I really cannot support what these two fellows are trying to sell. While the issuance of state and municipal bonds can be helpful for funding certain local needs, it really is not the best approach for solving things like healthcare, environmental issues, nationalizing the military industry, broader labor priorities, and so forth. The model needs to be federal funding with certain federal guidelines. From there, state/local execution of federally funded projects would be entirely appropriate and would likely fit the model of local governance that many Americans prefer.
Richard Nixon was mentioned in this episode, but not for what I was expecting. Nixon championed the idea, one supported by Democrats in power before him, of ‘federal revenue sharing’ with state and local governmental entities. This led to the State and Local Fiscal Assistance Act in 1972 which provided unrestricted block grant federal funds to state and local governments. This helped several local entities, but it was downsized and then eliminated entirely, with bipartisan support, in 1986 because of fiscal rectitude under the neoliberal era supported by both parties.
Now, I think the use of block grants is a bit troublesome, though a combination of targeted funding and block grants might be appropriate. I’d rather see targeted funding which ensures that federal priorities can be met and not altered by local officials who would rather use money to build sports stadiums or to engage in corporate welfare to try to attract Amazon offices. Also, I don’t like how Nixon’s efforts were labeled as ‘revenue sharing’ as that is a troublesome term from an MMT perspective, but still, it does go to show that even fiscal conservatives saw value in funding things through the federal level in the pre-neoliberal era.
This isn’t of great importance, but Klassik is also troubled by some assumptions by the two fellows that the Democratic Party is ‘anti-tyranny’ and that their donors support anti-tyrannical causes. Many of their donors want the same oligopoly we see under Republican administrations and even with small donors, clearly anyone supporting Biden/Harris was supporting genocide and proxy wars with no diplomatic effort at promoting peace. If the two fellows want a better shot at selling their ideas, they’d be better off knocking off the ‘blue is better by default’ narratives. Blue is the color of Tories, and that fits the Democratic Party.
My suggestion to these two fellows is to re-evaluate their approach to macroeconomics. Understanding MMT ought to reorganize how one thinks about economic policy entirely. It seems the fellows are trying to stick to policy agendas postulated from a mainstream understanding of economics. They need to let that go and formulate policy from an empirical approach. Taking a ‘bifocal’ approach of mixing mainstream and MMT economic lens just does not work.
“Ahhhh alas, you believe we have a democracy that can get these things done.”
Steve, it isn’t democracy which can get anything done, it is the people who can get things done! We’re far, far away from achieving anything on that front, but having this platform does help things. Hopefully nobody is discouraged and will continue to work hard to promote macroeconomic awareness at both the level of the everyman and also to progressive think tanks and other groups with at least minor influence and connections with policymakers. The latter can codify MMT-informed proposals into proposed bills written in proper legalese and that is a necessary step for any politician to take any proposal seriously.
How well-known do you think the aforementioned 1972 State and Local Fiscal Assistance Act is with both the MMT crowd and also the general public?
I don’t hear much about it even in US MMT circles. While it was flawed policy in many ways, it does show at the very least that even fiscal conservatives such as Richard Nixon saw great value in promoting federal subsidization of local government entities. Perhaps this is a good talking point when discussing MMT with others, both at the individual and think tank level. The concept on federal subsidization is hardly unprecedented and it has existed within the lifetimes of most people and policymakers. I just don’t know how many people even knew that existed and was eliminated with great help from neoliberals from both parties.
Yes, there are problems with bond schemes. Gesell currency or labour certificate is my preference. See my comment above. It is about what is fit for purpose.
If the local state/regional council can only get approval for a community bond investment program, I'd take it! But if they have the cojones to do that, they surely have the cojones to run a Gesell currency. I do not think it'd rankle Congress too much. All US Congress wants is no responsibility. So my question to them (the local council) would be "Why not?"
Thanks for the engagement. I'm not sure the commenters, however, have attended to precisely how and why we are framing this proposal precisely as bonds. 1) It's an temporary action, not a universal or timeless plan that should become the new normal. So, all of the comments here that are concerned with long-term reform and world-building are barking up the wrong tree. 2) We at Money on the Left are ultimately for a) extending the finance franchise to sub-federal governments (and other democratically organized bodies) and b) issuing local currencies to mobilize communal labor. In fact, the Blue Bonds project began as a community currency scheme. 3) While a) and b) are definitely worth talking about and fighting for (now and forever), neither stand a chance of being legible to the public in the short-term. This is why we finally dropped the community currency framing as we were working to place our proposal in national venues. The public discourse in the US is not at all ready for a conversation about community currencies. It just sounds too strange, unstable, and potentially illegal. (Whether community or complimentary currencies are actually illegal is a fraught issue that can quickly kill any project's political momentum. See this article for how complicated the legal history is: https://arpejournal.com/article/id/385/. 4) By contrast, bonds make sense to people. People know (or think they know) what they are and what they do. They've got a strong sense that bonds have been used in the past for major financing projects, as in WWI and WWII. Plus, bonds are already being issued by states in the trillions. So, the Blue Bonds project does not propose moving from nothing to everything, zero to sixty overnight. It argues for simply increasing the debt issuance that is already occurring, only with a crucial twist: this bond drive should be framed as an exciting collective action to save democracy and take care of people. Now it is true that the Blue Bonds scheme has thus far mostly fallen on deaf ears. The reasons? MotL is not taken seriously in the national conversation and, as we've discovered, people--even leftists and MMT-adjacent leftists, remain terrified of sub-federal debt. Yet we still stand behind the Blue Bonds strategy, given present ideological, economic, and political conditions. We feel strongly that, when it comes to *legally* and *non-violently* addressing the present emergency, it stands the best chance of speaking to people.
