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Dead Reckoning posted:If you don't actually care about what things cost because you would, as a moral imperative, rather bankrupt the country than see a child go hungry, then it doesn't matter what framework you use to model government currency flows. twodot fucked around with this message at 17:50 on Jun 20, 2019 |
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Jun 20, 2019 17:46
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Some interesting discussion happening. I'm surprised that so many posters in this thread seem so skeptical about MMT. It seems wildly popular in this forum.
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Jun 20, 2019 17:56
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punk rebel ecks posted:MMT stands for Modern Monetary Theory. It's a new(ish) economic theory similar to Keynesian and Classical that's been gaining steam over the years. Some thoughts: 1. MMT is a convergence of a number of strands of heterodox macro, notably of which there is 1) a kind of Abba Lerner-ish functional finance, emphasizing #4, and 2) post-Keynesian theories of loanable funds, emphasizing #5 I mention this because your #4 and #5 don't sit well together - #4 is an assertion that the govt can control 'excess money' and #5 is an assertion that it cannot. In technical terms the battle there is over whether a real interest rate is a thing that exists, and that clears the loanable funds market. This can and has filled books, but it's not necessary to plunge down that rabbit-hole to see the difficulty 2. In the MMT critique of conventional monetary policy, it's that the central bank swaps short-term liabilities (that is, cash or cashlike instruments) for long-term liabilities, or vice versa, and it's not clear why juggling this yield curve is supposed be effective or the most effective. Fine. So MMT says, okay, let's swap central bank short-term liabilities for government liabilities instead (namely govt obligations). And this is supposed to be dramatically different from the status quo. Well, maybe! But there are real-life economies that swap central bank short-term liabilities for... the short-term liabilities of other central banks, i.e., those small open economies that use the exchange rate as an instrument to target domestic macroeconomic goals (generally the balance between imports and exports). These economies don't seem to look very different from the small open economies that use the domestic interest rate as the instrument, and in particular the level of long-run unemployment does not look very different. This puts a big damper on promises of dramatically higher real rates of growth 3. once that promise evaporates, it's not very clear that the effect is much different from sufficiently anticyclical automatic stabilizers 4. I'm just going to quote SR Waldmann here in full for this point: quote:However, a sovereign government can always create demand for its money and debt via its coercive ability to tax. That is, if optimistic agents with strong balance sheets start up a spending spree, or if gold bugs fearful of devaluation ditch government paper for commodities, a government can reverse those flows by forcing private agents to surrender real goods and services for the money they will owe in taxes. If you wind back down to talking about credibility, commitment, and long-term expectations of the fiscal policy position, the math starts looking very conventional and wriggling the yield curve suddenly looks more plausible. 5. Initiating infrastructure projects takes a great number of years to approve and review, and perennially changing conditions means that holding projects in reserve as potential antirecessionary reserves is itself highly costly. As a practical point this means that the fiscal tool of choice is probably a broad-based tax, and if the target is unemployment then the best candidate is a payroll tax instrument, which ensures that both the micro and macro forces point the right way, most working people already pay it, and most working people will keep paying it so there's no "zero lower bound" so to speak. The instrument would be employer-side if one believes that the employee-side is nominally sticky, or vice versa. There's potential here, certainly, and there are even actually-existing countries that do this kind of thing, but it's perhaps not very exciting 6. "political will" is not a solved problem. Exhibit 1: every single country with a strong resource swing on the budgetary position. In particular, wind back to the Oughts when copper and oil prices were high and contemplate whether you were musing on the relevant Latin American countries and considering it obvious that they should be exercising more rather than less fiscal restraint, precisely because they were awash in plenty. Exhibit 2: every single person who says "MMT" and then "so let's pay for this new permanent item" in the next breath. That breath is exactly how long the sincere commitment to functional finance lasted. It's hard, man
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Jun 20, 2019 18:01
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twodot posted:It does matter because if you think you have to actually line up costs and income because the federal government's checking account might overdraft or whatever, then you have to actually check your balance or whatever it is you think you'll run out of before you attempt to give a hungry child food. If you know that's nonsense and there is no checking account, and the only reason costs and income matter is due to their effect on the economy and money supply, then you can feed the child first and use monetary policy to achieve whatever macroeconomic goals you have. punk rebel ecks posted:Some interesting discussion happening. I'm surprised that so many posters in this thread seem so skeptical about MMT. It seems wildly popular in this forum. Dead Reckoning fucked around with this message at 18:05 on Jun 20, 2019 |
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Jun 20, 2019 18:01
