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LloydDobler posted:This is so hard to wrap your head around as a layman. I saw a comedian who said "I'm not $32,000 in debt, I'm just running a $32,000 budget deficit". My whole adult life I've been a left winger super pissed off about how whenever the right is in power they always deficit spend like a motherfucker, but they do it on fighter jets and tax cuts for their friends instead of on the common good. Then the left gets in to power and (sometimes) balances the budget but it still only marginally helps the needy. You'd think they would fire up all kinds of social programs and prove that helping the lower classes helps america. The fundamental difference is that you cannot create money, but the government can. So you *must* count your dollars in vs dollars out. The government can and does create money all the time, so it does not. And yes, it is a very hard concept to wrap your head around at first, since we generally think in terms of money being a “thing” or commodity when it is not any more.
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Jan 24, 2019 05:23
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Gnumonic posted:Wait, so I'm confused about something. What would the point of the Fed be under MMT? I'm not an economist but I'm pretty sure that the fed influences monetary policy through buying and selling debt (i.e. treasuries). In a MMT-based system, why would the government issue debt at all? Isn't the central point of MMT that you don't need to "pay for" federal problems by issuing debt or raising taxes? Because if you *only* create money, you get inflation (well, if you create money too often and it's your only tool in the toolbox.) The Fed would still set interest rates, and use treasuries to move money from the private sector into the public sector if that was needed (to reduce the money supply, or to increase government spending in an inflationary period without making it worse by creating more money.)
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Jan 25, 2019 02:57
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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? At a near zero real interest rate, there would be almost no difference.
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Jan 25, 2019 03:01
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Dead Reckoning posted:Under MMT, government spending is still constrained by the need to avoid high inflation, so the government can't run huge deficits year over year by spending past that limit, since its creditors want to get paid evertually... which would require printing more money past that limit. If you create the money, there are no creditors for those funds, so there is no "deficit" spending. The policy question is "will the value of the services / infrastructure / whatever we create with the money we create offset the inflationary pressure of creating it." Which is why "create a million dollars for everyone and just give it to them" is a bad idea, but something like "create enough money to build wind & solar farms and power storage facilities for that energy" could be a good idea (or at least "not bad").
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Jan 26, 2019 21:36
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MMT is like quantum mechanics. You can try to explain it, but some people just refuse to believe things work that way.
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Jan 30, 2019 04:09
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Question for those who seem baffled that MMT can / does work: How did we pay for the Iraq War, the war in Afghanistan, and the 2008 bailout? Follow up question: Did the massive tax cuts Trump & the GOP passed cause runaway inflation?
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Jan 30, 2019 19:00
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