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Modern Monetary Theory: The New Paradigm?
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2022-04-17 at 10:17 PM UTCI've read quite a few books and papers on Modern Monetary Theory (MMT) recently and found it highly enlightening of how the economy actually works in practice. Curious to see if anyone of the NIS have been following/agree/disagree.
It essentially refutes orthodox economics and the montetarist idea that inflation is always linked to an oversupply of money, which has dominated economics for the last forty odd years since Thatcher claimed governments are no different economically from households and Reagan went fucking ham.
Politically, it can be used either way as it is primarily descriptive, although many MMT people advocate for certain policies to prevent inflation risks/full employment etc. MMT also destroys the the argument around debt for currency-issuing nations and the notion that taxpayers actually pay for anything.
The sheer fact we have an alternative economic theory emerging isn't really surprising considering the vacillation between the expansion of market forces and the subsequent counter-movement (unions etc), which is seemingly becoming faster and faster as globalisation and technology grow (Burawoy, pg. 40 https://rhuthmos.eu/spip.php?article1321)
For those unfamiliar there are three basic tenets set out in "The Deficit Myth" (recent book that really put MMT on display):
1. Currency-issuing nations have no financial constraints.
2. Nations have real constraints on resources and production capacity
3. A public deficit is, in effect. a surplus in the private sector.
Anyone else been following this stuff? What do you think?The following users say it would be alright if the author of this post didn't die in a fire! -
2022-04-17 at 10:42 PM UTCAll of macroeconomics is bullshit witchcraft (at least according to my dear economist friends). The Magic Money Tree school of thought is, in their estimation, particularly egregious though.
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2022-04-17 at 11:44 PM UTCThe following users say it would be alright if the author of this post didn't die in a fire!
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2022-04-18 at 12:08 AM UTCMMT stands for Maddox Monetary Theory.
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2022-04-18 at 12:37 AM UTCI don't understand what point you are trying to make other than "I read some books and am trying to understand them." Nobody who isn't retarded thinks inflation is just a result of monetary policy based around money supply and nobody has ever been that retarded.
1. Yes they do
2. No shit
3. The entire concept of government is a surplus in the private sector
Economics is fluid, that's cool you like reading about it, as do I. Are you just asking if anyone here likes to read about economics? -
2022-04-18 at 1:36 AM UTCSounds like nobody understands much about macroeconomics. Was worth a try.
And the point is to start discussion mate. I did the most basic summary I could for people unfamiliar so they could also maybe post or ask questions....but we niggas out in space you bunch of absolute shit cunts.
" Nobody who isn't retarded thinks inflation is just a result of monetary policy based around money supply and nobody has ever been that retarded. "
Yet the actual reality is our financial institutions are based on precisely this idea, which is why I find it interesting. As everyone said, orthodox macroeconomics is a joke and failed on all its promises. I'm simply raising a heterodox theory that looks set to take over at some point and trying to start a discussion. I guess you guys don't actually discuss shit. Sad. Totse used to be great for that reason.
EDIT: And duh economics are fluid. This is literally the theme of this thread. I don't understand the point of that post except to sound like a fuckwit. haha -
2022-04-18 at 1:41 AM UTCFuck I miss having 20 page debates on shit with people like it was on Totse. On here I raise something and besides the expected troll posts it's like uhh, why are you talking about actual stuff in the forum meant for that stuff..fucking weird forum now.
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2022-04-18 at 1:43 AM UTCUnfortunately I'm familiar with Austrian economics, but I'm mostly interested in Keynesian economics.
MMT seems to me to be a crock of shit predicated mainly on the relentless oppression of the working class and the artificial suppression of commodity prices.
So for instance MMT can flood an economy with cash and make everyone extract more resources and work really hard?
Right? That's the whole point isn't it?
And an economy is - in part -measured in the speed at which it turns natural resources to garbage.
And it's not a problem so long as only stock prices and land prices and home prices and other related fixed asset prices soar?
But suddenly when oil producers and farmers and workers demand a fair payment for their product that's inflation and evil? So evil that we need to drive the whole economy into recession and put half the work force in so-called-cyclicals out of work to fix?
MMT seems to be to just be the rich insiders trying to throw up intellectual cover for them looting the system. Nothing more, nothing less.
I'm 100% for Keynesian economics though. -
2022-04-18 at 1:45 AM UTC
Originally posted by Rabbi T. Weed All of macroeconomics is bullshit witchcraft (at least according to my dear economist friends). The Magic Money Tree school of thought is, in their estimation, particularly egregious though.
I think you're conflating fixed and floating exchange rates. For a monetarily sovereign (has their own currency/debt is owed in their currency) nation the money tree is constrained by real resources (the nation's productive capacity), not financial ones. -
2022-04-18 at 7:44 AM UTC
Originally posted by Donald Trump So for instance MMT can flood an economy with cash and make everyone extract more resources and work really hard?
Can doesn't mean will though, does it? Hence the emphasis on controlling for inflation in MMT (besides, an oversupply of money can be taxed out of the system) and the idea of a job guarantee scheme. Not everyone is going to work really hard or at all, which is why the NAIRU exists in the first place and a natural rate of unemployment is assumed. Doesn't mean you abandon welfare, but with the high levels of underemployment in many countries they aren't nearly utilizing their productive capacity (unless they genuinely lack the resources to put these people to some sort of work). I'm personally an advocate for full employment.And an economy is - in part -measured in the speed at which it turns natural resources to garbage.
Yeah. A job guarantee scheme implemented correctly (therein lies the problem..) would allow nations to utililse more of their productive capacity while also exactly determining the natural rate of unemployment. Very useful for policy and controlling inflation if you know the number of people who will continue to be unproductive regardless. Currently they just guess what it is and adjust interest rates accordingly.And it's not a problem so long as only stock prices and land prices and home prices and other related fixed asset prices soar?
