3 ms·

Any mirrors? This seems to be a good topic as MMT keeps coming up. Newb question here: People that "advocate MMT" are basically saying it's fine that our defic

Any mirrors? This seems to be a good topic as MMT keeps coming up. Newb question here: People that "advocate MMT" are basically saying it's fine that our deficit keeps rising because geopolitics and inflation/tax control? And the people disturbed by that actually want our existing tax structure to start making headway against the debt instead of increasing it? And secondary question to this, is MMT a mostly left theory (because we need to pay for the free stuff)? I'm not trying to cause arguments I just want to make sure I got how people see this issue.

StuntPope 8y ago
https://medium.com/@markjeftovic/the-disturbing-rise-of-modern-monetary-theory-mmt-aefeeab9dde2 https://medium.com/@markjeftovic/the-disturbing-rise-of-mode...
kortilla 8y ago
Yes, it seems to be mostly supported by the left in the Sanders/Cortez camps. It’s very convenient to not have to pay for anything when proposing monumental social programs.
- breakyerself 8y ago
  They both support tax increases. Perhaps not enough to cover the full bill when it comes due, but it's wrong to say they don't intend to do anything to pay for it. They tend to cover their proposed spending increases better than republicans try to cover their tax cuts.
  - kortilla 8y ago
    Not the proposals from Cortez. They aren’t even close to balanced. The tax increases for the rich seem to be more vindictive than any attempt to balance the budget.
pja 8y ago
No, MMT is pretty much how the monetary system operates in modern fiat currency economies where the government both prints and taxes in a currency they control. The essential insight is that taxes & spending are not joined at the hip - the only real constraint on total expenditure in a fiat economy is inflation. It’s not a particularly leftist idea - the right has tacitly treated government spending in this way for decades. It was Dick Cheney who said “deficits don’t matter” after all. The author of this article is confused: hyperinflations are a symptom of collapsing economies, not a cause in and of themselves. Having external debts that you can’t default on in a situation where your economy is shrinking is what drives hyperinflation. Look at every major hyperinflation (Weimar Germany, Zimbabwe etc etc) and you’ll see those are the drivers of hyperinflation.
- candiodari 8y ago
  Not at all. Another way of looking at money is that money represents value. It's a way of abstracting everything against each other. And let's ignore that that abstraction breaks as soon as you're talking even medium amounts of money, because we can. The total amount of money commands a fixed set of resources. Increasing the amount of money in circulation does not matter at all for reality. It's just an abstraction. An accounting fiction. If the government spends, there's someone else not using those same resources the government's now using. Even the Soviets didn't control 100% of the money supply. I once read that it was about 99.6%. And in both the Weimar and the Zimbabwe (and Venezuela) examples, it is very much the case that the government made the economy collapse, not the other way around. So yes, it is definitely possible to cause hyperinflation through government spending.
  - pja 8y ago
    Weimar Germany had to pay reparations which were not denominated in Marks. Zimbabwe had to import food, which had to be paid for in $. Neither had an economy that was capable (at the time) of sustaining these payments. Hyperinflation was the inevitable result.
    - candiodari 8y ago
Spooky23 8y ago
There’s no left or right in these discussions. Sometimes it seems that way because of rhetoric, but at the end of the day we need inflation, as without it the incentive to add value grind away.

StuntPope 8y ago

https://medium.com/@markjeftovic/the-disturbing-rise-of-modern-monetary-theory-mmt-aefeeab9dde2 https://medium.com/@markjeftovic/the-disturbing-rise-of-mode...

kortilla 8y ago

Yes, it seems to be mostly supported by the left in the Sanders/Cortez camps. It’s very convenient to not have to pay for anything when proposing monumental social programs.

breakyerself 8y ago
They both support tax increases. Perhaps not enough to cover the full bill when it comes due, but it's wrong to say they don't intend to do anything to pay for it. They tend to cover their proposed spending increases better than republicans try to cover their tax cuts.
- kortilla 8y ago
  Not the proposals from Cortez. They aren’t even close to balanced. The tax increases for the rich seem to be more vindictive than any attempt to balance the budget.

pja 8y ago

No, MMT is pretty much how the monetary system operates in modern fiat currency economies where the government both prints and taxes in a currency they control. The essential insight is that taxes & spending are not joined at the hip - the only real constraint on total expenditure in a fiat economy is inflation. It’s not a particularly leftist idea - the right has tacitly treated government spending in this way for decades. It was Dick Cheney who said “deficits don’t matter” after all. The author of this article is confused: hyperinflations are a symptom of collapsing economies, not a cause in and of themselves. Having external debts that you can’t default on in a situation where your economy is shrinking is what drives hyperinflation. Look at every major hyperinflation (Weimar Germany, Zimbabwe etc etc) and you’ll see those are the drivers of hyperinflation.

candiodari 8y ago
Not at all. Another way of looking at money is that money represents value. It's a way of abstracting everything against each other. And let's ignore that that abstraction breaks as soon as you're talking even medium amounts of money, because we can. The total amount of money commands a fixed set of resources. Increasing the amount of money in circulation does not matter at all for reality. It's just an abstraction. An accounting fiction. If the government spends, there's someone else not using those same resources the government's now using. Even the Soviets didn't control 100% of the money supply. I once read that it was about 99.6%. And in both the Weimar and the Zimbabwe (and Venezuela) examples, it is very much the case that the government made the economy collapse, not the other way around. So yes, it is definitely possible to cause hyperinflation through government spending.
- pja 8y ago
  Weimar Germany had to pay reparations which were not denominated in Marks. Zimbabwe had to import food, which had to be paid for in $. Neither had an economy that was capable (at the time) of sustaining these payments. Hyperinflation was the inevitable result.
  - candiodari 8y ago

Spooky23 8y ago

There’s no left or right in these discussions. Sometimes it seems that way because of rhetoric, but at the end of the day we need inflation, as without it the incentive to add value grind away.