MMT & Post-Keynesianism
System Change (RIDE instead of RICH)

Prof. Dr. Dirk Ehnts – one of the leading MMT economists in the German-speaking world, currently a scientific adviser at the European Parliament. His book "Geld und Kredit: Eine €uropäische Perspektive" (Metropolis-Verlag, 4th ed. 2020, ISBN 978-3-7316-1433-3) explains how money actually comes into existence and how sovereign money creation works. dirk-ehnts.de · Book at Metropolis-Verlag

Aaron Sahr – social researcher at the Hamburg Institute for Social Research, author of "Keystroke-Kapitalismus" (2017). Sahr describes money not as a technical mechanism but as a social relationship of debt and trust, shaped historically and politically – and therefore open to democratic redesign.

Prof. Dr. Heiner Flassbeck – former State Secretary at the German Federal Ministry of Finance and UNCTAD economist. He emphasises the central role of aggregate demand, wage policy and investment as drivers of economic development – against the neoclassical supply-side dogma of the "Agenda 2010" era. flassbeck-economics.de

IMK – Institute for Macroeconomics and Business Cycle Research at the Hans Böckler Foundation (Düsseldorf) and its annual FMM Forum for Macroeconomics and Macroeconomic Policy – the most important Post-Keynesian research and discourse institution in Germany, bringing together international economists outside the neoclassical mainstream. imk-boeckler.de

Keynes Gesellschaft e. V. – a German-speaking association for a pluralist, demand-oriented economics in the Keynesian tradition. It fosters dialogue between academic research, economic policy practice and the broader public. keynes-gesellschaft.de

Money is created as credit, not as savings: Over 90 % of circulating money is created by private commercial banks through lending – it is not "printed" by the central bank. A government can finance its spending through the central bank without first collecting taxes (MMT: "The state spends first – and recovers money later through taxes").

Taxes do not primarily fund the state: They control inflation (withdrawing purchasing power), redistribute income, steer behaviour and create fundamental demand for the state currency (chartalist function). This shift in perspective is fundamental for all fiscal policy thinking.

Demand is the key (Flassbeck): Production does not emerge automatically from supply. Businesses only invest when they anticipate sales. Wages, government spending and investment create the demand that makes growth and employment possible. Wage restraint – as practised in Germany since the 2000s – structurally weakens domestic demand and exports the country's deflationary problem abroad.

Money as a social trust relationship (Sahr): The value of the euro does not arise from a gold backing or intrinsic worth, but from the legal order, tax obligations, social acceptance and trust. Understanding this allows monetary policy to be seen as a democratically configurable instrument – not a law of nature.

Asset price inflation remains unresolved: As long as money can be hoarded as a store of value and invested in asset markets (real estate, equities, commodities), asset prices will structurally rise faster than wages and consumer prices. MMT offers no systemic brake against the Matthew effect.

The wealth gap remains structural: Without a demurrage charge on large fortunes and without a structural brake on capital accumulation, MMT-financed prosperity can repeatedly collapse back into inequality. Taxes can counteract this – but they do not resolve the mechanism systemically.

The growth compulsion remains at the core: Interest and compound interest in the private banking sector systemically compel continuous GDP growth. MMT can improve public investment – but it does not structurally address the growth pressure generated by interest obligations in the private economy.

Private money creation remains uncontrolled: Over 90 % of money continues to be created by private banks – guided by return expectations, not the common good. RICH creates a democratic alternative through the Monetative (a fourth branch of state power for money issuance); MMT leaves this power essentially with the banks.

No debt-free money: Every FIAT euro continues to be created as a debt bearing interest. The MMT framework improves how the state handles this reality – but it does not change the basic construction. The difference from RICH's debt-free Monetative remains fundamental.

Flassbeck's diagnosis: He locates the main problems in wrong macroeconomic policy: insufficient demand, wage dumping, current account imbalances, financial market dominance and the design flaws of the Eurozone. He is particularly critical of countries like Germany boosting their competitiveness through suppressed wages, thereby structurally deepening imbalances within Europe.

Flassbeck's starting point: He accepts the current FIAT monetary system, including private money creation by commercial banks. In his view, the problem arises not from the fact that banks create money, but from the fact that politics and regulation steer the economy badly.

Flassbeck's policy demands: coordinated European wage policy · stronger public investment · active fiscal policy instead of austerity · stricter regulation of financial markets · limiting speculative capital flows · correcting current account imbalances through better European coordination.

HMW/RICH goes deeper: It looks not only at economic policy but at the structure of the monetary and economic system itself as the root cause of many problems. Asset price inflation, money as a commodity, systemic wealth concentration, unearned income and persistent trade imbalances are understood not primarily as regulatory failures – but as consequences of the existing system architecture itself.

Foreign trade as an example: While Flassbeck seeks to correct trade imbalances politically (coordinated wage policy, European alignment), HMW/RICH aims to balance them systemically – through currency parities, real-economy adjustment mechanisms and, where necessary, balancing tariffs.

The low-threshold entry: No constitutional amendment, no building of new institutions, no international coordination as a precondition. An enlightened parliament, an engaged central bank and a changed fiscal culture suffice – in theory – for substantial improvements.

Communicable and connectable: "The state is not a household", "government debt is private sector savings", "full employment is financeable" – these are statements that work in parliamentary debates, in the media and in classrooms. That has communicative and political value.

As an intellectual bridge to deeper reform: Once someone understands that money is not a scarce resource, they are open to the next step: why not change the construction of money itself? MMT can be a springboard for deeper reforms like RICH.