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> [MMT] says you can spend without consequences. Really? I thought it said that money exists because a government prints it, so a government cannot default on
by madhadron 4y ago
> [MMT] says you can spend without consequences.
Really? I thought it said that money exists because a government prints it, so a government cannot default on a debt denominated in its currency unless it chooses to, and that inflation is a second order effect resulting from the money supply increasing faster than the pool of goods and services it's chasing.
- mr_toad 4y agohttps://en.wikipedia.org/wiki/Modern_Monetary_Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory The name implies that it is mainstream modern economics, but it isn’t.
- Rury 4y agoWhat you tend to see is some MMT proponents use this argument to state that government deficits aren't a problem, since they can't default on their debt. But the debt can still be a problem, not because a government indebted in its own currency can't default, but because it still has second order effects... So the entirety of that statement is toothless.
- imtringued 4y agoBut we have seen that countries who did more QE had even less inflation like Japan. The reason for that is that interest rates hit zero and therefore debt does not grow from interest which means less inflation is needed to erode debts. The second order effects that limit money creation are highly fluid but the fact that governments with their own currency cannot default is set in stone.