Can we have a civil, thoughtful discussion on this?

Discussion in 'Economics & Trade' started by Kode, Jan 11, 2017.

  1. AlNewman

    AlNewman Well-Known Member

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    Facts, obviously you have no clue as to the meaning of the word. Perhaps a quote from one of your heroes, Perry Merhling, is in order:


    Such seems to be the whole world of economics, not a science but a liberal arts curriculum as so well explained by Ha-Joon Chang:


    I believe Chang was an optimist. As has been proven over the past 100 or so years by the Federal Reserve, economics is but one big guessing game so devoid of possibility that even the worse gamblers wouldn't back any conclusion.
     
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  2. Lil Mike

    Lil Mike Well-Known Member

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    Well the simplest way to make your point is to point to a country that is practicing what you preach so we can evaluate how close your theory matches reality.
     
  3. Moonglow

    Moonglow Well-Known Member

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    Wow man! Weak and bogus..
     
  4. Econ4Every1

    Econ4Every1 Well-Known Member

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    Perry is 100% right, I don't disagree with that.

    If you'd like to continue to talk at me, you are welcome to get your feelings off your chest and vent. I'm glad I'm here to help you deal with your pent up frustration. Whenever you decide to engage in conversation, I look forward to it.

    -Cheers
     
  5. Econ4Every1

    Econ4Every1 Well-Known Member

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    That's just it, I'm not preaching anything. I'm telling ouy how the economy we have was designed to work and how we're slowly screwing it up because we don't understand. The US is an economic leader and other countries like UK, Japan, Canada and Austrailia all operate just about the same and have misunderstood their own economies as most of their economic authorities were educated here in the US.

    As far as the name of the concept, it was poorly chosen. It's sort of like "big bang theory" when talking about how the universe began. Anyone that understands it knows there was no "bang" in the beginning or at least that's now what the theory says. The man that coined the term was mocking the idea and it stuck.

    The moniker Modern Monetary Theory was a term coined by Bill Mitchell in 2012 and it stuck, unfortunately.

    Other names proposed were "Modern Monetary Reality", Functional Finance etc, but there is nothing in it that amounts to "Theory" (using the non-scientific definition).

    The other thing that MMT is not is not, is a belief or a prescription on how the economy should operate. It is a description of how the economy we have right now really operates. The reason I think I get so much resistance is that economics is politics, or at least it affects people's political beliefs when they hear my claims. The right believes we have a spending problem. When I say that, today, right now, we do not have a spending problem, no one is interested in the explanation. I am labeled a socialist or a progressive, like Mr. Newman has demonstrated. Economic reality conflicts with this political ideology and so he lashes out. Honestly, the left is no better, they don't have it right either, but, generally speaking, people who are on the left are sociologically more capable of adapting to new ideas. I not making this up, there is good evidence for this idea HERE. This is one reason that the right tends to be less accepting. The irony is that if the right embraced it, they would benefit most from it....But I digress.

    The left has just have a different brand of wrong.

    People seem to like being upset at the government, if you understood economics as I do, you'd know, I'm not going to take that away from anyone. The government is to blame, just not for the reasons that we've been taught.

    The problem is that we've learned something wrong to such an extent that it is simply taken for granted, like the idea that the sun rotates around the earth. I'm delivering bad news to people, that their understanding about something so basic as debt and deficit is wrong and it's not easy to accept.

    Now, having said all of that, there are people who understand and believe that MMT is the correct description of how the economy actually works that have their own prescriptions for how we should handle the economy, but it would be disingenuous at best and dishonest at worst to say that the theory of MMT promotes a belief in something like a "Jobs Guarantee" even though that idea is supported by many people who believe MMT is correct. That is, if you think MMT is correct, there is NOTHING that prevents a person from saying that they support Austrian or Chicago school prescriptions for how the economy should work.

    MMT simply looks at accounting facts. That's why it's so important to understand the factual workings of modern banking. Things like, one person's spending is another person's income. Banks don't loan customer deposits to other customers, interest earned on treasuries are earned as income by the people and organizations that hold them. Surpluses remove money from the economy. All of these claims are 100% facts, period, full stop.

