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| Re: Modern Monetary Theory [message #93127 is a reply to message #88755] |
Mon, 15 February 2021 11:58   |
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Wayne Parham
Messages: 18783
Registered: January 2001
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Illuminati (33rd Degree) |
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I'll be very honest. I do not believe that "Modern Monetary Theory" is correct. As theories like this go, the test of time will prove them or break them.
And while I hope I'm wrong and MMT proves true - 'cause if it is we can keep printing money and spending it without much consequence - I fear that it is not true and there will be a correction at some point. My fear is that America's dollar will no longer be seen as the world's premier international reserve currency. At that time, we will be much less able to print money at will to pay down our debts.
If (and I suppose, when) this happens, we will no longer be the worlds largest economic power. We will not enjoy the wealth that we have enjoyed for the past several decades. I hope this never happens, but since that is an unreasonable hope, I at least hope we can delay the inevitable shift for many years to come.
But to be honest, I fear that MMT is the very kind of thinking that could push us towards our fall.
America has greatly benefited from the Bretton Woods Agreement, which is what I think is most responsible for our strong economy since WWII. While I understand that John Maynard Keynes was largely influential in this agreement, I do not think his economic theories will solve all problems, in all occasions, for all time. That's what makes me fear that "Modern Monetary Theory" - which appears to be Keynes theory on steroids - will drive America towards the end of its economic supremacy.
I don't entirely disagree that "expenditure injection" - the key feature of Keynesian economics - can be helpful at times. There are times it appears to help. But I think we've gone way too far with it, and I think it's going to hurt us. I think if it weren't for the Bretton Woods Agreement, our nonchalant attitude towards spending and our national debt would have already killed us economically.
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| Re: Modern Monetary Theory [message #93129 is a reply to message #93128] |
Mon, 15 February 2021 15:23 |
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Wayne Parham
Messages: 18783
Registered: January 2001
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Illuminati (33rd Degree) |
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Oh heck no, my friend! Please don't think I want you to stop writing on this subject or others!
I just thought I'd chime-in to your thread, both because I wanted you to know I was reading your posts and also because I wanted to say what I thought.
To be honest, I've always been intuitively laissez-faire minded. I'm a libertarian at heart. But I have studied Keynes a little bit, and I've also studied America from the times of the robber-barons forward.
As an aside - I say "studied" but what I mean more is that I enjoy watching documentaries and chatting with buddies of mine that are history majors with advanced postgraduate degrees. One such friend of mine comes over every week (even during this corona-weirdness) and we visit together for hours. So I guess maybe I should say I have pondered more than I have "studied" but at least I've pondered together with folks that are educated in the subject. I'm mostly a techie-geek, but I am interested in history and economics and the ups-and-downs of cultures over time.
Anyway, my point is that while I'm generally pretty fiscally conservative, I do see that things like Keynes described - things like stimulating the economy with spending on infrastructure, research science and technology - is beneficial both for a stalled economy and for the natural utility it brings. So it's a win-win, for example, when we build and improve roads, especially when the spending is done in times of economic hardship.
This does imply that we take on some debt to create those things. I suppose the road-building could be done by a state that had a budget surplus, but the way Keynes described it was to take on some debt to build the roads. I agree with that because it makes sense to me. It's like buying a car on credit, and then using the car to get to your job.
What I fear, though, is the country can get too spendy, and instead of building roads, we build all sorts of other silly things that are wasteful spending. That kind of debt is no good. It's like a kid getting their first credit card and going hog-wild buying everything and then finding themselves strapped with debt and no way to pay it down.
Right now, today, our national debt is $27 trillion. Our population is 330 million, so that's roughly $82K per person. Of course, at least half of our population doesn't work - children and elderly - so our workforce is probably half the population, around 165 million. That means each of us that are working would have to pay about $165K to pay off the national debt.
I know these are oversimplifications and that macro-economics are different than balancing the family budget. But I still worry that once we get too far in debt, the world will no longer see the American dollar as the reference standard. This is especially true if we print more money to pay debts to other countries.
I personally think that even macro-economics can't get past that basic "common sense" matter of trust: If you get too far in debt, you lose your ability to pay it down. And if you are perceived as less able to pay your debt, your credit rating goes down. People lose trust in your economy.
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| Re: Modern Monetary Theory [message #93154 is a reply to message #93149] |
Sat, 20 February 2021 10:53 |
Rusty
Messages: 1185
Registered: May 2018
Location: Kansas City Missouri
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Illuminati (3rd Degree) |
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I'll put my view forward thusly on our society and the economic system that has dominated for, at least my lifetime. I tend anymore towards feeling the glass is becoming half empty and dwindling further with our collective wellbeing in an economic sense. For many decades now it seems that the approach with our capitalism has been one of boosterism without any critical introspection. Scapegoats seem to account for any tendencies that call out the status quo. Personal and governmental deficiencies make up some of the factors to explain the chronic indicator in statistics showing stagnation in education, health, wages etc. Or there's the popular external forces from abroad that are contributing to our situation.
I used to buy that argument. Until I started trying to understand things the way they are. I retired a little early, not by plan, but circumstance. The job was pulled out from under us where I worked. Closed down. Because a private equity outfit that owned the corporation had mismanaged the operations for about a decade wasn't able to squeeze any more blood out the turnip. I was burnt out with the work and at 64 I thought I could swing it with the SS payments compromised a bit from early retirement. I've saved and invested I hope a decent nest egg. So far so good. But I know people who've not been so comfortable as I due to health issues. One is destitute financially with cancer to deal with. Despite "taking care" of themselves physically. You never know what, when and where.
I don't think capitalism and the way our market system now utilized is the end all of what our human civilization can come up with to sustain life, liberty and the pursuit of happiness. I've read and agree it needs to evolve. Certainly from how it's affecting the greater population of the world these days. The balance is tipped too inequitable. And our heads have been in the sand for too long. Our economic state is what we have done with it. Blaming China or big government or not being personally responsible to me is a copout.
So, I've just gravitated with my investigations towards the thinking of individuals that have done a bit of critical evaluation in the economic thinking of our economy, with maybe a means of influence towards it's improvement. They have some interesting ideas in that regard. Public banking is one. The job guarantee is another. Then there is a notion that the capitalist relationship with the working class can be improved by aligning the worker into a more democratic position in an otherwise autocracy that has dominated the structure of capitalism since it's formation. Perhaps a vestige of Feudalism. A worker coop has been shown to ameliorate the dysfunction in the management dynamics of a business. And job satisfaction.
What ever the case, a public discourse should be encouraged without being reactionary that society is going to be dragged into insolvency or tyranny from ideas that don't expressly promote an established economic paradigm that can't be improved upon.
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