Modern Monetary Theory

Discussion in 'Markets & Economies' started by mmm....shiney!, Sep 14, 2019.

  1. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    20,021
    Likes Received:
    3,164
    Trophy Points:
    113
    Location:
    昆士蘭
    @Davros10, thanks for the the link to Andrew Marr. That looks a fascinating series and fuel for my optimistic outlook on life, @JulieW and @Shaddam IV should watch this as their both pessimistic bastards. :D

    Maybe I was wrong calling you a dickhead. :p
     
    sammysilver and Davros10 like this.
  2. Davros10

    Davros10 Well-Known Member Silver Stacker

    Joined:
    Aug 6, 2014
    Messages:
    568
    Likes Received:
    453
    Trophy Points:
    63
    Location:
    Canberra
    Maybe. We'll never know.
     
    mmm....shiney! and 66rounds like this.
  3. President Trump

    President Trump Active Member Silver Stacker

    Joined:
    Jun 26, 2019
    Messages:
    270
    Likes Received:
    240
    Trophy Points:
    43
    Question 1. If you could print money to buy gold, would you instead sell that gold in exchange for the money you can print (or someone else can print)?
    Question 2. If the money you can print is devaluing what would you want to hold to help stabilize its value?
    CB's will ask themselves these two questions before they sell their gold. Some CBs might decide to buy US Dollars or even Apple stocks but I think most will be slow to sell gold unless they have to. I also think it might be the Fed asking themselves those questions.
     
  4. Davros10

    Davros10 Well-Known Member Silver Stacker

    Joined:
    Aug 6, 2014
    Messages:
    568
    Likes Received:
    453
    Trophy Points:
    63
    Location:
    Canberra
    In a purely mechanical sense you may or may not be right, I wouldn't know. What is not often discussed in terms of gold, currencies, deflation or hyper-inflation is the importance of societal trust in the systems, or the piece of paper (plastic) with pretty pictures on it, or the electronic digits. Although currencies have been disconnected from gold backing for decades, I'd reckon the big unknown is how much of this "societal trust" is still attached to gold. I'm not looking forward to finding out as confidence is very hard won and probably almost impossible to recover once lost.
     
    mmm....shiney! likes this.
  5. President Trump

    President Trump Active Member Silver Stacker

    Joined:
    Jun 26, 2019
    Messages:
    270
    Likes Received:
    240
    Trophy Points:
    43
    The Spanish discovered a mountain of silver in South America and returned it to the capital and minted it into coinage. This was the equivalent of money printing. It destroyed the currency and caused massive inflation. I'd never heard of a such an event with respect to gold until the Mansa Musa example that Davros 10 points out. I guess the value of everything went up against gold for a while. Still I'd rather bet on PM than fiat
     
    Last edited: Jul 4, 2020
    Davros10 and leo25 like this.
  6. willrocks

    willrocks Well-Known Member Silver Stacker

    Joined:
    May 10, 2012
    Messages:
    7,012
    Likes Received:
    2,933
    Trophy Points:
    113
    The 1850s gold rush in Australia caused massive inflation too.

    https://www.rba.gov.au/publications/bulletin/2010/mar/pdf/bu-0310-10.pdf
     
    Davros10 and leo25 like this.
  7. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

    Joined:
    Mar 16, 2019
    Messages:
    1,693
    Likes Received:
    1,267
    Trophy Points:
    113
    Same here in colorado and all in the west besides the already high prices of living.
    It corrected itself naturally with the free market we had back then.
    Gold traded a little cheaper than the going rate for sure too.
     
  8. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    20,021
    Likes Received:
    3,164
    Trophy Points:
    113
    Location:
    昆士蘭
    https://rba.gov.au/media-releases/2020/mr-20-17.html

    Lowe reinforcing the theme. And the ALP calling on the government to extend financial support to workers beyond September and of course there’s no sound reason to not do that.
     
  9. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    20,021
    Likes Received:
    3,164
    Trophy Points:
    113
    Location:
    昆士蘭
  10. mattyman174

    mattyman174 Member

    Joined:
    Dec 11, 2018
    Messages:
    41
    Likes Received:
    39
    Trophy Points:
    18
    All of this stimulus money is a perfect example/case study for the ramifications of a UBI.

    Every time someone talks in favor of UBI they conveniently palm off the propensity for people receiving something for nothing to continue doing so indefinitely as if its not going to happen because they wish it so.
     
  11. leo25

    leo25 Well-Known Member Silver Stacker

    Joined:
    Jun 8, 2010
    Messages:
    3,420
    Likes Received:
    1,679
    Trophy Points:
    113
    Location:
    Sydney
    Government did a piss poor job with JobKeeper and JobSeeker. Government should never pick and choose where money goes. Either give everyone unconditioned stimulus (like Rudd did) or no one gets stimulus. Otherwise you get massive distortion in the markets.

    If they just gave everyone stimulus without conditions, then the vast majority of those people would have been more then happy to work in order to earn extra cash.
     
