DrSunshine posted:If taxes are just "deleting" money out of existence, what's the functional difference between taxing the rich at a higher rate, and simply paying the poor more generously? Like, would it be possible to get rid of inequality by paying everyone enough such that everyone is a millionaire? In the short run, yeah, you could. I assume the long run outcome would likely be somewhere between "economic collapse" and "now, but the numbers are 100 times larger." From a practical perspective, I figure "add more" has outcomes different from "take some out." It might be easier to balance by taking and reallocating (taxing, basically) than it is by adding here and there. I'm just speculating, though. Squalid posted:Another question. Say we could do an experiment. If we could create two United States of Americas, one with a national debt of zero, and another with a debt 500% as large as the real one has at present, what would be the economic effect of this difference on the two economies? How would they differ from the real existing USA? I think it's a question of why the debt is larger and if the larger debt actually represents additional productive "stuff" in the world. If tomorrow, the population were 500% as large, I figure you'd need 500% as much stuff in the economy to keep standards of living about the same. If the debt increased 500% tomorrow because the government just sold a bunch of bonds, the outcome is some people have a bunch more money than they used to. If there's 500% more stuff out there to consume, nothing much changes. There's probably not that much unrealized productive capacity in the U.S., though. The MMT take, I think, is the debt just reflects how much money the US government has pumped into the economy. That it's negative logically follows. The US government is the one giving away the dollars in the first place.
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Jan 25, 2019 01:31
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DrSunshine posted:Say some hypothetical country A then artificially puts a ceiling on prices so the rich couldn't outbid everyone? What would happen? Like is inflation really a problem still? Shortages if supply can't meet the (presumably increased) demand. I guess it depends on what you're putting a ceiling on, though. If you were to just make one arbitrary thing cheaper, people would probably just stop making that thing. You're moving toward a command economy with this sort of thing. If you're thinking of a scenario in which the government gives everyone some amount of money and tries to fix prices on goods and services related to "core living expenses," you're basically hoping the private sector will provide enough goods and services at your defined price points and that you didn't make a mistake that will result in the economy turning into a roaring dumpster fire.
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Jan 25, 2019 06:34
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Dead Reckoning posted:Can you explain this part to me? Because I don't really understand it. What's the limit? Are we close to it? How much room do we have? You assume implementing some selection of policy goals plus payment on debts would necessarily overrun the limit. Further, if inflation is becoming a problem because of the money flowing out of the government, the government could always do some combination of increase taxes or decrease spending. Mechanically speaking, I'm not seeing an issue. The government would also stop issuing debt, so debt payments would not climb indefinitely. The government doesn't need to issue debt to bring money into existence. That's not to say it couldn't choose to do so as a policy choice, though. The fiscal discipline comes from looking at the overall state of the economy and making a genuine evaluation of whether things like taxes or government spending should be changed. Yes, elected officials or the public could choose to not implement identifiable solutions to identifiable problems. That's not a new risk. People have been making dumb decisions for ages. OwlFancier posted:I mean I guess it's not a bad thing to try to do but I'm not sure there is a way to credible write "permanent good healthcare" into law and not have it be easily breakable by a government so inclined to doing it. Your insurance against that is popular support for the program which is achieved largely by creating universal dependence on it, so that it becomes politically impossible rather than legally difficult. I think the gist of the argument is it's politically easier to not appropriate funds for a program (or appropriate fewer funds) than it is to actively pass a bill modifying a tax for that same program. The latter gets headlines like "Senator so-and-so introduced a bill to kill <program> today." This is a political issue, though, not a mechanical one.
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Jan 26, 2019 21:28
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Dead Reckoning posted:The problem I see here is that our government is a collection of motivated self-promoters and not a philosopher-king. Under MMT, every representative can argue in favor of printing money for specific projects or tax cuts with their name attached to it, the downside being contributing to a collective future risk of inflation. The temptation to spend would be overwhelming, and motivation for fiscal discipline low. When inflation inevitably starts to heat up, and it comes time to decide how to increase taxes or decrease spending, how would our government be any more able to make that decision than it is today? All MMT seems to add is the risk that the govt will choose to keep printing money and hope inflation goes away on its own. Your whole post seems to be a lot of words to ask "What if leadership just makes bad decisions over and over and then bad things happen?" That's not a new risk. What if the President throws a fit and shuts down the government? What if leadership oversells the importance of paying off the national debt and drives the country into economic downturn? MMT proponents aren't denying there are risks, but I think you have to put some effort into explaining why harms are more likely under an MMT-friendly regime than what we're getting under the status quo. Squalid posted:What do the proponents of MMT think about the modern Japanese economy? IIRC they have maintained high deficits alongside very low unemployment and low inflation for the past two decades. I think I've seen two or three speakers use it as evidence what they're proposing is plausible.
