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> you think MMT is great and will have no consequences Doesn't MMT just tell us that we should focus on inflation instead of The Deficit? I don't think any of

> you think MMT is great and will have no consequences Doesn't MMT just tell us that we should focus on inflation instead of The Deficit? I don't think any of its adherents believe that printing money is consequence-free; rather, MMT states that over-printing money will eventually result in inflation, and we can choose to respond to that inflation by either reigning in government spending (which enables us to dial back the money printing), or by raising taxes (thereby decreasing the money supply). Its prescriptions are largely the same as the current mode of economic thought. If you spend too much, you'll have to pay for it somehow. Arguably, it just offers a better model of the trade-offs between taxation/spending/printing/inflation, and suggests a different feedback mechanism to drive policymaking decisions (inflation instead of deficit levels.)

anm89 5y ago
> Doesn't MMT just tell us that we should focus on inflation instead of The Deficit? While this is roughly aligned with some of MMTs talking points, I don't think you can reduce MMT to just this. At a minimum these talking points have some other implications like: 1) Our current congress is capable of reigning in spending - I strongly disagree that there is any political will power to do this regardless of inflation. The last time we ran a budget surplus was 2001. Interest payments + treasury spending + social security / medicare pay as you gos are currently 111% of all tax receipts. So even if we want to reduce spending it's not really clear how you do that without putting SS/ medicare payments on hold because the Federal government is running a deficit EVEN IF YOU ELIMINATE 100% OF DISCRETIONARY SPENDING FROM THE BUDGET. And that still implies that if you wanted to have just a decrease in the deficit you would have to spend less on defense which is never going to happen. Yeah you could cut veterans spending, transportation or education (probably not in reality) but it wouldn't matter, they are a margin of error of the deficit. https://fiscal.treasury.gov/files/reports-statements/mts/mts1021.pdf https://fiscal.treasury.gov/files/reports-statements/mts/mts... https://twitter.com/lukegromen/status/1359529371875356672 https://twitter.com/lukegromen/status/1359529371875356672 2) That the timeframes of tax policy decisions exist on the same time scale as would be necessary to use tax policy decisions to regulate inflation. - This is the core fallacy of MMT, even much more so than point 1. Maybe congress can figure out how to reduce spending, maybe if for no other reason than spite by a congress controlled by a different party then the president. But the idea that there is any feasible way to fine tune taxation to manage inflation on a fast enough timescale to be useful is beyond the pale. We get maybe one meaningful tax plan per president and even that is a battle every single time. so we are talking about maybe on average a meaningful change to tax policy every 6 years. Yet how fast did inflation just jump? We went from a CPI of nothing to 5+ in a few months. Who is this magical bureaucrat who just jumps in and fine tunes the taxes to account for this? It simply does not exist and will not exist any time soon without a major political revolution in America. But the problem is the policy is justified based on the idea that micromanaging velocity and money supply is possible but any time I've heard an MMTer questioned on this point, they openly admit that this part would need to be worked out when the times comes. Anyway, no obligation to agree with me. But as I said, be sure you know what you're talking about if it's your own money on the line.
- rrrrrrrrrrrryan 5y ago
  In response to your first point, I'd counter that Gen X through Gen Z are generally in favor of both decreasing defense spending and taxing the snot out of the ultra-wealthy - the only reason we haven't done it yet is because the silent generation has only just passed the baton to the baby boomers, who are now running the show. Your second point is a very good one, and has given me something to think about. Appreciate the detailed response.
  - anm89 5y ago
    Seriously think about that point with discretionary spending though. Even if Gen Zers took 100% control tomorrow and eliminated every penny of US spending that law makers are allowed to eliminate, we would still run a deficit. That's a game changer in my mind. And because the entitlement pay as you gos are inflation adjusted you can't just inflate that problem away.

anm89 5y ago

> Doesn't MMT just tell us that we should focus on inflation instead of The Deficit? While this is roughly aligned with some of MMTs talking points, I don't think you can reduce MMT to just this. At a minimum these talking points have some other implications like: 1) Our current congress is capable of reigning in spending - I strongly disagree that there is any political will power to do this regardless of inflation. The last time we ran a budget surplus was 2001. Interest payments + treasury spending + social security / medicare pay as you gos are currently 111% of all tax receipts. So even if we want to reduce spending it's not really clear how you do that without putting SS/ medicare payments on hold because the Federal government is running a deficit EVEN IF YOU ELIMINATE 100% OF DISCRETIONARY SPENDING FROM THE BUDGET. And that still implies that if you wanted to have just a decrease in the deficit you would have to spend less on defense which is never going to happen. Yeah you could cut veterans spending, transportation or education (probably not in reality) but it wouldn't matter, they are a margin of error of the deficit. https://fiscal.treasury.gov/files/reports-statements/mts/mts1021.pdf https://fiscal.treasury.gov/files/reports-statements/mts/mts... https://twitter.com/lukegromen/status/1359529371875356672 https://twitter.com/lukegromen/status/1359529371875356672 2) That the timeframes of tax policy decisions exist on the same time scale as would be necessary to use tax policy decisions to regulate inflation. - This is the core fallacy of MMT, even much more so than point 1. Maybe congress can figure out how to reduce spending, maybe if for no other reason than spite by a congress controlled by a different party then the president. But the idea that there is any feasible way to fine tune taxation to manage inflation on a fast enough timescale to be useful is beyond the pale. We get maybe one meaningful tax plan per president and even that is a battle every single time. so we are talking about maybe on average a meaningful change to tax policy every 6 years. Yet how fast did inflation just jump? We went from a CPI of nothing to 5+ in a few months. Who is this magical bureaucrat who just jumps in and fine tunes the taxes to account for this? It simply does not exist and will not exist any time soon without a major political revolution in America. But the problem is the policy is justified based on the idea that micromanaging velocity and money supply is possible but any time I've heard an MMTer questioned on this point, they openly admit that this part would need to be worked out when the times comes. Anyway, no obligation to agree with me. But as I said, be sure you know what you're talking about if it's your own money on the line.

rrrrrrrrrrrryan 5y ago
In response to your first point, I'd counter that Gen X through Gen Z are generally in favor of both decreasing defense spending and taxing the snot out of the ultra-wealthy - the only reason we haven't done it yet is because the silent generation has only just passed the baton to the baby boomers, who are now running the show. Your second point is a very good one, and has given me something to think about. Appreciate the detailed response.
- anm89 5y ago
  Seriously think about that point with discretionary spending though. Even if Gen Zers took 100% control tomorrow and eliminated every penny of US spending that law makers are allowed to eliminate, we would still run a deficit. That's a game changer in my mind. And because the entitlement pay as you gos are inflation adjusted you can't just inflate that problem away.