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There is a new documentary about MMT. it says all the progressive agendas can easily be paid for, because the national debt does not matter. The theory never made sense to me, or to a lot of economists. I saw an interview with the filmmaker, and everything she said sounded like confusing double talk.
Yet people are likely to buy this, if they are progressives, because it makes paying for climate change prevention measures, national health insurance, etc., possible and easy.
She says something like the US issues the debt, so it does not have to pay it back. But what about all the foreign investors? What about the retirement funds?
And then she says it's a myth that the Federal Reserve created the current inflation with its massive money creation. She says inflation has many different causes, which all must be addressed separately.
That doesn't sound true to me. And how can all those many causes be figured out and addressed? But obviously, massive money creation (quantitative easing) would eventually cause inflation.
She says the Fed is wrong to raise interest rates in order to control inflation.
Sounds like a ton of BS to me. But if experts say anything with authority, progressives are likely to believe it. The more confusing the better -- if it's confusing that means only smart experts can understand it.
The more simple truths are, it seems to me, that what goes up must go down and you can't keep the economy inflated forever with money creation. And too much money in circulation causes inflation.
There is a new documentary about MMT. it says all the progressive agendas can easily be paid for, because the national debt does not matter. The theory never made sense to me, or to a lot of economists. I saw an interview with the filmmaker, and everything she said sounded like confusing double talk.
Yet people are likely to buy this, if they are progressives, because it makes paying for climate change prevention measures, national health insurance, etc., possible and easy.
She says something like the US issues the debt, so it does not have to pay it back. But what about all the foreign investors? What about the retirement funds?
And then she says it's a myth that the Federal Reserve created the current inflation with its massive money creation. She says inflation has many different causes, which all must be addressed separately.
That doesn't sound true to me. And how can all those many causes be figured out and addressed? But obviously, massive money creation (quantitative easing) would eventually cause inflation.
She says the Fed is wrong to raise interest rates in order to control inflation.
Sounds like a ton of BS to me. But if experts say anything with authority, progressives are likely to believe it. The more confusing the better -- if it's confusing that means only smart experts can understand it.
The more simple truths are, it seems to me, that what goes up must go down and you can't keep the economy inflated forever with money creation. And too much money in circulation causes inflation.
The National Debt will never be paid off. Quite different than personal or business debt.
What are you saying or asking about foreign investors and retirement funds?
Some of current inflation has to be due to all the new money creation by the Fed. Most post Covid was due to supply/demand dysfunction and inequalities.
QE's did not cause inflation post 2008 crash, but it did with Covid related QE as intended to prevent recession.
Increased interest rates have provided over $200B to the private sector this past year, which has to tend inflationary.
The National Debt will never be paid off. Quite different than personal or business debt.
What are you saying or asking about foreign investors and retirement funds?
Some of current inflation has to be due to all the new money creation by the Fed. Most post Covid was due to supply/demand dysfunction and inequalities.
QE's did not cause inflation post 2008 crash, but it did with Covid related QE as intended to prevent recession.
Increased interest rates have provided over $200B to the private sector this past year, which has to tend inflationary.
The national debt is what the US government owes to its creditors, including foreign investors and domestic retirement accounts. Everyone who buys US bonds.
"Some of current inflation has to be due to all the new money creation by the Fed." Yes. Regardless of what the MMTers say.
"QE's did not cause inflation post 2008 crash, but it did with Covid related QE as intended to prevent recession."
Because post 2008 the money did not go into circulation, but it was there waiting. Covid related QE was massive, and got into circulation.
"Increased interest rates have provided over $200B to the private sector this past year, which has to tend inflationary." Yes, but raising interest is the only lever the Fed can adjust to control inflation.
It's another economic fringe theory. Stephanie Kelton, author of The Deficit Myth, was an advisor for Bernie Sanders' 2016 presidential campaign. Alexandria Ocasio-Cortez is also a supporter. Supporters of MMT also favor wage & price controls as an economic policy tool. Those of us old enough to remember the 1970s know how that turned out. Detractors call MMT Magic Money Tree.
It's another economic fringe theory. Stephanie Kelton, author of The Deficit Myth, was an advisor for Bernie Sanders' 2016 presidential campaign. Alexandria Ocasio-Cortez is also a supporter. Supporters of MMT also favor wage & price controls as an economic policy tool. Those of us old enough to remember the 1970s know how that turned out. Detractors call MMT Magic Money Tree.
