Blue Bonds: Duck or Rabbit?

Chronicle of a Summer

by Will Beaman

We are living through a strange reversal of the monetary story many of us have spent the last decade telling. Modern Monetary Theory helped a broader public see that the federal government—the so-called “monetary sovereign”—does not fund itself like a household and should not be bullied by austerity myths. That framing made sense when we could imagine a democratic or progressive White House using those capacities for public purpose. But in a Trump 2.0 world, sovereignty thinking hits a wall: the very office that issues and coordinates the currency is run by an executive who can impound appropriations, starve local services, and force austerity by other means. The question shifts from what could a benevolent sovereign do to how do we keep democratic life funded while the “sovereign” is hostile?

The answer is not to throw out MMT’s core insight, but to bring it closer to how people actually experience money. What matters is endogeneity: money is created inside our institutions—up and down the hierarchy—through ordinary acts of issuing, accepting, and managing public claims. Banks and credit unions create deposits when they buy public paper; pensions rebalance portfolios; the Federal Reserve can support municipal markets if it chooses. And when it comes to the timing and terms for redeeming bonds and other public assets, that is a contested political outcome—not an act of nature. A municipal lending facility does not have to mimic a short-term loan; it can be set up for steady, long-term support. In a healthier political order, state and city bonds could be treated more like U.S. Treasuries held at the central bank: not “borrowing” in the household sense, but one among many tools for organizing public investment.

Money on the Left has been known in MMT circles for pushing back against “monetary sovereignty” framings, even the “spectrum of sovereignty” version meant to address critiques that MMT only applies to the U.S. federal government. Those frames still tend to narrow the conversation to nodes of power for whom sovereignty is the natural goal. But much real-world monetary authority is improvised, contested, and backstopped at sites of issuance and receivability that we would rather see as responsible than sovereign. That is why ideas like the Uni—a complementary credit issued for large university fiscal circuits—are not about making universities “more sovereign.” They are about structuring public responsibility across the institutions that already knit democratic life together.

Now that traditional monetary sovereignty is, for practical purposes, off the table for progressives in U.S. national politics, this shift in emphasis feels less like a theoretical tangent and more like a necessity. Keep the endogeneity; drop the sovereignty reflex; and show how democratic institutions at many scales can provision the peace now, while building toward a political order where honoring public commitments is routine.

Two Tracks

When we began talking about what to propose in this moment, we quickly realized we were thinking on two tracks at once. On the one hand, we think it is important to promote experiments with complementary currencies—local scrip, university credits, and other tools that give communities fiscal space when dollars are scarce or deliberately withheld. On the other hand, when we imagined what someone like a Mayor Zohran Mamdani in New York or Illinois Governor J. B. Pritzker might plausibly get behind in the near term, the memory of war bonds—and the image of a public bond drive—already had wide cultural recognition. People know what it looks like to line up, to contribute to a shared fund, and to get a certificate in return. We called our proposal “Blue Bonds” in recognition that they would mostly be issued by Democratic -controlled “blue” states.

Which Bonds?

That familiarity is why we first reached for bonds, but it did not stop there. While bond issuance is commonplace for US cities and states, the idea of a bond drive for democracy evokes the memory of World War II bonds. 

This raised a question for us to consider internally: what are the ideological implications of the wartime analogy?

Coretta Scott King’s observation about the United States never confronting the idea of a peacetime economy became a kind of touchstone in our discussion. We asked ourselves: if we lean on the war bonds image too heavily, are we quietly reinforcing the idea that full employment and public belonging only make sense when there is an enemy to defeat? If so, that would be a dangerous starting point for democratic renewal. We do not want to bring people into public life only to leave them adrift when the “threat” disappears.

Then another, more practical worry surfaced. While the idea of a “national debt” owed to Chinese bond vigilantes sounds to many Americans like a cartoonish boogeyman, the public perception of bonds as debt feels more real at the state and local level. Here, concerns about bond ratings, refinancing terms, and investor confidence do not seem so far-fetched—they are the stuff of budget fights, service cuts, and “tough medicine” austerity campaigns. We have seen the same pattern play out internationally, where postcolonial governments are labeled “irresponsible” and punished through capital flight and IMF conditionality.

One Person’s Debt …

From our perspective, bonds are always endogenous. But the way they are experienced depends on the political and institutional surround. Sometimes they feel like a millstone—a debt plus interest hanging around the neck of some unfortunate city agency whose finances are under water. Other times, they feel more like a savings versus checking account: an interest-bearing claim in the broader circulation of public credit. The standard MMT framing would call this the difference between being the sovereign issuer of a currency and being a user. Yet it is just as accurate to say that the difference is designed into the political context. When, in the early days of COVID, the Federal Reserve created a facility to make municipal bonds receivable for dollars, it turned debt into cash almost overnight. “Trade your debt for money” sounds impossible until politics makes it happen.

That realization shifted our sense of what the war bonds analogy could do here. We are not trying to win a war (hopefully). The “victory” is a post-neoliberal government that can retire bonds or convert them to other kinds of assets without much fanfare—because they have already done their job of keeping democracy funded and public employment steady.

The Duck-Rabbit Problem

And here is where what we call the duck-rabbit problem comes in, named after the famous optical illusion. The duck-rabbit illusion is an illustration that looks to some people at first glance like a rabbit, and to others like a duck. While the drawing is purposely ambiguous, it illustrates a universal premise in Gestalt psychology: our first impressions are “wholes” before we can perceive parts, new combinations and new assemblages. You see a duck or a rabbit first, and then with a bit of time you can see both images.

The duck-rabbit idea is central to how we move and learn in coalition. Members of a coalition see the same policy in their own terms, idioms and vernacular—if not completely differently. By narrating these thoughts publicly, we hope to do coalitional communication more democratically. At Money on the Left, we will always say out loud that bonds are just another form of credit. Rather than borrowing funds that must be paid back at interest, bonds initiate new circuits of spending and receivability that can be structured in all kinds of ways. But whether the public understands them that way is not fixed in advance—it is something that the actual experience of Blue Bonds will shape. If they are used to provision a peacetime full-employment economy, and people see with their own eyes that this can be done whether or not Trump and his billionaires agree, then the idea that bonds must be “paid back” in the punitive sense will look like the cruel joke that it is.

That, at least, is the horizon we are trying to open up: not just a fiscal tool to survive the present, but a lived demonstration that our capacity to provision the peace is real. Because that unfolds across many institutions and ledgers at once — cities, states, unions, universities, and the central bank — our strategies and designs should be multiple. Focusing here on Blue Bonds is not an attempt to subordinate other strategies and designs to this one. The opposite: complementary currencies and the public discourse they generate help set the long-term trajectory for Blue Bonds, making them more legible, inclusive, and durable. So when it comes to weighing our options, the more the merrier will deliver better, more democratic outcomes.