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Modern Monetary Theory (MMT) (Read 181696 times)
thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #1560 - Oct 26th, 2026 at 4:43pm
 
From Prof. Michael Roberts' blog:

France’s pouvoir d’achat crisis  ("purchasing power crisis")

(excerpt) 

The recent high school and student protests in France have a simple objective: to get more resources for education.  France’s education crisis is defined by severe teacher shortages, deteriorating student outcomes, and massive funding deficits spanning primary schools to public universities. State education in France is among the most unequal in the developed world: schools in poorer areas are so under-resourced that the education system is cementing inequality. Students from the poorest neighbourhoods are disproportionately hard hit by staff shortages.

French students have experienced a catastrophic and unprecedented 20% drop in the education budget per student since 2017.  As French leftist economist Thomas Piketty put it: “The government, in bad faith, sometimes boasts that the nominal budget for higher education rose from €13.3 billion to €15.5 billion between 2017 and 2026 (+17%). That is true, except that inflation over the same period was 22%, meaning the budget actually fell by 5% in real terms. Add to this that the number of students rose from 2.6 million to over 3 million, an increase of 15%. The result is that the budget per student dropped by about 20%”. https://lucaschancel.com/etudiants/.

Research by the economist Asma Benhenda, based on payroll data from the French national education system, shows that the proportion of contract or beginning teachers in privileged areas like Paris or Hauts-de-Seine is just 10%. That figure rises to 50% in poorer departments, like Seine-Saint-Denis and Val-de-Marne, around the capital. The average salary per secondary school teacher is about 20% lower in the poorest areas than in the wealthiest, even after taking into account the (meager) bonuses awarded for priority education.

French teachers’ salaries consistently fall below the average for advanced economies (OECD). A French teacher with 15 years’ experience earns less than €40,000, 20% below average. Early-career teachers in Germany earn twice as much as their French counterparts. Yet French teachers have to cope with longer hours of teaching and some of the worst pupil-teacher ratios in Europe. As a result, record numbers are leaving the profession.

To plug staffing gaps, the government launched a scheme in 2022 to recruit “contract” teachers (as opposed to the standard tenure system, under which they count as fonctionnaires or civil servants). They were given four days’ training, despite often having no previous teaching experience. Predictably many quit within six months, owing to lack of adequate training or supervision.

It is not just teachers who are leaving. With a dearth of supervisors, careers advisers, school doctors and nurses, among others, it is virtually impossible to deliver the school support services pupils need. The independent defender of rights for France, Claire Hédon, warned last year that the shortage of qualified staff and suitable facilities meant that almost a quarter of all disabled children never go to school at all.

No wonder then that, as state schools slowly disintegrate, more prosperous families are turning to private education. Few government ministers have any direct experience of the state school system as many go to posh private schools. Yet these fee-paying schools also receive public funding.  Meanwhile French public universities are grappling with with an estimated €8 billion shortfall, which has pushed nearly all 75 public institutions into deficit budgets.

Christine Renon, the head of an infant school in Seine-Saint-Denis, died by suicide at her workplace in 2019. According to a letter she had sent to the school management board, she was “exhausted”. She went on to detail the deficiencies and inadequate resources of an organisation that had been left to rot. This tragedy should have shocked the authorities into a profound reappraisal. Macron pledged to make education a priority for his second presidential term.  But nothing has changed for the better, only for the worse.

It’s education that primarily worries students and teachers (and parents) in France, But education is just one aspect of the deterioration of basic public services in France. France used to have a healthcare system that was the envy of the world, let alone Europe.  Spending was high at 11.5% of annual GDP. As a result, life expectancy was much higher than the EU average.  But over the last few decades, government healthcare spending has been cut back well below the increased demand for health service as French people get older and subsuequently need health support. Before 2008, health spending was rising at 0.3% of GDP a year.  Since 2009, the rate of health spending growth has halved to just 0.17% of GDP a year.  And yet the share of over 65s in France has risen 40% over the same period, or more than ten times the rise in health spending.  As a result, life expectancy has virtually stopped rising. (at the bottom in figure below).[i]

Just as in all the major capitalist economies, The cost of living for the average French household has risen sharply, especially since the end of the pandemic slump that saw a significant inflation spike, and now more recently compounded by the energy shortages from the ongoing Iran war.



cont. reading at link

https://thenextrecession.wordpress.com/2026/10/23/frances-pouvoir-dachat-crisis/






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thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #1561 - Oct 27th, 2026 at 9:52am
 
https://www.ipsos.com/en-uk/share-britons-backing-personal-tax-cuts-grows-partic...

