This second edition explores how money 'works' in the modern economy and synthesises the key principles of Modern Money Theory, exploring macro accounting, currency regimes and exchange rates in both the USA and developing nations.

ContentsList Of IllustrationsPrefaceBox: DefinitionsIntroduction The Basics Of Modern Money Theory1. The Basics Of Macroeconomic Accounting1.1.The Basics Of Accounting For Stocks And Flows1.2.MMT, Sectoral Balances, And Behavior1.3. Stocks, Flows, And Balance Sheet: A Bathtub Analogy1.4. Government Budget Deficits Are Largely Nondiscretionary: The Case Of The Great Recession Of 20071.5. Accounting For Real Versus Financial1.6. Recent US Sectoral Balances: Goldilocks And The Global Crash2. Spending By Issuer Of Domestic Currency2.1. What Is A Sovereign Currency?2.2. What Backs Up Currency And Why Would Anyone Accept It?2.3. Taxes Drive Money2.4. What If The Population Refuses To Accept The Domestic Currency?2.5. Record Keeping In The The Money Of Account2.6. Sovereign Currency And Monetizing Real Assets2.7. Sustainability Conditions3. The Domestic Monetary System: Banking And Central Banking3.1. Ious Denominated In The National Currency3.2. Clearing And The Pyramid Of Liabilities3.3. Central Bank Operations In Crisis: Lender Of Last Resort3.4. Balance Sheets Of Banks, Monetary Creation By Banks, And Interbank Settle-Ment3.5. Exogenous Interest Rates And Quantitative Easing3.6. The Technical Details Of Central Bank And Treasury Coordination: The Case Of The Fed3.7. Treasury Debt Operations3.8. Conclusions On Fed And Treasury Roles4. Fiscal Operations In A Nation That Issues Its Own Currency4.1. Introductory Principles4.2. Effects Of Sovereign Government Budget Deficits On Saving, Reserves, And In-Terest Rates4.3. Government Budget Deficits And The 'Two-Step' Process Of Saving4.4. What If Foreigners Hold Government Bonds?4.5. Currency Solvency And The Special Case Of The US Dollar4.6. Sovereign Currency And Government Policy In The Open Economy4.7. What About A Country That Adopts A Foreign Currency?5. Tax Policy For Sovereign Nations5.1. Why Do We Need Taxes? The MMT Perspective5.2. What Are Taxes For? The MMT Approach5.3. Taxes For Redistribution5.4. Taxes And The Public Purpose5.5. Tax Bads, Not Goods5.6. Bad Taxes6. Modern Money Theory And Alternative Exchange Rate Regimes6.1.The Gold Standard And Fixed Exchange Rates6.2. Floating Exchange Rates6.3. Commodity Money Coins? Metalism Versus Nominalism, From Mesopotamia To Rome6.4. Commodity Money Coins? Metalism Versus Nominalism, After Rome6.5. Exchange Rate Regimes And Sovereign Defaults6.6. The Euro: The Set-Up Of A Nonsovereign Currency6.7. The Crisis Of The Euro6.8. Endgame For The Euro?6.9. Currency Regimes And Policy Space: Conclusion7. Monetary And Fiscal Policy For Sovereign Currencies: What Should Government Do?7.1. Just Because Government Can Afford To Spend Does Not Mean Government Ought To Spend7.2. The 'Free' Market And The Public Purpose7.3. Functional Finance7.4. Functional Finance Versus The Government Budget Constraint7.5. The Debate About Debt Limits (US Case)7.6. A Budget Stance For Economic Stability And Growth7.7. Functional Finance And Exchange Rate Regimes7.8. Functional Finance And Developing Nations7.9. Exports Are A Cost, Imports Are A Benefit: A Functional Finance Approach8. Policy For Full Employment And Price Stability8.1. Functional Finance And Full Employment8.2. The JG/ELR For A Developing Nation8.3. Program Manageability8.4. The JG/ELR And Real World Experience8.5. The JG And Inequality8.6. Conclusions On Full Employment Policy8.7. MMT For Austrians: Can A Libertarian Support The JG?9. Inflation And Sovereign Currencies9.1. Inflation And The Consumer Price Index9.2. Alternative Explanations Of Hyperinflation9.3. Real-World Hyperinflations9.4. Conclusions On Hyperinflation9.5. Conclusion: MMT And Policy10. Conclusions: Modern Money Theory For Sovereign Currencies10.1. MMT Got It Right: The Global Financial Crisis10.2. MMT Got It Right: The Euro Crisis10.3. Creastionism Versus Redemptionism: How A Money-Issuer Really Lends And Spends10.4. Growing Recognition Of The Need For A Job Guarantee10.5. MMT And External Constraints: To Fix Or To Float, That Is The Question10.6. A Meme For MoneyNotesBibliographyIndex