    Now, I'm not saying that I don't have my own beliefs, ideas, and prescriptions based on my understanding. The problem is, how can I discuss what I think we should do as a nation with respect to economics if most people don't even understand how the system we have today really works?

    Much of the way that people today understand banking rests on ideas that were taught prior to 1970 when the currency was backed by gold (not convertible to gold). In the 30 years that followed academia did not update its teachings to synchronize with the new modern money reality.

    So, I'm here arguing how the system actually works, not how I think it should work (though sometimes I admit I let my personal prescriptions slide into some of the conversations I have occasionally depending on the context). I welcome any challenge to my understanding. Either I'm right, or I'm wrong. I don't know what I don't know and people have over the years challenged me and exposed concepts and ideas I wasn't aware of. I go back and I study and understand, and never have I found something that was inconsistent with MMT as an explanation to how our modern money works.

    I've been studying economics since 2003. I've been through several "schools" of belief. MMT is the most convincing because to deals in facts and those facts are born out in the evidence.

    AlNewman likes to make claims and assertions, but I hope you see that he does very little with respect to actually engaging me. I am polite and I move on. You notice I don't lean on links to things that others have written (unless asked) though I do use charts and illustrations, I don't use arguments from authority. I took the time (several years) to understand MMT and I don't even talk about MMT as a school of thought (I believe you asked) though I don't hide from it either. I find asking or telling 'schools of thought" just introduces pre-conceived notions that just get in the way of good conversation.

    If you have any questions or would like to learn more and don't mind having your pre-conceived notions challenged, I can point you toward many resources.

    -Cheers
     
    Last edited: Mar 18, 2017
  6. Lil Mike

    Lil Mike Well-Known Member

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    One of the ways that a theory can demonstrate some measure of validity is that it explains some aspect of the real world better than other, competing theories. I'm not sure this does that. You are substituting an alternate explanation for the many already available ones.

    Secondly, it should be predictive. If the rest of the economic establishment is saying A, and you're saying B, and B actually happens, that moves your theory closer to be taken seriously. So what is the predictive history?
     
  7. Econ4Every1

    Econ4Every1 Well-Known Member

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    Quite right. Evidence of predictive capability is key. It's interesting because for the many hundreds of conversations like this I've had and the thousands (maybe 10's of thousands) of responses you are the FIRST skeptic who has asked that. Huge props to you.

    MMT, as we understand it today, was born in the mid-1990's, though there are several economists that understood the principles going back to the Mid 1900's (it would not have made much sense prior to 1934 when dollars were fully convertible into gold, something I can explain if you need me too). Men like John Kenneth Galbraith, Hyman MinskyHyman Philip Minsky, Joeseph Stiglitz, Irving Fisher and Fed Chairman (1940's) Beardsley Ruml. They didn't understand MMT, so much as the principles that we understand today. These men would have understood the concept as Chartalism. MMT is sometimes also called Neo-Chartalism.

    One of the challenges of any new idea is establishing it. Until 2010-2012 it still didn't have a formal name and it's handful of adherents were being roundly mocked by the mainstream. Today, there are several academic professors, Warren Mosler (who is the only non-academic), L. Randall Wray, Stephanie Kelton, Bill Mitchell and Pavlina R. Tcherneva. I'd also add Steve Keen to the list, though he identifies as "post-Keynesian", which can also be used to define MMT.

    To your point, MMT has excellent predictive power. Interestingly Waren Mosler said the only reason that he failed to fully predict the consequences of the GFC is that the government could have and should have intervened much earlier and it would have lessened the crisis. So the power to predict is limited to actions we take.

    For example, if you put a concrete barrier across a road around a blind corner, but with plenty of room for an oncoming car to see and come to a stop, you would probably predict that the barrier, while a nuisance, wouldn't cause an accident because there is enough time to slow down, but if the driver saw the barrier and drove straight into it anyway, was your failure to predict and indictment of your lack of understanding? This is what happened in the lead-up to the GFC. Once the government became aware of what was happening, the economic orthodoxy prevented anyone from asking for what was needed. 100's of billions of dollars. No one wanted to be responsible for that kind of deficit and resulting debt. The government watched as the "car drove into the proverbial wall" and did nothing until it was too late.

