MMT: overcoming the political divide.

Discussion in 'Economics & Trade' started by a better world, Mar 12, 2020.

  1. a better world

    a better world Well-Known Member

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    It's interesting that no-one on Bill Mitchell's MMT blog disagreed with me when I wrote:

    "Sovereign currency-issuing governments can issue debt-free money".

    And if Mosler's statement: "and the $ is a government liability - a tax credit, and your asset that can be used to pay taxes"

    is merely saying the dollar is a government liability from the POV of the taxpayer, not from the POV of the government, then there is no contradiction between my statement and Mosler's.

    [The government, of course, unlike you and I, doesn't NEED the stuff, since it can issue money as appropriate to achieve policy choices (within national resource and productivity constraints), and in that sense money is not a liability to the government itself. I'm hoping Mosler would agree with this].

    But hopefully we are close to resolving the present debate over the nature of money....indeed reality is difficult to define at times...

     
    Last edited: Jul 8, 2020
  2. a better world

    a better world Well-Known Member

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    Krystal Ball telling it like it is:

     
  3. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    She says "there's no going back to the lies and mythology that we had about the economy".
    I think she's wrong, I think people will lap it up again.

    I've been around the planet for a few years and seen this.

    The vast majority of people are too mentally lazy to form their own opinions about something that's too complicated for them to comprehend; and most of the ones that do are crackpots and aren't able to piece together a coherent understanding that's pragmatic or effectual.

    No, what's going to happen is busy people will lap up the information from somewhere they casually read or see it.
    You can sell the public on any idea that's half-plausible that way.

    Notice how much focus there is on the stock market, and how that almost seems to be the indicator for the economy. Well maybe that's an understatement; that does seem to be the indicator of the economy. When you look at the people that are making the decisions and have power over disseminating the information, the reason starts becoming obvious.
     
    Last edited: Jul 11, 2020
  4. a better world

    a better world Well-Known Member

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    Agreed. Though to be fair to Krystal, she does admit to not being sure when people will finally recognize the sham.

    Meanwhile the share-market is the only game in town during this pandemic, and is a great little hussle if you have some cash and are lucky; though be aware the P/E ratios have no relation to reality.....

    I'm still hoping covid-19 will bring the whole sham crashing down (as governments run up $trillions in rescue package debt), but unfortunately the virus will probably have to kill a lot more people in the first world, to bring about Krystal's envisioned public enlightenment, when orthodox economists will no longer be able to lie to the public that there is no alternative (TINA).

    Meanwhile, it's getting bad in the developing world, where governments don't have the money to support their populations in a lock-down, despite the fact they can print the ****ing stuff, and given there is no actual shortage of food.

    Heard on the radio today: 2020 won't be remembered for a health crises in many of these countries, but for a famine that killed many more people than the virus itself, as they starved to death in locked-down economies.

    http://bilbo.economicoutlook.net/blog/?m=20200709

    The – Report of the Special Rapporteur on extreme poverty and human rights – for the UN was released this week (July 7, 2020). It was Philip Alston’s last report in that role. It is a shocking indictment of the way neoliberalism has distorted our societies and the way the governments with the capacity to ‘move mountains should they wish’ have been co-opted as agents of capital and perpetuate those distortions. The Report is 19 pages of horror.

    In a world of plenty.....
     
  5. Zorro

    Zorro Well-Known Member

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    Krazy Krugman advocating for Magic Money Theory is good thing?

    LOSIN’ IT: Paul Krugman Tightens Tin-Foil Hat in Latest Bizarre Attempt to Prove Trump Will Try to Steal Election.

    Nuts.

    [​IMG]
    Suffers from "Orange Man Bad" Brain Rot.​
     
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  6. a better world

    a better world Well-Known Member

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    Just for context, I thoroughly debunked (in my post #581) the Scarlet Witch post to which you replied here.

    She's a dyed-in-the-wool neoliberal no-hoper. She didn't like my reference to the fact Paul Krugman has now changed his mind re acceptable levels of government debt, in our now - apparently for the foreseeable future - low interest rate environment.

    Krugman is nevertheless still a neoliberal who denies the capacity of currency-issuing governments to issue money without taxing or borrowing from anyone in the private sector, a capacity that should most definitely be utilised in the present non-inflationary pandemic environment, to avoid forcing a too early reopening of the economy. (Government can support the locked-down economy for as long as is required, without taxing or borrowing the money).

