Billionaires don't have magic money Trees. They have customers who want to buy their products because those products improve their standard of living more than any other they might buy anywhere in the world. That is the exact opposite of a magic money tree.
The idea that government can print money without inflation and you will be the beneficiary with new welfare checks is a pipe dream.
My amusement with Elon was that during his "work" with DOGE he had no idea that his Government printed money. Best examples were Biden with his $3 trillion stimulus for Covid and in the UK Rishi Sunak found £400 billion.
in each case they generate the money on a computer keyboard.
Yes, inflation could result but this is where effective management and control is vital/
Why would you be amused at Elon Musk when he was doing the nation a favor by telling us that the government has computers and just creates money with them? This is approximately the way Ben Bernacki described it too. Again if you care to tell us why you were amused why don't you give it a try? How will you learn if you don't try?
You say Biden $3 trillion is an example of something but you clean forgot to tell us what it is an example of.
Also if there is anything about a modern monetary theory that makes sense why don't you tell us directly what it is instead of telling us about your amusement. Do you know why you have to be so evasive and indirect? It is because in your heart you know magic money is really a deadly disaster. Money needs to come directly from taxpayers so that it is controlled by as many people as possible and how the money is spent Is controlled and how much is taken. This is something a child would understand. Mmt seems to be something if I may say so for idiots.
What if a third scale also placed in your exhibit shows a titanic imbalance between the assets of the wealthy and the general populace?
MMT, like every other economic and monetary theory, and amazingly, despite its wonderful insight about money being created with double entry bookkeeping, is generally unconscious of policy that directly benefits the individual and resolves the thorniest problems of modern economies.
That policy, a 50% Discount/Rebate (IOW equal debits and credits that sum to zero) at retail sale, and the rest of the policy program of Wisdomics-Gracenomics resolves those thorny problems, exposes Libertarian/Austrian economics as delusional and most of the framework of "free" market theoretics as a misnomer for unstable financially dominating chaos.
MMT is somewhat like the Copernican cosmological paradigm change in the following respect. At first helio-centrism was actually less accurate in predicting the motions of heavenly bodies. It took Kepler's observation that orbits were not perfect circles but ellipses to make it more accurate than Ptolemaic cosmology. And actually this is being too kind to MMT because it merely enlightened the current method for money creation not the actual key concept that strategically applied creates a thirdeness greater oneness of an unresolving duality AKA a paradigm change.
But it might be true that until an understanding and of the money-creation cycle filters into the minds of our politicians, bankers and establishment economists we go nowhere. And then they have to reach a recognition that acting in function of it will not be against their interests, (except where those are purely greed-based and rely on exploitation of the neoliberal mythology). And then they have to adopt policies based on that understanding and acquire empirical verification of their workability. Those seem to be prerequisites to moving to policy regimes that lead to individual equity in distribution.
Certainly, that seems to be the case in the UK, where the fiscal household budget and government piggybank mythologies drive economic policy.
Yes, but the key policy of the new paradigm program, the 50% Discount/Rebate at retail sale resolves so many of the anomalies of the current paradigm, is so incredibly beneficial for the long neglected/ignored individual, integrates the self interests of the traditionally opposed relationship of merchant/consumer while helping to separate the merchant's interests from those of Finance...that if they look at it economists can easily see it and if politicians get a little spine and realize that the new paradigm's policies are such winners that the party that advocates for them will easily be able to establish a winning coalition probably greater than The New Deal was in America.
Build a mass socio-economic and political movement for the new monetary paradigm and that irresistible "idea whose time has come" could quickly become the new reality.
Thanks for the likes. I want to make clear that MMT was an important insight regarding the money creation mechanics, and that I am only critiquing MMT because its advocates fail to analyze the economy and the money system on a conceptual/paradigmatic level. That and because they fail to look at and follow through with their own insight that money creation is an accounting operation by not advocating for a 50% Discount (credit to the consumer)/Rebate (debit back to the merchant) policy at retail sale IOW equal debits and credits that sum to zero...which again is precisely what MMT says is the actual money creating procedure AND BECAUSE THOSE DEBITS AND CREDITS REPRESENT AND ARE IN FACT GIFTED MONEY...
1) THEY ARE NOT MORE DEBT AND YET DESPITE THE FACT THAT THEY POTENTIALLY DOUBLE THE MONEY SUPPLY
2)THUS THEY RESOLVE INFLATION WHILE INVALIDATING THE QUANTITY THEORY OF MONEY,
3) ENABLE COST CUTS THAT THE IDIOT ORTHODOX LIBERTARIANS AND CONSERVATIVES ALSO WANT BUT CAN'T GET PAST THE IDEA OF DEBT IN ORDER TO ACCOMPLISH SUCH AND MOST IMPORTANTLY
4) TRANSFORMS (UNIVERSAL) PARTICIPATION IN THE ECONOMY FROM A FRUSTRATING EXPERIENCE INTO THE GREATEST OPPORTUNITY TO SELF ACTUALIZE GRATITUDE FOR A GIFT SINCE MEDITATION AND PRAYER.
5) THE LIST OF BENEFICIAL EFFECTS GOES ON AND ON IN MY EVOLVING BOOK HERE:
Who'da thunk it that bean counting and monetary gifting could be so powerfully beneficial? Only those who dare to analyze conceptually/paradigmatically and then find the best ways to apply that analysis. That is not only a paradigm change its a MEGA-paradigm change.
How are you going to build a new movement when none of the ideas make any sense? If there is an idea in MMT that makes sense why don't you tell us what it is? How will you learn if you are afraid to try?
What is wrong with the free market when it is simply the free interaction of people. Do you need a Nazi socialist fascist government interfering with the way people freely act or interact in their mutual interest????
Your head is so far up the ass of delusional libertarian "free" market theory that the only reasonable responses to you are rebuke or no response at all. Bye.
As soon as the UK government proposes expansive spending, as it appears to be about to on Wednesday, the cry always goes up ‘What has to be cut to pay for it?’ The prevailing view is that it will be welfare spending. But surely most of welfare payments are spent directly back into the economy, funding growth and GDP ie it is investment spending. In which case the debt to GDP ratio remains stable! Respected economist Mariana Mazzucuto is quoted as saying that such investment spending is not a fiscal problem. Is she wrong?
Yes she is dead wrong. Whenever the government takes money from the real economy and spends it it is wasting the taxpayers resources. This is a formula for increasing poverty. The government can build 1000 bridges to nowhere but it will only make everybody poorer and not richer. Resources need to be used where the free market says they will improve everyone's standard of living. No free market event takes place without an increase in the standard of living of both the buyer and the seller. If you keep that in mind you will know a lot about economics.
Stephanie Kelton has very carefully explained the myths that have been created in the field of money supply. some might go further and call them lies, because many economists know the truth a
…about money supply. The government does not use ‘taxpayer’s money’. Taxpayers money only exists because the government has first spent that money into the economy. How could people pay tax if the money had not first been spent into the economy? Kelton has made it very clear. But there’s none so blind as those who don’t want to see! (Sorry, that’s a bit harsh but sadly it’s true) Best wishes, Andrew
And incidentally, the most important function of taxpayer’s money is actually to prevent the inflation which would be caused if the government merely spent money into the economy, because without taxation it would build up until it became worthless.
I am always amused by the truth exhibited by the graphic you and Prof Wray made showing the link between balanced budgets and recessions. As a psychologist, that graph suggests that the presence or absence of deficits has a psychological impact on investment behavior. Perhaps people become more reckless when they think the books balance or show surpluses, and more cautious in their investment behavior when deficits show a pattern of increasing over time.
