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A Beginner’s Guide to MMT

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Re: A Beginner’s Guide to MMT

#61

Post by salawat »

throw0101a wrote: post #36
bryanlarsen wrote: post #21

Earlier quoted context omitted.

"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…

> The money supply has almost quadrupled in the last 10 years, yet inflation has been low. Explained by "traditional" (e.g., Keynesian) economics already: * https://en.wikipedia.org/wiki/Zero_lower_bound When QE was introduced, the US political Right went ape shit talking about inflation. Krugman (for one) predicted it would be fine because of interest rates, citing Japan as an example: > Everyone knows about the inf…

What exactly keeps you from implementing a negative interest rate?

I.e. some form of tax on held cash?

Re: A Beginner’s Guide to MMT

#62

Post by pytester »

the_optimist wrote: post #48

A credentialed economist should put a stake through the heart of the heart of MMT. Two simple critiques: 1) Relative to a financial statement (i.e. budget), it is difficult to predict and measure inflation. This difficulty lowers the likelihood of government fiscal responsibility and increases the likelihood of devestating inflation. 2) A basic second-order effect: What happens when people realize transfer medium is…

This critique (and it is the by far the most common critique of MMT I've heard) boils down to this:

"MMT may very well be an accurate depiction of reality, but the problem is that if people start to see it as an accurate depiction of reality then inflation might go up."

That's definitely a problem for a certain class of people (creditors and investors).

MMT is controversial because, if true, it's undermining a lie that is supporting those interests ("keeping inflation as low as possible") over the interests of society as a whole.

Re: A Beginner’s Guide to MMT

#63

Post by erentz »

mason55 wrote: post #60
erentz wrote: post #55

Earlier quoted context omitted.

> There's no shortage of work out there to be done Ok, I have to agree with this to a certain point as it’s an argument I find myself making in change resisting organizations. But the implication here is that there will always be no shortage of low end minimum wage work and that the best way to discover and assign that work is via a centralized means. So with a jobs guarantee we have to invent a government system tha…

> But the implication here is that there will always be no shortage of low end minimum wage work I'm not following how that's implied? I think the implication is that there's no shortage of work that has positive value but less positive value than people are willing to pay for it. Anyway, the idea is that if the economy is in good shape and most people are employed then the gov't is providing fewer jobs. If you have…

> I'm not following how that's implied?

The proposed job guarantee talked about is a $15 per hour minimum wage job.

Re: A Beginner’s Guide to MMT

#64

Post by cryptonector »

mason55 wrote: post #59
the_optimist wrote: post #48

A credentialed economist should put a stake through the heart of the heart of MMT. Two simple critiques: 1) Relative to a financial statement (i.e. budget), it is difficult to predict and measure inflation. This difficulty lowers the likelihood of government fiscal responsibility and increases the likelihood of devestating inflation. 2) A basic second-order effect: What happens when people realize transfer medium is…

Right, it seems like the problem is more political than economic. Point 2 obviously flows from point 1, so the argument is whether point 1 is valid or not. In theory there might be viable ways to control inflation via taxes and other ways of soaking up extra money supply that's created by printing/spending. The implementation will be difficult though, especially if it's driven by a political process. Even if you init…

1. Inflate 2. Tax to reduce inflation

WAT

No, (2) would simply add to inflation, adding insult to injury.

Re: A Beginner’s Guide to MMT

#65

Post by hackeraccount »

jonahhorowitz wrote: post #2

It seems obvious once you think about it that at the federal level taxes don't pay for spending. The fed can print as much money as it wants. Taxes only serve to remove excess cash from the economy and keep inflation down.

Eh, is that obvious? In some sense I don't pay for a burger with money from my job. I use my credit card to pay for burgers. So it's like I just print the money I need. Of course none of that is true. The fed could in theory print all the money it wants just like I could I theory borrow all the money I want. Both of us realize that there's a limit to how far that can take us.

Re: A Beginner’s Guide to MMT

#66

Post by dsr_ »

the_optimist wrote: post #48

A credentialed economist should put a stake through the heart of the heart of MMT. Two simple critiques: 1) Relative to a financial statement (i.e. budget), it is difficult to predict and measure inflation. This difficulty lowers the likelihood of government fiscal responsibility and increases the likelihood of devestating inflation. 2) A basic second-order effect: What happens when people realize transfer medium is…

"A credentialed economist should put a stake through the heart of the heart of MMT" -- yet somehow all the critiques made by credentialed economists have been based on misunderstanding MMT.

"The financial statement of the economy has to balance." The heart of MMT is that the imbalance between money coming in to a powerful central government and money going out is the primary contributor to growth (or contraction) of the economy as a whole. When it is balanced, the economy is neither growing nor contracting. When the government increases the public debt in a sustainable manner (i.e. people are willing to buy all the Treasury bonds being offered) the economy improves.

"This is merely a backdoor way of transferring assets in a deeply unaccountable way." It's not backdoor and it's not unaccountable; it's tax policy.

Re: A Beginner’s Guide to MMT

#67

Post by hackeraccount »

MMT seems to me like a plea to politicians to get rid of the independent federal reserve. MMT would create a situation where the goals of the Federal government and the Federal Reserve would be in direct conflict. I have no doubt that Federal Reserve would lost such a conflict but we'd all be worse off.

Re: A Beginner’s Guide to MMT

#69

Post by iooi »

Recently a younger friend realized that if they wanted to major in Economics, the only option at most schools is a B.A. instead of B.S.

At first I thought it was a bit dramatic for schools to differentiate that specific field so much, since I would think it belongs firmly with other STEM fields, but it's definitely the right call.

That such a basic question like how inflation is created (is it when you print the money, or when that money is spent) is still a topic being debated really makes you want more from the field.

Is there really no way to experimentally test these questions?

Re: A Beginner’s Guide to MMT

#70

Post by breischl »

throw0101a wrote: post #36
bryanlarsen wrote: post #21

Earlier quoted context omitted.

"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…

> The money supply has almost quadrupled in the last 10 years, yet inflation has been low. Explained by "traditional" (e.g., Keynesian) economics already: * https://en.wikipedia.org/wiki/Zero_lower_bound When QE was introduced, the US political Right went ape shit talking about inflation. Krugman (for one) predicted it would be fine because of interest rates, citing Japan as an example: > Everyone knows about the inf…

>you can’t cut interest rates below zero

Well, he was wrong on that point.

>Crazy as it sounds, several of Europe’s central banks cut interest rates below zero in 2014, and then Japan followed. By mid-2016, some 500 million people in a quarter of the world's economies were living with rates in the red

https://www.bloomberg.com/quicktake/negative-interest-rates

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