Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

A Beginner’s Guide to MMT

bloomberg.com

Post reply on HN
Print view View original

21–30 of 199 posts

Re: A Beginner’s Guide to MMT

#21

Post by bryanlarsen »

p_roz wrote: post #5

It’s immediately obvious that increasing the money supply and spending the money will result in inflation. MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. Printing more money does not change the real wealth in the economy. You can’t create additional purchasing power with an increase in the money supply because pr…

"It’s immediately obvious that increasing the money supply and spending the money will result in inflation."

The money supply has almost quadrupled in the last 10 years, yet inflation has been low.

MMT says that spending new money only causes inflation when the money is spent on stuff the private sector is also bidding for. Since that's pretty much everything that the government would want to spend money on, MMT & conventional economics are not in much disagreement here.

"MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction."

You can always spend more money, but only if you tax enough back to tame inflation. It's a constraint, not a contradiction.

"Printing more money does not change the real wealth in the economy."

Exactly. MMT doesn't create goods & services out of thin air, but what it does do is unlock idle capacity in the system. If Joe Sixpack is unemployed, he's a resource that the private sector is not utilizing, but he's a drain on society because somebody is paying for his food & shelter. MMT and the jobs guarantee would utilize that resource for good, and it won't affect inflation or the private sector as long as the jobs guarantee wage is at the minimum wage mark.

Caveat: beginner level understanding of MMT

Re: A Beginner’s Guide to MMT

#22

Post by klaudius »

brianjcohen wrote: post #12
p_roz wrote: post #5

It’s immediately obvious that increasing the money supply and spending the money will result in inflation. MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. Printing more money does not change the real wealth in the economy. You can’t create additional purchasing power with an increase in the money supply because pr…

> MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. The article follows that up by saying: >> As long as there are enough workers and equipment to meet growing demand without igniting inflation, the government can spend what it needs to maintain employment and later on: >> To stabilize employment, MMT would add a fe…

Job guarantee is a stupid idea. Some people create more value by not working than by working.

Imagine you're trying to make a meal and some incompetent dummies want to do some work in the kitchen. It might turn out that someone competent does better work when dummies are not interfering with his work and instead are watching TV. It's called "Too many chefs in the kitchen". Full employment and job creation are not necessarily good for the economy.

Re: A Beginner’s Guide to MMT

#23

Post by mistermann »

p_roz wrote: post #5

It’s immediately obvious that increasing the money supply and spending the money will result in inflation. MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. Printing more money does not change the real wealth in the economy. You can’t create additional purchasing power with an increase in the money supply because pr…

> Printing more money does not change the real wealth in the economy.

No, but you can create wealth with that newly printed money. Of course, as soon as you print it you are diluting the value of all other money which one might argue is unfair, but on the other hand is the rather arbitrary model of redistribution we happen to have landed upon right now completely fair?

And setting aside fairness, is the current economic model we've come to right now even roughly optimal?

https://www.consultantsmind.com/2017/10/30/elephant-chart/

> You can’t create additional purchasing power with an increase in the money supply because prices will adjust to the new level.

This isn't "wrong", but I wonder if it's too simplistic to accurately describe the current globalized & automated economy.

Re: A Beginner’s Guide to MMT

#25

Post by klaudius »

bryanlarsen wrote: post #21
p_roz wrote: post #5

It’s immediately obvious that increasing the money supply and spending the money will result in inflation. MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. Printing more money does not change the real wealth in the economy. You can’t create additional purchasing power with an increase in the money supply because pr…

"It’s immediately obvious that increasing the money supply and spending the money will result in inflation." The money supply has almost quadrupled in the last 10 years, yet inflation has been low. MMT says that spending new money only causes inflation when the money is spent on stuff the private sector is also bidding for. Since that's pretty much everything that the government would want to spend money on, MMT & co…

What if Joe Sixpack creates more value by being unemployed that by being formally employed? You do understand that some people can destroy value by doing work?

