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Modern Monetary Theory (MMT) (Read 91653 times)

thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #585 - Jul 22^nd, 2023 at 4:45pm

Frank wrote on Jul 22^nd, 2023 at 3:56pm:

thegreatdivide wrote on Jul 22^nd, 2023 at 11:40am:

Frank wrote on Jul 21^st, 2023 at 10:12pm:

thegreatdivide wrote on Jul 21^st, 2023 at 9:53pm:

Frank joining the ranks of the blindly ignorant: he posts some-one else's ignorance of MMT, and isn't equipped to defend it when the errors are exposed.

Ignorance is bliss, but you are not forgiven.

Little Red Book, little red book, uber alles

Blind ignorance confirmed, and not forgiven.

"Blind neanderthal competitive instincts might have served an evolutionay purpose when humans had to rely on our skills as hunters to survive, but those same instincts are potentially disastrous in a world in which warfare is increasingly directed by AI.....in the age of MAD, no less...."

Instinct-driven competition has always resulted in haves and have-nots; the ultimate cause of endless wars and entrenched poverty, as the winners of the economic competition attempt to hold onto their wealth.

But the desire for a more equal distribution (desire founded in a cortex-driven awareness of justice) always creates an opposite force, in the form of revolutionary movements which themselves, in the ensuing struggle against entrenched wealth, often descend to violence and injustice (though not always: the outlawing of slavery being an example of progressive change not resulting in civil war). Hence the French, Russian, Chinese revolutions and Spanish civil war; and also Hitler's desire to rule the world. (Of these, the Chinese revolution appears to be succesfully transitioning to a productive phase: since 1980, the CCP has lifted more people out of poverty than any other country in history).

Fast forward; today the main problem is people don't understand the nature of money, eg, that money is created out of thin air ("It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." Henry Ford).

Governments certainly need to claim the money creation power during global pandemics and climate-related catastrophes, otherwise governments will become bankrupt very quickly, leading to social collapse.

Note: the wealthy can always look after themselves, but the poor can't. So it is obvious that currency-issuing governments will need to access the money creation power currently reserved for private financiers.

Frank....see the problem? Or will your blind ignorance always back "the one (nation, individual) over all"....

This is very stupid, as usual.

Ok, let's see what you got - a long paragraph following; at least that is something for a change....

Quote:

Hundreds of thousands of years of evolution will be 'corrected' by a wise communist government printing money

Correct (assuming you now know what "printing money" means, which I strongly doubt...), as co-operation gradually replaces the blind Neaderthal competition which instinctively guided us when we were evolving from animals to men.

And as we increasingly find ourselves staring into the abyss, as social and economic planetary problems mount.

Quote:

and harnessing human nature to FINALLY go in the korrrekt direction in the 21st century, as envisaged in the 19th.

Two errors: the first one you can 'correct' yourself; and the 2nd error ignores the fact philosophers and preachers have been urging us to follow our 'better angels' for centuries (as concepts of 'law' and 'justice' have developed along with the invention of writing).

Quote:

Sure thing. Dialectical and historical materialism, with added printed money and bingo! Scientific socialism.
Easy. Next week we learn to play the flute: you blow in one and and move your fingers up and down the holes.

Addressed, and refuted above.

Adopting 19th century Marxist terminology won't save your argument, nor will it make you a better flute player....

« Last Edit: Jul 23^rd, 2023 at 11:17am by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #586 - Jul 23^rd, 2023 at 11:49am

Interestingly, the latest 'Resolve Political Monitor' poll shows support for the Voice has dropped to 48%.

Relation to MMT you ask?

It's not the Constitution which needs to be changed.

It's the nation's acceptance of longterm unemployment and welfare dependency which needs to change.

As discovered on the ABC's 'Background Briefing' today, re youth crime in Mt. Isa (with some of the highest crime rates in the nation).

A reformed black youth, previously caught up in domestic violence and petty crime, now settled into a productive life with a partner and young son, said; "I have a retail job which has made all the difference, that job is vital to me."

I don't know anything which could spell it out more succinctly: that young man WANTS to work, but he is well aware of the possibility that his job might become redundant or his employer might go broke or whatever, and that getting a replacement job in a market with over a million long-term unemployed people is not assured.

eg Telstra has just announced 550 job cuts, employees are simply expected to find other jobs, when central bank ogres are trying to INCREASE unemployment by raising interest rates - the dumbest 'solution' ever for dealing with inflation because higher interest rates raise housing costs (mortgages, rents) and hence the CPI (as pointed out in prof. Mitchell's article a couple of posts back: #574).

