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Old 03-06-2019, 06:31 PM
Danny B Danny B is online now
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Location: L.A. Ca.
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All the arguments against MMT

That disappeared article has made a reappearance.

"While adherents strenuously profess that MMT is subtler and more complex than this, its main selling point is that governments need not tax or borrow in order to spend — they can just create money out of thin air. A few computer keystrokes and everyone gets health insurance, student debt disappears, and we can save the climate too, without all that messy class conflict."
"As Wray put it, “The government does not ‘need’ the ‘public’s money’ in order to spend; rather the public needs the ‘government’s money’ in order to pay taxes. Once this is understood, it becomes clear that neither taxes nor government bonds ‘finance’ government spending.”
"Kelton’s paper foreshadowed what would become a trademark of MMT writing: detailed accounting exercises designed to show what happens, mechanically speaking, when the government spends money. These are mobilized to ask “why should the government take from the private sector the money . . . that it alone is capable of creating? "
Sorry, the vast majority of liquidity is created by financial institutions. Only recently, has The FED balance sheet bloated up into the $ trillions.

" Indeed, the entire process of taxing and spending must, as a matter of logic, have begun with the government first creating (and spending) new government money.” Government is as a God, giving economic life through spending: until it spends, we have no money. "
Nope, it's private institutions.
"Absent from Kelton’s paper, Wray’s book, and much of the subsequent MMT literature, is any sense of what money means in the private economy, where workers labor and capitalists profit from their toil and compete with each other to maximize that profit, a complex network of social relations mediated by money."
This may all be true but, those who rent their money add nothing to productivity.

"Knapp argues that the state names the currency by law, and by the practice of only accepting tax payments denominated in that currency. This doctrine, known as chartalism, is in one sense incontrovertible; states feel very strongly about their currency and punish people who counterfeit it. You must pay taxes in the official currency or you will go to jail. No modern country not in crisis would tolerate multiple currencies circulating in its borders "
"The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government"
"That brings us to the next problem: inflation. When the printing presses run freely, it’s not only reactionaries who think that runs the risk of spiraling prices. As I was researching this piece, many people to whom I described MMT, from Democrats to Marxists, brought it up as a worry. MMTers are coy about the topic"
Inflation is where the great debate takes off. Zimbabwe inflated the snot out of their currency to pay GOVERNMENT WORKERS.

"The standard view of the Weimer inflation is that the German economy, severely damaged by World War I and forced to make huge reparations payments to the victors, wasn’t up to the task — it just didn’t have the productive capacity, and its citizens were both unwilling and unable to pay the necessary taxes. So instead the government just printed money and spent it"
The external drain mandated by the agreement dictated at Versailles. Once agian, State drain.
"government just printed money and spent it, not only to pay its own bills, but to support bank lending to the private sector"
STRAIGHT to the upper loop.
"Wray’s explanation of the Weimar hyperinflation, one of the most dazzling of all time, is odd. The deficits, Wray explained in his book, were caused by the inflation, not the other way around."
Yep, money sent to the upper loop.
" Endogenous money theorists, in contrast, believe that money creation is driven by demand for credit coming from private actors, like businesses and consumers. "
When crashing wages crashed demand in the private sector, the State took over borrowing to save the banks.
"In normal times, the central bank injects enough money into the system to keep the wheels of commerce spinning, but it’s not what generates the spin. The work of production and distribution does that."
The FED's balance sheet has always been tiny . It is the private banks that "inject" money into the economy.
“Now that we all agree that government expenditure can maintain employment we should argue about what the expenditure should be for.”
WAR, of course. What a stupid question.

MMT "Keystrokes will save the Earth! Except they won’t. We need a wholesale revamping of our energy and transportation systems, the spatial organization of our cities, and the fundamental processes of industrial and agricultural production. To do that, we need to step on private capital’s freedom of investment, which strikes at the heart of ruling-class power."
No mention that war is most profitable.
"AOC’s defenders quickly noted, correctly (as she herself had earlier), that no one asks that question when it comes to funding the Pentagon"

'Acritical part of the MMT agenda is a job guarantee (JG), a policy under which the federal government becomes the employer of last resort (ELR). Unlike MMT’s monetary theorizing, the JG has nothing to do with the school’s core chartalist concept, and it deals directly with a crucial aspect of the real economy, namely the labor market. With a JG, the chronically unemployed could find decent work, and the temporarily unemployed would be accommodated until they find permanent work."
They will NOT find decent work.
"At recent levels of US unemployment, Tcherneva estimates 10–15 million people could be employed in a JG program"

"These disruptions would all be good for the working class, but to the bosses they’d look like quasi-revolutionary acts. When I interviewed Kshama Sawant, the socialist member of the Seattle city council who put a $15 minimum wage at the core of her agenda, in 2015, I asked her how she dealt with how system-challenging it was; she didn’t retreat. She said it was “an all-out class battle” — and if the system can’t pay, which it has a very hard time doing, that becomes a tool for showing that system is bad. "
Yep, the system is BAD. There is just no solution for growing automation.
"And if we had a political movement strong enough to force full-employment policies on the state, then why stop with a mere JG"
These people toss around words like "job guarantee" like a stroke of the pen will create jobs. It will never happen.

