MMT: overcoming the political divide.

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

  1. kazenatsu

    kazenatsu Well-Known Member Donor

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    And you think throwing more money into the mix is going to increase supply?


    Will you at least admit there will be some inflation when it comes to prices of non-essentials?
     
    Last edited: Apr 3, 2020
  2. bringiton

    bringiton Well-Known Member

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    Free, secure access to economic opportunity? Certainly. I'm all over that action. Wages they aren't productive enough to earn? Nope.
    No argument made. What do you incorrectly imagine is the problem with what you erroneously take to be my world view?
    No doubt there are people who can't manage, and a civilized community will provide for them. But that is charity, and chosen by the people democratically, not a RIGHT that is owed as a matter of community obligation.
    Not everyone does have something to contribute, and not everyone deserves above poverty participation..
    Monetarism is irrelevant.
    You have provided no factual or logical reason to think so.
     
  3. a better world

    a better world Well-Known Member

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    Like I said, your world view ie price is more important than value - is THE problem.

    That you don't even understand the difference - price v. value - derives from your classical liberal roots. I have to keep informing you: classical liberalism with its primacy of the individual over community well being (the latter implying no entrenched poverty), is an OVER-REACTION to the despised principle of the divine right of kings, which the 18th century New World settlers were escaping from.
    Equity demands above poverty participation, when the resources are available.

    https://www.forbes.com/sites/johntharvey/2019/03/05/mmt-sense-or-nonsense/#6f8dce845852

    The Core Problem to be Solved

    1. There is no reason to expect the private sector to provide a job for everyone who is willing to work. Indeed, for the private sector, labour is a cost that needs to be minimized. This isn’t a criticism, it’s just the incentive structure to inherent that part of our economy.
    2. We have the ability to produce goods and services on a level never before seen by human society. There is no logical reason anyone (e.g., the unemployed) should have to go without. It is immoral.


    "Immoral"...ie inequitable....get it now?

    All exposed above...….and correctly addressed.

    Just the sort of ideological based view I would expect from you, as already explained above.

    People "who can't manage" are very few, though ability to compete and succeed in price driven markets is another issue altogether; OTOH, most everyone has something of value (via their labour) to contribute to the nation's well-being eg environmental maintenance, caring for the elderly etc.

    Notice your monetarist worldview is behind everything you say. True wealth creation - food, housing, factories, education, technological advance desirable goods is actually a small part of the (largely junk) consumer economy.

    You have it back to front; everyone has the Right AND the Responsibility to participate in the nation's economic well-being.

    I agree....in the sense that money can be issued by the currency issuer at will and as required.....

    https://www.rollingstone.com/politi...coronavirus-fed-bank-bailout-disaster-976086/

    The Fed “balance sheet” as of Friday was already at $5.3 trillion, nearly $800 billion higher than its previous peak in May 2016. Wall Street analysts are predicting this number will eventually reach $10 trillion, and why not? Fed chief Jerome Powell signalled that assistance would be unlimited when he said the central bank would not run out of ammunition."

    ….it seems even Powell has been reading up on MMT...

    Well..the TWO new links above might cause you to reconsider....
     
    Last edited: Apr 4, 2020
  4. a better world

    a better world Well-Known Member

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    We are talking about the present emergency, correct?

    Supply of what?

    Government issuing money to pay for food and accommodation of unemployed workers, who suddenly don't have an income, will NOT add to total money supply in the economy (since the issued money merely replaces lost wages); what is your point?

    Ah...I see; but if Amazon says: "sorry, item temporarily unavailable", there will be no extra 'demand' (as economists conceive the term) for such non-essentials, that could cause inflation.
     
    Last edited: Apr 4, 2020
  5. bringiton

    bringiton Well-Known Member

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    I suppose price could be considered "more important" in the sense that it records an actual event rather than just a potential. I do think actual events are more important than possible events.
    I understand the difference very clearly: value is what something would trade for, price is what it did trade for. I suspect it is you who do not understand that.
    If by "entrenched" you mean multi-generation, then I don't believe there is any conflict between valuing the equal individual rights of all and valuing community well being.
    IMO justice is more important than "equity" (whatever that means).
    No. There is a very good logical and moral reason some people should go without: they choose to impose costs on society greater than their contributions. What is immoral is injustice.
    I don't think you can defend that view of what is immoral without a very stretchy concept of "inequitable."
    And duly refuted.
    <sigh> I try to take people at their word. Don't say, "everyone" if you mean, "most everyone." Clear?

    Having something potentially of value to contribute is not the same as choosing to contribute it rather than try to take from the community without contributing.

