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.
MMT does not support quantitative easing (QE), nor does it prescribe “helicopter drops,” for the simple reason that there is no such thing as a “helicopter-money” alternative to financing a fiscal-stimulus package. YEVA NERSISYAN , L. RANDALL WRAY [bold added]
There would be such a thing as “helicopter-money” if all citizens could use fiat in account form as the banks do - but they can't.
So when is the MMT School going to advocate that all citizens be allowed to use their own Nation's fiat in account form? Instead of INCREASED* privileges for a usury cartel?
The MMT School is currently not offering a genuine populist solution but an elitist one that attempts to make the current UNJUST system more stable by making it more unjust.
*e.g. unlimited deposit guarantees for free. *e.g. unlimited, unsecured loans of fiat for private depository institutions at zero percent interest.
I’m puzzled by Nersisyan and Wray’s claim that “…there is no such thing as a “helicopter-money” alternative to financing a fiscal-stimulus package”. Far as I’m aware the large majority of economists agree that helicopter drops are perfectly feasible, though whether they’re desirable is another matter. Moreover, the UK is doing helicopter drops right now in that the Bank of England is simply creating new money for government to spend in the quantities requested by the UK government.
However Nersisyan and Wray’s criticism in their last sentence of attempts to cut the debt to some arbitrarily chosen percentage of GDP is correct. As Simon Wren-Lewis (former Oxford economics prof) said at the start of a recent article, “…fiscal rules should never involve targets for the debt/GDP ratio..” See:
I’m puzzled by Nersisyan and Wray’s claim that “…there is no such thing as a “helicopter-money” alternative to financing a fiscal-stimulus package”. Ralph Musgrave
It's simple Ralph: citizens may not use fiat except in grubby physical form (coins and paper Central Bank Notes) so there's no practical way for government to give fiat to citizens.
And that's an outage on its face and should be changed by giving all citizens debit (and checking?) accounts at the Central Bank or Treasury itself.
But that's a slippery slope to ending ALL privileges for the usury cartel - which is why it is opposed by elitists of all persuasions, including the MMT School so far.
Ralph, Andrew - they are just referring to basic MMT reserve accounting. The upshot of which is that the reserve accounting, bond sales, interest rate games etc don't really mean anything.
As they explain - In other words, everything will operate the same way it does when there isn’t a pandemic or national emergency. At no point will anyone be cranking up the “printing press” or conducting “helicopter drops.”
They're making a Franko-esque point that "helicopter money" is figurative language, moreover language that applies to nothing whatsoever. It's like asking whether we should release the Easter Bunny against the pandemic or not. The question is crazy.
11 comments:
Double trigger
MMT does not support quantitative easing (QE), nor does it prescribe “helicopter drops,” for the simple reason that there is no such thing as a “helicopter-money” alternative to financing a fiscal-stimulus package. YEVA NERSISYAN , L. RANDALL WRAY [bold added]
There would be such a thing as “helicopter-money” if all citizens could use fiat in account form as the banks do - but they can't.
So when is the MMT School going to advocate that all citizens be allowed to use their own Nation's fiat in account form? Instead of INCREASED* privileges for a usury cartel?
The MMT School is currently not offering a genuine populist solution but an elitist one that attempts to make the current UNJUST system more stable by making it more unjust.
*e.g. unlimited deposit guarantees for free.
*e.g. unlimited, unsecured loans of fiat for private depository institutions at zero percent interest.
More “myth” , “helicopter money”... won’t work...
I’m puzzled by Nersisyan and Wray’s claim that “…there is no such thing as a “helicopter-money” alternative to financing a fiscal-stimulus package”. Far as I’m aware the large majority of economists agree that helicopter drops are perfectly feasible, though whether they’re desirable is another matter. Moreover, the UK is doing helicopter drops right now in that the Bank of England is simply creating new money for government to spend in the quantities requested by the UK government.
However Nersisyan and Wray’s criticism in their last sentence of attempts to cut the debt to some arbitrarily chosen percentage of GDP is correct. As Simon Wren-Lewis (former Oxford economics prof) said at the start of a recent article, “…fiscal rules should never involve targets for the debt/GDP ratio..” See:
https://mainlymacro.blogspot.com/2020/03/fiscal-rules-primer-for-budget.html
”More “myth” , “helicopter money”... won’t work...”
More denial. Will definitely not work.
Put a clock on it...
I’ve put a clock on your denial. Got change that battery.
I’m puzzled by Nersisyan and Wray’s claim that “…there is no such thing as a “helicopter-money” alternative to financing a fiscal-stimulus package”. Ralph Musgrave
It's simple Ralph: citizens may not use fiat except in grubby physical form (coins and paper Central Bank Notes) so there's no practical way for government to give fiat to citizens.
And that's an outage on its face and should be changed by giving all citizens debit (and checking?) accounts at the Central Bank or Treasury itself.
But that's a slippery slope to ending ALL privileges for the usury cartel - which is why it is opposed by elitists of all persuasions, including the MMT School so far.
Ralph, Andrew - they are just referring to basic MMT reserve accounting. The upshot of which is that the reserve accounting, bond sales, interest rate games etc don't really mean anything.
As they explain - In other words, everything will operate the same way it does when there isn’t a pandemic or national emergency. At no point will anyone be cranking up the “printing press” or conducting “helicopter drops.”
They're making a Franko-esque point that "helicopter money" is figurative language, moreover language that applies to nothing whatsoever. It's like asking whether we should release the Easter Bunny against the pandemic or not. The question is crazy.
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