This Headline in today's Bloomberg ( https://www.bloomberg.com/news/arti...t-but-wall-street-sees-room-for-u-s-to-try-it ) grabbed at my collar and jerked me back, then I read the accompanying article, and the first thing that came to mind was WTF. See the following article in today's, March 4, Bloomberg, to understand precisely what I am referring to. "economics Powell Trashed MMT, But Wall Street Sees Room for U.S. to Try It By Liz McCormick March 4, 2019, 5:00 AM CST Big deficits aren’t a future scenario -- they’re already here Pain may come one day, but yields below 3% say not for a while ..." Sometime last year I posted a story in this forum on how the MMT economists were finally getting some traction in Congress. At least a few legislators were sitting up and taking notice. Now it would seem that finally, 48 years after the "Nixon shock," people are beginning to realize that economists who have made a life's work out of studying fiat money and banking practice do exist. The next step, I suppose, will be full recognition that these economists ought to be paid much more attention. But how much longer will that take? Will we have to wait until the entire generation of pre-1971 economists dies off? MMT stands for "Modern Money Theory" --those bent on destroying the English language translate it as "Modern Monetary Theory." This is a field of study in Economics having to do with fiat money and banking. It's chief protagonist in the U.S. is Randall Wray -- https://en.wikipedia.org/wiki/L._Randall_Wray -- and in Australia, Bill Mitchell --https://en.wikipedia.org/wiki/Bill_Mitchell_(economist). These are the economists you should read if you want to learn what MMT economics is about, and you certainly should, because living ignorant of MMT is the economics equivalent of being marooned in "Neverland." I would go as far as to say that MMT is a critically important study for anyone in the markets today. Ever since Nixon took the U.S. off the gold standard, and the rest of the World followed suit, things have been different than painted in now obsolescent textbooks of economics. Yes, that's right, here we are in 2019 and basic undergraduate texts in Economics have yet to have their chapters on money and banking correctly adjusted for fiat money and the demise of the Gold Standard. They have been adjusted in some aspects but remain hopelessly wrong in others! Not only are the texts badly in error, but so too is nearly the entire panoply of pre-1971 trained economists. They never bothered to catch up. Worse yet, we have a lawyer converted to an investment banker, Jerome Powell, heading our U.S. Central Bank's Board of Governors. He appears to be hopelessly ignorant of Modern Money Theory. It's frightening! I have been a student of MMT the past few years, and that explains why when I read Liz McCormick's Article in today's Bloomberg my first thought was WTF, don't any of these folks have a clue. And it turns out, sadly, they apparently don't. Those quoted in her article all demonstrate woeful ignorance of Modern Money Theory. Even our Nobel Memorial Prize economist, Paul Krugman, must go back to school. Read this for example: https://krugman.blogs.nytimes.com/2...hat-wonkish/?smid=tw-NytimesKrugman&seid=auto A most egregious error that crops up repeatedly is the false assertion that MMT economists think deficits don't matter. That's pure nonsense. Here is what economist Jim Luke had to say in response to Krugman's ill informed remarks. I'll quote Luke because I could not have said it better myself. For background, see: https://econproph.com/2011/03/25/krugman-on-mmt/ Paul, you either have an incomplete understanding of MMT or have setup a strawman. MMT does NOT hold that “deficits never matter, as long as you have your own currency.” MMT says that deficits do matter but only if (a) there’s no slack of real resources in the economy and (b) the private sector is choosing to net accumulate debt instead of accumulate net financial assets. In the meantime, however, as long the private sector wants to accumulate net financial assets, deficits are necessary to prevent Aggregate demand from falling. You apparently prefer to use the interest rate on safe assets as the indicator of whether there’s slack real resources available – hence your emphasis on liquidity trap lingo. MMT emphasizes actual unemployment. If there’s significant unemployment, then there’s slack resources available for the government to purchase and put to use producing incomes for people. A key insight of MMT is how the real world of banking has changed since the 1970’s when gold and fixed rates were abandoned. In our real world today, reserves do not constrain bank lending and money creation. The fears of inflation based on old equation of exchange theories are unfounded. It’s a shortage of real resources that will drive inflation, not deficits per se. Here I will add that contrary to popular lore, Fiat Money is not backed by "thin air" ; it is backed by productivity! So yes, deficits do matter in the long run, and they matter in proportion to productivity.
I don't know why it's called "Modern Money Theory", debasing currencies has been happening for as long as currencies have existed.
If you're asking seriously, I don't know. But I noticed the proponents of each style their hair the same.
I listened carefully, my thoughts are below. Generally, I think that you _can_ use fiat money for the benefit of society but the problem is that humans are involved. Secondly, I love the way she involved her daughter. Very good role model. Looks like a ball buster though the way she interacted with her husband. She says the surplus that the government creates through deficit goes in the pocket of the private sector. Yeah... Right. It goes in the pocket of a select few in the private sector and always will. For the most part, the middle class does not see any of these benefits and "more government involvement" won't magically fix the issue. Very easy to see that this is true because most of my generation will live lower quality lives than their parents. She also says that deficits are financed by US treasuries which are really savings. OK, fine I can see this. Typical woman though... Pie in the sky thinking with no understanding of how brutal humans are. Let's think even more pie-in-the-sky: why not directly transfer the deficit into our bank accounts based on some inflation target? No need for special interests then. And one more pie-in-the-sky: if the government can will money into existence, why does it need to tax anything? Why take back $4 out of the $10 that you spent into the economy? You know why: the government has no power in that case. This is the real promise of crypto currency. One day, someone will invent a pegged crypto currency with the peg decreasing with adoption that removes the power of government from the equation.