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Buster, I've read as much as my brain can handle about MMT, and the technical, operational way the government operates correlates to MMT. It's when MMT and the concept that the government can not default is where I think MMT is flawed. I'm trying to wrap my head around the concept that the bond market does not raise funds, it merely controls the money supply.

MMT entire premise is founded upon the fact that the US government and the US Federal Reserve are the premier issuer of currency in the world. The problem with that is, we are slowly but steadily decreasing our power and ability to maintain that.

The premise that the only time money is created is when the government spends money just seems flawed. Isn't money created out of thin air through fractional reserve lending in the private market?
 
Originally Posted By: Tempest
Quote:
Mosler an economic genius

His policies are no different that those of the Wiemar Republic or Zimbabwe, and will result in the same thing. That is not genius, that is destructive.



Let's humor you for a moment.

What have our nobles that really run this country done? They've maneuvered and configured things the way that they want them. Maybe it's a Scottish feudal model vs. an Irish one ..a would be Forbes vs. Kennedy ruling class in competition ..

..but how do you see one being better over the other? You can't bow to one noble who owns big business ..then blame big business for killing the small business owner ..then give to the small business owner some tribute ..and keep going around in a circle blaming the very people who you say your beholding to.

Which lord do you want to kneel to, Tempest? Is it really all that much different since you're on your knees begging for favor in either case?
 
I hear you Drew. Some if it makes complete logical sense, like Government deficits = non-government surpluses by rule of accounting. That for example is not theory, that is a fact. Some of it sounds far utopian (maybe it is).

Here is a good break down of money and each of their +'s and -'s. The end is good and he briefly touches on Modern Monetary Theory and how it ties in with Lincoln's debt free Greenback notes with a few modifications to the Federal Reserve.

The Federal Reserve is a private corporation.
 
Jefferson.jpg


Jackson was only 1/2 right. He balanced the budget and threw the economy into a depression.
 
buster, you still have presented nothing that shows how central planning and hyperinflation will be avoided.

You called me wrong about this being the same as Zimbabwenomics with nothing to back up your assertion. If you can't even answer such a basic question as to how to avoid inflation, don't you see a basic fundamental flaw in this "MMT"?

And if you want to bring the Constitution into this:
Quote:
To coin Money, regulate the Value thereof, and of foreign Coin

There is nothing about printing money anywhere in it.

And Jefferson was no fan of ANY kind of paper money:
http://etext.virginia.edu/jefferson/quotations/jeff1325.htm
 
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Inflation is not a concern if deficit spending goes into the real economy to produce real goods and services. There is nothing wrong with paper money. Commodity backed money throughout history has shown to be problematic.

http://moslereconomics.com/2010/06/20/professor-bill-mitchell-on-inflation/

http://bilbo.economicoutlook.net/blog/?p=3773

Quote:
Zimbabwe is the new Weimar Republic. Not! Zimbabwe is the front-line evidence that shows that government deficits will generate hyper-inflation. Not! Zimbabwe is the demonstration of the folly of a fiat monetary system. Not! Zimbabwe is an African country with a dysfunctional government. Yes!

First we should make sure what we are talking about. The right think that when the workers get a pay rise it is inflation. It is not. The left think that when the corporate sector increase the price of a good or service it is inflation. It is not. It is also not inflation when the exchange rate falls pushing the price of imports up a step. It is also not inflation when the government increases a particular tax (say the GST) by x per cent to some new level.

So while a price rise is an essential pre-condition – a necessary condition – for what we call inflation it is not a sufficient condition. That is, the observation of a price rise will be required to define an episode as being inflationary (at some point) but observing a price rise alone will not be sufficient to categorise the phenomena that you are observing as being an inflationary episode.

Inflation is the continous rise in the price level. That is, the price level has to be rising each period that you observe it. So if the price level or a wage level rises by 10 per cent every month, then you have an inflationary episode. In this case, the inflation rate would be considered stable – a constant rise per period. If the price level was rising by 10 per cent in month one, then 11 per cent in month two, then 12 per cent in month three and so on, then you have accelerating inflation. Alternatively, if the price level was rising by 10 per cent in month one, 9 per cent in month two etc then you have falling or decelerating inflation.