Share of Britons backing personal tax cuts grows, particularly among Conservative and Reform voters

.....

See how 'government austerity' (as per Neoclassical economics) pits 'conservative' taxpayers against 'progressive' taxpayers; no wonder social cohesion in the democracies is fraying. 

The solution:

https://publicmoneypublicgood.net/

Note: public money, not 'taxpayer' money.
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tallowood
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PostModern Monetary Theory (PMMT)
Reply #1562 - Oct 27th, 2026 at 9:57am
 
What is postmodern monetary theory?
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thegreatdivide
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Re: PostModern Monetary Theory (PMMT)
Reply #1563 - Oct 29th, 2026 at 10:31am
 
tallowood wrote on Oct 27th, 2026 at 9:57am:
What is postmodern monetary theory?



Isn't it just another term for MMT, or 'modern money'?

Let's ask AI the question: what is postmodern monetary theory:

(google AI)

Postmodern Monetary Theory

• From Material to "Ideational" Money:

Traditional money tied to gold or physical commodity has vanished ("destuffation of money"), replaced by electronic ledgers, derivatives, and abstract symbols.

• Post-Modern Money Theory (PMMT):

Some economic theorists build on this by arguing that modern fiat banknotes are neither simple material objects nor traditional state debt (IOUs), but "ideational" or symbolic money sustained by social habit, trust, and future expectations.

• The Intersection with Modern Monetary Theory (MMT):

Critics and commentators often link postmodern dismissal of hard fiscal limits to Modern Monetary Theory (MMT)—a heterodox framework arguing that currency-issuing states are not revenue-constrained like households. Critics label extreme versions of MMT as "postmodern monetary theory" when they view multi-trillion-dollar spending programs as detached from traditional scarcity.

• Decentralization vs. State Sovereignty:

Postmodern monetary spaces split between decentralized cryptocurrencies (representing free-market networks) and Central Bank Digital Currencies (CBDCs) (representing reasserted state monetary sovereignty).


....

Admittedly there are disputes within the MMT community; eg, many MMTers posit taxation as a method of inflation control.

But I prefer government  intervention in the free market economy, via price controls and direct management of resource 'scarcity', to ensure delivery of essentials for all regardless of income, while maintaining zero public interest rates,  and full employment regardless of market conditions.

Not the same as the failed Soviet "command economy", but rather management of a 'capitallist' private sector by a 'socialist' govenment (public sector) authorized to issue its own currency without taxing or borrowing from the private sector. 

Thus demoting the 'independent' central bank to a clearing house for private banks, not in charge of inflation control in the macro economy; the outrage among many groups (borrowers) will be massive if the RBA increases rates again, because delusional  mainstrean Neoclassical economists insist 'there is no alternative' to 'austerity' economics.


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Re: Modern Monetary Theory (MMT)
Reply #1564 - Oct 29th, 2026 at 3:31pm
 



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thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #1565 - Oct 29th, 2026 at 3:59pm
 
https://email.telstra.com/app/mail/inbox/eyJNZXNzYWdlIjoiZXlKTllXbHNZbTk0SWpvaVp...

From Prof. Steve Keen:

The Theoretical Lie that Government Debt is Dangerous

Supporting the French protests against austerity with logic and accounting.

(excerpt)

Figure 22: A government deficit increases the money supply and GDP.

This is the exact opposite of what economics textbooks teach: they claim that a government deficit reduces the amount of money that the private sector has. So the mainstream view starts out as the exact opposite of the truth. The obsession with reducing the government deficit actually reduces the capacity of the economy to grow.

And the actions undertaken to reduce the deficit, such as running down the education system, mean that France has less well-educated people to cope with the challenges of the future. Just when France will need scientists and engineers to address the challenges of global warming, France is shutting down science classes to reduce the deficit.

(.....)

It might not look like I’ve covered the issue of government debt in this extremely simple model, but I have: the deficit pushes the Treasury’s account at the Central Bank into overdraft, and that is a form of debt. But it’s nothing like an overdraft for a private entity.

