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I recommend Stephanie Kelton's "The Deficit Myth" for more background on MMT: https://www.amazon.com/Deficit-Myth-Monetary-Peoples-Economy/dp/1541736184 https:

• siwatanejo 6y ago
  The point of that woman is simply: let the deficit go up ad infinitum (in USD value), it doesn't matter because as the central bank keeps printing money, the value of the deficit actually goes down (because the USD value goes down), so the value of the deficit is stable even if we don't perceive it to be this way. Quite BS imo
  • octoberfranklin 6y ago
    > Quite BS imo Well he said it was MMT, didn't he? ;)
  • daniel-s 6y ago
    Have you in the process also just wiped out everyone on a fixed income and who keep their savings in the bank?
    • donatj 6y ago
      Yep, and it’s arguably half the point as a means to keep the workforce working, depending on the leaning of who you talk to.
    • xwdv 6y ago
      Isn’t that what people want? To eliminate rent-seeking behavior?
      • ath92 6y ago
        This doesn't eliminate rent-seeking behavior because the dollar value of assets (e.g. houses, and with it rent) will just go up as well.
    • lasagnaphil 6y ago
      It also erases the debt for the people who have it. And quite many people in the US have enormous amounts of household debt: https://en.wikipedia.org/wiki/Household_debt#United_States https://en.wikipedia.org/wiki/Household_debt#United_States Inflation (in controlled amounts) can act as a redistribution mechanism between debtors and creditors (basically a way to lessen the huge inequality gap we have today).
  • ChrisMarshallNY 6y ago
    Printing money is a bad idea. You think we had it bad, check out what happened here: https://alphahistory.com/weimarrepublic/great-depression/ https://alphahistory.com/weimarrepublic/great-depression/ I seem to remember something else, rather alarming, that happened after that...
    • VMG 6y ago
      MMT proponents will have a list of reasons why this will not happen with the USD (because it is a reserve currency etc) The arguments are unconvincing because the USD could lose that status.
      • neilwilson 6y ago
        Nothing to do with reserve status. Everything to do with a non-convertible floating rate currency. The same applies to the UK, Japan, Canada, Australia and the Eurozone among others.
    • BenoitEssiambre 6y ago
      While printing money to the extent MMTs advocate is bad,lack of printing during financial crisis is off the scale bad. It puts a gridlock in the economy as everyone, businesses and and banks aggressively reduce real economic activity in favor of collectively hoarding government paper (money and bonds). As your own link explains: "Rather than ramping up spending, Bruning increased taxes to reduce the budget deficit. He then implemented wage cuts and spending reductions, an attempt to lower prices. Bruning’s policies were rejected by the Reichstag but the chancellor was backed by President Paul von Hindenburg, who in mid-1930 issued his policies as emergency decrees. Bruning’s measures failed and only contributed to increased unemployment and public suffering in 1931-32. They also revived government instability and bickering between parties in the Reichstag." Or from wikipedia: "From 1930 onwards, President Paul von Hindenburg used emergency powers to back Chancellors Heinrich Brüning, Franz von Papen and General Kurt von Schleicher. The Great Depression, exacerbated by Brüning's policy of deflation, led to a surge in unemployment.[8] In 1933, Hindenburg appointed Adolf Hitler as Chancellor with the Nazi Party being part of a coalition government."
    • 6y ago
  • xwdv 6y ago
    What’s BS about it? Using inflation to cheapen debts is pretty common knowledge.
    • frockington1 6y ago
      Long story short, if you keep printing money, eventually nobody wants your money. If nobody wants your money, trade becomes much more expensive
    • syshum 6y ago
      It is also a Tax on Saving, Retirements, and responsible behavior It encourages irresponsibility and debt, and discourages people from saving, planning for their future, and over all acting in a way that is not filled with instant gratification, or extremely leveraging themselves That provides good short term growth, but then you have recessions and depressions because at some point those balance sheets have to be balanced
      • JumpCrisscross 6y ago
        > It is also a Tax on Saving, Retirements, and responsible behavior Unexpected inflation is. Predictable inflation is easy to account for. I live in New York. My basket of goods included until recently rapidly-increasing real estate prices. That is the benchmark against which my money managers are judged. It is true that this forces them to invest more riskily. But that is a systemic lever inflation and interest rates are designed to tweak: low interest rates beget risk taking.
        • syshum 6y ago
          A healthy economy needs both savers and risk takers, What is happening today, the marginal rate @ or below zero there are no savers, that is equally as bad as high interest rates where no one was taking any risks
          • JumpCrisscross 6y ago
            > healthy economy needs both savers Based on what? Savings are the rue of Keynesian economics. And they at best do nothing in monetarist frameworks. > the marginal rate @ or below zero Marginal nominal rates are between 0.09% (1 mo.) and 1.63% (30 y.) [1]. Real rates are negative [2], but to the tune of -1.22% (5 y.) to -0.26% (30 y.), which hardly discourages rainy-day saving. For anything more than that, surplus capital should be invested, not hoarded. [1] https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield https://www.treasury.gov/resource-center/data-chart-center/i... [2] https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...
  • xuki 6y ago
    Yet it’s very tempting for politicians to implement exactly that, because to tax people to pay for stuff is not very popular politically. They will always, always, always kick the can down the road.
    • travisoneill1 6y ago
      Yeah, I get the feeling that this theory is mostly based on the fact that the consent of elected representatives is required to raise taxes, but not to print money.
