4 ms·

Author is advocating MMT, an extremely fringe, heterodox macroeconomic theory widely rejected by most economists, including Keynesians. Caveat emptor.

by qsort 6y ago

Nemrod67 6y ago
Is it really fringe? Printing money without limits for 13 years seems in line with MMT.
- UncleOxidant 6y ago
  Yeah, both sides of the political aisle seem to have embraced MMT. Of course, when they're out of power the GOP is critical of deficit spending that they weren't critical of just a few months ago when they had the power.
  - anonporridge 6y ago
    GOP presidents have exclusively been deficit spenders starting with Reagan, who reversed the decades long trend of paying off WWII debt and handed off a massive expansion of the national debt to GDP ratio after his terms. I believe Clinton is the only president in the past 50 years who has ever presided over a government surplus. GOP; gaslight, obstruct, project.
    - chrisco255 6y ago
      Clinton was kept in check by a republican Congress beginning in 1994. Remember our government isn't just one person.
      - LukeShu 6y ago
        Wow, I didn't realize how rare it's been for the Senate and the House to both be Republican. Only 7 times since 1955: 104th-106th (1995-2001), 108th-109th (2003-2007), and 114th-115th (2015-2019). (To be fair, during my lifetime, that's been about half the time.)
        chrisco255 6y ago
        Yeah after FDR in the 40s, the Democrat party enjoyed a long regime of dominance. That trend didn't reverse until Reagan in 1980 and it would still take a decade or so more before that shift began to reflect in state and local elections as well.
        anonporridge 6y ago
        This only gives more credence to the fact that Republicans are actually not fiscally responsible at all. Only after Reagan did the era of responsibility end, https://zfacts.com/wp-content/uploads/2020/04/2020-04-30-National-Debt-to-GDP-zFacts.jpg https://zfacts.com/wp-content/uploads/2020/04/2020-04-30-Nat...
      - anonporridge 6y ago
        So why did Reagan, the Bushes, and Trump all fail to keep themselves in check as leaders of the party that claims to value fiscal responsibility?
    - LukeShu 6y ago
      Indeed, FY1998, FY1999, FY2000, and F2001 are the only years of since FY1969 for which the federal government ran a surpluss rather than a deficit. George W. Bush, not Clinton, presided over most of FY2001; but he inherited the FY2001 budget from Clinton. Source: https://www.govinfo.gov/content/pkg/BUDGET-2021-TAB/pdf/BUDGET-2021-TAB.pdf https://www.govinfo.gov/content/pkg/BUDGET-2021-TAB/pdf/BUDG...
- qsort 6y ago
  MMT advocates would oppose quantitative easing. If you buy into their fantasy-land worldview that the government isn't financially constrained, the central bank purchasing government bonds is an asset swap.
- neilwilson 6y ago
  It's in line with the caricature of MMT from people who don't actually understand MMT.
mustafa_pasi 6y ago
What's funny about the internet is that all these heterodox theorists keep popping up in my news feed, but I almost never get to see an article about mainstream theory. I don't even know what theories are mainstream today. All I get is goldbugs, Austrians, communists, anarchists, this MMT stuff, and all, other sorts of people who need to rant on the internet cause they cannot get a word in amongst their peers.
chrisco255 6y ago
Unfortunately, that is the end game of our current trajectory whether it works or not, we will soon find out. U.S. government just distributed $2 trillion and there's already talks of printing and spending another $3 trillion. I've listened to many arguments about MMT and everyone who supports it boils down to the theory that if governments can just tax enough to hold off inflation they can spend as much as they want, and deficits in your native currency don't matter as long as inflation is unaffected. The definition of inflation has gotten conveniently flexible. We see stock, real estate, healthcare, and education prices rising while some goods and services have gone down. I think some of the deflationary pressure is from technological innovation (for example, a mobile phone does everything that thousands of dollars worth of equipment would do 20 years ago). Some of it is due to the deflationary pressure of globalization and the exportation of goods production to less developed countries (namely China). That trend won't last much longer though as those countries become more affluent (if it hasn't already reversed). At any rate it seems when inflation does occur, MMT seems to think that governments can and will levy higher taxes at will to stem it off. And will subsequently lower taxes when inflation subsides. I've rarely seen the government willfully lower taxes if they have a surplus. And I've rarely seen a politician run on a platform of raising taxes at will. It seems like such an unworkable theory in practice that it should be dismissed outright. However, we've already spent ourselves into a corner and we have massive deficits that are going to drag on our economy for a long time. So the MMT theory is alluring, as it allows for a level of irresponsibility we have not previously seen before. I don't predict this ends well, but I still see it as the last hail Mary of the fiat dollar regime. It will either lead to a golden era or cause a world of hurt and pain.
- laurencerowe 6y ago
  > The definition of inflation has gotten conveniently flexible. We see stock, real estate, healthcare, and education prices rising while some goods and services have gone down. Stock and real estate prices are assets, so have always been excluded from definitions of inflation, they're essentially inversely proportional to the interest rate. Rent (or the owner's equivalent rent) is included in CPI. I share your concern about rising healthcare and education costs though, but that is largely a political choice - other developed countries are able to provide them for substantially lower proportions of GDP. (Healthcare costs will inevitably increase over time as countries populations age, but other countries spend much less on healthcare and achieve better outcomes.) Good post from Noah Smith on inflation: https://noahpinion.substack.com/p/your-local-price-changes-arent-inflation https://noahpinion.substack.com/p/your-local-price-changes-a...