I will be asking Albo to legislate a JG, and forget changing the Constitution via an apparently lost referendum.

« Last Edit: Jul 23^rd, 2023 at 5:37pm by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #587 - Jul 24^th, 2023 at 11:25am

https://www.msn.com/en-au/news/australia/shock-poll-shows-wa-labor-government-po...

Shock poll shows WA Labor government popularity crashes

The eventual fate of all Labor governments who promise 'fairness' and never deliver it...because they have handed management of the economy over to unelected neoclassical central bank ogres, who put the 'economy' above fairness.

Note: Chalmers is talking about a "well-being budget"; Adern introduced the idea in 2018 causing her ratings to soar, but recently she resigned with rock-bottom ratings, and NZ Labour is likely to be defeated in the upcoming elections. Chalmers should learn, and stop taking us for fools...though most ARE deluded by neoclassical economics.

« Last Edit: Jul 24^th, 2023 at 11:32am by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #588 - Jul 25^th, 2023 at 11:36am

https://www.abc.net.au/news/2023-07-25/cfmeu-to-launch-campaign-for-tax-on-super...

CFMEU calls for a super-profits tax, to pay for public housing.

........

Well, that IS necessary in the current flawed system which forces currency-issuing governments to borrow money from private financiers.

How else can government fund public housing?

There is one way of course:

"The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." Thomas Jefferson.

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thegreatdivide Gold Member Offline Australian Politics<br /> Posts: 12448 Gender:	Re: Modern Monetary Theory (MMT) Reply #589 - Jul 25^th, 2023 at 4:16pm Jim Lahey wrote on Feb 27^th, 2022 at 4:58pm: Hello Shill. Do your censors let you read that? Irrelevant to the growing MMT movement around the world.
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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #590 - Jul 27^th, 2023 at 8:58am

From Professor Steve Keen.

https://profstevekeen.substack.com/p/preface-to-the-italian-edition-of?utm_sourc...

The Italian Edition of The New Economics: A Manifesto (Keen 2021) will be published in November by Meltemi, and I will attend the BookCity book fair in Milan to launch the book on November 18th. I owe a great intellectual debt to many great Italian economists, from Pierro Sraffa (Sraffa 1960, 1926) and Pierangelo Garegnani (Garegnani 1970), to Augusto Graziani (Graziani 1989): without their work, I could never have made the contributions that I have managed to add to sound economics. It is great pleasure to know that I will in part repay that debt by having my book appear in Italian.

Below is the preface that will be published (in Italian, of course) with the book.

There are few countries on the planet that illustrate the weaknesses of mainstream macroeconomic thinking better than Italy. As I explain in this book, amongst its many other weaknesses, mainstream "Neoclassical" economics ignores the role of private debt and credit in the economy, and demonises government debt and deficits, both on utterly fallacious grounds.

Mainstream economics dominates economic policy globally, but the extent to which policies based on it can be enforced varies around the world. Since the Maastricht Treaty effectively codified conventional economic thinking via its rules on government debt and deficits—that government debt should not exceed 60% of GDP, and deficits should be below 3% of GDP—the European Union has been the laboratory in which mainstream economics has been tested, and found wanting.

Italy has suffered more than most EU countries from the perverse effects of imposing mainstream economic fantasies on real economies. A country which used to regularly and substantially outperform the USA has now fallen behind it, especially in the aftermath to the abandoning the Lira for the Euro in 1999, and even more so during and after the Global Financial Crisis (GFC) in 2008—see Figure 1.

Figure 1: Real annual economic growth rates for Italy versus the USA

Before Neoclassical econocrats wrestled the reins of power from Italy's falsely maligned post-WWII "Keynesian" bureaucrats, Italy's real economic growth was volatile, but almost always substantially higher than the USA's. Growth in both countries trended down, rather than up, as the Neoclassical orthodoxy displaced Keynesian-style policies, and from the date that the "Growth and Stability Pact" took hold in Europe, things got worse rather than better for Italy. Its diminishing growth rate fell permanently below the USA's, it suffered more from the GFC than America—despite not having a Subprime Bubble—and the aftermath to the crisis has seen Italy's growth rate fluctuate around zero. The Growth and Stability Pact has brought stagnation and instability.