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Dead Reckoning posted:Assuming you understand that there exist some limits on the ability of government to control inflation through monetary policy, and that under MMT "monetary policy" still involves taxation, what you're really saying is that we should spend money on what you want now and figure out how to "pay for it" by deleting money out of people's bank accounts later. Obfuscating that link doesn't mean that government programs don't have costs under MMT, it's just that those costs are measured by the degree to which they contribute to inflation. Which, AFAIK, is not something we can predict in advance in an algorithmic way. edit: Dead Reckoning posted:It is because leftists want to spend money on generous social programs, but raising taxes to pay for those programs twodot fucked around with this message at 18:13 on Jun 20, 2019 |
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Jun 20, 2019 18:06
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punk rebel ecks posted:Some interesting discussion happening. I'm surprised that so many posters in this thread seem so skeptical about MMT. It seems wildly popular in this forum. I think it has traction as a one weird trick to get leftist policies without having to do taxes. But I think people are starting to sour on the initial enthusiasm after it sounded good but virtually no major economics experts are really biting onto it. Which puts it in a weird gold standard esq "no it's true, the internet figured it out, the experts are just TOO SCARED TO ADMIT IT"
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Jun 20, 2019 18:10
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punk rebel ecks posted:Some interesting discussion happening. I'm surprised that so many posters in this thread seem so skeptical about MMT. It seems wildly popular in this forum. I think that popularity is deceptive. A lot of left leaning posters intuitively believe that the American government could easily spend trillions of dollars on solving climate change and fixing the problems associated with economic inequality. They look at the enormous budget of the US government, its ability to bail out entire industries or to fight multiple decade long conflicts simultaneously, and intuitively believe that politicians and economists are lying about the budgetary constraints the government faces. MMT seems to give a plausible and scientific framework for this belief, and its now been name dropped by some popular politicians, so people are naturally becoming interested in it. Actually discussions of MMT here almost never get past bickering about inflation vs budgetary constraints though, which means MMT as an actual set of theories about the economy gets very little discussion. I think these arguments are mostly just a sort of proxy battle over whether the US government should radically change its spending priorities. The actual substantial implications of MMT mostly don't feature in these arguments because for the most part neither the opponents nor the proponents here are particularly familiar with them. For instance: an important premise of MMT is that setting interest rates is an ineffective tool for managing the economy compared to taxing and spending. Another crucial implication of MMT models is that because of the nature of sectoral balances a government surplus necessarily results in a private sector deficit. Mainstream economics believes that expansionary fiscal policy can lead to higher interest rates and therefore crowd out private investment where MMTers think in some cases expansionary fiscal policy injects new spending into the economy, increasing bank reserves and actually thereby lowering interest rates. As those examples imply, MMTers are operating on a different set of models for interpreting the economy. They're not just working with the same assumptions as neoclassicals but reaching different conclusions. I think that distinction often gets lost in these debates. twodot posted:It does matter because if you think you have to actually line up costs and income because the federal government's checking account might overdraft or whatever, then you have to actually check your balance or whatever it is you think you'll run out of before you attempt to give a hungry child food. If you know that's nonsense and there is no checking account, and the only reason costs and income matter is due to their effect on the economy and money supply, then you can feed the child first and use monetary policy to achieve whatever macroeconomic goals you have. A few pedantic but still important points: 1) Your spending is still constrained by how many resources you have control over. For the classic "free lunch" scenario to apply under MMT we have to assume that the economy is below full employment and therefore resources are being left idle. Under this scenario, you can use the government to put those resources to work at no additional cost by injecting more money into the economy via spending. However, in a scenario where there are insufficient idle resources to put to use you start to run into problems like inflation. The ultimate restriction on what you can do is the actual stock of wealth in society. 2) MMT tends to downplay the efficacy of monetary policy (central bank adjusting interest rates and changing its balance sheet) while advocating more activist fiscal policy (taxing and spending)
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Jun 20, 2019 18:16
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"feeding the children" is exactly the worst kind of fiscal instrument program to think about MMT with, because it's an instrument, the point of MMT is that you're pledging to use this instrument as your lever to hit your actual policy goal (which is something else - full employment, low inflation, what have you). So if inflation starts to inch up, you're going to, what, halt your children-feeding programmes first? It has to be something pretty flexible that you can just about do or do without. or, otherwise, what is really being discussed is what Helsing says: radical changes in the composition of spending ronya fucked around with this message at 18:26 on Jun 20, 2019 |
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Jun 20, 2019 18:22
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punk rebel ecks posted:Some interesting discussion happening. I'm surprised that so many posters in this thread seem so skeptical about MMT. It seems wildly popular in this forum. it's because this forum sees MMT as more or less an easy answer to "how do we pay for gov program X", not because of the actual merit of the theory itself nor the policy implications
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Jun 20, 2019 18:29
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Wow the responses in this thread make me feel really dumb and ignorant about economics.
