As MMT has been thrust into the spotlight, misrepresentations and misunderstanding have followed. MMT supposedly calls for cranking up the printing press, engaging in helicopter drops of cash or having the Fed finance government spending by engaging in Quantitative Easing.
None of this is MMT.
Instead, MMT provides an analysis of fiscal and monetary policy applicable to national governments with sovereign, non-convertible currencies. It concludes that the sovereign currency issuer: i) does not face a “budget constraint” (as conventionally defined); ii) cannot “run out of money”; iii) meets its obligations by paying in its own currency; iv) can set the interest rate on any obligations it issues.
Current procedures adopted by the Treasury, the central bank, and private banks allow government to spend up to the budget approved by Congress and signed by the President. No change of procedures, no money printing, no helicopter drops are required....Multiplier Effect
What MMT Is, and Why We Should Not Wait for the Next Crisis to Live Up to Our Means
Yeva Nersisyan and L. Randall Wray
“MMT ...concludes that the sovereign currency issuer: ..... ii) cannot “run out of money”;
ReplyDeleteThis is really all MMT has to offer..,, there is not much more to it other than this assertion... which that we “can’t run out of money” should be self evident...
Its not self evident due to a major deficiency in our cognitive development process ie in the academe...
Imo, mmt in a nutshell, but in no particular order
ReplyDelete1. Sectoral balances front and center.
2. Dollars didn't exist until govt created them. Taxes don't fund the govt, govt can't run out etc.
3. Recognition of the supply side of inflation and not just the spending side.
4. Credit is an expansion of purchasing power and not a transfer to purchasing power from saver to borrower.
Some of that is standard econ, some is not. Most if of exists in circuit theorists approaches too (like Keen, I still don't quite get where he departs from mmt). Mitchell would put in a job guarantee, but that's more prescriptive and theoretical to me. I see no real reason to move beyond the descriptive in the core mmt stuff.
But the MMTers have done a supremely terrible job at messaging. Sure, people are deliberately trying not to understand it, but come on, you can do better than this stupid "score keeper" analogy. It's a shitty analogy. Start with an animatation demonstrating the sectoral balances and work from there.
"Sure, people are deliberately trying not to understand it, "
ReplyDeleteoh come on! where is your evidence of that?????
They are just advocating for THEIR alternative Theory...
Joe,
humor me here.... do you think "we're out of money!" ?
If not then WHY NOT?????
"Because MMMT says so!" is a WRONG ANSWER....
"you can do better than this stupid "score keeper" analogy. "
ReplyDeleteyes an analogy is FIGURATIVE LANGUAGE... figure of speech...
Investigate the cognitive science... if someone is making a reification error the teacher cannot correct that by using MORE figurative language... this is somewhat well known in the cognitive area...
Here Joe,
ReplyDeletehttps://psychology.stackexchange.com/questions/4538/is-abstract-knowledge-incompatible-with-literal-memorization
"Solomon Shereshevsky (Luria, 1968) had an almost perfect literal memory. He remembers strings of hundreds of digits for years after only having read them once. I would like to explain this by his awesome synesthesia: everything is encoded in so many ways that everything is considered as new, and so a new memory trace is formed to remember it (we know that "first time" experiences are well remembered (Robinson, 1993), as are distinctive features (Hunt & Worthen, 2006)). Shereshevsky's gift was compensated by big difficulties recognizing (visages, which he considered extremely changing) and had basically no understanding of abstraction: metaphor, figurative language.
Kim Peek, the "real Rainman", had a rote knowledge of 6000 books, yet was unable to extract abstract information from this knowledge (his memory was like a computer's, basically). He was also unable to understand metaphors."
All that memorization required in Liberal Arts retards the brain's ability to abstract ... or perhaps the people are untrained in the first place...
Then when you try to correct a resultant reification error with more abstraction or more figurative language... IT DOESNT WORK...
There is a whole thing in the cognitive area that explains the cognitive deficiency with these people...
Its not some big secret neo-liberal conspiracy...
Jay Powell (securities lawyer) can probably recite the Securities Act of 1933 ver batum from memory...
