MMT: overcoming the political divide.

Nowhere yet.

But Lerner's 'functional finance', MMT's predecessor, might have been implemented in Britain in 1946 if it were not for the exigencies of the Cold War, since Lerner's theory was embraced by Keynes near the end of his (Keynes') life (in 1943).

However, there are indeed present geopolitical reasons why MMT has not been adopted, not to mention the loss of power that presently accrues to capital, under neoliberalism.

Now we will see what the present GLOBAL crisis spawns, when governments will do what they must, to prevent mass unemployment(see post #25, above).

Hint: the GFC was 'merely' a financial crisis; this present pandemic will cripple large sections of the REAL economy......

 

It's not and you were wrong.

 

Comprehension problems?

"Can be changed" doesn't resolve to "it's not"...

Try again.

 

You said "is".
You were wrong.

Lots of things can be changed to lots of things.

 

So it's untested.

Why would that be? I would expect many countries, particularly poor ones, would be happy to create enough money for all their citizens to live well. What's holding them back?

 

1. The financial class - owners of capital and their bankers - want to maintain the present neoliberal system which ensures most of the nation's productivity goes to them.

[Note: the 'NAIRU' concept itself is a neoliberal construct presupposing a buffer pool of unemployed workers to control inflation, despite the fact real continuous full employment - not the present false concept of full employment - is perfectly achievable].

So the answer is: "greed", and maintenance of their power.

2. Poor nations in particular would need assistance from an international agency (which doesn't exist), because their governments often lack certain resources or technological knowhow required for development of their economies ie any attempt to spend their way to prosperity will merely create hyperinflation.

……..

But the coming days will be extremely interesting as governments everywhere confront a crisis based, not on financial industry failure, but on collapsing employment in the real economy. QE and monetary policy won't be able to deal with this situation.

 

Can you identify where I said "is"?

Exactly. That is my point.

So the arrangements for a consolidated treasury and central bank can be established, just as the Dems CAN be elected - though not assured - which is a different thing based on politics.

But the point of the OP remains: why do you insist the public sector be dependent on the private sector (by taxing or borrowing from the private sector), thus perpetuating the Left-Right divide, when MMT describes an alternative method of funding the public sector?

Of course, the Right don't want to pay higher taxes, while the Left don't want government services to be cut....

 

So you think MMT policy is too complicated for third world countries to figure out? Can't someone mail them Kelton's book?

 

That's not what I said.

Unlike the first world which CAN implement universal full employment at above poverty level via a MMT understanding - because the resources, and knowhow exist to achieve this outcome; the situation in the 3rd world IS subject to a lack of resources and "technological knowhow" to COMPETITIVELY produce goods and services on the world market.
Nothing to do with knowledge or lack of knowledge of MMT, but everything to do with the productive capacity of 3rd world nations.

 

Three Canadian economists asserted that politicians deliberately decided to make the Canadian economy appear bankrupt on paper for a number of reasons...... .one of which was so that they could blame all of their inaction on The Deficit!

What do you think of the idea of using the COVID 19 crisis as a good time to promote variations on MMT?

COVID 19 and introduction of an unconditional income supplement

 

you said the central bank is an agency of the government. Are you denying ?

these two quotes are mutually exclusive
This is how the finance class and its government whores make lots of money and consolidate power.
Pigs will fly out of my butt before the treasury and the FED are consolidated.

 

This is distasteful. Your understanding of economics is nil. Your whole approach is based on copying and pasting guff fed to you by finance capitalism that funds the false libertarian sites that give you a semi.

 

Totally agree; perhaps we will see that governments have no choice, as jobs disappear on mass (= no income for workers!)

Professor Bill Mitchell has examined this closely:

http://bilbo.economicoutlook.net/blog/

"The coronavirus will redefine what currency-issuing governments can do – finally".

And, more significantly, the ideologues are giving way to the pragmatists in the policy space. Almost!(see below). The sudden realisation that even Germany will now spend large amounts to protect their economy exposes all the lies that have been used in the past (up until about yesterday) to stop governments doing what they should always do – maintain spending levels in the economy to sustain full employment and ensure no-one falls through the cracks and misses out on the material benefits of growth.

MMT prefers a Job Guarantee available to anyone of working age who wants work, in the form of a variable pool of workers with a guaranteed above poverty wage, funded by the government (which becomes the 'employer of last resort').

Normally such a buffer pool of workers would be a small proportion of the (usual public and private) workforce.

[The JG has the advantage (over a UBI) of preserving incentive, and acknowledging the universal desire to contribute to and participate in the economic - and social - well being of the nation.
Importantly, individual morale-destroying welfare could be almost entirely eliminated].

However, as you say an unconditional income supplement

may also be necessary for workers to pay ongoing bills in the coming weeks and months, since the pool of unemployed workers may simply be too large for even a Job Guarantee scheme to absorb. ​

 

But that has nothing to do with MMT, allegedly the topic of this thread. Of course first world countries are producing goods and services. Producing plenty of both is part of what makes them first world. But you can't even describe how exactly a first world country would implement MMT nor why third world countries would be excluded.

 

1. Mosler: ""The Chairman of the Federal Reserve Bank is telling us in plain English that they give out money (spend and lend) simply by changing numbers in bank accounts. There is no such thing as having to “get” taxes (or borrow) to make a spreadsheet entry that we call “government spending.”