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Jun 20, 2019 19:11
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Owlofcreamcheese posted:I think it has traction as a one weird trick to get leftist policies without having to do taxes. But I think people are starting to sour on the initial enthusiasm after it sounded good but virtually no major economics experts are really biting onto it. Which puts it in a weird gold standard esq "no it's true, the internet figured it out, the experts are just TOO SCARED TO ADMIT IT"
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Jun 21, 2019 04:35
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So if the purpose of taxation under MMT is to curb inflation, wouldn't it follow that you would always collect the dollar in the economy that had the least utility, and continue doing that until you had collected enough dollars to meet your inflation goals? Which is to say, is every dollar, or source of dollars, via taxation equivalent under MMT (putting aside the political question)?
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Jun 21, 2019 08:45
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The question is how much inflation are you going to be dealing with, and as I said before, it is situational. Yields are going to be highly depended on international demand, but international demand is not always easy to predict and is dependant on a number of factors. As for the policy implications, it isn't surprising, economics, domestic politics, and geopolitics are all tied at the hip. There is a reason Wealth of Nations was written when it was written. Americans seem mostly interested in MMT probably because it speaks to an American-centric situation.
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Jun 21, 2019 08:45
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US dollars are valuable because you can spend them in the US. Our economy is utterly massive and if it exists somebody here will probably sell it to you. For some things that involves the black market and breaking laws but still; enough $US and you can probably get your hands on it, whatever it is. The Benjamin is the world's reserve currency because America has just been so loving stable ever since the Civil War. The World Wars barely damaged us at all and our businesses really don't give much of a poo poo who you are. You have some Benjamins? You have our attention. While the gold standard is gone that's basically what backs the dollar. Fundamentally the dollar is backed by all the poo poo America has. In theory you could just double the amount of dollars in the world overnight but if you don't double the amount of poo poo that you can buy with them then that would only cause problems. While Keynes was right about a ton of things just printing more fiat currency is something that should be very seriously considered given that dumping too much raw cash into the economy quickly can cause massive problems. The simple fact of existence is that there's only so much actual stuff to go around. Magicking $100 trillion into existence doesn't mean that $100 trillion of stuff will suddenly magic into existence. Fiat money is really an illusion, in a lot of ways. It's basically an everything standard. If you have $100 and $100 worth of stuff you basically have $200. However if everybody doubled their cash then you wouldn't suddenly have more stuff. The stuff you have would instead just be worth $200. Each dollar would have half the value. I think MMT is flawed in some ways but really fundamental misunderstandings of money are the cause of a lot of economic misunderstandings. The core advantage of fiat money is that if I want more of it I don't need to acquire or produce a specific commodity (historically money has been pegged to precious metals). As long as I can make something that somebody, somewhere will give me green pieces of paper for I can create wealth. It doesn't matter what that is. Shirts, birdhouses, corn, fixing your car, YouTube videos about my cats doing stupid poo poo; doesn't matter. If I can get somebody to pay me for something I can get more money and then use that money to get other things. That of course goes back to what I said before; the US dollar is valuable because you can use it to get poo poo from American businesses which are just loving everywhere. That ultimately is the fundamental backing of American currency world wide. If you have $500,000 of American currency we would just loving love to sell you $500,000 worth of American poo poo. Whatever it is you want. You need $500,000 of corn? We got you, fam. $500,000 of natural gas? Tanker's on the way. $500,000 of guns? You bet your rear end we have that poo poo. $500,000 of shirts and posters? Yeah just let us know what you want printed on them we'll hook your rear end right the gently caress up. Try to buy poo poo from us with those $100 trillion bills from...what was it, Zimbabwe? Won't work. You could sell them as a curiosity but that currency is otherwise worthless. Soon as you understand that money and economics should make more sense. The inflation thing is probably one of the biggest; if we just printed enough Benjamins to double the $US supply in the world a hell of a lot of people would be upset that they could suddenly get less stuff for their dollars and would trust them less. ToxicSlurpee fucked around with this message at 09:28 on Jun 21, 2019 |
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Jun 21, 2019 09:07
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KOTEX GOD OF BLOOD posted:Economists and their field are famously scientific and reliably predictive. More than “a guy on the internet said it” is
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Jun 21, 2019 11:32
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So is the United States hosed with all the debt we have/accumulating?
