MMT to the rescue!

JohnfrmClevelan said:

I will happily cash my check as well. It will pay down debt and allow for more spending. Somebody will produce in order to earn my business. All beneficial for the economy.

I do expect to pay tax on it as if it were earned income, though.

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Yeah, someone will produce. It wont be you and it wont be me, but someone will do it. Lol suckers!

Fletch said:

Yeah, someone will produce. It wont be you and it wont be me, but someone will do it. Lol suckers!

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You are acting as if there is something wrong with people earning money that comes from the government.

JohnfrmClevelan said:

Congress is considering a number of measures to deal with COVID-19's effects on the economy, the most novel being direct cash payments to individuals, paid for by deficit spending (at least in the short term). We are talking about amounts in the $1-3 trillion range.

For example, giving 100 million households about $20,000 each (one of the more generous plans) would cost about $2 trillion.

The benefits are obvious - a ton of newly unemployed people, plus those who were just scraping by, would now be relatively secure and able to pay their bills, avoid foreclosure or eviction, eat, etc. Demand that would normally be lost because of high unemployment would be mostly sustained. The idea is to mitigate the kinds of economic (and social) damage that we saw in 2008.

The drawbacks?

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It is charlatans like MMT'rs who would use a worldwide pandemic to further their socialist goals. You were warned that the worldwide debt accumulated through MMT practices would cause another Great Depression when something like this pandemic hit and now you have the gall to claim it is our salvation. If the world had been fiscally conservative up until now we wouldn't be in the current mess we are in. It is the fault of people like you who pushed large national debts, thinking that no world wide event such as this would ever happen.

Moderate Right said:

It is charlatans like MMT'rs who would use a worldwide pandemic to further their socialist goals. You were warned that the worldwide debt accumulated through MMT practices would cause another Great Depression when something like this pandemic hit and now you have the gall to claim it is our salvation. If the world had been fiscally conservative up until now we wouldn't be in the current mess we are in. It is the fault of people like you who pushed large national debts, thinking that no world wide event such as this would ever happen.

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Yeah? Explain, in detail, how the national debt is preventing us from acting, or how the economy wouldn't crater during a pandemic if we were more "fiscally conservative."

As usual, I expect that you are just talking out of your backside, with no real idea of what you are talking about. But I'm listening... go ahead.

JohnfrmClevelan said:

Yeah? Explain, in detail, how the national debt is preventing us from acting, or how the economy wouldn't crater during a pandemic if we were more "fiscally conservative."

As usual, I expect that you are just talking out of your backside, with no real idea of what you are talking about. But I'm listening... go ahead.

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The national debt is NOT preventing us from acting. But, the previous debt along with unprecedented debt added onto it is bringing on the likes of something that has not been seen since the Great Depression. I have several posts on here saying exactly that and here we are. I predicted this and your "facts" don't mean a damn thing because here we are on the cusp of a depression.

Moderate Right said:

The national debt is NOT preventing us from acting. But, the previous debt along with unprecedented debt added onto it is bringing on the likes of something that has not been seen since the Great Depression. I have several posts on here saying exactly that and here we are. I predicted this and your "facts" don't mean a damn thing because here we are on the cusp of a depression.

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Yeah, all you are doing is saying it. Over and over, as if that makes it true.

You predicted the pandemic? Really? Let's see those posts, then.

You have no idea what you are talking about.

JohnfrmClevelan said:

The drawbacks?

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About the only drawback to MMT type thinking is the potential for long term stagflation. Under the circumstances, that's not really a concern because the whole world is going to be ****ed by this. The idea that somehow the dollar would be devalued is kind of silly.

MrWonka said:

About the only drawback to MMT type thinking is the potential for long term stagflation. Under the circumstances, that's not really a concern because the whole world is going to be ****ed by this. The idea that somehow the dollar would be devalued is kind of silly.

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Stagflation was the result of bad economic theory. High oil prices caused the inflation. Raising interest rates, which was never going to lower the price of oil, killed the economy and kept unemployment high. MMT would never suggest raising interest rates.

JohnfrmClevelan said:

Congress is considering a number of measures to deal with COVID-19's effects on the economy, the most novel being direct cash payments to individuals, paid for by deficit spending (at least in the short term). We are talking about amounts in the $1-3 trillion range.

For example, giving 100 million households about $20,000 each (one of the more generous plans) would cost about $2 trillion.

The benefits are obvious - a ton of newly unemployed people, plus those who were just scraping by, would now be relatively secure and able to pay their bills, avoid foreclosure or eviction, eat, etc. Demand that would normally be lost because of high unemployment would be mostly sustained. The idea is to mitigate the kinds of economic (and social) damage that we saw in 2008.