Direct sales of government bonds to the Central Bank are banned in most of the world, and not just the Eurozone. But these bans have been drafted by people who don’t understand the monetary system.

There is nothing in the accounting which prevents these sales, and if they take place, then government debt remains entirely within the government system. How then can it be a problem?

The real problem is that people who don’t understand money are in charge of the monetary system. If the French revolt is going to overcome the real problems France has, then it has to overthrow these false models of money as well. They are the real source of the decline in the quality of the French educational system.

In the next post in this series, I’ll show how the current system, which forces the Treasury to sell bonds to the private sector, is actually the worst possible way of managing government spending.




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Re: Modern Monetary Theory (MMT)
Reply #1566 - Oct 29th, 2026 at 4:07pm
 
Does bitcoin fit in MMT?

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Re: Modern Monetary Theory (MMT)
Reply #1567 - Oct 29th, 2026 at 4:10pm
 
tallowood wrote on Oct 29th, 2026 at 3:31pm:




At least he's honest: "I  know nothing about macroeconomics but this is what I've picked up from people much smarter than me...."

Can you indentify his argument?
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Re: Modern Monetary Theory (MMT)
Reply #1568 - Oct 29th, 2026 at 4:15pm
 
tallowood wrote on Oct 29th, 2026 at 4:07pm:
Does bitcoin fit in MMT?



No; bitcoin's value is based on a  ponzi scheme.

Whereas the value of post gold standard fiat money is based on the value of a nation's productive capacity; ie exploitation of the nation's real resources, to produce desired goods and services.



 
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Re: Modern Monetary Theory (MMT)
Reply #1569 - Oct 30th, 2026 at 11:49am
 
(Noting Tallowood is a Libertarian enquring about 'post modern monetary theory').

In #1653, AI told us:

"Critics and commentators often link postmodern dismissal of hard fiscal limits to Modern Monetary Theory (MMT)—a heterodox framework arguing that currency-issuing states are not revenue-constrained like households.

Critics label extreme versions of MMT as "postmodern monetary theory" when they view multi-trillion-dollar spending programs as detached from traditional scarcity."

........

"Extreme versions of MMT"?

1. MMT does indeed dismiss "hard" monetary (ie, "fiscal")  limits for currency-issuing governments; but the spending must be useful and productive, otherwise scarce resources  will be wasted.

2.  Hence desirable "multi-trillion-dollar spending programs" which are manifested via necessary resource mobilization are limited by the real resources available for purchase by the government , as opposed to being "detached from traditional scarcity" - a term which implies monetary scarcity as per Neoclassical "austerity" economics. 

.........

Re AI, this observation from 'The Conversation':

Recently, the Financial Times speculated generative AI might facilitate a planned economy: it could, the paper suggested, overcome the complexity that neoliberal economists Ludwig von Mises and Friedrich von Hayek once claimed made socialism unworkable.

Could there be a better illustration of how the abstract potential of a technology reveals little about its real-world deployment?

The Financial Times might be correct that AI could, in theory, benevolently guide the distribution of resources so each contributes according to their ability and receives according to their need. Yet no one thinks OpenAI will use its bags of tricks to facilitate socialist planning.

The function of AI cannot, in other words, be separated from the social order in which it emerges.


.....

The future is in our hands; nations can CHOOSE to "facilitate
socialist planning" aided by AI; China already being a possible example - though China, internationally,  is supporting dysfunctional Neoclassical "comparative advantage"  under 'free trade' WTO rules, because it became  wealthy following those rules (...and now Trump is fighting back...).      




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Re: Modern Monetary Theory (MMT)
Reply #1570 - Oct 30th, 2026 at 11:57am
 
Why do we have financial crisis if all economy experts so smart or are they?

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Re: Modern Monetary Theory (MMT)
Reply #1571 - Oct 30th, 2026 at 12:14pm
 
tallowood wrote on Oct 30th, 2026 at 11:57am:
Why do we have financial crisis if all economy experts so smart or are they?



1. Most mainstream economic experts are deluded by Neoclassical scarcity dogma;  a few heterodox economists predicted the GFC.

2. eg Neeclassical economists dismiss the role of excessive  private debt in financial crises - note:  the GFC resulted from the false assumptions of ever-increasing house prices, facilitated by loans from 'banksters'.... ).