    THIS VIDEO is an interview of Mr. Mosler who summarizes MMT pretty well. If you don't want to watch the whole thing you can fast forward to 6:00 where he discusses what I just talked about.

    Here is Steve Keen Predicting a recession in Australia

    Here is another video by Keen. I didn't watch the whole thing so I'm not sure if he makes predictions in it or not, but I think he does a good job illustrating some of the points with graphs.

    There is more, but I have to dig it up. We can catch up later.

    -Cheers
     
  8. Lil Mike

    Lil Mike Well-Known Member

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    Thanks! A little disappointed to be the first one though. That seems to be pretty basic.

    Well Australian recession is something to watch for this year, assuming that no other mainstream economists have also predicted it.
     
  9. Econ4Every1

    Econ4Every1 Well-Known Member

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    I'll see if I can find you some more. I'm feeling a little lazy right now.
     
  10. AlNewman

    AlNewman Well-Known Member

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    So now because I wont join in your little bandwagon fallacy but instead call you out on it you want to switch to an appeal to pity fallacy. Just because you can't defend your position does not mean others are venting and talking at you, it would seem they are talking over you.

    If by conversation you are referring to accept what you try to instill as facts, that will never happen so get used to it.
     
  11. AlNewman

    AlNewman Well-Known Member

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    This guy is an even bigger idiot than the last proponent of this mystery economical theory, even worse than the Keynesian theory.First, I like his statement that he wanted to run for a political office in Connecticut so he wrote a book, as an idiot it's a miracle he didn't win.

    This wacko elaborates on what G. Edward Griffin called the Mandrake Mechanism and has this great explanation on the national debt, "the debt is just money the government hasn't collected in taxes yet." But hey not to worry, according to this dolt, that doesn't reflect on future generations at all.

    According to Mosler, quantitative easing is a good thing that has only positive benefits with no negative consequences. This man is so far removed from reality, well he is just the perfect little progressive liberal. This guy makes about as much sense as Nancy Pelosi on Odumbocare.
     
  12. AlNewman

    AlNewman Well-Known Member

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    I would say that it is you that doesn't understand not only how the so called economy works but why it works that way. "Screwed up" yes but "screwing up" no, you don't understand. Leader, no the US is but a puppet being manipulated from afar. And all countries but three, used to be seven in 2000, in the world act exactly the same, soon to be two.

    The claims and assertions as you like to classify them come from actually following the trail you lay. I follow that trail and come up with with the fallacies you try and assert. Engage you, I not trying to engage you as that is impossible, there is nothing to engage. Your assertions are based on general progressive liberal collectivism/socialism.

    No links, gee then I guess that all those links I have killed in responding to your assertion just linked themselves. Of course you don't use arguments from authority as you have not posted a single authority, just clowns.

    Preconceived notions, you seem to be full of them, I haven't seen a single thing you posted the presents any challenge whatsoever. I have tracked your resources resources resources and it all keeps leading back to a single point. Nowhere in this hierarchy have I found intelligence just the gestation of collectivism.
     
  13. TedintheShed

    TedintheShed Banned

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    It was actually called chartalism in the early 1900's and wasn't taken seriously. When modern proponents rediscovered it, they revamped the discredited theory with some corrections/additions and it was dubbed "neo-chartalism". That seemed to conjur prior images of the previous failed incarnations so it was redubbed"Modern Money Theory" (MMT) After all, anything with the word "modern" in its name can't be all bad, right?

    If you boil it down, all it means is that the military is what backs the dollar. Once our military collapses, so shall the dollar. It is the incarnation of Eisenhower's warning regarding the military-industrial complex.

    MMT does nothing to really bolster the credibility of fiat currencies. They are all backed by force, in the end. Once the mechanism of force collapses, so shall the fiat.
     