The top 1% hold $50 Trillion in net wealth, same source.
So 1 in 100 could pay our $29 Trillion in treasury debt, if that was how it worked, and still have $21 Trillion left over, filthy rich.
And leave the 99 of us out of it.
And save the federal budget $1 Trillion per year. Fiscal triumph!
Let’s hear that from the floors of our Congress. We can negotiate from there.
No MMT needed. Could help sometime, fine.
What we need are facts and arithmetic, first.
Not hearing it. Last handed the facts to Jamie Raskin, by hand, on paper. Crickets. Jared Huffman, Jeff Merkley, Ari Melber, Ali Velshi, many more. Crickets.
We, the People, are not in debt. Not remotely. We are way rich.
Yes, wealth appropriation is the perfect, ideal solution to all our problems.
Incentives are irrelevant. Production of useful goods and services is irrelevant. There would be no issue at all killing the goose that lays the golden egg.
The rich don't accumulate money they earn it by selling products that people want to buy because they are better products than any other they might buy anywhere else in the world. Without the rich inventing products we would all be dead or living back in the Stone Age.
So then why don't you manipulate some stocks and get yourself a few billion dollars? Bill Gates Jeff Bezos Elon Musk are among the greatest inventors in human history. What have you invented how many millions of customers and workers do you have? Now you know why you are not a billionaire.
The "full employment" goal of MMT assumes people must labor to achieve health and happiness. But is that true? How much labor is required for Medicare for All, Free College for All (who want it), Good Housing For All, Food for All, etc.? Yes, someone (or something) has to provide the supply, but I look forward to the day when robots will do that. We are getting closer every day.
COVID showed us how much work can be done at home, so exactly what is "full employment"? Is the 8-hour, 5-day work week still "full" employment? I suggest that the goal of "full employment" is outmoded, and it should be changed to "Improving people's lives," however the people define "improve." Different strokes for different folks. Forcing people to work sounds way too much like a "MMT government knows best" dictatorship.
I don't work, and haven't worked for nearly 20 years. I am quite happy and have no desire to work. What exactly does full employment mean to me, so long as I am healthy, well fed, well housed, and entertained?
Why does MMT insist that people not retire at age 50? Or 40? Or 30? All would be possible with a government not hamstrung by a belief that work is a common goal.
Think of all the jobs that one day will be done by machines. What will "full employment" mean then? The goal of people is not to labor. The goal of people is happiness and safety.
And then there is inflation. Every inflation in history has been caused NOT by federal spending but by shortages of crucial goods and services -- most often energy and food. Cure the shortages and you cure the inflation. Federal deficit spending actually can cure shortages by acquiring the scarce
goods and/or by supplementing the producers of those goods. That is how the U.S. government got us out of the COVID inflation.
It's time for MMT to come into the 21st century and revise its goals to take into account the labor machines will do and the lives we want to live.
Thanks, Steph. I'm 90+. I have been living on passive income since 2008, and if the actuary tables are correct, I won't need much more.
But I pray that one day my children and grandchildren and you will benefit from the mantra that MMT and Monetary Sovereignty share: The federal government never can run short of dollars, and federal taxes don't fund federal spending.
It is true that the federal government can never run short of dollars as long as it can print them. A household would never run short of dollars either if it could print them. But that doesn't even address the issue of whether households and governments should simply print money.
Of course the downside of government printing money is that a few politicians decide where the nations resources are allocated. If taxpayers spend their own money they're doing what free people want to do namely spend their own money to increase their own standard of living, not turn it over to a few elites in govt to spend it on their behalf on the theory that people who earn the money are too stupid to spend the money correctly .Do you understand?
“Why does MMT insist that people not retire at age 50? Or 40? Or 30? All would be possible with a government not hamstrung by a belief that work is a common goal.”
Yes, agreed.
Everyone should be able to retire at 22.
With a Tesla, center court seats to the Lakers, a house in Malibu overlooking the ocean, and a huge Manhattan apartment overlooking Central Park.
No, everyone should work until 70. O 80? Or until they die. And no days off. Or nights off either. Now, Andy, that we have traded sarcasm, how about some reality:
1. Federal taxes don't fund federal spending. Even if federal tax collections were $0, the federal government would not run short of dollars.
2. Thus, the federal government could pay for Medicare for every man, woman, and child.
3. A far more generous Social Security for every man, woman, and child.
4. Free college for everyone who wanted it.
5. No FICA deductions.
Don't believe the Big Lie that the government can't afford these things. The rich know otherwise. That's why they get the tax loopholes while you get deductions from your paycheck.
Dude, u r delusional. The only way your statements are true is to devalue the dollar and all dollars debt to be worthless or nearly so. And u could only do it once, and then you couldn’t spend again, since no one will loan to the federal government.
You can believe in the Tooth Fairy if you want. That’s the only way what you suggest works.
The federal govt doesn't need "loans" because it does not "borrow". The meaning of these terms change with context. You're trying to frame the finances of a currency creator & issuer with your own perspective on how your finances operate as a currency end user . YOU ARE AN END USER. THE FEDERAL GOVT IS THE SOLE CREATOR & ISSUER. You cannot correctly understand ,comprehend, or learn how modern fiat money operates using your perspective because it simply doesn't apply. Your spending is constrained by money. The federal govt's spending is not because it creates it at will. It is constrained by resources. A price tag is irrelevant to a currency creator as long as that price tag is denominated in the currency it creates.
“You cannot correctly understand ,comprehend, or learn how modern fiat money operates using your perspective”
“The federal govt's spending is not because it creates it at will. It is constrained by resources. A price tag is irrelevant to a currency creator as long as that price tag is denominated in the currency it creates.”
Yes, you are correct.
I cannot understand, comprehend or learn how modern fiat money operates using my perspective.
It is indeed fortunate that we have such all knowing, all comprehending people like yourself to save us.
Yes, price tags are irrelevant to currency created by a sovereign.
That worked so well, e.g. in Weimar Germany, where they indeed never ran out of marks…
If the federal government pay for everything as you suggest wouldn't there be tremendous inflation which would actually mean that the federal government wasn't paying for it but rather we were paying for it with tremendous inflation???
Is the federal government prints money to pay for safety Net programs rather than taxes money to pay for them, then it will cause inflation. Inflation is currently at 2.7% which indicates that most of the money is coming from taxes.
MMT is popular on the left because it seems to provide a free welfare check for everybody. This is ultimately what the left believes. We have had 100 years of increasing safety Net programs and yet somehow they still want universal basic income the green new deal Medicare for all. They can never say how big is big.
Inflation is always and everywhere never a monetary problem, rather its root causes are supply-side profit-oriented capitalism practices and neoliberal governments failure to mitigate inflation causing business practices.
How can capitalism cause inflation when the capitalist has no ability to add to the money Supply?????? it is the obvious question and yet you failed to answer it?????
It sounds like you are lazy and lead a meaningless life without work. If you can get other people to work and give you free stuff so that you don't have to work , you'll only feel worse and worse about yourself for not contributing to society. MMT is not designed to make you a welfare queen I'm afraid. Mankind has been inventing tools labor saving tools for 10,000 years and robots will be no different. People will have to work or leech off of those who do work.
You don't pay for anyone's benefits? If that was the case why don't we give everyone benefits of $1 million a year? Didn't your mommy and daddy teach you that there is no free lunch??
Rather than try to change the subject why don't you answer my simple question??? if there is a free lunch and nobody pays for it why doesn't the government give us each $1 million. This is the second time I've had to ask. How will you learn if you are afraid to try?
