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A Beginner’s Guide to MMT

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Re: A Beginner’s Guide to MMT

#161

Post by elamje »

It seems that the risk here is more of the perception flavor. That is, the strength of the USD, has a lot more to do with peoples perception of the USD.

Similar to how the stock market reacts psychologically to perceived changes in companies management or performance, the USD, could easily be under the same influence - only staying stable as long as it has because Americans and foreigners view the Dollar as “safe”.

Considering most people don’t look into underlying phenomena, but tend to rely on surface level notions like governments printing money as needed = bad, I would say the public perception of the usd could go south.

No one, to my knowledge, has ever been taught that a government should print money as it needs.

If no one believes that is a good thing, then people will lose confidence in the USD as a store of value, which is when inflation starts to get out of control.

Re: A Beginner’s Guide to MMT

#162

Post by mikhailfranco »

mikhailfranco wrote: post #84
CPLX wrote: post #74

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...

Sorry, posted the wrong Reinhart paper, should be this one of course: https://www.nber.org/papers/w15815.pdf

Re: A Beginner’s Guide to MMT

#163

Post by peteretep »

tptacek wrote: post #152
peteretep wrote: post #148

Earlier quoted context omitted.

As a neutral observer, it feels like if you’re right you could easily show it by literally finding 3 normative judgements on inflation by prominent MMT proponents, and pasting them here, rather than referring to “I’ve read things”

Well, your first would be this article, as I said. Your second would be the debate between Furman and Kelton on the Ezra Klein podcast, as I said. I'll dig up a third cite. Like, one of the things in my head is the Kelton vs. Krugman argument, which I read on Krugman's blog, but that's not the best cite, since you're getting Kelton secondhand through Krugman there. Happy to help. If you'd like to help too, you could…

I have Ctrl-F’d through the article for “inflation” and only see “excessive” inflation as being normatively judged. Which bit do you feel supports your assertion?

Re: A Beginner’s Guide to MMT

#164

Post by mbrock »

User23 wrote: post #128

MMT has been getting a lot of press lately. I wonder what submarine[1] is responsible? Here's the thing: MMT isn't a policy position. It's simply an attempt to accurately describe how the monetary system actually works from an operational perspective[2]. It was a reaction against the Krugmanite nonsense that has no basis in reality and describes the activities of no market practioners. Anyone curious should read the…

I think one reply to your concern about the importance of businesses who accept the currency is this. Businesses will basically want to trade their goods for any sufficiently liquid asset; government currency has no special status except that it is what they need to pay taxes. All US businesses might move over to bitcoin for some reason, but they’ll need USD for all their taxes, so government currency retains its value as compared to other conceivable private means of exchange. The theory is about sovereign money in particular, and the only essential reason businesses are interested in the national sovereign currency (when they could transact in any medium of exchange and store value in any valuable asset class) is taxes.

Re: A Beginner’s Guide to MMT

#165

Post by imtringued »

maxlybbert wrote: post #136
pytester wrote: post #125

Earlier quoted context omitted.

They might on newly issued debt - that still allows the ~40 trillion USD of existing private debt to be watered down, however.

The survey of economists that the article poo-poos includes the comment by one economist that a government can print to pay its own debts exactly once (because people loaning to the government figure it out quickly). This argument falls into the same boat: sure, the banks will change how they price loans, but for the lucky guys with loans it’ll be glorious!

And the idea is that it only has to do it once. If the goal of the government is 2% inflation but the economy doesn't reach this goal because of deflation then the government not only can step in to pay off it's debts, it has to step in to fix the economy.

Re: A Beginner’s Guide to MMT

#166

Post by imtringued »

mason55 wrote: post #51
klaudius wrote: post #25

Earlier quoted context omitted.

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?

You're talking about in the government employ right? Obviously no commercial enterprise will pay Joe Sixpack to do anything if he can't create value. So let's say that Joe Sixpack can't get a "real" job. Then society's choices for him are 1. Let him starve to death. Hope that if his alternative is starving then he will reform himself enough to get a job. 2. Give him money with no strings attached (currently various w…

I don't see why it has to be a job guarantee. If the government allocates 50000 jobs to correct inflation there is no reason why they can't hire people under any condition but limit the work contracts to 1 year and "fire" unproductive workers and extend the contract to productive workers. It's not like those jobs are supposed to be a life long career. The goal is to help people during the bad years.

Re: A Beginner’s Guide to MMT

#167

Post by imtringued »

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…

>Some people create more value by not working than by working.

Are you trying to describe unsuccessful startup founders?

Re: A Beginner’s Guide to MMT

#169

Post by tchaffee »

vasilipupkin wrote: post #32

Macroeconomics is a sufficiently complex topic that trying to understand it or discuss it at a "beginner level" is almost pointless. At that level, all you need to know is that any theory that promises some certain knowledge of what's going to happen if this or that happens and that it's all very simple, is almost certainly wrong.

> trying to understand it.. at a "beginner level" is almost pointless.

Starting at the beginner level is where everyone starts when they want to learn something. By definition. Hardly pointless.

Re: A Beginner’s Guide to MMT

#170

Post by maxlybbert »

pytester wrote: post #147
maxlybbert wrote: post #136

Earlier quoted context omitted.

The survey of economists that the article poo-poos includes the comment by one economist that a government can print to pay its own debts exactly once (because people loaning to the government figure it out quickly). This argument falls into the same boat: sure, the banks will change how they price loans, but for the lucky guys with loans it’ll be glorious!

>The survey of economists that the article poo-poos includes the comment by one economist that a government can print to pay its own debts exactly once (because people loaning to the government figure it out quickly). The government can pay its own debts as many times as it wants. It can also dial the interest rate up and down virtually at will through QE or raising interest rates. It actually makes less sense to thi…

Somehow I managed to skip a word when I wrote the comment. It should have been “a government can print money to pay its debts exactly once.”

Obviously governments can pay off debts as often as they want, and there was a time when that was common. But a government that runs up big debts and pays them by making the currency worthless soon has a hard time finding anyone willing to lend it money.

But sometimes they manage. Russia is notorious for defaulting on its debts (which isn’t the same thing as paying with devalued currency, but should be a lesson to future lenders), but they still manage to borrow money. But they do have to pay higher interest rates than other countries to make up for the higher risk of default.

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