Yes I understand that MMT is non-mainstream. However, it is a great temptation for politicians to not worry about spending or debt. And the new documentary might convince and confuse people, especially progressives.
Confusing double-talk by a university professor is all some progressives need to feel a theory is valid. Especially if it's what they want to hear. Free healthcare! Ending climate change! Yay!
MMT is sloganeering. I would call MMT pure baloney but that is an insult to deli meat.
Economic theories are collections of mathematical models. If you want to know what the theory says, you can parse out the math of the models and see for yourself.
MMT is different. There are many wordy explainers and videos that will explain some of the concepts behind MMT, or tell you some of MMT's policy recommendations. But that's different than having a formal model of the economy.
Why?
There is no formal MMT model of the economy. If there were, economists could compare the model with quantitative data to see whether the model holds or fails. If there were a formal MMT model, it could make testable predictions.
There are no MMT articles in major peer-reviewed academic journals.
There are essentially no MMT articles at major professional conferences, such as the American Economic Association meetings.
There are no academic MMT articles in the major working paper series.
There are no scholarly MMT books from university presses.
So where does MMT live? It is almost entirely a creature of tweets, blog posts, youtube videos, and so on. That isn't academic inquiry.
Still... might it be right anyway? After all, "The absence of evidence does not imply the evidence of absence."
Monetary economics (regular monetary theory, not MMT) is a well established field, and this range of ideas -- the nature of money, the tax backing of money, the interaction of monetary and fiscal policy, government budget constraints and so on -- is well within the range that current intellectual institutions debate knowledgeably. The fraction of good, solid, ready-for-policy ideas of that come outside the scientific mainstream via tweets & blog posts is vanishingly small, and the fraction of crackpot junk science there is pretty large.
There is a lot of mileage that must be covered before a somewhat radical idea such as MMT is ready for policy evaluation. MMT certainly isn't ready for prime time, and on its current vector it probably never will be. But that might not be the point of MMT.
MMT, rather than being an economic theory, at current seems to be a political rallying cry analogous to the 1920s political slogan "A Chicken in Every Pot."
Well, here is one working paper that seems to examine MMT:
Modern Monetary Theory: Cautionary Tales from Latin America
By Sebastian Edwards, Henry Ford II Distinguished Professor of International Economics, Anderson Graduate School of Management, UCLA
Economics Working Paper 19106
April 25, 2019
Quote:
According to Modern Monetary Theory (MMT) it is possible to use expansive monetary policy – money creation by the central bank (i.e. the Federal Reserve) – to finance large fiscal deficits that will ensure full employment and good jobs for everyone, through a “jobs guarantee†program. In this paper I analyze some of Latin America’s historical episodes with MMT-type policies (Chile, Peru. Argentina, and Venezuela). The analysis uses the framework developed by Dornbusch and Edwards (1990, 1991) for studying macroeconomic populism. The four experiments studied in this paper ended badly, with runaway inflation, huge currency devaluations, and precipitous real wage declines. These experiences offer a cautionary tale for MMT enthusiasts.
MMT is sloganeering. I would call MMT pure baloney but that is an insult to deli meat.
Economic theories are collections of mathematical models. If you want to know what the theory says, you can parse out the math of the models and see for yourself.
MMT is different. There are many wordy explainers and videos that will explain some of the concepts behind MMT, or tell you some of MMT's policy recommendations. But that's different than having a formal model of the economy.
Why?
There is no formal MMT model of the economy. If there were, economists could compare the model with quantitative data to see whether the model holds or fails. If there were a formal MMT model, it could make testable predictions.
There are no MMT articles in major peer-reviewed academic journals.
There are essentially no MMT articles at major professional conferences, such as the American Economic Association meetings.
There are no academic MMT articles in the major working paper series.
There are no scholarly MMT books from university presses.
So where does MMT live? It is almost entirely a creature of tweets, blog posts, youtube videos, and so on. That isn't academic inquiry.
Still... might it be right anyway? After all, "The absence of evidence does not imply the evidence of absence."
