Wednesday, April 29, 2020

COVID-19 debt crisis: Is Modern Monetary Theory a solution? — Neville Spencer


At least some on the left are taking cognizance of MMT, but if this author is any indication, more study is required to understand what MMT is and what it is not. But at least it is a try.

Green Left
COVID-19 debt crisis: Is Modern Monetary Theory a solution?
Neville Spencer

7 comments:

Andrew Anderson said...

MMT in a nutshell:

1) No taxes needed unless price inflation is a problem; then taxes on the non-rich to quell consumption since the rich don't consume enough to matter. So instead of "tax and spend" we get "spend and tax the non-rich."

2) Increased privileges* for the banks to make an inherently unjust, obsolete (i.e. Gold Standard relic) banking model more STABLE.

3) Wage slavery to government to supplement wage slavery to the private sector for the victims of the banks.

4) Yes, the MMT School would eliminate positive yields on the inherently risk-free debt of monetary sovereigns but:

a) Would allow banks to borrow fiat in unlimited amounts, unsecured, at zero percent interest from the Central Bank.

b) What about eliminating non-negative yields/interest on the inherently risk-free debt of monetary sovereigns since the MOST they should yield is zero percent MINUS overhead costs = NEGATIVE? Or does the number line stop at 0?

And this is what you're so hot and bothered about, Tom?

One would think that Tom and others are not aware that the problem of banks is centuries old and is not to be solved so glibly as the MMT School would try.

*e.g. unlimited deposit guarantees FOR FREE.

Mike Norman said...

Fed chairman Powell complaining about the debt shows that MMT is completely ignored by policy makers. MMT has been around for 25 years and has gotten nowhere with decision makers. They completely ignore it. It's a failure of the movement's "leadership," Stephanie Kelton or no Stephanie Kelton. Total failure. How a moronic idiot like Art Laffer, in a couple of years, was able to push a failed paradigm, and he's still considered a "go to" guy on economic policy, but the MMTers can't get their ideas accepted anywhere? It's a total failure. Stephanie Kelton blocked me on Twitter. Blocked ME!

Matt Franko said...

Mike they are not trained in Science or problem solving... they are trained to dogmatically advocate for their Theory...

https://plato.stanford.edu/entries/hegel-dialectics/


Within their Theory they can include or exclude anything or anyone they want...

Its their Theory... they can do whatever they want in it..

Your methodology (science) is simply incompatible with theirs (platonistic)...

Matt Franko said...

Laffer just employs the same failed destructive methodology...

Peter Pan said...

Why did Stephanie K. block Mike N. ?

Joe said...

Sorry this is off topic but in today's nytimes itnsaud the ecb is paying banks to lend.

"Under certain conditions, the central bank will allow commercial banks in the eurozone to borrow at a rate of minus 1 percent provided the money is passed on to businesses and consumers. The negative interest rate means that banks do not need to pay back all of the money that they borrow."

Does this actually do anything other than earn the banks interest? It sounds like loanable funds stuff. How would a bank taking a loan from the cb allow it to lend more, since they don't actually lend out the reserves that they borrow?

Joe said...

At best, all I can see is that it allows the banks to absorb losses equivalent or the interest that they earn. So they could slightly ease their credit standards and still remain profitable.