    Oh, read some statistics. Here:

    https://www.nber.org/digest/dec00/w7833.html
    But not always the CAPACITY and the DESIRE. GET IT????
    Running out of ammo is not the Fed's problem. Shooting at the wrong side is its problem.
     
    Last edited: Apr 4, 2020
  6. a better world

    a better world Well-Known Member

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    We had that debate on another thread. (Debating you on this is like debating the arch libertarian longshot).

    Assisting the elderly to remain in their own homes is as 'valuable' to the nation's well-being, as bottling grog in a factory, for sale in a market.
    Actually, when stated like that, we can see where true "value" resides......

    Certainly there need not be any conflict between rights of individuals on one hand, and community prosperity, with U6 c. zero.

    People do NOT "choose" anything of the sort, but our present neoliberal monetary system makes it appear as if they do.

    Justice = moral; injustice = immoral.

    Prof. Harvey: "There is no logical reason anyone (e.g., the unemployed) should have to go without. It is immoral".

    Prof. Harvey accepts it is also the responsibility of all individuals to participate, according to ability.

    Again, it's our present neoliberal monetary system that results in placing the blame for "immorality" on the (unemployed) victims of it.

    What's your problem? I said "most everyone" to account for your "people who can't manage".
    I'll make it clear: "people who can't manage" ARE NOT the subject of this debate, except in your imagination of what people are worth, according to ability to compete in "invisible hands markets"

    Nobody sets out to steal, though the classical economics system, as well as your geoism (since you are arguing for reward based on the ability to compete rather than Marxist need), is certainly the cause of much demoralisation and criminality, since it fails to recognise 'value' that we all possess in our various abilities...though sometimes the state will have to assist the individual to realise his potential, rather than simply locking people up.

    I mean: regarding money as a real commodity. It is not. Money is unlimited; as Mosler explains, it is like points scored by opposing sides in a ball game. The supply of 'points' is unlimited for as long as the game goes on; in MMT terms, as long as the resources, knowhow and labour are available.

    Now you are really scraping the bottom of the barrel. That article was about productivity growth over the last century, NOT about how that productivity growth has actually been utilised eg in supplying profit driven, vast, junk consumerism.

    Already addressed above. Everyone has the capacity to contribute; and as to desire...well, we would all rather do other things than 'clock on' every day; but we all know - after the expulsion from the Garden of Eden- "in the sweat of thy face shall you eat bread"...

    Much better in a civilised community that government guarantees a job (via a JG); whether in the competitive, profit-seeking private sector, or in the social-value driven , "employer of last resort" public sector.

    In the case of the quote, ie, supporting the Wall Street ponzi casino, I agree the Fed is misplacing its support.

    However, the important point at this stage is for the general public to understand the currency-issuing capacity of the Fed + treasury.

    The present crisis might just be the event that forces amendments to the Fed Reserve Act, as government debt soars toward the $gazillions, to keep the economy - and the people - alive.
     
    Last edited: Apr 4, 2020
  7. a better world

    a better world Well-Known Member

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    http://bilbo.economicoutlook.net/blog/?p=44572

    “We need the state to bail out the entire nation”

    "Major developments across the globe in monetary and fiscal policy keep happening on a daily basis at present. We are now hearing conservatives, who previously made careers out of claims that government deficits would send nations broke and more, appearing in the media now claiming “We need the state to bail out the entire nation”. Not too many economists are pushing the line that the market will deal with this crisis. They all the want the state to be front and centre as their own personal empires (income etc) becomes vulnerable. In a normal downturn there is not much sympathy for the most disadvantaged workers who bear the brunt of the unemployment. Now it is different. This crisis has the potential to wipe out the middle classes and the professional classes. And suddenly, who would have thought – the nation state is apparently back, all powerful and being begged to intervene. It is wake up time. Now no-one can be unclear about the fiscal capacity of the state. They now know that politicians who claim they don’t have enough money to do things were lying all along.
    ..............
     
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  8. a better world

    a better world Well-Known Member

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    http://bilbo.economicoutlook.net/blog/?p=34315

    Helicopter money is a fiscal operation and is not inherently inflationary

    [Note: This article is long, and comprehensively explores fiscal and monetary operations. The following short extract deals with inflation itself, as described in MMT.]


    No-one...…. is suggesting that a government would continue expanding nominal spending via ever-growing deficits once an economy had reached full capacity and full employment. It is obvious that if such a strategy was pursued then ever-increasing inflation would be the result.


    This is because firms cannot squeeze any more real output out of the resources in use.

    Alternatively, when there are idle resources (such as unemployed labour and machines), an expansion of nominal spending will likely be mostly absorbed by higher production (real output) and firms will be highly reluctant to try to increase prices for fear of losing market share to other firms in the sector.

