Modern Monetary Theory

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

  1. leo25

    leo25 Well-Known Member Silver Stacker

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    Again MMT it's not trying to solve a problem, it's just telling you how the system "functions". So you can either understand the rules like Japan and run a deficit to build good infrastructure or be like Australia where we still use old diesel trains that cause you to pass out due to fumes entering the cabin, just so ScoMo can have a meaningless surplus.

    Remember most people are happy with how the system is, so it will never change. Best you can do is understand the allowed rules and get the most out of it.

    It's like an old lady at Coles getting upset with the checkout girl that the prices are too high, the checkout girl then tells the old lady that if she buys on a specific day she can get it half price. To which the old lady just gets angry saying how it's all rubbish. What more do you want from the checkout girl, she doesn't create the rules and at best can just tell you how to gain the most out of it.
     
  2. willrocks

    willrocks Well-Known Member Silver Stacker

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    Yet, in the video you posted above, it clearly states "We believe that MMT can be a game-changer in bringing back the economy that enriches all citizens instead of only the specific chosen ones." Isn't that trying to solve a problem?
     
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  3. leo25

    leo25 Well-Known Member Silver Stacker

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    People like to exaggerate, not a surprise. Just like how John Adams likes to exaggerate on the negative side. I guess John needs to sell doom and gloom for you to buy his gold.
     
  4. willrocks

    willrocks Well-Known Member Silver Stacker

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    Does MMT propose to solve any problems?

    According to Wikipedia it does.
    1. Maintaining full employment
    2. Government does not need to collect taxes or debt issuance to pay for goods and services.
    3. Government can't be forced to default on debt issued in it's own currency
    4. Money creation is only limited by inflation
    5. Removes excess money by collecting taxes and/or issuing bonds
    6. Government does not need to compete with the private sector for savings
    https://en.wikipedia.org/wiki/Modern_Monetary_Theory

    Has Japan solved any of the above problems using MMT?
     
  5. leo25

    leo25 Well-Known Member Silver Stacker

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    its solved 5 of them :) taxes are only there to enforce people use the currency, so that won’t go away. Thought since taxes are not needed for spending then yes it’s done with all 6 of those points. And once again MMT is not something new, all that was done within the current rules.
     
    Last edited: Sep 19, 2019
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  6. leo25

    leo25 Well-Known Member Silver Stacker

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    A great video on Bloomberg to watch. "Negative Rates is insanity"
    https://www.bloomberg.com/news/vide...-is-insanity-says-universa-s-spitznagel-video

    If you're still playing/thinking by the old rules then you will be left confused. But all this makes perfect sense with MMT (the current rules)
    There is no market, just central banks and governments keeping things going. There are two option to go forwards;

    1) Understand the new rules e.g. MMT/Japan. (more details explained in the videos linked in the beginning of this thread)
    2) have a massive market crash, restructure and start from scratch.
     
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  7. 66rounds

    66rounds Well-Known Member Silver Stacker

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    As much as my anarchist side would love to see option 2, no doubt option 1 will let them kick the can down the road indefinitely until some outside market force brings their house of cards crashing down.
     
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  8. mmm....shiney!

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

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    EBDE83BE-DE81-4D8E-86C8-30F5B9374B8C.jpeg MMT’s solution is to increase the level of spending in our economy.
     
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  9. leo25

    leo25 Well-Known Member Silver Stacker

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    Tax cut would be good, better the people spend the money then government. :)

    Though the rulers need you paying enough taxes in their currency to make sure you don't go using a different currency that they don't control. So i guess it will be more government spending.

    A business is "free" to accept any payment they wish for their goods/services (gold, crypto, eggs) but you can only pay your taxes with $$$. :(
     
    Last edited: Sep 20, 2019
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  10. mmm....shiney!

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

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    I'm starting to get an idea of what MMT is about. The most remarkable thing is that it advocates that consumption ie spending drives the economy so therefore when private spending decreases, the government must step in and spend.

    Sound familiar?

    Screen Shot 2019-09-20 at 8.40.45 pm.png

    I'll put aside that focussing on consumption spending as the driver of prosperity ignores the value added in the production process and that it is productivity improvements ie making more things by spending more cleverly that best enhances prosperity, and just briefly look at government spending.