But suddenly when oil producers and farmers and workers demand a fair payment for their product that's inflation and evil? So evil that we need to drive the whole economy into recession and put half the work force in so-called-cyclicals out of work to fix?
You lost me a bit here. MMT proponents mainly argue for a decentralised job guarantee scheme which would lessen the impact of recessions and speed up recovery from the boom-bust cycles. If people are out of work in a recession they can move straight into the public sector where the government has set a floor wage, keeping the economy going while things recover from the initial shock. Then, when viable again, the private sector has a whole group of experienced workers ready to go and can move back in with competitive wages.MMT seems to be to just be the rich insiders trying to throw up intellectual cover for them looting the system. Nothing more, nothing less.
Rich insiders? MMT thought has been around for forty or so years mainly within a small group of economists and academics in general. -
2022-04-18 at 2:14 PM UTCmmt is a ponzi scheme and no more different than monopoly money or other in-game money.
and like monopoly (or other in-game) money, it is only valueable to those who wish to play the game.
USD is a type of monopoly money. you have to use it to play saudis monopoly game, the oil trade.
but not anymore. -
2022-04-18 at 3:39 PM UTC
Originally posted by vindicktive vinny mmt is a ponzi scheme and no more different than monopoly money or other in-game money.
and like monopoly (or other in-game) money, it is only valueable to those who wish to play the game.
USD is a type of monopoly money. you have to use it to play saudis monopoly game, the oil trade.
but not anymore.
That's just saying our current monetary system is a ponzi scheme. lol. The notion that MMT is a theory isn't really accurate at all since it's descriptive. Just awkward wording by an academmic, which at least has the benefit of sort of posing it in opposition to actual economic theories....like the one we're using currently. -
2022-04-18 at 11:27 PM UTC
Originally posted by Devoid That's just saying our current monetary system is a ponzi scheme. lol. The notion that MMT is a theory isn't really accurate at all since it's descriptive. Just awkward wording by an academmic, which at least has the benefit of sort of posing it in opposition to actual economic theories….like the one we're using currently.
it used to be theory until the US stopped honoring the bretton woods system that they themselves created. -
2022-04-19 at 1:26 AM UTCThe essential message of MMT is that there is no financial constraint on government spending as long as a country is a sovereign issuer of currency and does not tie the value of its currency to another currency. Both Canada and the US are examples of countries that are sovereign issuers of currency. In principle, being a sovereign issuer of currency endows the government with the ability to borrow money from the country’s central bank. The central bank can effectively credit the government’s bank account at the central bank for an unlimited amount of money without either charging the government interest or, indeed, demanding repayment of the government bonds the central bank has acquired. In 2020, the central banks in both Canada and the US bought a disproportionately large share of government bonds compared to previous years, which has led some observers to argue that the governments of Canada and the United States are practicing MMT.
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2022-04-19 at 10:50 AM UTC
Originally posted by UNSUB The essential message of MMT is that there is no financial constraint on government spending as long as a country is a sovereign issuer of currency and does not tie the value of its currency to another currency. Both Canada and the US are examples of countries that are sovereign issuers of currency. In principle, being a sovereign issuer of currency endows the government with the ability to borrow money from the country’s central bank. The central bank can effectively credit the government’s bank account at the central bank for an unlimited amount of money without either charging the government interest or, indeed, demanding repayment of the government bonds the central bank has acquired. In 2020, the central banks in both Canada and the US bought a disproportionately large share of government bonds compared to previous years, which has led some observers to argue that the governments of Canada and the United States are practicing MMT.
Due to being far more descriptive in nature than prescriptive I've seen a number of arguments to change the term altogether as it doesn't exactly fit the model of a theory since it purports to purely describe something. Of course, for discursive reasons I think it's useful as it firmly situates itself as an alternative model of contemporary economies.
Similarly, many argue any country with high monetary sovereignty (ie: issues own currency, debt owed in this currency) are already operating within an MMT framework but without any of the controls for inflation or goals for full employment. -
2022-04-19 at 11:51 AM UTC
Originally posted by Devoid Yeah. A job guarantee scheme implemented correctly (therein lies the problem..) would allow nations to utililse more of their productive capacity while also exactly determining the natural rate of unemployment. Very useful for policy and controlling inflation if you know the number of people who will continue to be unproductive regardless. Currently they just guess what it is and adjust interest rates accordingly.
You lost me a bit here. MMT proponents mainly argue for a decentralised job guarantee scheme which would lessen the impact of recessions and speed up recovery from the boom-bust cycles. If people are out of work in a recession they can move straight into the public sector where the government has set a floor wage, keeping the economy going while things recover from the initial shock. Then, when viable again, the private sector has a whole group of experienced workers ready to go and can move back in with competitive wages.
Why does it need to be the government? This "theory" seems to line up with my belief that technology is actively replacing the reliance for centralized systems. The economy shouldn't even have "sectors" except for the S&P 12 sectors which are all being replaced by decentralized systems and industry self regulation
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2022-04-19 at 2:31 PM UTC
Originally posted by UNSUB The essential message of MMT is that there is no financial constraint on government spending as long as a country is a sovereign issuer of currency and does not tie the value of its currency to another currency.
thats called being the reserve currency.
and no, canadian dorrar isnt a reserve currency. -
2022-04-19 at 2:32 PM UTC
Originally posted by the man who put it in my hood Why does it need to be the government? This "theory" seems to line up with my belief that technology is actively replacing the reliance for centralized systems. The economy shouldn't even have "sectors" except for the S&P 12 sectors which are all being replaced by decentralized systems and industry self regulation
decentralization leads to feudalism.
