3 ms·

So MMT is terrible because it prints money and will be a catastrophe, but measures like QE are fine because it prints money to bail out the financial sector but

by dv_dt 8y ago

So MMT is terrible because it prints money and will be a catastrophe, but measures like QE are fine because it prints money to bail out the financial sector but isn't that large a catastrophe?

kortilla 8y ago
The difference is that money had to be paid back. Issuing loans is significantly different than the government taking on arbitrary amounts of debt and spending it all.
- dv_dt 8y ago
  Uh, I think you are possibly mistaking TARP (which did need to be paid back) for Quantitative Easing (which did not). QE wasn't a loan, and the assets purchased by the Fed only recently started being returned, and there is no requirement to repurchase the assets by the same entity they were purchased from.
StuntPope 8y ago
Make no mistake, the bailouts were a catastrophe and NOT fine. The author says as much: "Compared to what I see as the inevitable “dual death spirals of MMT”, letting all those banksters fry in 2008 looks a lot more palatable in retrospect. David Stockman’s Great Deformation shows how the economy would have fully recovered by 2010 or 2011 instead of being where we are now: trapped at the Zero bound and headed toward democratic socialism and MMT."
manfredo 8y ago
Quantitative Easing was essentially the same thing, to a degree (increasing the money supply). But it was done so with the specific goal in mind, to keep key financial institutions from collapsing. It was also done during a period relatively low inflation, and was done in low enough rates that inflation did not substantially rise. By comparison, MMT is basically telling the government to use quantitative easing to pay for everything. When you really dig down into it, the proponents of MMT know exactly how deceptive the scheme really is. They fully understand that it's allowing the government to pay for whatever it wants by printing money and letting the populace lose their savings due to larger inflation. And it fails to address immediate shortcomings: namely the fact that people will stop accepting payment in dollars if the government starts rampantly increasing inflation.
- dv_dt 8y ago
  I think that's an unfair characterization. For one, doesn't a dollar of QE cause just as much inflation as a dollar of MMT? MMT doesn't say to ignore inflation - it thinks inflation is a key measure to keep an eye on just like the current system - it just says that taxes and debt bonds should be used as independent control parameters from deficit.
  - manfredo 8y ago
    > I think that's an unfair characterization. For one, doesn't a dollar of QE cause just as much inflation as a dollar of MMT? In theory, yes. In practice, not at all. Recessions are exigent circumstances, and no one was under the impression that the government would continue increasing the supply of money to pay for arbitrary things. Not to mention, the bulk of this quantatitive easing took place during two years were we saw deflation - so increasing the money supply was something the government would have likely done anyway. By comparison, if the government announced that starting in 2020 it would start paying for everything by printing more money then the first thing that will happen is that smart, wealthy, people will just move their assets into things other than dollars. Like resources futures, which are independent of inflation. The people who actually take on the burden of taxation are people who don't have the means or know-how to manage their assets. So the result is probably that poor and middle class people are even worse off.
    - dv_dt 8y ago
      > Not to mention, the bulk of this quantatitive easing took place during two years were we saw deflation - so increasing the money supply was something the government would have likely done anyway. This is just underlining my question. If the congress were operating with an MMT view of the world, they could have injected money into beneficial social program without handwringing over deficits, avoided QE. Regular people would have more wealth in their hands, and less money would be running around the stock market inflating assets. We would have a healthier economy today. > By comparison, if the government announced that starting in 2020 it would start paying for everything by printing more money This isn't what MMT says to do, it keeps taxation as a control parameter, it just wouldn't be singularly obsessed about the budget deficit.

by dv_dt 8y ago

So MMT is terrible because it prints money and will be a catastrophe, but measures like QE are fine because it prints money to bail out the financial sector but isn't that large a catastrophe?

kortilla 8y ago

The difference is that money had to be paid back. Issuing loans is significantly different than the government taking on arbitrary amounts of debt and spending it all.

dv_dt 8y ago
Uh, I think you are possibly mistaking TARP (which did need to be paid back) for Quantitative Easing (which did not). QE wasn't a loan, and the assets purchased by the Fed only recently started being returned, and there is no requirement to repurchase the assets by the same entity they were purchased from.

StuntPope 8y ago

Make no mistake, the bailouts were a catastrophe and NOT fine. The author says as much: "Compared to what I see as the inevitable “dual death spirals of MMT”, letting all those banksters fry in 2008 looks a lot more palatable in retrospect. David Stockman’s Great Deformation shows how the economy would have fully recovered by 2010 or 2011 instead of being where we are now: trapped at the Zero bound and headed toward democratic socialism and MMT."

manfredo 8y ago

Quantitative Easing was essentially the same thing, to a degree (increasing the money supply). But it was done so with the specific goal in mind, to keep key financial institutions from collapsing. It was also done during a period relatively low inflation, and was done in low enough rates that inflation did not substantially rise. By comparison, MMT is basically telling the government to use quantitative easing to pay for everything. When you really dig down into it, the proponents of MMT know exactly how deceptive the scheme really is. They fully understand that it's allowing the government to pay for whatever it wants by printing money and letting the populace lose their savings due to larger inflation. And it fails to address immediate shortcomings: namely the fact that people will stop accepting payment in dollars if the government starts rampantly increasing inflation.

dv_dt 8y ago
I think that's an unfair characterization. For one, doesn't a dollar of QE cause just as much inflation as a dollar of MMT? MMT doesn't say to ignore inflation - it thinks inflation is a key measure to keep an eye on just like the current system - it just says that taxes and debt bonds should be used as independent control parameters from deficit.
- manfredo 8y ago
  > I think that's an unfair characterization. For one, doesn't a dollar of QE cause just as much inflation as a dollar of MMT? In theory, yes. In practice, not at all. Recessions are exigent circumstances, and no one was under the impression that the government would continue increasing the supply of money to pay for arbitrary things. Not to mention, the bulk of this quantatitive easing took place during two years were we saw deflation - so increasing the money supply was something the government would have likely done anyway. By comparison, if the government announced that starting in 2020 it would start paying for everything by printing more money then the first thing that will happen is that smart, wealthy, people will just move their assets into things other than dollars. Like resources futures, which are independent of inflation. The people who actually take on the burden of taxation are people who don't have the means or know-how to manage their assets. So the result is probably that poor and middle class people are even worse off.
  - dv_dt 8y ago
    > Not to mention, the bulk of this quantatitive easing took place during two years were we saw deflation - so increasing the money supply was something the government would have likely done anyway. This is just underlining my question. If the congress were operating with an MMT view of the world, they could have injected money into beneficial social program without handwringing over deficits, avoided QE. Regular people would have more wealth in their hands, and less money would be running around the stock market inflating assets. We would have a healthier economy today. > By comparison, if the government announced that starting in 2020 it would start paying for everything by printing more money This isn't what MMT says to do, it keeps taxation as a control parameter, it just wouldn't be singularly obsessed about the budget deficit.