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

[Secure Da Bag]

I'll just copy what was in the Kamala thread.

...which is a good thing

It is a good thing. A very good thing

Considering MMT is nonsense, this is definitely not a good thing.

Why not? Aren't we just printing money and using the debt ceiling for window dressing? Isn't MMT spending money and throwing away the fake ceiling?

Yung @Perfectson enlighten a breh on why MMT is bad. I honestly have no opinion on it.

First I appreciate the call out. Had a similar convo with @King Kreole

There are many triggers in the economy that happens when you over print money to pay for domestic goods . Long term you would devalue your currency and the fact that we are ind eat to countries like China means we would need to settle that debt at some point, in the mean time if inflation hits and currency devalued, we would need to tax citizens more in order to pay interest payments on the debt. The sucking out money from the citizens and economy to try to settle foreign holders of debt would be disastrous and cause long term economic recessions / depression . MMT believes money has no value and we can continue printing it because economically the goods and services haven't changed . .its a farce


This is why I don't believe in the socialist movie of spending money we don't have and expecting nothing to happen downstream

The crux of our debate is over the definition of "over printing money". MMT absolutely accounts for the fact that continually injected currency into the economy can to inflation/devaluation of currency. In fact, that's one of the two pillars of concern that MMT focuses on, next to unemployment. The point of MMT is that the government doesn't need to tax to spend money, because tax revenues aren't what funds spending. Most people think the government, a currency issuer, must obey by the same financial physics as private citizens, who are currency users. It's a nonsense theory put forth by conservative thinkers who want to shrink the role of the state. So no, America doesn't need to tax citizens more in order to pay interest payments on the debt, because government spending doesn't come from tax revenues. The government actually accounts for spends before it accounts for tax revenue. Taxes are used to control and regulate the amount of money in the economy, not pay for expenditures. It's patently absurd to claim "MMT believes money has no value and we can continue printing it because economically the goods and services haven't changed." I have no idea where you even got that idea from. MMT says there's no actual hard limit that government can run into when it comes to spending, the limits should contextual to the state of the economy. Fear of the debt ceiling or government deficits is almost completely unfounded.

The key question is what is the current state of the economy? If inflation is high, MMT advocates increasing taxes and slowing government spending to cool the economy down. If unemployment is high, MMT advocates increasing government spending and lessening taxes to heat it up. A key point is that the government debt levels is not a primary metric to worry about, because the government can never run out of currency it creates out of thin air. The government by definition cannot go broke, and it can always afford any spending it chooses to undertake. There is no such thing as "spending money we don't have" because the government literally creates money.

I don't believe any believers of MMT believe printing money leads to anything, despite your initial statement your final statement is my issues in a nutshell. Of course you can print money , but there are dire consequences that MMT proponents don't believe in or at least don't take serious.

It's akin to flat earthers saying something everyone logical scientist knows is factual

National debt and deficit don't cause any inherent problems, and inflation and unemployment are emphasized by MMT proponents, so what are the dire consequences that they don't believe in?

But deficit spending does/can cauze issues that's my entire point, you aren't gonna listen tho

 

[King Kreole]

Steph Kelton insane and Warren Mosler OG
So I'm insane, I don't know what to think
I'm MMT, I put deficits to sleep
I love my socialist agenda and her parents want to meet

 

[King Kreole]

But deficit spending does/can cauze issues that's my entire point, you aren't gonna listen tho

No, please, I'm actually interested. What problems does deficit spending cause to an entity that literally creates the currency that it's in "deficit" of?

 

[Perfectson]

No, please, I'm actually interested. What problems does deficit spending cause to an entity that literally creates the currency that it's in "deficit" of?

we had this discussion. We aren't in deficit to ourselves....we are paying interest to China and other nations who hold our debt. When the currency devalues (which isn't happening right now because our spending/printing is being controlled due to our positive GDP and economy) because we are over printing , we will need more money to pay our interest payments...in order to do that we can keep printing as that continues to create the problem of devaluation, instead we would tax higher and cuase a larger strain on the economy/citizens. It's literally what's going on in Venezuela to an extent.

 

[☑︎#VoteDemocrat]

Sam Seder's episodes with Stephanie Kelton turned me on to the whole wave

 

[King Kreole]

we had this discussion. We aren't in deficit to ourselves....we are paying interest to China and other nations who hold our debt. When the currency devalues (which isn't happening right now because our spending/printing is being controlled due to our positive GDP and economy) because we are over printing , we will need more money to pay our interest payments...in order to do that we can keep printing as that continues to create the problem of devaluation, instead we would tax higher and cuase a larger strain on the economy/citizens. It's literally what's going on in Venezuela to an extent.

