Friday, April 10, 2020

The Use and Abuse of MMT — Michael Hudson, with Dirk Bezemer, Steve Keen and T.Sabri Öncü

Using government spending power to bail out financiers and rentiers makes a travesty of MMT....
Naked Capitalism
The Use and Abuse of MMT
Michael Hudson, research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College, with Dirk Bezemer, Professor of Economics at the University of Groningen in The Netherlands, Steve Keen, Professor and Distinguished Research Fellow at the Institute for Strategy, Resilience and Security of University College London, and T.Sabri Öncü, economist based in İstanbul, Turkey

27 comments:

Matt Franko said...

This is funny these 4 non MMT people write a story nominally in support of MMT and have a graph they put in that has debt as % gdp...

It’s hopeless ...

All these non MMT people are synthesizing all their BS theories with the MMT theory...

Peter Pan said...

Get ready for bastardized MMT.

S400 said...

The graph says “private debt” so it differs from those who scream about debt to gdp who talks about government debt.

Matt doesn’t see the difference between private and public debt?

Matt Franko said...

It’s not stock-flow consistent...

Matt Franko said...

And this is wrong:

“ The problem nowadays is private debt. Most such debt is created by banks. This bank credit – debts owed by bank customers – tends to increase faster than the ability of debtors to earn enough income to pay it. ”

Total us bank credit before the virus was 14T and total loans and leases was 10T of this...

Then they have a stock flow inconsistent chart showing credit (balance) in excess of gdp (first derivative of US balances) by (to them) 150% which (to them) means bank credit is 30T and it’s nowhere near that...

Bank credit assets as part of total bank assets are regulated as has always been the case against bank retained earnings at a current ratio of 0.095 ...

These people don’t even know what is going on....

Matt Franko said...

Maybe they should sign up for a free 30 day trial of MMT Trader....

Matt Franko said...

Even if they don’t want to trade it all the data is in there for them....

S400 said...

“ The problem nowadays is private debt. Most such debt is created by banks. This bank credit – debts owed by bank customers – tends to increase faster than the ability of debtors to earn enough income to pay it. ”

So you are saying that there is no ability problem to pay private debt amongst a lot of people?

avidreader said...

Tom Hickey,

Is it possible to design a spaceship that transfers life e.g. anaerobic plants to other planets and figures out when near a suitable planet? Spreading life seems like a really good (morally) thing to do?

Matt Franko said...

No there isnt.... when you borrow the munnie the bank does what they call "underwriting" which is a review of the borrowers income to make sure they have enough income to pay the loan... and then there has to be collateral...

they usually want total of all loan payment to be 35% of gross or pre tax income of the borrower...

If the loan defaults then the lender can take recourse which is in the contract... or modify the contract

Rinse and repeat...

Banks are only allowed to accrue Assets (loans are treated as Assets of the banks) at a level about 10X retained earnings...

Bank residual or retained earnings right now is about $2T and total bank assets are 19T... so about 10.5

If you asked any of these 4 authors what bank assets are right now idt they would even know how to look it up...

Matt Franko said...

Look Trump understands eg aircraft finance he has his own 777 and has owned and operated small airline back in the 80s.. I used to fly on it...

The planes are just sitting there they are not depreciating as aircraft depreciate based on hours of operation..

So he knows all the two parties have to do is modify the lease to put another month or two on the back end of the current agreement and have the airlines skip a couple of payments... its not like the leasing firms are losing anything the planes are not depreciating..

Instead of getting the govt involved to make the aircraft leasing company whole in the current period...

Its a scam...

Finance isnt that hard...

S400 said...

“No there isnt...“

Do a lot of people in the US have problem servicing their private debt?

Matt Franko said...

I never have.... nobody I know ever has...

they will not let you borrow unless you can demonstrate current ability to pay...

And government wont let banks lend too much because they regulate the banks.. banks can only create a maximum amount of loans depending on their regulatory capital retained earnings and what other assets the regulators make them possess...

You could perhaps say: "hey! airlines are having trouble servicing their debts!" right now they are in effect grounded... due to the virus...

So Trump is just saying "well just extend the lease for 2 more months and have the airlines skip two payments... modify the lease/loan... the planes arent depreciating...

same with the mortgages... just have the banks modify the mortgage to extend the period two more payment on the end... let mortgage borrowers skip a couple of payments.. its not like the properties are going to burn down due to the virus so the bank isnt losing anything...

Easy peasy lemon squeezy....

this isnt hard...

S400 said...

I will answer that myself. Yes they do. And that’s what Hudson et al is referring to and that’s what the graph they use is correlating to.

S400 said...

“I never have.... nobody I know ever has...“

Yeah that’s answer based on science......

S400 said...

Actually that answer is fully in line with how liberals would answer - I’m ok and that’s good enough for me.

Matt Franko said...

Well if their circumstances change then they may have trouble paying....

That just calls for an increase in disability payment systems if the borrower develops some disability to pay...

It’s not that there is “too much debt!” like these debt doomsday morons Theorize...

Debt service of 35% max of gross pay doesn’t seem unreasonable...

Maybe taxes are too high?

S400 said...

“Well if their circumstances change then they may have trouble paying....“

And that’s what is happening to a lot of people.

And of course you can say “too much debt” if you can’t service your debt.

Matt Franko said...

Well just get some disability to get thru it then...

Or have the Depositories recast the mortgage or lease...

Its just a bunch of paperwork and accounting you people think its some big f-ing deal or something...

S400 said...

Yeah you think you know what people go thru. You don’t and that’s because you don’t have the training in empathy.

Hudson et al talk about real people, you don’t.

To conclude this thread, as usually you went out on your mission to cherry pick driven by your political bias and you thought you found something but as you’re a sloppy reader it back fired from the start where you thought the graph was about national debt and then you tried to cover it up with allot of words but in the end it all came down to the usual where you really don’t know what your talking about.

Matt Franko said...

I didnt think it was about national debt .. its not stock-flow consistent which is generally recognized within the MMT Theory as an error... regardless of specific application...

And I have more empathy than do you commies...

Matt Franko said...

"your political bias"

I have no political bias...

I actually have no bias at all...

I am not signed up for anyone's political campaign nor do I contribute to anybody's political campaigns or political parties...

And I study the evidence before judging anything...

S400 said...

Ah full right wing denial mode. No correction possible. Fail.

S400 said...

Stock flow consistent has nothing to do with how and why they used the graph. You would understand that if you weren’t such a sloppy reader who can’t grasp context.

S400 said...

“And I have more empathy than do you “

So you’ve learned your come backs from watching Trump I see.

Matt Franko said...

"Stock flow consistent has nothing to do with how and why they used the graph."

I know they are all art degree commies... Youre making my point...

Science means nothing to them...

Its a big technical error...

S400 said...

No it’s not the way they use the graph. You just are way off here but can’t admit it and therefore cannot correct. Major fail.