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Modern Monetary Theory (MMT) (Read 96916 times)

thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1020 - Nov 14^th, 2024 at 10:05am

Classic: Trump wants to defend Bitcoin, which is a non-government-issued digital currency, by banning the sale of the government's holdings of bitcoin.

In effect, the government is defending a ponzi scheme ie a 'coin' whose value is based soley on the number of people who own it.

(The Conversation)

The crypto community sees a powerful new friend in Donald Trump. Here’s why

Trump has flagged a wide range of pro-crypto policies, including building a government bitcoin stockpile, preventing the government from selling its cryptocurrency holdings, and even using cryptocurrency to address the national debt.

Furthering his pro-bitcoin stance, he’s also previously voiced opposition to “central bank digital currencies”, or CBDCs.

CBDCs are a relatively new digital form of money – and the US doesn’t have one yet. However, unlike decentralised cryptocurrencies such as bitcoin, the value of a CBDC is determined by its issuing country’s central bank.

Trump’s previous criticisms of the US Federal Reserve have resonated with many cryptocurrency supporters who have advocated for decentralised financial systems.

A volatile US dollar

A Trump presidency could lead to substantial US dollar volatility against major currencies.

A cornerstone policy of Trump’s re-election campaign has been to impose tariffs of 10–20% on all imports to the US, and 60% on imports from China.
.....

Hmm... so bitcoin might serve as a 'get out of jail' scheme, if Trump crashes the $US with high inflation?

Madness, based on obsolete neoclassical 'scarcity' economics which imposes austerity onto currency-issung governments, in a dog eat dog world pitting taxpayers against taxpayers.

« Last Edit: Nov 14^th, 2024 at 10:10am by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1021 - Nov 16^th, 2024 at 10:26am

Robbing Peter (US EV industry) to pay Paul (tax department):

(Inside EVs global)

Killing the $7,500 credit would deal a major blow to EV buyers and manufacturers. But trashing it won't be easy.

The President-elect seems to be sticking to at least one goal so far: unraveling Joe Biden’s policies that prop up America’s electric vehicle industry. Reuters on Thursday reported that the Trump transition team plans to kill the $7,500 consumer EV tax credit, a move that would drive up vehicle costs and make the U.S auto industry’s tough transition to EVs—one that is happening globally—even rockier.
......

Tesla may be the only automaker that stands to benefit from Trump’s plans. It turns a handsome profit selling electric cars and owns about half the U.S. EV market. So, while the axing of the consumer tax credit would probably hurt its sales to some degree, it would hurt its competitors more. Indeed, Reuters reported on Thursday that Tesla supports the Trump team’s plan. And that’s not so surprising, given Trump’s increasingly cozy relationship with Tesla CEO Elon Musk.

But the non-Tesla firms that constitute the backbone of U.S. manufacturing won’t let these tax credits go without a fight. After all, they’ve invested far too much in EV development and domestic EV factories—in part to make vehicles that qualify for the tax credit—to go quietly. That’s only part of why tossing 30D (as the tax credit is known) in the garbage may be harder than it looks.

Congress And Big EV Investments Complicate Things
EVs are more of a political football than ever, but they’re also far more ingrained in the U.S. and global economies. The EV tax credit survived the last Trump presidency, and it may prove just as durable this time around.

One big reason: It’s not just a handout to electric car buyers. Rather, it’s part of a complex web of policies aimed at supporting domestic car manufacturing and standing up to China’s fearsome EV and battery industries. Furthermore, it’s primarily Republican districts that stand to benefit from the billions of dollars going to EV investments and the tens of thousands of jobs they’ll create.

Hyundai’s new factory is the largest investment project the state of Georgia has ever seen, and the EVs produced there will qualify for the tax credit. Toyota is bringing battery manufacturing to Kentucky. BMW, Volvo and Scout Motors, a new offshoot of Volkswagen, are investing in EV operations in South Carolina. Any major attack on 30D and other IRA provisions could slow down future investments.

