Time for a Change

It’s finally March 2025, and I can hardly believe that a date I’ve had in the diary for such a long time has finally arrived. It means, at long last, I can call time on a 30-year contracting career and retire from full-time work.¹

I’ve read many books on the subject over the years, but the one that sticks in my mind is How to Get Rich by Felix Dennis. Not just because the book breaks into poetry on a regular basis but because it explains the only genuine reason why you’d want to get rich, which is to get your time back so you can spend it doing other things. In the words of the song: “I want to get by without the man on my back.”

I haven’t reached the heights that Felix did,² but I’ve done well for a lad from the back streets born without two ha’pennies to rub together. I’ve managed to get here thanks to my natural talent, which I can finally admit to - the ability to see things others can’t. Not because they aren’t there but because I don’t see what others have been influenced to see. To me, the Emperor has always been stark bollock naked, and, for a small fee, I’m happy to point that out - in those terms where necessary.³

When you’re ready to accept that your operation really is on fire and act, I’m the quickest way to the exit.⁴

Now, it’s a tradition in my family for the men to start growing tomatoes when they retire, but before I disappear permanently into the greenhouse, there are other things I want to get done.

Last year, I came across an article, Ontological Remodelling, that discusses the Copernican revolution and how it happened very differently from the way the potted history books describe it.

The puzzle is not “why didn’t scientists immediately adopt heliocentrism once Copernicus proved it was true?” but “why did anyone take him seriously at all, considering he failed to give any adequate reason to think it was true?”

There was no good observational evidence for heliocentrism until Galileo observed the phases of Venus in 1610. Copernicus’ arguments all invoked conceptual aesthetics, not evidence.

Copernicus’s model explained dramatically fewer phenomena than the state of the art. It is difficult to convey how extensive and important geocentrism’s implications were. It was woven, with rational arguments, into the whole Aristotelian and Medieval Christian worldview. All those explanations now seem absurd, but they were vital at the time. When geocentrism failed, the entire prevailing structure of certainty failed with it, and nihilism became a serious threat.

This is where we are with the description of Modern Monetary Theory. The prevailing structure of certainty is under threat from what it does say, even though it doesn’t cover everything. However, the issues within current economic thought clearly mirrors the problems of geocentrism.

All geocentric systems—there were many—assumed an ontology of perfectly circular motions. To account for the apparently non-circular motions of the planets, they used complex combinations of epicycles, deferents, eccentrics, and equants. These were, effectively, mechanical linkages and offsets that produced complex motions as combinations of multiple circular ones.

The problem was to hook these devices up in a way to generate predictions that agreed with observations. Thousands of smart people worked on this for thousands of years, tinkering with the details, and made essentially no progress…

Interestingly, with their need for accurate predictions, the Astrologers saved Heliocentricism.

Copernicus’ system was just another arrangement of circular motions via epicycles, deferents, and eccentrics. And it gave no better predictions than the state of the art. But it was sufficiently different that it wasn’t known to be unfixable. Every imaginable variant on geocentrism had been tried, and found not to work. Copernicus opened up new opportunities for obsessive tinkering that held out a reasonable hope of progress.

Modern Monetary Theory falls into the same slot - whatever gaps others suggest it has are not known to be unfixable - and for inveterate tinkerers like me, that holds out hope of progress.

Given that I live in that part of England where the mountains are high and the Emperor is a long way away, I can do little to influence the court of the King in Westminster. But I can fiddle around with the models and fill in the blanks.

Therefore, from now on, I intend to increase the quantity of reference work on how MMT should apply to the UK’s political system and our separate currency area.

There is much to explore.

We need to do more work on the floating exchange rate system and challenge the two-body model used by some Post-Keynesians. The world has multiple currencies, creating a complex n-body problem that cannot be distilled into a simplistic two-currency device. Recognising the reality of different currency areas, rather than viewing them as exceptions to a preferred monetary monopoly, is the way forward, emphasising the importance of scientific analysis over rhetoric.

We need to do more work on managing the carry trade and moving the float from here to where it needs to be. We can’t ignore the adjustment phase. We have to determine who the winners and losers will be and how that affects the politics.

We need to do more work on the export and import dynamics. In particular, explaining how ‘imports are a benefit and exports a cost’ works in practice. This concept demonstrates most clearly why GDP is a very poor proxy for welfare (given that GDP reduces with imports and grows with exports).

We need to do more work on how interest rate setting functions. The biggest fib of the past year was the House of Lords report that dismissed MMT outright, yet contained the whopper "[debt] has to be repaid with interest." Spoiler: It doesn’t and shouldn’t. The report may as well have ended with, “and that is why the Earth is at the centre of the Universe”. It’s remarkable that such a report can be issued today without any hint of irony.

We need to do more work demonstrating the dynamics of MMT’s predictions. After all, we can easily explain Argentinian hyper-inflation (firstly, stop paying so much interest), Japan’s lack of inflation (look what happens when you don’t pay interest), and the UK’s sticky inflation (this is what happens when you institutionalise indexation—particularly of interest!), where others struggle.

But all that is for the future. To start with, and to see if what I have in mind has any traction at all, there is an update to the Accounting Model document to do, bringing it up to date with all the improved understandings we’ve gathered over the last four years, to enhance the description of how banks work, and to start to cover the way interest works within the structure, along with at least a rudimentary simulation, where people can see how the linkages function. As before, I’ll be working with Andy and Richard to get that done.

Let me know what else needs to go on the list. The New Wayland Discord will be the place to be, and your invitation is below. Please share your thoughts there and help guide what we produce.

And if none of this goes anywhere, well, there’s always the tomatoes.

Chat about this and any other MMT topics on Discord with the growing New Wayland community . New members can click this invite link which will add the server to your Discord account