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Jun 21, 2019 16:36
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Typo fucked around with this message at 17:13 on Jun 21, 2019 |
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Jun 21, 2019 17:06
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punk rebel ecks posted:So is the United States hosed with all the debt we have/accumulating? At a most basic level, debt isn't a problem as long as 1) people are still willing to lend you money, and 2) you can make the payments (which really goes back to 1). How this works on a national economy scale is not as simple to answer. Especially when the ability to print your own money comes into it.
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Jun 21, 2019 17:21
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punk rebel ecks posted:So is the United States hosed with all the debt we have/accumulating? My gut says...maybe. Eventually. Or not. It depends.
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Jun 21, 2019 18:39
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In the case of the US, responses to handling the debt are more dangerous than debt itself. As I stated, the US is one of the few countries that could expand its money supply with minimal inflationary effect over the course of decades. This may change, but it would take another currency to replace it and there isn't a strong alternative atm.
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Jun 21, 2019 18:40
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Ardennes posted:In the case of the US, responses to handling the debt are more dangerous than debt itself. So if another currency replaces the USD we are hosed, or can America coast into a Japan situation? punk rebel ecks fucked around with this message at 19:15 on Jun 21, 2019 |
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Jun 21, 2019 18:52
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punk rebel ecks posted:So of Nother currency replaces the USD we are hosed, or can America coast into a Japan situation? If that happened the US would be hosed, IMO. But for that to happen the US would ALREADY have had to be hosed. Because otherwise it wouldn't happen. I don't see the US doing a Japan because it still has a growing population and (at least until Trump closes the borders and starts ethnic cleansing hispanics or something) a lot of immigration so the conditions for the same kind of stagnation don't seem to exist.
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Jun 21, 2019 19:12
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A personal frustration trying to read up on mmt is that 99.9% of the material is USA/dollar-centric, and of little practical use for a eurocommie, given our situation within a semi gold standard. e: I guess this is a half-assed request for european/europe-focused scholars on the subject... double nine fucked around with this message at 19:44 on Jun 21, 2019 |
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Jun 21, 2019 19:31
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double nine posted:A personal frustration trying to read up on mmt is that 99.9% of the material is USA/dollar-centric, and of little practical use for a eurocommie, given our situation within a semi gold standard. If you are on the Euro you can't execute monetary policy anyway, unless you are Germany. So mmt is irrelevant
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Jun 21, 2019 19:54
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punk rebel ecks posted:So is the United States hosed with all the debt we have/accumulating? You can't keep taking on debt forever. Eventually it needs to be repaid. It really depends on how we deal with it. Even then the bigger issue isn't federal debt but more local debt. I think Chicago is in a place right now where it can't really raise more debt because its municipal bonds are basically worthless. Meanwhile they also can't really raise taxes anymore and the local economy is cratering. Debt can absolutely spiral out of control if you don't keep a lid on it but there's always temptation to keep ballooning the debt for a variety of reasons. The U.S. as a whole could potentially turn things around but debt is a gigantic problem in the U.S. in general right now. It isn't even just government debt; a hell of a lot of Americans have utterly crippling amounts of debt be it student loans, too big of a mortgage, or massive credit card debt. Or all of the above in the worst cases.
