Sunday, September 6, 2020

The Mathematical Model of Modern Monetary Theory 3 — Steve Keen


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ProfSteveKeen
The Mathematical Model of Modern Monetary Theory 3
Steve Keen

7 comments:

NeilW said...

"The government can sustain deficits and accumulate substantial negative equity because it owns its own bank."

Sigh. Eventually Steve will learn how to account properly.

Every amount of "net financial assets" transferred to the private sector has a contingent asset within it of that amount of taxation - for any positive tax rate.

There can be no 'negative equity' that isn't offset by the contingent asset contained within the increased private sector savings.

Matt Franko said...

Neil that’s not how Modified Accrual Basis works.,,

You’re trying to apply Accrual Basis... US Fed got uses Modified Accrual...

https://corporatefinanceinstitute.com/resources/knowledge/accounting/modified-accrual-accounting/

The modified accrual basis does not allow accrual of Assets on the left hand side...

Your trying to use a sort of “accounts receivable “ as an asset on the LHS... cash basis does not use Accounts Receivable...

Just don’t evaluate the Modified Accrual illustration using Accrual Basis criteria or Cash Basis criteria...

Just stick with the same basis don’t bastardize it... why conflate the different bases?

Just pick one and STICK WITH IT.... it’s only ex post Accounting...., Accountants don’t run things...

Matt Franko said...

“ "The government can sustain deficits and accumulate substantial negative equity because it owns its own bank."

Keen doesn’t understand the Modified Accrual Basis of Accounting.... take an Accounting course ...

Matt Franko said...

Modified Accrual Basis does not include the Balance Sheet report .... so no need to compute “negative equity” which is only applicable to a Balance Sheet illustration... Balance Sheet only applicable to Cash Basis or Accrual Basis...,

Take an Accounting course or two then you will understand it....

Or just delegate to people who have..,

Matt Franko said...

Why do any morons out there read Keen about Accounting? Does Keen have any training in Accounting?

NeilW said...

The rest of the world doesn't follow US standards.

Accounting policy can be set as required. The UK "Whole of Government Accounts" has a balancing item called "Total liabilities to be funded by future revenues". That's based on IFRS standards as modified to apply to government by legislation and regulation.

Pretty much every country has a different model.

Whichever, negative equity is the wrong phrase - since that implies the government sector cannot meet its liabilities if they were all to come due - a nonsense notion for the currency issuer

Matt Franko said...

Right the only way to get “negative equity!” is to subtract liabilities from assets and get a negative number...

And the only way assets can be less than liabilities is to accrue liabilities and NOT accrue assets...

The intent of the modified accrual is to get a comparison of current assets to accrued liabilities.... as a measurement...

Accrued Liabilities are ALWAYS going To exceed current assets...

You just have be trained in accounting science and know what you are looking at in order to do an appropriate evaluation...

So let’s get unqualified Art Degree morons to do It instead and we can see what we get these days..,

I would bet $100 none of the MMT people even know what bass is of accounting the US govt uses.... much less what it means...