This video provides an easy to understand description of Modern Monetary Theory (MMT)
I never understood MMT until I saw this.
The author says that both critics and advocates of MMT badly misunderstand what MMT really is. Which is why most arguments - - both for and against MMT - - are based on politics.
The author said - near the end of this video - that MMT is "post Keynesian economics".
Why is modern monetary theory so important?
The author of the video says:
"MMT fundamentally reframes the power relationships within our economy, moving power away from banking and the City and towards democratic government control whilst prioritising people and full employment instead. No wonder so many people don’t like it: MMT challenges all the privileges they enjoy at cost to the rest of us."
"Tax is used to control inflation, not interest rates."
These two things change the balance of power.
The balance of power now lies with the treasury, and its decisions over taxation.
The central bank is reduced to just a regulator of the banks, and not a controller of the whole of economic policy, which was the status given to it for the previous 25 years – wholly mistakenly.
It's about taxing bad things and subsidizing good things.
MMT fundamentally changes ... how the economy works.
by Cornpop Sutton 
, A bad bad dude who makes good shine., Wednesday, September 18, 2024, 04:04 (312 days ago) @ SureThing
edited by Cornpop Sutton, Wednesday, September 18, 2024, 04:20
It's not sustainable. It's inherently an inflationary bubble of debt currency that will eventually hyperinflate and lose total. Then they will have to repudiate that currency and create a new one (probably CBDC.)
It's called Modern Economic Theory as in THEORY, hypothetical and unproven.
I personally believe that MMT is driven by the Marxist agenda to crater the US economy. So... it doesn't have to "work" or benefit anyone... all it is intended to do is put a professorial sheen on economic collapse.
All I see in MMT looking ahead is a void.
My understanding, and I'm willing to be corrected by SureThing or anyone else, is that MMT provides an excuse to borrow money. Because "debt" is meaningless or something, which I never got my head around.
And because you can borrow freely, well you're inevitably going to end up with enormous debt. But that doesn't matter, remember?
So if all of that is right then it's all a bunch of bullshit. But maybe I misunderstand.
4:23
He says
the whole of this myth of central bank independence and
the whole role of interest rates in controlling inflation
is not true
instead tax has that role
He's unhinged. The first one, interest rates, is what is generally labelled[1] monetary policy and the second one, tax, is fiscal policy. A government has both tools available to it to help it "control" inflation and unemployment.
[1] Be it known that I have a very low opinion of all economists and economics of the last century at least. It's kabuki theatre, mostly, except that all but the first players are indoctrinated in its ways and believe it is all true. Having said that, the labels of fiscal and monetary policy work well enough, in my view.
In practice, governments have delegated monetary policy to their respective central banks ("made them statutorily independent of government") so that when things go badly in terms of inflation and unemployment -- which the governments do not actually control but merely have some influence over -- the governments can wash their hands of it and tell the public it's the bank's fault.
We get that here, the government lazily does nothing constructive in terms of fiscal policy because they don't want to upset voters (or worse, does destructive things in buying votes) which ultimately forces the central bank to manipulate interest rates because somebody has to reduce inflation and the government won't so the bank must. We get that a lot.
This bloke says many things which are true and weaves them together in an enticing way. However, he fundamentally misunderstands reality and also says things which are not true. And he relies on argument by authority. And he uses those bloody distracting subtitles.
If it were up to me, I would bring the central bank back under the control of the government and so give the government the ultimate responsibility for monetary policy in addition to day-to-day responsibility for fiscal policy. That way, both can be used together, much more harmoniously than they are now. And the government can have responsibility for everything, which is why it won't happen :)
I challenge all MMT advocates to rebut what I have said.
It's been a fortnight. Are the MMT advocates unable to rebut what I said? That the bloke in the MMT video fundamentally misunderstands reality and also says things which are not true.
Anyone at all? Is everything I said totally right in all respects?
by Cornpop Sutton , A bad bad dude who makes good shine., Friday, October 04, 2024, 21:25 (295 days ago) @ ,ndo
edited by Cornpop Sutton, Friday, October 04, 2024, 23:23
I have many good compelling threads that get exactly one sympathy post from my friend JoAnne so there's that. Your bitter board owner clocking in with that opinion.
Otherwise...now on MMT
That MMT guy is pitching total propaganda.
NO policy should simply "put people at the center of policy".
What is at the CENTER of ANY monetary policy is one thing:
T*R*U*S*T
That the money is sound. That it won't be debased. Etc.
"The people" will debase the shit out of any store of value. That puts them at the center of the policy, alright.