I think another problem--again shared by leftists and a lot of MMT folks--is that we hold a rigid and disabling sense of economic causality that is mechanical, inevitable and unchanging. What if people stop buying the bonds? What if states and municipalities prove incapable of servicing them? Then the LaWs oF eCoNoMiCs simply kick in and Blue States are necessarily doomed to failure!
Imagine the same naysaying and handwringing in response to a Leninist revolutionary revolt. Absurd, right? I am, of course, not at all calling for violent revolution in the present moment. However, any such revolution would depend upon 1) the ability to mobilize the public in many forms of collective activity and 2) a strategic and transformative reframing of what the revolt means--ideologically, politically, legally, etc. The revolt would reject the notion that it is a criminal action that the state will mechanically and necessarily punish according to a conservative interpretation of the status quo. It would instead frame the action as a collective, morally justified effort, thereby transforming what counts as legal or just in the first place.
A full-scale revolution is totally unviable in the contemporary US.--at least from the left (insert crying emoji). But it's a helpful analogy because a Blue Bonds project would require the same basic relationship to causality, only in a much less intense, challenging, and illegal form.
I believe that it's the very legibility and viability of this bond scheme that sends folks into a tizzy. It's *too viable*; it gets *too close* to an actual (if temporary solution), that it begins to stir up all kinds of anxieties about the risks involved, which are then blown up out of proportion is deference to the status quo.
My sense is that this anxiety relies on a false binary--however unconsciously. In a revolution, WE write the rules. In a bond drive, THEY do. However, the key for us at MotL is to invert this opposition, using the legibility of the bond drive model to actively contest and shape what Blue Bonds will turn out to mean in the long run. To throw one's hands up and say "it's all doomed" is to capitulate to the very status quo we reject.
Does such reframing ensure success? Absolutely not. But neither does anything else that left-of-MAGA folks are now currently doing.
Thank you, Scott. I'll read your replies on Tuesday evening at our online 'listening party' when we discuss the episode. Better, of course, if you and/or Ben can join us. Jules emailed the link to you both. Hope to see you there
“They've got a strong sense that bonds have been used in the past for major financing projects, as in WWI and WWII.”
Holy London, Scott, just think what you’ve just posted with that statement. The public may think war bonds funded the WWII effort, but as Randy Wray has explained, WWII bonds were not used to ‘fund’ the war. They were used to delay consumption to avoid inflationary risks and to avoid reducing supplies for the war effort. Quite frankly, bonds of a similar type could have been used during the Covid era to reduce consumption while there were supply-side constraints. It might have reduced inflationary risks, but even then, those bonds have nothing to do with ‘funding’ anything. I am left bamboozled as to why you wish to confuse this matter even further.
As for the point about ‘Blue Bonds’ (an inane name, BTW, which only segregates the public rather than uniting them in a unified labor movement) being a temporary solution, temporary political solutions don’t work. Medicaid was deemed a temporary solution when it was passed. For some, the Affordable Care Act was deemed a temporary solution until more comprehensive reform could be passed. Now, instead of discussions of healthcare reform which did exist in Democratic Party circles in the 1990s and 2000s, there is nothing but silence on the matter and defending Medicaid itself, which is really mediocre policy compared to what we should have, would be seen as somewhat of an improbable victory from the Democrats at this point.
As someone who works at a public state/local entity funded in part by local bonds, I can tell you that the term is not one which engenders strong local support even in my strongly ‘blue’ city and county located within a ‘red’ state. The term is strongly associated with public-private partnerships of varying kinds and both Republican and Democratic Party leaning voters are wary of such propositions. They are associated with things such as local funding for professional sports stadiums and school district bonds. The latter may seem innocent enough, and some of the school needs are legitimate, but an entire industry exists to promote school bonds in self-satisfying PPP form and the public understands there is a corrupt relationship between schools and these firms (PBK being one of the big firms of this type in this area).
Furthermore, my local ‘blue’ county, Harris County, TX, was recently thwarted by the state, probably fortunately even if the state’s reasoning was hardly noble, in implementing a basic income scheme. The county will now, probably for the better, will focus their funding on more traditional poverty-fighting efforts. Some sort of job guarantee would be better, but a local job guarantee will be sure to be far more mediocre than a national one. Link: https://www.khou.com/article/news/local/uplift-harris-program-shut-down/285-465e1f56-1ba0-4b82-9e7c-07b9c75b3313
So, really, Scott, why all the policy gymnastics? Wouldn’t it just be better to promote that federal subsidization of local governments is hardly a foreign concept and then discuss how this can be achieved through the MMT lens? You do believe that MMT is an accurate description of the monetary system, right?
