7 ms·

> read up on modern monetary theory's theory/description of central banking. any recommendations?

by mi_lk 5y ago

scrollaway 5y ago
Economics Explained has an excellent video on it https://www.youtube.com/watch?v=aIQY44LCIjc https://www.youtube.com/watch?v=aIQY44LCIjc
- dalbasal 5y ago
  I would recommend going direct instead. Mmt is very simple, but needs to be explained with a bank ledger. Metaphors aren't helpful, imo.
lifeisstillgood 5y ago
Here is my poor attempt : Imagine I pluck a leaf off a tree and hand it to you and promise that I will do an hours farm labouring if you or anyone else comes back and give me that leaf. I now have a debt, and money is invented to tokenise that debt. However there are only 24 hours in the day so my productive capacity is limited to (at best) 24 leaves per day. (And yes this leads into time issues - that 24 leaves could buy an hour next week - but should there be 24 leaves for every day I am able to work? or just recycle the same 24 ? This leads us into money velocity which impacts the overall productivity calculation at the end) Now MMT says that as there is only one farm labourer and there is only 24 hours in the day you can only have 24 leaves in the monetary system - but if you have say, 18 leaves in the system it's fine to pluck another six off the trees - that will allow the plucker to purchase another six hours of my labour with no inflationary cost. Of course I need to sleep, and it's hard to judge how productive I am etc etc. But the idea is an economy is a whole system and a fiat government is able to purchase up to the productive capacity of the system - which seems quite sensible ... if we know what the productive capacity is. I may of course be wildly wrong and interested in other peoples views
barry-cotter 5y ago
Note that no one can link to an academic description by an economist which is precise enough to be right or wrong.
- epistasis 5y ago
  Oh no, there's plenty of papers like that. There's plenty of people claiming the ideas are "wrong" but typically they seem to misunderstand what they are critiquing. Here's a few papers from Stephanie Kelton (née Bell), for example, including ideas concrete enemigo to have been critiqued and then responded to: https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=96846 https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=968... There are many other academic authors with plenty of critiqueable ideas, but Kelton has been the most prominent as far as I can tell, and also Bourne most of the burden of being critiqued, often completely unfairly and unseriously.
  - BlueTemplar 5y ago
    Jason Bourne would concrete these enemigo straight away !
    - epistasis 5y ago
      I don't understand this comment.
      - BlueTemplar 5y ago
        Your autocomplete really shone today.
        epistasis 5y ago
        Oh, I see! Thanks. Autocomplete is my perpetual enemy. I wish I could go back to the keyboard from the first iPhone version, it was so so so much better. The absolute worst part of recent macOS is when it inserts completely embarrassing errors into presentation after a word has been completely typed. At least a typo can be deciphered, putting in the wrong word causes sentences that look like the mistake was intentionally included. Hate hate hate it.
epistasis 5y ago
The broadest audience book is probably Kelton's The Deficit Myth: https://www.goodreads.com/book/show/45731395-the-deficit-myth https://www.goodreads.com/book/show/45731395-the-deficit-myt... If you want a deeper dive in audio form, I really liked the MMT podcast sub-series embedded in Current Affairs' bird seed podcast. However they spend so much time on the basics and the "controversy" that they only focus on the central banking aspect of it; the critics they bring on are so bad at critiquing it that MMT really come out looking good. There are two aspects: 1) here's how money works with a central bank and what it means about, for example, US government "debt" 2) now that we have these concepts of money, and observe how monetary policy has been used to keep a pool of unemployed people, let's instead try to get full employment with a job guarantee to increase economic productivity. I am compelled by (2) but it's not as essential as understanding (1) IMHO. MMTers also tend to focus on government (sometimes called vertical) money creation, and pay much less attention to bank creation of money (sometimes called horitzontal), because MMTers are focusing on monetary policy by currency sovereigns. But horizontal money is super important to understanding economic cycles too. A really good book about this, that focuses on the intricacies of the UK banking system to prove its points, is Where Does Money Come From: https://www.amazon.com/Where-Does-Money-Come-Ryan-Collins/dp/1521043892 https://www.amazon.com/Where-Does-Money-Come-Ryan-Collins/dp...
- rsync 5y ago
  "MMTers also tend to focus on government (sometimes called vertical) money creation ..." I notice that MMT discussion (esp. on [1]) focus very tightly on sovereign currencies for their examples and spend a lot of time describing the impossibility of default, etc., for governments that make loans in their own currency. This is, of course, correct. But I continue to wonder: in a world of MMT - a world wherein we fully adopt MMT as our model and pursue it explicitly - what is to happen to the Argentinas and the Ukraines and the Malaysias, etc. ? That is always glossed over ... is it just assumed that they will be as ill-served as always by the world order ? AFAICT the answer that MMT has for Argentina (for instance) is: You'll be as fucked as you've always been. [1] https://www.nakedcapitalism.com/ https://www.nakedcapitalism.com/
  - 5y ago

> read up on modern monetary theory's theory/description of central banking. any recommendations?

by mi_lk 5y ago

> read up on modern monetary theory's theory/description of central banking. any recommendations?

