Modern Monetary Theory

[JackRiddler]

.

Where you would not expect him, with Cornel West also implausibly cast as the comedic straight man, the Class Enemy Philosopher appears: Yes, it is he, the man of In-Q-Tel Paypal, Plausibly Deniable Palantir, Libertarian Fortresses and Floating Offshore Kingdoms, Youthful Blood Transfusions, the Gawker Kill Op, and Smart Money for Trump, come to tell, as a very modest interlocutor, some truly interesting bits about: secular stagnation, hedonic deflator, precarious workers, rents in big cities, and the relation of current accounts to Wall Street. Plus, um... interesting bits and a few just straight-up honest-seeming beliefs (lacking only in empirical basis) about what really happened in the New Deal (one word, son: plastics!), growth and democracy and why it's just children asking for more cake, those thuggish public sector unions, the god of "innovation," big-corporate "culture," digital entrepreneurship as the only viable solution for unemployment and sexism (straight face maintained), and that terrible risk-averse culture of ours with its strangling regulations. You do not have to think it's interesting, but I thought so. Maybe the Roz Chast cartoon is more fun.


https://www.youtube.com/watch?v=h2TrRWAkbr8

[Elvis]

video ^^^

You do not have to think it's interesting

...I'm afraid I'll find it depressing. I'll try later—always happy to hear Cornell West.

[JackRiddler]

It gets interesting for me both for surprising insights shared with him, and at all the parts where you find you can pick it apart, this best mind of the ruling class who oh no would never see himself as ruling class, no no no, that's the liberal system. Also, for all his forms of pessimism. It's interesting for his awareness that he's just a guy, however inflated his importance. Also, apparently he studied philosophy and knows damn well STEM education is a lie.

[Elvis]

This is really great—and funny!

In which society is it easiest to get rich? Contrary to common belief, it is not countries like the US or the UK that create the highest number of rich people per capita, but Nordic social democracies like Norway and Sweden. Counter intuitive as it may sound, high taxes, generous welfare states and strong unions makes a better environment for the people who wants to earn huge amounts of money, than free markets, low taxes, and minimal government intervention. Harald Eia is a trained sociologist who works in television with comedy and documentaries.

https://www.youtube.com/watch?v=A9UmdY0E8hU

---

Then you have Jamie Diamond:

https://www.cnn.com/2019/03/18/economy/ ... gve3qdCDao

Jamie Dimon: The US economy has been 'fundamentally anti-poor'

Well, yeah, but your "fixes" are bullshit.

"Kids aren't getting the education they need to get a job," Dimon said. "And I'm talking about a real job."

You have my attention!

Dimon pointed to an overemphasis among employers on candidates with four-year college degrees, and said more value should be given to those who graduate from community college, or receive other types of training. Some positions shouldn't require college degrees at all, he added.

That's not education. You said education. That's just making your bank and the rest of society dumber. Oh, and now your bank can pay them less.

Such programs are most effective when companies can work with local government and education systems, according to Dimon.

Note the omission of the federal government, who "has" the money to fund education. Head this free education thing off at the pass! "The market's got this."

And the very worst of all:

He generally expressed skepticism of the federal government's ability to manage money, and said Democrats and Republicans need to do more to justify spending decisions. This should be part of the broader political conversation about increasing individual tax rates, he said.

[Elvis]

Was looking up War Bonds and was surprised to see a seldom spoken but crucial fact in the second sentence:

https://en.wikipedia.org/wiki/War_bond

War bonds are debt securities issued by a government to finance military operations and other expenditure in times of war. In practice, modern governments finance war by putting additional money into circulation, and the function of the bonds is to remove money from circulation and help to control inflation.

The rest is about borrowing, back in the olden days. Maybe an MMT'er added the second sentence; Stephanie Kelton could have written it. It does appear that MMT'ers are touching up Wikipedia pages to include MMT views.

The "Securities" entry gets it half wrong, half right:

https://en.wikipedia.org/wiki/Security_(finance)#Debt

Government bonds are medium or long term debt securities issued by sovereign governments or their agencies. Typically they carry a lower rate of interest than corporate bonds, and serve as a source of finance for governments [BZZZZZZT]. U.S. federal government bonds are called treasuries. Because of their liquidity and perceived low risk, treasuries are used to manage the money supply [DING DING] in the open market operations of non-US central banks.

As Bernanke tells us, Treasury bonds are not money.

[JackRiddler]

Re: Dimon

It's the same old story. Allow me to be simplistic, but not inaccurate. While there's never been a shortage of rich Social Darwinists, and we have them today in the executive --feeding-- another segment has always had a soft spot for the poorest - not the employed workers! They should get back to work and be more efficient. The nice rich are all for experimenting on the poor through philanthropic social engineering that makes them feel good. As long as the tax burden related to social welfare, for anyone, remains on the working population. Almost all rich can agree on that. You have to be Warren Buffett level to ask for a rise in the top marginal rate. Really we've got to give all of the rich more and more, so they can do good works. So the philanthropists can work to win allegiance of the poor and precarious, while in turn the Social Darwinists gain the solidarity of a segment of the working and aspirational middle with some no-free-lunch rhetoric. It's kind of the ruling classes' own version of the two party ping-pong system.

But in 2019? Dimon is just fucking words.