Thanks for the clear explanation. I really appreciate MotL's creativity in trying to get around the current public state of mind where currency/debt/taxes are concerned. I like the idea of using the strongly propagandized beliefs in our favor in the short term while still pushing for people to break away from that propaganda. In my head it's like using the tools of capital to destroy capitalism. ✊
If the local or regional government body has the guts or power to issue bonds, they also have the power to issue labour certificates, right? So the bond idea is redundant. Just pay people to do good things. Bonds are for when there is risk. There is no risk in asking someone to care for the elderly, help their neighbours, cure cancer or solve P≠NP. I would say there is some head room for some form of community bond, but I suggest it needs to be used "fit to purpose" which is as investment incentive, not wages.
Hence, if the purpose is risky investment where you need community buy-in, then it makes sense to give people in the community bonds, they only get paid out in real currency if the project the bond finances succeeds (by terms of the bond redemption).
If the purpose is rather to simply drive full employment during a time of Federal austerity, it makes infinitely more sense to me to pay the workers in a proper currency, a Gesell currency, or "labour certificate". They do this in Chiemgauer | http://www.chiemgauer.info/ using a 5% fee for conversion to the (euro) tax credit. It seems to be sufficient. This way, without direct conversion to US$ tax credit, you can probably avoid Congressional shutdown.
Imagine explaining to non physics majors a tern most have never heard of. Hats of to Ben and Scott for thinking about the Real Politik of the US and realizing complex concepts to the public are near impossible to convey much less anything more grandiose.
Why drag physics into this SteveG? Besides, I can explain complicated physics to very stupid people quite easily. If they wanna listen. Same for politicians who want some advice, they just don't come knockin'. It's about their motives. They do not want to know any solution, not yours, not mine, not Scott's, because they do not like shouldering any financial accountability, 'cos they are always looking at only one side of the ledger.
I'm over-generalizing of course. Some politicians do talk to me, they're the ones who tend to not get elected. But I'm only at it for the education, not for "winning". We will win in the end. The question is how many die in the mean time.
On the nerdy points your realpolitik crowd might not care to hear: a local state can issue tax credits I believe, and can call them anything they like.
Community bonds can drive some full employment, but likely not "happy employment." I think labour certificates are simpler, more direct, and any politician can comprehend the proposal. Politicians are not morons. They only act like morons because they do not want to take any responsibility. But in the USA (here too) local council politicians are likely to have more cojones, right? So educate them about Gesell currency options, and tell them they can issue tax credits.
The problem is the local state will still have Federal debt. So that's the elephant in the room to address for states like Kansas or Alabama, etc.
But do not leave the "red states" out, would be my advice. The USA needs more unity, not more polarization. A wealthy "blue state" can help a "red state" with some Federal debt service I imagine. Or better, maybe they can do a state-level sort of Federal debt strike? Could happen. Realpolitik notwithstanding.
Because esoteric grandiose ideas miss the real politik of the day. Been at this a long time and I see the investor grade framing of many MMT voices always seeking a more esoteric way to speak plainly. Times are far more bleak than the thoughts inside the ivory tower of esoterica will acknowledge
The Chiemgauer is a fully working successful system. No consequential realpolitik (other than spinelessness) stands in the way of local authorities in the USA using such a system, even a large city. The folks who set up that non-esoteric simple currency system were not rocket scientists. They were just people who understood unemployment is a choice of government. Better to have slightly unhappy full employment than unemployment.
You say non-esoteric... I don't think you are amongst the people of the US to really know what is and is not seen as esoteric. Living in both worlds, I see.it absolutely every single day..
Cool kids trashing the consolidated Treasury/Fed and deciding to make the TGA a something when it is nothing. MMT has lived on the consolidated balance sheet, yet the ledgers or bust gang comes sauntering in to say "well akchually" and they run the new person off with more esoterica. In any event, Scott and Ben, PhD MMT voices and of the previously known as Modern Money Network, were seeking a way with low explainer required to fight back on a local/state/ regional collective. I don't believe in the fake democracy so many ledger heads point to and refuse to acknowledge a lack of democracy capture by Princeton in 2014.
Bbbbut we can just elect a few more Progressives... its a weird world where people don't get the complete picture.
Let me post some recent research findings released by the Rice University Kinder Institute for Urban Research in their 2025 Houston Area Survey:
“A growing supermajority of Houston-area residents want something to be done to address the gap be-tween the rich and the poor. Since 2010, Harris County residents have regularly been asked whether they agree or disagree that “the government should take action to reduce economic inequality between the rich and poor.” Fifteen years ago, only 48% agreed with that statement. In other words, the majority did not think the government needed to act. Harris County residents no longer feel that way: In 2025, about 83% agreed they wanted to see the government take action to reduce economic inequality (Figure 21). During the same time period, there was also an increase in support for the government making sure that anyone who wants to work can find a job. In 2011, two-thirds of residents agreed with that idea, and in 2025 that percentage had risen to 88%, nearly 9 in 10 residents.
