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On April 4, 2020 the AFJM Coffee House hosted Maurice Höfgen. He holds a master’s degree in Economics from the University of Maastricht (Netherlands) and took the steering group lead for the ”Rethinking the Role of Banks in Economics Education” campaign by Rethinking Economics.

The topics discussed were 1) the ”Rethinking the Role of Banks in Economics Education” campaign, of which Mr. Höfgen is the lead coordinator, and 2) the overlap and difference between Sovereign Monetary Reform (SMR) and Modern Monetary Theory (MMT).

Because proponents for so-named Sovereign Monetary Reform (SMR) and adherents of Modern Monetary Theory (MMT) have different assessments of money and banking the dialogue aimed at elaborating overlaps and differences between the two.

The dialogue during the coffee house session was experienced by most participants as very satisfactory, though not yet finished. A second AFJM Coffee House then took place on May 9.

Out of the first coffee house came a set of three documents:

1). A Study Stack accompanying the coffee house enumerating the studies and ideas which were offered as background information or for further study by both Mr. Höfgen and participants.

2). For further elucidation Maurice wrote an ANNEX to Money and Banking: Assessing overlaps and differences between SMR and MMT“. 

3). Then John Glazer wrote a response titled “Accounting for Sovereign Money: A Response to “ANNEX to Money and Banking: Assessing Overlaps and Differences Between SMR and MMT” by Maurice Höfgen“.

The abstract of Maurice Höfgen’s “Annex” reads as follows:

No matter how government spending is organized – either as “monetary financing”, “direct financing” or “indirect financing” – the balance sheet results after spending has occurred are pretty similar. More concretely, in either way government spending ceteris paribus results in a balance sheet extension for the banking sector, which ends up holding reserves or interest bearing bonds on the asset side and customer deposits on the liability side, as well as in an increase in net-wealth of the non-government non-bank sector. As fiscal spending changes the amount of reserves circulating in the banking sector, bond sales satisfy the purpose of draining excess reserves in order for the central bank to achieve its interest rate target. Hence, bond sales don’t finance nothing but represent a monetary policy tool – more concretely, an interest rate maintenance tool. In fact, all the money that is used to pay taxes or buy bonds comes from the government as prior spending or central bank credit in the first place.

And the abstract of John Glazer’s response to the “Annex” reads:

This essay provides a detailed explanation for how government spending under a sovereign money system can be accounted for in compliance with double-entry accounting requirements. As such, the essay shows how money created under a sovereign money system can be understood as asset-based money. It appears that a basic presupposition of Modern Monetary Theory is that all money must necessarily be understood as debt. Therefore, the explanations and illustrations detailed in “Accounting for Sovereign Money” provides an argument against this claimed necessity. In the process, a conceptual framework is presented depicting the economy as a double-bottom-line social enterprise designed to create both economic and non-economic value and supplied with its raw material (money) by government spending conceived as investments aimed at creating public and social value as well as ensuring strong and healthy economic life. Sovereign money is thus represented as an asset invested into economy life with the goal of achieving a social return on investment. Accounting for this asset money with double-entry bookkeeping techniques is both easy and ultimately trivial. Sovereign money is not intended to simply provide a means for debt free government spending, but also to address the host of issues and problems stemming from the current monetary system in which banks create, by lending and as debt, the bulk of money circulating in the economy. A sovereign money system transforms the nation’s economy from one where money is created to profit private financial entities (banks) to one where money is created to deliver public value.

If more relevant documents are produced we will add them to this page and let people know through the AFJM Coffee House MailChimp e-mail system.

If you like to participate in our ongoing series of coffee houses, please contact Mark Young at

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