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Jan 27, 2019 17:57
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How Does Government Spending Affect Inflation?
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Jan 30, 2019 04:03
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Gnumonic posted:This. I'd really like someone to respond to my post on the first page where I ask if there is an empirically established method for predicting the effects of inflation. Cuz if that doesn't exist then... I don't see any advantage whatsoever to a MMT based analysis. What do you mean, "predicting the effects of inflation?" Inflation means prices go up. An inflationary period would be a time during which prices are climbing. This incentivizes buying things *right now* as opposed to later because things will likely be more expensive later. I think it's also worth noting the Federal Reserve has an inflation target and there's empirical evidence the Federal Reserve (or central banks more generally) has the ability to lower inflation. Source.
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Jan 30, 2019 06:50
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This tangent is ridiculous. MMT doesn't constrain your policy space by forcing you to make everything an annual appropriation. If you want permanent funding for a program, write it into policy. If you want to do it in a tax-neutral way, you could create a special new payroll tax and decrease income taxes by a commensurate amount. Or you could tax a certain population segment without worrying about neutrality. Or something else entirely.
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Jan 30, 2019 07:35
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Dead Reckoning posted:He's asking if there is a method for accurately, empirically predicting the inflationary effects of specific policy choices in advance. For example, if I come to you and say, "the government should print and then spend a billion dollars to do X", can you run some numbers and say to me, "that will cause the inflation rate to rise/fall by zero point Y%"? 1. If we agree the Federal Reserve can effectively manage inflation, then this is mostly irrelevant. If you review the source I posted previously, you'll see there's evidence the Federal Reserve can likely do this. 2. If you want information about the effects of government spending on inflation, try these: Older source first. This one's amusing in that the writer is clearly angry about the national debt, but not because of its effects on inflation: quote:The Bush and Obama administrations have added, and continue to add, much to the United States’ national debt. Both Republicans and Democrats spend too much of taxpayers’ money, but excessive government spending does not mean that inflation will necessarily — or even probably — follow. Source More recently... The article I linked previously was a summary of a lengthier article (full text here). Relevant text from summary: quote:Across the board, we found almost no effect of government spending on inflation. For example, in our benchmark specification, we found that a 10 percent increase in government spending led to an 8 basis point decline in inflation. Moreover, the effect is not statistically different from zero. I think they're overselling with the benchmark thing, but the idea remains the same: they didn't find evidence of government spending creating inflation. The full text also has some discussion of the recent Recovery Act. Source
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Jan 30, 2019 07:46
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karthun posted:This is opposed by MMT proponents. Sources? Other than people in this thread... Not that it matters. That an MMT proponent has specific policy positions you may disagree with doesn't undermine MMT itself. You can implement policies multiple ways, each with various drawbacks and advantages.
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Jan 30, 2019 07:53
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Dead Reckoning posted:There presumably exists some sort of limit on the ability of the Fed to manage inflation, yes? Probably. If you're going to claim that means we need to evaluate all new spending for inflationary risk, you should be against all further spending until the US starts doing this. quote:But if your quote is correct, then it doesn't matter whether the Fed can manage inflation or not, because government spending has no impact on inflation? I wouldn't assert that one paper finding no relationship means there's definitely no relationship. It seems entirely possible to me a certain level of spending could create problems. However, based on the evidence, some exploration into the sustainability of additional federal spending seems reasonable. The exact size of that exploration is a policy question we'd have to debate out. quote:Is this measuring countries where the government was balancing spending with revenues and issuing debt? Because if so, that kind of blows up that quote as an argument that spending unbalanced by revenues or debt doesn't cause inflation. This is what the article says about the sample: The cross-country analysis provides evidence on the long-run or steady-state relation between inflation and the size of government. Our sample consists of 80 countries during the period 1973-90. Inflation is measured by the average growth rates of the consumer price index (CPI) and M1, and the size of government is measured by the average of the ratios of general government spending to GDP. quote:If what you're saying is correct, then what exactly is the limiting factor on the government's ability to print money? What stops the government from zeroing out taxes and letting every congressperson print however much money they want for whatever program their heart desires? The empirical data doesn't account for a hypothetical government that runs the printers 24/7. That would likely be a terrible idea. The only limiting factors are self-imposed. There's nothing in MMT or the status quo that prevents this from happening. LuciferMorningstar fucked around with this message at 08:24 on Jan 30, 2019 |
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Jan 30, 2019 08:22
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Dead Reckoning posted:Presumably these were all countries operating under "pre-modern" monetary theory and were somewhat trying to balance expenditures with revenues. This doesn't tell us what would happen if the government decoupled spending from revenues and started printing money for whatever it wanted. Every explanation of MMT I've seen posits that the government printing money to fund its priorities puts inflationary pressure on the economy to some degree, but you seem to be saying it wouldn't. You do understand Congress can spend as it pleases literally right now, right? You're making a bunch of assumptions and providing no evidence your concerns have basis in reality. Further, you're willfully ignoring that *any* spending carries an inflationary risk. The requested empirical evidence shows government spending hasn't created serious inflationary risks in recent periods. You need to show why you think this will be different in the future, for reasons beyond, "But what if the US prints too much money???" Bottom line: you're not engaging in good faith and need to provide some evidence the risks you're describing don't exist right now, are likely to materialize under conditions that don't exist right now (and where those conditions will necessarily originate), and are more of a harm than the productivity lost to the status quo's aversion to deficit spending. LuciferMorningstar fucked around with this message at 19:32 on Jan 30, 2019 |
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Jan 30, 2019 19:12
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I'll try to respond to specific discussions in a few hours. I think it might be productive, though, to step back and develop a shared understanding of what MMT is and whether it describes a system that currently exists before getting into debates about the specific implementation details.
