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Well, the true is that most economic textbooks are wrong about, for instance, how banks and money creation works. This is a fact. If you don't believe me, go to

Well, the true is that most economic textbooks are wrong about, for instance, how banks and money creation works. This is a fact. If you don't believe me, go to your favourite orthodox textbook and read the relevant chapters and then read this from the Bank of England (that is what MMT have always said): http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf http://www.bankofengland.co.uk/publications/Documents/quarte... Nobody is saying that inflation is not real, what MMT is saying is that public deficits are arbitrary. In fact, in a way, what MMT says, precisely, is that inflation is the only limit. The funny thing is that you are not, I think, disagreeing with me, because your answer is about inflation, not about public debt. We hear politicians and economists talking about the big problem of public debt and the policies they want to implement to solve it, and it doesn't make sense. I hope you keep them to the same standard that you keep the MMT people.

Bartweiss 10y ago
Thanks for the reply, I actually understand way better where you're coming from now. Wray's piece threw me a bit, but I can see what you're objecting to. Apparently I got lucky with my basic econ education and didn't get these ideas pushed too strongly. I didn't actually know "intermediaries re-lending deposits" was taught as anything more than a way to explain banks to children. The reserve requirement theory I did learn, and had never seen deconstructed clearly. I knew that the reserve rate didn't determine money supply, but realizing that central banks offered reserve loans clears up why it's not a problem. Very simply, it looks like I underestimated how badly this is often taught. All of which is to say, it appears we do agree. Inflation and the consequences of negative interest rates are the only problems with ongoing money creation. I have mixed reactions to MMT, but I'm absolutely disdainful of "erase the debt now!" fear-mongering. With still-minimal inflation and foreign bond interest paying more than American debt costs, there's really no cause for concern.

Bartweiss 10y ago

Thanks for the reply, I actually understand way better where you're coming from now. Wray's piece threw me a bit, but I can see what you're objecting to. Apparently I got lucky with my basic econ education and didn't get these ideas pushed too strongly. I didn't actually know "intermediaries re-lending deposits" was taught as anything more than a way to explain banks to children. The reserve requirement theory I did learn, and had never seen deconstructed clearly. I knew that the reserve rate didn't determine money supply, but realizing that central banks offered reserve loans clears up why it's not a problem. Very simply, it looks like I underestimated how badly this is often taught. All of which is to say, it appears we do agree. Inflation and the consequences of negative interest rates are the only problems with ongoing money creation. I have mixed reactions to MMT, but I'm absolutely disdainful of "erase the debt now!" fear-mongering. With still-minimal inflation and foreign bond interest paying more than American debt costs, there's really no cause for concern.