I listened to an interview of Warren Mosler by Bob Murphy, for episode 18 of The Bob Murphy Show podcast.
If you wish to listen to the full interview, a link to it is at the bottom of the post.
The interview is easily divided into three sections, which can be listened to independently if desired, so I broke the interview audio file into those three sections which are below.
No part of the original episode is missing. I merely made it convenient to skip parts you might want to skip.
Table of Contents
Introduction: Bob Murphy talks about his show and his upcoming guest
Part 1: Warren Mosler talks about his career and how he saw what others missed
What surprised me the most about this segment is just how much of a non economist Mosler was at the time.
I knew he had a BA in economics.
I learned that he studied engineering for two years, then switched his major to economics. So he had at most two years of exposure to formal economics academia.
He then went to work as a bond trader, and some of his work was related to trading government bonds.
At the time he figured out MMT he had not read any of John Maynard Keynes. This is significant because MMT is now considered to be an offshoot of what is called post-Keynesian Economics, which is an economic school of thought that picks up where Keynes left off, after Keynes died in 1946.
So interestingly, Mosler came to some of the same conclusions, but starting from a very different place.
Mosler was looking for ways to figure out how to make better bond trades, and while doing so he saw something about how modern economies work, that others missed.
A modern economy being one where the dominate characteristics are a fiat currency, floating exchange rates relative to other currencies, and a credit expansion commercial banking system.
In the spirit of full disclosure, Mosler has done more than “merely” define how modern economies work. In this intro he also discusses the design of a racing car, and the design of a very stable ferry that runs between St. Croix (where he lives) and St. Thomas.
These parts aren’t strictly how he came to see MMT, so if you’re interest is strictly on MMT, when he starts talking about other stuff, you can stop listening.
In summary, what did Mosler see?
Essentially, what he saw is the Italian government would never be forced default on it’s obligation to pay lira for Italian government bonds, because the Italian government was the sole monopoly issuer of lira, and created them out of thin air whenever it felt the need to.
Bear in mind, when he saw this, Italy was still on the lira, as the euro didn’t yet exist. So while the Italian government did once create lira whenever it felt the need, the same is not true for euros.
Now, without further ado, part 1 is below.
How Mosler’s work as a bond trader led him to MMT.
Part 2: The fundamental aspects of MMT
As Bob said in his intro, he was not debating Warren Mosler on the viability of MMT. He was interviewing Mosler about the fundamental principals of MMT.
This is the meat of things for those interested in what MMT is, rather than how he figured it out.
I hope you find it as useful as I did.
The fundamental concepts of MMT.
As mentioned above, here is a link to the full episode.