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

    Joined:
    May 8, 2016
    Messages:
    3,161
    Likes Received:
    410
    Trophy Points:
    83
    In the meantime, ONLY the government issuing* - or borrowing - its own currency can prevent people from starving in this pandemic.

    *government (via treasury, reserve, and tax office) should simply change the numbers in the bank accounts of unemployed workers - rather than borrowing the money - as indicated by MMT.
     
    bringiton likes this.
  2. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,401
    Likes Received:
    302
    Trophy Points:
    83
    Do you have any idea how the Chinese government came into possession of trillions of US dollars that they use to buy US treasuries?
     
  3. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,401
    Likes Received:
    302
    Trophy Points:
    83
    Yeah, I think there is more to this story. China allows productivity to leave China because it's a way to skirt tariffs. products are assembled in china to a 90%+ state of completion and then shipped to other nations where they are finished in that nation. Now the product can wear a badge that says made in (insert nation that is not China)

    Virtual coins are largely traded as investments, not money. They have no intrinsic or extrinsic value and are purely speculative and in the long run, virtual currencies will always live in the shadows of government currencies.
     
  4. bringiton

    bringiton Well-Known Member

    Joined:
    Mar 11, 2016
    Messages:
    5,748
    Likes Received:
    512
    Trophy Points:
    113
    An investment yields a return. Virtual money "assets" do not. They are purely speculative hedges. In most cases, as with $#!+coin, their intrinsic supply characteristics are deflationary, meaning that their owners are rewarded for hoarding them rather than spending them. So they can never function effectively as money.
    I'm not sure no virtual currency can ever replace fiat money. Never is a long time. But it's certain that none of the ones currently on offer have any prospect of doing so. They can be of some use where the local fiat money is trash.
     
  5. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,401
    Likes Received:
    302
    Trophy Points:
    83
    Agreed, I should have said they treat them like investments, but I agree with you, purely speculative, a legal ponzi scheme.

    In any nation that has a functional government, I find it extremely unlikely that in the near future that virtual coins will replace sovereign money. That said, I could see a virtual money that is created and used as a universal money that all countries use (like gold prior to 1933) to trade into an out of (instead of the US dollar or other nations currency). I think the appeal would be the decentralized nature of virtual money. Of course for something like this to be possible, it would have to be bullet proof from a security standpoint. Something that might be possible when quantum computing becomes a widespread reality. There are lots of other problems that would have to be overcome, but I can see the possibility.
     
    Last edited: Aug 31, 2020
  6. Quadhole

    Quadhole Well-Known Member

    Joined:
    Nov 30, 2016
    Messages:
    1,434
    Likes Received:
    543
    Trophy Points:
    113
    Gender:
    Male
    Yes, we send it to them buying goods, trillions of dollars worth. The Reagan / Bush Admin started this in the 1980s. That is when the American Jobs started heading over. Art Laffer,, Trumps recent medal of Freedom winner was the cause, or part of it. Supply Side economics, huge tax cuts for the RICH to STIMULATE the economy. All was to be put back to NORMAL at the end of Reagans term. Then Bush ran on "no new taxes" that is when the deep Propaganda we see today from the RW think tanks started. He was telling working class people, "no new taxes" yet he only meant it for the millionaires at the time. Those 20000 millionaires are now Super Filthy rich from not paying tax for 40 years.

    What do have next ?
     
  7. Quadhole

    Quadhole Well-Known Member

    Joined:
    Nov 30, 2016
    Messages:
    1,434
    Likes Received:
    543
    Trophy Points:
    113
    Gender:
    Male
    Eurozone has been preparing for a long time. Most of their Stronger Govt's have Enough Gold to back their GDP. The IMF may Try to work with the Euro to do what you say, but it has to be backed to be Trust worthy and proper fundamental. It amazes me that our leaders have allowed the dollar to be destroyed. All the benefits go to 1M people and it crushes the rest of our country. It will be our demise.
    Trump recent "cut payroll taxes" shows just how out of touch with reality he is thru Larry Kudlow and Navarro. As if, we just dont need the money. He is directly buying votes with those statements. The Economy is in the toilet and we are just papering it over. Glad to see good HONEST chat in this section. The rest of this site is propaganda vs truth.
     