Because they deny Monetary Sovereignty, which they do on behalf of the rich. Monetary Sovereignty narrows the gap between the rich and the rest. Now answer my questions.
But that’s because printing money DOES in fact devalue the currency.
So yes the government could legally pay its debts by printing money.
But in the process it would crash the value of the dollar, and going forward people would be unwilling to loan it money (i.e. buy its bonds and even its short term debts) except at exorbitantly high interest rates.
There is no free lunch here.
Just because the government can print money is not a panacea.
Have you looked at how that has worked out in Weimar Germany, in Zimbabwe, etc., etc., etc.?
This reflects a nieve understanding of hyperinflation. The root causes have always been supply-side problems, not the actual "printing" of money to mitigate the supply-side causes.
Once again please keep in mind that MMT does not support printing enough money to cause inflation. It is not about increasing the quantity of money it is more about who gets to spend the money that already exists.
“It is not about increasing the quantity of money it is more about who gets to spend the money that already exists.”
You can claim this, but that doesn’t make it true.
Printing money increases the quantity of money.
And as it relates to the value of a dollar relative to other assets (gold, euro, etc.), MMT ideas for money printing, not paying interest on debt, not collecting taxes, massively increasing “social welfare” spending will crash the demand for dollars, and so the value of dollars.
So even if somehow you are “technically” correct that MMT in implementation wouldn’t increase the quantity of money, it would still destroy the value of the dollar.
There is really nothing in stephanie Kelton's book about increasing the quantity of money and increasing inflation. It is simply about giving politicians more freedom about where to spend money because she imagines they will spend it on social welfare programs.
I'm more inclined to believe it is a matter of development/utilization/allocation of resources to (best) meet society's needs without artificial monetary constraints.
This doesn't mean there isn't value in capitalism. But it does imply it may not be the allocation of resources.
You mean best meet societies needs according to the whims of a socialist fascist Nazi central government elite? When you have a free society the people are free to do things individually to improve their standard of living.
No, it is because every hyperinflation case I'm aware of has social, economic, and/or government causes that lead to a need to grow the monetary base that weren't initially a money printing problem.
Friedman's Monetarism has the causality relationship for inflation backwards. Private credit and to a much lesser extent Gov spending support/facilitat inflation. But it is decisions made by profit-oriented capitalists and neoliberal politicians that are the root causes of supply-side inflation. This includes increased profit margins, just in time supply chain disruptions, ....
According to Milton Friedman when the government prints too much money you have inflation. There is no other way to generate inflation. 1+ one equals 2. If you know of another way to generate inflation tell us what it is.
Milton Friedman was a lazy, if not incompetent, neoclassical economists that used 3 simplifying assumptions to come up with Monetarism, none of which were valid. It's supply-side decisions that are always the root causes of inflation that result in a supporting increase in money on the demand-side. That is the reason Fed interest rates >0% are intrinsically inflationary, not deflationary and FDR instituted wage, price, and rationing controls during WW-II.
It's the reason FDR established wage, price, and rationing controls during WW-II. It's also one reason Federal Reserve (CB) interest rates have always failed at achieving Congress's dual mandate of price and employment stability.
Fed interest rates >0% are intrinsically inflationary and only tame inflation by causing recessions/depressions, usually in conjunction with government austerity.
Well honestly it would not crash the value of the dollar. MMT does not advocate spending enough to cause inflation. What it really is about is letting the government decide where to spend the money because it in theory will spend it on social welfare programs. Whereas, if you let the people spend their own hard earned money they won't necessarily spend it on social welfare programs.
“Well honestly it would not crash the value of the dollar”
Not only can you not know that, once people believe that MMT is the new policy of the U.S. government, the demand for dollar-denominated debt, and for dollars themselves, will go way down.
Since the value of the dollar is based on supply and demand, even if your MMT supposedly “reasonably” controls supply, the crashing demand will in fact cause the value of the dollar to decline massively.
That is basic common sense. One of several commons sense things MMT advocates ignore.
There is no free lunch. Your other comments seem to recognize this.
Further, the government spending the money on social programs in the general case is by definition not “productive” spending (except in rare cases like in 2007-2009 when there is a lack of consumer spending/demand as a major portion of the problem), and the opposite of other MMT claims.
How am I all over the lot? Demand for dollars crashing will cause the value of the dollar to crash.
Money printing will cause the value of each dollar to go down.
MMT means abandoning the debt market, so OF COURSE the value of that debt crashes - and the value fo the dollar crashes - as people realize the U.S. is just going to print money to give out to favored social programs of leftists.
If taxes aren’t needed now OR IN THE FUTURE to pay off debt, then that’s announcing the debt is being monetized, and no one will want to hold dollars.
Why not concentrate on a quick simple definition of MMT? I've given you mine what is yours? No discussion is possible unless we are talking about the same thing.
Your book changed my geopolitical perspective, unveiled almost limitless opportunities and renewed my insufferable optimism. I remain optimistic that we’ll survive the authoritarian regime my American neighbors voted in. My continued MMT advocacy spurns me on daily to refine strategies to communicate more effectively the need for a Blue Revolution to demonstrate the people’s power lies in our fiat sovereign currency to influence fiscal policy and the possibility to make billionaires irrelevant. I’m grateful to you Stephanie.
If there is anything whatsoever about the deficit myth that makes sense to you why don't you tell us what it is. Most intelligent people agree that it is fringe nonsense for the most part.
If there was anything important in the book that you can defend why don't you go ahead and give it a try. i seriously doubt you understood anything in the book. In fact I have never met anyone who read the book and understood it. Turns out economics is far too complicated for 99% of the population to understand. Professor Kelton has only groupies she has no students whatsoever based on what I can see.
Encourage all in this thread to visit the commentator Rodger Mitchell's blog. He linked it in his comment. We must do what we can to spread the good word.
People need to get comfortable with the idea that deficit spending at the federal level is something to be managed, not feared. So let's try this thought experiment. Suppose the U.S. Treasury/Federal Reserve has decided to create "out of thin air" $100 trillion dollars denominated in $100 dollar bills (so folks can visualize it) and stored it all in a secure warehouse. Congress could theoretically spend the whole kit and kaboodle this year. Instead, it chooses to release $2.4 trillion and leave $97.6 trillion safe and sound (that is, unspent). Would voters view this deficit spending of $2.4 trillion as just one more instance of Congressional profligacy, or would they instead decide that leaving $97.6 trillion unspent was an act of admirable responsibility and fiscal restraint?
“Would voters view this deficit spending of $2.4 trillion as just one more instance of Congressional profligacy, or would they instead decide that leaving $97.6 trillion unspent was an act of admirable responsibility and fiscal restraint?”
Sane people would view it as another $2.4T of profligacy.
The $97.6T they would look at as a signal for even more profligacy in the near future.
Stephanie emphasizes the importance of understanding the goal of debt. I believe the real goal is further enrichment and empowerment of the plutocracy. The debt is a wealth conveyer from the taxpayer to the top 1%. Full employment (jobs) is incidental. Much of the job creation goes overseas.
Example #1: The trade deficit is financed with fiscal deficits, which facilitates exports of low-cost goods to the U.S. made in factories made possible by private investors. Part of the trade deficit includes services like "returns (profits) on IP. The cost (interest) is borne by the taxpayer, jobs are overseas, profits are repatriated back to the U.S. and tax havens. So, the conveyor works like this: Fiscal deficits --> Trade Deficits --> jobs overseas --> hard assets (factories) overseas --> private profits.
