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Modern Monetary Theory (MMT) (Read 86874 times)
thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #885 - Apr 18th, 2024 at 1:29pm
 
Jim Lahey wrote on Feb 27th, 2022 at 4:58pm:
Hello Shill.

Do your censors let you read that?


I don't have any internet "censors"**, just as HK and Macau residents don't.  The topic is MMT - which is known in China, but resisted by orthodox neoclassical Western-trained economists in the PBofC.


**Whereas Trump was booted-off Twitter....
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thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #886 - Apr 18th, 2024 at 8:34pm
 
The Oz treasurer is in Washington with other financial leaders; at least he is prepared to stand up to the "free-market knows best" high priests including  officials in the Productivity Commission.

In an interview with  the ABC's Sarah Ferguson, he pointed out that many countries are now pursuing interventionist industrial policies like Labor's "Made in Australia", given the global push to zero emissions by 2050.

"The markets are good servants, but bad masters, and a worse religion."

O course the most egeregious market failure in Oz currently is the housing crisis. 
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thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #887 - Apr 22nd, 2024 at 9:40am
 
An explanation of the intricacies and faults in Oz's student debt program.

A debt program which only exists because people erroneously think the currency-issuing government needs to tax its citizens, to raise revenue.


https://theconversation.com/biden-is-cancelling-millions-of-student-debts-heres-...


"So weighed down have Americans become by student debt, and so potent a political issue has it become in the US, that President Biden plans to waive interest or write off money owing by 30 million of them.

He is doing it bit by bit, in the face of resistance from the US Supreme Court. He has already axed or wound back 4.3 million debts, and on Friday cancelled 277,000 more.

The benefits, as he keeps telling anyone who will listen in the lead-up to the November election, are likely to be increased consumer spending, better mental health and credit scores for borrowers, and increased home ownership.


Meanwhile, back in Oz:


"Britain and other nations that copied Australia’s system don’t impose large repayments in one hit, and the economist who designed Australia’s system now says that part of the system was “an error, a mistake”.

That economist, Bruce Chapman, has suggested a redesign that would require collections only on extra rather than total incomes, a proposal the report to the government endorses."



Sad thing is - once the education infrastructure has been built and teachers have been trained, the only resources 'consumed' in education are the time and mental effort of teachers and students, which is free like sunshine and wind - a free renewable resource for the currency-issuing government.     
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« Last Edit: Apr 22nd, 2024 at 12:03pm by thegreatdivide »  
 
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Re: Modern Monetary Theory (MMT)
Reply #888 - Apr 23rd, 2024 at 10:02am
 
To recap, the three main axioms of MMT:

1. A sovereign currency-issuing government faces no purely financial constraints (unlike households who are USERS of the currency).

2. Such a government faces a resources and productive capacity restraint. 

3.  The public sector's deficit is the private sector's surplus.

[Note: if a nation cannot produce all its own vital  resources locally  (eg, food and energy, medicines), it will need to be able to earn sufficient foreign exchange (to pay for imports) by exporting sufficient of what other nations want, to maintain currency sovereignty].
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thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #889 - Apr 24th, 2024 at 11:31am
 
The 'Dismal Science' , despite an abundance of resources....and "over-capacity" in China:

(Sky News)

Calls for Albanese govt to adopt spending constraint in Budget

There are calls for the government to adopt a spending constraint in this year’s federal Budget.

According to Nine Newspapers, some economists (sic) believe Labor’s Budget should be contractionary and take money out of the economy.

This is in a bid to help the Reserve Bank maintain its inflation target.

This quarter’s inflation figures are expected to be around the 3.5 per cent mark.

It could see the RBA hold off on an interest rate cut until early next year.



.........

And yet:

(Sky News)

"Grim Jim has nothing for you in the budget" (because he thinks the government's budget has to be in surplus to pay down debt).

Labor will not cut petrol taxes, to ensure 'budget' surplus'

Sky News host Paul Murray says with a federal budget surplus the government could cut petrol taxes, but they choose not to because that’s how they keep the surplus.

But of course, if it's a surplus, it is a surplus that means the government has more money than they can spend,” Mr Murray said.

