6 ms·

A 600-Page Textbook About Modern Monetary Theory Has Sold Out

62 points by howard941 7y ago

awakeasleep 7y ago
I'm torn between whether this is 'good' because people are learning about seignorage and taxation through fresh eyes because everything is called something different, or if it's bad because it's an insane cult
- dang 7y ago
  I'm sure there's a good point underlying this but could you please follow the site guidelines and not be snarky on HN? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - shitgoose 7y ago
    believing in "something out of nothing" - yes, this is a cult.
    - dang 7y ago
      Ok, but we're looking for substantive comments here, not just labeling.
neonate 7y ago
https://outline.com/6ZH6md https://outline.com/6ZH6md
40acres 7y ago
MMT going mainstream is valuable because it's charging the conversation about what we really should be worried about in terms of fiscal policy. And the answer is inflation, if you want to know why we are still adding 200,000 jobs a year 10 years into our economic recovery it's because the Fed was too scared of inflation to signal that long term interest rates would remain low. The Fed should probably raise their target interest rate, especially if we are going to invest in green technology to mitigate climate change.
- SubiculumCode 7y ago
  I think it is helpful that the narrative is changing away from household debt model (gotta pay our bills) to a fiat model (we can always pay high debt owed in our currency, but we risk inflation). Please let me know where I bugger this. New money is either created through Federal fiscal spending or through loans (e.g., businesses). Because there is only so much monetary space in an economy beyond which inflation occurs, policies must choose between a mixture of fiscal spending (public works) and loans (private sector). 1. The prototypical fiscal conservative position is low taxes & low spending. 2. The prototypical fiscal liberal position is high taxes & high spending. Each of these policies can provide roughly the same monetary space for money creation through new loans, but can incur different problems (e.g. over/under regulation, over/under provision of services). 3. A low taxes & high spend policy could push on inflation, pushing out money creation via loans if maintaining inflation target (via raising interest rate). 4. A high tax & low spend policy could pull deflation, driving money creation via loans if maintaining inflation target (via lowering interest rate (but will there be customers?)). But none of this has to do with the "federal deficit is bankrupting us" arguments that have plagued our policy discussions. The shift in framing by MMT allows us to move away from debt towards how to most productively use new money creation. Some believe public works are productive. Some believe that businesses are most ready to use new money productively. hy does productivity matter? Apparently, from what I gather, when new money is used productively (creates value) it is less likely to be inflationary, perhaps because it creates new products and services instead of just driving demand. And the shift in focus allows us to focus on answering the important questions about how much money can be pumped into the economy (and to whom) before we see significant inflation, and relatedly, what are the real drivers of inflation. For example, money creation can create too many dollars chasing too few goods, but if there is an excess in supply/supply capacity, then you won't see inflation until there is an equilibrium. I suspect that our economy can run a lot hotter before we see a lot of inflation outside of housing, non-competitive markets, and healthcare. I'm just a guy that has read a few blogs on monetary policy. I'm probably wrong on a bunch of levels.
- notme77 7y ago
  Inflation moves money from the rich (who have assets) to the poor (who have debt). Can't have that...
habosa 7y ago
Reminds me of when Piketty's "Capital" was sold out everywhere. I was one of many people who bought it due to the hype. Apparently I was also one of many people who never read it: https://www.huffpost.com/entry/piketty-book-no-one-read_n_5563629 https://www.huffpost.com/entry/piketty-book-no-one-read_n_55... MMT is very "in" right now but most people won't finish a 600pg novel, let alone a texbook.
- xyzzyz 7y ago
  You should actually read Capital, if only for the interesting data series he collected there.
googlemike 7y ago
I found the article to be poorly written and confusing, at least in that it failed to answer the most simple question I had: "What is MMT?" The Wikipedia article seems far more useful: https://en.wikipedia.org/wiki/Modern_Monetary_Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory To quote the intro: "MMT advocates argue that the government should use fiscal policy to achieve full employment, creating new money to fund government purchases. The primary risk once the economy reaches full employment is inflation, which can be addressed by raising taxes and issuing bonds, to remove excess money from the system.[3] MMT is controversial, with active debate[4] about its policy effectiveness and risks."
