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Badger of Basra posted:If I'm understanding correctly, if it was decided that the federal government would run on MMT terms there would be no bonds. They'd "print" a bunch of money through the Federal Reserve to pay off existing debt (all at once? unclear if this would just generate huge inflation) then not issue anymore. New deficit spending would be paid for through money printing. T-bills have an incredibly stabilizing effect on the market, and it would be a good idea to keep issuing them. Think of it as just another service the government provides for the common good. But the government could decide how many bonds to issue by directly measuring that stabilizing force, instead of trying to tie it to spending. It also factors into US soft power by interlinking our economy with most other nations.
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Jan 25, 2019 22:25
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OwlFancier posted:So if I'm understanding right the size of your deficit is basically the size of your economy? Or should track relatively closely? Because the deficit represents the liquid money supply, more or less? The size of the deficit matches (or needs to) the annual growth of the economy. You have to add currency to the economy at the rate that the economy grows so that you don't run into effective deflation (i.e. try to keep the 'share of the economy' that a single dollar represents constant)
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Jan 27, 2019 18:50
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Delthalaz posted:How does all of this take into account actual instances of hyperinflation? As in, what would this system do differently than the scenarios that produced hyperinflation? I'm no economist and expert in this topic In MMT inflation is controlled by raising taxes, raising interest rates, and reducing discretionary spending. Those are the same tools we use now to control inflation. Hyperinflation is almost always caused by a government holding debt denominated in a foreign currency and then being unable to service that debt when its economy cools. This isn't something that the US needs to worry about because the US borrows in dollar-denominated debt.
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Jan 28, 2019 18:24
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Delthalaz posted:OK, I guess I'm still confused. Is MMT something that can only be practiced by the US government because it can print dollars? Any nation that issues its own currency could use MMT. Yes we should continue selling bonds because US debt is an important market stabilization tool. It's just that we could decide how much debt to sell by directly measuring its stabilizing effect rather than trying to tie it to spending.
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Jan 28, 2019 19:54
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Owlofcreamcheese posted:That would be deflationary. I mean, imagine if we made tanks by gluing a bunch of quarters together then having them go get blown up or sit in a field somewhere forever if you want to realize why. No, that's inflationary. This is almost literally Keynes' 'dig holes in the ground to bury gold' thought experiment.
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Jan 28, 2019 20:33
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Dead Reckoning posted:Just Um, actually fiscal multipliers are pretty well studied.
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Jan 28, 2019 21:05
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if you think determining the true cost and economic activity generated by a government program is something that can be trivially done in a consistent and non-partisan manner.
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Maybe you first should explain what you think inflation means. Does stimulating the economy lead to inflation?
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Jan 28, 2019 21:36
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Dead Reckoning posted:OK, but how do you get people to agree to raise taxes or reduce discretionary spending when the relationship between policy decisions and inflation is abstract? Discretionary spending usually goes down automatically when the economy heats up. A hot economy means more people working, which means fewer welfare recipients. quote:Someone can go ahead and correct me if I'm wrong, but part of the reason the US is able to find buyers for dollar denominated debt is because control of the federal reserve is in the hands of technocrats, rather than congress being able to print another billion dollars every time they have an idea. What do you think happens right now when congress decides to spend (where 'spend' might include cutting taxes, like they did last year)? That's not in the hands of the technocrats at the Fed. Yet somehow we're still able to find buyers for T-bills. Family Values fucked around with this message at 22:45 on Jan 28, 2019 |
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Jan 28, 2019 22:42
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Gnumonic posted:In a democracy, it's probably a good thing if we adopt a macroeconomic policy that isn't incomprehensible to the average voter? "Tax people in order to pay for programs" is pretty comprehensible. That isn't how our government currently works, and the only people that pretend that it does are Republicans when they want to pull stunts with the artificial debt limit.
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Jan 30, 2019 00:58
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karthun posted:So do you support or oppose permenant funding for M4A? Programs that have ‘permanent funding’ like Social Security and Medicare are in the very near future going to be contributing to the deficit. Does that matter? MMT says one thing, and ‘pretend the federal budget is a checking account’ says another. Which one is right?
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Jan 30, 2019 07:23
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karthun posted:Matter in a political sense or matter in a monetary sense? In order to make cogent arguments in the former space, you need a working intellectual framework in the latter space.
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Jan 30, 2019 07:43
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Fiscal multipliers and inflationary effects of government spending aren't really what MMT is about, though? For those things stick with neo-Keynesian models or whatever else you like. The question MMT asks is must we create debt, then create fiat currency to 'buy' the debt, or can we just create the fiat currency and directly use it.
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Jan 30, 2019 22:33
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Ardennes posted:Granted, taxes mean a currency has some type of minimal value but it doesn’t obviously mean it retains its full value. This is fairly obvious looking at any floating currency. The IRS assesses income tax on an individual's entire income, not just the income denominated in USD. If you were paid entirely in bitcoin, you would still owe income tax at an exchange rate chosen by the IRS. So yes, taxes mean that all economic activity in the US happens in USD or can be convertible to USD. That counts as 'full value' to me. Floating currencies don't really factor into this because the income is reported at the time the transaction takes place.
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Feb 2, 2019 05:37
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silence_kit posted:I also don’t get how the theory is really that useful, except as a way to promote government spending if you don’t think about it too much. It seems to make similar kinds of predictions as the government budgeting type of thinking, except it involves a nebulous quantity (inflation risk). Inflation risk is exactly the argument against deficit spending made by austrians, gold bugs, and assorted other econ kooks that hold sway over the political right, so actually a theory that better explains and predicts it is useful.
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Feb 2, 2019 19:41
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MMT: Sense Or Nonsense?quote:Before I get into details, I want to make it clear where I stand. I don’t agree with everything in MMT. However, those aspects with which I disagree have never been part of the public debate and they make no difference whatsoever to the policy recommendations. To the general public, they would be minutia (although they might be worth a couple of journal articles!). I mention this simply to assure the reader that I’m actually critical of some aspects of MMT and am not simply toeing the party line here.
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Mar 6, 2019 17:58
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It's funny because most of the criticisms of MMT are not even about features exclusive to MMT. Like balancing spending against inflation, that's already a part of mainstream (Keynesian) economics.
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Mar 22, 2019 18:52
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