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MMT - Modern Monetary Theory


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#101 Traveler

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Posted 29 April 2019 - 02:03 PM

Well said! But still a couple questions and thoughts.

1. Typical poor choice of words on my part. When I said con game, I meant we all buy the "con" that our money actually is negotiable. We marks are trusting, whether conned or not.

2. Interesting. I thought MMT actually did envisage something along those lines. Again, just an economic cretin.

3. So do we trust China more? And Japan the most? Is investor capital flowing to these places more than say the US? I fail to follow the linkage.

4. I like the bottom line, but I do think the kabuki theater of bonds (and QE) actually works. Deficit scolds are pretty well discredited anymore.

I would love to see this applied to stuff like infrastructure, which is much more than wealth creation. You actually get a return on investment by greater receipts in the future due to higher productivity. That sort of economics I understand.
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#102 D. C. Sessions

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Posted 28 July 2019 - 11:57 AM

I've been tagging some analyses and such by economists on MMT meaning to post them here. Please forgive the delay:

https://johnhcochran...-economics.html

Be sure to read Waldmann's comment, also the issues with guaranteed jobs: https://www.bradford...-hates-him.html

which references: https://www.gmo.com/...ryone-hate-mmt/

https://worthwhile.t...-mmt-model.html
with some good commentary at https://www.bradford...-mmt-model.html

General agreement on the idea that MMT is not particularly novel and to the extent that it is it relies upon fiscal authorities doing very unpopular things (raising taxes) in real time.
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#103 D. C. Sessions

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Posted 27 August 2019 - 07:35 AM

More tagged content:

Cory Doctorow (Podcast) Part 1
Cory Doctorow (Podcast) Part 2

I've misplaced some other links, but there's a fairly strong consensus among the more mainstream economists (salt and fresh) that to the extent that MMT gets quantitative (spending creates money, taxes destroy it) MMT is pretty orthodox in a Keynesian way.
The Devil is in the details: MMT advocates propose adjusting taxes to manage inflation, which would work in theory but have implementation problems -- notably that at best it would be slow in response, leading to an unstable control system and then there's the question of accountability for the unpopular task of taxation.
The way a lot of catastrophes happen is that X doesn't occur because there are safeguards in place, therefore people assume X isn't a worry and they remove the safeguards. Then X happens.
— Nate Silver
"Robots aren't the problem. Capitalism is." -- Last words of Stephen Hawking.
These days, "libertarian" is just a euphemism for a Nazi who's afraid to commit.
"If you're not outraged, you're not paying attention." -- Heather Heyer
"I'd rather have my child, but by golly, if I gotta give her up, we're gonna make it count." -- Her mother
"Your purpose, then, plainly stated, is that you will destroy the Government, unless you be allowed to construe and enforce the Constitution as you please, on all points in dispute between you and us. You will rule or ruin in all events." -- some RINO

#104 indy

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Posted 27 August 2019 - 08:57 AM

You don't say.

#105 LFC

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Posted 27 August 2019 - 09:42 AM

 D. C. Sessions, on 27 August 2019 - 07:35 AM, said:

The Devil is in the details: MMT advocates propose adjusting taxes to manage inflation, which would work in theory but have implementation problems -- notably that at best it would be slow in response, leading to an unstable control system and then there's the question of accountability for the unpopular task of taxation.

Sooooo it's basically really, really hard if not impossible to continually fine tune a $20T economy spread across 3.8M square miles? What a shock.
" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

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#106 J-CA

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Posted 27 August 2019 - 10:16 AM

 J-CA, on 29 April 2019 - 01:02 PM, said:

As I understand it:
3. In a competition between issuing bodies the competition for trust is a contest of who can use their printing press the least, not the most.
4. Internally to an economy the pressure to print is a pressure to create demand for the purposes of employing people who don't have vast amount of currency on hand and thus have the most to gain from taking the risk of more spending creating higher inflation. Balancing the interests between the haves and have-nots not dissimilar to how things work now but without the kabuki theatre of bond-issuing and deficit-scolding, that is replaced by a direct discussion of demand (or employment by proxy) vs. inflation.

