Modern Monetary Theory

The Agonist ^ | The Agonist

[PeterPrinciple]

Folks,

Somtime times you have to get into the mind of liberals to understand what they are thinking. Another posting here had a reference to Modern Monetary Theory so I chased the rabbit. Did not find reference to this in search. A general search shows activity in academics and bloggers.

If you do some research and thinking on this you will see that this is the theory our govt is operating under. It is the new fashionable economic theory adopted by the elites.

This is only one of many sourced, but do some research and reading because the idea is GROWING.

[PeterPrinciple]

In this case, wikipedia has some good background information.

http://en.wikipedia.org/wiki/Chartalism

Folks, this is going to require thinking, get out your thinking caps.

[delapaz]

see also chartalism: link It's fascinating to see a theory which makes Keynesians look sane and sober-minded. There have some correct ways of looking at fiat money, but in real world terms, I think MMT is beyond dangerous.

[PeterPrinciple]

Again, taxes reduce demand in the private sector to make room for government spending.

Note that this turns our normal reasoning on its head. The federal government does not tax you so that it can then spend your money on buying or providing goods and services. It taxes you so that you cannot spend as much of your money on goods and services, which then makes room for it to spend money on them instead.

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Did you get that? We are in the govt’s way. This is about as open and honest of a statement as you can get from our govt and elitists.

[GOPJ]

Liberals think it's all ‘funny money’ - that contruct works as long as ‘funny money’ will buy the world's labor and production. The flaw is it only works when a country has earned reserve currency status. A status our grandparents eared for us... If a liberal doubts this they can look at Haiti and try to explain why Haiti can't do the same with their 'money'...

[GOPJ]

Liberals think it's all ‘funny money’ - that construct works as long as ‘funny money’ will buy the world's labor and production. Two groups have to accept the illusion - the producers and consumers.

The flaw is it only works when a country has earned reserve currency status. A status our grandparents eared for us... If a liberal doubts this they can look at Haiti and try to explain why Haiti can't do the same... buy it all with ‘funny money’...

[the invisib1e hand]

whether you like it or not, it certainly puts things in perspective.

[Thane_Banquo]

Why does the government have to issue debt (as under the gold currency regime) when it doesn’t need the money in the first place? It generates money, so neither taxes nor loans made via debt contribute to government funds.

This is such sophistry. The guy who wrote this should simply note that when the government issues debt, the amount of currency in its Treasury increases. So therefore debt does contribute to government funds.

[Thane_Banquo]

Spending beyond the economy’s total productive capacity is what leads to inflation. This additional money cannot buy any new products or services (there’s no way to make them since we’re at full capacity), so it goes toward bidding on existing products and services and therefore raises their prices.

The author claims this new theory is distinct from Keynesianism, and then posits one of the central tenets of Keynesianism. If this statement is true, stagflation cannot happen and the 1970's are just a figment of our imaginations.

[delapaz]

Basically MMT is a very fancy way for the guv to skim wealth from the producers in the country. In Haiti of course there are no producers, so the theory sort of breaks down, and does not escape the laws of the copybook headings. (If you don’t work you will starve).

[PeterPrinciple]

Full employment

For Chartalists, a preferred method of achieving full employment and price stability is the Job guarantee. Under the notion of Job Guarantee, the pool of unemployed workers is guaranteed a job by the government – typically at minimum wage – and this would act as a buffer stock and automatic stabilizer to the wider economy. By decreasing in size it would lower deficits and deflate booming economies, and by increasing in size, enlarge deficits and stimulate depressed economies.

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So Workman's comp is now a job guarantee, a reserve pool.

[PeterPrinciple]

This is such sophistry.

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I agree but they believe in it and are implementing it.

[Southack]

MMT, Keynesian, and Monetarist theories are all fatally flawed. For one thing, none of them take into account private credit availability even though all of the world’s major economies are credit-based.

The problem with the government simply printing money...or with the government borrowing money...is that either action destroys more private credit than whatever new money was either borrowed or printed.

Thus, government over-spending leads to deflation...a slower speed of money...because that over-spending (above tax revenues) destroys access to private credit.

[PeterPrinciple]

This is such sophistry.

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I agree but they believe in it and are implementing it.

[GOPJ]

Jobs are people doing favors for each other. “Money” is the accounting of those favors. Government stepping in to give validity to "a money" by issuing debt is also their way of taking a cut of the action. And yeah, if they take too much it devalues the currency.Paper isn't that different than gold - both represent 'wealth of favors' - one is ever so slightly 'more real' - the major difference being one can be manipulated unethically easier...

[GOPJ]

When we destroy the illusion of our productivity, our money is no different than Haiti's...

[DaxtonBrown]

“Spending beyond the economy’s total productive capacity is what leads to inflation. “

This is moronic thinking. What is important about money is it’s information carrying capacity, period. Arbitrary fluctuations, whether for pump priming or whatever are devastating to information content. Any fixed rule will work, whether it is inflationary or deflationary, as long as it is fixed. But politicians like to steal, so they can’t keep with a constant fiat currency but debase it in an accelerating way. That’s where gold comes in, because it is stable, but it is also subject to fractional banking.

So in short, that’s why you have revolutions, to purge the kings/bankers when they steal too much. The idea that central bankers can know how much money to pump in to keep the economy at full roar is absurd Keynesianism which we are now experiencing in full fail mode.

[PeterPrinciple]

Keynesian-ism which we are now experiencing in full fail mode.

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They agree with you, modern monetary theory replaces the failed Keynesian economics.

[PeterPrinciple]

Your taxes do not pay for any federal government expenditures. Taxes are instead a form of private sector demand reduction.

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These people believe this and act on it.

[blam]

Thanks.

BFL.