“They could cut petrol taxes, but of course, they choose not to because that's how they're going to get to a budget surplus.”

Treasurer Jim Chalmers said in terms of the fiscal strategy, they are aiming for a second surplus.

The first surplus last year, the first in 15 years, was an important way to put downward pressure on inflation, Mr Chalmers said.


Endless confusion among the talking heads steeped in 'The Dismal Science".


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thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #890 - Apr 25th, 2024 at 1:04pm
 
https://billmitchell.org/blog/?p=61692

IMF now claiming that Japan has to inflict austerity when the government’s current policy settings are maintaining stability

It was only a matter of time I suppose but the IMF is now focusing its nonsensical ‘growth friendly austerity’ mantra on Japan. In a recent interview, the former Portuguese Finance Minister now in charge of the IMF’s so-called ‘Fiscal Affairs Department’, Vitor Gaspar claimed that Japan is now in a precarious position and must start to impose austerity. Recall last week that I concluded that
– The IMF has outlived its usefulness – by about 50 years
(April 15, 2024). The current interventions from senior officials such as Gaspar only serve to reinforce that assessment. The problem is that they are still able to command a platform and a significant number of people in policy making circles actually believe what they say. It would be a much better world if the IMF and its toxic ideology and praxis just disappeared off the face of the Earth. Then we could send all the highly educated officials to thought reassignment camps to allow their considerable intellectual capacity to search for cures to cancer or whatever.


Yes....evidence of mainstream 'group-think' on a massive scale.

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thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #891 - Apr 26th, 2024 at 2:12pm
 
Alan Kohler reverting to form, as a private sector investment advisor: 

https://www.thenewdaily.com.au/finance/2024/04/01/alan-kohler-monetary-theory

Alan Kohler: Modern Monetary Theory has become modern fiscal practice

"A few years ago everybody was talking about Modern Monetary Theory, both ardently for and scornfully against, but nobody was doing it.

Now everybody is doing it but hardly anybody is talking about it, apart from American economist Stephanie Kelton, promoting a film on the subject.

Doing what, exactly? Governments are showing by their deeds that deficits and debt don’t matter."


The problem - apart from the fact "hardly  anybody is talking about (MMT)"?

Kohler continues:

The combination of increased retirement support and health care spending with a shrinking working age population paying taxes means that balanced budgets are now politically too hard – the only way a government can hope to get re-elected is to kick the can down the road and just not talk about it.

Well of course MMT shows currency-issuing governments don't NEED to tax or borrow (they need to 'balance' resource distribution, and avoid inflation).

Kohler concludes in self-interest-driven, free-market private sector mode:

"Modern Monetary Theory does not represent permission to print money to fund government spending as a lot of people think, it’s just a description of the way government finances work, which is that government spending takes place before tax revenue is collected (from that spending to begin with), and the only constraint on the spending is inflation.

And that, it turns out, is the way things are working.


Obviously not working for everyone, Alan Sad

That's why we MUST grant the said "permission", then introduce a JG and a ZIRP, and manage inflation with price controls (and in the last resort, rationing) in cases of supply failure. 

To avoid having to raise taxes or interest rates (which hurt different people differently),  when funding spending or controlling inflation, as current orthodoxy sees it. 
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« Last Edit: Apr 26th, 2024 at 2:20pm by thegreatdivide »  
 
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thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #892 - Apr 28th, 2024 at 11:37am
 
On the Job Guarantee as price anchor (inflation control) in MMT.

1. Replaces neoclassical orthodoxy's inflation control aka the NAIRU (non-accelerating inflation rate of unemployment), with the Job Guarantee's price anchor aka the NAIBER (non-accelerating inflation buffer employment ratio ). 

2. The buffer employment pool is a variable employment pool which expands or contracts depending on the state of the economy.

3. In the NAIRU system, unemployment is deliberately engineered by the Reserve Bank to reduce demand and hence reduce inflation in the economy.

4. In the NAIBER system, employment is shifted from the inflating section of the economy to the buffer employment pool which is paid at the minimum wage in the economy, ie acting as the price anchor.
.........

MMT economists have differing views on economic management.