The drawbacks?

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I haven't heard $20k, only $2k? or so? I think yours was a typo,eh?

The ideas being proffered to grease the economic skids are not originally "MMT", they are Keynesian.

MMT has some differences, primarily a lax attitude towards deficits ( oh, uh, well, just print our way out of it ) and a lot of fancy looking equations to make it seem like serious economics.

It's MMT's cavalier attitude towards debt and deficits that I find scary.

Whatever one can argue about laissez - faire economics, now often being called 'neoliberal economics' (Milton Friedman, et al), we really cannot do neolib with a fed and fiat currency in place, it's just not possible. We are forced into a Keynesian world, like it or not. And, given that we are, it is the correct action.

Though on a smaller scale, ( and it was big, that being said) the bailout was similar to what is being proposed now, EXCEPT the part where the corporate elites take the dough and line their pockets, and corporate boards electing to buy back outstanding stocks. Repubs want to give the money to corporations without strings, without assurances to protect jobs, etc., and dems do not.

Another reason to vote for a dem in November.

OscarLevant said:

The ideas being proffered to grease the economic skids are not originally "MMT", they are Keynesian.

MMTers are just Keynesians who smoke pot.


Okay, seriously, MMT has some differences, primarily a lax attitude towards deficits ( oh, uh, well, just print our way out of it ) and a lot of fancy looking equations to make it seem like serious economics.

It's the cavalier attitude towards debt and deficits that I find scary.

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It may seem like a cavalier attitude towards debt, if you still believe that countries go into real debt when they create fiat currencies. But if you understand that bond issuance is merely some handwaving that clears some outdated legal hurdles to issuing money, then it's not cavalier, it's just enlightened. Governments have the power to create and spend their own currencies, no "borrowing" is necessary. That should be clear by now, but tons of people still can't get past the word "debt."

Keynes, being a product of the gold standard era, believed that governments should run surpluses in good times, partly to pay down (real) debt. I think he would agree with us that with a fiat currency, there is no need to run surpluses in most situations.

Moonglow said:

But Oblama was so generous and gave out an extra twenty five bucks a week extra on unemployment.

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He was lucky to get that out of the GOP, with Mitch McConnell, and Ted Cruz pushing the government to the edge of default.

JohnfrmClevelan said:

When I talk about this "theory," I am very specific about how the federal government finances itself RIGHT NOW. There isn't much about MMT that is theoretical.

Other schools of thought, that said QE would lead to massive inflation? THAT'S theoretical. When MMT said that QE would not lead to massive inflation? THAT was theoretical. (QE didn't lead to inflation, btw, so we were right on that.) Whether or not these plans will preserve the economy? That's theoretical stuff, and what I was hoping we would be discussing eventually.

But the mechanics of federal funding are objectively verifiable facts.

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QE can lead to inflation, if the new money exceeds production to a great extent, i.e., if it's overdone.

If demand sinks, and it's use to bring demand back to normal, it won't cause inflation.

In the current situation, it probably won't, it will just prevent deflation if nothing is done. However, they could over do it.

The last QE that didn't result in inflation is not proof that QE doesn't cause inflation, for it has, in the past, so it depends on what is going on in the economy.

Quantitative easing - Wikipedia

Quantitative easing may cause higher inflation than desired if the amount of easing required is overestimated and too much money is created by the purchase of liquid assets. On the other hand, QE can fail to spur demand if banks remain reluctant to lend money to businesses and households.

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This is my beef with MMT'ers, it's becoming a cult of sorts, as if this is the panacea for all of our economic woes. The truth is, it's considered "fringe" economics by many economists, though no one is doubting that a few persons of letters are advocating it.

My criticism is that they, like you, offer the last 10 years as "proof" that QE doesn't cause inflation. You have to go back further, a lot further, than that, to weigh the policy and know when you can do it, and when you can't, and even then, the economy is a very difficult thing to manage, because the effect of policies often take months to take affect, during which time the ground can shift again. Managing the economy is a tricky business, for sure.

I would be very reluctant to accept any school of economic thinking as the final approach to any problem, everything should be considered, and weighed, accordingly.

OscarLevant said:

QE can lead to inflation, if the new money exceeds production to a great extent, i.e., if it's overdone.

If demand sinks, and it's use to bring demand back to normal, it won't cause inflation.

In the current situation, it probably won't, it will just prevent deflation if nothing is done. However, they could over do it.

The last QE that didn't result in inflation is not proof that QE doesn't cause inflation, for it has, in the past, so it depends on what is going on in the economy.

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When, in the past, has QE resulted in inflation?