Example #2: Much of the Debt goes to the MIC and military hardware/software development. Much of this is developed via technology R&D from DARPA and piloted (pre-commercialization) by DOD. This includes GPS, mapping, search engines, AI, robotics, sensors, drones, etc. Once the bugs are worked out, the VC take the last and least risky step of commercialization. As with the previous example, many of the jobs in actual manufacturing go overseas. Many trillionaires were made possible by DOD. As Robert Reich pointed out, the DOD is U.S. style industrial policy. Jobs? Full employment? Not so much.
China is the fly in the ointment because increasingly, as IP rights expire, China's manufacturing margins get plowed back into China job creation and infrastructure, and undercutting privately owned firms elsewhere. The China model is looking increasingly attractive in Southeast and South Asia. Therefore, our plutocrats must make war on China! Also at taxpayers' expense.
Example #3: War against countries that don't threaten the U.S. militarily, but do threaten the plutocrats profiteering.
The implication of the above is that spending will be supported where it furthers private profit and reduced where it doesn't. Think Medicare Advantage Plans for the former, Medicaid for the latter. That's exactly what's happening, folks!
A corollary is that the deficits WILL continue, and continue to grow, until the fiscal dam breaks. This may take the form of hyper-inflation that no one can control, or WW III.
What is happening folks is that government spending is going up and up with the vast majority of it going to Social Security Medicaid Medicare and then Defense.
Hopefully anyone who read this and believes it - or wants to believe it, because gee, wouldn’t it be nice… - will read this excellent (and too polite for my taste) review of the book by Arnold Kling:
Just three of several great quotes from the review:
“Kelton seems to believe that in a fiat money regime inflation only appears when the economy is at full capacity, with no unemployment. But we know from the experience of the 1970s that this is not the case.”
“Because inflationary psychology is self-fulfilling, the belief in Modern Monetary Theory is inherently self-refuting. Once people believe that the government is not constrained by deficit concerns in its issuing of paper claims (low-interest bonds or money), they have to be alert to the possibility that the government will at any point drastically devalue the monetary unit. To protect themselves, people will raise the prices of what they sell. This will devalue the monetary unit.”
“Most economists believe that the government debt plus its unfunded obligations to future recipients of Social Security and Medicare make for a dire outlook. Kelton argues instead that the ability of the government to issue money to discharge these obligations means that there is no need to raise taxes, cut entitlements, or reduce other spending. … Put it this way: if money-printing were the solution for entitlements, then it would be feasible to lower the age of eligibility for Social Security and Medicare to 35 instead of 65.“
Kling is nicer to MMT and Kelton than I would be. It might be nice to believe in the Tooth Fairy, and that government can print money, run up enormous debts and never have to pay them with no meaningful consequences, but that is simply not reality.
What it is when you believe that the government can borrow money and run up debt, as you do? Where do you believe the interest on that debt comes from?
Why do you accept the government borrowing money at interest as natural and normal, but not the government issuing the money debt free, instead?
“Why do you accept the government borrowing money at interest as natural and normal, but not the government issuing the money debt free, instead?”
Uh… I believe that most people believe in the rule of law.
And that states have taxing power with which they can pay off future debt.
I also understand economics and basic human nature. If a government just prints money, eventually - and sometimes immediately - the currency is devalued significantly.
I’m not really sure what you are getting at with your largely rhetorical questions, so perhaps you should be clear and state *your* position.
I’m NOT defending huge government debt.
I’m merely saying that printing money to get out of debt doesn’t work, and that at the end of the day that is essentially what the MMT crowd are saying.
Sorry if my initial hasty response was a bit cryptic.
This has nothing to do with the rule of law. Genuine and effective monetary reform requires changing the law.
I agree with you that simply printing money to get out of debt doesn't work.
I am not an advocate for MMT, which doesn't fully address the core of the problem. I support monetary reform as proposed by the American Monetary Institute, the Alliance for Just Money and such economists as Ellen Brown. Here are some resources that you can check out that explain the proposed reforms more fully:
The current system of borrowing money and running up debt is very bad but the system that Kelton proposes is even worse. The most responsible system would include a balance budget amendment so sleazy politicians can never spend a penny without First taxing their constituents to do so. That is the democratic way to do things.
Although I support a different type of monetary reform as explained in the sources shared above, I agree with you that, under the current monetary system, we need to move toward a balanced budget, and that a constitutional amendment to that effect would be desirable. You might find this to be of interest: https://independenceparty.substack.com/p/the-stop-stealing-from-children-amendment
In my opinion, this is the most important book today. This is a book that changed my entire outlook on economics and how government finances operate. And contrary to some, this reading is indeed compelling and worth your time. A must recommend and again its the most important reading material today.
I hate to rock your world but if you think it is an important book it is only because you did not understand it. If there is something of importance in the book that makes sense why don't you tell us what it is?
Many congratulations, Stephanie, here's to next 5 years trying to convince UK Prime Minister.
BTW, no doubt you would see Elon Musk realising he had 14 Magic Money trees
Billionaires don't have magic money Trees. They have customers who want to buy their products because those products improve their standard of living more than any other they might buy anywhere in the world. That is the exact opposite of a magic money tree.
The idea that government can print money without inflation and you will be the beneficiary with new welfare checks is a pipe dream.
Thanks Ted and noted.
My amusement with Elon was that during his "work" with DOGE he had no idea that his Government printed money. Best examples were Biden with his $3 trillion stimulus for Covid and in the UK Rishi Sunak found £400 billion.
in each case they generate the money on a computer keyboard.
Yes, inflation could result but this is where effective management and control is vital/
Why would you be amused at Elon Musk when he was doing the nation a favor by telling us that the government has computers and just creates money with them? This is approximately the way Ben Bernacki described it too. Again if you care to tell us why you were amused why don't you give it a try? How will you learn if you don't try?
You say Biden $3 trillion is an example of something but you clean forgot to tell us what it is an example of.
Also if there is anything about a modern monetary theory that makes sense why don't you tell us directly what it is instead of telling us about your amusement. Do you know why you have to be so evasive and indirect? It is because in your heart you know magic money is really a deadly disaster. Money needs to come directly from taxpayers so that it is controlled by as many people as possible and how the money is spent Is controlled and how much is taken. This is something a child would understand. Mmt seems to be something if I may say so for idiots.
What if a third scale also placed in your exhibit shows a titanic imbalance between the assets of the wealthy and the general populace?
MMT, like every other economic and monetary theory, and amazingly, despite its wonderful insight about money being created with double entry bookkeeping, is generally unconscious of policy that directly benefits the individual and resolves the thorniest problems of modern economies.
That policy, a 50% Discount/Rebate (IOW equal debits and credits that sum to zero) at retail sale, and the rest of the policy program of Wisdomics-Gracenomics resolves those thorny problems, exposes Libertarian/Austrian economics as delusional and most of the framework of "free" market theoretics as a misnomer for unstable financially dominating chaos.
MMT is somewhat like the Copernican cosmological paradigm change in the following respect. At first helio-centrism was actually less accurate in predicting the motions of heavenly bodies. It took Kepler's observation that orbits were not perfect circles but ellipses to make it more accurate than Ptolemaic cosmology. And actually this is being too kind to MMT because it merely enlightened the current method for money creation not the actual key concept that strategically applied creates a thirdeness greater oneness of an unresolving duality AKA a paradigm change.
But it might be true that until an understanding and of the money-creation cycle filters into the minds of our politicians, bankers and establishment economists we go nowhere. And then they have to reach a recognition that acting in function of it will not be against their interests, (except where those are purely greed-based and rely on exploitation of the neoliberal mythology). And then they have to adopt policies based on that understanding and acquire empirical verification of their workability. Those seem to be prerequisites to moving to policy regimes that lead to individual equity in distribution.
