Comments by "Neolithic Transit Revolution" (@neolithictransitrevolution427) on "Economist warns Modern Monetary Theory is dangerous" video.
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@willnitschke I would suggest that because YouTube is so difficult to communicate with, replacing an explanation with an assertion is particularly useless. I also have a minor in economics, I don't claim expertise, but implying I have no grasp is a weak character argument.
I don't endorse MMT and Kelson is a Hack. But the point around the dollar being a tax credit is a point I agree on. It's a Fiat currency, everyone knows this is a creation of the state. Your reply is equivalent to thinking that wheat isn't grown for food because a farmer could never eat it all themselves; people who don't pay taxes, whether domestic or international users, have a large population of working individuals who do need USD for taxes to trade with. It hardly matters why people think a currency has value, how many people think USD has value because "Petro dollar and US Navy"? No one is trading scarps of unbacked paper because it just feels right.
I agree that Fiat currencies compete with each other in part on the basis you are describing. The US dollar is more reliable than the Argentinian dollar undoubtedly. The issues around Argentina spending more than is taxed is widely understood and fits perfectly well within this framing, what good are tax credits when everyone has more than enough to pay taxes.
Look again at Canada. In the last decade both the $1000 bill and 1¢ penny have stopped being accepted by the government, neither remain in usage. Look at the French Franc or the German Mark or the Italian Lyra etc. None are accepted by their former government, and so none remain in circulation. Instead the Euro, accepted by all 3 governments, is the currency.
I don't understand why it's contentious to you that a Fiat currency, issued by a government, is primarily valued by its acceptance by that government. One can pay for another good with any other currency, or choose not to pay for a good or service. Taxes are required in set currencies, chiefly the national fiat but with exceptions - generally based around accepting USD - and must be paid. Inarguably a government can print currency. Surely you would agree a government that printed currency but refused to accept it would soon find that currency valueless. How is it you disagree then, that accepting a Fiat currency is what drives its value?
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@scottcincinnatikid9804 I think you really need to decide who the "proponents" are. I really suggest listening to Warren Mosler on YouTube. He actually debates Bob Murphy from this video. Bill Mitchell is also worth listening to. They are widely seen as the founders, and I tend to think they are speaking about the correct way the monetary system operates.
Then you have Stephanie Kelton here, who seems to actively misrepresent and represent in the most confusing terms possible MMT, and baits people who want certain policies into believing they can be gotten for free. While these people might say they support MMT, I don't believe they actually understand anything other than a vague idea of money creation.
While obviously many supporters of MMT do believe some degree of central planning is beneficial, I don't think it's correct to frame MMT in general as being any more supportive of Central Planning than a Central Bank and fiat currency inherently is.
The fact that radical elements might misrepresent something to justify spending they, as you point out, were going to justify regardless has no bearing on that initial thing's, here MMT's, validity.
But a correction; the Fed doesn't use interest to create reserves. Reserves are created through asset purchases. Interest recieved by the Fed goes to the treasury as general revenue, after subtracting operating expenses. If the balance is negative, the Treasury pays the difference.
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@scottcincinnatikid9804 I don't recall this coming up from either Bob or Warren, I may rewatch and get back to you, but I've seen Warren in several interviews and he's certainly not shy about the reality of government lending or implicitly suggesting the Fed buys all debt. I'd be surprised if Bob had left such an easy point I scored. Sorry if I'm digging something old up, I didn't see myself replying to when I was trying to figure out what the guy replying to me was referencing.
In my longer reply, I certainly agreed with the point Kelton isn't being genuine, but that wouldn't post.
I do have to say I think it's an entirely ideological point to suggest the government can only achieve a zero sum gain. You could suggest empirically it's rare, and we could debate the point. But I can point to a number of Governments, Norway, Singapore, Switzerland, who have very apparently grown wealth.
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@scottcincinnatikid9804 I don't have any strong objections to these points. And your third sentence is non-confrontational. The only thing somewhat nebulous is the fourth sentence, because MMT suggests (and not only MMT) that while the government while take after giving, the giving will create enough benefits it is still worth while.
I would say we shouldn't vote off Proverbs, and that the concept of MMT says we should vote for responsible financiers.
I guess my main disagreement, I should be clear it is not inherent, is "The borrowing happening now, even if held by the Fed, will require future debt servicing cost, meaning less". You'll never find a successful business afraid to borrow. While technically I agree, borrowing means repayment with interest, I don't agree that implies less.
We should expect our elected government to invest well enough that less is not the outcome. A failure in this is a failure in the democratic concept. I would never expect the public sector to invest better than the best of the private sector, but I do believe proper investment into infrastructure and a nation's comparative or strategic advantages leveraged at the relatively low borrowing rates nations face can be advantageous. Honestly, if someone ran on the idea of giving every citizen a savings account funded by national borrowing, where we could only keep the dividend payments, I'd have to think very seriously about what I thought of the lower end of society. The low cost of national borrowing is enticing.
