This MMT economic model makes my head hurt

[dan_bgblue]

every time I read an explanation on how it can be made to work without bankrupting the country. I liken it to my wife and I have a credit card that has no limit and we happily go around paying off home mortgages for all of our friends on our block, sending all their grand kids to Harvard, and build 200 miles of 6 lane highways that go nowhere.

[Doc]

Link something so we have some idea of what you are talking about...LOL. There are so many crackpot economic models out there it is impossible to know which crackpot model you are talking about

[CitizenBBN]

MMT = "Modern Monetary Theory".

basically a fancy update of Chartalism, which says money doesn't exist as an evolution of barter but that its legitimacy exists b/c it can be used to pay taxes, and thus the government can print as much of it as it wants and control inflation through taxation (among other means).

In that view money isn't a medium of exchange but is a kind of debt the government collects through taxation.

the problem, of course, it's that it's pure bollocks. Paper money only works when people have confidence in it, and when governments in massive debt go on printing sprees people lose confidence in it and hyperinflation results.

The examples are many of nations where this has happened, including the early United States. The whole use of "bits" as in "2 bits" to describe the price of something derives from the fact that the US central currency wasn't trusted for long early periods of this nation's history, and thus silver coins were cut physically into 8 "bits" and those were used as exchange.

Money only works when it has the faith of the people. No amount of taxation makes them trust it. It's more about psychology than math.

AOC is a proponent of it for as much as it suits her purpose, b/c modern MMT suggests the government should print and hand out money to end poverty and get full employment and that inflation would be handled by taxation and other means (bonds mostly). thus her questions to Fed chair about full employment and inflation.

But it's still bollocks. In part b/c of the faith argument, but also b/c we still have to get people to buy our debt issued by that printed money, and they will lose faith as well if they think we're going to just print money to cover it, and devalue the currency in the process.

these are the kinds of things created by people who have lots of raw intelligence, and absolutely no common sense. Kind of like Socialism and communism themselves. Marx was very smart, but had no understanding of how people really behave.

[CitizenBBN]

every time I read an explanation on how it can be made to work without bankrupting the country. I liken it to my wife and I have a credit card that has no limit and we happily go around paying off home mortgages for all of our friends on our block, sending all their grand kids to Harvard, and build 200 miles of 6 lane highways that go nowhere.

It should make your head hurt. It sounds great, and is absolute drivel.

it's the ultimate "something for nothing" economic model, where as if by magic with no consequences government can create wealth not by expanding industry and production of actual goods and services, but by simply printing it into existence.

Chartalists even cite Adam Smith, Karl Marx and others trying to make their argument sound persuasive. No one would have railed on them more than Smith and Marx. For all their difference both understood that economies are a function of their ability to produce things and that wealth is created by that conversion of raw materials into goods and services.

It's about as valid as suggesting we can get to the moon safer by building a tall building rather than using rockets.

[CitizenBBN]

BTW, this school of thought has been around a while, and was relegated to the crackpot wing of economics. It was introduced by Knapp in the early 1900s. Some concepts find themselves in Keynesian economics and other modern macro schools where monetary policy is seen as the amount of money in the system, but it's never taken hold beyond those most basic notions.

Even Keynesians I think would reject the notion of it's conclusion that you can print all you want and just b/c you then raise taxes you can control inflation.

in fact time after time we see that pattern, and it doesn't work. Nations print lots of money, raise taxes, and inflation still runs rampant.

I really believe in the conspiracy that the government is putting chemicals in our air or water to make people dumber. I certainly hope we aren't this stupid naturally.

[dan_bgblue]

Link something so we have some idea of what you are talking about...LOL. There are so many crackpot economic models out there it is impossible to know which crackpot model you are talking about

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

It seems to be the favorite of today's leading group of jibbering socialist "democrats".

[CitizenBBN]

Oh, they love it b/c it's something for nothing. They can hand out money as much as they want and there's no downside.

[KeithKSR]

Oh, they love it b/c it's something for nothing. They can hand out money as much as they want and there's no downside.

Absolutely, they can use it to justify the trillions they plan to spend on Medicaid for all and the Green New Deal.

[Doc]

Oh, they love it b/c it's something for nothing. They can hand out money as much as they want and there's no downside.

[dan_bgblue]

Knopfler looks a lot better in real life.