5 ms·

That take requires significant citation. A century of work says you’re wrong, and 3 years of attempting MMT has showed that’s wrong as well.

MJsGlove 4y ago
The user may be referencing work done on global and domestic demographics (aging populations in china and at home) and supply chain challenges highlighted by the Ukraine issues, since Ukraine is home to critical manufacturing inputs for farming + Russian exports going offline (fertilizers and oil). Ukraine won’t come online any time soon to its previous capacity and the replacement for it isn’t known yet. The story on Russia is that it is being cut off completely from the west. The work on demographics is done by Pradhan and Goodhart and of course Peter Zeihan likes to discuss the latter as well. I don’t know where Zeihan gets his sources but he consults for the military and other government agencies. In any case, I’d like to see asset markets deflate courtesy of the Fed raising rates, so I would agree with your take on the Fed holding more responsibility.
bryanlarsen 4y ago
The last 3 years is proof that we haven't been attempting MMT. MMT says that taxes should rise when inflation is up.
- JumpCrisscross 4y ago
  > MMT says that taxes should rise when inflation is up Keynes said that. In theory, fiscal policy alone can keep an economy balanced. In practice, you need an independent central bank. MMT's novel assertion is that government debt is a monetary, not fiscal, exertion. (It also asserts raising rates is stimulative, et cetera.) It's broadly criticized and empirically unsubstantiated.
  - bryanlarsen 4y ago
    > It also asserts raising rates is stimulative, et cetera. Can you cite that? That's very odd, and contradictory to the MMT works I've read.
    - alxmng 4y ago
      Interest on treasury bonds or federal reserve accounts can only come from new money. The Fed has no power to do anything but create money or sell money created by the treasury. All roads lead to the money printer. 1. When central banks raise interest rates, this means governments spend more on their interest payments. This translates into increased income for bondholders. Higher incomes lead to more consumer demand, pushing up prices. Similarly, banks benefit from higher interest payments from the Federal Reserve. In other words, the interest from the higher interest rates goes to someone in the economy, and their demand increases rather than decreasing. 2. Interest rates are a cost for businesses. When central banks raise interest rates, businesses pass this new cost on to consumers in the form of higher prices, which is inflation by definition. 3. Higher interest rates make it harder to start a business and harder to hold inventory. This reduces supply, leading to higher prices aka inflation. 4. Finally, MMT economists point to the fact that there is no empirical research at all showing that higher interest rates decrease inflation. In fact, the correlation runs in the opposite direction. The above points are taken from Additionally, the following points are taken made here https://www.reddit.com/r/mmt_economics/comments/wchq55/raising_interest_rates_to_fight_inflation/ https://www.reddit.com/r/mmt_economics/comments/wchq55/raisi...
    - JumpCrisscross 4y ago
      Straight from Wikipedia [1]. A few coastal politicians saw MMT supports deficits, ignored the intellectual bankruptcy within, and turned it into a polarising topic when it’s just an interesting but impractical way of reframing common topics. [1] https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory
      - bryanlarsen 4y ago
        Wow, Kelton did really say that. I never did finish reading her book, I found it much less convincing than Mosler's or Mitchell's. Many MMT'ers consider themselves to be the true heirs of Keynes, so embracing things that so directly contradict Keynes... Like any field, there are different sides to it. Krugman and Cowell are both mainstream economists, but they disagree on a lot.
- dkqmduems 4y ago
  You don't need mmt understand why taxes should rise.
naasking 4y ago
First, it's self-evident that no one controls inflation, so I'll assume you're talking about the rest. Rate rises are being justified to "loosen the labour market" aka drive unemployment higher, and to suppress wages. Except labour costs are NOT the main driver of recent inflation: https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-inflation-how-should-policymakers-respond/ https://www.epi.org/blog/corporate-profits-have-contributed-... So if employment and high wages aren't driving inflation, then suppressing them will only eventually, indirectly drive down demand to the point where corporations can no longer justify their profiteering.
- lamontcg 4y ago
  > Except labour costs are NOT the main driver of recent inflation Wages drive spending and aggregate demand. We know that tax cuts for the rich don't do it, if you want to juice aggregate demand give everyone a $500 tax rebate. If everyone is employed and their wages are climbing they go out and buy things. > indirectly drive down demand to the point where corporations can no longer justify their profiteering. If you cut those wages that means that means that less is getting bought which means that corporations start to look at warehouses full of flat panel TVs or whatever that aren't moving fast enough, and they start to price them lower in order to move them. The corporation that sticks to their pricing model becomes the one left holding the bag with all the inventory that isn't moving. Dunno why you'd describe that as only "indirectly" affecting prices since that is directly addressing the supply and demand curve that sets the prices of the goods. The company will always try to take any profits it can.
  - roflyear 4y ago
    Rent increases drove inflation
  - naasking 4y ago
    > Dunno why you'd describe that as only "indirectly" affecting prices since that is directly addressing the supply and demand curve that sets the prices of the goods. The company will always try to take any profits it can. It's an interesting double standard that you seem perfectly willing to tolerate this greedy behaviour from corporations, but not when it's individual people getting better wages and being employed. Here's a thought: instead of capping employment and driving down wages, why not cap profits and so drive down incentives to take any profits they can?
roflyear 4y ago
Primarily rate increases don't even correlate with less borrowing (meaning less credit) so how can they correlate with something ten steps down the line, being inflation?!

