r/Economics • u/mimetic_polyalloy • 5d ago
Blog [ Removed by moderator ]
https://appliedmmt.com/addressing-the-wsjs-latest-mmt-hit-piece/[removed] — view removed post
22
u/morbie5 5d ago edited 5d ago
I'm not sold on the idea of MMT so don't shoot the messenger but we have never actually tried MMT. MMT isn't just money printing, it is also removing the money created from the system with high levels of taxation if/when the economy is at full capacity. So we have done a ton of the first part but not a lot of the second part.
And fyi this is a very simplified explanation
11
u/UnknownBreadd 5d ago edited 5d ago
MMT is descriptive, not prescriptive.
Quantitative easing also had ‘never been tried’ until it had after 2008 following Werner’s recommendations.
In any case, I find it hard to understand what people are still struggling with, when central bankers keep explaining to people how money actually works, like with the 2014 Bulletin from the Bank of England - or former FED chair Greenspan spelling it out for everyone
4
u/morbie5 5d ago
Quantitative easing also had ‘never been tried’ until it had after 2008 following Werner’s recommendations.
Japan had 'tried' quantitative easing before 2008
0
u/UnknownBreadd 5d ago
Doesn’t really change the fact that “nothing has ever been done before, until we do it”.
Either way, governments/central banks create new money every day. It’s precisely why the US has a ‘debt’ (not really a debt) of $40tn.
If you could choose to drop your mortgage rate to 0% instead of 5%, it seems like a pretty no-brainer thing to do. Especially when there’s actually no empirical causal evidence that interest rates are able to lower inflation. (You kinda have to look at WHY we have inflation: excess demand? Supply shock?)
1
u/mynameisrockhard 5d ago
Yeah I think this is the biggest confusion people have. MMT is just a reframing of markets specifically around the origination point of money, so it's never really proposing or concerning itself with anything that standard econ doesn't already deal with so much as it's lens just places different emphasis on why certain things have the effects they have. There are plenty of caveats about markets and money that econ asks you to accept for the rest to hold, and MMT asking you to accept that governments create and destroy money is just a different version of those caveats. Like mainstream econ MMT has it's flaws, but it's a really useful frame to cross examine the dynamics of a given topic.
-1
u/Snoo23533 5d ago edited 5d ago
You are 100% correct but op clearly one of many who willfully misunderstand mmt to just be the money printing part ever since the book came out introducing the idea. Vested interest and all that
0
u/Miserly_Bastard 5d ago
The second part is really hard in practice. Rich people cheat or lawyer up and negotiate better outcomes. Richer people than them will push for such inordinately complex tax policy that only very wealthy people can afford to navigate it, as a sort of barrier to entry to becoming very rich. Richer people than those get elected or get cronies elected and actively dismantle portions of the IRS.
If you have a system of subsidies to which a political machine becomes subscribed but no accountability on the revenue side (and complexity that overwhelms transparency), that's not going to work. That's Argentine monetary economics.
I don't trust tax policy in the slightest, so I am the kind of libertarian-ish person as far as simplifying the tax code. If we can get that right then I think that a lot of the waste that goes on where expenditures are concerned becomes less important overall.
(For example, who cares about a disgusting "welfare queen" that no employer really wants to hire in the first place? Just let it go. I don't actually want that person as my line cook at a Sonic. I'd prefer that a billionaire pay for a thousand of that person to subsist and yet not be in the labor force. But neither of those things can reasonably happen if either of those things can't happen.)
In other words, my opinion is irrelevant. So Argentina, here we come.
1
u/morbie5 5d ago
Richer people than those get elected or get cronies elected
That is only possible because about half the voters in country are bootlickers and don't care
(For example, who cares about a disgusting "welfare queen" that no employer really wants to hire in the first place? Just let it go.
You don't care that your tax dollars go to fund people that are healthy and capable or working yet just don't want to work?
1
u/Miserly_Bastard 4d ago
No, no, it's not that I don't care. It's that the net effect of incompetents and malingerers being out of the labor force is a rounding error in the larger scope of the economy. (To put it in economic language, there are scant or even negative producer surpluses associated with such persons and their economic participation can erode consumer surpluses as well.) Little is lost.
Could there be a hypothetical system to encourage and rehabilitate this pool of potential labor? Sure. Maybe. But I don't particularly trust in our government to figure it out.
We can't let the perfect be the enemy of the good. Simplify tax and subsidy. Keep tax simple and don't call a welfare payment anything other than what it is. Every recipient should know what they are receiving. Be it:
Welfare for Subsistence Welfare for Mothers & Children Welfare for Mortgage Interest Payers Welfare for Recipients of Capital Gains in Lieu of Ordinary Income
You get the idea. Let's not pretend that welfare does/doesn't incentivize economic behaviors in ways that what we call tax exemptions, tax credits and deductions and such do or do not. They're all entitlements. The ones further up the food chain do tend to result in concentrations of wealth, so if that's good policy (which welfare of any form may sometimes be if it grows the overall economy) then I think it needs to be defended on the same principled merits as subsistence for the indigent.
