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

191–199 of 199 posts

Re: A Beginner’s Guide to MMT

#191

Post by EGreg »

dragonwriter wrote: post #190
EGreg wrote: post #141

Earlier quoted context omitted.

Warren Mosler is one of the advisers to our company for over a year now. I had a lot of discussions with him about these kinds of things and I originally reached out to him because we are building a crypto currency platform to allow any community, from a casino or festival, to a city or even a country, to issue its own currency. We are still looking for some Economists with other views to balance out MTA. So, I can t…

> Mosler concludes by saying that the government is not constrained in how much debt it can take on It seems to me that’s kind of half-a-loaf MMT. Or, to borrow from The Matrix trilogy, it's the spoon-bending level. Where the full loaf (“there is no spoon”) is: Government is not constrained to take on debt at all to finance an excess of spending the over revenue. The idea that, if the State chooses to create net new…

When more currency X is issued, the losers are people (including lenders) who are locked into assets denominated in X, if this leads to a devaluation of X relative to other things.

The status of fiat being legal tender for all debts is what makes lenders unable to demand other currencies but they can execute forward contracts of X versus a basket of commodities for example.

Re: A Beginner’s Guide to MMT

#192

Post by kaycebasques »

morningmoon wrote: post #159
kaycebasques wrote: post #143

Earlier quoted context omitted.

Based on the names that you supplied, I'm guessing that you assume that MMT is a left-wing idea. I think the bigger reason to pay attention to it is because it has support on both sides of the American political spectrum. Read The Macro Tourist's post [1] for a pragmatic trader's take on the matter. He also suggests that Trump is already an implicit proponent of MMT, what with his increased spending and decreased tax…

"implicit proponent" is an oxymoron.

I get what you mean based on the dictionary definitions of implicit and proponent. What I meant was that his actions are aligned with MMT theory, even though he probably doesn't explicitly subscribe to the theory.

Re: A Beginner’s Guide to MMT

#193

Post by pytester »

maxlybbert wrote: post #170
pytester wrote: post #147

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). 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 manag…

Yeah, the fatal assumption there was assuming that they need to have money lent to them.

As I said, it doesn't really make sense to think of the national debt as a debt. It's a government run savings account accommodating the private sector's desire to save money.

In the same way if maxlybbert printed maxlybbert dollars, spent them and then "borrowed" them back it wouldn't really be doing it because he actually needed them. He's providing a service.

Re: A Beginner’s Guide to MMT

#194

Post by pytester »

WillPostForFood wrote: post #155
pytester wrote: post #72

Earlier quoted context omitted.

It will result in inflation, but that's not necessarily a bad thing. At its heart inflation is just a wealth transfer from creditor to debtor (god forbid, right? creditors are king ). The real issues are that: * Inflation is treated as a bogeyman in the investor managed media rather than an integral and necessary part of a monetary system (you want real pain? try DEflation). * Complete misrepresentation of the risks…

At its heart inflation is just a wealth transfer from creditor > to debtor That is one way to put it, but you could also say inflation punishes responsible people who work and save money, and rewards less responsible people who spend beyond their means.

This is what I call the "Paris Hilton is more responsible than my friends who were bankrupted over a medical debt" theory.

If you pretend that wealth is fairly distributed it makes a certain amount of sense.

Re: A Beginner’s Guide to MMT

#195

Post by throw0101a »

dragonwriter wrote: post #188
throw0101a wrote: post #15

Earlier quoted context omitted.

> 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…

> I think the MMT argument is that one can reduce the money supply through taxation. The MMT argument is stronger: taxes only exist in a fiat money system to reduce the money supply (and, to create behavioral incentives with specific targeting.) Viewing them as “paying for” government spending in a balanced sense where you need $1 in revenue (or debt financing which you pay back with interest to a lender) to pay for…

> The MMT argument is stronger: taxes only exist in a fiat money system to reduce the money supply (and, to create behavioral incentives with specific targeting.)

I think this is like the image of the snake eating its own tail, and what you see may depend on whether you see start at the end-end of things or the tail-end. Or the optical illusions that change if between duck/rabiit, etc.

:)

Re: A Beginner’s Guide to MMT

#196

Post by maxlybbert »

pytester wrote: post #193
maxlybbert wrote: post #170

Earlier quoted context omitted.

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 manag…

Yeah, the fatal assumption there was assuming that they need to have money lent to them. As I said, it doesn't really make sense to think of the national debt as a debt. It's a government run savings account accommodating the private sector's desire to save money. In the same way if maxlybbert printed maxlybbert dollars, spent them and then "borrowed" them back it wouldn't really be doing it because he actually neede…

I’m only focusing on the fact that a nation that prints its own money can end up printing too much and devaluing it. And when a country shows its printing presses are controlled by people who have no clue what they’re doing, people tend to stop buying their bonds.

I don’t really care whether it’s truly borrowing when a country sells bonds and promises to pay the bondholders back with interest. As long as the country feels it has an obligation to pay those bondholders, it has a temptation to pay them with devalued currency. Most countries don’t do that because they expect few people will buy bonds the next time the government wants to sell some.

Re: A Beginner’s Guide to MMT

#197

Post by bubbleRefuge »

anm89 wrote: post #90

Assume someone with a biology PhD explained to you that the sky was actually purple because of a hidden extra cone your eye possesses that was perceiving light that your brain was canceling out. This somehow sounds plausible, and it's impossible for non biologist me to disprove but at the end of the day I can look up at the sky and say"no, I'm confident it's blue". This is MMT. MMT says: "government debt isn't really…

We don't need tresury securities. They are a relic. The can be replaced by interest bearing accounts at the fed which are essentially the same thing.

Re: A Beginner’s Guide to MMT

#198

Post by bubbleRefuge »

AnimalMuppet wrote: post #138

So if I understand correctly, MMT says that, when the economy has slack (and therefore unemployment) in it, the government should print money to buy stuff until inflation appears, and then should collect taxes to quench inflation. I see three problems - two major and one minor. First, spending and taxes are controlled by Congress. MMT would therefore ask Congress to manage the economy. That seems like an incredibly b…

Mostly the economy has built in automatic stabilizers such as unemployment compensation. Recession = less tax receipts = more unemployment, food stamps, etc = bigger deficits untill the deficits are big enough to stimulate growth again.

It would be good to get rid of the debt ceiling which is a ridiculous prop. Congress can do that. Secondly it would be good to give the federal reserve or other independent policy makers the ability to control payroll taxes to stabilize the economy in a pro-cyclical fashion. When the economy is booming, and we want to curtail inflation , increase payroll taxes, when the economy soft, lower payroll taxes.

Re: A Beginner’s Guide to MMT

#199

Post by bubbleRefuge »

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…

Another Central point which has not been mentioned here is that since government imposes a tax on a society in the base currency, then by definition it controls unemployment in that base currency. As a result, the government should offer or provide a job guarantee in order to close that gap. Note to socialist/alarmist types, this is a job that would put a floor on labor.
Post reply on HN