| Modern Monetary Theory [message #88755] |
Mon, 03 September 2018 14:25  |
Rusty
Messages: 1186
Registered: May 2018
Location: Kansas City Missouri
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Illuminati (3rd Degree) |
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Figured this a dungeon topic with it's political implications.
I've been drawn to this economic theory for a few years now as my occupation was affected by the economic downturn of 07-08. Like so many. What interested me was this notion that we hear of the national debt as being something that is ominous and foreboding which will affect generations to come. The standard line in political discourse. Modern monetary theory or, MMT regards this notion as a cop out for austerity. As one prominent MMT economist Bill Mitchell describes the intention of this unorthodox aspect of economics, is the notion that MMT can be liken to a "lens", focusing on what is really just how the function of a sovereign issuer of fiat currency operates within a financial system. And what it shows in it's realization of our currency and it's usage is a disconnect with fiscal policy and the reality of how this system works. It's interesting to note that Japan is actually writing down about half of it's national debt which is about double of it GDP.
The mystery of the national debt: http://neweconomicperspectives.org/2018/08/the-explicable-mystery-of-the-national-debt.html#more-11306
MMT simplified: https://modernmoney.wordpress.com/
When I hear a politician, (on either side) bloviating about the debt and future generations, anymore I just raise an appropriate finger and utter go blow.
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| Re: Modern Monetary Theory [message #90212 is a reply to message #90210] |
Wed, 01 May 2019 14:45  |
Rusty
Messages: 1186
Registered: May 2018
Location: Kansas City Missouri
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Illuminati (3rd Degree) |
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Glad you took note of it. I think some of what they're getting at with this economic offshoot is that government debt is not the boogieman that it is made out to be. Japan has a much higher debt to GDP ratio, with no inflation. The current debt level reflects what the federal government has spent, over the history of this country on all manor of things, worthwhile and wasteful. It can be for the collective good of society, or the selective few in society. Like W.W. II or the recent tax cut for wealthy individuals. Or say, the banking bail out in 08, that they created.
When individuals claim, how is it going to be paid for? Think of this. Your taxes don't really PAY for any of what the government spends in deficit. That's the concept which is the seeming obstacle to wrap ones mind around. I view it as a sensible way for the government to get things done that benefit it's citizens. As the MMT economists state emphatically to their naysayers. This economic principal does not give a free lunch, and does not claim that the government can spend limitless amounts of money without the probability of inflation suppressing the economy. But it gives quite a bit more leeway tackling seemingly insoluble issues like the crumbling infrastructure this country faces, without everyone having to become burdened with crushing taxes and belt tightening elsewhere in our general well being. That's the self inflicted wound of austerity. They say essentially, the government can spend what's needed up to the capacity of what resources are available and ability of workers to make it happen. Uncle Sam is not a banker, he does not expect his investment to make money for the government. Or even be repaid.
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| Re: Modern Monetary Theory [message #90323 is a reply to message #90302] |
Mon, 13 May 2019 09:56 |
Rusty
Messages: 1186
Registered: May 2018
Location: Kansas City Missouri
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Illuminati (3rd Degree) |
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Quote:Then why is it called a debt? That's what I don't get. If I borrow $5,000 because those resources were not available at the time I needed them, and then have to pay both that and interest back, that is called a debt.
Hi Kingfish. Why debt? I suppose it's a vestige of accounting. Which is all the national debt is. Debit's and credits. But using your personal experience as an individual is where one goes off the road in the analogy of MMT. If you were a sovereign issuer of a currency, then your dilemma of debt and interest, to a private bank would be solved. You'd simply pay it, like the bond market. The govt. has never, nor will ever, default on bond payments. Resources to the government are land, minerals, things to make industry, commerce, labor flourish. We pay taxes not as a means to keep the govt. running. Rather, somewhat as a means to the validity of our currency. We don't use (bogus, darkweb) bitcoin, or gold or anything else. Just greenbacks, or more specific, debits and credits.
If our government is presumably for, of and by the people. Then what our govt. does in the pursuit of happiness mentioned in our constitution, should be, hopefully, in the best interest for, of and by the people.
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