Home » xyzzy » Dungeon » Modern Monetary Theory (or, how I stopped worrying about the natl debt.)
Re: Modern Monetary Theory [message #92880 is a reply to message #92409] Tue, 29 December 2020 11:22 Go to previous messageGo to next message
Rusty is currently online  Rusty
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Stating the obvious. Trickle down economics, or supply side economics, or Reganomics just doesn't work, never did. For the majority of us. The famous Regan tax abatements were equally followed by government spending increases, whereby the recession of the early 80's were dug out of. Tax cuts for the rich do not gin up the economy. It merely promotes better investment opportunities for the upper classes. Most of the Trump corporate tax breaks were used to buy up their own stock, increasing their "winnings".
A new study has been published following 18 countries over 50 years proving yet again the obnoxiously obvious persistent fact that will still not penetrate the mind set of our elected elite. They won't bite the hand that feeds it.

https://www.businessinsider.com/tax-cuts-rich-trickle-down-income-inequality-study-2020-12
Re: Modern Monetary Theory [message #93027 is a reply to message #92880] Wed, 27 January 2021 11:42 Go to previous messageGo to next message
Rusty is currently online  Rusty
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Even more insidious is Finance Capitalism. It's what has replaced industrial capitalism in this country and throughout the world. Part of what Mr. Hudson refers to as parasitism. The elite feeding off of the working class through debt peonage for rent extraction and privatization of public resources. Here is a long read with historical background into what the world doesn't need now, Love. Love of money, the easy way. Making it in their sleep.

https://michael-hudson.com/2021/01/the-rentier-resurgence-and-takeover-finance-capitalism-vs-industrial-capitalism/
Re: Modern Monetary Theory [message #93126 is a reply to message #93027] Mon, 15 February 2021 10:21 Go to previous messageGo to next message
Rusty is currently online  Rusty
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A case for modern day Jubilee. The ancients wisely used debt write down to preserve stability in their society. The accumulation of interest on debt outstripped the publics ability to thrive even then. They used the Jubilee when drought, flood or any chronic downturn of ancient economy threatened the public's allegiance to the throne. As apposed to the financial class of lenders.
One aspect of our modern deficit spending is Quantitative Easing. Where the Federal Reserve buys up debt bonds, stocks and mortgage backed securities to help stabilize, "the markets". A lot of it being junk bonds and stocks that are underperforming. Currently the amount stands at 7.24 trillion. https://www.statista.com/topics/6441/quantitative-easing-in-the-us/

Strikingly this expenditure of the government always seems to fly below the radar of policy makers that are quibbling over aid to citizens stuck between the proverbial rock and a hard place. The Fed propping up financial institutions with mountains of money is ignored, but the working populous whom make up the "real" economy are scrutinized with a tendency of whether or not the government can afford to support their economic hardship with money that will have to be somehow reimbursed to some entity.
The quantitative easing from the last economic downturn of 2008 was never paid back by the financial sectors that caused the fiasco to begin with. This is the disconnect lawmakers have and even economists trained in orthodox economics.

Australian economist Bill, (Billy) Mitchell is one of the main authors of the MMT textbook. This article concerns the need and ability to write down the debt. Like the ancients did, like the allies did with Germany after WWII leading to their economic miracle as was called. And what can and should be done with the worlds economies to deal with the current COVID depression we're going through now. The damage is done, don't make it worse going full press austerity. Let the computer keyboard do it's duty and eliminate just a number. Not our better lives.

http://bilbo.economicoutlook.net/blog/?p=46891
Re: Modern Monetary Theory [message #93127 is a reply to message #88755] Mon, 15 February 2021 11:58 Go to previous messageGo to next message
Wayne Parham is currently offline  Wayne Parham
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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.
Re: Modern Monetary Theory [message #93128 is a reply to message #93127] Mon, 15 February 2021 14:34 Go to previous messageGo to next message
Rusty is currently online  Rusty
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Wayne I hope you don't feel I'm peddling propaganda here with my posts on this subject. It's certainly not mainstream economic thinking. But if it's too derisive a subject towards the orthodox and you feel it on the level of conspiratorial thinking, I'll defer from posting any more. I've gotten all my information on it from seasoned professionals working on their theories for decades now. They were educated along the lines of all standards of education that constitutes degreed economists. They've just taken alternative views on the status quo.