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Jun 21, 2019 20:39
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ToxicSlurpee posted:You can't keep taking on debt forever. Eventually it needs to be repaid. in real terms this isn't actually true
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Jun 21, 2019 20:43
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Er wasn't there just like a really long thread on this topic? Am I hallucinating? You have to manage inflation with MMT but otherwise that's really the only issue. Yeah obviously you can't double the money supply overnight that would be insane but the point is that "ahhh but who will pay for $X necessary thing" is a fundamentally specious argument*. The US government doesn't need your tax dollars to operate. Yeah it issues debts but a lot of the time the Fed just poofs in money to purchase them (very nutshell level here). ToxicSlurpee posted:You can't keep taking on debt forever. Eventually it needs to be repaid. Why? ToxicSlurpee posted:a hell of a lot of Americans have utterly crippling amounts of debt be it student loans, too big of a mortgage, or massive credit card debt. Or all of the above in the worst cases. This is true but it has really nothing to do with the government debt. double nine posted:A personal frustration trying to read up on mmt is that 99.9% of the material is USA/dollar-centric, and of little practical use for a eurocommie, given our situation within a semi gold standard. Yeah I mean this is mutually exclusive with MMT which is a function of fiat currency. The Euro being semi gold standard is news to me though? Typo posted:If you are on the Euro you can't execute monetary policy anyway, unless you are Germany. So mmt is irrelevant but yeah Owlofcreamcheese posted:I think it has traction as a one weird trick to get leftist policies without having to do taxes. But I think people are starting to sour on the initial enthusiasm after it sounded good but virtually no major economics experts are really biting onto it. Which puts it in a weird gold standard esq "no it's true, the internet figured it out, the experts are just TOO SCARED TO ADMIT IT" Eh all mostly the "major economics experts" are on some Friedman anti-Keynes juice since the Reagan years so MMT is loving just kryptonite basically. They're all employed by major corps and big think tanks with money like Cato so of course their results will lean towards Laffer worship but the actual scientific rigor is... basically nonexistent. A lot of the fundamental econ math is just lifted from physics because "if it works with particles bouncing around it'll work with money too" iirc. Like, even without MMT - free tuition isn't just a black hole money pit. It's an investment. Yeah okay the gov't "pays" for someone's tuition but then it collects income taxes on more college graduates who earn more money so...... but they're not saying poo poo about that because that's not in the interests of the people privatizing the gently caress out of everything. Nah they're just going "ahh well see it would cost $X billions over Y years..." Moridin920 fucked around with this message at 21:40 on Jun 21, 2019 |
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Jun 21, 2019 21:21
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Moridin920 posted:Er wasn't there just like a really long thread on this topic? Am I hallucinating? This is the dumb wrong conclusion that people take from MMT. From a purely mechanical standpoint, yeah, the US government can never run out of dollars and the supply of dollars is not a constraint on spending. But it doesn't follow that "How do we pay for X" is an irrelevant question because running the presses to fund things, especially ongoing outlays, has consequences.
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Jun 21, 2019 21:40
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ToxicSlurpee posted:You can't keep taking on debt forever. Eventually it needs to be repaid. Why do we have to pay back the national debt? To whom are we repaying it? What happens if we fail to pay it?
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Jun 21, 2019 21:43
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wateroverfire posted:This is the dumb wrong conclusion that people take from MMT. From a purely mechanical standpoint, yeah, the US government can never run out of dollars and the supply of dollars is not a constraint on spending. But it doesn't follow that "How do we pay for X" is an irrelevant question because running the presses to fund things, especially ongoing outlays, has consequences. Did you miss the first sentence where I said you have to manage inflation or what's up quote:running the presses to fund things, especially ongoing outlays, has consequences. quote:You have to manage inflation
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Jun 21, 2019 21:45
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quote:"How do we pay for X" is an irrelevant question More specifically, it is an irrelevant question when used in the real world context it is used in 99.9% of the time which is in response to policy proposals to improve healthcare, education, or generally any conditions for working people. Obviously we can't just declare it wonderland and spend trillions on whatever the gently caress. e: Also that other MMT thread which is basically the same exact arguments is now on the first page of D&D also fwiw Moridin920 fucked around with this message at 21:51 on Jun 21, 2019 |
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Jun 21, 2019 21:47
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WampaLord posted:Why do we have to pay back the national debt? To whom are we repaying it? What happens if we fail to pay it? A variety of other countries, federal things owing money to each other, privately held bonds, money borrowed from individuals and corporations, retirement funds and pensions...pretty much everybody, really. It doesn't exist in a vacuum. If you buy, say, a bond you give the government $X with the expectation that the government will give you back $X + $Y in the future. That's literally how debt works. The reason that loaning money to the U.S. government is so popular is because it's been very solid in paying the money back. The trillions of dollars America owes are all owed to somebody, somewhere and whoever that is or whatever organization that is generally expects that they can cash that in some day. What happens if we don't pay it? The government can't borrow money anymore because it won't get paid back. You know that one friend we all have that always seems to need to borrow money but never wants to pay it back? The country becomes That Guy. Loaning money to That Guy is a terrible idea. This is a problem because a gently caress ton of America's spending is debt-backed at the moment. Suddenly there's a massive problem funding all the things the government funds which once again doesn't exist in a vacuum. That hand is in a lot of pies, for better or for worse. Note that a lot of retirement and pension funds own government debt. What happens to retired people if their checks quit coming in because the government just decided to quit paying the debt? Or, worse yet, if it just defaults? Everybody is just kind of assuming that the fed can keep paying its debts forever but of course there's always that question; what happens when they can't? At a certain point it becomes a Ponzi scheme.