- xyzzyz 7y ago
  So, like, have government spend money on whatever programs it wants, and issue enough bonds and collect enough taxes to keep inflation in check? It’s what we’ve been doing all along. Where is the novelty?
- mamon 7y ago
  This sounds exactly like how communist economy used to work in Poland before 1989: Governing communist party claimed to represent the common people, so we had government-mandated full employment - state-owned companies (the only kind there was) were employing people, whether they actually needed them or not. To finance that, government would print money, causing hyperinflation. Net result was: everyone had a job, everyone had a high (in nominal value) salary, but the money we had was worthles - you couldn't actually buy anything with it, because the store shelves were empty. Government had to ration all consumer goods, by introducing stamps (similar to foods stamps in the US). It is funny to see communism making its great comeback :)
  - mesozoic 7y ago
    You don't have to worry about rich people if all money is worthless I guess.
  - shitgoose 7y ago
    why downvotes? this is exactly how government-run economy works. i experienced it in USSR. if people think that by naming it MMT and dressing it in pseudo-theoretical jargon will somehow make it work - good luck with that. it is fascinating to watch how bastion of freedom is falling for this shit.
baddox 7y ago
> MMT argues that governments in control of their own currencies, like the U.S. and Japan, aren’t constrained in the ways standard economics says they are. They may risk stoking inflation or running out of resources if they spend too much -- but they can’t go broke. I'm a bit confused. My impression is that this is overwhelmingly the dominant view in mainstream political discourse. My impression is that, at least in the United States, it's considered fairly radical to talk seriously about significant spending cuts, balancing the budget, or even having the slightest concern at all about budget deficits or national debt.
- SubiculumCode 7y ago
  These are the things I've heard over and over and over in political discourse. Federal deficit clocks! omg China is owns us, We are gonna be bankrupt! All these are household budget ideas that do not fit with a fiat currency and debt denominated in your own currency.
- portroyal 7y ago
  Economics? Politics? le gasp Religion?!? Society says go find an echo-chamber and don't bother anyone. ¯\_(ツ)_/¯
- basementcat 7y ago
  My understanding is the most people in the USA (and their elected representatives) are totally in favor of budget cuts; they just don’t agree on exactly what to cut. Some liberals may want to reduce military spending and some conservatives may want to reduce social spending. As a compromise, both parties usually agree to increase spending on both.
- britch 7y ago
  I think talking about spending cuts and balancing the budget were pretty common not too long ago. It was a big part of Paul Ryan's speaker-ship.[0] Republicans (and some democrats) have used "balancing the budget" rhetoric, to justify cutting or refusing to expand wellware and social safety net programs. This has died down once they got into power because no one actually want to balance the budget (cutting military spending is not exactly a hit in republican strongholds).[1] So in a way you are right, no one is _seriously_ talking about balancing the budget, but people certainly were talking about it. [0] https://en.wikipedia.org/wiki/The_Path_to_Prosperity https://en.wikipedia.org/wiki/The_Path_to_Prosperity [1] https://www.vox.com/policy-and-politics/2018/12/10/17929460/paul-ryan-speaker-retiring-debt-deficits-trump https://www.vox.com/policy-and-politics/2018/12/10/17929460/...
austenallred 7y ago
They should print more
- BenoitEssiambre 7y ago
  Books or money?
  - c0nducktr 7y ago
    Yes.
YjSe2GMQ 7y ago
It is a kind of crazy cult - believing that more money simply solves problems, and that we should have full employment. There's extensive historical record on governments going drastically for full employment: https://news.ycombinator.com/item?id=20065380 https://news.ycombinator.com/item?id=20065380 That being said, MMT is also similar to what Japan has done, and it caused neither recession nor growth there. I mean the Japanese central bank owns even equity ETFs, it's kind of insane. And still no results, which is even more insane: https://www.economist.com/special-report/2018/10/11/what-to-do-if-the-usual-weapons-fail https://www.economist.com/special-report/2018/10/11/what-to-...