My work background sort of thrust me into contemplating the larger meaning behind what I thought was an inequitable relationship with management and working staff. Our little hospital was taken over by a private equity group, which led to a revolving door of disgruntled employees and having to deal with difficult tasks with substandard equipment and help. I just fell into trying to find out "roughly" about how our economic system is which has led me to embrace a few of the non orthodox economists on this thread I don't do justice to.

Economics is at best a social science and it's ties to politics makes for it also controversial at times. But it's inexorably linked to it in it's advisory capacity for the basis of underpinning the policies carried out. For me the articles I've included in this thread express the notions that our society is slowly devolving from economic principals that are aligned toward a capitalism that has been working more and more over the decades to the point where now a few percentage points of population have amassed most of the wealth making up the economies of the world. The middle class of this country particularly is shrinking but throughout the old capitalist economies of the world. This is what I have tried to address with my limited understanding of the MMT and other heterodox economic principals. Principals I think are valid and useful.

I've pointed it out before but will restate from what I've gleaned from studying a bit of the MMT research I've done. It does not say that a sovereign government with a fiat floating currency can spend limitless amounts of deficit to affect some target to stabilize or make socially correct some discriminant problem. It states that the monetary system simply has greater capacity than is typically alluded to help with economic strategy. The only real constraint is resources.
As far as the Bretton Woods Agreement goes. Listening to this link from the Oxford Economics Society and guest Michael Hudson can give some alternative meaning to it's historical context for what the IMF and World Bank are all about. And why nations are already moving away from the dollar as the exchange currency for the world. And we owe it all to ourselves and our American exceptionalism.

https://michael-hudson.com/2021/02/at-the-oxford-economics-society/
Re: Modern Monetary Theory [message #93129 is a reply to message #93128] Mon, 15 February 2021 15:23 Go to previous messageGo to next message
Wayne Parham is currently offline  Wayne Parham
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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.
Re: Modern Monetary Theory [message #93131 is a reply to message #93129] Mon, 15 February 2021 17:09 Go to previous messageGo to next message
Rusty is currently online  Rusty
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I'm glad you've affirmed what I respectfully felt. An open mind to discourse, when it deviates from your own thinking. As mentioned from my experiences from working from what I like to refer to as corporate tyranny was my catalyst towards investigation this subject the public at large has little knowledge of. It seemed to confirm with my history of growing up in a fairly large family that was able to live relatively well in a lower middle class setting in the 60's that today would be unrealistic. We'd probably be in HUD housing and on food stamps. But then the cost of living and debt burden weren't so profound as is now. Housing is sky high these days, schooling is underfunded and higher learning is becoming an upper class entitlement. There were no credit cards back in the 60's. Schooling was public and good, even in lower class sections. Government wasn't demonized, unions were strong, healthcare wasn't a pathway to being destitute.

Basically what I have come to understand is our economy has been so infused with finance capitalism we've undermined the real economy and the ability of working people to thrive. Orthodox economic thinking has not been able to counter these chronic issues but instead let them exacerbate. It might seem that it would be appropriate to investigate other ways to allow the economy to work more efficiently for a greater proportion of the population. It works fabulously for the top few percentile. If the sciences and technology worked along the lines of economic dogma, we'd probably be using oxen to plow and candles for light.
Re: Modern Monetary Theory [message #93141 is a reply to message #93131] Tue, 16 February 2021 11:57 Go to previous messageGo to next message
Rusty is currently online  Rusty
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Here's a little critique from one of my mentor's, the Wolff Man. Richard Wolff explains in regards to the high ideals that Libertarians express for the capability of Capitalism, if weren't for the meddling of that big bad government messing with it's potential.

https://www.youtube.com/watch?v=POtqYiBAgTM&feature=emb_logo

The latter part of the clip gets garbled somewhat from the Wolff Man's animations close to the microphone.
Re: Modern Monetary Theory [message #93149 is a reply to message #93141] Wed, 17 February 2021 10:52 Go to previous messageGo to next message
Rusty is currently online  Rusty
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As a supplement to the prior podcast with Richard Wolff. Here is a good debate Wayne with Michael Hudson and Jeffrey Miron, a Libertarian economist. On the merits and shortcomings of capitalism. Would it not be to our greater good understanding the problems of today, than to have these types of discussion more widely available and promoted to the public at large. There is too much ignorance these days and bickering over fantastical false narratives.

https://michael-hudson.com/2020/05/definitions-and-debate/

Re: Modern Monetary Theory [message #93154 is a reply to message #93149] Sat, 20 February 2021 10:53 Go to previous messageGo to previous message
Rusty is currently online  Rusty
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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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