Looking more closely at current patterns, the support for action to address economic inequality is consis-tent across counties and political ideology. For exam-ple, about 81% of residents in the three-county area supported the government taking action to address economic inequality between the rich and poor: In Fort Bend County it was 82%, in Harris County it was 83%, and in Montgomery County it was 72% (Figure 22). Widespread support was even greater for the govern-ment making sure that anyone who wants to work can find a job: 88% support in Fort Bend County, 89% sup- port in Harris County, and 83% support in Montgomery County. Majority support existed for addressing economic inequality across political ideology as well.
…
Residents were also asked if they agreed or disagreed that the government should ensure a basic standard of living for all Americans, marking the first time this question has been asked on the Kinder Houston Area Survey. Overall, 84% — more than 8 in 10 — agreed this was something the government should do (Figure 22). Support for ensuring a basic standard of living was also strong across all three counties: 85% in Fort Bend County, 86% in Harris County, and 74% in Montgomery County. With the exception of extremely conservative and conservative residents, a supermajority of support for providing a basic standard of living exists across the political spectrum. And even among extremely conservative and conservative residents, more than 6 in 10 support the idea (Figure 23).”
This is just a little bit taken from the report. There is much more starting on page 29.
In Houston, and even in the most conservative parts of Houston such as Montgomery County, there is strong support for things such as the job guarantee. With that, Warren Mosler is vindicated in saying there is strong support across the political spectrum for the job guarantee. We also know that the JG, along with many other things, can only really be implemented via national funding and national guidelines. Local execution of policy might well be preferrable, but support must come from the national stage.
This is why I’m rather dismissive of the two fellows. First, their divisive ‘Blue state, red state’ language is part of the problem. Second, they are advocating for muddling the MMT narrative in the hopes of temporary ‘bandage’ repairs when we know temporary ‘bandage’ repairs don’t work. At best, what their suggestions will do is lead to a situation where some ‘Blue staters’ will become smug about their local basic income program while crowing about their superiority over ‘red state rednecks’. The ‘red staters’ will then laugh at the ‘blue staters’ and their idiotic inflationary spending programs…and they wouldn’t be entirely incorrect in saying so if it is a basic income program or anything where resource constraints aren’t considered. Such is the problem today and the useless divisiveness is why there isn’t a national labor movement. We shouldn’t be contributing to that. These are national problems with national demand for solutions and the solutions are national in nature. This should never be confused.
“Bbbbut we can just elect a few more Progressives... its a weird world where people don't get the complete picture.”
Yes, as we know, there aren’t any progressives to elect. Maybe this wouldn’t work for everyone, but I don’t mind being an ass about things. ‘Ass’ is at the center of Klassik, after all. What I do is ridicule Democratic Party supporters who claim they are progressives and laugh and shame them for their support of genocide and religious-like faith-based economic beliefs. I equate it to vaccine denial. I do notice it causes people mental anguish to know they have supported absolute losers, but often they don’t confront that with themselves until they’ve been shamed and forced to confront it.
I think we have to get people to think outside of the binary ‘good guys vs bad guys’ party system and see what people have in common and then explain solutions which are quite outside the binary box. There are parts of MMT which are harder to understand, at least without someone really thinking about things over time, but there are other parts which, if explained decently, should click immediately. We must continue to strive for that and not get discouraged and try to confuse things with mediocre policy suggestions and framing like the two fellows have unfortunately done here.
Hopefully you and Virginia can promote those Kinder Institute numbers on a broader stage. They are really telling. And, of course, it has to be promoted at the progressive think tank level and that should be more of the focus of our efforts, IMO.
I sympathize and largely agree Steve. But "the cool kids" are not a monolith. Maybe you & I used to be them? They can change. Most politicians are smart enough to fully comprehend the non-esoteric idea that a state authority can be a currency monopolist (without any other sovereignty needed).
It is analogous to in MMT noting the government always has the capacity to spend, but often not the willingness. People, even the "cool kids") have the capacity to understand MMT, but often not the willingness. As they do with every issue from unemployment origins to Gaza genocide.
I maintain with friendlies I talk with that the politicians are self-serving ꕗ𖧳𖧥𖨚𖢧𖧥𖦪𖦧s who just do not *want* to know, which is different to the issue being one of too esoteric. MMT and local currency like Gesell units, is too "working class". Not "too esoteric".
State & municipal #bonds are one way to lessen the pain of #austerity measures like those in the #BigBeautifulBill. However it'll take more #workingclass folks to #LearnMMT & #classstruggle to not only prevent these terrible bills from passing but to increase social spending.
Scott and Ben are among my all-time favorite guests, and this episode was very good. I'd add that MnC episode 136, Money and the Limits of Sovereignty, forever reshaped my thinking.
I really cannot support what these two fellows are trying to sell. While the issuance of state and municipal bonds can be helpful for funding certain local needs, it really is not the best approach for solving things like healthcare, environmental issues, nationalizing the military industry, broader labor priorities, and so forth. The model needs to be federal funding with certain federal guidelines. From there, state/local execution of federally funded projects would be entirely appropriate and would likely fit the model of local governance that many Americans prefer.
