Game-changer!
Hi,
You all are making way too much out of the jg.it comes down to this:
with ‘state currency’ there necessarily is, always has been, is, always will be a buffer stock policy.
Call that the mmt insight if you wish.so it comes down to ‘pick one’-
- gold
- fx
- unemployment
- employed/jg/elr
- wheat
- whatever!
I pick ‘employed/jg/elr as it works best as a buffer stock based on any/all criteria for a buffer stock.
so yes, it’s an option. you are free to pick one of the others.
Best!
Warren
by Warren Mosler
Read it at Pragmatic Capitalism here
Follow on:
SS: Now I’m really confused. Randy’s article said you sided with Bill. But now you’re saying that the buffer stock of unemployed is not necessarily a key piece of the MMT puzzle?01/02/2012 at 4:44 PMwarren mosler
I believe a careful read of Bill will show he entirely agrees with me.
mmt shows how there is necessarily some kind of buffer stock at work with state, tax driven, currency.
mmt shows how using one buffer stock or another alters outcomes: http://www.moslereconomics.com/mandatory-readings/full-employment-and-price-stability/
http://moslereconomics.com/2010/10/04/exchange-rate-policy-and-full-employment/ MMT shows how the outcomes of an employed buffer stock/jg/elr serve public purpose as currently defined as full employment and price stability vs the other buffer stock choices.
And you can know all this and still select any buffer stock you want, each with its associated outcomes, which MMT also describes.
Does that help?
01/02/2012 at 4:55 PM
I think Warren is indicating it's important to delineate the aspect of MMT that's a description of reality with the aspect that seeks to propose specific economic solutions. Not everyone will immediately agree to all policy proposals, but this should not detract from the fact that its descriptive aspect is more accurate than the mainstream framework.
ReplyDeleteI am not an economist so I am not familiar with all the history and terminology, but it seems to be that the there are two aspects of MMT, monetary economics and finance, and macroeconomics. It's the macro that leads to elaboration of various policy options, and these policy options are different from the ones on the table largely because the MMT macro model sits on top of monetary economics and finance.
ReplyDeleteWhat MMT has done is to combine these into a more comprehensive macro paradigm than most economists are operating in terms of. That is to say, MMT has expanded the macro universe of discourse to include monetary economics, whereas most economists are not fully aware that they are dealing with a monetary economy and they don't have the tools and skills needed to handle the job. So the policy options they come up with are less effective and less efficient that those of MMT.
I guess things start getting complicated when you get to the macro level, as it now concerns itself with the masses of people. As such, many solutions at this level tend to be highly political, since macro solution impact everyone, and it impacts everyone in different situations in different ways. There are always unintended consequences.
ReplyDeleteEven the choice of what to measure, and how to measure it will impact different people differently, and it's going to be hard to find the right balance at all times. It's very easy to overshoot in one direction, and there's an imbalance again. That's why as you've said before, philosophers are always needed, in the sense we need people who are open to all sorts of inputs, and are not wedded to a single frame of thought.
I don't think there is a game changer here. Mosler was clear from the beginning: the price anchor is always some kind of buffer stock. There is only a question which one. And Mosler is still clear that JG is simply the best, period. Your ideology can make you feel revulsion, but technically JG is the most efficient.
ReplyDeleteLet's say that Warren puts it diplomatically and Bill puts it categorically. But if Warren thinks they are saying the same thing, they are.
ReplyDelete"But if Warren thinks they are saying the same thing, they are."
ReplyDeleteUnless that's the part where he was being diplomatic. :o)
Bill Mitchell: I accept the macroeconomic concepts of full employment and price stability as being desirable goals and the way for the economy to achieve public purpose – advance the prosperity and well-being of its citizens.
ReplyDeleteSo based on the body of work that has become known as MMT we understand that a buffer stock of some sort will be used to ensure inflation control. The question becomes what is the “best” buffer stock to employ.
MMT demonstrates clearly that it is the employment buffer option that is superior.
source
No daylight between them as far as I can see.
Interesting, I was watching The West Wing Season 4 last night - the new speech writing assistant Will Bailey has just come into it and was asked by his boss Toby Ziegler to work on the language in the Foreign Policy section - Will basically rewrites it and wins over the President on the rewrite but what Toby meant was make the language sound more pleasant.
ReplyDeleteThat is all that I see is happening here, the language is being massaged. The meaning and intent remain unchanged.
Perhaps in the context of operational discussion (as opposed to political sell) we should call the JG, Buffer Stock, so each of our understanding of what we are talking about to each other is explicit.
What is not optional is the price anchor you choose.
ReplyDeleteYou either pick one or it gets picked for you.
MMT states that an employed labour market anchor - ie people engaged doing something useful - is the best shock absorber and dampening mechanism in an economy.
It is for others to explain why engaging people to watch Sky TV, drink too much or some other mechanism for blotting out the wasted hours is superior.
We have a population brought up and trained by the education system to find value in work. Structurally denying them that value through no fault of their own is probably a form of torture.