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Jan 30, 2019 21:54
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Dead Reckoning posted:I'm starting to think that you don't understand the sources you are citing. That paper from the St Louis Fed says that government spending does not drive inflation. But, and this is the important part, it describes spending by governments operating under conventional monetary theory. Congress can spend as much as it wants right now, but it has to appropriate revenue or issue debt in order to do it. MMT seeks to do away with that limitation. 1. The original request was regarding empirical evidence of "an empirically established method for predicting the effects of inflation," or, in your words: quote:He's asking if there is a method for accurately, empirically predicting the inflationary effects of specific policy choices in advance. For example, if I come to you and say, "the government should print and then spend a billion dollars to do X", can you run some numbers and say to me, "that will cause the inflation rate to rise/fall by zero point Y%"? I therefore offered the evidence I identified. Overall, the evidence suggests government spending hasn't been linked to inflation. That does not mean government spending can never create inflation, though, which is one of the things you keep trying to claim. The evidence also suggests military spending is a policy area that tends to increase inflation, but other types of government spending may not. Again, this is based on things that have actually happened, and it's possible no country has yet met a condition where general government spending does drive inflation. Full article for the multi-country study here, if anyone else is interested. The various articles I linked have models for predicting inflation, I believe. I'm therefore inclined to say, yes, we've got empirically established methods for predicting inflation. E: I went back and looked again at the original request on page 1. The poster seemed interested in ensuring no inflation occurs. That's also not a realistic benchmark, since the US has an inflation target and too low inflation puts the country at economic risk. If you want empirical evidence of an MMT-loving regime having employed functional policies, that's a different request from the one I responded to. This is one reason I feel you're not engaging in good faith. That evidence may be unavailable if no such regimes exist(ed). However, making evidence involving <thing that hasn't been tried before> a prerequisite to trying <thing that hasn't been tried before> isn't a reasonable request. 2. MMT isn't doing away with the limitation you describe. There's no limitation to do away with. If we agree the U.S. has the authority to create money, then it logically follows they don't need to borrow or tax it from anyone if they don't want to. In fact, they had to create and distribute money in the first place for there to be anything to tax or borrow against. The US chooses to issue debt and extract taxes. These options are and will remain policy tools. Even if you want to insist the government has to do the song and dance of "borrowing" from somewhere, they can just borrow from themselves, as the United States currently does: "Forbes Article posted:Money can be and is created with a keystroke, ... MMT only tells us to disregard the song and dance surrounding the fact that the government simply brings money into existence. It doesn't require us to materially change how we do business. quote:Our government has operated under conventional monetary theory for the period they studied, so the government spending being studied was counterbalanced by the government taking similar amounts of money out of the economy through revenues or issuing debt. MMT says that the government can do away with the latter and simply print money to pay its bills. Since none of the governments being studied were operating under MMT, it doesn't support your assertion that spending by a government operating in the way that MMT enthusiasts want would not cause inflation. Again, the original request was not for a empirical evidence involving an MMT-loving regime. Further, at no point have I suggested government spending at the levels advocated by some MMT enthusiasts wouldn't create inflation. You keep trying to put those words in my mouth, and it's another reason I think you're arguing in bad faith. Another edit: you did catch the part where I said any spending carries inflationary risk, right? Dead Reckoning posted:I'm participating in a few parallel discussions. With LuciferMorningstar, I'm trying to figure out if they understand that, under MMT, the ability of a government to print money to pay for spending is constrained by how much that spending contributes to rising inflation. (The government can also raise taxes to put downward pressure on inflation.) Inflation is not a constraint. It's a response. There may be a point at which it would be more advisable to not spend money in favor of limiting inflation, but that doesn't mean policymakers would *have to.* LuciferMorningstar fucked around with this message at 02:34 on Jan 31, 2019 |
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Jan 31, 2019 02:21
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Dead Reckoning posted:Their ability to find buyers for US debt willing to give them reasonable rates, something they are already managing to gently caress up. So you're choosing to ignore that the US can and does buy its own debt?