 Traveler, on 29 April 2019 - 02:03 PM, said:

3. So do we trust China more? And Japan the most? Is investor capital flowing to these places more than say the US? I fail to follow the linkage.
4. I like the bottom line, but I do think the kabuki theater of bonds (and QE) actually works. Deficit scolds are pretty well discredited anymore.

I would love to see this applied to stuff like infrastructure, which is much more than wealth creation. You actually get a return on investment by greater receipts in the future due to higher productivity. That sort of economics I understand.
3. If you have an investment opportunity that is denominated in a particular currency then one of the factors you consider in the return on that investment is the odds that you will lose all of your investment and returns to currency fluctuations, right? It is really that simple. There are financial instruments build for managing this sort of thing too, there is a whole market built around it.
Is anyone seriously concerned about China inflating away a capital investment on the mainland over the duration of a manufacturing facilities' lifetime? I don't think so. The bigger risk in any high-value project is having the IP stolen from you, the biggest risk is just normal business management risks. In a place like Russia, where virtually no one invests anymore you have the literal fear of having your business stolen from you. Likewise in Zimbabwe you would rightly not invest because you can see that your investment would be inflated away to nothing and you have to worry about government cronies stealing your property.
You can imagine a world where inflation across the board in the developed world is much higher but stable and in the developing world higher still and more unstable and the world economy is much more dynamic but inflations risks are actually something people worry about for real and not just in goldbug fever dreams - that might be a better world.

4. It would be an interesting phenomenon if the ECB refused to change policy and literally ran out of bonds to buy, then we would see the "kabuki theatre" have a real impact on policy and economic conditions. I don't think that will happen and if it did it would be very bad as far as I can tell. This is where I am well out over my skis in terms of my understanding of the economics of monetary policy.
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#107 Traveler

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Posted 27 August 2019 - 11:53 AM

I am over my skis even trying to keep up with you. That is meant as a compliment.
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"Anyone who has the power to make you believe absurdities has the power to make you commit injustices" Voltaire

#108 LFC

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Posted 24 March 2021 - 05:10 PM

Here's a piece from TAC called Modern Monetary Theory for Conservatives and how it ties to taxes and policy. Interesting stuff.
" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

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#109 indy

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Posted 25 March 2021 - 06:27 AM

The comments on that article aren't as insane as usual, which is a nice change. Again, as DC says a few posts back, and as I've been saying since this theory was brought up, the problems here aren't economic but political. In order to control inflation---which is caused by too much money chasing too few goods---the excess money in the system is taxed away. You have to target taxes on the people who are chasing the goods, which is the good old middle class working stiffs. Poor people actually need the money to eat, and rich people, as a rule, don't consume all that much. So, from a political viewpoint, you are raising taxes while costs are going up on the vast majority of voters resulting is some pretty predicable voting patterns that will make the system completely unstable.

Now somewhere like China, on the other hand, this might be doable.

#110 LFC

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Posted 25 March 2021 - 08:13 AM

 indy, on 25 March 2021 - 06:27 AM, said:

In order to control inflation---which is caused by too much money chasing too few goods---the excess money in the system is taxed away.

In the same vein do we have financial asset inflation because too much money is chasing too few investments?
" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

"That's the problem with being implacable foes - no one has any incentive to treat you as anything more than an obstacle to be overcome."

"The 'Road to Serfdom' is really all right turns." --Progressive Whisperer

""The GOP ... where every accusation is also a confession." --Progressive Whisperer

#111 indy

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Posted 25 March 2021 - 08:28 AM

Well, the causes of asset inflation are somewhat disputed. People are chasing yield, which is influenced by a variety of real world factors like interest rates, currency exchanges, debt levels, etc. The theory I generally like is that it's more or less a by-product of central bank and/or other government policies. The real estate bubble in 2008, for example, seemed less related to actual supply and demand issues than it did lax oversight. But, again, the causes are disputed.

#112 Sinan

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Posted 25 March 2021 - 09:48 AM

 Beelzebuddy, on 26 February 2019 - 05:17 PM, said:

Didn't Sinan bring this up a while back?