ReplyDeleteCan he take the Reserve Requirement Ratio of 10% of Deposits and see in his own H.8 Report that Deposits are $13T in September 2019 and then figure out how to multiply by 0.1 to get $1.3T of Reserves at minimum????
Noooooooooooo......
Where is your evidence that art degrees is behind every decision you think is a bad decision?
ReplyDeleteSo far you managed to come up with only your own hypothesis that that is the case.
Show the proof!
Those are interesting phenomena Matt.
ReplyDelete"So, it seems to me that abstraction is incompatible with literal memory: we have to forget some concrete features to get the abstract essence. "
That's sort of what neural networks are doing when they recognize the same letters in different fonts as being the same letter. Concrete are ignored and a more fundamental sort of "essence" is recognized. An associative neural network memory is fundamentally different than the classic RAM picture.
Facial rec in humans use a special area of the brain separate from normal object recognition. There's a syndrome where the person can see just fine but can't recognize people's faces. You'd be able to recognize your wife's voice but not recognize her in a crowd.
In programming we have a thing called the law of leaky abstractions. Abstractions ate great and all until they eventually bump into the real world and the abstraction starts to "leak" and it no longer works.
I don't think analogy and metaphor are bad things, quite the contrary. You just have to recognize their limitations.
ReplyDeleteLike in a Feynman clip explaining electrons, paraphrasing, "it's like planets, no not exactly. It's like a cloud, no not exactly, it's like a ball spinning, not not exactly. Maybe there don't exist familiar pictures for peiple who need familiar pictures."
"humor me here.... do you think "we're out of money!" ?
ReplyDeleteIf not then WHY NOT?????"
I'd start by explaining how US dollars didn't exist until the US govt created them and how only the US govt can create them). You couldn't pay tax in usd until the govt first created the usd etc, you know the story... but then you immediately have to talk about the inflation constraints and productive capacity. How just because govt can spend as much as it wants doesn't mean it always should.. then you need to explain from the beginning again because the person jumped to hyperinflation right away and didn't actually listen to anything you said.
Who just says "because mmt says so?" It's not particularly difficult to understand, it doesn't use any metaphors or analogies.
Electrons are said to orbit the nucleus in a three dimensional plane. These areas of probability, or shells, come in several shapes. For more details, please refer to the Bohr model of the atom. Animations of this model are also available. If you are still unable to comprehend what your eyes are seeing, please consult your ophthalmologist. Applications requesting a refund of your arts degree, must include a full medical report.
ReplyDelete... and a 30,000 word essay containing no figurative language.
ReplyDeleteI actually think the scorekeeper analogy is a good one. 1) It captures the competitive nature of chasing the dollar for many people, illuminating the fact that many people put all their effort into simply getting more points regardless of how they get them. 2) It’s something everyone has experience with
ReplyDeleteA phrase I use to people when trying to shake up gold standard thinking....... Money is an invention, not a discovery
Regarding memorization vs understanding
There are certain things you just have to memorize...... others you will eventually understand. Anatomy has to be memorized, physiology becomes understood. As a surgeon does more and more surgery he “lives” the anatomy and just gets the relationships, knowing the landmarks that tell him when he’s getting close some part of the body he needs to explore. Eventually he gets to where he knows when there is some anomaly to the patients anatomy. Somethjng that usually runs posterior to this muscle actually runs lateral in a percentage of patients but he’s able to recognize it after a while. A first year resident will cut something he’s not supposed to because he’s going off text book relationships. There are things that you just have to remember. Cardiac physiology on the other hand is almost no memorization it s simply understanding flows, resistance, volumes, etc It’s not an Art degree thing to do things by rote memorization, frankly that’s asinine, if anything most artists feel and understand more than they memorize.
Formulas and equations have to be memorized first and then they are worked with and the understanding starts to be revealed as to why they are illuminating something important.
Choosing the extremes of literal thinking like some autistic guy does not make your case for you like you think it does.
The score keeper analogy does capture how there's ultimately no fixed supply of dollars.
ReplyDeleteBut it does not work as well with the sectoral balances. Most people do not understand that everyone can't run a personal surplus or that govt deficit=nongovt surplus.. there's not many games where one teams's points go to another team. So as long as the game involves players transferring points to each other and the scorekeeper disappearing points, it works.