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Feb 1, 2019 18:37
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Gnumonic posted:There are two sorts of claims floating around in this thread, both by people who support and oppose MMT: With regard to how MMT is a more accurate analysis of what we do, I'd ask you to specifically make an evidence-based argument about how MMT isn't a more accurate analysis. Accepting that MMT is accurate doesn't necessarily prompt policy change, but it allows for more policy space. Questions like "can we afford it?" stop being a consideration (note that isn't the same question as "Should we spend money on it?"). All that said, MMT is only valuable if citizens electorally punish elected officials for (a) not taking advantage of the expanded policy space, or (b) abusing the expanded policy space. I'm not going to get my hopes up.
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Feb 2, 2019 01:22
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Owlofcreamcheese posted:Like the fact that the US can't default because it can just print money is a trivially obvious fact. If you think about it for a second that is clearly a true thing. It's an 'accurate analysis" of something no one would or ever has questioned. I mean, you say this, but Obama, for example, is on record saying, "Well, we're out of money now." Elected officials trot out lacking of funding as being a reason for enacting (or not enacting) legislation. I think there's reason to believe people don't understand the system, or are at the very least willfully obscuring how it works. Dead Reckoning posted:If we assume that we have a finite a mount of money to spend, or a finite ability to print more money without either raising taxes or causing too much inflation, then it really is the same question, with the second part being "Should we spend money on it (instead of other things)?" Good thing you're the only one trying to make those assumptions.
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Feb 2, 2019 01:45
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Xae posted:Because MMT is a joke. The claim isn't exclusive to Neo-Chartalism, it's part of Chartalism itself. You'll note it's not that a currency's value need not be wholly based on the power of the state, and that a currency's value is not necessarily limited being valuable only due to taxation, though it is the obvious example: quote:At issue is the nature of money and the inspiration for its use. The Metallists argue that money evolved as a means of reducing some of the inefficiencies of barter. Precious metals, they maintain, were collectively settled upon as a convenient medium of exchange, and money's value derived from its precious metal content. In contrast, the Chartalists argue that the use of money is based primarily on the power of the State and that its value derives from its usefulness in settling certain obligations to the State (in particular, tax liabilities). Source
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Feb 2, 2019 02:30
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Dead Reckoning posted:The question isn't whether the act of the government handing someone $10,000 for a widget causes inflation, the question is whether it is (more) inflationary when the government gets that $10,000 by printing more money versus by taking that $10,000 out of the economy somewhere else via taxation. Printing the money is more inflationary. quote:You're not understanding the question then. By my understanding, the whole reason that "defects don't matter" according to MMT is because government spending is constrained by the need to avoid overinflation, rather than a fixed quantity of dollars. Stephanie Kelton explains it that way. If you're right, and government spending doesn't cause inflation even when you're printing money to do it, then MMT makes no sense because there is no constraint on the government printing eleventy trillion dollars to do everything at once. Spending would not be constrained by a fixed pool of dollars nor by the need to avoid inflation. I bolded the part where you misrepresent my position, again. At no point have I claimed government spending doesn't cause inflation under any circumstances. Additional government spending carries inflationary risk. quote:You are correct that our government currently has all these tools. Policymakers decided to insulate the part of the government with the ability to print money and set monetary policy from the part of the government that spends money, sets taxes, is susceptible to public pressure, and frequently needs to seek reelection. Do you have any thoughts on why our government might have been deliberately set up this way? The Treasury is dependent on Congress to raise the debt ceiling and authorize spending. The people who are most vulnerable to public pressure are the ones directing people to work the levers, here. From the Congressional Research Service: quote:The total amount of debt issued over the fiscal year depends in large part on the decisions made by Congress and the priorities it chooses in its annual budget and appropriations process. Recently, Treasury has issued increasing amounts of debt as a result of the government response to the most recent economic downturn, along with other budgetary initiatives. quote:Do you think that risk can be quantified in any rigorous way? Do you think that whether the money was printed without balance or counterbalanced by taxation changes the degree of inflationary risk? Probably. Yes, spending not balanced by tax revenues increases the risk. quote:Yes, policymakers allowing inflation to go unchecked (because it represents an abstract, collective risk) rather than increasing taxes or cutting spending (which is a specific risk to their reelection chances) is indeed a huge problem with the proposal to allow congress to print money. There is no proposal, here. Congress authorizes the creation of money. You just described the status quo.