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Jun 21, 2019 22:22
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Moridin920 posted:Eh all mostly the "major economics experts" are on some Friedman anti-Keynes juice since the Reagan years so MMT is loving just kryptonite basically. They're all employed by major corps and big think tanks with money like Cato so of course their results will lean towards Laffer worship but the actual scientific rigor is... basically nonexistent. A lot of the fundamental econ math is just lifted from physics because "if it works with particles bouncing around it'll work with money too" iirc. The experts being wrong doesn't make any random thing anyone says right in contrast. The concept a country that controls it's currency can't possibly default is pretty much a statement of fact. That translating to any of the policy stuff people have tried to claim is pretty unsupported and probably needs some legitimacy beyond forums posters making it up or a couple blog posts or a single book written by non-experts before any country is going to adopt it as the one weird trick to have infinite socialism but with no taxes.
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Jun 21, 2019 22:29
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ToxicSlurpee posted:US dollars are valuable because you can spend them in the US. Our economy is utterly massive and if it exists somebody here will probably sell it to you. For some things that involves the black market and breaking laws but still; enough $US and you can probably get your hands on it, whatever it is. The Benjamin is the world's reserve currency because America has just been so loving stable ever since the Civil War. The World Wars barely damaged us at all and our businesses really don't give much of a poo poo who you are. You have some Benjamins? You have our attention. This account brushes over the crucial detail that oil is priced and sold in USD, a status quo that is backed up not only by the American economy but also its military power. It's hardly just a function of the size of the American economy. quote:Fiat money is really an illusion, in a lot of ways. It's basically an everything standard. If you have $100 and $100 worth of stuff you basically have $200. However if everybody doubled their cash then you wouldn't suddenly have more stuff. The stuff you have would instead just be worth $200. Each dollar would have half the value. This only works if we ignore debt. If I owe the bank $100 and suddenly everyone has twice as much money as before then the real value of my debt was cut in half and I'm richer than before. This idea that money is just an illusory "veil" over the real economy is one of the more ridiculous and destructive aspects of mainstream economic theorizing and by far one of the greatest advantages of MMT is that it emphasizes that you cannot ignore or abstract away the crucial role of money and debt in our economy. quote:I think MMT is flawed in some ways but really fundamental misunderstandings of money are the cause of a lot of economic misunderstandings. The core advantage of fiat money is that if I want more of it I don't need to acquire or produce a specific commodity (historically money has been pegged to precious metals). As long as I can make something that somebody, somewhere will give me green pieces of paper for I can create wealth. It doesn't matter what that is. Shirts, birdhouses, corn, fixing your car, YouTube videos about my cats doing stupid poo poo; doesn't matter. If I can get somebody to pay me for something I can get more money and then use that money to get other things. Two points, each relating to one of the bolded sentences. 1) Money originated as a form of debt. The Just So story that is popular in economics textbooks where gold became a store of value and replaced an earlier barter system is not a historically accurate account. If we go back to the early Bronze Age societies of Babylon and Egypt then we can already see the emergence of credit economies, with people purchasing goods and services on a tab that was recorded by the palace or temple and recouped later after harvest. 2) Regarding wealth: this argument is fairly specific to neoclassical economists. If we look at ancient writers who touched upon economic issues, or if we look at the earliest recognizable economists - the mercantilist, the physiocrats, the classical economists like Smith, Mills and Ricardo, all of them make a distinction between productive value creating economic activities and parasitic value consuming activities. Neoclassical economists mostly rejected this notion for political reasons and tend to view all non-criminal enterprises that make money as automatically contributing value. This is a more or less intentional blind-spot in the theory that just so happens to make it much more difficult to identify problematic behaviors like rent-seeking. quote:Soon