2. I have already noted that MMT proposes consolidation of treasury and central bank into a consolidated government sector.

3. I cannot actually find where I said the central bank is an agency of the government, without qualification.

Can you assist? If you can actually point out where I said 'the central bank IS an agency of the government', I will retract that statement.

I will defer to Reiver post #37.....

That's just denying that an alternative political party might gain control of the treasury benches.

 

They do this at their member bank accounts, not the Treasury

What's a sector?

MIGHT, .....lots of things.
But likely not

 

1st world:

1. Sovereign governments CAN use their currency issuing capacity to guarantee universal above poverty employment, consistent with available resources and the productive capacity of the nation.

How difficult is that to understand?

(Remember the beaver, faced with building a dam? He didn't need to go to 'River Bank Co' to build the dam....)

2. 3rd world countries can do the same, but there is no guarantee they have sufficient resources to raise everyone out of poverty.

How difficult is that to understand?

(Though ideological blindness certainly make comprehension of simple concepts difficult, apparently.....)

MMT offers a way out of the Left-Right gridlock, since it bypasses the constant refrain from the Right: "How can we pay for it (without raising taxes)".

 

So Mosler has explained the mechanics of how governments create money - ex nihilo - not by taxing or borrowing.

The next step in MMT is to consolidate the Fed and the treasury into the government sector, which will operate along side the private sector

Addressed above.

We will see....see Dennis Tate's post #35 and my reply post #36 above.

Interesting times ahead...

 

"Run out of money" is just an expression. But it conveys a true meaning, even if it is not technically accurate itself.
It may be more accurate in this situation to say they will run out of spending power.
If you print more money, people will simply demand more money to provide the same services.

Can you explain to me exactly what MMT is, in its essence? because right now, it's sounding like an excuse for the government to spend more money and do it by causing more inflation.
That's been tried in numerous parts of Latin America and Africa, with disastrous consequences.

 

Thank you for the link... I quoted from it over here as well as on my Facebook wall and in a group already.



http://www.politicalforum.com/index...ent-for-all-canadians.569587/#post-1071517396

 

I've honestly tried to understand MMT, and to me it sounds like pure stupidity. And I am good at understanding complex economic theories.

From what I've read, it makes about as much sense as Anarchism. (yes, I know that's a harsh criticism)

Maybe its unfair of me to suspect supporters of MMT of ulterior motives, but I suspect they might just be trying to use it as an excuse for the "gimme" mentality, wanting free money.

The same way that economists in recent years have warped and twisted Keynes' original suggestion into an excuse for free money any time things go bad. (Keynes actually suggested the government SAVE money for a rainy day, but apparently that little part has gotten forgotten about)

 

This may be helpful:

https://theglobepost.com/2019/03/28/stephanie-kelton-mmt/

There was hyper-inflation during the President Lincoln era because the money supply had been increased to..... hire Americans to stop producing.... and shoot cannons and rifles and muzzleloaders at each other........ So.. .an increase in the money supply at the same time as a decrease in productivity leads to serious inflation but..........
our productive capability in 2020 is very high.... so an increase in the money supply put into the economy will not necessarily lead to inflation unless we end up producing stuff that people do not want...... .such as was done in Russia and in many other nations.

 

1. A real full employment economy with above poverty minimum wage is not "free money".

2. the neoliberal economy is just an assertion of 'merit based' reward, in the private sector "invisible hand" market ALONE, without recognising everyone has something to contribute to the nation's well being, though not necessarily in a competitive, profit-driven market model of production and distribution (given the widely differing capacities and capabilities of individuals).

MMT offers a solution to the gridlocked Left-Right divide, since it answers the constant refrain from the Right, namely "how will we pay for it", without requiring taxation before the government spends. The Left of course are also concerned with how government services will be funded...but the Left is less averse to taxes than the Right. Guess why......

Re MMT: refer to Kelton's excellent explanation, linked by Dennis Tate, above, and reproduced below:

https://theglobepost.com/2019/03/28/stephanie-kelton-mmt/

Keynes' ideas were evolving rapidly after he wrote his seminal post-Great Depression work "The General Theory on Employment, Interest and Money", in 1935. By 1943 he had become acquainted with Abba Lerner's Functional Finance theories, which are the forerunner of MMT. (And Keynes became quite the internationalist, with his proposal for a post WW2 "clearing union" to which all nations would belong, presented at the Bretton Woods conference in 1944, but rejected by the Americans...

 

But you said you were going to achieve that by printing more money, didn't you?

Well I'm not going to disagree with you there, but what does this have to do with money & this monetary theory of yours?

The Right doesn't support inflation.
(in theory, fundamentally, ideologically, in practice may be a whole different matter)

It really seems to me you are just peddling inflation as an alternative to taxation, in dressed-up terms. I hope I am wrong about that.

 

I see you haven't read the simple one-page question and answer explanation of MMT presented by Kelton, in the link first provided by Dennis Tate above.
If you do, you will see "printing money" in MMT is heavily qualified/curtailed.

Read the article, then we can debate the points in that explanation, one by one, if you wish, and then see how an extended role for both the public sector (eg with a JG), alongside private sector employment, is necessary to maximise the productive capacity of the economy.

Addressed above.

Neither does MMT; inflation is a core concern in MMT, as you will see if you read the page noted above.