"Government spending for the most part is just reclassification of who will consume". Even on this point, between tax and borrowing, I'm not sure tax is the better choice. Taxing means taking away from productive investment, borrowing means taking away from the least productive investments. Does the economy really grow better under an income tax that pays for education than borrowing now in the expectation those educated will grow the economy? I find it hard to square.
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@macsnafu The exchange function, and also that it is the unit of account. It is obvious that printing money doesn't create new wealth, but spending that money does lead to production of new wealth.
You say like any borrower, the government will have to repay it's loan. But I put forward that large financial institutions don't intend on repaying all their debt, which exist in the form of deposit, and actually aim to increase debt annually. Debt can be a very inexpensive way to access capital. I don't see why we wouldn't want to leverage government spending, with our main concern being growth in the tax base, or Debt to GDP.
If you're talking about a crowding out effect, that exists only to the extent interest rates are raised due to borrowing, which itself is a question of inflation. But I would suggest a low crowding out effect is less damaging than taxes in many cases. Taxes are indiscriminate and disincentivize working, interest rates of 3% mean that any investment returning 3% or less won't be made, which means only the least productive will be impacted.
In some cases government borrowing can certainly stimulate the economy. When people are afraid to invest they pull capital out of the market. Government debt can pull that back into circulation, and that spending could have a positive multiplier effect.
The Guaranteed Job scheme I would support is to have the Federal government fund a program that allows Charities and Municipalities to pay workers Minimum wage for 8 hours a day 5 hours a week, with a basic benefits package. That would keep these jobs from competing with the private market, and I think charities and municipalities are best suited to finding a variety of tasks for differing skills and doing it quickly. I would also extend it to Manufacturering companies for up to 6 months of training, with the requirement the company has to pay 50% of the cost back if the employee isn't working there in a year.
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@willnitschke even if we supposed I agreed that growing national indeptiness was causative to decline in GDP growth, rather than a result as is obviously possible, you aren't disputing my claim of decreasing spending power per unit currency held, only saying that a nation's output is decreasing.
The second part is just kinda silly. The suggestion medical care, or Medicare/medicaid, spending doesn't add value to the economy is hard to comprehend. Likewise, the focus on interest payments without looking at what the loans paid for is difficult to take seriously; obviously the interest on my mortgage isn't an asset to me, but the house is. Military spending is a real mixed bag and I'm not going to defend every line item of an audit the department can't write up, but obviously some technological advances have been produced, and the question to some extent is what is the best cost for impact in a strategic sense, rather than expecting a direct return.
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@willnitschke The hyper inflation was the result of the economic crash with money printing. But you'll never find hyper inflation in a country where there is goods and food on store shelves, people don't start burning money until there is nothing left to buy.
MMT definitely understands there are consequences. Whether you can reasonably use taxes to influence inflation is a reasonable cointer point. I would agree that MMT is inherently stateist, I would suggest it's argument lies on the concept that Fiat money is inherently a statist tool/policy, and treating it like a commodity currency is the flawed approach.
That said I think there are automatic stabilizers, the form of economic policy usually put forward, that keeps the Federal government at a reasonable distance and avoids the disease that is a command economy.
i strongly suggest listening to Bob Murphy (the Austrian Economist interviewed here) debating Warren Mosler (the Founder, so to speak, of MMT). Stephanie Kelton is just awful, and constantly spends her time going on about the minutia of technical details and then seemingly implying absurd outcomes. Warren Mosler and Bill Mitchell are both much better. I'm not saying you'll Agree with it, but I'm fairly libertarian i listen to a lot of Reason debates, and while I thought I did, I didn't even understand MMT until listening Mosler.
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@willnitschke Stimulus policy also is a major component of MMT which is descended from Keynesian economics. I don't disagree that government ROIs in developed economies are generally low, but even a 90¢ return on a dollar in investment is pretty good, it implies you could borrow ~80% of the programs cost and the increased revenue would pay off the debt. Every debt does equal an asset. A debt means I owe someone something, for the other person that is an asset. MMT recognizes the difference between expenses and liabilities, you are mistaken. That isn't something you could really confuse.
The Five basic requirements for a field to be considered scientifically rigorous: clearly defined terminology, quantifiability, highly controlled experimental conditions, reproducibility and, finally, predictability and testability.
The Theory of Evolution, all but universally accepted as valid, is called a theory - and not considered proven - precisely because it cannot be rigorously tested. And evolution only attempts how things came to be, more akin to Economic History. Whereas economics has no rigorously proven basis, and claims to be predicative.
You are right national debt is not literally a commodity. The point being made was that the national debt has already been commodified, and is traded in a free market as a commodity would. I apologize if any other meaning was taken.