62 points by howard941 7y ago

I'm torn between whether this is 'good' because people are learning about seignorage and taxation through fresh eyes because everything is called something different, or if it's bad because it's an insane cult

dang 7y ago
I'm sure there's a good point underlying this but could you please follow the site guidelines and not be snarky on HN? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- shitgoose 7y ago
  believing in "something out of nothing" - yes, this is a cult.
  - dang 7y ago
    Ok, but we're looking for substantive comments here, not just labeling.

neonate 7y ago

https://outline.com/6ZH6md https://outline.com/6ZH6md

40acres 7y ago

MMT going mainstream is valuable because it's charging the conversation about what we really should be worried about in terms of fiscal policy. And the answer is inflation, if you want to know why we are still adding 200,000 jobs a year 10 years into our economic recovery it's because the Fed was too scared of inflation to signal that long term interest rates would remain low. The Fed should probably raise their target interest rate, especially if we are going to invest in green technology to mitigate climate change.

SubiculumCode 7y ago
I think it is helpful that the narrative is changing away from household debt model (gotta pay our bills) to a fiat model (we can always pay high debt owed in our currency, but we risk inflation). Please let me know where I bugger this. New money is either created through Federal fiscal spending or through loans (e.g., businesses). Because there is only so much monetary space in an economy beyond which inflation occurs, policies must choose between a mixture of fiscal spending (public works) and loans (private sector). 1. The prototypical fiscal conservative position is low taxes & low spending. 2. The prototypical fiscal liberal position is high taxes & high spending. Each of these policies can provide roughly the same monetary space for money creation through new loans, but can incur different problems (e.g. over/under regulation, over/under provision of services). 3. A low taxes & high spend policy could push on inflation, pushing out money creation via loans if maintaining inflation target (via raising interest rate). 4. A high tax & low spend policy could pull deflation, driving money creation via loans if maintaining inflation target (via lowering interest rate (but will there be customers?)). But none of this has to do with the "federal deficit is bankrupting us" arguments that have plagued our policy discussions. The shift in framing by MMT allows us to move away from debt towards how to most productively use new money creation. Some believe public works are productive. Some believe that businesses are most ready to use new money productively. hy does productivity matter? Apparently, from what I gather, when new money is used productively (creates value) it is less likely to be inflationary, perhaps because it creates new products and services instead of just driving demand. And the shift in focus allows us to focus on answering the important questions about how much money can be pumped into the economy (and to whom) before we see significant inflation, and relatedly, what are the real drivers of inflation. For example, money creation can create too many dollars chasing too few goods, but if there is an excess in supply/supply capacity, then you won't see inflation until there is an equilibrium. I suspect that our economy can run a lot hotter before we see a lot of inflation outside of housing, non-competitive markets, and healthcare. I'm just a guy that has read a few blogs on monetary policy. I'm probably wrong on a bunch of levels.
notme77 7y ago
Inflation moves money from the rich (who have assets) to the poor (who have debt). Can't have that...

habosa 7y ago

Reminds me of when Piketty's "Capital" was sold out everywhere. I was one of many people who bought it due to the hype. Apparently I was also one of many people who never read it: https://www.huffpost.com/entry/piketty-book-no-one-read_n_5563629 https://www.huffpost.com/entry/piketty-book-no-one-read_n_55... MMT is very "in" right now but most people won't finish a 600pg novel, let alone a texbook.

xyzzyz 7y ago
You should actually read Capital, if only for the interesting data series he collected there.

googlemike 7y ago

I found the article to be poorly written and confusing, at least in that it failed to answer the most simple question I had: "What is MMT?" The Wikipedia article seems far more useful: https://en.wikipedia.org/wiki/Modern_Monetary_Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory To quote the intro: "MMT advocates argue that the government should use fiscal policy to achieve full employment, creating new money to fund government purchases. The primary risk once the economy reaches full employment is inflation, which can be addressed by raising taxes and issuing bonds, to remove excess money from the system.[3] MMT is controversial, with active debate[4] about its policy effectiveness and risks."