  8. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,401
    Likes Received:
    302
    Trophy Points:
    83
    The Chinese government does not make goods, it's a government. Chinese businesses make goods.

    So the question stands, how does the Chinese government end up with so many US dollars?
     
  9. bringiton

    bringiton Well-Known Member

    Joined:
    Mar 11, 2016
    Messages:
    5,748
    Likes Received:
    512
    Trophy Points:
    113
    Government-owned businesses in China make a LOT of goods.
    The Chinese government issues Chinese money, the Chinese companies trade their American money for the government's Chinese money. Not rocket science.
     
  10. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,401
    Likes Received:
    302
    Trophy Points:
    83
    Sure, but that doesn't account for $3 trillion dollars in USD holdings. Holdings for Chinese government-owned companies hold capital like any other multinational company.

    For some it is. This question came in response to A better Word saying "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."

    The fact is China already issues its own money, but instead of using most of it to invest in its own economy, it invests in ours. It buys our currency to maintain it's peg and increase exports and thereby decreasing its own unemployment rate and increasing all the things that go with the sort of growth that comes with its massive productivity sector.
     
  11. a better world

    a better world Well-Known Member

    Joined:
    May 8, 2016
    Messages:
    3,161
    Likes Received:
    410
    Trophy Points:
    83
    ??

    The Chinese government has invested in the largest high-speed rail network in the world. Must be worth many trillions of dollar equivalent (yuan)

    But you are right, the Chinese government via the PBC issues and spends its own currency into the economy, something Powell would like to do, post this pandemic.

    Like I said to scarlet witch, if China understood MMT, there would be NO unemployment in China.

    Note: private sector wealth creation alone results in misallocation of resources every bit as serious as communist misallocation of resources. MMT enables wealth (money) creation in both the pubic and private sectors, via both planning (public) and individual (private) self-interest. The electorate should get a say in determining the balance of the private/public allocation.
     
  12. a better world

    a better world Well-Known Member

    Joined:
    May 8, 2016
    Messages:
    3,161
    Likes Received:
    410
    Trophy Points:
    83
    Last edited: Sep 6, 2020
  13. a better world

    a better world Well-Known Member

    Joined:
    May 8, 2016
    Messages:
    3,161
    Likes Received:
    410
    Trophy Points:
    83

    (From an article written by Bill Mitchell, 15/9/20)


    "There is no limit to government debt issuance – if you have your own currency"


    Professor Bill Mitchell (of MMT fame) has just been awarded a fellowship by the Japan Society for the Promotion of Science.

    http://bilbo.economicoutlook.net/blog/?p=45871

    Bill gave a MMT lecture in the Japanese Diet (Parliament) last year; it seems Japan has taken note.

    The incoming PM Yoshihide Suga stated - in answer to a journalist's question: is there a limit to bond issuance? - "I don't think so".


    [Japan's national - not private - debt is 240% of GDP, yet Japan has low unemployment, zero interest rates and low inflation, all discrediting the dogma of neoliberal orthodoxy, which claims Japanese inflation should be rampant, given those figures].
     
    Last edited: Sep 16, 2020 at 1:41 AM
  14. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,401
    Likes Received:
    302
    Trophy Points:
    83
    I didn't mean to say that all China invests in is the US dollar, just that China creates it's own currency and uses a large portion of it to purchase foreign reserves (currency). This is how it achieves its peg. To date, China as a whole has invested $3.2 trillion purchasing foreign reserves (in one form or another), the majority of which are US dollars.

    The point is, most people fear the creation and spending of currency, especially the fear that it creates inflation. Hopefully, you understand that currency creation does not, as a rule, create inflation.

    I think that could be true in many places. When you understand the power of sovereign currency-issuing government, you realize that the limitation isn't the number of dollars (or whatever the currency of a p[articular nation is), the limitations are grounded in real resources and labor that can be deployed and consumed or exported in a given nation.

    Yes, I'm very familiar with the writings of Keen and Mitchell. Thanks for that.
     
