Is Modern Monetary Theory (MMT) a Viable Economic System?

FAH1223

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Isnt Japans deficit enormous and they haven gone bankrupt yet have they ?

Nope. :mjgrin: Their debt to GDP ratio is 240%.

Ours is like 105% of GDP.

Stephanie Kelton:

Malter: How much is too much? The CBO estimates that if things remain unchanged, the debt will be 152 percent of GDP in 2048. That will be the highest in the nation’s history. Is that too much?

Kelton: Let’s remember what the national debt is. The national debt is nothing more than a historical record of all of the dollars that the government spent into the economy and didn’t tax back that are currently being held in the form of safe U.S. Treasurys. That’s what the national debt is. So the question about whether the debt is too big or too small (or whether it might get too big at some point in the future) is really a question about whether that’s too many safe assets for people to hold 10, 20, 50 years from now.

If you think about what happened after World War II, when the U.S. national debt went in excess of 100 percent, close to 125 percent of GDP. If we were talking about it the way we talk about it today as burdening future generations as posing a grave national security risk, we would have to scratch our heads and say, wait a minute. Do we think that our grandparents burdened the next generation with all of those bonds that were sold during World War II to win the war, build the strongest middle class, produce the longest period of peacetime prosperity, the golden age of capitalism, all of that followed in the wake of fighting World War II, increasing deficits, massively increasing the size of the national debt. And of course the next generation inherits those bonds. They don’t become burdens to the next generation. They become their assets.

So it’s impossible really to put a number, nobody can. How much debt is too much debt? If you look at Japan today you see a country where the debt-to-GDP ratio is something like 240 percent. Well above, orders of magnitude above, where the U.S. is today or even where the U.S. is forecast to be in the future. And so, the question is how is Japan able to sustain a debt of that size? Wouldn’t it have an inflation problem? Wouldn’t it lead to rising interest rates? Wouldn’t this be destructive in some way? And the answer to all of those questions, as Japan has demonstrated now for years is simply: No. Japan’s debt is close to 240 percent of GDP — almost a quadrillion, that’s a very big number, yen. Long-term interest rates are very close to zero, there’s no inflation problem. And so despite the size of the debt there are no negative consequences as a result and I think Japan teaches us a really important lesson.

Really, the only potential risk with the national debt increasing over time is inflation and to the extent that you don’t believe the U.S. has a long-term inflation problem you shouldn’t believe that the U.S. is facing a long-term debt problem.
 

King Kreole

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I think it's funny that Steph Kelton is on Bernie's team yet he's advocating for the necessity of raising taxes to pay for M4A :jbhmm:
 

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One word Nope!

It's like kids raising themselves. If you have a child and they are ripping up your things in house MMT would say don't do anything to them let them continue to rip up the house it will all work out in the end.

How in the world do debts not matter?

It has been tried and has failed miserably before not sure why this theory is starting to pick up steam again. I understand that human memories and scopes can be limited because of hell if we haven't experienced it there isn't a viable counter-argument to compare it to.

I understand that people who are proposing this idea have no idea about the times when fiat money wasn't circulating around like a damn blizzard so they feel that it is here now so just run the printing press to pay for everything.

I guess this is like when Milton in the '70s was pushing around his ridiculous ideas around and a few knowledgable members in the audience were looking around at the audience saying to themselves wait this man can't be serious.
 
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Oldschooler

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My conspiracy theory is that ever since we got away from money being equal to something tangible like gold. The monetary system has become a shyt show and a big scam to get more labor for less pay out of the ordinary man.
 

DEAD7

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Are we going to see movement away from "wealth taxes" and "make the rich pay for it"? is the left ready to concede that was bullsh*t and we dont use tax revenue to fund the government...:mjgrin:
#taxationistheft:lolbron:
 

King Kreole

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Are we going to see movement away from "wealth taxes" and "make the rich pay for it"? is the left ready to concede that was bullsh*t and we dont use tax revenue to fund the government...:mjgrin:
#taxationistheft:lolbron:
The primary purpose of a wealth tax isn't to fund the progressive state, it's to create social stability and broad-based prosperity via wealth equity. Even if the budget was balanced and the national debt was zeroed out, the massive amounts of wealth inequality would be bad for society. Taxation is about regulating the flow of money (and consequently prosperity distribution). Wealth tax is shifting the prosperity from the few to the many.
 

DEAD7

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The primary purpose of a wealth tax isn't to fund the progressive state, it's to create social stability and broad-based prosperity via wealth equity. Even if the budget was balanced and the national debt was zeroed out, the massive amounts of wealth inequality would be bad for society. Taxation is about regulating the flow of money (and consequently prosperity distribution). Wealth tax is shifting the prosperity from the few to the many.
Can you give a real world example of wealth inequality destabilizing American society? and progressive taxation creating broad-based prosperity?
 
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