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So with my poor laypersons understanding of MMT, governments print money to direct a nations resources where they want (ie if govt pays for nurses they are out

So with my poor laypersons understanding of MMT, governments print money to direct a nations resources where they want (ie if govt pays for nurses they are out competing the private sectors use of same person for say food delivery). But if they don’t tax that money away then inflation occurs. They cannot tax the nurse 100% (!) so the money goes up the wealth chain (to nurses landlord and electric utilities owners). And then it gets invested in things like grub hub Now the govt could tax the wealthy - but they don’t for reaosns (usually to do with campaign finance but also other less corrupt reasons) But here grubhub just set fire to 5.5Bn dollars. Which from MMT pov is exactly the same as taxing it And now the govt can print 5.5bn new dollars and spend it on nurses … with in theory net zero inflation effect And that ladies and gentlemen is how MMT looks like Keynesianism with a new coat of paint And is also why wealth taxes - which there is a fair bit of resistance to - is more or less the same as some horrific stock market crash - just the taxes are more controlled and more targeted And why bonds are the compromise candidate in that debate as well ! Edit: so on bonds - if inflation is at 10% as was recently then offering 100bn of 20 year treasuries at 1% is taking 100bn out of the market or removing 9% of inflation pressure for the cost of 1% pa. It does mean that when the bond market that every government is afraid of starts charging 7% then governments response really should be - ok that’s too expensive a means of reducing inflation - we are going to tax the wealthy instead. Which is why I find it weird most governments have been persuaded to tie one hand behind their backs …

alberth 2y ago
You're overcomplicating it. It's just Capitalism. Someone made a $5B bet and it didn't payoff. It's nothing more than that.
sdwr 2y ago
Hang on, it's only the same if Just Eat bought GrubHub from the government. Otherwise, the $5.5B isn't removed from circulation, it's in the hands of the previous owners of GrubHub
- lifeisstillgood 2y ago
  Hmmm, my dreams of the Nobel in economics goes up in smoke. I think it depends on how just eat financed it. If they borrowed 6bn from a bank, then the bank created 6bn from thin air, and will more or less have to write that off as just eat won’t pay it back. So the net balance will be .. err 6bn created and given to just eat: bank assets 6bn, just eat liability 6bn - total new cash in world is 6bn. Just eat hands 6B to lucky founder, in return for a website and domain name. Aha - the bank is the creator of the money - they magic it into existence - now if lucky founder deposits it into same bank, they have a liability of 6bn to him, and previously had a asset of 6bn of loans. Net zero. But now they have to write off the 6bn asset, so they are negative 6bn. So total money across the economy is down 6bn This also - I think - works if just eat raised it from VCs who got it from investors - someone at some point loaned money to someone or is obliged to pay it back. This shit is harder than it looks on Steve keens podcast
yieldcrv 2y ago
Yeah this was a very poor and incorrect understanding. Many assumptions. Tax isnt to curb inflation. The wealthy do get taxed. Everything about creating money and to whom was wrong. Look, everything makes more sense if you ditch that entire understanding and look at it like this: The speed that money moves in an economy is more important than the revenues the government earns. So the government’s ability to collect tax actually isnt the priority, and it isnt controversial when your entity earns and has nothing for the government to collect. No individual politician is responsible for this view or would even lead with it, but the aggregate outcome is that the government incentivizes some forms of transactions. If you do them, it wont tax you, and if you do something else it will tax you on the remainder. For example, you just want to earn income and save? This is the most heavily taxed because money is not moving in the economy and you are penalized for trying to take no risk. In this case in the article, taking risk is incentivized. Just Eat moved ~6bn dollars to grubhub’s prior owners a couple years ago, in exchange for shares of grubhub. This is the velocity we want. They sold it to someone else and realized a 90% loss. That’s a side effect of taking risk and the government allows tax deductions against future gains. Just Eat can make 5.5bn tax free now if they ever have any profitable trades. Money moving in the economy into businesses and assets is more important and incentivized.
- marcosdumay 2y ago
  I'm not disagreeing with your overall point. But: > Tax isnt to curb inflation. In MMT, it is for that, and only for that. > The speed that money moves in an economy is more important than the revenues the government earns. AFAIK, that's not known. I'd really like to hear if anybody knows more here.
- lifeisstillgood 2y ago
  I am dubious about the speed issue - I am pretty sure wash trades are fast, but they don’t count. So we need some measure of “transactions, but that produce or have chance to produce value” - which is kind of back to square one. >>> Tax isnt to curb inflation. Under MMT tax is for destroying money >>> The wealthy do get taxed. But at the same rate as labour ? No. Ie capital gains vs income tax. This might be a fairness issue but it is also directly a resource allocation and incentive issue. If we want more risk to produce more value why not incentivise labour over investment - in the end who will be left to do the labour ? >>> Everything about creating money and to whom was wrong. Governments print money as do banks - it’s where it comes from as a debt. Not sure how else to put it
marcosdumay 2y ago
If you are going with MMT with a state monopoly on money creation (that extra assumption isn't automatic), then the only way private entities can make money disappear is if they literally burn it. Only the government can do that by transactions. (And if you decide to go with private money creation, it's way more complex, and I have very little confidence on you solving the problem you stated.) > And that ladies and gentlemen is how MMT looks like Keynesianism with a new coat of paint Your explanation doesn't sound like Keynesianism at all (with the "ism" it's that theory that Keynes didn't believe in). It sounds exactly like Monetarism (with the "ism" it's that theory that isn't derived from the MMT). > It does mean that when the bond market that every government is afraid of starts charging 7% then governments response really should be - ok that’s too expensive a means of reducing inflation - we are going to tax the wealthy instead. Taxing the wealthy tends to be healthy. And after several years, your tax rate may have some impact on the interest rate (nobody really knows, lots of people claim to know). But on the best case, there's a delay to take into account that your idea does not fit at all.

