The Left’s embrace of Modern Monetary Theory is a recipe for disaster

[Peter1469]

The Left’s embrace of Modern Monetary Theory is a recipe for disaster

I have discussed this in other threads and posts. Basically MMT holds that the government can print money to cover the deficit without causing inflation or stagflation. That is false.

The author gets “supply-side / voodoo economics” wrong, but makes some good points about MMT.

Modern monetary theory, sometimes shortened to MMT, is the supply-side economics of our time. A valid idea — that traditional fiscal-policy taboos need to be rethought in an era of low real interest rates — has been stretched by fringe economists into ludicrous claims that massive spending on job guarantees can be financed by central banks without any burden on the economy. At a moment of economic and political frustration, some in the more extreme wing of the out-of-power political party are seizing on the possibility of a free lunch to offer politically attractive ways out of economic difficulty.

Modern monetary theory is fallacious at multiple levels.

Read why at the link.

[Tahuyaman]

The Left’s embrace of Modern Monetary Theory is a recipe for disaster

I have discussed this in other threads and posts. Basically MMT holds that the government can print money to cover the deficit without causing inflation or stagflation. That is false.

The author gets “supply-side / voodoo economics” wrong, but makes some good points about MMT.




Read why at the link.

Government simply printing money to pay off debt is what causes inflation.

[Peter1469]

Government simply printing money to pay off debt is what causes inflation.

Right, even worse stagflation. I don't understand why MMT theorists say otherwise.

[Tahuyaman]

Right, even worse stagflation. I don't understand why MMT theorists say otherwise.

It defies a logical explanation.

[Peter1469]

The New York Times attempts to partially rehabilitate modern monetary theory.

The term “modern monetary theory” has been talked about so much lately that we mainstream economists need to try to understand it.

We’re having trouble, though I’m beginning to suspect that it may be because M.M.T., as it’s often called, is really just a voguish name for a group of old and, for the most part, sensible ideas, repackaged in a new form.

Sensible? This is off to a bad start. Government debt spending may make sense in limited circumstances, but MMT says it is always fine. Just print more money.
Anyhow, read the rest at the link.

[Peter1469]

Here is an article that attempts to put a good spin on MMT.

The only new thing from what I have previously written on MMT is that government can print money so long as unemployment is still a factor. I can understand the appeal. But as they say, if something is too good to be true....

US Representative Alexandria Ocasio-Cortez isn't afraid to voice controversial opinions, as her proposals of a Green New Deal and 70% top income tax rate show.
The millennial congresswoman and Instagram sensation added to that list when she said Modern Monetary Theory should be "a larger part of the conversation," in an interview with INSIDER in January. And Democratic presidential candidate Bernie Sanders has an economic advisor who is an MMT proponent.


MMT is a significant departure from the traditional view of economics taught in most business schools.


Here's an explanation of what MMT is and why people are so interested in it.


Countries can create and spend their own money, and that on its own is not a bad thing

In traditional economics, the notion of printing money to solve a country's problems is almost universally regarded as a bad idea. Yet MMT proposes that money creation ought to be a useful economic tool, and that it does not automatically devalue the currency, lead to inflation, or economic chaos.


MMT argues that by insisting the government rein in its spending to "balance its books" we're hobbling ourselves with an underperforming economy and all the unemployment and lost opportunities that go along with that.


To understand where MMT is coming from, it's useful to start with two recent occasions when chairmen of the US Federal Reserve admitted that the government can print all the money it needs, and nothing bad happens. Central bankers almost never say things like this, which is why the statements are so interesting.

Read the rest of the article at the link.

[Captdon]

Right, even worse stagflation. I don't understand why MMT theorists say otherwise.

Anyone working between 1969-2000 know what the damage was to the economy. Inflation almost took us down. All the various markets were starting to fail. The average person couldn't afford to buy a house. A new car was a dream unless you wanted a Pinto.

[jet57]

The Left’s embrace of Modern Monetary Theory is a recipe for disaster

I have discussed this in other threads and posts. Basically MMT holds that the government can print money to cover the deficit without causing inflation or stagflation. That is false.

The author gets “supply-side / voodoo economics” wrong, but makes some good points about MMT.




Read why at the link.

The only way that MMT works, as it did from the '30s to the '70s, is when it's "all in". Supply Side Economics worked for a while because it was -all in and demand side economics was virtually destroyed by the war on labor unions. Now the chickens of Supply Side have come home to roost.

The Free Market Will - NEVER - police Itself - period - full stop. And thus the pendulum swings both ways.

Hungry people are the worst enemies to have and thus strikes are breaking out all over the world with much more to come. The key is cooperation through force of government policy and legislation that's the only way a safe balance will be struck.

No corporate taxes for closed union shops and better pay, benefits and pensions. That's also how we keep immigration for jobs under control.

[Peter1469]

The only way that MMT works, as it did from the '30s to the '70s, is when it's "all in". Supply Side Economics worked for a while because it was -all in and demand side economics was virtually destroyed by the war on labor unions. Now the chickens of Supply Side have come home to roost.

The Free Market Will - NEVER - police Itself - period - full stop. And thus the pendulum swings both ways.

Hungry people are the worst enemies to have and thus strikes are breaking out all over the world with much more to come. The key is cooperation through force of government policy and legislation that's the only way a safe balance will be struck.

No corporate taxes for closed union shops and better pay, benefits and pensions. That's also how we keep immigration for jobs under control.

This does not seem to be a defense of MMT. That is what I am interested in with this thread.

The article cites to the great recession and the various plans like QE and stated that interest rates did not rise. That is true, but ignores the fact that the Fed kept it artificially low. So we can't point to 2008-11 and QE to say MMT works. Keeping interest artificially low and flooding the market with money is likely why the recovery from the recession was the most flaccid in US history.

Also, these MMT theorists are working with the USD which is a world reserve currency- that is why we can carry so much debt. Other nations buy it. Japan is an anomaly, they choose programs that harm them in the long term to keep people comfortable today. Anyway, time for work.

[Captdon]

The only way that MMT works, as it did from the '30s to the '70s, is when it's "all in". Supply Side Economics worked for a while because it was -all in and demand side economics was virtually destroyed by the war on labor unions. Now the chickens of Supply Side have come home to roost.

The Free Market Will - NEVER - police Itself - period - full stop. And thus the pendulum swings both ways.

Hungry people are the worst enemies to have and thus strikes are breaking out all over the world with much more to come. The key is cooperation through force of government policy and legislation that's the only way a safe balance will be struck.

No corporate taxes for closed union shops and better pay, benefits and pensions. That's also how we keep immigration for jobs under control.

This sounds like the agenda of a new party. You could use an old name-the Know Nothings.