    Last edited: Sep 16, 2020 at 10:36 AM
  15. bringiton

    bringiton Well-Known Member

    Joined:
    Mar 11, 2016
    Messages:
    5,748
    Likes Received:
    512
    Trophy Points:
    113
    I like Keen, and he has a very astute critique of neoclassical economics; but he doesn't seem to understand that excessive debt is an inherent artifact of the debt money system wherein private commercial banks are legally entitled to create money in order to charge interest on it. That's what has to go. As long as private banks can shovel money into their own pockets by increasing the money supply, they will increase it too much in pursuit of unearned interest income. We have to require private banks to hold 100% reserves for demand deposits so they can't increase the money supply.
     
  16. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,401
    Likes Received:
    302
    Trophy Points:
    83
    Not exactly. Banks swap an asset for a liability.

    That is, when you borrow you sign a note promising to repay the amount borrowed plus interest. The note's value is principle+interest which the bank deposits at the full face value, however, as I'm sure you know, the bank's liability is the amount created and lent. Profit is the principal - principal + interest.

    Why does the bank deserve interest? Because the bank's investors took risk. When notes aren't repaid and/if adequate collateral does not exist, it's the bank's investors that lose money. Without the bank's investors, banks can't create money. Now if you want to argue that leverage ratios are too high, or investors are bailed out by the government when losses start to affect the economy overall don't deserve to be, that's a conversation worth having, but you make to sound as if banks just create magic money without risk.
     
    Last edited: Sep 16, 2020 at 9:18 PM
  17. bringiton

    bringiton Well-Known Member

    Joined:
    Mar 11, 2016
    Messages:
    5,748
    Likes Received:
    512
    Trophy Points:
    113
    Yes, exactly. Without reading further, I predict that you will now attempt to offer some sort of disingenuous rationalization for banks' parasitism. Watch:
    No, they do not. They CREATE a liability -- the loan proceeds, a demand deposit which is money -- in return for the borrower CREATING the loan asset with his signature. As the liability is money and the asset is not, that is a net increase in the money supply.
    The loan asset balances the loan proceeds liability. The bank books interest income as the loan is repaid, not all at once when the loan is made.
    GARBAGE. Lots of people take risks, and rent seeking behavior almost always involves risk even though rentiers do not thereby deserve anything. Criminals take more risks than pretty much anyone, but they do not thereby deserve anything. So you are objectively wrong: merely assuming a risk does not imply deserving anything. Only a contribution to production can EARN anything, and the banks' investors do not make any contribution to production. They merely exercise a rent collection privilege. They therefore deserve no interest income. They are simply rentiers, parasites, legalized counterfeiters. The only difference is that they pocket interest, not seigniorage.
    Just as it is the protection racketeer who loses money if his expenses -- paying thugs, maintaining his territory, etc. -- exceed his income when his victims do not pay up. By your "logic," that means a protection racket deserves its income.
    That is mere sophism: without its investors the bank would not exist in the first place, so obviously it could not create money. The relevant FACT is that the bank does not need investors' (or depositors') money to lend out because it CREATES the money it lends out, and can then BORROW reserves to cover the borrower's disbursements from the loan proceeds.
    They create money in order to charge interest on it. There is nothing magical about it, and I never claimed or implied that there was. Nor did I claim or imply that their rent seeking is risk-free. The risk is a problem the BANK CREATES FOR ITSELF by extending credit to the borrower and increasing the money supply in order to obtain its unearned interest income. The debt money system that provides them with their unearned interest income is itself the biggest risk because its positive feedback characteristic makes it inherently unstable. So to claim that banks somehow deserve interest income for shouldering a risk that they create themselves is logically, economically, and morally equivalent to rationalizing a protection racket by pointing out that the racketeer has expenses, he has to pay his thugs, he risks losing money if his victims don't pay up, blah, blah, blah.
     
    Last edited: Sep 16, 2020 at 11:24 PM
  18. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,401
    Likes Received:
    302
    Trophy Points:
    83
    There's a lot to criticize in the banking system and it's a conversation worth having, but as usual, you're rude and act like a petulant child. You have zero capacity to talk to people, rather you talk at them. Do us all a favor and go play Minecraft or Fortnight and let the adults talk.
     