as you understand that money and economics should make more sense. The inflation thing is probably one of the biggest; if we just printed enough Benjamins to double the $US supply in the world a hell of a lot of people would be upset that they could suddenly get less stuff for their dollars and would trust them less. This is the "quantity theory of money" advocated by, among others, Milton Friedman. But even if we accept this theory of inflation it's important to remember that there are two variables here: amount of money in circulation and the velocity of money. This is why the big Obama era stimulus spending did not lead to the hyper inflation that so many conservative commentators were warning about. St. Louis Fed posted:During the first and second quarters of 2014, the velocity of the monetary base2 was at 4.4, its slowest pace on record. This means that every dollar in the monetary base was spent only 4.4 times in the economy during the past year, down from 17.2 just prior to the recession. This implies that the unprecedented monetary base increase driven by the Fed’s large money injections through its large-scale asset purchase programs has failed to cause at least a one-for-one proportional increase in nominal GDP. Thus, it is precisely the sharp decline in velocity that has offset the sharp increase in money supply, leading to the almost no change in nominal GDP (either P or Q). Of course the MMT paradigm goes further and outright rejects the idea that there's a stable quantifiable relationship between the amount of money in circulation and price levels, instead arguing that the economy creates money endogenously which, as I said above, is a significant theoretical distinction that rarely gets discussed in threads like this one.
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Jun 21, 2019 22:45
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Lot to unpack in that paragraph.Owlofcreamcheese posted:The experts being wrong doesn't make any random thing anyone says right in contrast. Obviously not. The assertion was "all the experts say X though," to which I said "all the experts are paid to say X," not "they are wrong and literally everything the opposite of what they say is true." Idk why you'd even read what I wrote as this. Like, I'm not a loving 8 year old lol give me some credit. Owlofcreamcheese posted:That translating to any of the policy stuff people have tried to claim is pretty unsupported Which is what, exactly? Most MMT people just say "this is how it already works in fiat systems." No one is proposing policies to 'switch over to MMT.' The policy stuff proposed is "cheaper healthcare, free education, fix infrastructure, fix climate." Owlofcreamcheese posted:probably needs some legitimacy beyond forums posters making it up or a couple blog posts or a single book written by non-experts before any country is going to adopt it as the one weird trick to have infinite socialism but with no taxes. Okay, well, I dunno why you broadly declare that it has 0 support outside of random weirdo "one weird trick" blogs when actually it is a fairly well studied topic by a lot of smart people. It's almost like you're just trying to simply categorize it into your "weirdos" bucket without actually doing any research... because it really isn't some new radical concept - Start with Chartalism from 1905? https://en.wikipedia.org/wiki/Chartalism quote:In macroeconomics, chartalism is a theory of money which argues that money originated with states' attempts to direct economic activity rather than as a spontaneous solution to the problems with barter or as a means with which to tokenize debt,[1] and that fiat currency has value in exchange because of sovereign power to levy taxes on economic activity payable in the currency they issue. Meanwhile Hyman Minsky (Harvard PhD!) was right all along in predicting the subprime mortgage crisis when the mainstream toed the line with Greenspan. Random crackpots I guess. See, I'm not saying "oh, all economists are wrong so I can believe whatever I want to believe." I'm saying "most mainstream economists are wrong because X, and looking at the actual math it seems like the neo-chartalists (who are also in possession of the right criteria insofar as fancy degrees and professorship positions) are correct actually." Moridin920 fucked around with this message at 22:57 on Jun 21, 2019 |
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Jun 21, 2019 22:48
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Moridin920 posted:Obviously not. The assertion was "all the experts say X though," to which I said "all the experts are paid to say X," This is what people selling magnets to cure cancer say. You can find legitimate economics experts that say all sorts of pro-communist and pro-socialism stuff that doesn't seem to get suppressed. why does Big Economics specifically suppress this one? Who is even benefiting from hiding this one?