Certainly, that seems to be the case in the UK, where the fiscal household budget and government piggybank mythologies drive economic policy.
Yes, but the key policy of the new paradigm program, the 50% Discount/Rebate at retail sale resolves so many of the anomalies of the current paradigm, is so incredibly beneficial for the long neglected/ignored individual, integrates the self interests of the traditionally opposed relationship of merchant/consumer while helping to separate the merchant's interests from those of Finance...that if they look at it economists can easily see it and if politicians get a little spine and realize that the new paradigm's policies are such winners that the party that advocates for them will easily be able to establish a winning coalition probably greater than The New Deal was in America.
Build a mass socio-economic and political movement for the new monetary paradigm and that irresistible "idea whose time has come" could quickly become the new reality.
Thanks for the likes. I want to make clear that MMT was an important insight regarding the money creation mechanics, and that I am only critiquing MMT because its advocates fail to analyze the economy and the money system on a conceptual/paradigmatic level. That and because they fail to look at and follow through with their own insight that money creation is an accounting operation by not advocating for a 50% Discount (credit to the consumer)/Rebate (debit back to the merchant) policy at retail sale IOW equal debits and credits that sum to zero...which again is precisely what MMT says is the actual money creating procedure AND BECAUSE THOSE DEBITS AND CREDITS REPRESENT AND ARE IN FACT GIFTED MONEY...
1) THEY ARE NOT MORE DEBT AND YET DESPITE THE FACT THAT THEY POTENTIALLY DOUBLE THE MONEY SUPPLY
2)THUS THEY RESOLVE INFLATION WHILE INVALIDATING THE QUANTITY THEORY OF MONEY,
3) ENABLE COST CUTS THAT THE IDIOT ORTHODOX LIBERTARIANS AND CONSERVATIVES ALSO WANT BUT CAN'T GET PAST THE IDEA OF DEBT IN ORDER TO ACCOMPLISH SUCH AND MOST IMPORTANTLY
4) TRANSFORMS (UNIVERSAL) PARTICIPATION IN THE ECONOMY FROM A FRUSTRATING EXPERIENCE INTO THE GREATEST OPPORTUNITY TO SELF ACTUALIZE GRATITUDE FOR A GIFT SINCE MEDITATION AND PRAYER.
5) THE LIST OF BENEFICIAL EFFECTS GOES ON AND ON IN MY EVOLVING BOOK HERE:
https://www.amazon.com/Wisdomics-Gracenomics-New-Monetary-Paradigm-Policies-ebook/dp/B0C49B9PX7/ref=tmm_kin_swatch_0?_encoding=UTF8&qid=1552358772&sr=1-1-catcorr
Who'da thunk it that bean counting and monetary gifting could be so powerfully beneficial? Only those who dare to analyze conceptually/paradigmatically and then find the best ways to apply that analysis. That is not only a paradigm change its a MEGA-paradigm change.
How are you going to build a new movement when none of the ideas make any sense? If there is an idea in MMT that makes sense why don't you tell us what it is? How will you learn if you are afraid to try?
What is wrong with the free market when it is simply the free interaction of people. Do you need a Nazi socialist fascist government interfering with the way people freely act or interact in their mutual interest????
Your head is so far up the ass of delusional libertarian "free" market theory that the only reasonable responses to you are rebuke or no response at all. Bye.
Translation : I am a left-wing MMT nut job and know I lack the intelligence to respond substantively.
Projection. Bye.
Translation: I am not intelligent enough to debate.
As soon as the UK government proposes expansive spending, as it appears to be about to on Wednesday, the cry always goes up ‘What has to be cut to pay for it?’ The prevailing view is that it will be welfare spending. But surely most of welfare payments are spent directly back into the economy, funding growth and GDP ie it is investment spending. In which case the debt to GDP ratio remains stable! Respected economist Mariana Mazzucuto is quoted as saying that such investment spending is not a fiscal problem. Is she wrong?
Yes she is dead wrong. Whenever the government takes money from the real economy and spends it it is wasting the taxpayers resources. This is a formula for increasing poverty. The government can build 1000 bridges to nowhere but it will only make everybody poorer and not richer. Resources need to be used where the free market says they will improve everyone's standard of living. No free market event takes place without an increase in the standard of living of both the buyer and the seller. If you keep that in mind you will know a lot about economics.
Ted, the government does NOT ‘take money from the real economy’ when it spends, nor does it use taxpayers’ money’.
Stephanie Kelton has very carefully explained the myths that have been created in the field of money supply. some might go further and call them lies, because many economists know the truth a
…about money supply. The government does not use ‘taxpayer’s money’. Taxpayers money only exists because the government has first spent that money into the economy. How could people pay tax if the money had not first been spent into the economy? Kelton has made it very clear. But there’s none so blind as those who don’t want to see! (Sorry, that’s a bit harsh but sadly it’s true) Best wishes, Andrew
And incidentally, the most important function of taxpayer’s money is actually to prevent the inflation which would be caused if the government merely spent money into the economy, because without taxation it would build up until it became worthless.
I am always amused by the truth exhibited by the graphic you and Prof Wray made showing the link between balanced budgets and recessions. As a psychologist, that graph suggests that the presence or absence of deficits has a psychological impact on investment behavior. Perhaps people become more reckless when they think the books balance or show surpluses, and more cautious in their investment behavior when deficits show a pattern of increasing over time.
We had $160 Trillion in net personal wealth at the end of 2024. Net. Net household wealth.
<uswealthclock.com> US Fed numbers, links
The top 1% hold $50 Trillion in net wealth, same source.
So 1 in 100 could pay our $29 Trillion in treasury debt, if that was how it worked, and still have $21 Trillion left over, filthy rich.
And leave the 99 of us out of it.
And save the federal budget $1 Trillion per year. Fiscal triumph!
Let’s hear that from the floors of our Congress. We can negotiate from there.
No MMT needed. Could help sometime, fine.
What we need are facts and arithmetic, first.
Not hearing it. Last handed the facts to Jamie Raskin, by hand, on paper. Crickets. Jared Huffman, Jeff Merkley, Ari Melber, Ali Velshi, many more. Crickets.
We, the People, are not in debt. Not remotely. We are way rich.
We need to hear it — b.rad
Is that net personal wealth in currency and/or liquid assets?
It’s mostly stocks and bonds, as I read the tables. Some property.
The tables are in the Z.1 Fed report, quarterly.
Those reports are linked at the Fed web site linked above — b.rad
Yes, wealth appropriation is the perfect, ideal solution to all our problems.
Incentives are irrelevant. Production of useful goods and services is irrelevant. There would be no issue at all killing the goose that lays the golden egg.
🙄🙄🙄
So your big idea is to steal money from the rich so that you don't have to pay your fair share of the national debt?
are you a bot ? taxes are ‘steal money from the rich?’ that doesn’t make any sense . . . property taxes are old news, established, proven
I’m curious about the richest amongst us and their hoards of money accumulated relative to the average bloke’s Velocity of Money.
The rich don't accumulate money they earn it by selling products that people want to buy because they are better products than any other they might buy anywhere else in the world. Without the rich inventing products we would all be dead or living back in the Stone Age.
Earn ? Balderdash. Stock manipulating.
So then why don't you manipulate some stocks and get yourself a few billion dollars? Bill Gates Jeff Bezos Elon Musk are among the greatest inventors in human history. What have you invented how many millions of customers and workers do you have? Now you know why you are not a billionaire.