    Last edited: Sep 18, 2020 at 10:30 AM
  19. kazenatsu

    kazenatsu Well-Known Member Past Donor

    Joined:
    May 15, 2017
    Messages:
    15,921
    Likes Received:
    4,727
    Trophy Points:
    113
    related thread about past long-term monetary policy in Japan and its effects:
    Is the USA heading the way of Japan
     
  20. kazenatsu

    kazenatsu Well-Known Member Past Donor

    Joined:
    May 15, 2017
    Messages:
    15,921
    Likes Received:
    4,727
    Trophy Points:
    113
    It is another example of the fallacy of composition.

    (logical fallacy that says what is true for the whole is not necessarily true for the parts)

    If I hand you $1 you are $1 richer (as an individual), but the society as a whole (even including you into that) are no better off.
    That additional $1 is not wealth, from the macro standpoint of the economy.
     
    Last edited: Sep 18, 2020 at 1:54 PM
  21. bringiton

    bringiton Well-Known Member

    Joined:
    Mar 11, 2016
    Messages:
    5,748
    Likes Received:
    512
    Trophy Points:
    113
    Sorry I proved your attempts to justify bankster parasitism were fallacious and disingenuous. My bad.

    But why do you try to justify it? Is it just that you don't understand how much economic and social harm the banksters' debt money system does, how many millions of lives it blights with poverty, how many people it murders every year? Do you really think rich, greedy, privileged parasites can extract trillions from the economy every year in return for nothing and there will be no victims?
     
  22. a better world

    a better world Well-Known Member

    Joined:
    May 8, 2016
    Messages:
    3,161
    Likes Received:
    410
    Trophy Points:
    83
    Thanks for the link.

    Abders Hoveland has obviously decided that Japan is a basket case, but as with all orthodox economic commentators, his analysis of both cause and effect is wrong.

    Hoveland: "Both countries tried to rescue their economies by offering near zero interest rates".

    Japan's emergence as a global manufacturing and exporting powerhouse in the 80's resulted in property in Tokyo reputedly being more valuable than the entire US.

    When that bubble burst in 1992, the banks were technically bankrupt, meaning a severe national depression could only be avoided by the government issuing massive public debt.

    But it was not a matter of "offering near zero interest rates"; people were in no position to borrow money no matter how low interest rates went.

    Japan DID rescue its economy and avoided a depression and mass unemployment; meanwhile orthodox economists have been predicting Japan's demise ever since, because of the huge increase in public debt (currently 240% of GDP).

    But the error in Japan - as long pointed out by Bill Mitchell's study of Japan since 1992 - is the continual attempts by orthodox economists to reduce this public debt by raising sales taxes....which only always snuffs out any economic growth. This is the real reason for Japan's lost decades; there was no actual reduction in Japan's massive productive capacity and export capability (as MMT observes: prosperity results from enabling real productive capacity and allocation of available resources, not manipulation of interest rates or other monetary processes).

    Meanwhile the US was rapidly becoming a debtor - as opposed to the surplus trading nation that is Japan, so the two nations are not comparable, as Hoveland attempts to argue, above.
     
  23. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,401
    Likes Received:
    302
    Trophy Points:
    83
    Yes, you made an argument and sullied it with your childlike behavior. To bad as I have some comments about it.

    Again, it's not what you say it's how you say it. If you want to claim victory without a conversation, again, more of what I'd expect from someone with the ego of a child. Now, you can go on acting like a child, that's your prerogative, but if you want to talk to this adult you're going to start acting like one.
     
    Last edited: Sep 21, 2020 at 3:08 PM
  24. bringiton

    bringiton Well-Known Member

    Joined:
    Mar 11, 2016
    Messages:
    5,748
    Likes Received:
    512
    Trophy Points:
    113
    Please quote the passages of my post that you claim are "sullied" by my "childlike" behavior. Or maybe you can quote me personally insulting you as you persist in personally insulting me....?
    I'm devastated...
    You mean, without compromise or concession to fallacy, dishonesty and evil?
    You are the one who persists in personally insulting me by your accusations of childishness, and I will thank you to remember it.
    OK, so all you have to offer is personal insults. Thought so.
     
  25. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,401
    Likes Received:
    302
    Trophy Points:
    83
    I didn't call you names, I mearly pointed out the child-like way you interact with others that disagree with you here on the forum.

    If you can't understand that, perhaps that's part of your problem.
     

Share This Page