The great debate over savings has come to a head over at the Monetary Realism blog. The pseudonymous writer JKH has an extraordinarily detailed presentation at Monetary Realism of the debate over the correct way to view the concepts of saving and investment.
It’s very long, very wonkish and full of accounting equations. If that sort of thing gets you going on a Tuesday afternoon, by all means please read the whole thing.
For those of you looking for a cheat-sheet, here’s a quick breakdown about what’s going on in this debate.
Read it at CNBC NetNet
The Great Debt/Savings Throwdown: A Cheat Sheet
by John Carney
Just posted two comments on Carney's post. Still a bit of a muddle going on I think.
ReplyDeleteCan we go back to trying to overthrow the Buckaroo Program? While lecturing how important "productivity" is?
ReplyDeleteSomeone make it stop.
Still waiting for something of real substance to come out of MMR. So far we've had squabbling over use of language and terminology, vague unfounded statements about this and that, accusations thrown round willy nilly, attempts at theorising that demonstrate a lack of familiarity with past research, and personal attacks...
ReplyDeleteA typical MMR argument goes as follows: 1. CR makes a statement such as "a CAD is bad in the long term". CR then provides a random literary quote to "prove" his point. The statement is then inserted into the MMR primer and immediately becomes accepted MMR doctrine. Research is irrelevant. This is now what MMR believes and MMT is therefore 100% wrong on the subject. Oh, and MMT is a bunch of socialists, MMR is apolitical and has no policy prescriptions and therefore there is no rationale for the JG. Genius!
The "About MMR" primer is an extraordinary example of sophistry.
Let me explain why I think this important.
ReplyDeleteI'm not trying to shoot down the core insights of MMT. In fact, I find them extremely valuable to my reporting and analysis.
But there are some statements coming out of MMT that are highly misleading or confusing to people. Much of this confusion stems from the impression people get reading MMT blogs and papers that saving requires deficit spending. This is wrong, of course. But many smart, intelligent folks think this is what MMT is claiming.
So they dismiss it as nonsense.
What I've been trying to do is explore what it is that makes people think this is an MMT claim and what must be said to clarify it.
Furthermore, I do think there's a problem with MMT that cannot be confined to confusion.
The problem is as follows: MMTer are so focused on sectoral balances and the interaction between the private domestic sector and the public sector that they often downplay the intra-sector dynamics.
Finally, MMTers do not seem to fully appreciate the problems of ignorance and calculation that inform Austrian economics. They seem to recoil at even thinking about them because of the implications for the limits of political action. This also needs to be corrected.
Mr. Carney wrote:
ReplyDeleteMMTers do not seem to fully appreciate the problems of ignorance and calculation that inform Austrian economics. They seem to recoil at even thinking about them because of the implications for the limits of political action. This also needs to be corrected.
MMTer do not seem to fully appreciate the problems of ignorance and calculation?
Really?
MMTers (and all Keynesians, for that matter) haven’t the faintest idea what Austrians are talking about when the topics of the problem of ignorance, knowledge in society and economic calculation appear. Naturally, they “recoil”* from a detailed and thorough economic analysis of which they are completely ignorant, an ignorance that they work vigorously to maintain.
*This “recoiling” generally manifests itself in the form of name-calling: “Fringe fringe fringe” and “religious nut” are two of my favorites.
MMTer are so focused on sectoral balances and the interaction between the private domestic sector and the public sector that they often downplay the intra-sector dynamics.
MMTers downplay intra-sector dynamics? Such an analysis utterly disappears from MMT analysis. That’s the cause of the hysterical MMT reaction when presented with the Austrian concepts of ignorance, knowledge in society and economic calculation. There cannot be intra-sector dynamics in an analysis that excludes human beings and their actions.
Good points by Carney. Usual Roddis stuff.
ReplyDelete"The problem is as follows: MMTer are so focused on sectoral balances and the interaction between the private domestic sector and the public sector that they often downplay the intra-sector dynamics."
ReplyDeleteMMT folks don't focus on the intra-sector dynamics because they are already well-known. There are no real mysteries here, only willful ignorance.
Why fix the problems that have already been solved?
The sectoral balances and closed-system relationships are very poorly understood and unlearnable by a significant segment of the population, even though they are comparatively simple.
Which problem do you think we should focus on? If we don't come to understand the second problem as a nation the first one doesn't matter much. It's the tail wagging the dog.
"MMTers (and all Keynesians, for that matter) haven’t the faintest idea what Austrians are talking about when the topics of the problem of ignorance, knowledge in society and economic calculation appear."
ReplyDeleteThe statement of a buffoon.
It is Austrians in fact who pay lip service to uncertainty, ignorance and so on, when these issues, properly understood, destroy their self-correcting, "plan coordination" view of markets.