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Jun 21, 2019 22:56
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Owlofcreamcheese posted:This is what people selling magnets to cure cancer say. I mean, given that you pick out one tiny bit of my argument and strawman it while ignoring the rest (repeatedly), I don't feel particularly inclined to respond. If that's what you think my position is then I guess I'm not being clear enough. These arguments are already run through several times in that other thread which makes me even less inclined. Just read that thread  quote:why does Big Economics specifically suppress this one? You want me to explain why Keynes is out and Hayek is in? In a nutshell, the people in charge want to privatize everything which means government has to be portrayed as incompetent and lovely so anything that is Keynesian or Chartalist gets poo poo on hard because gov't spending bad. Thank Reagan. Has nothing to do with socialism or communism. Which uh are also suppressed pretty hard dunno what USA you're talking about but gl getting professorships and tenures and employment at the big think tanks while talking about socialism. This has maaaybe lightened up in recent years but not really. Moridin920 fucked around with this message at 23:04 on Jun 21, 2019 |
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Jun 21, 2019 22:58
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Just a heads up, Owlofcreamcheese's arguments are lazy enough that I honestly don't think there's any need to formally refute them and spending a couple pages getting him to repeat the same vacuous non-argument again and again will only slow down or kill the thread. Save your effort for someone who actually says something.
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Jun 21, 2019 23:02
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punk rebel ecks posted:So is the United States hosed with all the debt we have/accumulating? No. ToxicSlurpee posted:You can't keep taking on debt forever. Eventually it needs to be repaid. Basically, this is just wrong. It's true of you or I but not of sovereign nations. A lot of people like to bandy the big debt clock and "HOW ARE WE EVER GOING TO PAY THIS OFF" but it doesn't matter how much debt we accrue as long as our GDP is rising at a similar rate. Typically GDP will be well above the debt but right now we're a bit under. Considering our proximity to the last major economic crisis, this is to be expected. The reason national debt MAY be problematic is if it gets too high your bonds may become less desirable. But it would take something crazy to stop people from buying up US bonds. punk rebel ecks posted:So if another currency replaces the USD we are hosed, or can America coast into a Japan situation? I doubt the US would be hosed. If the USD weren't backing all international trade it would eliminate a big safety net, since other countries wouldn't be quite as invested in keeping the USD valuable, but we'd still have the largest economy in the world so people are gonna keep taking USD. This is also VERY unlikely. EU and China are the only economies that come close to the US. As was pointed out, China's behind closed doors manipulation of their economy makes the Yuan undesirable. The Euro might be viable but this isn't a change that's going to happen overnight. If we're totally honest, I think a major issue with this discussion is a lot of people aren't really coming at it in good faith, myself included. The primary implication here is the Fed should have control over taxes and be able to issue stimulus packages while policy funding should be focused on economic growth. While I do think this would be good economic policy, I am a lefty pinko and I don't actually give a poo poo about what's good for the economy- I'm much more interested in improving quality of life of the lower class. Meanwhile, the people who actually are interested in the wellbeing of the US economy also typically want to maximize their own wallets so giving the Fed free reign over taxes is a nightmare scenario for them.
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Jun 22, 2019 01:20
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Earlier in the thread it was brought up that oil is bought, sold, and traded in US Dollars. This is due to agreements made at Bretton Woods. If CO2 emissions, or Hydrogen, is bought or traded in a non-U.S. currency (possibly the Euro or perhaps UN SDR), how would that impact things? From what I can tell the EU seems to be getting pretty serious about going all in on Hydrogen development and Electrification. (I was under the impression that the EU pretty much innovated the use of natural gas, I don't see why they cannot do the same for Hydrogen.) If the dollar is replaced as.... the currency of energy trading. Wouldn't that have a significant change on it's distribution and use? I know there is a graph that shows the breakup of reserve currencies. (I want to say around 60% of the reserve currencies of the world are held in US Dollars.) But is there any information that shows how much money is spent/used to trade for what? How much does the world trade in oil support the dollar? How much will a transition to renewables and hydrogen remove its influence? **Edit I just realized the last post is over a year old. Whoops. I'll take a temporary ban. However, I think the question is a valid one. Senor P. fucked around with this message at 03:14 on May 20, 2020 |
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May 20, 2020 02:58
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