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A Beginner’s Guide to MMT

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Re: A Beginner’s Guide to MMT

#171

Post by ThirdFoundation »

AnimalMuppet wrote: post #124
ThirdFoundation wrote: post #10

A fear of mine is that MMT gains enough traction to be implemented, but only partially. Similar to what has happened with the ACA. For argument's sake, let's just assume MMT is a sound theory. Regardless, if it's only half-implemented -- without all components for regulating taxes, inflation, and spending -- it could be an absolute disaster. Additionally, there are concerns about having the government itself involved…

> All it would take is one conservative majority congress to semi-dismantle any MMT mechanism and completely mess up any "controls" put in place by MMT proponents. One liberal majority Congress could do the same. They might dismantle in a different direction, but it could be just as disastrous.

Fair point.

Re: A Beginner’s Guide to MMT

#172

Post by scott_s »

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…

On the discussion with Kelton and Furman on the Ezra Klein show: I came away frustrated, because I felt that every time Kelton tried to delineate an ideological difference, Furman disagreed that it was in fact a difference. I found it a good discussion on economics, but no clear line-in-the-sand between MMT and orthodox economics.

Re: A Beginner’s Guide to MMT

#173

Post by salawat »

selectodude wrote: post #77
salawat wrote: post #61

Earlier quoted context omitted.

What exactly keeps you from implementing a negative interest rate? I.e. some form of tax on held cash?

Nothing. It’s already been done. Sweden and the ECB used them for a few years.

Okay. I thought that was the case, and frankly, it's the only mechanism that even comes close to making MMT make some sort of sense, since that could act as a monetary black hole... I think.

Re: A Beginner’s Guide to MMT

#174

Post by zwaps »

WorldMaker wrote: post #71
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…

> What happens when people realize transfer medium is being debased? They'll obviously try not to store value in that transfer medium. Arguably, to some proponents of MMT/in some versions of MMT, this is a feature and not a bug. Economically speaking, stored value at rest isn't "interesting", it's a potential indicator of waste or inefficiency of resource utilization in current flows. I've heard the argument that the…

So you do not want to store value for things like retirement or risky times?

Runaway inflation can make even intra-year saving impossible.

If this is a feature of MMT, it seems they'd be willing to give up on a lot of civilization since be began farming.

Re: A Beginner’s Guide to MMT

#175

Post by conanbatt »

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…

Krueger, Summers have very publicly vouched against it.

Im surprised MMT is a thing at all.

Re: A Beginner’s Guide to MMT

#176

Post by WorldMaker »

zwaps wrote: post #174
WorldMaker wrote: post #71

Earlier quoted context omitted.

> What happens when people realize transfer medium is being debased? They'll obviously try not to store value in that transfer medium. Arguably, to some proponents of MMT/in some versions of MMT, this is a feature and not a bug. Economically speaking, stored value at rest isn't "interesting", it's a potential indicator of waste or inefficiency of resource utilization in current flows. I've heard the argument that the…

So you do not want to store value for things like retirement or risky times? Runaway inflation can make even intra-year saving impossible. If this is a feature of MMT, it seems they'd be willing to give up on a lot of civilization since be began farming.

Many MMT proponents argue heavily for raising strong "floors" such as minimum current flows to/through individuals. The general goals are often to eliminate "risky times" as a category altogether as a general safety net for everyone. Then things like retirement and disability and sabbaticals are merely "special cases" of the general goal of eliminating "risky times".

Yes, it's a very different view of economics from a lot of traditional approaches. It's not a fundamental "give up on a lot of civilization", even where it is a general rethink of "what does it mean to be a member of a civilization", including such things as what should be an individual's guaranteed safety floor, it's still mostly just civilization as we know it today swapping what we today think of as edge cases (social security, medicare, et al) for more generalized principles (in theory at least).

Re: A Beginner’s Guide to MMT

#177

Post by conanbatt »

WorldMaker wrote: post #71
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…

> What happens when people realize transfer medium is being debased? They'll obviously try not to store value in that transfer medium. Arguably, to some proponents of MMT/in some versions of MMT, this is a feature and not a bug. Economically speaking, stored value at rest isn't "interesting", it's a potential indicator of waste or inefficiency of resource utilization in current flows. I've heard the argument that the…

I find the idea that private firms over-save and the way fix that is to print money to be disagreeable, and not an application of scientific or economical mindset, but the mere psychology of wanting to get results today at the cost of results tomorrow.

Re: A Beginner’s Guide to MMT

#178

Post by conanbatt »

throw0101a wrote: post #15
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. I think the MMT argument is that one can reduce the money supply through taxation. From the article: > In MMT’s ideal world there would still be taxes, but their main purpose, aside from lessening inequality, would be as “offsets” to keep inflation under control. Taxes would drain just enough money from consum…

Increase spending by printing, and then increase spending by taxes, sounds like a big-gov wet-dream.

Re: A Beginner’s Guide to MMT

#179

Post by conanbatt »

erentz wrote: post #40

Probably dumb question: if debt and deficits don’t matter and a country can just print money - how does that explain cases where countries have defaulted and other countries and their own citizens lose confidence in the currency? I also don’t understand how the jobs guarantee is supposed to work. Presumably if we had work to be done we would have open positions for it. Now we have to magic up jobs, which means diluti…

> how does that explain cases where countries have defaulted and other countries and their own citizens lose confidence in the currency?

Other countries cant issue dollars which is the world exchange currency. When you print out your countries cash, your currency exchange value drops and then you have to reduce your imports. Its easy for a country like argentina, for example, to keep a negative balance trade, run out of dollars and then it cant pay unless it devaluates the currency so much , outside money comes flooding in.

The US can print out its own money, but the major risk I perceive is that it wrecks its exchange rate. If the dollar loses value, first it actually adjusts the prosperty of the american people relative to imports/exports, but also risks its world-reserve status. It is often underestimated how profitable it is for the US to be financed by the entire earth on trade. If that changed..it would be a serious, irreversible economic damage.

Re: A Beginner’s Guide to MMT

#180

Post by conanbatt »

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.

Its one way of doing it, but think that tax policy you can control: you can make it progressive, or give credits, or do something else. Printing money affects all the currency, and has uneven effects of all kinds, including favoring the banking sector the most.
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