    But certainly Witchie must be horrified by Trump's massive deficits, with tax cuts and QE mostly benefiting rich individuals and corporations.

    Of course Trump's huge deficits - though poorly targeted, are exactly what is required at the moment to keep the economy alive and avoid another GD.

    As for Krugman's theories about how Trump will attempt to steal the election, we will see soon enough.

    Surely with Mary Trump's revelations in her latest book, and high ranking members of the military - and even Bolton (!) all speaking out against Trump, and the current polls suggesting Trump can't win, perhaps even a rebound in the economy before November won't save Trump....
     
    Last edited: Jul 17, 2020
  7. scarlet witch

    scarlet witch Well-Known Member Past Donor

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    pffft... you debunked nothing... all you have is helicopter money theory, the problems we are dealing with today emerged with Greenspan, there really isn't anything they can do now to change direction, they're going to print us into oblivion. By all means put your faith in them & their fiat currency... I'm already hedging against them.

     
  8. bringiton

    bringiton Well-Known Member

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    That's just clearly false.
    No, they have been present literally for centuries; Greenspan merely assumed the problems were solutions.
    Yes, that seems to be the only way to rescue the super-duper uber-rich from their own greed, rapacity and folly.
     
  9. a better world

    a better world Well-Known Member

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    Ah...the Anarchist wet dream of "free currency" (eg Bitcoin).

    It's a non-starter: the government won't accept Bitcoin as payment for taxes.....and Anarchism would take as back to the stone-age.

    But I'd advise you to be careful with your hedging against a (US) currency collapse..... given the foreseeable low interest, low inflation and notional full-employment being maintained by the fed reserve at all costs, including deficits as far as the eye can see,....

    People (expecting a rise in interest rates) who bet against the Bank of Japan - which had began issuing unlimited government debt to finance sale of government bonds, after the Tokyo property crash in the 1990's - lost their shirts.
     
    Last edited: Jul 18, 2020
  10. scarlet witch

    scarlet witch Well-Known Member Past Donor

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    I will 100% NOT take your advice, as far as I'm concerned no one should keep their wealth in fiat currency, it should be kept in assets, like gold, real estate, silver, Bitcoin. (Real estate obviously overvalued so just hold what you have if you can, don't go shopping)
     
    Last edited: Jul 19, 2020
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  11. a better world

    a better world Well-Known Member

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    Note: real assets, inc housing. (yes, it's overpriced in OZ at the moment, but it affords you shelter and utility).

    Non-real resources: money, whether fiat or otherwise.

    But government always can ensure the productive capacity of the economy remains at or near potential.

    That's why MMT states the fact of the matter:

    A sovereign currency-issuing government is constrained by resources and productive capacity, NOT money.

    Your view of gold, silver, and bitcoin (none of which you can eat) as a repository of 'value' is obsolete in the modern world.
     
  12. TedintheShed

    TedintheShed Banned

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    Correct. Sound investments. All fiat in the history of the world has collapsed. Neo-chartalist theory can not change that. It's always failed. It always will. To quote the great Milton Friedman, "Inflation is always and everywhere a monetary phenomenon.". As long as inflation exists, those resources will always hold value.
     
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  13. a better world

    a better world Well-Known Member

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    Friedman...... belonging to the obsolete classical - neoliberal school, wrote:

    "Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society".

    Note the underlined above: here he is actually groping toward the MMT principle that the resource/productivity constraint IS the inflation constraint, NOT money.

    Because the "output" limit refers to real goods and services, not money....though Friedman might not have understood the concept in that manner.

    So..... inflation is the chief concern to discredit MMT; but in a modern AI, IT and robot assisted economy, government can always keep track of the productive capacity of every producer in the economy (a bit like continuous 'stocktaking') rather than being at the mercy of "invisible hand" markets ALONE...which always and increasingly results in soaring inequality, entrenched poverty, flat-lining median wages while CEO pay has increased from 30 times to 300 times median wages over the last 4 decades of neoliberalism etc etc.

    All magnified in this pandemic, in which underemployment will remain at catastrophic levels for an extended period.

    And disadvantaged blacks are still being incarcerated at high rates cf whites...

    The solution is a job guarantee, given we know by now that poverty level welfare only increases social disadvantage, and that the government can act as employer of last resort. given that there is an unlimited amount of socially useful work to be done, and no actual lack of resources that would prevent implementation of a JG.
     
