4 ms·

"MMT is largely nonsense, sorry." You have not rebutted any content in either of the articles I posted. "Inflation would be the immediate result" I said that

"MMT is largely nonsense, sorry." You have not rebutted any content in either of the articles I posted. "Inflation would be the immediate result" I said that inflation is a risk, as does every MMTer. The conversation we should be having is "how much inflation is really at risk here?" And inflation has been, in fact, quite elusive for a long time. A bit of inflation would be a good thing. "such a policy" What policy? MMT is not a policy, it's a description of the way the economic system already functions. It's an explanation of why the Federal Reserve can engage in $4 trillion of QE and not cause inflation to budge. It's an explanation of why the US federal government can run $1 trillion annual deficits and not cause interest rates to skyrocket. It's most definitely not nonsense. "No such thing as a free lunch" It's not free. The government is paying for it, and will later collect that money back in tax revenues. That's the way the government buys anything.

ikeboy 8y ago
The first is just saying you can borrow as long as nominal growth exceeds the interest you need to pay. Sure, but that doesn't mean you can borrow an infinite amount, since as you borrow more interest will rise. "What policy" you're advocating for printing money to spend regardless of the cost, which means costs will certainly rise. If you want to have the "is the current inflation target optimal, or should we have a higher one" debate, don't pollute it by implying that spending doesn't matter. I agree the with the second article that the risk is inflation, not bankruptcy, but that doesn't mean it's not a real risk or that we should have larger deficits.
- jganetsk 8y ago
  Of course spending matters. MMT is in agreement. Here's the main public advocate of MMT tweeting that: https://twitter.com/stephaniekelton/status/1044313733600874496 https://twitter.com/stephaniekelton/status/10443137336008744... Before we continue this discussion, you need to define "printing money". Because I will provide the definition: in the MMT worldview, printing money is synonymous with government deficit spending. Can we agree on that definition? Ok, then inflation is a controllable problem. Because what I'm suggesting is increasing government spending to pay for Medicare. That's like... pushing on a gas pedal. It can create inflation. Now, there are 2 ways to deal with inflation: 1) Stop pushing on the gas pedal. Cut spending. 2) Raise taxes. That's like pushing on the brakes. Because my definition of "printing money" is "deficit spending", and raising taxes lowers the deficit. So we shouldn't be afraid of inflation, because it is something we can control. And if we start by spending first on Medicare, and then taxing later to control inflation... then we've stabilized the size of the deficit while growing the overall size of the federal government budget. And there's Medicare for All.
  - ikeboy 8y ago
    No, you can print money without spending. Central bank is independent.
    - jganetsk 8y ago
      I'm not sure what we are really arguing about at this point. I'm claiming that the government would increase deficit spending to pay for Medicare For All. If you want to discuss the impact of having a larger government deficit, I would agree with you that inflation is the potential risk. We can have that discussion. I'm probably more optimistic about the risk of inflation and the effectiveness of mechanisms for controlling inflation. If you want to discuss government debt default risk for a country that prints its own currency, MMT and many mainstream economists says it is zero. If you want to discuss technical constraints on the size of the deficit for a country that prints its own currency (through mechanisms like bond vigilantes, etc) MMT would say there is no constraint. There is plenty of evidence to support this. Just look at what's happening with the US federal government deficit right now. If you want to discuss what fraction of GDP is appropriate for government spending, that's an interesting conversation and would be curious to hear your thoughts. Central banks are a necessary mechanism, as you point out, and need to do their job well. But the main questions in this debate are around fiscal policy, not monetary policy.
krupan 8y ago
That's a little better explanation than, "The US federal government does not face an affordability constraint in dollars. It can pay for anything it wants..."

ikeboy 8y ago

The first is just saying you can borrow as long as nominal growth exceeds the interest you need to pay. Sure, but that doesn't mean you can borrow an infinite amount, since as you borrow more interest will rise. "What policy" you're advocating for printing money to spend regardless of the cost, which means costs will certainly rise. If you want to have the "is the current inflation target optimal, or should we have a higher one" debate, don't pollute it by implying that spending doesn't matter. I agree the with the second article that the risk is inflation, not bankruptcy, but that doesn't mean it's not a real risk or that we should have larger deficits.

jganetsk 8y ago
Of course spending matters. MMT is in agreement. Here's the main public advocate of MMT tweeting that: https://twitter.com/stephaniekelton/status/1044313733600874496 https://twitter.com/stephaniekelton/status/10443137336008744... Before we continue this discussion, you need to define "printing money". Because I will provide the definition: in the MMT worldview, printing money is synonymous with government deficit spending. Can we agree on that definition? Ok, then inflation is a controllable problem. Because what I'm suggesting is increasing government spending to pay for Medicare. That's like... pushing on a gas pedal. It can create inflation. Now, there are 2 ways to deal with inflation: 1) Stop pushing on the gas pedal. Cut spending. 2) Raise taxes. That's like pushing on the brakes. Because my definition of "printing money" is "deficit spending", and raising taxes lowers the deficit. So we shouldn't be afraid of inflation, because it is something we can control. And if we start by spending first on Medicare, and then taxing later to control inflation... then we've stabilized the size of the deficit while growing the overall size of the federal government budget. And there's Medicare for All.
- ikeboy 8y ago
  No, you can print money without spending. Central bank is independent.
  - jganetsk 8y ago
    I'm not sure what we are really arguing about at this point. I'm claiming that the government would increase deficit spending to pay for Medicare For All. If you want to discuss the impact of having a larger government deficit, I would agree with you that inflation is the potential risk. We can have that discussion. I'm probably more optimistic about the risk of inflation and the effectiveness of mechanisms for controlling inflation. If you want to discuss government debt default risk for a country that prints its own currency, MMT and many mainstream economists says it is zero. If you want to discuss technical constraints on the size of the deficit for a country that prints its own currency (through mechanisms like bond vigilantes, etc) MMT would say there is no constraint. There is plenty of evidence to support this. Just look at what's happening with the US federal government deficit right now. If you want to discuss what fraction of GDP is appropriate for government spending, that's an interesting conversation and would be curious to hear your thoughts. Central banks are a necessary mechanism, as you point out, and need to do their job well. But the main questions in this debate are around fiscal policy, not monetary policy.

krupan 8y ago

That's a little better explanation than, "The US federal government does not face an affordability constraint in dollars. It can pay for anything it wants..."