Australian Politics Forum - Modern Monetary Theory (MMT)

Bobby. Gold Member Offline Australian Politics Posts: 114543 Melbourne Gender:	Re: Modern Monetary Theory (MMT) Reply #1335 - Yesterday at 11:36am MMT doesn't work so now they are after our Super:
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Bobby. Gold Member Offline Australian Politics Posts: 114543 Melbourne Gender:	Re: Modern Monetary Theory (MMT) Reply #1336 - Yesterday at 7:29pm MMT means we have no real jobs - 9 out of 10 jobs are in the Public Service now - otherwise unemployment would be sky high.
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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1337 - Today at 10:31am

Bobby. wrote Yesterday at 11:36am:

MMT doesn't work so now they are after our Super:

Your error: MMT is currently rejected by Neoclassical economists, bureaucrats and politicians in charge of national and global governance.

Hence the political chaos in the UK (see the following post).

So politicians who are trying to 'balance the government budget', as per Neoclassical orthodoxy, will certainly try to "come after your super"...

I have already addressed the concerns re free treasury issued money (currently illegal) and inflation, in #1322:

To avoid inflation, an MMT government must ensure the resources needed for vital public services are available for purchase, before issuing the (free) 'public money' needed to purchase them.

I note you still haven't understood the difference between interest-bearing money which is "printed" by central banks, and (free) treasury-created money.

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« Last Edit: Today at 11:30am by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1338 - Today at 10:45am

Political chaos courtesy of the Neoclassical 'balanced government budget' delusion:

https://thenextrecession.wordpress.com/2025/11/26/uk-the-make-or-break-budget/

UK: the ‘make or break’ budget

The UK had an apparently important financial event today. The Labour government’s finance minister (called the Chancellor of the Exchequer, a feudal royal term), Rachel Reeves presented the government’ s tax and spending measures for the year (and years ahead).

It was billed as a ‘make or break’ budget for the Labour government which is languishing badly in the opinion polls – its share of support has halved from an already low election result of 34% in July 2024 when Labour won a landslide of seats. The anti-immigration, pro-Brexit Reform party is now polling near 35%, with the Conservative party also down in the teens.

The Labour government’s 18 months in office has been nothing short of disastrous. First, it launched a series of vicious cuts in welfare spending: dropping the annual winter fuel allowance for pensioners just at a time when energy prices reached an all-time high. Then it announced cuts in benefits for disabled people. And just so another section of vulnerable Britons were not missed, it announced the maintenance of the ‘cap’ on child benefits to families with no more than two children. This meant that any family with more than two kids was badly hit. There are already 4.3m children officially in poverty in the UK and the cap would drive that poverty level to new heights.

PM Starmer and Reeves were wedded to the idea that the government had to fill a ‘fiscal black hole’, namely running an annual deficit of spending over revenue that would drive up the public sector debt, already 100% of GDP.

To stop that rising, the ‘black hole’ had to be filled with tax rises and spending cuts, so that holders of government bonds (banks, pension funds, insurance companies, foreign investors etc) would not sell bonds and/or demand higher interest to buy them. The last government that intended to raise spending and finance it by ‘printing’ money (by the Bank of England) was the ill-fated and very short reign of Conservative PM Liz Truss. The bond market sold off and the pound slumped. Truss and her Chancellor were ousted by their own party within days.

On gaining office, Reeves and Starmer assured the ‘bond vigilantes’ (as the City of London is often called) that Labour would not be spendthrift but instead would close the ‘fiscal gap’ and keep public debt under control. And they did what would appeal to the vigilantes the most: austerity for the poor and subsidies and deregulation for the rich. This was a political disaster and under pressure from their own MPs, the Labour leaders have rowed back on all those cuts. This November budget finished that 180 degree turn by announcing the end of child benefit cap.

However, the problem remained that the government still thought it needed to meet the bond market’s demands. How to fill the ‘fiscal hole’? The trouble is that this hole is imaginary – it’s in the minds of the government and the financial sector; and it varies in size depending on how fast the British economy is growing. The faster it grows, the more tax revenues rise and spending falls on welfare and unemployment benefits.; and so the hole gets smaller. But here’s the rub. The UK economy is stagnating, more or less, in real terms, the only growth is in nominal GDP, in other words, in price inflation. The UK has the highest inflation rate among the top G7 economies. As a result, money lenders have kept their interest rates high in order to maintain their real gains and so small companies and household mortgage holders are suffering badly.

The body that oversees the credibility of government tax and spending measures, the Office for Budget Responsibility (OBR), has finally recognised that the UK economy is crawling along. Having previously optimistically forecast an economic growth rate that was never achieved, the OBR has now reduced its forecast for real GDP growth from 1.8% a year to 1.5% for the next few years. If those new forecasts were right, it would mean that government would not get enough tax revenues to match spending.

But it was not true that welfare spending was ‘out of control’. Welfare spending has held roughly steady as a share of the economy since 2007. Total welfare spending in Britain in 2025-26 is estimated to be 10.8 per cent of GDP. That’s just 0.8 per cent of GDP higher than in 2007-08, and spending has actually fallen fallen by 1.2 per cent of GDP since 2012-13. Nevertheless, big business and the financial sector still demand welfare cuts and oppose tax rises – at least for the rich.

So what has Reeves done? In order to ‘fill the fiscal hole’ to keep government debt from rising, she has not raised taxes on the rich; she has not raised the tax rate for the richest earners; she has not introduced a wealth tax on the super-rich. Instead, she has raised a ‘stealth tax’ on average earners which she admits will “hurt working people. I won’t pretend otherwise.” So the tax burden as a share of national GDP will reach an all-time high by the end of the Labour government’s term of office in 2029 (if it lasts that long).