    Most importantly, growth in nominal spending can continue even when the economy is operating at full capacity as long as it matches the growth in that productive capacity and doesn’t strain the capacity of the economy to respond to the extra spending with output growth."
    ............

    As you can see, Bill covers the inflation problem fairly well in that post; any spending, private or public, is potentially inflationary. The important thing is the availability of sufficient resources on which to spend the money.

    But given this proviso, sovereign governments can use their unlimited currency issuing capacity, to fund given policy without causing inflation. (In MMT, taxation is used to constrain private sector spending, if required to cool an overheating sector/s in the economy. Taxation is not required to fund a currency-issuing government).
     
  9. a better world

    a better world Well-Known Member

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    Stephanie Kelton rightly asks: Is there a worse economist in the world?

    https://www.reuters.com/article/us-...y-says-laffer-conservative-fave-idUSKCN21Q3AT

    Cut salaries, taxes to reopen U.S. economy says Laffer, conservative fave
    Ann Saphir, Jeff Mason

    WASHINGTON (Reuters) - Republican economist Art Laffer, an architect of the Reagan era tax cuts that paved the way for historic budget deficits in the United States*, has a plan to rejuvenate today’s pandemic-crippled economy.

    Tax non-profits. Cut the pay of public officials and professors. Give businesses and workers who manage to hold on to their jobs a payroll tax holiday to the end of the year.

    What about the extra aid funnelled to newly jobless workers by the $2.3 trillion fiscal rescue package? Such government spending, Laffer told Reuters in an interview, will only serve to deepen the downturn and slow the recovery.

    Laffer is also being floated in influential right-wing circles as a good candidate to head a proposed new industry task force aimed at re-opening the U.S. economy as soon as possible. “Bring in the minds like Art Laffer,” Sean Hannity, the Fox News host said April 6 of the proposed task force.

    Trump tweeted his support for the new economic task force on April 4, calling it a “good idea.” He hasn’t yet mentioned Laffer, but on Tuesday reiterated his support for a payroll tax cut, saying it would be a “fantastic time” to deliver it.

    Thank God for the underlined bit.

    More unfunded tax cuts? But how does he fund the estimated $6 trillion Fed support package?












     
    Last edited: Apr 10, 2020
  10. a better world

    a better world Well-Known Member

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    from a New York relief worker, delivering food in poor districts:

    What people are watching right now, is what happens when you don't invest in poverty alleviation for generations''
     
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  11. Reiver

    Reiver Well-Known Member

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    For right wing corruption of economics, that probably goes to Lucas. Laffer just managed to make a mockery of himself, given the 'Laffer Curve' is found to be multipeaked and therefore offers as much an argument for tax rises.
     
  12. kazenatsu

    kazenatsu Well-Known Member Donor

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    How do you define "full capacity".

    I feel you have still not adequately explained yourself. Why do you think more money will allow an economy to reach closer to full capacity?
    Why do you feel this additional money will not have an inflationary effect that will, alternatively on the other hand, reduce production?

    I want you to think about this, because you have still not explained this very well.

    I'm trying to follow your argument, but a lot of it seems circular, and doesn't really seem to end up anywhere.

    And then you make many claims, with explanations that do not really explain the heading.
     
    Last edited: Apr 10, 2020
  13. kazenatsu

    kazenatsu Well-Known Member Donor

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    No, it does not "merely replace lost wages". You also have reduced production in the economy because those people are not working.
    By adding money, you are trying to keep demand at the same level while the supply has been reduced. That will just get you inflation.
     
  14. Reiver

    Reiver Well-Known Member

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    Nothing increased unemployment more than monetarism. Indeed, its the very reason we saw hysteresis in unemployment.
     
  15. kazenatsu

    kazenatsu Well-Known Member Donor

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    Reiver, could you please explain to us why a little bit of gradual deflation is bad?

    Why are you complaining about monetarism when the US and almost every other country have had gradual incessant inflation?
     
  16. Reiver

    Reiver Well-Known Member

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    Why would I? I don't do Econ101

    This is a nonsensical question. I'm complaining at how folk still are corrupted by the zombie ideas. Monetarism is no different to right wingers whining about immigration. Same old make believe kack designed only to justify the status quo.
     
  17. kazenatsu

    kazenatsu Well-Known Member Donor

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    Econ 101 does not explain why a little bit of deflation is bad.

    So what? It's obvious those ideas are not being put into practice anywhere if there is inflation everywhere.
     
  18. bringiton

    bringiton Well-Known Member

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    Yes it does: people stop spending money because it will be worth more if they wait. Demand crashes, production and employment follow. It's especially dangerous in the debt-money system of finance capitalism because of the positive feedback effect.
     