xyzzyz 7y ago
So, like, have government spend money on whatever programs it wants, and issue enough bonds and collect enough taxes to keep inflation in check? It’s what we’ve been doing all along. Where is the novelty?
mamon 7y ago
This sounds exactly like how communist economy used to work in Poland before 1989: Governing communist party claimed to represent the common people, so we had government-mandated full employment - state-owned companies (the only kind there was) were employing people, whether they actually needed them or not. To finance that, government would print money, causing hyperinflation. Net result was: everyone had a job, everyone had a high (in nominal value) salary, but the money we had was worthles - you couldn't actually buy anything with it, because the store shelves were empty. Government had to ration all consumer goods, by introducing stamps (similar to foods stamps in the US). It is funny to see communism making its great comeback :)
- mesozoic 7y ago
  You don't have to worry about rich people if all money is worthless I guess.
- shitgoose 7y ago
  why downvotes? this is exactly how government-run economy works. i experienced it in USSR. if people think that by naming it MMT and dressing it in pseudo-theoretical jargon will somehow make it work - good luck with that. it is fascinating to watch how bastion of freedom is falling for this shit.

baddox 7y ago

> MMT argues that governments in control of their own currencies, like the U.S. and Japan, aren’t constrained in the ways standard economics says they are. They may risk stoking inflation or running out of resources if they spend too much -- but they can’t go broke. I'm a bit confused. My impression is that this is overwhelmingly the dominant view in mainstream political discourse. My impression is that, at least in the United States, it's considered fairly radical to talk seriously about significant spending cuts, balancing the budget, or even having the slightest concern at all about budget deficits or national debt.

SubiculumCode 7y ago
These are the things I've heard over and over and over in political discourse. Federal deficit clocks! omg China is owns us, We are gonna be bankrupt! All these are household budget ideas that do not fit with a fiat currency and debt denominated in your own currency.
portroyal 7y ago
Economics? Politics? le gasp Religion?!? Society says go find an echo-chamber and don't bother anyone. ¯\_(ツ)_/¯
basementcat 7y ago
My understanding is the most people in the USA (and their elected representatives) are totally in favor of budget cuts; they just don’t agree on exactly what to cut. Some liberals may want to reduce military spending and some conservatives may want to reduce social spending. As a compromise, both parties usually agree to increase spending on both.
britch 7y ago
I think talking about spending cuts and balancing the budget were pretty common not too long ago. It was a big part of Paul Ryan's speaker-ship.[0] Republicans (and some democrats) have used "balancing the budget" rhetoric, to justify cutting or refusing to expand wellware and social safety net programs. This has died down once they got into power because no one actually want to balance the budget (cutting military spending is not exactly a hit in republican strongholds).[1] So in a way you are right, no one is _seriously_ talking about balancing the budget, but people certainly were talking about it. [0] https://en.wikipedia.org/wiki/The_Path_to_Prosperity https://en.wikipedia.org/wiki/The_Path_to_Prosperity [1] https://www.vox.com/policy-and-politics/2018/12/10/17929460/paul-ryan-speaker-retiring-debt-deficits-trump https://www.vox.com/policy-and-politics/2018/12/10/17929460/...

austenallred 7y ago

They should print more

BenoitEssiambre 7y ago
Books or money?
- c0nducktr 7y ago
  Yes.

YjSe2GMQ 7y ago

It is a kind of crazy cult - believing that more money simply solves problems, and that we should have full employment. There's extensive historical record on governments going drastically for full employment: https://news.ycombinator.com/item?id=20065380 https://news.ycombinator.com/item?id=20065380 That being said, MMT is also similar to what Japan has done, and it caused neither recession nor growth there. I mean the Japanese central bank owns even equity ETFs, it's kind of insane. And still no results, which is even more insane: https://www.economist.com/special-report/2018/10/11/what-to-do-if-the-usual-weapons-fail https://www.economist.com/special-report/2018/10/11/what-to-...