Sunday, July 26, 2020

The View Through The MMT Lens — NeilW


MMT is a way of looking at the financial part of the economy from a different point of view. It is often described as a Lens you can look through to see things that hither too have not been made clear.
New Wayland Blog
The View Through The MMT Lens
NeilW

7 comments:

Peter Pan said...

Cullen Roache took a view through the MMT lens, yet he still believes that unemployment builds character.

Unknown said...

Probably believes eating hamburgers cooked by individuals whose wage is so low they can't afford the rent is character building!

Matt Franko said...

“ bond auctions keep getting covered bids.”

But that was not happening in March...

So you can create a Theory that says “bond auctions never fail” but then when they fail everybody looks at you and thinks you don’t know what is going on...

Same as MMT says “Fed always supplies enough Reserves!” then in September THAT didn’t happen either...

So what good is MMT if it is often wrong ?

What good is it?

Matt Franko said...

MMT is NOT “problem solving” in any way ...

Matt Franko said...

Check that they would solve the UE problem by the JG... ok that is ONE... I give them that one... but that is all...

Matt Franko said...

And they know were not “out of money!” too but that is nothing to brag about either...

NeilW said...

"But that was not happening in March... "

I didn't say Bond auctions never fail. I said they keep getting covered bids - when the expectation is that they would dry up because government was 'spending too much'.

They will fail when liquidity preference is so high nobody wants to play in the market. At which point the authorities have to enforce those bids by suing those dealers who have failed to abide by their contracts to make a market. That they haven't demonstrates the regulator is too close to the participants. It's a cosy cartel.

"Same as MMT says “Fed always supplies enough Reserves!” then in September THAT didn’t happen either..."

But they did eventually, or the payment system would have collapsed or the interest rate would climb above the policy rate. With QE in place there is always enough reserves in the system in any case.

There is nothing in the MMT literature that precludes stupidity Venezueala can happen and has.. What it describes is the consequence of the failure. Airplanes flown by bad pilots will still crash. That doesn't prove heavier than air flight is impossible.

There's no law against stupidity. People are entitled to insist that reserve balances do no go up when government makes a payment to a person's bank account. That just makes them incompetent fools, and there are a lot of them around in mainstream economics.