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It seems clear that you have very little respect for the MMT set. But I haven’t seen anything to suggest they’d disagree with my characterization. I wonder wher
by wbsss4412 5y ago
It seems clear that you have very little respect for the MMT set. But I haven’t seen anything to suggest they’d disagree with my characterization. I wonder where you draw your understanding of MMT because from my view the theory is fairly straightforward: money creation happens when the government spends, and is taken out when it raises taxes. The purpose of central banks is to provide financial stability.
- whimsicalism 5y ago> from my view the theory is fairly straightforward But as you've stated it, the "theory" is on-face wrong. Money isn't created when the government spends because it borrows from private credit markets when it spends, taking money out of circulation. Money is created by monetary policy, not fiscal policy. I don't necessarily disrespect MMT, I just have trouble tying people down to making a specific claim. Either they are saying something obvious and not at all contrary to mainstream economics, or they are making claims that I think are wrong - but I have trouble pinning down any particular claims.
- wbsss4412 5y agoI think the crux of the disagreement is the order of events. MMT proponents would not character bond issuance as something that takes money out of circulation per se. It is only when that money is taxed back out of the economy that money is removed. In this construction central bank policy and government budgets both do play a role, the question is what comes first. When governments runs deficits, it signals the central bank to print money.