MJsGlove 4y ago

The user may be referencing work done on global and domestic demographics (aging populations in china and at home) and supply chain challenges highlighted by the Ukraine issues, since Ukraine is home to critical manufacturing inputs for farming + Russian exports going offline (fertilizers and oil). Ukraine won’t come online any time soon to its previous capacity and the replacement for it isn’t known yet. The story on Russia is that it is being cut off completely from the west. The work on demographics is done by Pradhan and Goodhart and of course Peter Zeihan likes to discuss the latter as well. I don’t know where Zeihan gets his sources but he consults for the military and other government agencies. In any case, I’d like to see asset markets deflate courtesy of the Fed raising rates, so I would agree with your take on the Fed holding more responsibility.

bryanlarsen 4y ago

The last 3 years is proof that we haven't been attempting MMT. MMT says that taxes should rise when inflation is up.

JumpCrisscross 4y ago
> MMT says that taxes should rise when inflation is up Keynes said that. In theory, fiscal policy alone can keep an economy balanced. In practice, you need an independent central bank. MMT's novel assertion is that government debt is a monetary, not fiscal, exertion. (It also asserts raising rates is stimulative, et cetera.) It's broadly criticized and empirically unsubstantiated.
- bryanlarsen 4y ago
  > It also asserts raising rates is stimulative, et cetera. Can you cite that? That's very odd, and contradictory to the MMT works I've read.
  - alxmng 4y ago
    Interest on treasury bonds or federal reserve accounts can only come from new money. The Fed has no power to do anything but create money or sell money created by the treasury. All roads lead to the money printer. 1. When central banks raise interest rates, this means governments spend more on their interest payments. This translates into increased income for bondholders. Higher incomes lead to more consumer demand, pushing up prices. Similarly, banks benefit from higher interest payments from the Federal Reserve. In other words, the interest from the higher interest rates goes to someone in the economy, and their demand increases rather than decreasing. 2. Interest rates are a cost for businesses. When central banks raise interest rates, businesses pass this new cost on to consumers in the form of higher prices, which is inflation by definition. 3. Higher interest rates make it harder to start a business and harder to hold inventory. This reduces supply, leading to higher prices aka inflation. 4. Finally, MMT economists point to the fact that there is no empirical research at all showing that higher interest rates decrease inflation. In fact, the correlation runs in the opposite direction. The above points are taken from Additionally, the following points are taken made here https://www.reddit.com/r/mmt_economics/comments/wchq55/raising_interest_rates_to_fight_inflation/ https://www.reddit.com/r/mmt_economics/comments/wchq55/raisi...
  - JumpCrisscross 4y ago
    Straight from Wikipedia [1]. A few coastal politicians saw MMT supports deficits, ignored the intellectual bankruptcy within, and turned it into a polarising topic when it’s just an interesting but impractical way of reframing common topics. [1] https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory
    - bryanlarsen 4y ago
      Wow, Kelton did really say that. I never did finish reading her book, I found it much less convincing than Mosler's or Mitchell's. Many MMT'ers consider themselves to be the true heirs of Keynes, so embracing things that so directly contradict Keynes... Like any field, there are different sides to it. Krugman and Cowell are both mainstream economists, but they disagree on a lot.
dkqmduems 4y ago
You don't need mmt understand why taxes should rise.

naasking 4y ago

First, it's self-evident that no one controls inflation, so I'll assume you're talking about the rest. Rate rises are being justified to "loosen the labour market" aka drive unemployment higher, and to suppress wages. Except labour costs are NOT the main driver of recent inflation: https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-inflation-how-should-policymakers-respond/ https://www.epi.org/blog/corporate-profits-have-contributed-... So if employment and high wages aren't driving inflation, then suppressing them will only eventually, indirectly drive down demand to the point where corporations can no longer justify their profiteering.

lamontcg 4y ago
> Except labour costs are NOT the main driver of recent inflation Wages drive spending and aggregate demand. We know that tax cuts for the rich don't do it, if you want to juice aggregate demand give everyone a $500 tax rebate. If everyone is employed and their wages are climbing they go out and buy things. > indirectly drive down demand to the point where corporations can no longer justify their profiteering. If you cut those wages that means that means that less is getting bought which means that corporations start to look at warehouses full of flat panel TVs or whatever that aren't moving fast enough, and they start to price them lower in order to move them. The corporation that sticks to their pricing model becomes the one left holding the bag with all the inventory that isn't moving. Dunno why you'd describe that as only "indirectly" affecting prices since that is directly addressing the supply and demand curve that sets the prices of the goods. The company will always try to take any profits it can.
- roflyear 4y ago
  Rent increases drove inflation
- naasking 4y ago
  > Dunno why you'd describe that as only "indirectly" affecting prices since that is directly addressing the supply and demand curve that sets the prices of the goods. The company will always try to take any profits it can. It's an interesting double standard that you seem perfectly willing to tolerate this greedy behaviour from corporations, but not when it's individual people getting better wages and being employed. Here's a thought: instead of capping employment and driving down wages, why not cap profits and so drive down incentives to take any profits they can?

roflyear 4y ago

Primarily rate increases don't even correlate with less borrowing (meaning less credit) so how can they correlate with something ten steps down the line, being inflation?!