Richard Nixon was mentioned in this episode, but not for what I was expecting. Nixon championed the idea, one supported by Democrats in power before him, of ‘federal revenue sharing’ with state and local governmental entities. This led to the State and Local Fiscal Assistance Act in 1972 which provided unrestricted block grant federal funds to state and local governments. This helped several local entities, but it was downsized and then eliminated entirely, with bipartisan support, in 1986 because of fiscal rectitude under the neoliberal era supported by both parties.
Now, I think the use of block grants is a bit troublesome, though a combination of targeted funding and block grants might be appropriate. I’d rather see targeted funding which ensures that federal priorities can be met and not altered by local officials who would rather use money to build sports stadiums or to engage in corporate welfare to try to attract Amazon offices. Also, I don’t like how Nixon’s efforts were labeled as ‘revenue sharing’ as that is a troublesome term from an MMT perspective, but still, it does go to show that even fiscal conservatives saw value in funding things through the federal level in the pre-neoliberal era.
This isn’t of great importance, but Klassik is also troubled by some assumptions by the two fellows that the Democratic Party is ‘anti-tyranny’ and that their donors support anti-tyrannical causes. Many of their donors want the same oligopoly we see under Republican administrations and even with small donors, clearly anyone supporting Biden/Harris was supporting genocide and proxy wars with no diplomatic effort at promoting peace. If the two fellows want a better shot at selling their ideas, they’d be better off knocking off the ‘blue is better by default’ narratives. Blue is the color of Tories, and that fits the Democratic Party.
My suggestion to these two fellows is to re-evaluate their approach to macroeconomics. Understanding MMT ought to reorganize how one thinks about economic policy entirely. It seems the fellows are trying to stick to policy agendas postulated from a mainstream understanding of economics. They need to let that go and formulate policy from an empirical approach. Taking a ‘bifocal’ approach of mixing mainstream and MMT economic lens just does not work.
Ahhhh alas, you believe we have a democracy that can get these things done. Federally at that... what they are saying is an end around..
These are all tools to backfill the void the lack of federal spending has done and without Democratic levers to pull, finding an end around
I told them it would be tough to teach folks new tricks when the mind still holds that there is a democracy at work
“Ahhhh alas, you believe we have a democracy that can get these things done.”
Steve, it isn’t democracy which can get anything done, it is the people who can get things done! We’re far, far away from achieving anything on that front, but having this platform does help things. Hopefully nobody is discouraged and will continue to work hard to promote macroeconomic awareness at both the level of the everyman and also to progressive think tanks and other groups with at least minor influence and connections with policymakers. The latter can codify MMT-informed proposals into proposed bills written in proper legalese and that is a necessary step for any politician to take any proposal seriously.
How well-known do you think the aforementioned 1972 State and Local Fiscal Assistance Act is with both the MMT crowd and also the general public?
I don’t hear much about it even in US MMT circles. While it was flawed policy in many ways, it does show at the very least that even fiscal conservatives such as Richard Nixon saw great value in promoting federal subsidization of local government entities. Perhaps this is a good talking point when discussing MMT with others, both at the individual and think tank level. The concept on federal subsidization is hardly unprecedented and it has existed within the lifetimes of most people and policymakers. I just don’t know how many people even knew that existed and was eliminated with great help from neoliberals from both parties.
Yes, there are problems with bond schemes. Gesell currency or labour certificate is my preference. See my comment above. It is about what is fit for purpose.
If the local state/regional council can only get approval for a community bond investment program, I'd take it! But if they have the cojones to do that, they surely have the cojones to run a Gesell currency. I do not think it'd rankle Congress too much. All US Congress wants is no responsibility. So my question to them (the local council) would be "Why not?"
Thanks for the engagement. I'm not sure the commenters, however, have attended to precisely how and why we are framing this proposal precisely as bonds. 1) It's an temporary action, not a universal or timeless plan that should become the new normal. So, all of the comments here that are concerned with long-term reform and world-building are barking up the wrong tree. 2) We at Money on the Left are ultimately for a) extending the finance franchise to sub-federal governments (and other democratically organized bodies) and b) issuing local currencies to mobilize communal labor. In fact, the Blue Bonds project began as a community currency scheme. 3) While a) and b) are definitely worth talking about and fighting for (now and forever), neither stand a chance of being legible to the public in the short-term. This is why we finally dropped the community currency framing as we were working to place our proposal in national venues. The public discourse in the US is not at all ready for a conversation about community currencies. It just sounds too strange, unstable, and potentially illegal. (Whether community or complimentary currencies are actually illegal is a fraught issue that can quickly kill any project's political momentum. See this article for how complicated the legal history is: https://arpejournal.com/article/id/385/. 4) By contrast, bonds make sense to people. People know (or think they know) what they are and what they do. They've got a strong sense that bonds have been used in the past for major financing projects, as in WWI and WWII. Plus, bonds are already being issued by states in the trillions. So, the Blue Bonds project does not propose moving from nothing to everything, zero to sixty overnight. It argues for simply increasing the debt issuance that is already occurring, only with a crucial twist: this bond drive should be framed as an exciting collective action to save democracy and take care of people. Now it is true that the Blue Bonds scheme has thus far mostly fallen on deaf ears. The reasons? MotL is not taken seriously in the national conversation and, as we've discovered, people--even leftists and MMT-adjacent leftists, remain terrified of sub-federal debt. Yet we still stand behind the Blue Bonds strategy, given present ideological, economic, and political conditions. We feel strongly that, when it comes to *legally* and *non-violently* addressing the present emergency, it stands the best chance of speaking to people.