Fuck that guy up the ass, honestly. All we hear these days is propaganda and I'm sick of policy simps.
by Cornpop Sutton , A bad bad dude who makes good shine., Friday, October 04, 2024, 23:58 (295 days ago) @ Cornpop Sutton
edited by Cornpop Sutton, Saturday, October 05, 2024, 00:24
MMT is a rationale that frames inflation of fiat currency as a benefit. The purpose is to put the government in the role of the only caretaker of the people. The people can't take care of themselves (be self reliant) when the currency is constantly debased.
So, the government is mother and the government is father in the MMT scheme.
Again: the purpose of MMT is totalitarianism. Money itself becomes a fiction, totally fungible and is "whatever we say it is."
Sounds like MMT is actually "Modern Marxist Theory" then :)
The purpose is to put the government in the role of the only caretaker of the people.
I don't know that I would go that far. But I could be wrong. Perhaps the advocates have something to say on this.
by Cornpop Sutton , A bad bad dude who makes good shine., Saturday, October 05, 2024, 23:21 (294 days ago) @ ,ndo
edited by Cornpop Sutton, Sunday, October 06, 2024, 00:29
I don't know that I would go that far. But I could be wrong. Perhaps the advocates have something to say on this.
First of all, this is a closed and secret forum that I haven't admitted a new member to in almost a year. Therefore you won't find one advocate for MMT here. The best we can do here is informed guesswork on the "pros".
I don't see any benefits except that MMT as a acknowledged policy position may de-stress the public about public debt expansion - a soporific to keep people from protesting or resisting or asking for change. MMT was probably invented to keep social order.
Secondly, discussing MMT as though it is an intellectually rigorous and engineered economic concept that is now in rollout phase - is a mistake.
MMT is not a "new" theory or concept. It is simply words plastered onto the way things have always operated in our debt based economy and justifying any arbitrary level of inflation.
MMT was probably in all likelihood retroactively constructed in order to make careless expansion of the debt appear to be a deliberate, well crafted framing with intellectual rigor.
I'm saying that MMT came after, not before. But it is also a concept that justifies doing anything with the currency. Just as TPTB are doing right now.
Germany during the Weimar Republic had MMT if you think about it.
Most economists going back decades don't believe that uncontrolled monetary expansion is a good thing. MMT says that it is.
If you say that MMT is a totalitarian mechanism for controlling the public is a stretch - I'd simply point out the consequences of MMT over a long period, and whether they are positive or negative for each party involved: the US gov; the Fed; the general public; the business community (all businesses.)
It seems to me that MMT guarantees that the only way to preserve personal wealth is investing in bubble speculations (housing, stonks, etc) or assets - precious metals, land, etc. So it's horrible for individuals and families unless they have the expertise to stay ahead - most don't - so individuals wind up being cratered economically. The gov and the fed? It creates a intellectualized moral justification for debt spending. They get off scott free. Business? Probably the least affected - they are squeezed by rising input prices so they raise their own output prices.
Not very abstract to see who benefits, cui bono.
If I'm wrong or seriously off-base on the provenance of MMI, I'll eat my shorts.
guarantees that the only way to preserve personal wealth
This is a flaw in any paper monetary system with inflation.
Under a gold standard, you can hold physical gold, opt out of the financial system, and preserve your purchasing power.
With paper money, you're forced to invest, which lets the financial industry fleece you. Holding paper money in a checking account or under your mattress? You'll get ripped off by inflation. The stock market? Plenty of ways to get robbed there. Real estate? Again, lots of ways to lose a fortune if you aren't careful.
Even investing in gold is hard. The transaction costs on bullion can be 10% or more. There's a database of all gold purchasers. There are rumors of criminals showing up to gold hoarder's houses, knowing exactly how much was in their stash. Are you really going to say no to a criminal who's holding your family hostage? Keep your gold in a safe deposit box? You're not the only one with a key. If the contents of your box disappears, now it's your word against the bank's to try and recover. Paper gold like GLD? That's the same problem as with the stock market, you're getting fleeced.
An unelected central bank isn't "good". They're just lining the financial industry's pockets, with the cost paid by everyone else as inflation. Why is the financial industry so rich? That's because they get first drink at the firehose of free money the central bank is pumping into the economy.
by Cornpop Sutton , A bad bad dude who makes good shine., Tuesday, October 08, 2024, 00:32 (292 days ago) @ FSK
edited by Cornpop Sutton, Tuesday, October 08, 2024, 01:02
Do you, FSK, agree that MMT is pure bullshit that was tacked on to create an appearance of honest intellectual rigor around deficit spending?
Basically MMI came out of absolutely nowhere. All of a sudden about 6 months ago MMI was the alt tech protest video buzzword. I never heard of it, say 1+ years ago.