My own view (being a Marxist) is that the inflation fighting tools used by mainstream free-market central bankers, ie lifting interest rates to cool demand, should be replaced with price controls (and rationing if necessary in cases of supply-chain failure).

Some MMT economists regard taxation a tool to control inflation (of course all MMTers know currency-issuing governments don't need to tax - or borrow -  in order to fund governement spending, MMTers assign other functions to taxation). 

I prefer to eliminate taxation (except to discourage unhealthy consumption, eg grog and tobacco) in a zero interest rate, no tax scenario, using price controls and rationing as outlined above, to ensure "an economy which works for all"  (whereas  raising taxes and/or interest rates to control inflation hurts different people in different ways).

Note: free market economies CANNOT create an economy which works for all, there are always winners and losers.

Our goal is shared, sustainable prosperity, in a ZIRP, JG economy with minimal taxation  and directly limited inflation (via price controls and rationing as outlined above).

Note: economist Isabella  Weber caused a stir when she proposed price controls as an inflation control tool, but the idea has gained recognition in the mainstream

https://www.theguardian.com/business/commentisfree/2021/dec/29/inflation-price-c...

Could strategic price controls help fight inflation?

And if AGW climate scientists are correct, then the World Bank will have to create money out of thin air to fund the green transition in poor countries , since rich countries have failed to deliver on their promised $100 billion  annual transfer to poor countries....






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thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #893 - May 1st, 2024 at 11:27am
 
The 'efficiency' of the free market...oops....

https://thenextrecession.wordpress.com/2024/04/30/inclusive-economics-and-the-im...

Inclusive economics and the IMF

The great and the good have just finished attending a special World Economic Forum in Riyadh, Saudi Arabia.  The theme of the conference for the over 1000 delegates from corporations, governments and international agencies was global cooperation and inclusive growth.  In other words, how to reverse the growing international trade wars and rising inequality of income and wealth with policies of cooperation and inclusive economic measures.

There was a certain irony about all these attendees discussing ‘inclusive’ economic policies in Saudi Arabia, infamous for its discrimination and exclusion of women, gays and exploitation of its immigrant population that does most of the labour in the country. Nevertheless, the leaders of the IMF and the World Bank were there in force to promote their new tack of a ‘compact for inclusive growth’.  The aim is to ‘reverse’ what they think is only a recent trend towards greater inequality of income and wealth globally.

  : The richest 1% own almost half the world's wealth, while the poorest half owns just 0.75%.

  : 81 billionaires have more wealth than 50% of the world combined, with only 4 cents in every dollar of global tax revenue coming from wealth taxes.

  : Extreme wealth wealth and extreme poverty have seen a sharp simultaneous increase.   


IMF leader, Kristalina Georgieva was there to press for policies that will boost global collaboration and reduce economic inequality – seemingly a switch by the IMF from competition, labour ‘flexibility’ and fiscal ‘prudence’ which have been the watchwords of IMF economic policy for decades.

It would seem that the IMF is a changed body.  Recently it even promoted an article by Nobel prize winner, Angus Deaton, who has been exposing the growing inequalities of income and social mobility in his books and papers.  In a piece, called Rethinking my economics, Deaton gave us his mea culpa on the changes in his own views.

Deaton reckoned that mainstream economics (and by implication the IMF, the World Bank and the World Economic Forum) “are in some disarray. We did not collectively predict the financial crisis and, worse still, we may have contributed to it through an overenthusiastic belief in the efficacy of markets, especially financial markets whose structure and implications we understood less well than we thought.”  So ‘free markets’ are not as efficacious as claimed and crises cannot be avoided.

Deaton admitted that “I have recently found myself changing my mind, a discomfiting process for someone who has been a practising economist for more than half a century.”  You see, the “emphasis on the virtues of free, competitive markets and exogenous technical change can distract us from the importance of power in setting prices and wages, in choosing the direction of technical change, and in influencing politics to change the rules of the game.”

So Deaton has had an epiphany.  He now finds that it is the power of capital and its attempt to exploit labour that is the driving force in economies, not technical efficiency or ‘free and fair’ markets. Apparently, at some point in time, not defined by him, “social justice became subservient to markets, and a concern with distribution was overruled by attention to the average, often nonsensically described as the “national interest’.”