Despite—or rather because of—the EU obsession with reducing the level of government debt, Italy is one of the few countries in the world where government debt substantially exceeds private debt. High private debt is not good for the economy—far from it, as I explain in the second chapter—while high government debt, contrary to Neoclassical economics, is not a major problem for a country which issues its own currency. But to end up with substantially higher government debt, when the objective of the policy was to reduce it—to halve it as a proportion of GDP, in Italy's case—is a sign of how truly perverse these policies have been in practice.

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thegreatdivide Gold Member Offline Australian Politics<br /> Posts: 12448 Gender:	Re: Modern Monetary Theory (MMT) Reply #591 - Aug 1^st, 2023 at 10:21am More proof "the issuing power should be taken from the banks and restored to the people, to whom it properly belongs."(Thomas Jefferson)....... https://billmitchell.org/blog/?p=61030 Central bankers deliberately trying to increase poverty is not a sound policy framework
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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #592 - Aug 2^nd, 2023 at 9:58am

Today's lie from the Noalition, in a Senate debate:

"Labor's $10 billion Housing Fund is funded by the taxpayer...."

No it's not. It's funded by government borrowing $10 billion FROM the private sector.

But the question ought to be, why is the government doing that?

Obviously because under current arrangements government is forced to borow from the private sector.

Proving once again: "the issuing power should be taken from the banks, and restored to the people to whom it properly belongs". Thomas Jefferson.

Note: the government thinks it is being clever by treating the Fund as "off-budget", with no implications for the budget's debt and deficit figures, because the government claims it will redeem the $10 billion after five years of investing the money in the stock market.

In any case, the hoped for $500 million return on investment each year (ie 5%) is woefully inadequate to deal with the current housing crisis, which requires ten times as many public housing units as will be delivered by the Fund.....assuming it makes a profit on the stock exchange casino.

« Last Edit: Aug 2^nd, 2023 at 12:56pm by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #593 - Aug 3^rd, 2023 at 9:50am

The ABC's business editor Ian Verrender says the pandemic "proved MMT doesn't work".

He's wrong, of course.

Philip Lowe SHOULD have funded the living expenses of locked-down workers, at no cost to the government, but he sheeted the costs of the government's covid-rescue package back to the government - which saw the government's debt increase by c. $350 billion.

Naturally in a pandemic, government should take control of supply and demand, to ensure supply of essentials can continue to be delivered while many enterprises are shut down, either by necessity (because locked down workers are not available) or by design, to limit effective demand to purchase of essentials.

Interesingtly, recently Verrender postulated "economists should ignore what their textbooks say about the NAIRU"...it's a pity he doesn't take his own advice.....

« Last Edit: Aug 3^rd, 2023 at 10:31am by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #594 - Aug 4^th, 2023 at 1:11pm

Re the argument over "debt-free" money:

Private banks of course create 'debt' money when they write loans for credit-worthy customers, whereas currency-issuing governments with their own treasury (and central bank) SHOULD be authorized to create 'debt free' money, to fund certain public sector policies when the required resources are available for purchase by the government.

Which means the ideology re government debt and deficits, and the associated narrative re the necessity for budget surpluses, is wrong.

A currency-issuing government can never run out of the currency it issues.

The concerns re inflation are misplaced; the real issue is the extent to which the public sector should have prior claim over the nation's output and resources.

This is increasingly important as the developed world is arguing with the developing world over "who should pay for" the transition to the green economy.

If rich nations claim they have 'budgetary problems', how can anyone expect the developing world - already burdened with higher levels of poverty - to bear the "cost"** of the transition?

** which is a resource opportunity cost, not a monetary cost, for a currency issuer.

« Last Edit: Aug 4^th, 2023 at 1:18pm by thegreatdivide »

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #595 - Aug 5^th, 2023 at 8:37am

Housing: it's getting hot for the ALP:

https://www.theguardian.com/australia-news/2023/aug/03/more-than-1600-australian...

After outlining the extent of the present housing and rental crisis, the article concludes with:

"Max Chandler-Mather, the Greens’ housing spokesman, claimed the federal government was “pretending” it couldn’t do more on coordinating rent freezes.

“The prime minister could go to national cabinet, take national leadership, put money on the table and incentivise a freeze and cap on rent increases,” Chandler-Mather said.

He noted national cabinet was already considering broader action on renters’ rights and that state leaders had already instituted caps in the energy market.

The probem is of course the PM thinks the government has to balance its budget and pay down debt...

Even Menzies didn't believe that - Menzies ran continuous budget deficits, and maintiained full employment, low inflation and low interest rates....AND built sufficient public housing to ensure affordable housing for all.

https://www.abc.net.au/news/2020-08-30/liberal-party-of-robert-menzies-proudly-d...