[Elvis]

"When our Federal Government, that has the exclusive power to create money, creates that money and then goes into the open market and borrows it and pays interest for the use of its own money, it occurs to me that that is going too far. I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money...

The Constitution of the United States does not give the banks the power to create money. The Constitution says that Congress shall have the power to create money, but now, under our system, we will sell bonds to commercial banks and obtain credit from those banks. I believe the time will come when people will demand that this be changed.

I believe the time will come in this country when they will actually blame you and me and everyone else connected with this Congress for sitting idly by and permitting such an idiotic system to continue. I make that statement after years of study.”

Wright Patman, Chairman of the House Committee on Banking and Currency
September 29, 1941, as reported in the Congressional Record of the House of Representatives (pages 7582-7583).

Experience, more prevalent than all the logic in the world, has fully convinced us all, that it (paper money issued directly by government) has been, and is now of the greatest advantages to the country.

Benjamin Franklin, Busybody #8, March 24, 1729

https://en.wikiquote.org/wiki/Monetary_reform

[Elvis]

A completely unformed (and unserious) idea:

Instead of "tax day" there should be a traditional "money burning day." This would recognize explicitly the primary purpose of federal taxation.

Once a year, it would be determined how much money needs to be drained from the system, then on the big day, everyone would turn out in fields and toss their anti-inflation contributions into fiery, oversize Inflation Monsters (picture a Burning Man dragon).

This would appease the inflation gods and assure a prosperous and inflation-free year ahead, in anticipation of a round of fresh federal spending (only as needed of course).

Bring marshmellows!

[Grizzly]

https://www.metafilter.com/180068/Who-Gets-What-Economics-as-Religion-Once-More-Unto-the-Breach
A Beginner's Guide to MMT (Modern Monetary Theory) - "MMT

[Elvis]

Grizzly, thanks, lots of good discussion there (I skimmed the comments), and the gist is overall pro-MMT, but the first sentence reflects a common but maddening misunderstanding about MMT...

https://www.metafilter.com/180068/Who-Gets-What-Economics-as-Religion-Once-More-Unto-the-Breach
A Beginner's Guide to MMT (Modern Monetary Theory) - "MMT

First sentence:

"MMT proposes that a country with its own currency, such as the U.S., doesn't have to worry about accumulating too much debt because it can always print more money to pay interest.

As with so many of the "let me explain MMT for you" articles we're seeing, it completely misses MMT's point that the government doesn't have to go into debt in the first place, precisely because it can always "print money." And it always does. All U.S. federal spending is "printed money."

I don't think I've seen a single MMT hit piece that didn't start off with a major false premise, generated either by the writer's lifetime of conditioning (that even fiat money must be "paid back" to someone e.g.) or by a deliberately created strawman.

https://twitter.com/videotroph/status/1 ... 7226677249

MMT: X is actually Y.

Skeptics: X isn’t Z it’s just X.

MMT: But we said Y not Z.

Skeptics: How come you claim Z, though?

MMT: We never do. Read our 20 plus years of literature. Can we debate whether X is Y or X, now?

Skeptics: Baffling! MMT is an attitude, not a model!

[Elvis]

Who would want us to think that the U.S. federal government has to borrow money?

Someone start a list.

[Elvis]

This looks pretty good —

https://www.bloomberg.com/news/features ... er-s-guide

March 21, 2019, 3:00 AM PDT

Warren Buffett Hates It.
AOC Is for It.
A Beginner’s Guide to Modern Monetary Theory

An overview of a once-fringe school of economic thought that’s suddenly of the moment.

By Peter Coy, Katia Dmitrieva, and Matthew Boesler

kudos to Bloombergdotcom for running this kinda thing....

[Elvis]

This looks pretty good —

https://www.bloomberg.com/news/features ... er-s-guide

kudos to Bloombergdotcom for running this kinda thing....

Ha! on me — that's the same text grizzly posted.

[stickdog99]

Late one night dialing the radio, I caught a European economist (wish I knew who it was) saying that major social programs (a UBI in this case) could be funded by the state issuing the necessary money then simply writing it off — not treating it as a debt. The important thing was to get money into people's hands and circulating into a real economy.

It seems the only real objectors would be the Fed: "You can't do that in our system."

Taxation circulates it back to the source, where it ceases to exist. Spending by the issuer (or extension of credit by financial entities licensed by the issuer) creates money, which is then exchanged for labor and goods and services. Taxation and paying debt subtracts money from the total supply.

Oh, blessed Law of Jubillee, why oh why have we forsaken thee?

Until very recently, all debt always had a statute of limitations. Liens became the US government's way of extending these traditional statutes in perpetuity for "taxation debts." And, most diabolical of all, a special carve out was created for student loans, which for some "bizarre" reason were made made wholly exempt from the traditional statute of limitations on debt.

But somehow all of us alive today have been successfully conditioned from birth to conceive of debt as something that exists in perpetuity and that can even extend from generation to generation to generation. Even one's "debt to society" as a once convicted felon is considered something that can never be fully repaid in many states. Who benefits when we all imagine debt to be a perpetual state of criminality?

I've just spent 60 days in the jail house, for the crime of having no dough.
Now here I am back out on the street, for the crime of having nowhere to go.

[stickdog99]

Even if they understand it perfectly at their dinner parties, it's a bit unspeakable in the ring.

It's like the Catholic Church and birth control. Think of the slippery slope if any of us were to stop believing "Every Debt Is Sacred."