IE, do you agree that MMI was "retconned", IE, retroactivity continuity, to create a deficit spending defense: "see, MMI says we KNOW what we're doing!"
That's how I see it. Dunno what anyone else here thinks. I don't think it could be otherwise.
Another manufactured lie.
The whole concept of paper money is bullshit. MMT is another layer stacked on top of a foundation of bullshit, so how can you determine if it is bullshit or not?
In our system of paper money and a central bank, there are two people who benefit from inflation.
1. The financial industry benefits from inflation all the time, as the Federal Reserve "monetizes the debt".
2. The government benefits from inflation whenever it has deficit spending.
MMT is the government claiming its "fair share" of the wealth stolen via inflation. MMT says that, as long as there isn't a hyperinflation of the money supply, deficit spending doesn't matter. Government can always issue more debt and refinance its loans.
The national debt does not represent an amount that must someday be repaid. It can be rolled over indefinitely. In fact, trying to actually repay the national debt would need tax hikes or spending cuts that would cripple the economy. The national debt represents a running total of stolen wealth, and not a debt that should be repaid.
by Cornpop Sutton , A bad bad dude who makes good shine., Tuesday, October 08, 2024, 01:05 (292 days ago) @ FSK
MMT is the government claiming its "fair share" of the wealth stolen via inflation. MMT says that, as long as there isn't a hyperinflation of the money supply, deficit spending doesn't matter. Government can always issue more debt and refinance its loans.
That's what I've gotten from the shills who popularize this stuff, too.
But how can there NOT be hyperinflation if the government keeps inflating the debt? At present we're looking at national debt interest payments > the defense budget due to fluctuations in the interest rates.
Do you know how this deficit spending supposed to be extended indefinitely? Just because we never hit a wall yet is not a reason why there's no wall.
As a normal person, if your income is $3k every month and you spend $4k every month, you go bankrupt eventually.
The insight of modern monetary theory is that rule does not apply to government, when debt is in the money issued by that government.
The national debt does not represent a number that must someday be repaid. It can be rolled over indefinitely, by issuing more bonds. In the US monetary system, the government can issue bonds not money. New money is issued by the central bank, the Federal Reserve.
When the Federal Reserve inflates the monetary supply, some/most of that new money goes to the financial industry. The rest goes to the government. Deficit spending is just the government claiming its fair share of the newly created money.
Why can't the government just print and spend money instead of borrowing it from a central bank? The rules of the financial system were written that way, by lobbyists from the financial system. With access to unlimited capital, they have an unlimited lobbying budget. It's impossible to change it now.
The national debt is merely a running tally of money stolen by the government via inflation. It cannot every be repaid. It's built into the rules of the monetary system. If the government tried to jack up taxes and collect enough money to repay the national debt, it would cause a deflationary spiral of the monetary system.
In a system of debt-based money, money is created when it is borrowed and destroyed when a loan is repaid. To avoid hyperdeflation in a recession, deficit spending by the government is needed.
It doesn't have to be that way. It's enforced by various treaties, that countries have to have a corrupt monetary system like the USA. Any country who tried to hold out against this system would have its leaders couped out of a job.
It's even worse in the EU. Since no single country controls the Euro, it's possible for EU countries to actually go bankrupt. They can't endlessly inflate their way out of debt, because the EU rules impose government debt limits.
The insight of modern monetary theory is that rule does not apply to government, when debt is in the money issued by that government.
Yes that was one of the arguments I've seen. Feels good! doesn't it. It's wrong, though.
It can be rolled over indefinitely, by issuing more bonds.
Of course it can! Lenders will lend, lend, lend to governments because they know they will get their interest payments.
But the taxpayer is paying, paying, paying interest. When the interest bill rises to 10% or more of Gross Domestic Product, that payment becomes a genuine drag on the economy. Loans are not free. They have a cost. MMT pretends there is no cost. It's bullshit.
Just to show that none of this is new, that the bullshit is old and that people were seeing through the bullshit even then, here is an excerpt from 1983. The source is not important but I'm happy to give it if asked.
"Economists, and those controlling money, have persuaded people and their governments that development necessarily involves the creation of monetary debt. So most development is carried out with loan money, rather than out of income. The result is a piling up of debts, the interest on which, alone, is crippling many nations, while amortisation becomes a rapidly receding possibility, achievable only by inflationary decrease in the real value of the money borrowed. So great have many international debts become that nations are becoming bankrupt, with inflation rates of 100 percent or more. The barter system of the world, through money, is in danger of complete collapse, rather as happened in Germany after World War I. With governments as with individuals, there is something fundamentally unsound about spending much more than income, for it is impossible to be absolutely sure that a development will generate the expected increase in income."