Unlike today's Liberals, Robert Menzies boasted of delivering large budget deficits

And indeed - as Lisa has trumpeted - Albo makes a great modern liberal PM.

« Last Edit: Aug 5^th, 2023 at 10:18am by thegreatdivide »

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thegreatdivide Gold Member Offline Australian Politics<br /> Posts: 12448 Gender:	Re: Modern Monetary Theory (MMT) Reply #596 - Aug 6^th, 2023 at 2:22pm The trials and tribulations of debunking the neoclassical mainstream: https://profstevekeen.substack.com/p/the-day-i-pranked-paul-samuelson?utm_source... The Day I Pranked Paul Samuelson
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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #597 - Aug 8^th, 2023 at 10:58am

More on the failed ideology of privatization:

https://profstevekeen.substack.com/p/railroaded-bring-back-thatcher-and?utm_sour...

Railroaded: Bring Back Thatcher and Reagan

When a commitment to privatise the railways was finally made by the Major government (in the Conservatives' Election Manifesto in 1992) these problems [considered by Thatcher] were simply ignored. The subsequent White Paper, a slim document of 21 pages 'rather lightweight' on the economic rationale behind the privatisation plans blandly asserted that a privatised industry would 'mean more competition, greater efficiency and a wider choice of services more closely tailored to what customers want' and 'provide greater opportunities to . . . reduce costs, without sacrificing quality' (McCartney and Stittle 2017, p. 2).

.....

plus an informative look at concepts like "the pay-back period":

The Payback Period
Avner Offer provides such a general principle in his recent book Understanding the Private-Public Divide: Markets, Governments and Time Horizons (Offer 2022): the time horizon for investment in ventures like railways, schools and sewerage systems lies outside the payback period that private investors expect:

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #598 - Aug 10^th, 2023 at 12:36pm

Re the 'Public-Private divide' referred to in the previous post (in relation to different investment-return horizons applicable for the public and private sectors), the fact is the public and private sectors will have to be 'divided', in regards to financing the different needs of each sector.

The private sector funds itself with debt money issued when banks write loans for credit-worthy customers, but the public sector will need to fund itself using its currency-issuing capacity.

This means the public sector will NOT be subject to the same budget constraints as the private sector, but rather, the public sector will be subject to resources constraints determined by the nation's available resources and productive capacity.

And this latter can be determined by the electorate, rather than the "independent central bank" as at present.

Discussion on radio today about "where's the money coming from" for increased aged care, public housing, electricity transmission and storage, and military, when no one wants to pay higher taxes.

Obviously the people most in need of government support will be squeezed more and more under present arrangements, and the wealth divide will increase relentlessly (as more Auzzies are forced to rent, and on retirement don't own a house).

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thegreatdivide

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Re: Modern Monetary Theory (MMT)
Reply #599 - Aug 10^th, 2023 at 4:32pm

Very sad: a "socialist government" trying tp reduce poverty is destroyed by international finance.

https://en.wikipedia.org/wiki/Rafael_Correa

Raffael Correa (former Ecuadorian president during the South American "pink tide" up to 2017) has criticized the neoliberal policies of previous presidents, particularly former president Mahuad's adoption of the U.S. dollar as Ecuador's domestic currency in 2000 to combat the country's inflation. Correa has characterized American dollarisation as a "technical error" which has effectively eliminated Ecuador's ability to set its own currency and exchange policy. However, Correa has also acknowledged that it would be politically and economically impossible to abandon that policy now. After his election victory of 15 April 2007, he pledged to maintain dollarisation during the entire four years of his administration, though he also indicated his support for the idea of replacing the US dollar with a regional South American currency at some point in the future

Correa has criticized the neoliberal policies of previous presidents, particularly former president Mahuad's adoption of the U.S. dollar as Ecuador's domestic currency in 2000 to combat the country's inflation. Correa has characterized American dollarisation as a "technical error" which has effectively eliminated Ecuador's ability to set its own currency and exchange policy. However, Correa has also acknowledged that it would be politically and economically impossible to abandon that policy now. After his election victory of 15 April 2007, he pledged to maintain dollarisation during the entire four years of his administration, though he also indicated his support for the idea of replacing the US dollar with a regional South American currency at some point in the future.

.......

As always, the US-backed IMF (Instant Misery Fund) and World Bank have triumphed after the election of a conservative president, and once again the country has descended into chaos.

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