An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Thursday, February 21, 2019
Nathan Lewis — The Problem With "Modern Monetary Theory" Is That It's True
Nathan Lewis is totally confused about government finance and central banking. And he has an attitude to begin with. Amazing that this kind of rant gets published. Oh well, Forbes.
“Modern Monetary Theory" basically posits that a government can pay its bills by printing money. What exactly is so ‘modern’ about this I don't know.”
MMT explains how money has always worked from the dawn of human civilization. All MMT proponents dislike the name “Modern Monetary Theory,” but that’s the name that stuck. The name does not diminish the truth.
“The irony of it is: that a government can, in part, pay its bills with the printing press, but this works best when the government acts as if it cannot.”
In short, ZIMBABWE!
No one ever screams ZIMBABWE! when the US government sets a new record each year in creating money for wars and weapons makers. Idiots only scream ZIMBABWE! regarding government programs that help average people.
“Recently, the Federal Reserve held U.S. Treasury securities amounting to about $2.2 trillion. The interest income from this is remitted back to the Treasury.”
WTF? Interest income from money deposited in Fed savings accounts is remitted back to DEPOSITORS.
And by the way, the gross figure is $22 trillion, not 2.2 trillion.
The errors compound from there, but I didn’t bother to slog through them. Essentially this clown says MMT is correct, but we must pretend that it isn’t. We must pretend that Social Security is “unsustainable,” and there is “no money” for Universal Medicare.
If we fail to maintain the pretense, then ZIMBABWE!
Because we trust the Federal Reserve not to make too many mistakes (rightly or wrongly), we are thus willing to hold ("demand") a large amount of dollars. Nathan Lewis
And how is the non-bank private sector even able to use US dollars besides "cash", mere bills and coins?
It can't; instead the non-bank private sector in the US, at least, must use private bank deposits and these must be heavily privileged by government for the public to have confidence in them.
So, government privileges for private bank deposits increase the demand for those while lowering the demand for US dollars.
Because we "demand" this, the Federal Reserve can thus "supply" a large amount of dollars, and the dollar does not lose value. Nathan Lewis
Since only depository institutions in the US may use US dollars, the demand for US dollars is already so low that its so-called "natural" interest rate is ZERO percent.
MMT explains how money has always worked from the dawn of human civilization.
No it doesn't. It explains how the curious, immoral, degenerate, illegal and unconstitutional fiat money system of the USA and its minions mechanically operates but which exists primarily to allow the slow drip drip drip of fiat money looting for the .1% to continue undetected by a brainless populace. The MMT analysis meticulously avoids understanding actual economics or how societies operate.
... but which exists primarily to allow the slow drip drip drip of fiat money looting for the .1% to continue undetected by a brainless populace. Bob Roddis [bold added]
It is not "brainless" to refuse to be suckered into a previous looting scheme based on needlessly expensive, scarce or inconvenient/unsafe-to-use fiat such that the population's use of private bank deposits instead is not entirely voluntary.
So inexpensive fiat is NOT part of the problem but a REQUIRED part of any ethical solution.
As stated, MMT explains how money works. It does not explain how financial systems are abused, which is a seperate but related issue. Libertarians (in gold we trust) are the worst kind of capitalists, caring only for themselves. Their anti-violence / anti-war stance is only because they are anti-tax, which they think is used to finance wars. Libertarians have no problem using economics to harm people by denying them health care and retirement because these are "funded by taxes", too ("taxation is theft").
As MMT explains how money really works and how taxes are not necessary to fund government spending - which Roddis acknowledges in his post above - a person of even nominal intelligence can see that the entire foundation of Libertarian "thinking" is based on mistaken beliefs. Unfortunately, those who have drunk deeply from this batch of bad KoolAid are without the cognitive ability to reconcile this.
This says it all - “I write about economic topics in the Classical or "supply side" tradition.”
ReplyDelete“Modern Monetary Theory" basically posits that a government can pay its bills by printing money. What exactly is so ‘modern’ about this I don't know.”