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Re: Modern Monetary Theory (MMT)
Reply #1572 - Oct 30th, 2026 at 12:20pm
 
Yes. I have to admit they are neo classical.
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AIMLESS EXTENTION OF KNOWLEDGE HOWEVER, WHICH IS WHAT I THINK YOU REALLY MEAN BY THE TERM 'CURIOSITY', IS MERELY INEFFICIENCY. I AM DESIGNED TO AVOID INEFFICIENCY.
 
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thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #1573 - Oct 30th, 2026 at 12:30pm
 
Elon Musk's view of (monetary) "scarcity":

Elon Musk says long-term saving is 'pointless' as he touts a future of abundance

Elon Musk says it's "pointless" to save for the long term, as he expects "super intelligent abundance."
The Tesla and SpaceX CEO was replying to an X user who said they'd stopped stressing about spending.
Musk previously said that if he's right about the future, "saving for retirement will be irrelevant."
Elon Musk says it's not worth saving for the long term, as nest eggs won't matter.

"Saving money for the distant future is pointless with the advent of super intelligent abundance," Musk said in an X post on Thursday, doubling down on one of his most polarizing predictions.

The Tesla and SpaceX CEO was replying to a user who said they weren't stressing over their "questionable financial decisions" because a future of abundance meant "most of it won't matter in a few years anyway."

The world's richest person — who has a nearly $1 trillion net worth — has previously advised against saving for decades to come.

"Don't worry about squirreling money away for retirement in 10 or 20 years," Musk said during a podcast episode released in January. "It won't matter."

"If any of the things that we've said are true, saving for retirement will be irrelevant," he added.

Musk said at the time that he expects progress in AI, energy, and robotics to supercharge productivity, resulting in plentiful resources so that "anyone can have whatever stuff they want."

In that world, he continued, everyone would have access to "better medical care than anyone has today," there would be "no scarcity of goods and services," and "you can learn anything you want about anything for free."

Business Insider spoke to seven personal finance and AI experts about those comments, and they all agreed people should keep saving for retirement given the risk that Musk may be wrong.

Musk laid out an even more utopian vision on a recent podcast, predicting that advances in robotics and space travel would lead to a multiplanetary economy, at which point "money becomes irrelevant" and "conventional currency will not matter."

Several other tech leaders have predicted AI and other technologies will transform the way we live.

Microsoft cofounder Bill Gates said on a recent podcast episode that AI will lead to "true abundance" with robots able to "build houses, grow food, do surgery."

But he also warned the next two decades will be "as tumultuous a period as there's been in human history," as technological advances will mean "none of the things that human labor provides to the economy will be necessary for most goods and services."

Similarly, Musk has predicted a "bumpy" transition to a brighter future. He's suggested government checks for all as the best solution to AI-fueled job destruction.


The brave new world of "free money"?

1. Does Musk know money is created out of thin air?

2. If so,  why did he condemm Trump's 'Big Beautiful Bill' because (so Musk believed) it would increase US debt - or rather, why did Musk think increasing US debt is a bad thing? 

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Re: Modern Monetary Theory (MMT)
Reply #1574 - Yesterday at 9:20am
 
The consequences of mainstream Neoclassical 'austerity' orthodoxy:

(The Daily Mail)

France is 'going to the wall' warns Macron's finance minister as nation faces recession and disorder.

(excerpt)

The national statistics office, Insee, calculated that gross domestic product – a key yardstick of a country's economic health – shrank by 0.1 per cent in the third quarter.

That spelled bad news for the government amid deepening concerns about public finances and growing political tensions ahead of presidential elections next spring.

The French economy had already stagnated in the second quarter after shrinking by 0.2 per cent in the first.


.....

So why doesn't France's government properly fund public housing, education and health, thus avoiding public unrest?

Answer: the Finance Minister thinks he has to balance the government budget like households must do.

Meanwhile inequality is soaring, as private wealth for the few  soars.   

Deplorable.

What happened to 'liberty, fraternity, equality'......

........


Meanwhile,  apparently inflation in Oz is high "because of the economy's incapacity to meet demand for goods and services". 

Nonsense: Oz has the resources to deliver the essentials for all, without causing inflation. 


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