This brings us back to the reality of IMF and World Bank policies against the rhetoric of inclusive economics.  The IMF claims it now cares about the negative consequences of fiscal austerity, often citing how social spending should be protected from cuts through conditions that stipulate spending floors. Yet, an Oxfam analysis of seventeen recent IMF programs found that for every $1 the IMF encouraged these countries to spend on social protection, it told them to cut $4 through austerity measures. The analysis concluded that social spending floors were “deeply inadequate, inconsistent, opaque, and ultimately failing.”


......

Billionaires aren't paying enough tax?

Time for the no tax system outlined in the previous post...
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Re: Modern Monetary Theory (MMT)
Reply #894 - May 1st, 2024 at 1:15pm
 
And....

"The Natural Rate of Interest Is Zero"

Mathew Forstater and Warren Mosler.

https://moslereconomics.com/wp-content/graphs/2009/07/natural-rate-is-zero.PDF




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thegreatdivide
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Re: Modern Monetary Theory (MMT)
Reply #895 - May 1st, 2024 at 4:50pm
 
freediver wrote on Mar 31st, 2022 at 6:10pm:
TGD believes that the government can print food to provide a wage guarantee, food, housing, and a bunch of other stuff, without causing inflation.


Wrong; obviously a currency-issuing government (but not Oz state governments which are USERS of the currency) is not purely financially constrained and can never 'run out' of money; whereas the government  CAN run out of "food" (eg, in a famine, and without sufficient foreign exchange to import food).

Oz normally has all the resources it needs to "to provide a wage - ie a job - guarantee, food, housing, and a bunch of other (essential) stuff, without causing inflation" - because it can supply all those things (we are talking about the essentials) without creating excess demand on available resources ie without causing inflation.

Quote:
He has latched onto MMT in a desperate effort to give credibility to his crazy ideas.


Funny how commonsense eludes deluded ideologues like FD.

If a nation has sufficient resources to satisfy basic needs for all (including employment), then - it can do it.
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Re: Modern Monetary Theory (MMT)
Reply #896 - May 3rd, 2024 at 10:43am
 
Even these mainstream neoclassical economists recognize the IMF and World Bank are no longer able to deal with the economic problems facing the globe.

(Larry Summers is the goon who said  - 2 years ago - unemployment in the US would have to be increased to 10% for a year, to bring inflation down to 2-3%.)

https://www.project-syndicate.org/commentary/imf-world-bank-spring-meetings-need...
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Re: Modern Monetary Theory (MMT)
Reply #897 - May 3rd, 2024 at 10:52am
 
thegreatdivide wrote on May 3rd, 2024 at 10:43am:
Even these mainstream neoclassical economists recognize the IMF and World Bank are no longer able to deal with the economic problems facing the globe.

(Larry Summers is the goon who said  - 2 years ago - unemployment in the US would have to be increased to 10% for a year, to bring inflation down to 2-3%.)

https://www.project-syndicate.org/commentary/imf-world-bank-spring-meetings-need...

History Repeats Itself As Communists Run Out Of Food


COLUMBIA UNIVERSITY — History has again repeated itself as communism once again devolved into mass starvation. The commies at Columbia University lasted less than twelve hours before running out of food and pleading for humanitarian aid, setting a new record for the collapse of communist food supply.

"Okay, time-out on the intifada revolution, we're out of pizza rolls," said Tara Gentry-Smith, protest organizer and self-proclaimed commie. "I'm going to go see if the people we just assaulted will send us some DoorDash. Ugh, why are we always running out of food?"

Communist protestors had barricaded themselves in buildings over the weekend and soon realized they had no means of production to feed themselves. Activists tried to enact communal ownership of the snacks they did have, but supplies ran out quickly.

"Man, why didn't we take over the food court?" lamented protestor Drake Jones. "I'm so hungry. I haven't had Chipotle in almost eight hours now! Still, I bet the people of Gaza are inspired by our sacrifice."

As of publishing time, the protestors had told onlookers that true communism hadn't been tried and that they were going to start a new, even better collective one building over.