alberth 2y ago

You're overcomplicating it. It's just Capitalism. Someone made a $5B bet and it didn't payoff. It's nothing more than that.

sdwr 2y ago

Hang on, it's only the same if Just Eat bought GrubHub from the government. Otherwise, the $5.5B isn't removed from circulation, it's in the hands of the previous owners of GrubHub

lifeisstillgood 2y ago
Hmmm, my dreams of the Nobel in economics goes up in smoke. I think it depends on how just eat financed it. If they borrowed 6bn from a bank, then the bank created 6bn from thin air, and will more or less have to write that off as just eat won’t pay it back. So the net balance will be .. err 6bn created and given to just eat: bank assets 6bn, just eat liability 6bn - total new cash in world is 6bn. Just eat hands 6B to lucky founder, in return for a website and domain name. Aha - the bank is the creator of the money - they magic it into existence - now if lucky founder deposits it into same bank, they have a liability of 6bn to him, and previously had a asset of 6bn of loans. Net zero. But now they have to write off the 6bn asset, so they are negative 6bn. So total money across the economy is down 6bn This also - I think - works if just eat raised it from VCs who got it from investors - someone at some point loaned money to someone or is obliged to pay it back. This shit is harder than it looks on Steve keens podcast

yieldcrv 2y ago

Yeah this was a very poor and incorrect understanding. Many assumptions. Tax isnt to curb inflation. The wealthy do get taxed. Everything about creating money and to whom was wrong. Look, everything makes more sense if you ditch that entire understanding and look at it like this: The speed that money moves in an economy is more important than the revenues the government earns. So the government’s ability to collect tax actually isnt the priority, and it isnt controversial when your entity earns and has nothing for the government to collect. No individual politician is responsible for this view or would even lead with it, but the aggregate outcome is that the government incentivizes some forms of transactions. If you do them, it wont tax you, and if you do something else it will tax you on the remainder. For example, you just want to earn income and save? This is the most heavily taxed because money is not moving in the economy and you are penalized for trying to take no risk. In this case in the article, taking risk is incentivized. Just Eat moved ~6bn dollars to grubhub’s prior owners a couple years ago, in exchange for shares of grubhub. This is the velocity we want. They sold it to someone else and realized a 90% loss. That’s a side effect of taking risk and the government allows tax deductions against future gains. Just Eat can make 5.5bn tax free now if they ever have any profitable trades. Money moving in the economy into businesses and assets is more important and incentivized.

marcosdumay 2y ago
I'm not disagreeing with your overall point. But: > Tax isnt to curb inflation. In MMT, it is for that, and only for that. > The speed that money moves in an economy is more important than the revenues the government earns. AFAIK, that's not known. I'd really like to hear if anybody knows more here.
lifeisstillgood 2y ago
I am dubious about the speed issue - I am pretty sure wash trades are fast, but they don’t count. So we need some measure of “transactions, but that produce or have chance to produce value” - which is kind of back to square one. >>> Tax isnt to curb inflation. Under MMT tax is for destroying money >>> The wealthy do get taxed. But at the same rate as labour ? No. Ie capital gains vs income tax. This might be a fairness issue but it is also directly a resource allocation and incentive issue. If we want more risk to produce more value why not incentivise labour over investment - in the end who will be left to do the labour ? >>> Everything about creating money and to whom was wrong. Governments print money as do banks - it’s where it comes from as a debt. Not sure how else to put it

marcosdumay 2y ago

If you are going with MMT with a state monopoly on money creation (that extra assumption isn't automatic), then the only way private entities can make money disappear is if they literally burn it. Only the government can do that by transactions. (And if you decide to go with private money creation, it's way more complex, and I have very little confidence on you solving the problem you stated.) > And that ladies and gentlemen is how MMT looks like Keynesianism with a new coat of paint Your explanation doesn't sound like Keynesianism at all (with the "ism" it's that theory that Keynes didn't believe in). It sounds exactly like Monetarism (with the "ism" it's that theory that isn't derived from the MMT). > It does mean that when the bond market that every government is afraid of starts charging 7% then governments response really should be - ok that’s too expensive a means of reducing inflation - we are going to tax the wealthy instead. Taxing the wealthy tends to be healthy. And after several years, your tax rate may have some impact on the interest rate (nobody really knows, lots of people claim to know). But on the best case, there's a delay to take into account that your idea does not fit at all.