Re: A Beginner’s Guide to MMT

#26

Post by mruts »

bryanlarsen wrote: post #21
p_roz wrote: post #5

It’s immediately obvious that increasing the money supply and spending the money will result in inflation. MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. Printing more money does not change the real wealth in the economy. You can’t create additional purchasing power with an increase in the money supply because pr…

"It’s immediately obvious that increasing the money supply and spending the money will result in inflation." The money supply has almost quadrupled in the last 10 years, yet inflation has been low. MMT says that spending new money only causes inflation when the money is spent on stuff the private sector is also bidding for. Since that's pretty much everything that the government would want to spend money on, MMT & co…

Inflation only occurs when the printing of money outpaces real value. Real value in the last 10 years has skyrocketed, so it’s not surprising that inflation has not been strongly affected by the increase of money.

Re: A Beginner’s Guide to MMT

#27

Post by jimbo507 »

mmmmmmmm MMT!

Finally some sensible financial policy.

Did the New Deal result in inflation?

Did the Wall St bailout result in inflation?

Does productive investment, private or public, result in inflation?

Why do we care so much about inflation?.... oh yea, because it spooks bondholders!

Boohoo - 'en marche MMT!'

Re: A Beginner’s Guide to MMT

#28

Post by thadjo »

SubiculumCode wrote: post #18
p_roz wrote: post #5

It’s immediately obvious that increasing the money supply and spending the money will result in inflation. MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. Printing more money does not change the real wealth in the economy. You can’t create additional purchasing power with an increase in the money supply because pr…

Actually, printing money doesn't necessarily cause inflation because there are two sides to the equation. If you have more money chasing the same amount of goods you get inflation. Yes. But if supply is currently in excess, or if production is well below production capacity, then inflation is much less likely. I'd argue that in today's international economy, there is actually a huge excess of supply capacity that is…

> I'd argue that in today's international economy, there is actually a huge excess of supply capacity that is under utilized.

By "supply capacity" here do you mean idle capital? I'm interested in this, but I'm not really sure what metrics show it.

Re: A Beginner’s Guide to MMT

#29

Post by SubiculumCode »

klaudius wrote: post #9
p_roz wrote: post #5

It’s immediately obvious that increasing the money supply and spending the money will result in inflation. MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. Printing more money does not change the real wealth in the economy. You can’t create additional purchasing power with an increase in the money supply because pr…

Yes, but you can steal by diluting the value of existing money.

You do not own the value of the dollar you hold in your hand...you just own the IOU. The value of the dollar is what other people deem it to be worth, and you cannot own that.

If I have a car, I own the car. If you break in and steal the car, then you have stolen from me. But if the car company that produced the car decided to overproduce so that there is an excess used car supply in the market (lowering prices), well sorry friend, but the car company didn't steal from you.

Re: A Beginner’s Guide to MMT

#30

Post by brianjcohen »

klaudius wrote: post #22
brianjcohen wrote: post #12

Earlier quoted context omitted.

> MMT says that the only constraint on spending is inflation, but also turns around and says that you can always print more money. That’s a contradiction. The article follows that up by saying: >> As long as there are enough workers and equipment to meet growing demand without igniting inflation, the government can spend what it needs to maintain employment and later on: >> To stabilize employment, MMT would add a fe…

Job guarantee is a stupid idea. Some people create more value by not working than by working. Imagine you're trying to make a meal and some incompetent dummies want to do some work in the kitchen. It might turn out that someone competent does better work when dummies are not interfering with his work and instead are watching TV. It's called "Too many chefs in the kitchen". Full employment and job creation are not nec…

It appears that MMT is meant to be a macroeconomic theory. I'm not here to defend it. But I would wager that an MMT advocate would claim to possess evidence that in the aggregate, a jobs guarantee would create more value than it would destroy because the pattern you describe does not apply to most people.

Again, I am not here to defend this theory. In fact, I have witnessed your anecdote myself and agree with the premise, at least on a micro scale.

Post reply on HN