131–140 of 199 posts
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.
I mean that what you mention does not look obvious to me, as you can reach a point where even very high taxes cannot counter inflation.
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…
Scott Sumner, who is a leading monetary economist and very much credentialed, has a takedown on his blog: https://www.themoneyillusion.com
Later on he cites low overall GDP growth in Japan to counter Japan as an example of large deficits/low inflation. This: 1) Doesn't invalidate the point. 2) Totally discounts that Japan has had _some_ GDP growth even as an aging population has led to a _smaller_ workforce over that period.
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…
He would then continue: "The problem is spending, thats what you have to cut". (MMT, however, took the exact opposite stance).
Just modern keynesians wanting to confiscate savings somehow, and what better way than to print money. But even then, MF would say "You print money, reduce your deficit and your currency devalues to match your import/export". MMT has less weakness in inflation as it has in the exchange value of the dollar.
You dont want to mess the dollar value because it might take away its role as a world reserve currency, meaning everything gets way more expensive for the us if that happens.
Ugh...it seems that no one in the media actually understands what MMT is saying and what's underpinning it. http://www.levyinstitute.org/publications/modern-money-theor... MMT isn't actually proposing anything, but rather is simply explaining how money in the modern economy of a country like America, who's currency is a fiat currency and effectively underpins the currencies of many other much smaller economies, behav…
From the introduction of that paper: One of the main contributions of Modern Money Theory (MMT) has been to explain why monetarily sovereign governments1 have a very flexible policy space that is unencumbered by hard financial constraints. Not only can they issue their own currency2 to meet commitments denominated in their own unit of account, but also any self-imposed constraint on their budgetary operations can be…
"Now they claim we have got nothing new. And, yet, much of the thought that we integrated in MMT had been lost in the postwar period. Even the very best of the heterodox thinkers—people like Bob Eisner—had got caught up in debates over just how strong “crowding out” is. He took what we call a “deficit dove” argument, against the “deficit hawks”. The debate took place largely on orthodox grounds, trying to find some “sweet spot” for budget deficits and debts. Most of our critics remain in the “dove” camp, arguing that deficits in recession are fine, but that if “too large” they become unsustainable. We developed the “deficit owl” position—a position that indeed can be found in the work of those we follow, but a position that was mostly lost by second and third generation heterodox economists."
They go on to explain what that is, and why it matters.
Earlier quoted context omitted.
> debts which will be constantly devalued in a high inflation environment. Why wouldn't lenders just charge higher interest rates to offset inflation?
They might on newly issued debt - that still allows the ~40 trillion USD of existing private debt to be watered down, however.
Earlier quoted context omitted.
> Countries can and have defaulted on debts issued in their own currencies. Really? How? > If you printed your way out of debt that would be a default in all but name. Oh, right, actually they don't. So in fact it is actually impossible to default on debt in your own currency and you're admitting as much. > You would cause a collapse of credit and a collapse in confidence in the currency itself. Right. And a reductio…
https://scholar.harvard.edu/files/rogoff/files/forgotten_his...
First, spending and taxes are controlled by Congress. MMT would therefore ask Congress to manage the economy. That seems like an incredibly bad idea. If you think Congress has done a good job of running the rest of the country, it might sound reasonable. But given Congressional approval numbers, nobody actually thinks that.
Second, this assumes that following this approach will get us to full employment at the same time or before it gets us to inflation. That sounds reasonable... but what if it's wrong? What if, say, the constraint on the economy is physical stuff rather than people? We might be able to have the government hire people to do jobs that don't require any stuff... if they're watching for this kind of problem and respond appropriately. Again, though, it's Congress that's going to be controlling this. Do you really trust them not to mess it up?
Third, a minor note: When inflation starts, shut of the spending, don't just raise taxes. Otherwise, you have the economy hitting the limits, government using a lot of the output of the economy, and what's left for the non-government getting taxed. It would be better for the government to release some of the resources that it's using, and if inflation continues, then tax.
Earlier quoted context omitted.
^^ This is a straw man. I also agree that runaway inflation is bad. Almost everybody does. What I wrote above cannot, under any serious interpretation, be considered as a defense of runaway inflation.
Help me understand where I went wrong reading this. I read, paraphrased: "The problem with MMT is that if everyone believes in it, they'll do things that cause inflation to rise", and "This is a problem primarily for the investing class".
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. MMT is, AFAICT, pretty soldily grounded recitations of facts about fiat money that are widely recognized. It's been embraced by advocates of monetizing fiscal affairs because, well, it says that there is virtually unlimited short-term capacity to do that in a fiat-money system. But it's exactly that temptation in a fiat money system…