Found it

All it does is describe the way banking operates in a fiat money system. It does not promote policy nor does it describe morality or any typically subjective goal which you might hear from a Hayek or Friedman. Once you understand money, then you can decide what to do with it. Many of the MMTers do venture into policy prescriptions such as full employment to show what could be done with money if we chose to do it. Others discuss how to retire sovereign debts or pay for structural investments. The one thing that most typical economists do not like about it is that it opens the kimono on how money works and that is works mostly for the top brackets.
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#113 LFC

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Posted 30 March 2021 - 02:07 PM

The austerity folks have lost. Little Lindsey tried to squawk about it but nobody took him seriously, not that he's to be taken seriously on any issue.

Quote

As Biden’s victory became certain in the first week of November, Sen. Lindsey Graham (R-SC) declared his priority should Republicans hold the Senate: addressing the national debt.

The GOP did not hold the Senate, but, even then, Graham’s ploy was painfully obvious: use concerns about the national debt as an excuse to prevent progressive priorities from passing.

That’s a departure from the early years of the Obama administration. Then Obama played at least some homage to fears around rising deficits, pledging in February 2009 to cut the deficit his administration inherited by half before the end of his first term.

That may have been a rhetorical ploy meant to cut GOP deficit-mongers off from oxygen, caving to their concerns as a way of muzzling the criticism. Others, like Columbia University Professor Adam Tooze, contend that Obama aides were ready in the late 2000s to fight a crisis, but not the one that came. Rather, they had prepared for a situation in which the bond market balked at the size of the national debt, fleeing it and causing interest rates to skyrocket.

But developments over the past decade have shown how even sincere concerns about the size of the debt are profoundly flawed, as the predictions of the austerity alarmists — inflation, rising interest rates, a collapse in bond marketing financing — did not come true. Meanwhile, Republican politicians who stoked the concerns passed a massive tax cut once in power, revealing the extent of the bad faith made in peddling those claims. Now, it’s almost embarrassing to be seen to take these concerns seriously, argued Mike Konczal, Director of Progressive Thought at the Roosevelt Institute.

Since the early 2010s, when the GOP was aided by economics professors arguing that the size of the national debt would lead to another economic crash, not only have none of those predictions come true, but the Republicans themselves passed a massive tax cut in 2017 which further ballooned the size of the national debt.

“A lot of electeds were like, ‘wow, we really were caught off guard by how cynical that was,'” Konczal told TPM.

He added that Democrats had since held the line in not voting for the 2017 tax cuts not on concerns about the national debt, but about the way the cuts distribute huge amounts of money towards the already-wealthy.

“And that’s going to be sustainable, that reflects a real shift, we’re not going to prioritize these concerns,” he added.

" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

"That's the problem with being implacable foes - no one has any incentive to treat you as anything more than an obstacle to be overcome."

"The 'Road to Serfdom' is really all right turns." --Progressive Whisperer

""The GOP ... where every accusation is also a confession." --Progressive Whisperer

#114 AnBr

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Posted 02 April 2021 - 07:53 PM

A conversation with the economist Stephanie Kelton about the "deficit myth," Modern Monetary Theory for dummies, and why the age of capital may finally be ending

Quote

Joe Biden is president of the United States, but he lives in Stephanie Kelton’s world.

An economist and champion of so-called Modern Monetary Theory, Kelton has long agitated against what she calls “the deficit myth,” which is also the title of her bestselling book on the subject.

At the most basic level, Kelton believes the United States government is capable of investing far more than it ordinarily does, or than most people think it should, in making people’s lives better. And she argues that much of the resistance to doing so is grounded in outdated, gold-standard thinking that has no place in reality today.

Whatever you think of her ideas, which have a rapidly growing number of adherents, and which tend to make Larry Summers cry, there is no question that they are carrying the day in the American public debate. Indeed, it is hard to understand the comfort the new Biden administration has had with significant government spending — contrary to Biden’s own past nature — without understanding how much the terms of the debate have shifted, and how much Kelton herself has to do with that shift.

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The Demon-Haunted World: Science as a Candle in the Dark
1995


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On Politics: A Carnival of Buncombe


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