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Re: Modern Monetary Theory [message #91680 is a reply to message #91660] |
Sat, 11 April 2020 13:05 ![Go to previous message Go to previous message](/forum/theme/AudioRoundTable/images/up.png) ![Go to next message Go to next message](/forum/theme/AudioRoundTable/images/down.png) |
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Wayne Parham
Messages: 18756 Registered: January 2001
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Illuminati (33rd Degree) |
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I've been meaning to chime-in on this thread for months. It is very interesting to me. And what I like about the people here is that I think we can have a respectful discourse, even if we don't agree. Might even sway opinions or at least be food for thought.
I understand laissez-faire economics and I understand Keynesian economics. Both of those are about a century old now. Or I guess I should say John Maynard Keynes presented his ideas around 100 years ago, which sort of countered the notion of laissez-faire thinking. But both still consider the economy to be a sort of closed system having finite resources. The difference is how to use those resources.
If I understand you right, Rusty, I think you are describing an idea that the economy shouldn't be tied to resources. Is this what you are saying? Or maybe you're not saying that economy shouldn't be tied to resources, but rather making an observation that it isn't? Or are you saying something else entirely?
To me, economic models should consider all resources, including commodities and labor sources. And economic models should also consider all requirements, using a sort of wish-list that prioritizes wants and needs.
But the problem, of course, is the complexity of the system. There is a large number of unknown initial conditions, which makes it a true chaotic system. It is the very definition of the Butterfly Effect. Economics is stochastic, so any analysis must be done statistically, looking for patterns. I don't think a deterministic model of economics makes any sense at all.
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Re: Modern Monetary Theory [message #91685 is a reply to message #91684] |
Sat, 11 April 2020 17:23 ![Go to previous message Go to previous message](/forum/theme/AudioRoundTable/images/up.png) ![Go to next message Go to previous message](/forum/theme/AudioRoundTable/images/down.png) |
Rusty
Messages: 1153 Registered: May 2018 Location: Kansas City Missouri
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Illuminati (3rd Degree) |
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The government 'spends' into the economy. Government debt is the private sectors savings and profit. Resources, (materials, labor) are simply what are utilized by the private sector, and are the only 'limiting factor' to what the government can spend towards before inflation accrues. The government has to spend before it can tax. I love Wrays example of the colonial American redemption taxes.
Quote:I like several things about this example. First, it is clear that the colonies spent the notes first, then collected them in taxes. They could not possibly have collected paper notes in taxes if they had not first spent them because there were no other paper monies around.
The Keynesian economists go apoplectic over the core of MMT.
Quote:If I say that the heterodox approach insists that injections are causally prior to leakages, you all recognize that from fundamental Keynesian theory.
And if I say that government spending is an injection and taxes are a leakages, everyone understands.
But when I say that government spending is logically prior to taxes, heterodox economists suddenly get all dazed and confused.
If I say government has to spend first before taxes can get paid, I'm called crazy.
Government spending cannot be financed out of taxes--it must precede taxes. It is one of the injections that creates income that can be used to finance leakages such as saving and taxes.
The link given is a very good thumbnail sketch of what MMT is.
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