The government (who can literally create money) is the one paying interest on those treasury bonds, not the private citizenry. You're still operating on the incorrect assumption of a 1-to-1 connection between government spending ability and tax revenue from the citizenry. Yes, currency devaluation is a legit phenomenon that must be accounted for, hence MMT not advocating for wild, unchecked spending like some of its detractors like to paint. The question is what is the current state of the economy, and can it responsibly take a higher influx of cash to buoy unemployment/underemployment, or is the risk of inflation imminent? Right now, the answer to the former question is yes (there is chronic and systemic underemployment/underutilization in the US economy, and severe public need for massive spending programs in healthcare, education, transportation, etc), and the answer to the latter question is no (currently quite low, hewing to the 2% target). Of course devaluation of currency is a legitimate concern. That's why MMTers are highlighting it instead of the fake concerns of an objective deficit and government debt level problem. There is absolutely no need to increase taxes to pay for interest payments or any government spending, because the government doesn't use tax revenues to pay for things.

The Venezuelan Bolivar literally had 3 or so different exchange rates, they were doing some funky ass shyt with their currency. Venezuela wasn't running an MMT economic regime.

 

[Perfectson]

The government (who can literally create money) is the one paying interest on those treasury bonds, not the private citizenry. You're still operating on the incorrect assumption of a 1-to-1 connection between government spending ability and tax revenue from the citizenry. Yes, currency devaluation is a legit phenomenon that must be accounted for, hence MMT not advocating for wild, unchecked spending like some of its detractors like to paint. The question is what is the current state of the economy, and can it responsibly take a higher influx of cash to buoy unemployment/underemployment, or is the risk of inflation imminent? Right now, the answer to the former question is yes (there is chronic and systemic underemployment/underutilization in the US economy, and severe public need for massive spending programs in healthcare, education, transportation, etc), and the answer to the latter question is no (currently quite low, hewing to the 2% target). Of course devaluation of currency is a legitimate concern. That's why MMTers are highlighting it instead of the fake concerns of an objective deficit and government debt level problem. There is absolutely no need to increase taxes to pay for interest payments or any government spending, because the government doesn't use tax revenues to pay for things.

The Venezuelan Bolivar literally had 3 or so different exchange rates, they were doing some funky ass shyt with their currency. Venezuela wasn't running an MMT economic regime.

The VEB has different exchange rates because they were printing money like bats out of hell to pay for social programs. When the currency devalued they couldn't pay their debts and hyper inflation took over...the government tried to print and controls the rste but the people couldn't buy basic necessities and thus black market rates emerged . You literally kill your whole argument shen you introduce Venezuela

The more a government prints money the further it devalues it's currency expect when in debt and required to pay interest to foreign entities whose economies are growing at larger rates . America is surviving because it's #1 economy when in a few years years it's #2 and #3 you're gonna see how this impacts us.

 

[King Kreole]

The VEB has different exchange rates because they were printing money like bats out of hell to pay for social programs. When the currency devalued they couldn't pay their debts and hyper inflation took over...the government tried to print and controls the rste but the people couldn't buy basic necessities and thus black market rates emerged . You literally kill your whole argument shen you introduce Venezuela

The more a government prints money the further it devalues it's currency expect when in debt and required to pay interest to foreign entities whose economies are growing at larger rates . America is surviving because it's #1 economy when in a few years years it's #2 and #3 you're gonna see how this impacts us.

Why Is Venezuela in Crisis?

"Venezuela’s present currency system dates from 2003. It was established to prevent capital flight in the wake of the economically devastating 2002-2003 oil lockout, and amid intense political polarization. At the time, this was a sensible move. Most economists, however, including many sympathetic to the government, believe currency controls should have lasted only a few years. Once the threat of capital flight subsided, the currency should have been allowed to float against the dollar, as was the case before 2003, and as is the case in most countries."

I'm not seeing any evidence that Venezuela's economic woes were solely, or even primarily, caused by massive spending on social programs. They had a one-trick-pony economy dependant on oil, which made them highly susceptible to shocks. In the aftermath, they made controversial decisions around access to currency, flagrant corruption, and have faced suffocating sanctions. Apples and oranges.