ReplyDeleteMMT explains how money has always worked from the dawn of human civilization. All MMT proponents dislike the name “Modern Monetary Theory,” but that’s the name that stuck. The name does not diminish the truth.
“The irony of it is: that a government can, in part, pay its bills with the printing press, but this works best when the government acts as if it cannot.”
In short, ZIMBABWE!
No one ever screams ZIMBABWE! when the US government sets a new record each year in creating money for wars and weapons makers. Idiots only scream ZIMBABWE! regarding government programs that help average people.
“Recently, the Federal Reserve held U.S. Treasury securities amounting to about $2.2 trillion. The interest income from this is remitted back to the Treasury.”
WTF? Interest income from money deposited in Fed savings accounts is remitted back to DEPOSITORS.
And by the way, the gross figure is $22 trillion, not 2.2 trillion.
The errors compound from there, but I didn’t bother to slog through them. Essentially this clown says MMT is correct, but we must pretend that it isn’t. We must pretend that Social Security is “unsustainable,” and there is “no money” for Universal Medicare.
If we fail to maintain the pretense, then ZIMBABWE!
Because we trust the Federal Reserve not to make too many mistakes (rightly or wrongly), we are thus willing to hold ("demand") a large amount of dollars. Nathan Lewis
ReplyDeleteAnd how is the non-bank private sector even able to use US dollars besides "cash", mere bills and coins?
It can't; instead the non-bank private sector in the US, at least, must use private bank deposits and these must be heavily privileged by government for the public to have confidence in them.
So, government privileges for private bank deposits increase the demand for those while lowering the demand for US dollars.
Because we "demand" this, the Federal Reserve can thus "supply" a large amount of dollars, and the dollar does not lose value. Nathan Lewis
Since only depository institutions in the US may use US dollars, the demand for US dollars is already so low that its so-called "natural" interest rate is ZERO percent.
MMT explains how money has always worked from the dawn of human civilization.
ReplyDeleteNo it doesn't. It explains how the curious, immoral, degenerate, illegal and unconstitutional fiat money system of the USA and its minions mechanically operates but which exists primarily to allow the slow drip drip drip of fiat money looting for the .1% to continue undetected by a brainless populace. The MMT analysis meticulously avoids understanding actual economics or how societies operate.
... but which exists primarily to allow the slow drip drip drip of fiat money looting for the .1% to continue undetected by a brainless populace. Bob Roddis [bold added]
ReplyDeleteIt is not "brainless" to refuse to be suckered into a previous looting scheme based on needlessly expensive, scarce or inconvenient/unsafe-to-use fiat such that the population's use of private bank deposits instead is not entirely voluntary.
So inexpensive fiat is NOT part of the problem but a REQUIRED part of any ethical solution.
As stated, MMT explains how money works. It does not explain how financial systems are abused, which is a seperate but related issue. Libertarians (in gold we trust) are the worst kind of capitalists, caring only for themselves. Their anti-violence / anti-war stance is only because they are anti-tax, which they think is used to finance wars. Libertarians have no problem using economics to harm people by denying them health care and retirement because these are "funded by taxes", too ("taxation is theft").
ReplyDeleteAs MMT explains how money really works and how taxes are not necessary to fund government spending - which Roddis acknowledges in his post above - a person of even nominal intelligence can see that the entire foundation of Libertarian "thinking" is based on mistaken beliefs. Unfortunately, those who have drunk deeply from this batch of bad KoolAid are without the cognitive ability to reconcile this.
The Dunning-Kruger Effect strikes again.
Roddis, A.A.
ReplyDeleteGet a room, you two.
Preferably soundproof.
++++++++++++++++++++++++++++++++++++++++++++++++
@A Noah Way: As stated, MMT explains how money works. It does not explain how financial systems are abused, which is a separate but related issue."
Correct. For this reason I say that without bank reform, MMT cannot help us.
Libertarians (in gold we trust) are the worst kind of capitalists, caring only for themselves.
Exactly. Their idea of "liberty" is freedom for themselves at the expense of everyone they don't like, or they disagree with.
"The Dunning-Kruger Effect strikes again."
It's the reason why most peasants are slaves.