If the price level starts to continuously fall then we call that a deflationary episode.

Hyper-inflation is just inflation big-time!

So a price rise can become inflation but is not necessarily inflation. Many commentators and economists get this basic understanding wrong – often and continually.

Second, it also follows that cyclical adjustments in price levels by firms from what they are currently offering at depressed levels of activity to what the price levels that are defined at their normal operating capacity levels are also not sensible to consider as inflation. When the economy is in poor shape, firms cut prices in an attempt to increase capacity utilisation by temporarily suppressing their profit margins and hence maintain market share. As demand conditions become more favourable the firms start increasing the prices they offer until they get back to those levels that offer them the desired rate of return at normal capacity utilisation. Have you tried hiring hotel accommodation recently in the tourist areas? Big discounts are on offer but they will disappear once the economy improves. It is not helpful to call that inflation.
 
Originally Posted By: Tempest
You called me wrong about this being the same as Zimbabwenomics with nothing to back up your assertion.


Every currency system is like that, look at how USD devaluation forces Euro, Yen, everyone except China to try and devalue their currency to get an export and debt forgiveness advantage.

Just when you think gold is the answer, look up how the discovery of the New World and the new found gold causes inflation due to a sudden oversupply of gold.

In the end, it is the production and consumption of resources that propel the economy, and monetary policy is one of the tool to achieve that as its primary purposes, not to protect the wealth of the people who hold on to it. For that you have politics, media attentions, lands, private armies, and religious organizations.
 
http://blogs.reuters.com/rolfe-winkler/2010/01/19/mosler-the-wrong-standard/

Quote:
New Keynesian thought is also flawed, because it too presumes gold standard constraints. Today government never actually has nor doesn’t have dollars, and spends, taxes, and borrows simply by changing numbers in bank accounts at the Fed.

When it comes to the dollar, the US government is the scorekeeper. Unlike the gold standard days, the government can’t run out of money. Nor is it dependent on China to fund spending.

Under the old gold standard, taxes and borrowing did fund spending. Today taxes function only to regulate aggregate demand and to control prices. The federal deficit is merely the difference between the numbers changed upward when the government spends, and the numbers changed downward when it taxes. Taxes therefore function to regulate aggregate demand, not to raise revenue, per se. Tax cuts increase our spending power, tax hikes lower it. This is indisputable operational fact, not theory or philosophy.

Jim’s general warning is that too much spending or monetary stimulus might lead us to cross a “critical threshold where diverse actors reject dollars in a cascading collapse.” But this only applies to fixed exchange rate regimes such as the gold standard, where a weak currency results in gold outflows.

Today the dollar is a non-convertible currency. The exchange rate continually adjusts, always representing indifference levels with no gain or loss of gold reserves. I would note too that the U.S. is actively seeking to weaken the dollar vis-à-vis the Chinese yuan. Would Jim want the reverse?

Jim’s arguments are as good as gold. However, we are not on a gold standard, so they don’t apply. Today’s monetary arrangements call for my solutions to restore output, employment, and price stability.


I'm not saying Mosler or MMT is entirely right. It's theoretical and to be honest, doesn't address the private control of the money system. Some of his banking proposals are really good though.
 
The thing I completely disagree with about MMT and Mosler is that the government, as an entity in the economy, essentially is not accountable and can just credit bank accounts to spend money and do this or that and spend like a drunk sailor WITHOUT consequences.

I still firmly believe that the government is just like any other economic entity and has consequences for how it acts.

If both you or I could print our own money at will to buy the goods and services someone else produces, without contributing anything of real economic value (ie producing real assets), then that currency we print is worthless.

I know the fed/treasury doesn't literally print money to fund it's deficit spending. It's done on a computer of course, but their is still an accounting of it. At least that's the way it should be!