I think another problem--again shared by leftists and a lot of MMT folks--is that we hold a rigid and disabling sense of economic causality that is mechanical, inevitable and unchanging. What if people stop buying the bonds? What if states and municipalities prove incapable of servicing them? Then the LaWs oF eCoNoMiCs simply kick in and Blue States are necessarily doomed to failure!
Imagine the same naysaying and handwringing in response to a Leninist revolutionary revolt. Absurd, right? I am, of course, not at all calling for violent revolution in the present moment. However, any such revolution would depend upon 1) the ability to mobilize the public in many forms of collective activity and 2) a strategic and transformative reframing of what the revolt means--ideologically, politically, legally, etc. The revolt would reject the notion that it is a criminal action that the state will mechanically and necessarily punish according to a conservative interpretation of the status quo. It would instead frame the action as a collective, morally justified effort, thereby transforming what counts as legal or just in the first place.
A full-scale revolution is totally unviable in the contemporary US.--at least from the left (insert crying emoji). But it's a helpful analogy because a Blue Bonds project would require the same basic relationship to causality, only in a much less intense, challenging, and illegal form.
I believe that it's the very legibility and viability of this bond scheme that sends folks into a tizzy. It's *too viable*; it gets *too close* to an actual (if temporary solution), that it begins to stir up all kinds of anxieties about the risks involved, which are then blown up out of proportion is deference to the status quo.
My sense is that this anxiety relies on a false binary--however unconsciously. In a revolution, WE write the rules. In a bond drive, THEY do. However, the key for us at MotL is to invert this opposition, using the legibility of the bond drive model to actively contest and shape what Blue Bonds will turn out to mean in the long run. To throw one's hands up and say "it's all doomed" is to capitulate to the very status quo we reject.
Does such reframing ensure success? Absolutely not. But neither does anything else that left-of-MAGA folks are now currently doing.
Well said Scott. Trying to get people to even realize how late we are at building capacity is met with derision
Thank you, Scott. I'll read your replies on Tuesday evening at our online 'listening party' when we discuss the episode. Better, of course, if you and/or Ben can join us. Jules emailed the link to you both. Hope to see you there
“They've got a strong sense that bonds have been used in the past for major financing projects, as in WWI and WWII.”
Holy London, Scott, just think what you’ve just posted with that statement. The public may think war bonds funded the WWII effort, but as Randy Wray has explained, WWII bonds were not used to ‘fund’ the war. They were used to delay consumption to avoid inflationary risks and to avoid reducing supplies for the war effort. Quite frankly, bonds of a similar type could have been used during the Covid era to reduce consumption while there were supply-side constraints. It might have reduced inflationary risks, but even then, those bonds have nothing to do with ‘funding’ anything. I am left bamboozled as to why you wish to confuse this matter even further.
As for the point about ‘Blue Bonds’ (an inane name, BTW, which only segregates the public rather than uniting them in a unified labor movement) being a temporary solution, temporary political solutions don’t work. Medicaid was deemed a temporary solution when it was passed. For some, the Affordable Care Act was deemed a temporary solution until more comprehensive reform could be passed. Now, instead of discussions of healthcare reform which did exist in Democratic Party circles in the 1990s and 2000s, there is nothing but silence on the matter and defending Medicaid itself, which is really mediocre policy compared to what we should have, would be seen as somewhat of an improbable victory from the Democrats at this point.
As someone who works at a public state/local entity funded in part by local bonds, I can tell you that the term is not one which engenders strong local support even in my strongly ‘blue’ city and county located within a ‘red’ state. The term is strongly associated with public-private partnerships of varying kinds and both Republican and Democratic Party leaning voters are wary of such propositions. They are associated with things such as local funding for professional sports stadiums and school district bonds. The latter may seem innocent enough, and some of the school needs are legitimate, but an entire industry exists to promote school bonds in self-satisfying PPP form and the public understands there is a corrupt relationship between schools and these firms (PBK being one of the big firms of this type in this area).
Furthermore, my local ‘blue’ county, Harris County, TX, was recently thwarted by the state, probably fortunately even if the state’s reasoning was hardly noble, in implementing a basic income scheme. The county will now, probably for the better, will focus their funding on more traditional poverty-fighting efforts. Some sort of job guarantee would be better, but a local job guarantee will be sure to be far more mediocre than a national one. Link: https://www.khou.com/article/news/local/uplift-harris-program-shut-down/285-465e1f56-1ba0-4b82-9e7c-07b9c75b3313
So, really, Scott, why all the policy gymnastics? Wouldn’t it just be better to promote that federal subsidization of local governments is hardly a foreign concept and then discuss how this can be achieved through the MMT lens? You do believe that MMT is an accurate description of the monetary system, right?