    Last edited: Mar 19, 2017
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  14. Econ4Every1

    Econ4Every1 Well-Known Member

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    The fact that something is or isn't taken seriously has little to do with its correctness.

    A little overstated, but I will agree that the government's ability to enforce a tax is part of what gives the nation's dollar its value and if the government's ability to enforce that value was lost, the dollar would probably lose value too. But the same can be said of any promise made where the IOU is a worthless token. Train tokens, gift certificates, movie stubs, super bowl tickets, whatever. All have value strictly because of the rule of law and the consequences for failure to redeem those promises. This is nothing new. It's how civilized societies work.

    Sure you can create a society where commodities are traded as money, but a society that limits its economic activity to the quantity of commodities that can be harvested, limits itself, and will always lose, all other things being equal, to a society that successfully deploys a chartalism.

    For example, the government created $4.1 trillion dollars (adjusted for inflation) to fight WWII in just 4 years. Without the ability to tax and create dollars the US wouldn't have contributed anywhere near the same level and the Allied powers might have lost the war.

    MMT has nothing to do with "bolstering the credibility of fiat currencies". It's simply a factual explanation on how they work. You can agree with MMT in the sense that it accurately explains how fiat works and still disagree that fiat is the best economic system a nation can employ.
     
    Last edited: Mar 19, 2017
  15. AlNewman

    AlNewman Well-Known Member

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    So you are trying to state that it contains some grain of correctness? And what would that be? You have already agreed that at best it is theory well ahead of facts. What you are trying to ignore is it's implications.

    Overstated, I would say understated. And coercion is not what gives the dollar it's value. I would suggest that you first learn what "money" actually entails, then perhaps you will start to discover the fallacies of this whole scam you are trying to promote. Train tokens, gift certificates, movie stubs, and super bowl tickets are not in any way a comparison to the a Federal Reserve Note. The former are all voluntary transactions wherein one give something perceived as having value for something that actually has value. A Federal Reserve note is the thing perceived as having value, it is nothing more than downright theft. Rule of law has nothing at all to do with it. If rule of law where to be in effect, then those that pass the counterfeit currency would be in jail. This is not how civilized societies work, civilized societies trade value for value. This is how slave societies work, where value has been stolen and the little slaves will accept what they are told.

    This is a bifurcation fallacy. You totally ignore that period when this country arose from nothing to a world power without the use of a debt based society. That in and of itself destroys your entire theorem.

    Adjusted for inflation, do you realize what that term means? What I can buy for a $1 now could have been had for 4 cents in 1913, let's say a candy bar. Other than today's candy bar would be a lot smaller, what else has changed? Except for perhaps some additional chemicals, the ingredients are the same. Now with advances in technology, labor and energy would be reduced. So why is it that you get less but pay more? Inflation, the hidden tax.

    War, this country has been at war for 222 of it's 246 years of existence as of 2016. WWII, the people where against it even though the Military Industrial Complex was involved when the country proclaimed neutrality. The bankers went crazy they were not getting their full share of the profits even though they were financing both sides. It is your cockamamie theory that makes this possible, after all as the real president, Cheney said, debt don't matter.



    No, MMT does not accurately explain how fiat works. It but glosses over the subject and causes many false conclusions. It not only glorifies that which is evil but portends it's expansion. It offers nothing in reality outside that glorification. It does not address the real issues of why, just pretends the who and what is a natural progression. It is but liberal blabbering.
     
  16. Kode

    Kode Well-Known Member

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    You don't post facts. You post personal opinions and try to pass them off as "facts". That is why I stopped replying to you.
     
  17. Econ4Every1

    Econ4Every1 Well-Known Member

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    Same.
     
  18. AlNewman

    AlNewman Well-Known Member

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    Facts, I haven't seen any actual facts from either of you, slanted views would be more like it. And I care less at whether you respond or not. I do not even care if you read my responses. That would be like talking to a brick wall and expecting a response much less an intelligent response.Maybe that is why neither of you has ever rebutted any challenge to your bull.