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Re: Modern Monetary Theory (MMT)
Reply #898 - May 3rd, 2024 at 12:30pm
 
Frank wrote on May 3rd, 2024 at 10:52am:
thegreatdivide wrote on May 3rd, 2024 at 10:43am:
Even these mainstream neoclassical economists recognize the IMF and World Bank are no longer able to deal with the economic problems facing the globe.

(Larry Summers is the goon who said  - 2 years ago - unemployment in the US would have to be increased to 10% for a year, to bring inflation down to 2-3%.)

https://www.project-syndicate.org/commentary/imf-world-bank-spring-meetings-need...

History Repeats Itself As Communists Run Out Of Food


COLUMBIA UNIVERSITY — History has again repeated itself as communism once again devolved into mass starvation. The commies at Columbia University lasted less than twelve hours before running out of food and pleading for humanitarian aid, setting a new record for the collapse of communist food supply.

"Okay, time-out on the intifada revolution, we're out of pizza rolls," said Tara Gentry-Smith, protest organizer and self-proclaimed commie. "I'm going to go see if the people we just assaulted will send us some DoorDash. Ugh, why are we always running out of food?"

Communist protestors had barricaded themselves in buildings over the weekend and soon realized they had no means of production to feed themselves. Activists tried to enact communal ownership of the snacks they did have, but supplies ran out quickly.

"Man, why didn't we take over the food court?" lamented protestor Drake Jones. "I'm so hungry. I haven't had Chipotle in almost eight hours now! Still, I bet the people of Gaza are inspired by our sacrifice."

As of publishing time, the protestors had told onlookers that true communism hadn't been tried and that they were going to start a new, even better collective one building over.


Your error there: the US uni protests aren't communist, they are protests about the Israeli genocide on Palestinians.

Until the US stops blocking the establishment of Palestine (as per UN res 242), the protests will likely continue.

Nothing to do with food availability in US unies.

[See... your 'comedy' narrative didn't work - don't give up your day job.....Sad   ] 
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Re: Modern Monetary Theory (MMT)
Reply #899 - May 3rd, 2024 at 12:35pm
 
thegreatdivide wrote on May 3rd, 2024 at 12:30pm:
Frank wrote on May 3rd, 2024 at 10:52am:
thegreatdivide wrote on May 3rd, 2024 at 10:43am:
Even these mainstream neoclassical economists recognize the IMF and World Bank are no longer able to deal with the economic problems facing the globe.

(Larry Summers is the goon who said  - 2 years ago - unemployment in the US would have to be increased to 10% for a year, to bring inflation down to 2-3%.)

https://www.project-syndicate.org/commentary/imf-world-bank-spring-meetings-need...

History Repeats Itself As Communists Run Out Of Food


COLUMBIA UNIVERSITY — History has again repeated itself as communism once again devolved into mass starvation. The commies at Columbia University lasted less than twelve hours before running out of food and pleading for humanitarian aid, setting a new record for the collapse of communist food supply.

"Okay, time-out on the intifada revolution, we're out of pizza rolls," said Tara Gentry-Smith, protest organizer and self-proclaimed commie. "I'm going to go see if the people we just assaulted will send us some DoorDash. Ugh, why are we always running out of food?"

Communist protestors had barricaded themselves in buildings over the weekend and soon realized they had no means of production to feed themselves. Activists tried to enact communal ownership of the snacks they did have, but supplies ran out quickly.

"Man, why didn't we take over the food court?" lamented protestor Drake Jones. "I'm so hungry. I haven't had Chipotle in almost eight hours now! Still, I bet the people of Gaza are inspired by our sacrifice."

As of publishing time, the protestors had told onlookers that true communism hadn't been tried and that they were going to start a new, even better collective one building over.


Your error there: the US uni protests aren't communist, they are protests about the Israeli genocide on Palestinians.

Until the US stops blocking the establishment of Palestine (as per UN res 242), the protests will likely continue.

Nothing to do with food availability in US unies.

[See... your 'comedy' narrative didn't work - don't give up your day job.....Sad   ] 

Cheesy
It worked perfectly!

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