Thanks for the clear explanation. I really appreciate MotL's creativity in trying to get around the current public state of mind where currency/debt/taxes are concerned. I like the idea of using the strongly propagandized beliefs in our favor in the short term while still pushing for people to break away from that propaganda. In my head it's like using the tools of capital to destroy capitalism. ✊
If the local or regional government body has the guts or power to issue bonds, they also have the power to issue labour certificates, right? So the bond idea is redundant. Just pay people to do good things. Bonds are for when there is risk. There is no risk in asking someone to care for the elderly, help their neighbours, cure cancer or solve P≠NP. I would say there is some head room for some form of community bond, but I suggest it needs to be used "fit to purpose" which is as investment incentive, not wages.
Hence, if the purpose is risky investment where you need community buy-in, then it makes sense to give people in the community bonds, they only get paid out in real currency if the project the bond finances succeeds (by terms of the bond redemption).
If the purpose is rather to simply drive full employment during a time of Federal austerity, it makes infinitely more sense to me to pay the workers in a proper currency, a Gesell currency, or "labour certificate". They do this in Chiemgauer | http://www.chiemgauer.info/ using a 5% fee for conversion to the (euro) tax credit. It seems to be sufficient. This way, without direct conversion to US$ tax credit, you can probably avoid Congressional shutdown.
Imagine explaining to non physics majors a tern most have never heard of. Hats of to Ben and Scott for thinking about the Real Politik of the US and realizing complex concepts to the public are near impossible to convey much less anything more grandiose.
Why drag physics into this SteveG? Besides, I can explain complicated physics to very stupid people quite easily. If they wanna listen. Same for politicians who want some advice, they just don't come knockin'. It's about their motives. They do not want to know any solution, not yours, not mine, not Scott's, because they do not like shouldering any financial accountability, 'cos they are always looking at only one side of the ledger.
I'm over-generalizing of course. Some politicians do talk to me, they're the ones who tend to not get elected. But I'm only at it for the education, not for "winning". We will win in the end. The question is how many die in the mean time.
On the nerdy points your realpolitik crowd might not care to hear: a local state can issue tax credits I believe, and can call them anything they like.
Community bonds can drive some full employment, but likely not "happy employment." I think labour certificates are simpler, more direct, and any politician can comprehend the proposal. Politicians are not morons. They only act like morons because they do not want to take any responsibility. But in the USA (here too) local council politicians are likely to have more cojones, right? So educate them about Gesell currency options, and tell them they can issue tax credits.
The problem is the local state will still have Federal debt. So that's the elephant in the room to address for states like Kansas or Alabama, etc.
But do not leave the "red states" out, would be my advice. The USA needs more unity, not more polarization. A wealthy "blue state" can help a "red state" with some Federal debt service I imagine. Or better, maybe they can do a state-level sort of Federal debt strike? Could happen. Realpolitik notwithstanding.
Because esoteric grandiose ideas miss the real politik of the day. Been at this a long time and I see the investor grade framing of many MMT voices always seeking a more esoteric way to speak plainly. Times are far more bleak than the thoughts inside the ivory tower of esoterica will acknowledge
I will take that as an agreement then.
The Chiemgauer is a fully working successful system. No consequential realpolitik (other than spinelessness) stands in the way of local authorities in the USA using such a system, even a large city. The folks who set up that non-esoteric simple currency system were not rocket scientists. They were just people who understood unemployment is a choice of government. Better to have slightly unhappy full employment than unemployment.
You say non-esoteric... I don't think you are amongst the people of the US to really know what is and is not seen as esoteric. Living in both worlds, I see.it absolutely every single day..
Cool kids trashing the consolidated Treasury/Fed and deciding to make the TGA a something when it is nothing. MMT has lived on the consolidated balance sheet, yet the ledgers or bust gang comes sauntering in to say "well akchually" and they run the new person off with more esoterica. In any event, Scott and Ben, PhD MMT voices and of the previously known as Modern Money Network, were seeking a way with low explainer required to fight back on a local/state/ regional collective. I don't believe in the fake democracy so many ledger heads point to and refuse to acknowledge a lack of democracy capture by Princeton in 2014.
Bbbbut we can just elect a few more Progressives... its a weird world where people don't get the complete picture.
Steve,
Let me post some recent research findings released by the Rice University Kinder Institute for Urban Research in their 2025 Houston Area Survey:
“A growing supermajority of Houston-area residents want something to be done to address the gap be-tween the rich and the poor. Since 2010, Harris County residents have regularly been asked whether they agree or disagree that “the government should take action to reduce economic inequality between the rich and poor.” Fifteen years ago, only 48% agreed with that statement. In other words, the majority did not think the government needed to act. Harris County residents no longer feel that way: In 2025, about 83% agreed they wanted to see the government take action to reduce economic inequality (Figure 21). During the same time period, there was also an increase in support for the government making sure that anyone who wants to work can find a job. In 2011, two-thirds of residents agreed with that idea, and in 2025 that percentage had risen to 88%, nearly 9 in 10 residents.