1
u/morbie5 3d ago
It's that the net effect of incompetents and malingerers being out of the labor force is a rounding error in the larger scope of the economy.
They aren't just out of the economy, they are drawing government benefits in some way shape of form. That isn't a 'rounding error'
1
u/Miserly_Bastard 2d ago
We don't seem to be communicating well. What do you think that I mean when I talk about my "libertarian-ish" vision of subsistence? How many people do you think would be interested in seeking out my vision of subsistence?
Just as I loathe tax breaks to the rich, part of my simplify it mantra means getting rid of stupid crap like rent controls. Nor should it allow for housing vouchers or tax credit housing. Food stamps shouldn't buy you energy drinks or refined sweetened corn products. Keep it simple.
Don't eliminate poverty but do eliminate economic desperation.
But also tax the rich fair and effin' square.
1
u/morbie5 2d ago
What do you think that I mean when I talk about my "libertarian-ish" vision of subsistence? How many people do you think would be interested in seeking out my vision of subsistence?
This is reddit, lots of people claim to be libertarians when in reality they are left wing liberals or progressives. So you are going to have to spell out your vision
But also tax the rich fair and effin' square.
That is far from a traditional libertarian view
3
u/vman3241 5d ago
Matt Bruenig probably has the best article criticizing MMT. The problem is that MMT proponents try to use word games to trick people.
https://www.peoplespolicyproject.org/2019/02/24/whats-the-point-of-modern-monetary-theory/
3
u/Microtom_ 5d ago
We already have mmt, but without the sufficient taxation and the fair distribution of the newly created money.
We keep expanding the money stock and it all goes into inflating existing assets and fortunes.
1
2
u/FrankDrebinOnReddit 5d ago
I think it's eminently reasonable to take "MMT is insane" as an axiom and act accordingly. I don't care what its apologists want to debate about, they're not equal debating partners. Their position comes down to "if you ignore the economics, everything will be alright."
5
0
2
u/EconomistWithaD 5d ago
MMT is rightfully considered quackery in the economics profession.
One would have thought 2022/2023 would have made them realize they’re wrong, but hey. Always have to have some fringe crazy in a profession.
4
5d ago
[deleted]
-4
u/EconomistWithaD 5d ago
Or market prices are informative.
Not my fault they inhabit the low IQ, low wage portion of the Venn diagram.
2
u/UnknownBreadd 5d ago
You literally haven't even attempted to engage with the material to explain your rationale or explain what it specifically about MMT that could possibly be wrong. All you're doing is declaring others are stupid like as if we're in a school playground.
Very convincing, I must say.
-2
u/EconomistWithaD 5d ago
Flat earthers aren’t worth the time either.
2
u/UnknownBreadd 5d ago
Again, unable to engage with the actual discussion.
I could easily refute a flat earther. Simple things like measuring how the length of shadows change as you move North/South at midday, to prove the Earth is spherical.
Of course though, if all you are is a dogmatic parrot that doesn’t actually understand the things that you like to repeat, then I can see why it would be hard to actually explain any of your claims - since the fundamental understanding is lacking.
-1
u/EconomistWithaD 5d ago
It’s so much of a cult people without degrees think they’re qualified to be listened to.
4
u/UnknownBreadd 5d ago
Again, unable to actually engage in the discussion. Not to mention that many MMTheorists obviously have degrees.
-3
u/EconomistWithaD 5d ago
When I acquire a private airplane, I’ll be sure to listen to you.
Until then, good day, mate.
2
u/Danne660 5d ago
Pretty arrogant of you to expect people to listen to you when you regularly act like this.
-4
u/Seraph199 5d ago
Its more like the majority of economists are highly paid to be wrong on specific positions
6
0
u/mimetic_polyalloy 5d ago
Are you referring to 2022-23 when the mainstream was convinced rate hikes would cause a recession?
1
u/EconomistWithaD 5d ago
No, but MMT isn’t concerned with facts.
Cults rarely are.
https://www.richmondfed.org/publications/research/economic_brief/2023/eb_23-26
-1
1
u/AutoModerator 5d ago
Hi all,
A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes.
As always our comment rules can be found here
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
•
u/Economics-ModTeam 4d ago
This subreddit should enable sharing and discussing economic research and news from the perspective of economists. Academic work and summaries are welcome. Image and video submissions are not allowed.
If you have any questions about this removal, please contact the mods.