The "full employment" goal of MMT assumes people must labor to achieve health and happiness. But is that true? How much labor is required for Medicare for All, Free College for All (who want it), Good Housing For All, Food for All, etc.? Yes, someone (or something) has to provide the supply, but I look forward to the day when robots will do that. We are getting closer every day.
COVID showed us how much work can be done at home, so exactly what is "full employment"? Is the 8-hour, 5-day work week still "full" employment? I suggest that the goal of "full employment" is outmoded, and it should be changed to "Improving people's lives," however the people define "improve." Different strokes for different folks. Forcing people to work sounds way too much like a "MMT government knows best" dictatorship.
I don't work, and haven't worked for nearly 20 years. I am quite happy and have no desire to work. What exactly does full employment mean to me, so long as I am healthy, well fed, well housed, and entertained?
Why does MMT insist that people not retire at age 50? Or 40? Or 30? All would be possible with a government not hamstrung by a belief that work is a common goal.
Think of all the jobs that one day will be done by machines. What will "full employment" mean then? The goal of people is not to labor. The goal of people is happiness and safety.
And then there is inflation. Every inflation in history has been caused NOT by federal spending but by shortages of crucial goods and services -- most often energy and food. Cure the shortages and you cure the inflation. Federal deficit spending actually can cure shortages by acquiring the scarce
goods and/or by supplementing the producers of those goods. That is how the U.S. government got us out of the COVID inflation.
It's time for MMT to come into the 21st century and revise its goals to take into account the labor machines will do and the lives we want to live.
Thanks, Steph. I'm 90+. I have been living on passive income since 2008, and if the actuary tables are correct, I won't need much more.
But I pray that one day my children and grandchildren and you will benefit from the mantra that MMT and Monetary Sovereignty share: The federal government never can run short of dollars, and federal taxes don't fund federal spending.
Much good luck to you.
It is true that the federal government can never run short of dollars as long as it can print them. A household would never run short of dollars either if it could print them. But that doesn't even address the issue of whether households and governments should simply print money.
Of course the downside of government printing money is that a few politicians decide where the nations resources are allocated. If taxpayers spend their own money they're doing what free people want to do namely spend their own money to increase their own standard of living, not turn it over to a few elites in govt to spend it on their behalf on the theory that people who earn the money are too stupid to spend the money correctly .Do you understand?
“Why does MMT insist that people not retire at age 50? Or 40? Or 30? All would be possible with a government not hamstrung by a belief that work is a common goal.”
Yes, agreed.
Everyone should be able to retire at 22.
With a Tesla, center court seats to the Lakers, a house in Malibu overlooking the ocean, and a huge Manhattan apartment overlooking Central Park.
🙄
No, everyone should work until 70. O 80? Or until they die. And no days off. Or nights off either. Now, Andy, that we have traded sarcasm, how about some reality:
1. Federal taxes don't fund federal spending. Even if federal tax collections were $0, the federal government would not run short of dollars.
2. Thus, the federal government could pay for Medicare for every man, woman, and child.
3. A far more generous Social Security for every man, woman, and child.
4. Free college for everyone who wanted it.
5. No FICA deductions.
Don't believe the Big Lie that the government can't afford these things. The rich know otherwise. That's why they get the tax loopholes while you get deductions from your paycheck.
Dude, u r delusional. The only way your statements are true is to devalue the dollar and all dollars debt to be worthless or nearly so. And u could only do it once, and then you couldn’t spend again, since no one will loan to the federal government.
You can believe in the Tooth Fairy if you want. That’s the only way what you suggest works.
🙄
The federal govt doesn't need "loans" because it does not "borrow". The meaning of these terms change with context. You're trying to frame the finances of a currency creator & issuer with your own perspective on how your finances operate as a currency end user . YOU ARE AN END USER. THE FEDERAL GOVT IS THE SOLE CREATOR & ISSUER. You cannot correctly understand ,comprehend, or learn how modern fiat money operates using your perspective because it simply doesn't apply. Your spending is constrained by money. The federal govt's spending is not because it creates it at will. It is constrained by resources. A price tag is irrelevant to a currency creator as long as that price tag is denominated in the currency it creates.
“You cannot correctly understand ,comprehend, or learn how modern fiat money operates using your perspective”
“The federal govt's spending is not because it creates it at will. It is constrained by resources. A price tag is irrelevant to a currency creator as long as that price tag is denominated in the currency it creates.”
Yes, you are correct.
I cannot understand, comprehend or learn how modern fiat money operates using my perspective.
It is indeed fortunate that we have such all knowing, all comprehending people like yourself to save us.
Yes, price tags are irrelevant to currency created by a sovereign.
That worked so well, e.g. in Weimar Germany, where they indeed never ran out of marks…
https://chatgpt.com/share/6948654b-10e4-8005-ac7f-f917aa959ebe
I see you read Paul Krugman.
While he’s far too leftist now for my taste, even he says clearly that MMT don’t work:
https://archive.nytimes.com/krugman.blogs.nytimes.com/2011/03/25/deficits-and-the-printing-press-somewhat-wonkish/
https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wonkish.html
https://www.themoneyillusion.com/wrong-in-a-very-confusing-way/
https://www.econlib.org/library/Columns/y2021/SumnermodernmonetarytheoryPartII.html
If the federal government pay for everything as you suggest wouldn't there be tremendous inflation which would actually mean that the federal government wasn't paying for it but rather we were paying for it with tremendous inflation???
Is the federal government prints money to pay for safety Net programs rather than taxes money to pay for them, then it will cause inflation. Inflation is currently at 2.7% which indicates that most of the money is coming from taxes.
MMT is popular on the left because it seems to provide a free welfare check for everybody. This is ultimately what the left believes. We have had 100 years of increasing safety Net programs and yet somehow they still want universal basic income the green new deal Medicare for all. They can never say how big is big.
Inflation is always and everywhere never a monetary problem, rather its root causes are supply-side profit-oriented capitalism practices and neoliberal governments failure to mitigate inflation causing business practices.
How can capitalism cause inflation when the capitalist has no ability to add to the money Supply?????? it is the obvious question and yet you failed to answer it?????
You do know that a very significant part of the money supply is private bank credit?
So what????
It sounds like you are lazy and lead a meaningless life without work. If you can get other people to work and give you free stuff so that you don't have to work , you'll only feel worse and worse about yourself for not contributing to society. MMT is not designed to make you a welfare queen I'm afraid. Mankind has been inventing tools labor saving tools for 10,000 years and robots will be no different. People will have to work or leech off of those who do work.
Ted, whoever invented the wheel must have been too lazy to carry stuff.
Your comment about other people working and giving me stuff indicates you do not understand Monetary Sovereignty or MMT.
When the government spends money, nobody has worked to make it happen. Your federal taxes do not fund federal spending.
That is the foundation of MMT. The federal government creates new money whenever it spends. You don't pay for anyone else's benefits.
You don't pay for anyone's benefits? If that was the case why don't we give everyone benefits of $1 million a year? Didn't your mommy and daddy teach you that there is no free lunch??
No free lunch? Really?
Do you have any idea where money comes from? Who or what creates it? Who or what destroys it.
Do you know the differences between a federal bond and a corporate bond? What about a federal note vs. a private note?
Do you know what backs the U.S. dollar?
Do you know how the first dollars were created? What limits money creation?
Do you know what exactly the federal debt is, not in amount but in description? What about the deficit?
Do you know how the federal government pays off its debt?
Do you know what Monetary Sovereignty is? Do you know what MMT is?