Looking more closely at current patterns, the support for action to address economic inequality is consis-tent across counties and political ideology. For exam-ple, about 81% of residents in the three-county area supported the government taking action to address economic inequality between the rich and poor: In Fort Bend County it was 82%, in Harris County it was 83%, and in Montgomery County it was 72% (Figure 22). Widespread support was even greater for the govern-ment making sure that anyone who wants to work can find a job: 88% support in Fort Bend County, 89% sup- port in Harris County, and 83% support in Montgomery County. Majority support existed for addressing economic inequality across political ideology as well.
…
Residents were also asked if they agreed or disagreed that the government should ensure a basic standard of living for all Americans, marking the first time this question has been asked on the Kinder Houston Area Survey. Overall, 84% — more than 8 in 10 — agreed this was something the government should do (Figure 22). Support for ensuring a basic standard of living was also strong across all three counties: 85% in Fort Bend County, 86% in Harris County, and 74% in Montgomery County. With the exception of extremely conservative and conservative residents, a supermajority of support for providing a basic standard of living exists across the political spectrum. And even among extremely conservative and conservative residents, more than 6 in 10 support the idea (Figure 23).”
https://rice.app.box.com/s/u3oigkr1frmz0hwlexqbuupq986newen
This is just a little bit taken from the report. There is much more starting on page 29.
In Houston, and even in the most conservative parts of Houston such as Montgomery County, there is strong support for things such as the job guarantee. With that, Warren Mosler is vindicated in saying there is strong support across the political spectrum for the job guarantee. We also know that the JG, along with many other things, can only really be implemented via national funding and national guidelines. Local execution of policy might well be preferrable, but support must come from the national stage.
This is why I’m rather dismissive of the two fellows. First, their divisive ‘Blue state, red state’ language is part of the problem. Second, they are advocating for muddling the MMT narrative in the hopes of temporary ‘bandage’ repairs when we know temporary ‘bandage’ repairs don’t work. At best, what their suggestions will do is lead to a situation where some ‘Blue staters’ will become smug about their local basic income program while crowing about their superiority over ‘red state rednecks’. The ‘red staters’ will then laugh at the ‘blue staters’ and their idiotic inflationary spending programs…and they wouldn’t be entirely incorrect in saying so if it is a basic income program or anything where resource constraints aren’t considered. Such is the problem today and the useless divisiveness is why there isn’t a national labor movement. We shouldn’t be contributing to that. These are national problems with national demand for solutions and the solutions are national in nature. This should never be confused.
“Bbbbut we can just elect a few more Progressives... its a weird world where people don't get the complete picture.”
Yes, as we know, there aren’t any progressives to elect. Maybe this wouldn’t work for everyone, but I don’t mind being an ass about things. ‘Ass’ is at the center of Klassik, after all. What I do is ridicule Democratic Party supporters who claim they are progressives and laugh and shame them for their support of genocide and religious-like faith-based economic beliefs. I equate it to vaccine denial. I do notice it causes people mental anguish to know they have supported absolute losers, but often they don’t confront that with themselves until they’ve been shamed and forced to confront it.
I think we have to get people to think outside of the binary ‘good guys vs bad guys’ party system and see what people have in common and then explain solutions which are quite outside the binary box. There are parts of MMT which are harder to understand, at least without someone really thinking about things over time, but there are other parts which, if explained decently, should click immediately. We must continue to strive for that and not get discouraged and try to confuse things with mediocre policy suggestions and framing like the two fellows have unfortunately done here.
Hopefully you and Virginia can promote those Kinder Institute numbers on a broader stage. They are really telling. And, of course, it has to be promoted at the progressive think tank level and that should be more of the focus of our efforts, IMO.
I sympathize and largely agree Steve. But "the cool kids" are not a monolith. Maybe you & I used to be them? They can change. Most politicians are smart enough to fully comprehend the non-esoteric idea that a state authority can be a currency monopolist (without any other sovereignty needed).
It is analogous to in MMT noting the government always has the capacity to spend, but often not the willingness. People, even the "cool kids") have the capacity to understand MMT, but often not the willingness. As they do with every issue from unemployment origins to Gaza genocide.
I maintain with friendlies I talk with that the politicians are self-serving ꕗ𖧳𖧥𖨚𖢧𖧥𖦪𖦧s who just do not *want* to know, which is different to the issue being one of too esoteric. MMT and local currency like Gesell units, is too "working class". Not "too esoteric".
State & municipal #bonds are one way to lessen the pain of #austerity measures like those in the #BigBeautifulBill. However it'll take more #workingclass folks to #LearnMMT & #classstruggle to not only prevent these terrible bills from passing but to increase social spending.
Scott and Ben are among my all-time favorite guests, and this episode was very good. I'd add that MnC episode 136, Money and the Limits of Sovereignty, forever reshaped my thinking.
https://realprogressives.org/mnc-podcast-ep/episode-136-money-and-the-limits-of-sovereignty-with-scott-ferguson/
Fantastic. Glad to see you around.