Author is advocating MMT, an extremely fringe, heterodox macroeconomic theory widely rejected by most economists, including Keynesians. Caveat emptor.

by qsort 6y ago

Author is advocating MMT, an extremely fringe, heterodox macroeconomic theory widely rejected by most economists, including Keynesians. Caveat emptor.

Nemrod67 6y ago

Is it really fringe? Printing money without limits for 13 years seems in line with MMT.

UncleOxidant 6y ago
Yeah, both sides of the political aisle seem to have embraced MMT. Of course, when they're out of power the GOP is critical of deficit spending that they weren't critical of just a few months ago when they had the power.
- anonporridge 6y ago
  GOP presidents have exclusively been deficit spenders starting with Reagan, who reversed the decades long trend of paying off WWII debt and handed off a massive expansion of the national debt to GDP ratio after his terms. I believe Clinton is the only president in the past 50 years who has ever presided over a government surplus. GOP; gaslight, obstruct, project.
  - chrisco255 6y ago
    Clinton was kept in check by a republican Congress beginning in 1994. Remember our government isn't just one person.
    - LukeShu 6y ago
      Wow, I didn't realize how rare it's been for the Senate and the House to both be Republican. Only 7 times since 1955: 104th-106th (1995-2001), 108th-109th (2003-2007), and 114th-115th (2015-2019). (To be fair, during my lifetime, that's been about half the time.)
      - chrisco255 6y ago
        Yeah after FDR in the 40s, the Democrat party enjoyed a long regime of dominance. That trend didn't reverse until Reagan in 1980 and it would still take a decade or so more before that shift began to reflect in state and local elections as well.
        anonporridge 6y ago
        This only gives more credence to the fact that Republicans are actually not fiscally responsible at all. Only after Reagan did the era of responsibility end, https://zfacts.com/wp-content/uploads/2020/04/2020-04-30-National-Debt-to-GDP-zFacts.jpg https://zfacts.com/wp-content/uploads/2020/04/2020-04-30-Nat...
    - anonporridge 6y ago
      So why did Reagan, the Bushes, and Trump all fail to keep themselves in check as leaders of the party that claims to value fiscal responsibility?
  - LukeShu 6y ago
    Indeed, FY1998, FY1999, FY2000, and F2001 are the only years of since FY1969 for which the federal government ran a surpluss rather than a deficit. George W. Bush, not Clinton, presided over most of FY2001; but he inherited the FY2001 budget from Clinton. Source: https://www.govinfo.gov/content/pkg/BUDGET-2021-TAB/pdf/BUDGET-2021-TAB.pdf https://www.govinfo.gov/content/pkg/BUDGET-2021-TAB/pdf/BUDG...
qsort 6y ago
MMT advocates would oppose quantitative easing. If you buy into their fantasy-land worldview that the government isn't financially constrained, the central bank purchasing government bonds is an asset swap.
neilwilson 6y ago
It's in line with the caricature of MMT from people who don't actually understand MMT.

mustafa_pasi 6y ago

What's funny about the internet is that all these heterodox theorists keep popping up in my news feed, but I almost never get to see an article about mainstream theory. I don't even know what theories are mainstream today. All I get is goldbugs, Austrians, communists, anarchists, this MMT stuff, and all, other sorts of people who need to rant on the internet cause they cannot get a word in amongst their peers.

chrisco255 6y ago

Unfortunately, that is the end game of our current trajectory whether it works or not, we will soon find out. U.S. government just distributed $2 trillion and there's already talks of printing and spending another $3 trillion. I've listened to many arguments about MMT and everyone who supports it boils down to the theory that if governments can just tax enough to hold off inflation they can spend as much as they want, and deficits in your native currency don't matter as long as inflation is unaffected. The definition of inflation has gotten conveniently flexible. We see stock, real estate, healthcare, and education prices rising while some goods and services have gone down. I think some of the deflationary pressure is from technological innovation (for example, a mobile phone does everything that thousands of dollars worth of equipment would do 20 years ago). Some of it is due to the deflationary pressure of globalization and the exportation of goods production to less developed countries (namely China). That trend won't last much longer though as those countries become more affluent (if it hasn't already reversed). At any rate it seems when inflation does occur, MMT seems to think that governments can and will levy higher taxes at will to stem it off. And will subsequently lower taxes when inflation subsides. I've rarely seen the government willfully lower taxes if they have a surplus. And I've rarely seen a politician run on a platform of raising taxes at will. It seems like such an unworkable theory in practice that it should be dismissed outright. However, we've already spent ourselves into a corner and we have massive deficits that are going to drag on our economy for a long time. So the MMT theory is alluring, as it allows for a level of irresponsibility we have not previously seen before. I don't predict this ends well, but I still see it as the last hail Mary of the fiat dollar regime. It will either lead to a golden era or cause a world of hurt and pain.

laurencerowe 6y ago
> The definition of inflation has gotten conveniently flexible. We see stock, real estate, healthcare, and education prices rising while some goods and services have gone down. Stock and real estate prices are assets, so have always been excluded from definitions of inflation, they're essentially inversely proportional to the interest rate. Rent (or the owner's equivalent rent) is included in CPI. I share your concern about rising healthcare and education costs though, but that is largely a political choice - other developed countries are able to provide them for substantially lower proportions of GDP. (Healthcare costs will inevitably increase over time as countries populations age, but other countries spend much less on healthcare and achieve better outcomes.) Good post from Noah Smith on inflation: https://noahpinion.substack.com/p/your-local-price-changes-arent-inflation https://noahpinion.substack.com/p/your-local-price-changes-a...