In reports of China's looming debt crisis, it's common to see references to the "shadow finance" or "shadow banking" system, but it's not always clear what these terms mean. Read the rest

"First they ignore you, then they laugh at you, then they fight you, then you win" -- Gandhi's aphorism neatly describes the trajectory to date of Modern Monetary Theory, the latest incarnation of "chartalism," which holds that money comes into existence through government spending, and is taken out of circulation when the government taxes it back -- which means that without government deficit spending, there is no money, and which also means that the government doesn't have to fund its operations through taxes, but rather, it can issue as much currency as it needs to operate, within limits. Read the rest

You know the drill: someone proposes something utterly commonsense, that has been done all over the world (say, universal healthcare) and the next thing you know, someone's shown up to shout "Who will pay for it?!" Read the rest

The last 40 years has seen a steady rise of deficit-hawking, in which the world's postwar social safety nets are shredded because the state "can't afford" them -- think of all the times you've heard of national debt being money that "the taxpayers" will have to pay back, and misleading comparisons between sovereign governments (who print their own money) to households and businesses (who don't), as though sovereign state finance was just a scaled-up version of balancing the family check-book. Read the rest