    Last edited: Jul 20, 2020
  14. scarlet witch

    scarlet witch Well-Known Member Past Donor

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    :lol:
     
  15. a better world

    a better world Well-Known Member

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    Your view on government debt is also obsolete:

    The Australian government cannot run out of Australian dollars.
    It can print too many which would cause inflation; but in this pandemic it would be a catastrophic mistake to worry about the size of the deficit which is required to support unemployed workers during the enforced lockdown of the economy.

    Alan Kohler is the latest MS commentator to understand this, and though Fran Kelly* would like to get hysterical about "eye-watering deficits", the fact is government deficits are necessary to avoid another great depression.

    *she still thinks government budgets are like household budgets, but of course households are users, not issuers of the currency

    And ...the money doesn't have to be borrowed or "repaid in the future"; that's just evil neoliberal mythology which will finally be exposed as such in the coming years when neoliberal economists try to impose unnecessary austerity on the nation, post pandemic.
     
    Last edited: Jul 22, 2020
  16. TedintheShed

    TedintheShed Banned

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    FB_IMG_1595954099843.jpg FB_IMG_1595954103951.jpg
     
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  17. bringiton

    bringiton Well-Known Member

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    Some mystery. The Treasury and the Fed have been printing trillions of dollars and throwing them at the super-duper uber-rich. It's all they know how to do. Meanwhile working people are forced deeper into debt. It's not rocket science.
     
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  18. TedintheShed

    TedintheShed Banned

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    Precisely. Central banking and the Fed had been sapping the wealth of the middle and lower class for 100 years.
     
  19. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Let me explain how this is done, in a little more detail exactly. The Fed buys financial assets from rich people, as part of their "quantitative easing" policy (expansion of the money supply, it goes under different names). The Fed also lends out money to rich people at below normal interest rates, as part of their policy to try to lower interest rates in the economy. These rich people then take this money, buy up some investments, and make a profit. (That's the oversimplified explanation, it's a bit more complicated)

    Obviously none of this is targeted specifically at "the rich", but it is obvious that these policies will be throwing money out there very much in proportion to how much money someone already has out there.

    Remember, when the Fed wants to "help the economy", some people own a double share of this "economy" relative to someone else.
     
    Last edited: Jul 29, 2020
  20. a better world

    a better world Well-Known Member

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    And the Fed should not be doing any such thing! The fed doesn't need to buy "financial assets". it can create all the finance it wants, subject to resources available for purchase and the nation's productive capacity. The government can, however, tax those rich people if they are placing too much demand on resources.

    Well, bully for rich people. They should be made to work for their money like everyone else!!

    Yes, the present neoliberal system stinks to high heaven.

    If only the covid virus was strong enough to destroy the private-debt based system ....when even rich people could not be raided for dosh.....

    Then we would at last see treasury and reserve bank simply changing numbers in peoples' bank accounts, so they can buy food....
     
  21. bringiton

    bringiton Well-Known Member

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    The only asset it should be buying is federal debt, in order to permanently retire it in exchange for debt- and interest-free fiat money.
     
  22. a better world

    a better world Well-Known Member

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    Agreed. We live in interesting times......this pandemic might just be the 'trick' to drive that message home, judging from the '2nd wave' that appears to be developing around the globe.
     
  23. bringiton

    bringiton Well-Known Member

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    Sorry to say, I disagree. The educational foundation has not been laid. Not one person in 100 -- maybe not one in 1000 -- understands how the debt money system turns any economic difficulty into an emergency, and a crisis like COVID-19 into a global economic catastrophe. This is not an accident. Bankers do not want people to understand the debt money system, and have made sure that they do not:

    “It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” -- Henry Ford
     
  24. TedintheShed

    TedintheShed Banned

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    .

    Gold breaks $2000 for the first time in history


    FB_IMG_1596691538312.jpg
     
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  25. a better world

    a better world Well-Known Member

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    Given orthodox neoliberalism in the US, the US currency might begin to look shaky as the US borrows $trillions in this pandemic…..the Chinese currency might begin to look much more stable, if China understands they can issue their own currency debt-free, provided they keep an eye on the inflation constraint, which is the resource and productive capacity restraint, not a yuan constraint.
     
    Last edited: Aug 7, 2020

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