"If the United States is going to continue to fight to bring those jobs here and actually compete to win against China, there needs to be a demand signal—like the New Clean Vehicle Tax Credit—aligned with that goal, otherwise we would be undercutting those investments and hurting American job growth,” Albert Gore, executive director of the Zero Emission Transportation Association, a trade group, said in a statement on Friday.

Trump wants to kill the tax credit to fund tax cuts, Reuters reports, and for that he needs Congress. It would only take a handful of Republican lawmakers—the party has just a slim majority in the House—to gum up the works. And there very well may be enough representatives who don’t want to jeopardize transformative investments in their districts, or who believe strongly enough that the U.S. shouldn’t cede the future of car manufacturing to its biggest global adversary.

After all, without the EV tax credit, manufacturers won’t be under nearly the same pressure not to use Chinese-sourced batteries and minerals. They’ll just buy whatever’s cheapest, which would likely come from China.

So, there are strong tides that could keep the tax credit in place.

« Last Edit: Nov 16^th, 2024 at 10:49am by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1022 - Nov 19^th, 2024 at 9:45am

Andrew Bolt getting his nickers in a knot over money:

Sky News

Andrew Bolt slams government not ruling out the $1.8 trillion climate payment proposed by China

Sky News host Andrew Bolt slams the Albanese Labor government pushing renewable energy at the APEC summit and the G20.

China has urged developed countries, including Australia, to provide $1.8 trillion a year to developing nations to combat the effects of climate change.

“He [Chris Bowen] hasn't ruled out this demand from China and its 133 friends,” Mr Bolt said.

“There's our energy minister, still saying, we've got to discuss paying this $1.8 trillion to China and its mates.”
.......

Well, the developed world IS responsible for most of the AGW-CO2 emissions which have accumulated in the atmosphere in the last 200 years.

But what the world is facing now is mobilization of resources across ALL countries, to transition to the green economy.

Money isn't the issue, it's created out of thin air...

Bolt needs to educate himself.

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1023 - Nov 21^st, 2024 at 11:07am

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1024 - Nov 23^rd, 2024 at 9:40am

American industry sweating over Trump's policies:

(Inside EVs)

U.S. automakers wrote a letter to Trump pleading for regulations that are "predictable" and "stable."

A week after the U.S. elections, the country's top auto industry lobbying group wrote a letter to President-elect Donald Trump. It had a clear message: Don't mess with the electric vehicle tax credits. Of course, the group attempted to strike a far more subtle and diplomatic tone. But the urgency of that letter is palpable. Automakers want to continue manufacturing EVs and remain competitive with the rest of the world, especially China.
....

No doubt Musk woudn't mind seeing the competition in the US disappear; but EVs (whether battery or HFC) are the future of motoring, and Trump might inadvertently reduce US competitiveness even more than it already is.

A pity, given that "everybody knows government debt and deficts don't matter": Rush Limbaugh, conservative shock-jock extraodinaire (see #1019)

« Last Edit: Nov 23^rd, 2024 at 9:45am by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1025 - Nov 23^rd, 2024 at 9:57am

thegreatdivide wrote on Nov 21^st, 2024 at 11:07am:

Today in Parliament a Conservative MP said "money doesn't grow on trees".

But it's a pity he doesn't know money is created out of thin air.

He was on firmer ground when he mentioned "opportunity costs".

The debate was about "free" TAFE; he said it's not "free" because taxpayers have to pay for it.

But a Labor member (rightly) pointed out access to TAFE shouldn't depend on ability to pay.

The real issue is indeed 'opportunity cost' to the nation, ie, how to mobilize the nation's resources to achieve sustainabe prosperity for all.

Conservatives are more inclined to mobilize resources to enrich the most capable (or criminal) in the community**, at the expense of the least capable - hence a differnet view of "opportunity cost".

**via the 'invisible hand' market, rather than government regulation.

"Conservatives" in this context meaning both Lib and Lab who are signed up to the failing "small goverment' low tax/low spending/balanced budget" ideology.