OscarLevant said:

This is my beef with MMT'ers, it's becoming a cult of sorts, as if this is the panacea for all of our economic woes. The truth is, it's considered "fringe" economics by many economists, though no one is doubting that a few persons of letters are advocating it.

My criticism is that they, like you, offer the last 10 years as "proof" that QE doesn't cause inflation. You have to go back further, a lot further, than that, to weigh the policy and know when you can do it, and when you can't, and even then, the economy is a very difficult thing to manage, because the effect of policies often take months to take affect, during which time the ground can shift again. Managing the economy is a tricky business, for sure.

I would be very reluctant to accept any school of economic thinking as the final approach to any problem, everything should be considered, and weighed, accordingly.

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There is nothing more cult-like than a group of people believing in something that not only isn't backed up by data, but also doesn't make logical sense. For years, educated economists, who should well understand the mechanics of federal finance, have insisted that the country goes into actual debt when they issue bonds, even with a fiat currency. I'm sure you are familiar with the process; if not, I went over it in an earlier post in this thread. Can anybody understand those mechanics and still think that the government is in real, resource-costing debt? Yet that belief has continued to shape economic policy half a century after leaving the gold standard.

It is against this background that we ask, "Why is the burden of proof always on us? Why do we still take these older, unfounded economic assumptions as the prima facie truth?" Why should we start with the assumption that QE would cause inflation (and that was the mainstream view before it happened)? Why should we believe that one can control the economy with a single lever that supposedly adjusts both the overnight interest rate and the unemploymet rate?

We have already gone through the trouble of considering and weighing these mainstream theories, and we have rejected them. (Almost nobody starts out with an MMT background - all of the academics plowed through standard econ programs to get their degrees.) Very few mainstream economists, on the other hand, have made a genuine effort to understand MMT.

I don't care if this is a fringe economic theory or not, because the vast majority of economists are both wrong and unwilling to change their thinking. Acceptance into their deluded world is not something we aspire to.

JohnfrmClevelan said:

Congress is considering a number of measures to deal with COVID-19's effects on the economy, the most novel being direct cash payments to individuals, paid for by deficit spending (at least in the short term). We are talking about amounts in the $1-3 trillion range.

For example, giving 100 million households about $20,000 each (one of the more generous plans) would cost about $2 trillion.

The benefits are obvious - a ton of newly unemployed people, plus those who were just scraping by, would now be relatively secure and able to pay their bills, avoid foreclosure or eviction, eat, etc. Demand that would normally be lost because of high unemployment would be mostly sustained. The idea is to mitigate the kinds of economic (and social) damage that we saw in 2008.

The drawbacks?

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Have to admit I have been a skeptic of what you have been posting for a long time. However after years of zero interest rates, QE in the trillions, Europe with negative interest rates and the Bank of Japan buying up just about anything not nailed down with no signs of inflation in any major country to speak of you deserve to be listened to.

Just throws everything we think we "knew" about money supply and inflation out the window,hard to do.

washunut said:

Have to admit I have been a skeptic of what you have been posting for a long time. However after years of zero interest rates, QE in the trillions, Europe with negative interest rates and the Bank of Japan buying up just about anything not nailed down with no signs of inflation in any major country to speak of you deserve to be listened to.

Just throws everything we think we "knew" about money supply and inflation out the window,hard to do.

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Welcome to the Dark Side.

JohnfrmClevelan said:

Yeah, all you are doing is saying it. Over and over, as if that makes it true.

You predicted the pandemic? Really? Let's see those posts, then.

You have no idea what you are talking about.

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I predicted that MMT would lead to a world wide Depression if some event such as the pandemic were to happen. It's in the posts here. I said it several times. That's the trouble with MMT, it only works if everything runs along hunky dory. Once some form of calamity hits and national debts are huge problems, on comes another Great Depression. We are here. It is happening. To deny that is foolish.

washunut said:

Have to admit I have been a skeptic of what you have been posting for a long time. However after years of zero interest rates, QE in the trillions, Europe with negative interest rates and the Bank of Japan buying up just about anything not nailed down with no signs of inflation in any major country to speak of you deserve to be listened to.

Just throws everything we think we "knew" about money supply and inflation out the window,hard to do.

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I was skeptical of the quantitative easing that was undertaken by the Obama Administration. It wasn’t significantly different from the Fed’s behavior in the 1979 stagflation recession.

That one may have saved Wall Street, but it was very hard on Main Street.

QE clearly saved the US economy, that and the Stimulus Bill.

What’s different between 1979 and 2009 is the role of the price of oil.

In the 1980’s oil was the most valuable commodity on earth. And, after the 1979 embargo, OPEC was able to sustain its cartel price for five more years. This artificially high price stunted economic growth and delayed the recovery worldwide

Indeed, the brakes only went off when Saudi Arabia announced that it would no longer restrict production to cover cheating by Nigeria and Iraq.