Honestly, I find it quite funny that most MMT detractors only become deficit hawks when it comes to programs that help the poor and middle class. I don't remember any of these deficit hawks turning into war doves when the question of paying for the Iraq War or Bush and Trump tax cuts came up. Who was saying "We don't have the money in the coffers to pay for this?" at that point? Conservatives turn into MMTers when it comes to giving the rich money, but they do a 180 when it comes to healthcare, education, environmental policies, etc. That shyt funny to me.

 

[Perfectson]

Why Is Venezuela in Crisis?

"Venezuela’s present currency system dates from 2003. It was established to prevent capital flight in the wake of the economically devastating 2002-2003 oil lockout, and amid intense political polarization. At the time, this was a sensible move. Most economists, however, including many sympathetic to the government, believe currency controls should have lasted only a few years. Once the threat of capital flight subsided, the currency should have been allowed to float against the dollar, as was the case before 2003, and as is the case in most countries."

I'm not seeing any evidence that Venezuela's economic woes were solely, or even primarily, caused by massive spending on social programs. They had a one-trick-pony economy dependant on oil, which made them highly susceptible to shocks. In the aftermath, they made controversial decisions around access to currency, flagrant corruption, and have faced suffocating sanctions. Apples and oranges.

Honestly, I find it quite funny that most MMT detractors only become deficit hawks when it comes to programs that help the poor and middle class. I don't remember any of these deficit hawks turning into war doves when the question of paying for the Iraq War or Bush and Trump tax cuts came up. Who was saying "We don't have the money in the coffers to pay for this?" at that point? Conservatives turn into MMTers when it comes to giving the rich money, but they do a 180 when it comes to healthcare, education, environmental policies, etc. That shyt funny to me.

Because you're choosing to ignore every article that talks about it

shrinking economy is causing large fiscal deficits, which the World Bank estimates to be greater than 20 percent as of 2015. The situation has gotten materially worse since then. Having run down its foreign reserves from $30 billion in 2013 to less than $10 billion today, and with foreign direct investment from the US steadily declining from $600 billion per year in 2011 to below zero today, the only option for the government to raise money is to issue local currency debt. Sanctions announced in May from the Trump administration compounded the difficulty in accessing foreign currency by restricting Venezuela from selling debt in the US. The more money it prints to fund imports, the more the currency depreciates.

The Path To Hyperinflation: What Happened To Venezuela?


I'm not saying oil prices had nothing to do with it, but when prices fell, they were still subsidizing their imports by deficit spending. All this did was gradually devalued the currency and it continued throughout all the decade until the above happened. They continued to print money almost out of necessity and continued having to tax ( or in this case they raised debt locally ) to pay interest on their foreign debt. Youre ignoring it tho


And I'm in no way saying Venezuela problems were because solely MMT but deficit spending exasperated issues during the early 2000s when they should have been getting more controls in on debt

 

[Secure Da Bag]

So I'm reading this article, MMT history and overview - The Center of the Universe and ran across this interesting paragraph:

In the U.S., MMTers see the contentious issue of a mounting national debt and continuing budget deficits as a pseudo-problem, or an “accounting mirage.” The quaint notion of the need for a balanced budget is another ancient relic from the old gold standard days, when the supply of money was actually limited. In fact, under MMT, running a federal budget surplus is usually a bad thing and will often lead to a recession.

The US had a surplus when Clinton left office. Does that mean that Clinton in fact started the 2000 recession?

 

[Secure Da Bag]

And this paragraph aptly describes the current conversation.

MMT is not easy to for many people, including trained economists, to understand. This is probably because of its heavy reliance on accounting principles (debts and credits). Some critics consider MMT nothing more than a twisted Ponzi scheme that is simply “printing prosperity.” Calling MMT a “printing prosperity” scheme, by the way, is the quickest way to send MMTers into spasms of outrage. MMT does not “print prosperty” according to its proponents. The MMT counter argument is:

it [is] a perverse injustice that, in online discussions, MMT sympathizers are frequently reproached for imagining that “we can print prosperity” when in fact it is us who constantly stress as a fundamental point that the only true constraints are resource based, not financial or monetary in nature. We are the ones insisting that if we have the resources, we can put them to use. It is the neoclassical orthodoxy and others who try to make out that we can’t use resources, even if they are available, because of some magical, mysterious monetary or financial constraint. Just who is it that believes in magic here?

 

[FAH1223]

 

[Berniewood Hogan]

oh, does the deficit matter again all of a sudden?

did a Dem already get into the oval office? i hadn't noticed.

 

[FAH1223]

 

[wtfyomom]

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