Do you know what causes inflation? Do you know what has led to almost every recession? Do you know what has led to every depression in U.S. history?
Do you know what has cured every recession and depression in U.S. history?
Do you know how much money the federal government has?
Do you know what happens to federal tax dollars when they reach the Treasury?
Do you know what happens to state/local government tax dollars when they reach state/local government treasuries?
When you can demonstrate you even the most meager understanding of economics, please feel free to respond.
Rather than try to change the subject why don't you answer my simple question??? if there is a free lunch and nobody pays for it why doesn't the government give us each $1 million. This is the second time I've had to ask. How will you learn if you are afraid to try?
Because they deny Monetary Sovereignty, which they do on behalf of the rich. Monetary Sovereignty narrows the gap between the rich and the rest. Now answer my questions.
Cause of inflation discussed here: https://mythfighter.com/2025/04/08/at-long-last-lets-put-this-inflation-question-to-bed/
Dude, that is true in the technical sense.
But that’s because printing money DOES in fact devalue the currency.
So yes the government could legally pay its debts by printing money.
But in the process it would crash the value of the dollar, and going forward people would be unwilling to loan it money (i.e. buy its bonds and even its short term debts) except at exorbitantly high interest rates.
There is no free lunch here.
Just because the government can print money is not a panacea.
Have you looked at how that has worked out in Weimar Germany, in Zimbabwe, etc., etc., etc.?
This reflects a nieve understanding of hyperinflation. The root causes have always been supply-side problems, not the actual "printing" of money to mitigate the supply-side causes.
Right, I am “nieve.”
And you ignore all the actual hyperinflation from money printing instances in history because they are, I suppose, inconvenient truths for you.
Once again please keep in mind that MMT does not support printing enough money to cause inflation. It is not about increasing the quantity of money it is more about who gets to spend the money that already exists.
“It is not about increasing the quantity of money it is more about who gets to spend the money that already exists.”
You can claim this, but that doesn’t make it true.
Printing money increases the quantity of money.
And as it relates to the value of a dollar relative to other assets (gold, euro, etc.), MMT ideas for money printing, not paying interest on debt, not collecting taxes, massively increasing “social welfare” spending will crash the demand for dollars, and so the value of dollars.
So even if somehow you are “technically” correct that MMT in implementation wouldn’t increase the quantity of money, it would still destroy the value of the dollar.
There is really nothing in stephanie Kelton's book about increasing the quantity of money and increasing inflation. It is simply about giving politicians more freedom about where to spend money because she imagines they will spend it on social welfare programs.
I'm more inclined to believe it is a matter of development/utilization/allocation of resources to (best) meet society's needs without artificial monetary constraints.
This doesn't mean there isn't value in capitalism. But it does imply it may not be the allocation of resources.
You mean best meet societies needs according to the whims of a socialist fascist Nazi central government elite? When you have a free society the people are free to do things individually to improve their standard of living.
So millions of free people allocating their own capital and resources is inferior to a few Nazi elites in government doing it?
No, it is because every hyperinflation case I'm aware of has social, economic, and/or government causes that lead to a need to grow the monetary base that weren't initially a money printing problem.
Even if that is true, it doesn’t change the fact that printing a lot more money leads to a lot more inflation.
You cannot repeal the basic law of supply and demand, no matter the words you choose to describe it.
Yes, but the demand is from the supply-side for demand-side money 91% of which is supplied by commercial banks, not the government.
If Supply side problems are the root cause of inflation why not give us the reason you think that. How will you learn if you are afraid to try?
Friedman's Monetarism has the causality relationship for inflation backwards. Private credit and to a much lesser extent Gov spending support/facilitat inflation. But it is decisions made by profit-oriented capitalists and neoliberal politicians that are the root causes of supply-side inflation. This includes increased profit margins, just in time supply chain disruptions, ....
According to Milton Friedman when the government prints too much money you have inflation. There is no other way to generate inflation. 1+ one equals 2. If you know of another way to generate inflation tell us what it is.
Milton Friedman was a lazy, if not incompetent, neoclassical economists that used 3 simplifying assumptions to come up with Monetarism, none of which were valid. It's supply-side decisions that are always the root causes of inflation that result in a supporting increase in money on the demand-side. That is the reason Fed interest rates >0% are intrinsically inflationary, not deflationary and FDR instituted wage, price, and rationing controls during WW-II.
Mainstream neoclassical economics is a farce!
If I extend private credit to someone that does not generate inflation because it does not create money. One plus one equals two
It's the reason FDR established wage, price, and rationing controls during WW-II. It's also one reason Federal Reserve (CB) interest rates have always failed at achieving Congress's dual mandate of price and employment stability.
Fed interest rates >0% are intrinsically inflationary and only tame inflation by causing recessions/depressions, usually in conjunction with government austerity.
Well honestly it would not crash the value of the dollar. MMT does not advocate spending enough to cause inflation. What it really is about is letting the government decide where to spend the money because it in theory will spend it on social welfare programs. Whereas, if you let the people spend their own hard earned money they won't necessarily spend it on social welfare programs.
“Well honestly it would not crash the value of the dollar”
Not only can you not know that, once people believe that MMT is the new policy of the U.S. government, the demand for dollar-denominated debt, and for dollars themselves, will go way down.
Since the value of the dollar is based on supply and demand, even if your MMT supposedly “reasonably” controls supply, the crashing demand will in fact cause the value of the dollar to decline massively.
That is basic common sense. One of several commons sense things MMT advocates ignore.
There is no free lunch. Your other comments seem to recognize this.
Further, the government spending the money on social programs in the general case is by definition not “productive” spending (except in rare cases like in 2007-2009 when there is a lack of consumer spending/demand as a major portion of the problem), and the opposite of other MMT claims.
You are all over the lot here and I'm not sure what your point is if you have one good point please present it to us.
How am I all over the lot? Demand for dollars crashing will cause the value of the dollar to crash.
Money printing will cause the value of each dollar to go down.
MMT means abandoning the debt market, so OF COURSE the value of that debt crashes - and the value fo the dollar crashes - as people realize the U.S. is just going to print money to give out to favored social programs of leftists.
If taxes aren’t needed now OR IN THE FUTURE to pay off debt, then that’s announcing the debt is being monetized, and no one will want to hold dollars.
Simple supply and demand common sense.
Why not concentrate on a quick simple definition of MMT? I've given you mine what is yours? No discussion is possible unless we are talking about the same thing.
If Milton Freeman was wrong about inflation tell us why.
Your book changed my geopolitical perspective, unveiled almost limitless opportunities and renewed my insufferable optimism. I remain optimistic that we’ll survive the authoritarian regime my American neighbors voted in. My continued MMT advocacy spurns me on daily to refine strategies to communicate more effectively the need for a Blue Revolution to demonstrate the people’s power lies in our fiat sovereign currency to influence fiscal policy and the possibility to make billionaires irrelevant. I’m grateful to you Stephanie.
The Deficit Myth was the most important idea I discovered in ten years. Completely changed my thinking, also. So much is possible...
If there is anything whatsoever about the deficit myth that makes sense to you why don't you tell us what it is. Most intelligent people agree that it is fringe nonsense for the most part.
If there was anything important in the book that you can defend why don't you go ahead and give it a try. i seriously doubt you understood anything in the book. In fact I have never met anyone who read the book and understood it. Turns out economics is far too complicated for 99% of the population to understand. Professor Kelton has only groupies she has no students whatsoever based on what I can see.
Encourage all in this thread to visit the commentator Rodger Mitchell's blog. He linked it in his comment. We must do what we can to spread the good word.