    Actually to what responses you do provide this could be one and the same person using different accounts, two peas of a pod. But slamming your little antics amuses me, so what do I care what you think which is being overly optimistic of your demeanor.
     
    Last edited: Mar 19, 2017
  19. TedintheShed

    TedintheShed Banned

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    That has nothing to do with why I said it- I stated it as a matter of record to establish the fact it is 100+ years old, and there inst really anything new or modern about it. After all, I am an anarchist- you don't think I've been told this myself, then you're insane.

    Then you really do not understand MMT. The ability to enforce tax via violence has nothing to do with what I stated. After all, many MMT theorists propose that taxation can and will approach zero. My actual statement was "If you boil it down, all it means is that the military is what backs the dollar." and that has nothing to do with taxation. Taxation is enforced via police.

    ...which is why every society in history that employed fiat currencies have failed?

    We were still on the gold standard at that time, you understand this- right?


    No, no, no. It is not factual, it is theoretical. MMT is a theory.

    This leads me to my favorite saying about economic theory:

    "If you take all the economist in the world and line them up end to end, they will all point in a different direction!"
     
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  20. AlNewman

    AlNewman Well-Known Member

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    That is actually only half true. That most socialist of socialists Franklin Delano Roosevelt made it illegal for any American citizen to own gold. All gold had to be turned in and gold certificates in circulation where no better than the Federal Reserve Notes that replaced them. The true part was that foreign central banks could redeem US dollars for gold at $35 an ounce up until Nixon stopped this in August of 1971 because of a looming gold run. I think perhaps this run would confirm that there is no more gold to be had such as when Germany wanted theirs back.
     
  21. a better world

    a better world Well-Known Member

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    Agreed, provided that we recognise the desired benefits from the point of view of the individual may not always coincide with the best outcomes for the collective.

    I mean non-instinctive, conscious (self aware) choice available only to humans, eg, an agreement by the collective to limit the ability/behaviour (instinctive and/or conscious) of an individual in the group who may be able or may wish to usurp 'unjust' benefits for himself.

    Thus the individuals in the collective can agree to choose to abide by rule of 'man-made' law, (aka rule of law) for the greater good of the individuals that make up the collective.

    OK.

    You are ignoring the reality of privilege and greed of some individuals.
    Good government is not easy, and is always a 'work in progress', but this is no reason to obstruct working for "the greatest good for the greatest number. .

    Collective security facilitates the right to life (a man-made concept) of all individuals.

    Equality of opportunity is another man-made, widely admired concept that you can accomodate through better (co-operation) or worse choices (war).

    .
     
  22. a better world

    a better world Well-Known Member

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    The individual must interact (including trade) within the collective, in a two-way process (the collective will regulate individual behaviour), which requires 'rule of law' (government) to achieve a balance between individual self interest and collective well being, which do not necessarily align, for maximisation of the common welfare.

    No rule of law = anarchy = perpetual war.

    Anarchist, Political Atheist, Religious Abolitionist, Spiritual Deist, Full Electorate, Member of No Society, and Ever Sui Juris.

    I attempted to define the 'natural law' identified in Spiritual Deism, which I think merely ordains instinctive individual survival above collective well being, and so denigrates the possibility of rule by conscious, man-made law (government) to promote collective well-being, above that which can be achieved in nature (by pure instinct and and/or conscious self interest alone).

    But I see this from wikipedia on anarchy:

    Anarchism is an ideology that promotes a rejection of philosophies, ideologies, institutions, and representatives of authority, in support of liberty. It asserts that cooperation is preferable to competition in promoting social harmony; that cooperation is only authentic when it is voluntary; and that government authority is unnecessary at best, or harmful at worst.[citation needed]

    Wow, there is some unreality in there - an idealised perception of human nature, perhaps.
    Eg, we have patent law for an obvious reason, and even so the disputes over the operation of patent law are legion (caused by greed, jelousy, self-aggrandisement, and a million other very human traits).