(If Labor lose the next election I will be chastizing Andrew Leigh for the loss....).

"Markets are good servants, but bad masters, and a worse religion" : Amory Lovins.

But it's time to stop the nonsense about "money doesn't grow on trees"; indeed, money is in fact created out of thin air.

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1026 - Nov 24^th, 2024 at 4:57pm

Remarkable; the greed of the comfortable class who don't need provision of government services.

Daily Mail

More than 200,000 people sign petition demanding General Election

(...2 months after UK Labour was elected...)

A petition calling for a general election has exceeded the amount needed for a response from the government and needed to be considered for a debate in in parliament.

The online petition has surpassed 200,000 signatures, at the time of publication, after being widely shared on social media since being created on Wednesday.

It smashed through the 100,000 mark today which is the amount needed for it to be considered for a debate in parliament.

A petition needs 10,000 signatures for a government response.

Set up by Michael Westwood, the petition reads: 'I would like there to be another General Election.

'I believe the current Labour Government have gone back on the promises they laid out in the lead up to the last election.'

..........

Promises not to raise taxes, no doubt - which Jeremy Clarkson was bleating about recently.

A graphic illustration of how 'Left wing' parties are condemned to 'austerity' by neoliberal 'small government/low tax' ideology, and hence disappoint the people who voted them in....

And in Oz:

(Guardian)

The Coalition is leading in the polls as of 18 November 2024

A one-term Labor government? - even though the Coalition would hurt low-wage workers even more, with so called productivity increases (ie, screw workers even more).

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1027 - Nov 28^th, 2024 at 8:50am

New book from Prof. Steve Keen explains why balanced government budget dogma achieves the opposite of what it is supposed to achieve.

The book explains why Reeves’ obsession—and Musk’s in the USA—with running a balanced budget looks sensible to her. IF the Neoclassical model of banking, called Loanable Funds, is correct, THEN the future crisis that she and Musk fear is inevitable. Government debt and interest rates skyrocket, and GDP collapses.

But the model is wrong. Households don’t lend to firms, nor do they buy bonds off the Treasury (at the initial auction of bonds): banks do. And the government’s main bank accounts are at the Central Bank, not private banks. By simply removing those two false assumptions, a totally different outcome applies. A government deficit results in a growing money supply, and no crisis.

In this real-world setting, the balanced budget that both Reeves and Musk thinks is essential actually results in a lower rate of economic growth, when they both think it will enable faster growth.

This new book explains the modelling in great detail, because I want as many people as possible to be able to do this themselves.

This necessitates learning how to drive Ravel, because it is the literally the only computer program that enables the contstruction of double-entry bookkeeping models of the financial system. This can be done without having to master Ravel’s mathematical modelling capabilities—though I explain those as well in the book.

I am beyond frustrated with how the pedestrian belief that “the government is like a household and must spend less than it earns” dominates public discourse, but I can understand why too when so many people believe that banks “lend out deposits”—since that’s what conventional economics teaches. This new book grew out of this frustration, because no amount of posting on this topic by me (or like-minded colleagues, such as Richard Murphy and Stephanie Kelton) will convince enough people to turn the tide.

Instead, I think that people like yourselves—people who subscribe to and support economic rebels like us—need to be able to explain this analysis to your friends and colleagues.

This book will show you how to build accounting-only models of the financial system in Ravel, and how to run some models I’ll provide with the book that also do the numerical simulations done above.

I have roughly 10,000 supporters and followers on Patreon and Substack. If 2-3 per cent of you are willing to help, then that’s 200-300 people who can bore their friends over a beer or meal every now and then, and in the process convince them that this “fear of deficits” is simply wrong.** Otherwise, we’ll be stuck with economic policies that aim for growth but achieve the opposite (and which will also give us no guidance of what to do when global warming forces degrowth upon us).

