A few years back I started calling my economic views “Monetary Realism”. This was based on the popular paper I wrote called “Understanding the Modern Monetary System”. I wrote the paper to serve as an operating manual for the economy and when I recognized that many of its views were unique I realized that it was silly to align it with any specific “economic school” that might influence or unjustly bias the way people utilized the paper’s understandings. What we came up with was the name “Monetary Realism” which really just serves as a set of understandings described in the operating manual.
Anyhow, I also wrote a popular post a few years back titled “A Cheat Sheet for Understanding the Different Schools of Economics”.¹ The goal was to provide a brief overview of the various ways some “schools” see the economy. Now, someone in the comments asked me to write the same outline for MR, which, in my view doesn’t make a lot of sense because MR isn’t a “school”. It’s just a set of ideas based on viewing the economy like an engineer might view the physics of airplane’s operations. But I indulged the idea so maybe this will help clarify some things that confuse people about my views and what it is that I am trying to do with these ideas:
Overview – Monetary Realism (MR) is a description of the monetary system and its various institutional relationships using an operational perspective to understand how these pieces interact and impact the economy. MR should be viewed in much the same way that an automobile operator might view their operating manual. It will provide you with the basic outline of the functions of the vehicle, but will not necessarily tell you how to resolve all of its issues or how to perfectly operate that machine.
Mission Statement – To provide a general overview of the monetary system to serve as an operating manual for understanding the economy.
General view of the economy – The economy is a complex dynamic system whose pieces will interact to influence the economy in varying ways contingent upon the specifics of those relationships and how we influence their use.
How to fix the economy – Monetary Realism does not provide specific “fixes”, but serves as an operating manual to understand how one might prescribe certain fixes in certain environments. For instance, in a motorized vehicle we might understand that applying the gas in certain environments makes the car move forward, however, in other environments (such as icy conditions) this might not be a viable solution to our problem. MR views the monetary world similarly and understands that certain institutions, entities and people can influence the system in certain ways that are contingent upon specific environmental conditions.
What they love – Thinking about the economy as though it’s a machine. Accounting. Thinking about the monetary world like an engineer.
What they hate – Politics that result in a biased view of the economy.
Notable Pundits – Probably none. Except for a dope named Cullen Roche who isn’t really very notable.
Famous Dead Economist Associated with School – MR is not economics by economists. It is simply an understanding of the financial system as proposed by several market practitioners. None of its founders are dead yet. Based on our operational understandings of the world we are confident this problem will be resolved with time.
Political Associations – Varies. Operating manuals don’t have political associations.
Preferred form of communication – Any reasonable form of dialogue producing a superior understanding of how the world works.
¹ – Most economists will argue that there are no longer “schools” and that most economics is one big tent with minor differences. This is, flatly, misleading. The near daily arguments in prominent economic blogs have made this abundantly clear in recent years.