If there is any idea you saw in the blog that makes sense why don't you tell us what it is? How will you learn if you are afraid to try???
People need to get comfortable with the idea that deficit spending at the federal level is something to be managed, not feared. So let's try this thought experiment. Suppose the U.S. Treasury/Federal Reserve has decided to create "out of thin air" $100 trillion dollars denominated in $100 dollar bills (so folks can visualize it) and stored it all in a secure warehouse. Congress could theoretically spend the whole kit and kaboodle this year. Instead, it chooses to release $2.4 trillion and leave $97.6 trillion safe and sound (that is, unspent). Would voters view this deficit spending of $2.4 trillion as just one more instance of Congressional profligacy, or would they instead decide that leaving $97.6 trillion unspent was an act of admirable responsibility and fiscal restraint?
“Would voters view this deficit spending of $2.4 trillion as just one more instance of Congressional profligacy, or would they instead decide that leaving $97.6 trillion unspent was an act of admirable responsibility and fiscal restraint?”
Sane people would view it as another $2.4T of profligacy.
The $97.6T they would look at as a signal for even more profligacy in the near future.
Very simple:
1) intelligent voters would view it as the government wasting money on its priorities and not on the people's priorities.
2) intelligent voters would view it as 2.4 trillion in inflation that would make them poorer because prices would go up by 2.4 trillion.
BTW, The Deficit Myth's Chapter 3 is an absolute tour de force.
How interesting but can you tell us what it said and why you think it makes sense?
Stephanie emphasizes the importance of understanding the goal of debt. I believe the real goal is further enrichment and empowerment of the plutocracy. The debt is a wealth conveyer from the taxpayer to the top 1%. Full employment (jobs) is incidental. Much of the job creation goes overseas.
Example #1: The trade deficit is financed with fiscal deficits, which facilitates exports of low-cost goods to the U.S. made in factories made possible by private investors. Part of the trade deficit includes services like "returns (profits) on IP. The cost (interest) is borne by the taxpayer, jobs are overseas, profits are repatriated back to the U.S. and tax havens. So, the conveyor works like this: Fiscal deficits --> Trade Deficits --> jobs overseas --> hard assets (factories) overseas --> private profits.
Example #2: Much of the Debt goes to the MIC and military hardware/software development. Much of this is developed via technology R&D from DARPA and piloted (pre-commercialization) by DOD. This includes GPS, mapping, search engines, AI, robotics, sensors, drones, etc. Once the bugs are worked out, the VC take the last and least risky step of commercialization. As with the previous example, many of the jobs in actual manufacturing go overseas. Many trillionaires were made possible by DOD. As Robert Reich pointed out, the DOD is U.S. style industrial policy. Jobs? Full employment? Not so much.
China is the fly in the ointment because increasingly, as IP rights expire, China's manufacturing margins get plowed back into China job creation and infrastructure, and undercutting privately owned firms elsewhere. The China model is looking increasingly attractive in Southeast and South Asia. Therefore, our plutocrats must make war on China! Also at taxpayers' expense.
Example #3: War against countries that don't threaten the U.S. militarily, but do threaten the plutocrats profiteering.
The implication of the above is that spending will be supported where it furthers private profit and reduced where it doesn't. Think Medicare Advantage Plans for the former, Medicaid for the latter. That's exactly what's happening, folks!
A corollary is that the deficits WILL continue, and continue to grow, until the fiscal dam breaks. This may take the form of hyper-inflation that no one can control, or WW III.
The goal of debt is to free sleazy politicians from having to tax their constituents and lose their votes. 1+1 = 2
What is happening folks is that government spending is going up and up with the vast majority of it going to Social Security Medicaid Medicare and then Defense.
Hopefully anyone who read this and believes it - or wants to believe it, because gee, wouldn’t it be nice… - will read this excellent (and too polite for my taste) review of the book by Arnold Kling:
https://lawliberty.org/book-review/deficits-budgetary-and-conceptual/
Just three of several great quotes from the review:
“Kelton seems to believe that in a fiat money regime inflation only appears when the economy is at full capacity, with no unemployment. But we know from the experience of the 1970s that this is not the case.”
“Because inflationary psychology is self-fulfilling, the belief in Modern Monetary Theory is inherently self-refuting. Once people believe that the government is not constrained by deficit concerns in its issuing of paper claims (low-interest bonds or money), they have to be alert to the possibility that the government will at any point drastically devalue the monetary unit. To protect themselves, people will raise the prices of what they sell. This will devalue the monetary unit.”
“Most economists believe that the government debt plus its unfunded obligations to future recipients of Social Security and Medicare make for a dire outlook. Kelton argues instead that the ability of the government to issue money to discharge these obligations means that there is no need to raise taxes, cut entitlements, or reduce other spending. … Put it this way: if money-printing were the solution for entitlements, then it would be feasible to lower the age of eligibility for Social Security and Medicare to 35 instead of 65.“
Kling is nicer to MMT and Kelton than I would be. It might be nice to believe in the Tooth Fairy, and that government can print money, run up enormous debts and never have to pay them with no meaningful consequences, but that is simply not reality.
What it is when you believe that the government can borrow money and run up debt, as you do? Where do you believe the interest on that debt comes from?
Why do you accept the government borrowing money at interest as natural and normal, but not the government issuing the money debt free, instead?
“Why do you accept the government borrowing money at interest as natural and normal, but not the government issuing the money debt free, instead?”
Uh… I believe that most people believe in the rule of law.
And that states have taxing power with which they can pay off future debt.
I also understand economics and basic human nature. If a government just prints money, eventually - and sometimes immediately - the currency is devalued significantly.
I’m not really sure what you are getting at with your largely rhetorical questions, so perhaps you should be clear and state *your* position.
I’m NOT defending huge government debt.
I’m merely saying that printing money to get out of debt doesn’t work, and that at the end of the day that is essentially what the MMT crowd are saying.
Sorry if my initial hasty response was a bit cryptic.
This has nothing to do with the rule of law. Genuine and effective monetary reform requires changing the law.
I agree with you that simply printing money to get out of debt doesn't work.
I am not an advocate for MMT, which doesn't fully address the core of the problem. I support monetary reform as proposed by the American Monetary Institute, the Alliance for Just Money and such economists as Ellen Brown. Here are some resources that you can check out that explain the proposed reforms more fully:
https://ellenbrown.com/2024/12/10/how-to-escape-the-federal-debt-trap/#more-15857
https://monetary.org/resources/intro-to-reform/
https://www.monetaryalliance.org/
Distinctions between AMI's proposed reforms and MMT: https://monetary.org/articles/99-ami-s-evaluation-of-modern-monetary-theory-mm/
The current system of borrowing money and running up debt is very bad but the system that Kelton proposes is even worse. The most responsible system would include a balance budget amendment so sleazy politicians can never spend a penny without First taxing their constituents to do so. That is the democratic way to do things.
Although I support a different type of monetary reform as explained in the sources shared above, I agree with you that, under the current monetary system, we need to move toward a balanced budget, and that a constitutional amendment to that effect would be desirable. You might find this to be of interest: https://independenceparty.substack.com/p/the-stop-stealing-from-children-amendment
Why not tell us what it says if it is a value?
In my opinion, this is the most important book today. This is a book that changed my entire outlook on economics and how government finances operate. And contrary to some, this reading is indeed compelling and worth your time. A must recommend and again its the most important reading material today.
I hate to rock your world but if you think it is an important book it is only because you did not understand it. If there is something of importance in the book that makes sense why don't you tell us what it is?
😳🙌👏