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Modern Monetary Theory, basically it's a preposterous idea that central banks and governments can just willy nilly print money to their hearts content to do any

Modern Monetary Theory, basically it's a preposterous idea that central banks and governments can just willy nilly print money to their hearts content to do anything they want without ever having or worrying about inflation or any negative side effects whatever.

wbsss4412 5y ago
That’s not what MMT says. In fact, they specifically says that you have to manage inflation with fiscal policy, by “taxing money out of the economy” or cut spending.
- nradov 5y ago
  In practice politicians are happy to cite MMT as justification for increasing spending on their favored programs, and then conveniently forget about it when the time comes to raise taxes. So we end up with an exploding national debt. That can appear to "work" for many years, but eventually the system will hit a tipping point that results in either hyperinflation or (more likely) a debt default. It's impossible to predict when that crisis will hit but by that time most of the politicians responsible for causing the problem will be out of office anyway and we won't be able to hold them accountable.
  - wbsss4412 5y ago
    > eventually the system will hit a tipping point that results in either hyperinflation or (more likely) a debt default. Neither of which are even close to occurring in the United States. Politicians are going to politician. Just look at the “dynamic scoring” models republicans apply to tax cuts. It isn’t the job of economic theory to ideologically reign in politicians, it’s job is to model to world accurately. I haven’t read enough into MMT to actually assess that for myself, but it’s ridiculous to assert that it’s flat out wrong because politicians run deficits (which they have done for decades before MMT even came into existence)
    - nradov 5y ago
      I didn't claim that MMT is wrong necessarily, just that trying to apply that theory will in practice accelerate the arrival of an eventual fiscal crisis. We aren't close to such a crisis, but we are getting closer every year. Based on what has happened in other countries I expect the crisis will probably hit in a couple decades once the national debt to GDP ratio reaches about 250%, but many factors could change that timeline.
      - wbsss4412 5y ago
        Again though, the theory doesn’t say “always maintain a deficit of X amount”. By no means is it implied that deficits are required. In fact, as long as we are at full employment deficits should be stabilized or cut. In the end, it’s advocating utilizing the economic resources you ah e at your disposal, rather than letting them languish. Also, note that the us is hovering at around 120% debt/gdp, a number that has declined since Q2 of 2020.
    - jhauris 5y ago
      TFA asserts that MMT lacks a model, and instead is a collection of ideological policies with a facade of science. If true, that puts it outside the above definition of economic theory as well.
      - wbsss4412 5y ago
        > instead is a collection of ideological policies with a facade of science This is actually an accurate description of the whole of economics, irrespective of MMT.
- kizer 5y ago
  Seems like it's big on dividing money into "out in the open" or "with the government" and its movement between those two states?
  - wbsss4412 5y ago
    The core of MMT’s story is that money creation begins and ends with government spending and taxes respectively. Beyond that I am unsure as to how much their theory differs from mainstream economic theory. At the end of the day they seem very much rooted in the question of wether there are productive economic assets that can be utilized. Yes => the government should spend money to use them, don’t worry about deficits, No => either spend less (create less demand for resources) or tax more (remove demand from somewhere else). In the end, there’s no reason assets should be left to no productive use, by their estimation.

wbsss4412 5y ago

That’s not what MMT says. In fact, they specifically says that you have to manage inflation with fiscal policy, by “taxing money out of the economy” or cut spending.

nradov 5y ago
In practice politicians are happy to cite MMT as justification for increasing spending on their favored programs, and then conveniently forget about it when the time comes to raise taxes. So we end up with an exploding national debt. That can appear to "work" for many years, but eventually the system will hit a tipping point that results in either hyperinflation or (more likely) a debt default. It's impossible to predict when that crisis will hit but by that time most of the politicians responsible for causing the problem will be out of office anyway and we won't be able to hold them accountable.
- wbsss4412 5y ago
  > eventually the system will hit a tipping point that results in either hyperinflation or (more likely) a debt default. Neither of which are even close to occurring in the United States. Politicians are going to politician. Just look at the “dynamic scoring” models republicans apply to tax cuts. It isn’t the job of economic theory to ideologically reign in politicians, it’s job is to model to world accurately. I haven’t read enough into MMT to actually assess that for myself, but it’s ridiculous to assert that it’s flat out wrong because politicians run deficits (which they have done for decades before MMT even came into existence)
  - nradov 5y ago
    I didn't claim that MMT is wrong necessarily, just that trying to apply that theory will in practice accelerate the arrival of an eventual fiscal crisis. We aren't close to such a crisis, but we are getting closer every year. Based on what has happened in other countries I expect the crisis will probably hit in a couple decades once the national debt to GDP ratio reaches about 250%, but many factors could change that timeline.
    - wbsss4412 5y ago
      Again though, the theory doesn’t say “always maintain a deficit of X amount”. By no means is it implied that deficits are required. In fact, as long as we are at full employment deficits should be stabilized or cut. In the end, it’s advocating utilizing the economic resources you ah e at your disposal, rather than letting them languish. Also, note that the us is hovering at around 120% debt/gdp, a number that has declined since Q2 of 2020.
  - jhauris 5y ago
    TFA asserts that MMT lacks a model, and instead is a collection of ideological policies with a facade of science. If true, that puts it outside the above definition of economic theory as well.
    - wbsss4412 5y ago
      > instead is a collection of ideological policies with a facade of science This is actually an accurate description of the whole of economics, irrespective of MMT.
kizer 5y ago
Seems like it's big on dividing money into "out in the open" or "with the government" and its movement between those two states?
- wbsss4412 5y ago
  The core of MMT’s story is that money creation begins and ends with government spending and taxes respectively. Beyond that I am unsure as to how much their theory differs from mainstream economic theory. At the end of the day they seem very much rooted in the question of wether there are productive economic assets that can be utilized. Yes => the government should spend money to use them, don’t worry about deficits, No => either spend less (create less demand for resources) or tax more (remove demand from somewhere else). In the end, there’s no reason assets should be left to no productive use, by their estimation.