    MMT would argue that getting all taxpayers to fund public infrastructure and goods that benefit select taxpayers is economically responsible and morally right and would drive economic growth and prosperity. Obviously it would lift the living standards of those who are the beneficiaries of whatever projects are funded by government largesse, but that's the point, some will experience gain at the expense of others. Some industries and sectors will benefit whilst for others there may be a lag before the increased activity in one sector flows into another, which happens in any free-market admittedly. Some producers and employees will get income boosts and drive up the prices of consumer goods and assets, but others will be left on the sideline waiting their turn for helicopter money. If that happens in the free-market then that's fine, as investment chases the best returns which either forces the cash starved sectors to innovate, or perish. But unconstrained government funding is immune to market forces, funding (and legislation) will and does flow into cash starved sectors that are perishing or failing to innovate. Further, unlike the free-market, public expenditure programs are assessed and financed not by entrepreneurs risking their own funds in an attempt to meet a perceived market need (with the greatest need getting the attention and funding of the private sector), but by bureaucrats exercising their own subjective judgments in prioritising the needs of people they've never met with other people's money.

    I'm not sure how adopting MMT will solve that problem.
     
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  11. leo25

    leo25 Well-Known Member Silver Stacker

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    Lol you just realised it was based on what John Maynard Keynes talked about. :p
    That’s why I kept saying it’s nothing new. And again it doesn’t fundamentally solve anything, since it’s the system we already have. Just we play shell games to make it seem like it’s not. (minus Japan, they are more open about it)

    My preference is the system falls apart and we can start from scratch. But Ive accepted that will never happen. Most people love big government looking out for them, that way they don’t have to think.
     
    Last edited: Sep 20, 2019
  12. mmm....shiney!

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

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    No I didn't realise that.

    And in Japan the outcome is still the same, the closer you are to the source of cash from government, the better off you will be.
     
  13. mmm....shiney!

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

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    MMT is pushing the Green New Deal. I'm not sure that the nationalisation of industries fits into their plans though, it's just that the advocates of the GND not only argue that governments bankroll industries, they're also meant to own them.

    Gee, that's gone well in Venezuela, Malema wants the same in South Africa and Labour is calling for the nationalisation of Royal Mail, and the rail, water and energy industries in the UK.

    The future is looking bright, especially for college professors looking to get cushy jobs as economics advisers and financial advisers looking to get their clients into potentially lucrative government deals. :oops:
     
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  14. leo25

    leo25 Well-Known Member Silver Stacker

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    Yep this was always going to happen. Idiots like Alexandria Ocasio Cortez will read a one line headline about MMT and then go full retard with it. Warren Mosler talked about this, people misrepresenting MMT. So far I haven't come across anything where Warren Mosler thought government should own everything.

    Like any tool/theory, it can be used in a good or bad way. Nuclear can be used to provide an abundant amount of relatively clean energy or blow up the world.
     
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  15. mmm....shiney!

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

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    It’s frightening how much press/social media commentary is focused on economic inequality and how every solution involves a central authority redistributing wealth.

    This is 2019 and not the 1930’s isn’t it? I’m with David Stackman, if we don’t plug this nonsense we’ll see the far left in office with their redistributive policies. FDR all over again.

    And Mosler is not doing his bit to correct the misinformation, his tweets are ambiguous and he fails to pick up on the misuse of his theory although in fairness he probably doesn’t even see them. And no, I haven’t seen him advocating nationalisation.
     
    Last edited: Sep 22, 2019
  16. mmm....shiney!

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

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    This one is one of the worst of them:

    1F1D30A8-02AF-4A29-8C48-6D64B9D7443A.jpeg

    Edit to add: actually Mosler follows her. Disturbing.
     
  17. leo25

    leo25 Well-Known Member Silver Stacker

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    He probably rather work on his car then deal with the endless amount of idiots in this world.

     
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  18. mmm....shiney!

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

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    Or his inter island ferry.
     
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  19. Silver260

    Silver260 Active Member Silver Stacker

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    Wow, just discovered this discussion. So many questions I don't even know where to start. And not just about MMT...

    If I'm not mistaken, couldn't the words Cortez be replaced with Reagan/Thatcher, and MMT with Friedman... And we'd be able to explain the situation we have now?

    But the Austrian view on monopolistic currency really caught my attention. Can you guys recommend any particular literature on that?. Not concerned with how old, currently reading a Rothbard book from 1963.

    Cheers all :)
     
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  20. leo25

    leo25 Well-Known Member Silver Stacker

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    In my opinion, no. For me there is a difference between government spending on projects that will increase future productivity/consumption Vs people that want to spend money on things that reduce future productivity/consumption.

    Some examples might be government spending on core road network, dams, electrical grid, NASA etc... Vs Universal income that just dumps money into peoples pockets.

    I guess my take away from Warren Mosler is that if something is important and people want it then build it. A local example might be a east coast high speed rail link between Brisbane, Sydney & Melbourne which will encourage people to live further out from the city centers and reduce congestion. Though I'm sure Qantas and Virgin are lobbying hard for that to never happen. :)
     
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