… A guaranteed alternative job replaces bank credit manipulation [by monetary policy] as the stabilisation process. The production system gets a change in output, not a dead loss. You get income in your pocket, not a debt millstone around your neck.New Wayland Blog
And that's how you get to true full employment and price stability within an economic system where demand is satisfied.
The MMT Approach in a Nutshell
NeilW
10 comments:
And that's how you get to true full employment NeilW
True employment can in no way be to pay people to waste their time. How about instead returning the productive assets that were stolen from them?
and price stability ibid
As long as price inflation is produced in an ethical manner (e.g. an equal Citizen's Dividend) why should it matter if it is not excessive? It certainly beats price deflation since that rewards money hoarding, not investment.
Also, how can paying people to waste their time not cause price inflation since that precludes them from working for themselves and others during their "work" shift?
Oh and thanks Neil for putting to rest the often heard defense that MMT is descriptive ONLY.
Therefore you leave the base rate at the natural rate of 0% NeilW
There's nothing "natural" about limiting the use of a Nation's fiat in account form to a cartel of government privileged usurers, aka "the banks." Why can't citizens do so also?
and stop artificially trying to hold it above that, particularly stop moving it around. ibid
Except, in addition to limiting fiat use in account form to "the banks", Warren Mosler would have the Central Bank "artificially" lend to banks unsecured at zero percent interest!
The question I have is MUST the MMT gang be such bank toadies? One cannot serve two masters, can he?
The wage is paid with vertical money and matches the ebb and flow of bank money spending countercyclically. NeilW
So would a Citizen's Dividend whose expressed purpose would be to counter price deflation.
But importantly it does the same thing on the production side with labour hours - injecting and removing labour hours countercyclically with private and public sector demand keeping labour hours near constant relative to the working population. ibid
So the banks would be forbidden from financing automation? No, because iirc, you once told me that the purpose of the private sector and banks was to destroy jobs.
So basically your endgame is this situation:
1) a few rich owners of the automation.
2) a few highly skilled human wage slaves to manage the automation.
3) government.
4) the vast majority of mankind paid to waste their time as wage-slaves to government.
What that means is that government stops paying banks "welfare on reserves" payments. No Interest on Reserves. NeilW
Not good enough. As large users/hoarders of a risk-free PUBLIC utility, the Nation's fiat, private depository institutions should PAY for that use/hoarding, e.g. NEGATIVE interest.
The irony is that MMT proponents don't properly understand what fiat is, a public utility meant to serve the public, not a cartel of usurers. Instead, they cling tenaciously to a Gold Standard banking model as far as the use of fiat is concerned - as if fiat were still too expensive for everyone to use instead of private bank deposits.
What a strange mixture of fascists and socialists the MMT crowd is.
I agree with NeilW's opposition to manipulating interest rates (though there's no harm to retaining the OPTION of interest rate hikes to be used only in an emergency, which is very much what Milton Friedman advocated).
However, Neil's claim that there'll be less debt around everyone's neck is not really compatible with his advocacy of the permanent zero interest rate. Under the latter regime, people will borrow MORE THAN where interest rates are higher: not that that desperately matters because in that where interest rates fall and total borrowng rises, the net effect on household debt servicing costs as a % of income can be zero. In fact debt servicing costs are currently at a record 30 year low despite the rise in debt as a % of GDP over the last 20 years or so.
I agree with NeilW's opposition to manipulating interest rates ... Ralph Musgrave
To the contrary, the MMT gang advocates a permanent zero interest policy but only for members of a government-privileged usury cartel - who alone may use fiat in account form (i.e. via exclusive access to inherently risk-free accounts at the Central Bank) AND via exclusive access to unlimited, unsecured loans from the Central Bank at zero percent interest.
That's manipulation and not for the general welfare but for the private welfare of the banks and the so-called "credit worthy" of what is currently the PUBLIC'S credit but for private gain.
"Under the latter regime, people will borrow MORE THAN where interest rates are higher: "
And if the banking policies proposed impose a 20 year limit on mortgages how will they borrow more? What about if loans to facilitate the shorting of the currency are unenforceable?
People can't borrow more without more collateral. The idea that interest rates are the sole determinant is mainstream economics.
And therefore wrong.
MMT removes the banks from the critical path.
People can't borrow more without more collateral. NeilW
1) Having collateral should not entitle any one to the PUBLIC'S credit but for private gain.
2) Bank credit creation causes collateral prices to rise in nominal terms thus qualifying the holders for even more credit and so forth. George Soros calls this process "refexitivity", iirc. So much then for "MMT removes the banks from the critical path."
If you really want to remove banks from the critical path as well as be decent human beings and not exploit the poor, you'd advocate 100% private banks with 100% voluntary depositors and an equal Citizen's Dividend to replace all fiat creation for private interests such as for the banks and by extension for the rich, the most so-called "creditworthy."
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