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Feb 2, 2019 03:49
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Dead Reckoning posted:So what did you mean by this then? I already addressed this: LuciferMorningstar posted:Overall, the evidence suggests government spending hasn't been linked to inflation. That does not mean government spending can never create inflation, though, which is one of the things you keep trying to claim. The evidence also suggests military spending is a policy area that tends to increase inflation, but other types of government spending may not. Again, this is based on things that have actually happened, and it's possible no country has yet met a condition where general government spending does drive inflation. I bolded the relevant bits for your convenience. quote:Not the department that physically prints the bills, dingus, the one that controls the money supply. The Federal Reserve is run by political appointees and supposed to be insulated from political pressure. Why do you think that is? 1. Are you arguing there's an important distinction between physically printed money and money created via computer? 2. Congress still authorizes spending. When they authorize spending above tax revenues, they increase the deficit, prompting the Treasury to add money to the economy that wasn't there before. Congress maintains root control of the money supply. quote:If MMT doesn't suggest any structural changes to the way we run our government, then why does it matter outside an academic context? Also, does this mean you think the OP was wrong when they said: I agree it's largely academic until voters either (a) electorally punish officials who don't use/abuse the expanded policy space, or (b) electorally reward officials who do use the space effectively. Yes, I think the OP was wrong with their original claim. "Economically speaking," it's entirely possible some programs could create issues. Note I'm not saying we necessarily should or shouldn't pursue any individual program.
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Feb 2, 2019 20:37
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Typo posted:where are you getting this from? AFAIK, he's making it up based on whatever math he did. You'll note he says there's $20 trillion in circulating currency. Per the St. Louis Fed, that's not true.
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Feb 2, 2019 20:39
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Hentai Jihadist posted:I've never really understood why people have such trouble understanding MMT. Certain individuals are working really, really hard to not understand.
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Feb 15, 2019 18:49
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TrixR4kids posted:Someone from Jacobin did a hit piece on MMT and a job guarantee (semi) recently, I'll admit to not being equipped to really know how much their critiques are valid: https://www.jacobinmag.com/2019/02/modern-monetary-theory-isnt-helping My take is this is actually the author's concern: quote:Taxation may not be full expropriation but it’s the next best thing in this fallen world. It is a form, however mild, of socialization — transforming private investment and consumption into public expenditures. And divorcing taxation of the rich from the provision of public services throws aside the material and agitational advantages of waging class war through fiscal politics. Rich people would have a lot harder time complaining about their money being taken to educate kids and save the planet than if it were taken just because they’re too rich.
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Mar 6, 2019 02:18
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CNBC headline giving me a good laugh: "Fed doesn't have to worry about high inflation, and that's a problem."
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Mar 7, 2019 19:26
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theblackw0lf posted:This may be the best explanation of MMT from a mainstream publication (and one of the best from any publication) I've seen Their simple description is bad because it emphasizes a connection to debt that doesn't make sense: quote:MMT proposes that a country with its own currency, such as the U.S., doesn’t have to worry about accumulating too much debt because it can always print more money to pay interest. So the only constraint on spending is inflation, which can break out if the public and private sectors spend too much at the same time. As long as there are enough workers and equipment to meet growing demand without igniting inflation, the government can spend what it needs to maintain employment and achieve goals such as halting climate change. They go on to say this, though: quote:The reason the government doesn’t need to sell treasury securities, or levy taxes, to spend money is that the central bank, under the control of the treasury, can pay for everything by conjuring up electronic money. Under their own assertions, a country with its own currency doesn't need to worry about debt because it doesn't need to accrue the debt in the first place. If a country wants to sell Treasuries as a tool to achieve policy goals, that's fine. But such a country needs neither to tax nor accrue further debt to spend more money. There's no need to assert some connection between government spending and accumulating debt on which it will have to pay interest, especially when you're giving someone some language they can trot out for their friends.
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Mar 22, 2019 01:03
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It's neither. I think it's important to separate the descriptive components from the policy proposals.
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Mar 22, 2019 18:41
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