Monetary economics (regular monetary theory, not MMT) is a well established field, and this range of ideas -- the nature of money, the tax backing of money, the interaction of monetary and fiscal policy, government budget constraints and so on -- is well within the range that current intellectual institutions debate knowledgeably. The fraction of good, solid, ready-for-policy ideas of that come outside the scientific mainstream via tweets & blog posts is vanishingly small, and the fraction of crackpot junk science there is pretty large.
There is a lot of mileage that must be covered before a somewhat radical idea such as MMT is ready for policy evaluation. MMT certainly isn't ready for prime time, and on its current vector it probably never will be. But that might not be the point of MMT.
MMT, rather than being an economic theory, at current seems to be a political rallying cry analogous to the 1920s political slogan "A Chicken in Every Pot."
Well, here is one working paper that seems to examine MMT:
Modern Monetary Theory: Cautionary Tales from Latin America
By Sebastian Edwards, Henry Ford II Distinguished Professor of International Economics, Anderson Graduate School of Management, UCLA
Economics Working Paper 19106
April 25, 2019
YES. I am not an economist so i wasn't sure I could trust my own logic about MMT. I don't like to reject ideas just because they are non-mainstream. HOWEVER, everything I heard so far about MMT sounds like obvious TOTAL BS.
I don't have the link anymore, but I watched a video of the filmmaker, who idolizes Stephanie Kelton. She sounds like a progressive propagandist, whose goal is to deceive not to inform.
It seems the proponents usually link MMT to policy recommendations:
With MMT, the government can effectively borrow as much as it wants without negative consequences
So.... let's borrow a lot of money and hand it out to poor people, POC, social justice initiatives, DEI initiatives, housing subsidies for the poor, solar power, wind power, ban fossil fuels, etc.
Somehow, proponents of MMT never say:
With MMT, the government can effectively borrow as much as it wants without negative consequences
So.... let's borrow a lot of money and use it to rebuild our military, buy more nuclear bombs, invest in nuclear power, build more hydroelectric plants and coal-fired power plants, eliminate corporate taxes, prepare for war with Iran, China, and Russia, etc.
It seems the proponents usually link MMT to policy recommendations:
With MMT, the government can effectively borrow as much as it wants without negative consequences
So.... let's borrow a lot of money and hand it out to poor people, POC, social justice initiatives, DEI initiatives, housing subsidies for the poor, solar power, wind power, ban fossil fuels, etc.
Somehow, proponents of MMT never say:
With MMT, the government can effectively borrow as much as it wants without negative consequences
So.... let's borrow a lot of money and use it to rebuild our military, buy more nuclear bombs, invest in nuclear power, build more hydroelectric plants and coal-fired power plants, eliminate corporate taxes, prepare for war with Iran, China, and Russia, etc.
No, their recommendations are all standard progressive.
BUT EITHER WAY, it puts the government in control of what gets spent on what. It kills free enterprise, because who can compete with a government with unlimited cash to spend?
AND FINALLY, the whole thing comes crashing down as always happens with attempts at central planning. Instead of a free marketplace deciding what ideas are worth spending on, the central government decides. Instead of consumers deciding what products are the best, the central government decides.
Basically, the MMTers want to follow the example of the Soviet Union. Not surprising, since university economists are mostly neo-Marxists now.
There is a new documentary about MMT. it says all the progressive agendas can easily be paid for, because the national debt does not matter. The theory never made sense to me, or to a lot of economists. I saw an interview with the filmmaker, and everything she said sounded like confusing double talk.
Yet people are likely to buy this, if they are progressives, because it makes paying for climate change prevention measures, national health insurance, etc., possible and easy.
She says something like the US issues the debt, so it does not have to pay it back. But what about all the foreign investors? What about the retirement funds?
And then she says it's a myth that the Federal Reserve created the current inflation with its massive money creation. She says inflation has many different causes, which all must be addressed separately.
That doesn't sound true to me. And how can all those many causes be figured out and addressed? But obviously, massive money creation (quantitative easing) would eventually cause inflation.
She says the Fed is wrong to raise interest rates in order to control inflation.
Sounds like a ton of BS to me. But if experts say anything with authority, progressives are likely to believe it. The more confusing the better -- if it's confusing that means only smart experts can understand it.
The more simple truths are, it seems to me, that what goes up must go down and you can't keep the economy inflated forever with money creation. And too much money in circulation causes inflation.
Let me guess. Bloomberg? Business Insider?
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