Ravel is available via Patreon at https://www.patreon.com/ravelation; it is $1/month for the modelling only version, and $7/month for the extended data analysis version. The new book provides a detailed explanation of how to use Ravel to unravel the persuasive but nonsensical economic thinking that has locked us into unending austerity.

** So Rush Limbaugh (!) is correct, after all.......(see#1019).

« Last Edit: Nov 28^th, 2024 at 8:56am by thegreatdivide »

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thegreatdivide Gold Member Offline Australian Politics<br /> Posts: 12939 Gender:	Re: Modern Monetary Theory (MMT) Reply #1028 - Dec 3^rd, 2024 at 4:17pm https://billmitchell.org/blog/?p=62207 Austerity cultist Kenneth Rogoff continues to bore us with his broken record
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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1029 - Dec 5^th, 2024 at 11:55am

French government collapses because the minorty-backed RW PM wants to force through a 'deficit reduction' package to "fix the government budget".

How? By raising taxes on ordinary people (rich people know how to avoid taxes) and cutting government spending (which poor people rely on).

The collapse represents an effective demonstration of people power counterinng mainstream economics.

The French want to avoid Argentina's fate, where the RW economic ignoramus Milei has plunged half the population into poverty "to fix inflation" via spending cuts and high interest rates. [Note: what about 'fixing' prices - literally, ie with price controls, instead of pauperizing half the population?)

France would be smart to look at the US, which has been ignoring deficits and the associated increasing government debt, for many years, and yet the US economy has low unemployment, with falling interest rates and inflation.

« Last Edit: Dec 5^th, 2024 at 6:18pm by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1030 - Dec 9^th, 2024 at 3:07pm

More egregious free market ideology from Conservative politicians:

'The Independent' (google the article, my news feed is cluttered with ads)

Kemi Badenoch (new UK Conservative Party leader) landed a major political coup when she secured a meeting with vice president elect J. D. Vance on her trip to Washington DC.

The meeting is understood to have lasted for an hour. The pair discussed themes from Ms Badenoch’s speech at the International Democracy Union conference earlier int he trip, particularly her thesis on the rise of the bureaucratic state and size of govt and why they are hindering risk taking and economic growth.

A Badenoch ally said: “J.D. sees Kemi as one of those on the global right doing the deep thinking about how we reform the state. He and Kemi are of a new generation of centre-right politicians - like Pierre Poilievre, who she met in Toronto on Friday; and Ron DeSantis, who endorsed her leadership campaign - who are using strong conservative principles to enthuse younger voters**. The dinner renewed their friendship, and Kemi and J.D. will continue to stay in touch as the Trump administration gets up and running.”

The connections are crucial as the Tories fight back from their worst-ever election defeat in their 365-year history returning a mere 121 MPs in July.

........

**so they are attempting to restore Maggie T's discredited 'small government, low tax, 'trickle down' economics.

While the young can't afford housing. Good luck with that, Kemi....

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1031 - Dec 9^th, 2024 at 3:24pm

linked from the previous article

'Independent'

Jeremy Hunt is fighting for his place in history – and the Tories’ future may depend on it.

The former chancellor says Rachel Reeves’s budget ‘black hole’ is fiction. John Rentoul examines whether voters will listen

Saturday 07 December 2024 16:02 GMT

The author (Rentoul) concludes

I suspect that Hunt’s sunny optimism that public-sector productivity gains could have saved run-down public services without big tax increases is not going to persuade many historians – let alone voters

......

Exactly. The false Conservative narrative of 'getting government out of the way and freeing up animal spirits' won't fix the NHS.

If it did, Conservatives would have already done it in their decade in power before being turfed out of office by Starmer's 'moderate' Labour Party.

Which is why Brits now have to live with Reeves' "black hole" nonsense....they moved from the frying pan into the fire.

The poor will never win, with neoclassical-duped parties in power.

Note: 'John Rentoul is a visiting professor at King’s College London'.

....I wonder if he has any solutions to the obsolete neoclassical 'scarcity' doctrine which is enforcing austerity on democratic governments.