  12. leo25

    leo25 Well-Known Member Silver Stacker

    Joined:
    Jun 8, 2010
    Messages:
    3,420
    Likes Received:
    1,679
    Trophy Points:
    113
    Location:
    Sydney
    I would say it's a bad example as they are not comparable. Atm Governments gives many people an option, either work and earn $550~pw or don't work and earn $550pw. Clearly a stupid option!

    With UBI the option might be get $550 per week plus you can work and earn extra. The only way to know for sure how people will act will be to test it out, but I think most people will want to keep working and earn extra.
     
    Last edited: Jul 8, 2020
  13. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

    Joined:
    Mar 16, 2019
    Messages:
    1,693
    Likes Received:
    1,267
    Trophy Points:
    113
    Trillions in bailouts have already been given to wall street and companies that dont need it.
    The masses wont ever see anything like that besides crumbs.
     
    Markco2 and precious roar like this.
  14. mattyman174

    mattyman174 Member

    Joined:
    Dec 11, 2018
    Messages:
    41
    Likes Received:
    39
    Trophy Points:
    18
    Your absolutely right on the first part. Your second part however, I feel as though I have less faith in the majority of peoples enthusiasm for work given an alternative than you do.
     
    mmm....shiney! likes this.
  15. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

    Joined:
    Mar 16, 2019
    Messages:
    1,693
    Likes Received:
    1,267
    Trophy Points:
    113
    They will probably have to do ubi here in the states with half the workforce sitting at home haha.
    Their plan is coming together perfectly!

    I'd keep my job of course but I'll take any extra too. It would all go into my stack or savings same as now.
    It sure is nice not having any debt!
     
  16. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

    Joined:
    Mar 16, 2019
    Messages:
    1,693
    Likes Received:
    1,267
    Trophy Points:
    113
    Silver about to hit $19.
     
  17. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

    Joined:
    Mar 16, 2019
    Messages:
    1,693
    Likes Received:
    1,267
    Trophy Points:
    113
  18. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    20,021
    Likes Received:
    3,164
    Trophy Points:
    113
    Location:
    昆士蘭
  19. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    20,021
    Likes Received:
    3,164
    Trophy Points:
    113
    Location:
    昆士蘭
    Martin North seems to have some followers on this forum so here's his interview with South Australian academic Steven Hail. Now I know some people like to watch and then there's some who hate watching so I've summarised some of the main points.



    1:50 The biggest risk to the Australian economy is politicians on both sides of the house, particularly the budget surplus fetish they have


    Then more stuff about MMT which we’ve covered in this thread already.


    4:20 The current Australian government debt is money circulating in the economy that hasn’t been taxed back out as of yet


    4:35 There are two ways money is created, by the government issuing currency and by the creation of private debt. Private debt is a burden, credit applications are levelling as people are loathe to take on more debt, if the government reduces its level of debt then that would result in even less money circulating in the economy.


    5:40 Hail estimates that in order to get the economy out of the doldrums (see Richard Koo’s balance sheet recession) the budget should be about 2 -3% in deficit.


    That was in May 2019. I’m not sure what it is now but I’ve seen figures in the 6 – 7 % of GDP range quoted, I don’t know if Hail is talking about % of GDP or another measure.


    Then more stuff about MMT which we’ve discussed.


    8:35 Surpluses and deficits have to cancel each other out. (There’s that double entry book keeping we’ve talked about.) If there is a surplus of money somewhere, then there is a corresponding deficit of money somewhere else. If the government has a budget surplus, then the private sector is funding that and has a corresponding deficit.


    9:30 Desperately need our private sector to run financial surpluses because that’s what drives the economy, so the economy needs the government to run a deficit ie spend to take the place of the private sector which is not spending.


    12:02
    Donald Trump understands how the modern monetary system works better than the Aust Coalition.


    13:53 Interest payments on government debt are like any government spending, they inject new money into the system and are therefore mildly stimulating. There is an inflation risk, but a government can’t be forced into insolvency. Governments don’t need to issue debt. They do so in order to cancel out their net spendings. They don’t need to issue debt to finance themselves.


    19:03 If the government net spends too much and the money supply increases over time then there may be an inflationary risk and that’s the time for austerity or tax hikes. It’s not significant though at the moment.


    21:00 Not enough spending at the moment in Australia, large level of underutilisation of resources. Lots of potential projects that could benefit mankind ie climate change measures.


    Then stuff about the job guarantee which we’ve talked about before.


    27:31 There is political interest in MMT, the ALP, The Greens and professional bodies.


    Then some predictions about stuff which is unimportant to this thread/and or wrong.
     
    precious roar and Markco2 like this.
  20. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

    Joined:
    Mar 16, 2019
    Messages:
    1,693
    Likes Received:
    1,267
    Trophy Points:
    113
    We are watching mmt fail before our eyes. Theres nothing they can do at this point!
     

Share This Page