2020 here.)
Since then, the official stance of the BMRC has been to berate and condemn MMT and its proponents. Academics and activists alike whose advocacy coincides with the Green Party in all respects, with the sole exception of their economic policy. After personal email correspondence with the BMRC, it was made obvious there is no interest from certain committee members to update their decade-old policy platform. The tone with which they regard MMT and its proponents is revealing to their stance, stating in an email that MMT is a ”faux solution […] that strengthens and defends the central banking system tooth and nail,” and further that, “…enough Greens have researched [Greening the Dollar],” and “the historical background on MMT and the personalities promoting it.”
There is a clear conflict of personality between certain members of the BMRC and the growing community of advocates who engage in MMT. Especially when genuine questions as a Green Party Member are met with egotistical hostility and perceived as an “exercise”. Despite the MMT proponents that have existed within the committee itself, the actions of the BMRC have lead those members to excuse themselves from the committee.
All the while, 2020 presidential candidate Howie Hawkins was willing to appear on Real Progressives podcast Macro n Cheese in May 2020 while fresh off his Green Party nomination campaign, as well as later speaking on MMT during the Free & Equal Elections Open Presidential Debate in Oct 2020 saying, “When we go into debt it’s a debit on the public side, but it’s an asset on the private side.” One of the highest profile Greens in the nation is attempting to put economic truth to power, as more state Green Parties begin to follow suite, but the background committees of GPUS like the BMRC are willfully disengaged with their base pushing them on MMT. It should certainly make the case for just how effective they have been for GPUS.