« Last Edit: Dec 9^th, 2024 at 3:33pm by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1032 - Dec 11^th, 2024 at 11:33am

Here we go.....

(Daily Mail)

Musk's controversial proposal that would save billions picks up steam

One of the most controversial proposals from Elon Musk 's Department of Government Efficiency (DOGE) is gaining support as he and lawmakers look to cut costs. President-elect Donald Trump has tapped the Tesla CEO and entrepreneur Vivek Ramaswamy to cut trillions of dollars in federal spending as the U.S. national debt continues to balloon to staggering new highs inflated by runaway expenditures over the few last decades.

As it stands, that debt totals $36.2 trillion dollars, but Musk estimates that DOGE could cut 'at least $2 trillion' from the current White House 's $6.5 trillion budget in the near term. The next natural questions is where should these cuts will come from. Musk and Ramaswamy are reportedly considering stripping all taxpayer-funded foreign aid , which would send shock waves internationally.etc.

........

The silly part about all this is that:

https://ellenbrown.com/2024/12/10/how-to-escape-the-federal-debt-trap/

U.S. Currency Should Be Issued by the U.S. Government

Well over 90% of the U.S. money supply today is issued not by the government but by private banks when they make loans. As Thomas Edison argued in 1921, “It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one promise fattens the usurers and the other helps the people.”

The government could avoid increasing the debt by printing the money for its budget as President Lincoln did, as U.S. Notes or “Greenbacks.” Donald Trump acknowledged in 2016 that the government never has to default “because you print the money,” echoing Alan Greenspan, Warren Buffett and others. So writes Prof. Stephanie Kelton in a Dec. 2, 2024 blog.

What happened to Don's "radicalism"? Has he forgotten that "the government never has to default

“because you print the money.”

?

How can he improve needed government services for those whose can't pay, if he is just going to cut government spending?

Re the fear of inflation posited by some mainstream economists (from the same article):

How to Avoid Hyperinflation

Alarmed economists contend that a Weimar-style hyperinflation is the inevitable outcome of government-issued money. But as Michael Hudson points out, “Every hyperinflation in history has been caused by foreign debt service collapsing the exchange rate. The problem almost always has resulted from wartime foreign currency strains, not domestic spending.”

Issuing the money directly will not inflate prices if the funds are used to increase the domestic supply of goods and services. Supply and demand will then go up together, keeping prices stable. This has been illustrated historically, perhaps most dramatically in China. The People’s Bank of China manages the money supply by a variety of means including just printing currency. In 28 years, from 1996 to 2024, China’s money supply (M2) grew by 52 times or 5,200%, yet hyperinflation did not result. Prices remained stable because the funds went into increasing GDP, which went up along with the money supply.

« Last Edit: Dec 11^th, 2024 at 9:30pm by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1033 - Dec 14^th, 2024 at 11:53am

Memo for gruesome mainstream neoclassical economists and their discredited NAIRU dogma.

(from the previous post)

Issuing the money directly will not inflate prices if the funds are used to increase the domestic supply of goods and services. Supply and demand will then go up together, keeping prices stable.

So economists employed by a nation's Treasury and Central Bank should be studying the nation's available resources and productive capacity - a 'stock-taking' exercise - to ensure supply is always sufficent to meet demand, and demand never exceeds supply.

As opposed to manipulating interest rates which unfairly burden the least well off, while the fool Bullock is refusing to cut rates until unemployment rises.

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #1034 - Dec 16^th, 2024 at 11:59am

(The Age)

Treasurer Tim Pallas quits parliament after 18 years as state bogged down in debt

.......

Provided Victoria's government spent the money to increase the state's productive capacity, Pallas should just off-load the debt to the currency-issuing Oz Treasury, since there will be no negative outcomes for the economy if that course of action was taken (see the previous two posts).

Meanwhile, forcing governments to borow money will crash democracies around the world (see France and Germany), since failing national economies around the world mean the middle class can no longer afford to pay higher taxes to fix the cost of living and homelessness crises affecting all nations.

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