Economics Explained has an excellent video on it https://www.youtube.com/watch?v=aIQY44LCIjc https://www.youtube.com/watch?v=aIQY44LCIjc

dalbasal 5y ago
I would recommend going direct instead. Mmt is very simple, but needs to be explained with a bank ledger. Metaphors aren't helpful, imo.

lifeisstillgood 5y ago

Here is my poor attempt : Imagine I pluck a leaf off a tree and hand it to you and promise that I will do an hours farm labouring if you or anyone else comes back and give me that leaf. I now have a debt, and money is invented to tokenise that debt. However there are only 24 hours in the day so my productive capacity is limited to (at best) 24 leaves per day. (And yes this leads into time issues - that 24 leaves could buy an hour next week - but should there be 24 leaves for every day I am able to work? or just recycle the same 24 ? This leads us into money velocity which impacts the overall productivity calculation at the end) Now MMT says that as there is only one farm labourer and there is only 24 hours in the day you can only have 24 leaves in the monetary system - but if you have say, 18 leaves in the system it's fine to pluck another six off the trees - that will allow the plucker to purchase another six hours of my labour with no inflationary cost. Of course I need to sleep, and it's hard to judge how productive I am etc etc. But the idea is an economy is a whole system and a fiat government is able to purchase up to the productive capacity of the system - which seems quite sensible ... if we know what the productive capacity is. I may of course be wildly wrong and interested in other peoples views

barry-cotter 5y ago

Note that no one can link to an academic description by an economist which is precise enough to be right or wrong.

epistasis 5y ago
Oh no, there's plenty of papers like that. There's plenty of people claiming the ideas are "wrong" but typically they seem to misunderstand what they are critiquing. Here's a few papers from Stephanie Kelton (née Bell), for example, including ideas concrete enemigo to have been critiqued and then responded to: https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=96846 https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=968... There are many other academic authors with plenty of critiqueable ideas, but Kelton has been the most prominent as far as I can tell, and also Bourne most of the burden of being critiqued, often completely unfairly and unseriously.
- BlueTemplar 5y ago
  Jason Bourne would concrete these enemigo straight away !
  - epistasis 5y ago
    I don't understand this comment.
    - BlueTemplar 5y ago
      Your autocomplete really shone today.
      - epistasis 5y ago
        Oh, I see! Thanks. Autocomplete is my perpetual enemy. I wish I could go back to the keyboard from the first iPhone version, it was so so so much better. The absolute worst part of recent macOS is when it inserts completely embarrassing errors into presentation after a word has been completely typed. At least a typo can be deciphered, putting in the wrong word causes sentences that look like the mistake was intentionally included. Hate hate hate it.

epistasis 5y ago

The broadest audience book is probably Kelton's The Deficit Myth: https://www.goodreads.com/book/show/45731395-the-deficit-myth https://www.goodreads.com/book/show/45731395-the-deficit-myt... If you want a deeper dive in audio form, I really liked the MMT podcast sub-series embedded in Current Affairs' bird seed podcast. However they spend so much time on the basics and the "controversy" that they only focus on the central banking aspect of it; the critics they bring on are so bad at critiquing it that MMT really come out looking good. There are two aspects: 1) here's how money works with a central bank and what it means about, for example, US government "debt" 2) now that we have these concepts of money, and observe how monetary policy has been used to keep a pool of unemployed people, let's instead try to get full employment with a job guarantee to increase economic productivity. I am compelled by (2) but it's not as essential as understanding (1) IMHO. MMTers also tend to focus on government (sometimes called vertical) money creation, and pay much less attention to bank creation of money (sometimes called horitzontal), because MMTers are focusing on monetary policy by currency sovereigns. But horizontal money is super important to understanding economic cycles too. A really good book about this, that focuses on the intricacies of the UK banking system to prove its points, is Where Does Money Come From: https://www.amazon.com/Where-Does-Money-Come-Ryan-Collins/dp/1521043892 https://www.amazon.com/Where-Does-Money-Come-Ryan-Collins/dp...

rsync 5y ago
"MMTers also tend to focus on government (sometimes called vertical) money creation ..." I notice that MMT discussion (esp. on [1]) focus very tightly on sovereign currencies for their examples and spend a lot of time describing the impossibility of default, etc., for governments that make loans in their own currency. This is, of course, correct. But I continue to wonder: in a world of MMT - a world wherein we fully adopt MMT as our model and pursue it explicitly - what is to happen to the Argentinas and the Ukraines and the Malaysias, etc. ? That is always glossed over ... is it just assumed that they will be as ill-served as always by the world order ? AFAICT the answer that MMT has for Argentina (for instance) is: You'll be as fucked as you've always been. [1] https://www.nakedcapitalism.com/ https://www.nakedcapitalism.com/
- 5y ago