Longtime friend Yves Smith of Naked Capitalism published an interview today with Richard Vague, Pennsylvania's acting Secretary of Banking and Securities, that takes issue with my last two Substack pieces on the recent bailouts. Both Vague and Yves seem to think I've been "acrophobic" about modern Monetary Theory and perhaps unconsciously mired in questionable orthodoxies about debt and government spending....Matt Taibbi
A Quick Note In Response to Naked Capitalism— I'm phobic about kleptocracy, not Modern Monetary Theory
5 comments:
The mmt shitty messaging chickens have come home to roost. MMT will forever now be known as bail-out-the-wealthy-money-printer-go-brrrr-inflation-wuuuut.
Taibbi is maybe the best journalist in the world, but on useful idiots he sounded like he read a paragraph by Peter Schiff describing mmt.
MMT: 100% Fiscal Free
All of taibbis stuff is figurative language BS....
GFC caused by Fed increasing Resrves by 100s of $B in September 2008 and caused their own Depositories to violate their regulatory Leverage limits and have to cease credit operations...
No figurative language used in above description...
"MMT shitting messaging chickens..."
You got it, Joe.
A KISS version of MMT:
GDP is the measure of our PRODUCTIVE economy. GDP is the sum of household, business and government spending (and likewise the income of those sectors equals that spending, because ALL spending is someone else's income). Our economy depends on household spending (2/3 of GDP). That spending is limited by household income (which comes only from those three sectors). Business provides that income to the extent demand (business opportunity) exists, and government provides the rest. All that's important to the economy is maintaining this flow, and with a fiat currency (whose value, by definition, depends ONLY on currency-users perception), there are no limits other than that perception.
Now, if you'll look at the income side of GDP, you'll find that neither Federal borrowing nor income taxes are part of that income - so they DO NOT (and never have) paid for (or "funded") that spending. If you want proof for any of this, just pull up the GDP Primer at https://www.bea.gov/resources/methodologies .
Note that the PRODUCTIVE economy is the production-and-consumption economy. It is
NOT the FIRE (Finance, Insurance, Real Estate) economy.
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