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@willnitschke Stimulus policy also is a major component of MMT which is descended from Keynesian economics. I don't disagree that government ROIs in developed economies are generally low, but even a 90¢ return on a dollar in investment is pretty good, it implies you could borrow ~80% of the programs cost and the increased revenue would pay off the debt. Every debt does equal an asset. A debt means I owe someone something, for the other person that is an asset. MMT recognizes the difference between expenses and liabilities, you are mistaken. That isn't something you could really confuse.
The Five basic requirements for a field to be considered scientifically rigorous: clearly defined terminology, quantifiability, highly controlled experimental conditions, reproducibility and, finally, predictability and testability.
The Theory of Evolution, all but universally accepted as valid, is called a theory - and not considered proven - precisely because it cannot be rigorously tested. And evolution only attempts how things came to be, more akin to Economic History. Whereas economics has no rigorously proven basis, and claims to be predicative.
You are right national debt is not literally a commodity. The point being made was that the national debt has already been commodified, and is traded in a free market as a commodity would. I apologize if any other meaning was taken.
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@willnitschke @willnitschke Stimulus policy also is a major component of MMT which is descended from Keynesian economics. I don't disagree that government ROIs in developed economies are generally low, but even a 90¢ return on a dollar in investment is pretty good, it implies you could borrow ~80% of the programs cost and the increased revenue would pay off the debt. Every debt does equal an asset. A debt means I owe someone something, for the other person that is an asset. MMT recognizes the difference between expenses and liabilities, you are mistaken. That isn't something you could really confuse.
The Five basic requirements for a field to be considered scientifically rigorous: clearly defined terminology, quantifiability, highly controlled experimental conditions, reproducibility and, finally, predictability and testability.
The Theory of Evolution, all but universally accepted as valid, is called a theory - and not considered proven - precisely because it cannot be rigorously tested. And evolution only attempts how things came to be, more akin to Economic History. Whereas economics has no rigorously proven basis, and claims to be predicative.
You are right national debt is not literally a commodity. The point being made was that the national debt has already been commodified, and is traded in a free market as a commodity would. I apologize if any other meaning was taken.
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@willnitschke Stimulus policy also is a major component of MMT which is descended from Keynesian economics. I don't disagree that government ROIs in developed economies are generally low, but even a 90¢ return on a dollar in investment is pretty good, it implies you could borrow ~80% of the programs cost and the increased revenue would pay off the debt. Every debt does equal an asset. A debt means I owe someone something, for the other person that is an asset. MMT recognizes the difference between expenses and liabilities, you are mistaken. That isn't something you could really confuse.
The Five basic requirements for a field to be considered scientifically rigorous: clearly defined terminology, quantifiability, highly controlled experimental conditions, reproducibility and, finally, predictability and testability.
The Theory of Evolution, all but universally accepted as valid, is called a theory - and not considered proven - precisely because it cannot be rigorously tested. And evolution only attempts how things came to be, more akin to Economic History. Whereas economics has no rigorously proven basis, and claims to be predicative.
You are right national debt is not literally a commodity. The point being made was that the national debt has already been commodified, and is traded in a free market as a commodity would. I apologize if any other meaning was taken.
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@willnitschke Stimulus policy also is a major component of MMT which is descended from Keynesian economics. I don't disagree that government ROIs in developed economies are generally low, but even a 90¢ return on a dollar in investment is pretty good, it implies you could borrow ~80% of the programs cost and the increased revenue would pay off the debt. Every debt does equal an asset. A debt means I owe someone something, for the other person that is an asset. MMT recognizes the difference between expenses and liabilities, you are mistaken. That isn't something you could really confuse.
The Five basic requirements for a field to be considered scientifically rigorous: clearly defined terminology, quantifiability, highly controlled experimental conditions, reproducibility and, finally, predictability and testability.
The Theory of Evolution, all but universally accepted as valid, is called a theory - and not considered proven - precisely because it cannot be rigorously tested. And evolution only attempts how things came to be, more akin to Economic History. Whereas economics has no rigorously proven basis, and claims to be predicative.
You are right national debt is not literally a commodity. The point being made was that the national debt has already been commodified, and is traded in a free market as a commodity would. I apologize if any other meaning was taken.
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Frankly speaking, in all likelihood yes, they can. Employment in Construction seems to vary most much more than average with recessions. Many recessions are primarily a result of a building collapse, 2007, Savings and Loans Crisis, the Great Depression, etc.
But more to the point, you are correct that not every unemployment individual will end up working in construction. But I do support the concept of a Guaranteed Employment scheme. I would suggest keeping the federal government, which responds slowly and bluntly, largely out of the operation. Instead I would have a federally funded program wherein Municipal governments and Charities can pay people minimum wage for 8 hours a day 5 days a week. I would also open it up to Manufacturing companies to cover up to 6 months of training, although half the cost would have to be repaid if the trainee wasn't employed there a year later. Smaller and generally financially strained entities will react much more quickly and efficiently to the available labour pool. They aren't stealing jobs from the private sector because of the limits on hours available and wage. But it would keep employment up in a recession while getting things done.
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