If this theory were brought to it's final conclusion, then we should have no income tax of any kind and any excess money created by the government should just be deleted in the computer system. That's essentially sort of what happens when no corresponding liability is created when the government spends money.

The concept is very difficult to understand, but in a way, it does make some sense.
 
Quote:
Zimbabwe is an African country with a dysfunctional government. Yes!

They admit that their "idea" is central planning!!
If it wasn't, then government action would be irrelevant.
33.gif


That guy sure can pontificate with the best of them. He's one to definitely dazzle people with important sounding words.

Inflation is too much money chasing too few goods. There is one sentence that took him a page to "explain". If you increase the money supply beyond the goods and services available, then you have inflation. Printing or "computing" money on a large scale is a sure fire way to inflation.

The Fed (on it's face) was brought about in order for "experts" to control the money supply so that recessions would be eliminated. Great job they have done, eh? These people are advocating the EXACT same thing, just with government doing it. Keep in mind that those government "experts" have put us more than $100 trillion in debt.
 
Originally Posted By: Drew99GT
The thing I completely disagree with about MMT and Mosler is that the government, as an entity in the economy, essentially is not accountable and can just credit bank accounts to spend money and do this or that and spend like a drunk sailor WITHOUT consequences.

I still firmly believe that the government is just like any other economic entity and has consequences for how it acts.

If both you or I could print our own money at will to buy the goods and services someone else produces, without contributing anything of real economic value (ie producing real assets), then that currency we print is worthless.

I know the fed/treasury doesn't literally print money to fund it's deficit spending. It's done on a computer of course, but their is still an accounting of it. At least that's the way it should be!

If this theory were brought to it's final conclusion, then we should have no income tax of any kind and any excess money created by the government should just be deleted in the computer system. That's essentially sort of what happens when no corresponding liability is created when the government spends money.

The concept is very difficult to understand, but in a way, it does make some sense.


Yeah I hear ya....like I said I'm not hear to claim MMT would work with certainty, however, it does point out some flaws that are being thrown around by a lot of people that have no concept of how the actual operations of the monetary system actually work.
 
Originally Posted By: Tempest
Quote:
Zimbabwe is an African country with a dysfunctional government. Yes!

They admit that their "idea" is central planning!!
If it wasn't, then government action would be irrelevant.
33.gif


That guy sure can pontificate with the best of them. He's one to definitely dazzle people with important sounding words.

Inflation is too much money chasing too few goods. There is one sentence that took him a page to "explain". If you increase the money supply beyond the goods and services available, then you have inflation. Printing or "computing" money on a large scale is a sure fire way to inflation.

The Fed (on it's face) was brought about in order for "experts" to control the money supply so that recessions would be eliminated. Great job they have done, eh? These people are advocating the EXACT same thing, just with government doing it. Keep in mind that those government "experts" have put us more than $100 trillion in debt.


I'm in favor of fully Nationalizing the Fed. What are you in favor of?

You fail to accept that MMT is not about central planning. It doesn't have to be that way but I see you keep creating a straw man argument. Again, MMT is the reality of how our monetary system works.

Bill Mitchell talks far too much, I agree.
 
Btw, private credit has been contracting. Until that money is lent into the economy, it sits at the Fed banks.
 
Nationalizing the Fed? Maybe. I have yet to see a well reasoned, fool proof monetary system. As your previous vid stated, there are pros and cons.

You are obsessed with how the monetary system works. I've not contradicted what these guys are saying on that. I'm saying printing money on a grand scale leads to inflation and they don't address that.

ALL government spending, whether it be $1 or $4 trillion, is central planning. So the more money the government spends, the more central planning you have. It's that simple.
It's good people are reducing their debt levels. This makes them less beholden to someone else.
 
True and I think you raise a good point in that there really is no fool proof monetary system.

I only harp on the monetary part because most people, including myself until a few months ago, really understood what goes on. Myths keep getting perpetuated.
 
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