  19. a better world

    a better world Well-Known Member

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    Definition of full capacity: All the nation's resources including labour are continuously and sustainably employed to maximise production of wanted goods and services.

    Note: a public sector is required to operate alongside the private sector to realise this outcome, because "invisble hand" markets are subject to destructive, as well as creative, competitive forces. Hence the term 'market failure'.

    More money available to be spent BY GOVERNMENT will take up the slack left by the private sector which never achieves real full employment. (involuntary U6 + those who have given up looking for work, eg in the US, this never got below c.10% after the GFC.).

    Because I don't accept the absurd quantity theory of money. Utilisation of unused resources including labour by means of government spending, to take up private sector employment and resource-use (capacity) slack, will not cause inflation if the economy can absorb the extra spending, ie if the economy has the productive capacity to increase output of goods and services the public want to buy (including eg 'free' tertiary education for those with the capacity to benefit from it).

    [In this post, let's leave aside the issue of reduced production (of non-essentials) during the enforced pandemic shutdown]

    See above: you have previously claimed "money has to come from somewhere". I'm telling you money is created 'ex nihilo' , whether by government issue, or by deposit creation in private banks (when credit worthy customers are granted loans by the bank manager).

    Maybe we have to look more closely at this issue of money created 'ex nihilo'?

    Yes, I can see the problem if you don't grasp the basic issue of what money is (it's a measuring device) and how it is created (it's created ex nihilo).

    Understand that, and then you will see that resource management, not money management* is the key to prosperity.

    * meaning money management by government, on behalf of the community; OTOH, the key concern for private citizens IS the management of their OWN money, since they cannot legally issue their own money.

    It's incredibly important that you do understand this. Neoliberal monetarism is loved by the rich of course, because - as we have seen over the last 5 decades - it shovels more and more money to the top. MMT would return power to the people through their elected government, so that government can oversee and promote resource utilisation for the benefit of all, not just the rich.
     
    Last edited: Apr 10, 2020
  20. Reiver

    Reiver Well-Known Member

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    You've said nothing. Of course that's because you're reliant on a poor understanding of zombie economics. And you have the arrogance to pretend you can critique MMT? Nope, that ain't going to happen.
     
  21. Zorro

    Zorro Well-Known Member

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    Gee, government planners instead of having to convince Citizens of their plans, just print up their own currency and do it. Our purchasing power obtained by sweat and labor, competing against their unrestrained purchasing with money they create by pushing a button, available in unlimited amounts? Of course they love it! And of course we would be idiots to stand for it.

    [​IMG]
     
  22. Reiver

    Reiver Well-Known Member

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    Capitalism has always been reliant on government planning, as illustrated by how infant industries were protected in order to allow economic development. Didn't you know?
     
  23. Lil Mike

    Lil Mike Well-Known Member

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    Ha!

    Exactly the argument I've seen on Facebook. Only they're serious.
     
  24. Reiver

    Reiver Well-Known Member

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    The added political economic comment here is astounding.
     
  25. Zorro

    Zorro Well-Known Member

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    Yes. One of our challenges in this ongoing experiment in self-government is the inability to get Congress to obey our will, rather than their own on Federal Spending. MMT (Which just the old Chartilism) completely severs the link between Government spending power and our assent. If you can get an opportunity to look at some of the discussions between proponents, it's a amazing the things they have planned in order to implement the socialist agenda, starting with seizing industries by simply printing out enough money to outbid everyone else. The Green New Deal is basic framework for their plans. One of the things they are quite interested in is buying up the coal industry and then idling it.

    Now, human nature being what it is, we all know that their cronies will move heaven and earth to acquire those industries before being bought out by the Government that then idles it. Many fortunes will be made in just this first step. And then this goes on and on and on.

    They don't think Amazon has enough diversity in their workforce? Fine, they buy it, and no longer driven by profit motive because they can print all the money they need, they set it up with the "diversity" that appeals to their voting base, all staffed with constituents with cushy jobs that depend on maintaining their power. The purpose of the company is no longer to provide us the goods we want delivered to our doorstep, the purpose now is maintaining the workforce, and keeping them happy enough so that they enjoy their political support. So, the purpose has shifted from pleasing us to pleasing the folks who control the printing presses, and this goes on and on and on and on. One industry after another.

    Humans have been coining money for 5,000 years, but these folks think they are the first ones to ever consider "Hey, let's print up a bunch of money and do whatever the hell we want!"

    Bottom line, there is no restraining them, and it is through restraining government that we preserve our freedom and liberty for ourselves and our posterity.
     
    Last edited: Apr 11, 2020
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