Fast forward three decades, and oil is a much smaller part of the energy equation that it was in 1980.

So, when the Saudis announced that they were not going to restrict production to prevent prices from falling, the financial markets barely noticed.

Indeed, oil prices will continue to collapse. Allowing central banks to buy up debt and prop up the world’s financial stability.

I agree with Jet. The risk is it’s an unknown.

The problem is, in responsible hands it would be fine. But then, Republicans.

washunut said:

Have to admit I have been a skeptic of what you have been posting for a long time. However after years of zero interest rates, QE in the trillions, Europe with negative interest rates and the Bank of Japan buying up just about anything not nailed down with no signs of inflation in any major country to speak of you deserve to be listened to.

Just throws everything we think we "knew" about money supply and inflation out the window,hard to do.

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When I first came across MMT about 5 years ago or more, I too was skeptical but kept an open mind. As I watched videos by Steve Keen, Wray and Kelton though, I started to understand more fully just how the Fed and Treasury actually operate. Once I grasped the essential nature of FIAT money, I realized that all MMT did was describe reality. It was not a prescription or ideology, it was simply a way of understanding how banking and the macro economy are linked. People want to believe that econ is a science because it looks like one and is sold to us as one. But in reality, it is really just about how to manage a macro economy to suit the aims and goals of that economy. If your goal is to create a class of super wealthy people, you will love monetarism and supply side. If you want to increase the middle class and create a more egalitarian economy, you start out with Keynes and then move on to MMT. Its that simple.

JohnfrmClevelan said:

And $2 trillion more held by the private sector. Where is the downside?



Your taxes don't pay down the debt now. What makes you think they would pay down the debt in the future?



In the short term, probably nothing. People need money NOW to pay bills. In the longer term, it's a relatively simple matter of eliminating those with a sufficient income and phasing out assistance.



The different plans have different cutoffs. In the short term, it's too difficult to separate the needy from the rest.

But let me point out that even people with relatively good incomes usually have relatively larger obligations. A foreclosure is an economically destructive event, whether it's a small mortgage or a bigger one. So money going to the middle class would still be money well-spent.

There are going to be complainers either way. Either we should only help the ones that need help, or we should be fair and give everybody the same amount, or we should only give taxpayers money back, depending on how much they paid in taxes, etc. There is no plan that will make everybody happy, but any plan that preserves most of our economy will benefit everybody, compared to letting the economy crumble.

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What about lower classes?

Moderate Right said:

I predicted that MMT would lead to a world wide Depression if some event such as the pandemic were to happen. It's in the posts here. I said it several times. That's the trouble with MMT, it only works if everything runs along hunky dory. Once some form of calamity hits and national debts are huge problems, on comes another Great Depression. We are here. It is happening. To deny that is foolish.

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First of all, you don't make predictions, you make guesses. Predictions are based on something besides a complete lack of knowledge. You only have a complete lack of knowledge.

Second, it's the pandemic and our (necessary) response to mitigate the spread of infection that will cause whatever economic damage that ensues.

You have never coherently explained why national debts are a problem, either in good times or in bad.

You never believed that MMT works, even when things are "hunky dory," in the past. Don't change now, just because you think it suits your (ridiculous) argument.

The government is going to create and spend a bunch of money to try and keep the economy afloat. They won't spend enough, as always, because they still don't get it. And when they don't spend nearly enough, you can't blame MMT or Keynesianism or anything else for their failure.

If you still have a problem with MMT, put your money where your mouth is and tear up the checks you get. They're worthless anyway, right? Tear them up, or stop your constant yapping.

Maybe we'll hear renewed calls for the trillion dollar coin solution. Then Turtleboy and Pelosi can thumb wrestle over whether to give it to a rich old white (orange?) guy or to everyone else.

bomberfox said:

What about lower classes?

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Money to the lower classes is the best-spent money of all, because they need it the most, and because they spend 100% of what they get.

Helix said:

Maybe we'll hear renewed calls for the trillion dollar coin solution. Then Turtleboy and Pelosi can thumb wrestle over whether to give it to a rich old white (orange?) guy or to everyone else.

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That's actually a part of Rashida Tlaib's bill. It calls for two coins to start off. Written with the help of Rohan Grey, a second-generation MMT economist.

JohnfrmClevelan said:

That's actually a part of Rashida Tlaib's bill. It calls for two coins to start off. Written with the help of Rohan Grey, a second-generation MMT economist.

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If we mint a kajillion^infinity power coin and give it to the five old rich guys, can you imagine? The trickle down will be like the wave in Deep Impact.