      • ethbr0 6y ago
        Not just the consent of representatives, but the very attention of the public. Housing prices are going up = average citizen is happy, or at least not concerned Fiscal austerity & inflation = average citizen is alarmed and votes you out of office So yes, it's essentially a magician's version of the hard choices government has to make.
      • dragonwriter 6y ago
        > Yeah, I get the feeling that this theory is mostly based on the fact that the consent of elected representatives is required to raise taxes, but not to print money. It's required for both; the fact that Congress has delegated monetary policy and not recalled it, and not done the same with fiscal policy doesn't change that, it's just the mechanism by which it provides ongoing consent to the Feds decisions in monetary policy.
    • sdfin 6y ago
      Just look at Argentina's economic history.
    • neilwilson 6y ago
      Take a tax rate of 1% Now spend $100. Tax it at 1%. Then the next person gets $99 income. Spend it all again. Tax that at 1%. Then the next person gets $99.01. Tax that at 1%. And so on like a stone skipping across a pond. When you get to the end of the sequence and total up the tax take, what is the value? You'll be surprised. Now work out why that doesn't happen in the actual world. The answer is that somebody didn't spend everything they earned straight away. And that's what a deficit is.
  • JumpCrisscross 6y ago
    MMT is a neat theory. The mathematics are quite elegant. Unfortunately, like a lot of beautiful macroeconomics, it isn’t a policy prescription. (Though it provides ivory tower cover for bad policy.) Reserve currency status does afford increased deficit-spending capacity. But it isn’t an immutable, environmental variable. Deficits and reserve currency status interact. If a country runs up large deficits in the name of its reserve currency it affects others’ inclinations to hold the currency in reserve. Precisely where this happens is difficult to predict. It involves many levels of animal instincts. That it happens, however, is well evidenced. By analogy: we know the plane will safely travel at a 300 flight level. There is theoretical work for higher FLs. Do you point up the nose of a fully-loaded plane until the wings or engine or fuselage fail? Piloting federal fiscal policy on MMT is akin to steering the plane to FL 100 and keeping an eye out for a stall. You might get lucky. But you should have experimented in smaller and more-controlled settings first.
    • arethuza 6y ago
      Presumably for the USD to lose reserve currency status some other currency would have to become more attractive as a long term bet? Are there any obvious candidates at the moment?
      • mmm_grayons 6y ago
        Red China and her policies of debt-trap diplomacy are making increased use of her currency more attractive.
      • JumpCrisscross 6y ago
        > for the USD to lose reserve currency status some other currency would have to become more attractive as a long term bet? Not necessarily. Reserve currencies facilitate international trade and finance, things which may not exist in their present form without the United States. There is no rule saying the world must have one. Everyone could wind up owning their trading partners’ currencies. We could revert to a commodity standard. Or free trading zones could emerge with synthetic currencies.
      • 6y ago
  • cryptica 6y ago
    Yep, I agree it's clearly a disaster. The government shouldn't be the one deciding who gets all the new money and on what terms... That's essentially what communism does with coupons. It's naive to think that people will still value the dollar and assets which earn revenue denominated in dollars when everyone knows that the value of the dollar is always approaching 0. I think something big is going to happen when big investors collectively realize that it's not just the dollar which is losing value, it's also all assets whose earnings are denominated in those dollars. If gold was worthless, then all gold mines would also be worthless. Somehow people still haven't gotten their heads around that.
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  • sauwan 6y ago
    Have you read the book? That's quite the oversimplification. She says the deficit doesn't matter because a government that prints its own money can wipe out the debt with a few clicks of the button (if they so choose). The debt number doesn't really matter. It can be paid off by a large injection of printed cash. But that has other implications. Ultimately, it's inflation that we really care about, not the deficit. And there are better tools for controlling inflation that hurt fewer people than the current monetary policies in place.
    • JumpCrisscross 6y ago
      > there are better tools for controlling inflation that hurt fewer people than the current monetary policies in place This is the part of her argument that I found unconvincing. The tools sort of work. But once you have inflation and inflation expectations a tremendous amount of political capital and pain must be spent to get out of it. A system which regularly subjects itself to such a test will eventually fail it.
      • deleted 6y ago
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    • boringg 6y ago
      Printing money and issuing debt are almost interchangeable in terms of what they perform. My sense is that modern economics is steering towards full employment with an eye on inflation. Multiple goal setting and balancing makes more sense the strictly the 2% inflation goal.
  • question000 6y ago
    Yeah too bad it actually explains reality instead of the weird "debt is just bad." ideas that predict a crisis every single quarter.
  • OGWhales 6y ago
    This is an intentional misinterpretation of MMT. Quite BS imo.
  • bryanlarsen 6y ago
    According to MMT, inflation is the metric that matters. Since the deficit and inflation are very closely linked, then deficits do matter.
  • neilwilson 6y ago
    Deficits are just the accounting counterparty of people saving in the currency of issue. Why are you against additional saving?
• boringg 6y ago
  MMT discussed by economists about the truths and fallacies of MMT (link at bottom). It is lacking in real data and has a lot of very siren-like qualities to it. https://capitalisnt.com/episodes/the-right-and-wrong-of-mmt-modern-monetary-theory https://capitalisnt.com/episodes/the-right-and-wrong-of-mmt-...