Home » xyzzy » Dungeon » Modern Monetary Theory (or, how I stopped worrying about the natl debt.)
Modern Monetary Theory [message #88755] Mon, 03 September 2018 14:25 Go to next message
Rusty is currently offline  Rusty
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Registered: May 2018
Location: Kansas City Missouri
Master
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.
Re: Modern Monetary Theory [message #88757 is a reply to message #88755] Mon, 03 September 2018 14:56 Go to previous messageGo to next message
Kingfish is currently offline  Kingfish
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Registered: November 2012
Illuminati (1st Degree)
In other words, the current financial system is above the heads of the politicians. Makes sense to me.

Politicians like to take things down to the lowest common demoninator in order for us to get all riled up. In this case, they do it because they themselves don't understand this.
Re: Modern Monetary Theory [message #88805 is a reply to message #88757] Sun, 09 September 2018 11:23 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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Unfortunately the current financial system is above the heads of mainstream economists. Politicians just ape what the conventional seemingly unchallangeable economic doctrine is. Then they make sure the policies they enact make good on the needs of the few whom support them financially.
Re: Modern Monetary Theory [message #88813 is a reply to message #88805] Tue, 11 September 2018 16:43 Go to previous messageGo to next message
gofar99 is currently offline  gofar99
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Illuminati (3rd Degree)
Maybe we could go back to a barter system......I'll give you two chickens if you will fix my roof leak. Humm. Rolling Eyes I wonder how many chickens I can raise before the city get on my case? Laughing

Good Listening
Bruce
Re: Modern Monetary Theory [message #88817 is a reply to message #88813] Wed, 12 September 2018 10:12 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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Location: Kansas City Missouri
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Or we could evolve capitalism into a democratically run system where workers have a say in the game. Worker cooperatives. The market system can be contrived any way humans can think of. From barter, to slavery then feudalism to capitalism, communism, socialism. What ever provides the best outcome for the better percentage of people.
https://www.rdwolff.com/capitalism_is_not_the_market_system
Re: Modern Monetary Theory [message #89839 is a reply to message #88817] Sun, 17 February 2019 18:09 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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Registered: May 2018
Location: Kansas City Missouri
Master
Here we go friends. A nice condensed interview with Eric Tymoigne. An economist following MMT principals. Hysteria will be building over the national debt as the 2020 presidential race heats up. Oh Boy!! It's not the debt that should be obsessed over, he says. It is the issues. Our collective well being for society that debt expenditure is good for. Not tax cut's for the billionaire, millionaire class wealth enhancement's to invest. Sovereign governments issuing legal notes do not function like the budgets of households, businesses, towns and cities or states. But that doesn't keep everyone and their aunt Shirley from thinking it must be. Especially the politician. Propaganda and ignorance goes hand in hand. Here's the condensed interview, (to whom it may interest), minus all the charts and things economists use to make their point. To them. They make my eye's cross.

http://neweconomicperspectives.org/2019/02/what-you-need-to-know-about-the-22-trillion-national-debt-the-alternative-short-interview.html#more-11409


Re: Modern Monetary Theory [message #90210 is a reply to message #88755] Wed, 01 May 2019 11:04 Go to previous messageGo to next message
Kingfish is currently offline  Kingfish
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Illuminati (1st Degree)
I have always believed that the national debt is simply a tool which the rest of the world scores our credit worthiness from. In other words, if I had a private debt that was just as bad as the national debt in terms of the incoming/outgoing ratio, I would never get a loan. It also has little bearing on my overall financial health.

Thank you for posting that link. It confirmed a lot of my beliefs.
Re: Modern Monetary Theory [message #90212 is a reply to message #90210] Wed, 01 May 2019 14:45 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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Location: Kansas City Missouri
Master
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.
Re: Modern Monetary Theory [message #90302 is a reply to message #90212] Sun, 12 May 2019 15:37 Go to previous messageGo to next message
Kingfish is currently offline  Kingfish
Messages: 371
Registered: November 2012
Illuminati (1st Degree)
Rusty wrote on Wed, 01 May 2019 14:45
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.
That is what most people don't understand in my opinion. They have little concept of history and how it pertains to the present.

Quote:
They say essentially, the government can spend what's needed up to the capacity of what resources are available
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.
Re: Modern Monetary Theory [message #90323 is a reply to message #90302] Mon, 13 May 2019 09:56 Go to previous messageGo to previous message
Rusty is currently offline  Rusty
Messages: 220
Registered: May 2018
Location: Kansas City Missouri
Master
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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