"If you ask, “Do you really believe the government doesn’t need to tax or borrow to spend,” which is something they frequently do argue, they’ll deny it. When questioned by a sympathetic Ryan Grim of the Intercept about what happens when the government spends without taxing or borrowing (something the United States never does, but bracket that for now), Kelton says it depends on who gets the money"
if it goes, once again, to the upper loop, it will just bring more price inflation.
"If rich people get it, they’d probably save it. If poor people get it, “they’d spend it into the economy.”
Lula tried this in Brazil and, it worked very well.

"Or is it that we shouldn’t worry about deficits at all? Kelton, asked about the Trump tax cuts, said she was ready for Tax Cuts 2.0. So, should we then not worry about the rising ratio of federal debt to GDP that comes with big deficits, and the increased share of spending devoted to debt service (which is a gift to bondholders, who are mostly quite rich)? Will there never be a point at which even the US government might find it hard to float new bonds to pay off the old ones and finance fresh spending? "
There is NO ratio of federal debt to GDP. The new liquidity is created ex nihilo.
" Debt, as the late sociologist James O’Connor said, increases capital’s power over the state: a government that is not pursuing market-friendly policies will find it hard to get a loan. Is that not a concern? Could we solve that problem by just Debt, as the late sociologist James O’Connor said, increases capital’s power over the state: a government that is not pursuing market-friendly policies will find it hard to get a loan. Is that not a concern? Could we solve that problem by just having the Fed buy the bonds? Aside from the fact that that’s technically illegal, isn’t it a few steps down the road to Weimar? At what point would debt become worrisome? As with inflation, MMTers just never say. Aside from the fact that that’s technically illegal, isn’t it a few steps down the road to Weimar? At what point would debt become worrisome? As with inflation, MMTers just never say."
just having the Fed buy the bonds? NO FED and NO bonds
As far as inflation, does the money go to the upper loop OR , does it go to the consumptive loop?


"Congress can pass any budget it chooses, and our government already pays for everything by creating new money.” But the government doesn’t do that. It spends only money gotten from tax revenues or bond sales."
Exactly.
"the government cannot spend via keystrokes money created out of thin air."
when public pensions crash, you will hear a whole new story.
"The major problems at the fiscal level are what we spend money on and what we don’t. If anything, we’re closer to terminal now than we were fifty years ago, when Martin Luther King Jr said, “a nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.”

"More broadly, we have a private economy driven by exploitation, overwork, asset stripping, and ecological destruction. MMT has little or nothing on offer to fight any of this. The job guarantee is a contribution, though a flawed one, and it’s not at the core of the theory, which proceeds from the keystroke fantasy. That fantasy looks like a weak response to decades of anti-tax mania coming from the Right, which has left many liberals looking for an easy way out. It would be sad to see the socialist left, which looks stronger than it has in decades, fall for this snake oil. It’s a phantasm, a late-imperial fever dream, not a serious economic policy."

OK, there you have it. A long, detailed authoritarian analysis showing that MMT is bunk. We can not let the Treasury create money as needed for the producing economy. We must continue to pay the bankers 1/2 trillion a year to use our own money. We must spend a $1 trillion plus for wars everywhere.
" asset stripping and ecological destruction. MMT has little or nothing on offer to fight any of this."
Not true. The ecological destruction is due in large part to an effort to liquidate tangibles to support enormously bloated credit schemes. Cut down all the Redwoods so that you have tangible collateral that you can leverage to do a hostile takeover of a company that you plan to asset strip. Sears is a prime example.
The arguments against MMT are loaded with lies and ignorance. They keep using words like debt and deficit. Nothing of the sort would be created. THAT is very worrying to those who rent their money. It certainly isn't perfect. Crony capitalism has brought us to the brink of destruction . NOTHING other than MMT can hold back the pension crisis until the time when the elderly can die a natural death.
In Weimar Germany, the elderly were wiped out by price inflation. They would take their life savings and buy a great meal. Then, they would turn on the gas and go to sleep.
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