    Voluntary co-operation? If only! The UNSC would make its decisions by majority vote, and instantly the world's vast military expenditure would be channelled into education and poverty alleviation. (Actually I believe this will happen one day, by acceptance of rule of international law, on behalf of collective security, rather than 'voluntary co-operation' of individuals, although I wonder if a sufficiently well-educated global citizenry might indeed 'voluntarrily co-operate' to abolish the UNSC veto, which is undeniably the sane course of action.

    [Reminds me of the HG Wells dictum: Civilisation is a race between education and catastrophe]

    Of course government might be oppressive, but that is the challenge for intelligent men - the goal is the correct balance between antagonistic individual and collective interests. (Fancy a world without warranty law, or occupational health and safety labour regulations?)

    As for Spooner, his espousal of the independent capitalist as the behavioural ideal for the individual may have had something to commend it in mid 19th century America, but it is certainly obsolete in a post-industrial global economy.

    [And Constitutions do not need to be signed by everyone, in a representative democracy, as he contended].
     
  23. Ddyad

    Ddyad Well-Known Member

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    Gold is often in the eye of the beholder. ;-)

    “... Last fall, Rob Kirby of Kirby Analytics in Toronto reported that China’s central bank had discovered nearly 6,000 400-ounce gold-plated tungsten bars among those it had recently received from bonded warehouses. It was later learned that at least four counterfeit bars at other locations were found and that all had come from sources within the United States, including Fort Knox, according to the Chinese investigators.

    As suspicions grow about counterfeit bars among those held in bonded warehouses for delivery against either COMEX or London Bullion Market Association contracts or shares of exchange-traded funds, investors could panic. It is believed this could be the reason for the blackout on news coverage in the United States on this story except for AFP. ...” http://www.americanfreepress.net/html/gold_bar_scam_215.html
     
  24. Econ4Every1

    Econ4Every1 Well-Known Member

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    A couple of things. It makes no difference "what a couple of MMT theorist say" with respect to what MMT as a concept actually describes and more than it matters what the Westborough Baptist Church has to say about Christianity.

    People that understand MMT can be wrong.....

    Having said that. I assure you that, as someone who has spoken to Warren Mosler several times (the person acknowledged to have created MMT as we know it today), no one that understands MMT thinks; "many MMT theorists propose that taxation can and will approach zero.".

    People who are new to MMT have been known to say; "taxes doesn't pay for spending", which is true, but they take that to mean taxes aren't necessary, which is false.

    Taxes don't pay for spending (something that is true) is not the same as saying taxes aren't necessary at all. Can you see the distinction?


    Which is no different than saying every society that there have ever been have failed. That just states the obvious and then commits the fallacy of assuming the conclusion that the reason societies using fiat failed was because of the use of fiat, all while ignoring the fact that every society that has used a commodity system has also failed.

    With all due respect, and I mean that, you continue to expose your ignorance on the topic.

    The "gold standard", a time when you could convert your dollars for gold, ended in 1934. From 1934 to 1970 the amount of money in the economy was "backed by gold" (dollars weren't convertible to gold at this point), but that did not prevent the government from creating all the money it wanted as long as it removed it somewhere else. Which is why the top tax rate in the 1940's was 94%!!!

    I want you to imagine me taking a deep sigh.

    Yes, that is what it's called and it's a stupid name and widely disliked by those that understand it for exactly this reason. People like you, who don't understand anything about MMT will use the "it's just a theory" defense when discussing its alleged shortcomings. There is another branch of MMT called Modern Money Reality. Does the name of the concept really change how you feel about it?

    Yep, economics is hard, except MMT isn't really pointing you in a direction. MMT simply helps you understand where you are, where you are standing so that you can point in a direction and make claims with some understanding.

    If you think the world is flat or that the sun rotates around the earth, you will make poor assumptions based on those ideas.

    MMT proports to tell you that, from an economic point of veiw, you think the sun goes around the earth economically. Ironically, people are responding the same way today as they did when they found out the earth went around the sun.
     
    Last edited: Mar 20, 2017
  25. Econ4Every1

    Econ4Every1 Well-Known Member

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    Please don't feed the self admitted troll....

     

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