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This article has so many problems, but it's typical MMT talking points. If savings incerease when the deficit increases, why don't we crank defecit so high tha

This article has so many problems, but it's typical MMT talking points. If savings incerease when the deficit increases, why don't we crank defecit so high that everyone can be billionaires? And if the savings decreases when the deficit decreases the entire country must have been broke when we paid off our debt in 1835. Right?

dools 3y ago
> If savings incerease when the deficit increases, why don't we crank defecit so high that everyone can be billionaires? Nominal wealth is relative. If everyone is a billionaire it doesn’t change the relative claims we all have on real resources. What we can do however, and what MMT economists recommend, is using the power of the federal government as the issuer of the currency to ensure spending is maintained at full employment levels (meaning 0% involuntary unemployment). The best mechanism to achieve that is a federal job guarantee. > And if the savings decreases when the deficit decreases the entire country must have been broke when we paid off our debt in 1835. Right? Well sort of. Every budget surplus leads to a recession or depression[0]. However the US could retire all its “debt” overnight and stop issuing bonds and paying interest if it wanted to, without any surplus. The fancy terms for this are quantitative easing and overt monetary financing but fundamentally there is no difference between treasury issuing bonds “out of thin air” and issuing reserves “out of thin air”. Both reserves and government securities are high grade financial assets held by private banks, the nature of the liability held makes virtually no difference to the operation of the money system. Bonds are simply used to set and defend the target cash rate which is also a pointless vestige, we should just have ZIRP forever[1]. [0] https://www.levyinstitute.org/pubs/pn99_3.pdf https://www.levyinstitute.org/pubs/pn99_3.pdf [1] https://neweconomicperspectives.org/2014/07/debt-free-money-zirp-forever.html https://neweconomicperspectives.org/2014/07/debt-free-money-...
- keep_reading 3y ago
  > ensure spending is maintained at full employment This is the MMT fallacy. Full employment != full production. If you want your economy to be as efficient and productive as possible, the mandate cannot be "full employment". This means inefficient workers must be paid to not work. https://fee.org/resources/economics-in-one-lesson/#calibre_link-30 https://fee.org/resources/economics-in-one-lesson/#calibre_l...
  - dools 3y ago
    Ignoring the weird philosophical overtones that come with any libertarian treatise on economics, the fundamental reason why we should eliminate involuntary unemployment is because it is the imposition of taxes to provision government which creates unemployment in the first place. It doesn't really matter if workers in a job guarantee program are productive in the sense of being profitable, because involuntary unemployment has a negative (not neutral) impact on productivity at an individual and a societal level. Ensuring spending is at full employment levels through a job guarantee maintains a buffer stock of employed and employable labour, ready for work in either the public or private sector, or at the very least prevents intergenerational poverty cycles from forming due to the negative impacts of involuntary unemployment.
    - keep_reading 3y ago
      If people want a job and are capable we should absolutely make sure they are working. That is not being challenged. But what about all the people who we force to work who should not be working due to age or a disability? That's not "involuntary unemployment"; that's "involuntary employment"! We're using the coercion of homelessness and despair to force these people into roles where they are not suitable and then we pay a shift supervisor to hold their hand all day.
      - dools 3y ago
        Well, if there are people who can't or shouldn't work at all, then I personally think they should just get the JG wage (this could extend to new parents, the aged, the infirmed, and so on). However you might find that there are some aged, infirmed or disabled people who do want to work, and almost anyone can do something. It may be in their best interests, and in the best interests of society, to support their efforts. When you remove a private sector profit motive your definition of "useful work" can expand quite a bit. For the most part, though, involuntary unemployment consists of people who are willing and able to work, but who can't find employment in the private or permanent public sectors.

dools 3y ago

> If savings incerease when the deficit increases, why don't we crank defecit so high that everyone can be billionaires? Nominal wealth is relative. If everyone is a billionaire it doesn’t change the relative claims we all have on real resources. What we can do however, and what MMT economists recommend, is using the power of the federal government as the issuer of the currency to ensure spending is maintained at full employment levels (meaning 0% involuntary unemployment). The best mechanism to achieve that is a federal job guarantee. > And if the savings decreases when the deficit decreases the entire country must have been broke when we paid off our debt in 1835. Right? Well sort of. Every budget surplus leads to a recession or depression[0]. However the US could retire all its “debt” overnight and stop issuing bonds and paying interest if it wanted to, without any surplus. The fancy terms for this are quantitative easing and overt monetary financing but fundamentally there is no difference between treasury issuing bonds “out of thin air” and issuing reserves “out of thin air”. Both reserves and government securities are high grade financial assets held by private banks, the nature of the liability held makes virtually no difference to the operation of the money system. Bonds are simply used to set and defend the target cash rate which is also a pointless vestige, we should just have ZIRP forever[1]. [0] https://www.levyinstitute.org/pubs/pn99_3.pdf https://www.levyinstitute.org/pubs/pn99_3.pdf [1] https://neweconomicperspectives.org/2014/07/debt-free-money-zirp-forever.html https://neweconomicperspectives.org/2014/07/debt-free-money-...

keep_reading 3y ago
> ensure spending is maintained at full employment This is the MMT fallacy. Full employment != full production. If you want your economy to be as efficient and productive as possible, the mandate cannot be "full employment". This means inefficient workers must be paid to not work. https://fee.org/resources/economics-in-one-lesson/#calibre_link-30 https://fee.org/resources/economics-in-one-lesson/#calibre_l...
- dools 3y ago
  Ignoring the weird philosophical overtones that come with any libertarian treatise on economics, the fundamental reason why we should eliminate involuntary unemployment is because it is the imposition of taxes to provision government which creates unemployment in the first place. It doesn't really matter if workers in a job guarantee program are productive in the sense of being profitable, because involuntary unemployment has a negative (not neutral) impact on productivity at an individual and a societal level. Ensuring spending is at full employment levels through a job guarantee maintains a buffer stock of employed and employable labour, ready for work in either the public or private sector, or at the very least prevents intergenerational poverty cycles from forming due to the negative impacts of involuntary unemployment.
  - keep_reading 3y ago
    If people want a job and are capable we should absolutely make sure they are working. That is not being challenged. But what about all the people who we force to work who should not be working due to age or a disability? That's not "involuntary unemployment"; that's "involuntary employment"! We're using the coercion of homelessness and despair to force these people into roles where they are not suitable and then we pay a shift supervisor to hold their hand all day.
    - dools 3y ago
      Well, if there are people who can't or shouldn't work at all, then I personally think they should just get the JG wage (this could extend to new parents, the aged, the infirmed, and so on). However you might find that there are some aged, infirmed or disabled people who do want to work, and almost anyone can do something. It may be in their best interests, and in the best interests of society, to support their efforts. When you remove a private sector profit motive your definition of "useful work" can expand quite a bit. For the most part, though, involuntary unemployment consists of people who are willing and able to work, but who can't find employment in the private or permanent public sectors.