Re the underlined: none of that nonsense would happen under MMT; the "printing money" by the BoE would be replaced with free money "printed" by Treasury, no bonds involved.

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« Last Edit: Today at 11:10am by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1339 - Today at 10:58am

Bobby. wrote Yesterday at 7:29pm:

MMT means we have no real jobs -
9 out of 10 jobs are in the Public Service now -
otherwise unemployment would be sky high.

https://m3.gab.com/media_attachments/a8/84/ba/a884ba766a80bded646b9b9ffc8294bf.p...

Again, courtesy of Neoclassical economics.

The post-Keynesian privatization ideology in place since the 80s has failed, hence governments once again have to create jobs outside of the private sector.

The US is about the only economy where an AI boom is growing the economy (though the benefits mainly accrue to billionaires); all other 1st world economies are moribund like the UK (detailed in the previous post) partly because China - the "world's factory" - reigns over the production of consumer goods, a feat achieved under WTO "freetrade" rules.

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« Last Edit: Today at 11:08am by thegreatdivide »

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Bobby.

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Re: Modern Monetary Theory (MMT)
Reply #1340 - Today at 12:47pm

thegreatdivide wrote Today at 10:31am:

Bobby. wrote Yesterday at 11:36am:

MMT doesn't work so now they are after our Super:

Your error: MMT is currently rejected by Neoclassical economists, bureaucrats and politicians in charge of national and global governance.

Hence the political chaos in the UK (see the following post).

So politicians who are trying to 'balance the government budget', as per Neoclassical orthodoxy, will certainly try to "come after your super"...

I have already addressed the concerns re free treasury issued money (currently illegal) and inflation, in #1322:

To avoid inflation, an MMT government must ensure the resources needed for vital public services are available for purchase, before issuing the (free) 'public money' needed to purchase them.

I note you still haven't understood the difference between interest-bearing money which is "printed" by central banks, and (free) treasury-created money.

Nahh - MMT is all about printing funny money -

in this case Albo is creating fake jobs with borrowed money
that has been printed by the traitorous RBA.

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1341 - Today at 1:09pm

Bobby. wrote Today at 12:47pm:

thegreatdivide wrote Today at 10:31am:

Bobby. wrote Yesterday at 11:36am:

MMT doesn't work so now they are after our Super:

Your error: MMT is currently rejected by Neoclassical economists, bureaucrats and politicians in charge of national and global governance.

Hence the political chaos in the UK (see the following post).

So politicians who are trying to 'balance the government budget', as per Neoclassical orthodoxy, will certainly try to "come after your super"...

I have already addressed the concerns re free treasury issued money (currently illegal) and inflation, in #1322:

To avoid inflation, an MMT government must ensure the resources needed for vital public services are available for purchase, before issuing the (free) 'public money' needed to purchase them.

I note you still haven't understood the difference between interest-bearing money which is "printed" by central banks, and (free) treasury-created money.

Nahh - MMT is all about printing funny money -

Oh - you are back to your uncomprehending narrative re 'funny money'.

I have explained to you many times already, ALL money is 'funny money' ie created out of thin air.

The real question is: should the private sector or the public sector manage its distribution....

If you are a 'survival of the fittest', private enterprise, free market ideologue, your choice will be obvious.

I prefer a productive combination of central planning and private enterprise, as already noted in #1322.

Quote:

in this case Albo is creating fake jobs with borrowed money
that has been printed by the traitorous RBA.

Jobs in the public-sector caring industries are not "fake jobs", regardless of how government funds them.

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Bobby. Gold Member Offline Australian Politics Posts: 114543 Melbourne Gender:	Re: Modern Monetary Theory (MMT) Reply #1342 - Today at 2:42pm Here's a good one for TGD:
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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1343 - Today at 6:12pm

Bobby. wrote Today at 2:42pm:

Here's a good one for TGD:

I didn't have to waste too much time; JM Keynes (who died in 1946) was responsible for the very successful, post-WW2 'welfare state' era which saw governments funding social programs (eg, hospitals and housing) via deficit spending, for the first time.

Unfortunately, the 'stagflation' which arose during the Arab oil embargo couldn't be cured by Keynes' deficit spending policies (which would normally counter recessions), so economists who instinctively disliked public sector spending saw their chance, and reverted to pre Great Depression private sector economics - hence the arrival of Neoclassical economics which is devastating the world today.

https://www.gresham.ac.uk/watch-now/oil-shock

The oil shocks of 1973 and 1979 led to international disruption and a crisis in the post-war order. Domestically, weaker productivity growth, the squeeze on profits, and de-industrialisation led to conflict between capital and labour. Public finances came under strain and led to major changes associated with Thatcher and Reagan. The result was an intellectual revolution: a shift to neo-liberalism** with a stress on individualism and incentives rather than collectivism and equality, and greater power for finance. ‘Hyper-globalisation’ now prioritised international over domestic concerns.

**and the delusional economics behind neoliberalism , namely Neoclassicism.

I could tell where the video's narrator was going as soon as he mentioned 'Keynes' and 'massive debt' in the same sentence; indeed debt is now reaching catastrophic proportions around the globe and is forcing governments into 'austerity' which will destabilize democracy itself.

Yet the post-WW2 Keynesian period (1946-1970)was the most successful for capitalism in history....until the price of oil quadrupled in the 70's because the Arabs were angry with Israel, and the 'sleeping giant' Asia, at the same time, roused itself out of the ashes of WW2 and beat the Western capitalists at their own game until, finally, China became 'the world's factory'.

Trump is very displeased....

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« Last Edit: Today at 6:25pm by thegreatdivide »

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